-- sold 7,544,936 million shares of common stock at an offering price of
$6.70 per share in a public offering commenced in December;
-- acquired 12 additional Hotels;
-- increased overall POI and occupancy, and growth in ADR and RevPAR for
limited service hotels;
-- extended stay hotels added to the Company's lodging portfolio;
-- the payment of dividends on the common stock during each quarter, for
a total of $.365 per share in 2006, up from $.24 per share in 2005; and
-- the dividend declared on the common stock for the fourth quarter of
2006 was $.11 per share.
Fourth Quarter Results
The Company had net earnings of $71,000, for the three months ended
December 31, 2006 compared to a net loss of $224,000 for the same period
ended December 31, 2005. After recognition of dividends for the Preferred
Stock shareholders, the net loss available to common shareholders was
$231,000 or $0.02 per diluted share, for the three months ended December
31, 2006, compared with a net loss of $230,000, or $0.02 per diluted share,
for the same period ended December 31, 2005. The net loss available to common shareholders was increased by $302,000 of preferred stock dividends compared to the $6,000 of preferred stock dividends in the year ago period.
Revenues for the three months ended December 31, 2006 compared to the three
months ended December 31, 2005, increased $4.0 million or 27.1%, of which
$3.7 million was due to the increase in revenue from acquisitions and $0.3
million was due to the increase in revenue from the same store portfolio.
The increase in revenues for the same period of 2006 over 2005 was also due
in part to a 6.4% increase in average daily rate (ADR) to $57.08 and a 5.7%
increase in revenue per available room (RevPAR) to $32.63 for the limited
service hotels. The fourth quarter of 2006 is the Company's first quarter
that reflects a full quarter of results from its extended stay hotels. The
extended stay hotels are economy hotels with significantly lower ADR and
RevPAR than limited service hotels. For the quarter, the extended stay
hotels portfolio had an ADR of $24.08 and a RevPAR of $16.24. For the
fourth quarter of 2006 compared to the fourth quarter of 2005, ADR for the
entire hotel portfolio decreased 4.5% to $51.26, RevPAR for the entire
hotel portfolio decreased 2.4% to $30.11, reflecting the lower ADR, and
RevPAR typical for economy extended stay hotels. The occupancy for all
hotels for the three months ended December 31, 2006 increased 2.1% from
that of the year ago period.
Hotel and property operations expenses for the three months ended December
31, 2006 increased $2.6 million or 23.7%, of which $2.5 million was due to
the increase in hotel and property operations expenses from new hotel
acquisitions, and $159,000 from the same store portfolio, 2006 over 2005.
Interest expense increased by $737,000, due primarily to increased debt
incurred for hotel acquisitions. The depreciation and amortization expense
increased $471,000 for the fourth quarter of 2006 over the same period in
2005. This is primarily related to hotel acquisitions as well as asset
additions for the same store portfolio outpacing the amount of assets
exceeding their useful life.
The Company believes property operating income (POI) is a useful measure of
the Company's operating efficiency of its hotel properties. POI, which is
revenue from room rentals and other hotel services less hotel and property
operations expenses, increased $1.4 million or 37.0% for the fourth quarter
of 2006, compared to the year ago period.
The general and administration expense for the three months ended December
31, 2006 increased $48,000 or 6.8% compared to the year ago period. This is
primarily related to increases in salaries and professional fees.
FFO was $2.1 million, or $0.16 per diluted share, for the fourth quarter of
2006, compared to $1.7 million or $0.14 per diluted share, for the same
quarter of 2005. EBITDA was $4.6 million for the fourth quarter of 2006,
compared to $3.1 for the same quarter of 2005. The increases in FFO and
EBITDA were primarily the result of hotel acquisitions.
2006 Year-End Results
The Company had net earnings of $3.7 million, for the year ended December
31, 2006, an increase of 33.9% compared to $2.8 million for 2005. After
recognition of dividends for Preferred Stock shareholders, the net earnings
available to common shareholders was lower at $2.5 million, or $0.20 per
diluted share, for 2006, compared to $2.8 million, or $0.23 per diluted
share, for 2005. The net earnings available to common shareholders for the year ended December 31, 2006 was reduced by $1.2 million of preferred stock dividends compared to $6,000 of preferred stock dividends for the year ended December 31, 2005.
Revenues for 2006 compared to 2005, increased $16.6 million or 27.4%, of
which $15.4 million was due to the increase in revenue from acquisitions
and $1.2 million was due to the increase in revenue from the same store
portfolio. The increase in revenues was also due in part to a 6.4% increase
in ADR to $57.46 and a 7.3% increase in RevPAR to $36.15 for the limited
service hotels. For the year, the extended stay hotels had ADR of $24.03
and a RevPAR of $16.54. For 2006 compared to 2005, ADR increased 2.2% to
$55.18 and RevPAR increased 3.7% to $34.92 for the entire hotel portfolio.
The occupancy for all hotels increased 1.4%.
During 2006, hotel and property operations expenses increased $11.2
million, of which $10.3 million was due to the increase in hotel and
property operations expenses from new hotel acquisitions and $0.9 million
was due to same store, 2006 over 2005.
Interest expense increased by $2.3 million, due primarily to increased debt
used for hotel acquisitions. The depreciation and amortization expense
increased $1.8 million for 2006 over 2005. This is primarily related to
hotel acquisitions as well as asset additions for the same store portfolio
outpacing the amount of assets exceeding their useful life.
POI increased by $5.4 million or 29.6% for 2006, compared to 2005.
The general and administration expense for 2006 increased $316,000 or 12.5%
compared to 2005, this is primarily related to increases in salaries and
professional fees.
FFO was $11.2 million, or $0.83 per diluted share, for 2006, compared to
$9.6 million, or $0.80 per diluted share, for the year ago period. EBITDA
was $20.9 million for the year ended December 31, 2006, compared to $15.8
for 2005. The increases in FFO and EBITDA were primarily the result of
hotel acquisitions.
Significant Events through February 26, 2007:
-- the acquisition of five hotels;
-- agreements, subject to customary purchase conditions, to purchase 14
additional limited service hotels; and
-- enhancing the Company's revolving credit facility with Great Western
Bank to increase the borrowing capacity from $20 million to $34 million,
decrease the interest rate to prime minus 75 basis points, extend the
maturity date to February 22, 2009 and increasing the loan to value ratio
from 60% to 65% for the borrowing base.
About Supertel Hospitality, Inc.
As of February 26, 2007, Supertel Hospitality, Inc. (
In thousands:
December 31, December 31,
Unaudited
2006 2005
------------- -------------
ASSETS
Investments in hotel properties $ 254,241 $ 205,169
Less accumulated depreciation 63,509 55,399
------------- -------------
190,732 149,770
Cash, accounts receivable, prepaid expenses,
deferred financing and other assets 11,416 7,186
------------- -------------
$ 202,148 $ 156,956
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Accounts payable, accrued expenses and other
liabilities $ 8,905 $ 7,937
Long-term debt 94,878 92,008
------------- -------------
103,783 99,945
------------- -------------
Minority interest in consolidated partnerships 3,528 3,560
------------- -------------
SHAREHOLDERS' EQUITY
Shareholders' equity 94,837 53,451
------------- -------------
$ 202,148 $ 156,956
============= =============
The following table sets forth the Company's results of operations for the
three-month periods ended December 31, 2006 and 2005, respectively, and the
years ended December 31, 2006 and 2005, respectively.
In thousands, except per share data:
Three months Twelve months
ended December 31, ended December 31,
---------------------- --------------------
Unaudited Unaudited Unaudited
2006 2005 2006 2005
---------- ---------- ---------- --------
REVENUES
Room rentals and other hotel
services $ 18,885 $ 14,859 $ 77,134 $ 60,537
---------- ---------- ---------- --------
EXPENSES
Hotel and property
operations 13,649 11,036 53,591 42,372
Depreciation and
amortization 2,351 1,880 8,680 6,863
General and administrative 750 702 2,842 2,526
---------- ---------- ---------- --------
16,750 13,618 65,113 51,761
---------- ---------- ---------- --------
EARNINGS BEFORE NET GAINS
(LOSSES)ON DISPOSITIONS OF
ASSETS, OTHER INCOME,
INTEREST EXPENSE, MINORITY
INTEREST AND INCOME TAX
BENEFIT 2,135 1,241 12,021 8,776
Net gains (losses) on
dispositions of assets 3 (3) (3) (2)
Other income 77 31 185 158
Interest expense (2,451) (1,714) (8,255) (5,959)
Minority interest (61) (45) (334) (226)
---------- ---------- ---------- --------
EARNINGS (LOSS) BEFORE INCOME
TAXES (297) (490) 3,614 2,747
Income tax benefit 368 266 107 31
---------- ---------- ---------- --------
NET EARNINGS (LOSS) 71 (224) 3,721 2,778
Preferred stock dividend (302) (6) (1,215) (6)
NET EARNINGS (LOSS) AVAILABLE
TO COMMON SHAREHOLDERS $ (231) $ (230) $ 2,506 $ 2,772
========== ========== ========== ========
NET EARNINGS (LOSS) PER SHARE
- BASIC: $ (0.02) $ (0.02) $ 0.20 $ 0.23
========== ========== ========== ========
NET EARNINGS (LOSS) PER SHARE
- DILUTED: $ (0.02) $ (0.02) $ 0.20 $ 0.23
========== ========== ========== ========
In thousands, except per share data:
Three months Twelve months
ended December 31, ended December 31,
---------------------- --------------------
unaudited unaudited unaudited
2006 2005 2006 2005
---------- ---------- ----------- --------
Weighted average number of
shares outstanding for EPS
basic 12,836 12,064 12,261 12,062
diluted 12,836 12,064 12,272 12,062
Weighted average number of
shares outstanding for FFOPS
basic 12,836 12,064 12,261 12,062
diluted 15,529 12,064 14,960 12,062
Reconciliation of net earnings
(loss) to FFO-Unaudited
Net earnings (loss) available
to common shareholders $ (231) $ (230) $ 2,506 $ 2,772
Depreciation and amortization 2,351 1,880 8,680 6,863
Net (gains) losses on
disposition of assets (3) 3 3 2
---------- ---------- ----------- --------
FFO $ 2,117 $ 1,653 $ 11,189 $ 9,637
========== ========== =========== ========
FFO per share - basic $ 0.16 $ 0.14 $ 0.91 $ 0.80
========== ========== =========== ========
FFO per share - diluted $ 0.16 $ 0.14 $ 0.83 $ 0.80
========== ========== =========== ========
FFO is a non-GAAP financial measure. The Company considers FFO to be a market accepted measure of an equity REIT's operating performance, which is necessary, along with net earnings, for an understanding of the Company's operating results. FFO, as defined under the National Association of Real Estate Investment Trusts (NAREIT) standards, consists of net income computed in accordance with accounting principles generally accepted in the United States of America ("GAAP"), excluding gains (or losses) from sales of real estate assets, plus depreciation and amortization of real estate assets, and after adjustments for unconsolidated partnerships and joint ventures. The Company believes its method of calculating FFO complies with the NAREIT definition. FFO does not represent amounts available for management's discretionary use because of needed capital replacement or expansion, debt service obligations, or other commitments and uncertainties. FFO should not be considered as an alternative to net income (loss) (computed in accordance with GAAP) as an indicator of the Company's liquidity, nor is it indicative of funds available to fund the Company's cash needs, including its ability to pay dividends or make distributions. All REITs do not calculate FFO in the same manner; therefore, the Company's calculation may not be the same as the calculation of FFO for similar REITs. The Company uses FFO as a performance measure to facilitate a periodic evaluation of its operating results relative to those of its peers, who like Supertel Hospitality, Inc., are typically members of NAREIT. The Company considers FFO a useful additional measure of performance for an equity REIT because it facilitates an understanding of the operating performance of its properties without giving effect to real estate depreciation and amortization, which assumes that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, the Company believes that FFO provides a meaningful indication of our performance.
Unaudited, In thousands:
Three months Twelve months
ended December 31, ended December 31,
------------------ ------------------
2006 2005 2006 2005
-------- -------- -------- --------
RECONCILIATION OF NET EARNINGS
(LOSS) TO EBITDA
Net earnings (loss) available to
common shareholders $ (231) $ (230) $ 2,506 $ 2,772
Interest expense 2,451 1,714 8,255 5,959
Income tax benefit (368) (266) (107) (31)
Depreciation and amortization 2,351 1,880 8,680 6,863
Minority interest 61 45 334 226
Preferred stock dividend 302 6 1,215 6
-------- -------- -------- --------
EBITDA $ 4,566 $ 3,149 $ 20,883 $ 15,795
======== ======== ======== ========
EBITDA is a non-GAAP financial measure. With respect to EBITDA, the Company
believes that excluding the effect of non-operating expenses and non-cash
charges, all of which are also based on historical cost accounting and may
be of limited significance in evaluating current performance, can help
eliminate the accounting effects of depreciation and amortization, and
financing decisions and facilitate comparisons of core operating
profitability between periods and between REITs, even though EBITDA also
does not represent an amount that accrues directly to common shareholders.
EBITDA doesn't represent cash generated from operating activities
determined by GAAP and should not be considered as an alternative to net
income, cash flow from operations or any other operating performance
measure prescribed by GAAP. EBITDA is not a measure of the Company's
liquidity, nor is EBITDA indicative of funds available to fund the
Company's cash needs, including its ability to make cash distributions.
Neither measurement reflects cash expenditures for long-term assets and
other items that have been and will be incurred. EBITDA may include funds
that may not be available for management's discretionary use due to
functional requirements to conserve funds for capital expenditures,
property acquisitions, and other commitments and uncertainties. To
compensate for this, management considers the impact of these excluded
items to the extent they are material to operating decisions or the
evaluation of the Company's operating performance.
The following table sets forth the operations of the Company's hotel
properties for the three and twelve months ended December 31, 2006 and
2005, respectively. The Company owned 88 hotels at December 31, 2006. This
presentation includes non-GAAP financial measures. The Company believes
that the presentation of hotel property operating results (POI) is helpful
to investors, and represents a more useful description of its core
operations, as it better communicates the comparability of its hotels'
operating results.
Unaudited-In thousands, except Three months Twelve months
statistical data: ended December 31, ended December 31,
------------------ ------------------
2006 2005 2006 2005
-------- -------- -------- --------
Average daily room rate (ADR):
Limited Service $ 57.08 $ 53.66 $ 57.46 $ 54.00
Extended Stay $ 24.08 $ - $ 24.03 $ -
Total $ 51.26 $ 53.66 $ 55.18 $ 54.00
Revenue per available room
(RevPAR):
Limited Service $ 32.63 $ 30.86 $ 36.15 $ 33.68
Extended Stay $ 16.24 $ - $ 16.54 $ -
Total $ 30.11 $ 30.86 $ 34.92 $ 33.68
Occupancy percentage:
Limited Service 57.2% 57.5% 62.9% 62.4%
Extended Stay 67.4% - 68.8% -
Total 58.7% 57.5% 63.3% 62.4%
Revenue from room rentals and other
hotel services consists of:
Room rental revenue $ 18,301 $ 14,470 $ 75,011 $ 59,027
Telephone revenue 96 38 244 179
Other hotel service revenues 488 351 1,879 1,331
-------- -------- -------- --------
Total revenue from room rentals and
other hotel services $ 18,885 $ 14,859 $ 77,134 $ 60,537
======== ======== ======== ========
Room rentals and other hotel
services
Same Store locations * $ 14,075 $ 13,767 $ 60,145 $ 58,979
Acquisitions 4,810 1,092 16,989 1,558
-------- -------- -------- --------
Total room rental and other
hotel services $ 18,885 $ 14,859 $ 77,134 $ 60,537
======== ======== ======== ========
Hotel and property operations
expense
Same Store locations * $ 10,339 $ 10,180 $ 42,121 $ 41,194
Acquisitions 3,310 856 11,470 1,178
-------- -------- -------- --------
Total hotel and property
operations expense $ 13,649 $ 11,036 $ 53,591 $ 42,372
======== ======== ======== ========
Property Operating Income ("POI")
Same Store locations * $ 3,736 $ 3,587 $ 18,024 $ 17,785
Acquisitions 1,500 236 5,519 380
-------- -------- -------- --------
Total property operating income $ 5,236 $ 3,823 $ 23,543 $ 18,165
======== ======== ======== ========
POI as a percentage of revenue from
room rentals and other hotel services
Same Store locations * 26.5% 26.1% 30.0% 30.2%
Acquisitions 31.2% 21.6% 32.5% 24.4%
Total POI as a percentage of
revenue 27.7% 25.7% 30.5% 30.0%
* Same Store reflects hotels owned as of October 1, 2005 for the three
months ended December 31, 2006 and 2005 and hotels owned as of January 1,
2005 for the twelve months ended December 31, 2006 and 2005.
RECONCILIATION OF NET EARNINGS Three months Twelve months
(LOSS) TO POI-UNAUDITED: ended December 31, ended December 31,
------------------ ------------------
2006 2005 2006 2005
-------- -------- -------- --------
Net earnings (loss) $ 71 $ (224) $ 3,721 $ 2,778
Depreciation and amortization 2,351 1,880 8,680 6,863
(Gain) loss on disposition of assets (3) 3 3 2
Other income (77) (31) (185) (158)
Interest expense 2,451 1,714 8,255 5,959
Minority interest 61 45 334 226
General and administrative expense 750 702 2,842 2,526
Income tax benefit (368) (266) (107) (31)
-------- -------- -------- --------
POI $ 5,236 $ 3,823 $ 23,543 $ 18,165
======== ======== ======== ========
Contact Information: CONTACT: Supertel Hospitality, Inc. Donavon A. Heimes 402/371-2520