SOURCE: Supertel Hospitality, Inc.

Supertel Hospitality, Inc.

March 23, 2015 13:43 ET

Supertel Hospitality Reports 2014 Results With Improved Revenue and Adjusted EBITDA

NORFOLK, NE--(Marketwired - March 23, 2015) - Supertel Hospitality, Inc. (NASDAQ: SPPR), a real estate investment trust (REIT), today announced its results for the fourth quarter and year ended December 31, 2014. 

2014 Fourth Quarter and Full-Year Highlights 

  • Net loss attributable to common shareholders was $(3.8) million for the quarter, compared to $(2.2) million in the fourth quarter 2013, and $(19.7) million for the year, compared to $(4.7) million for the prior year.
  • Revenue from continuing operations in the fourth quarter was $13.2 million, an increase of 9.7 percent over the same 2013 period and $57.4 million for the full year, an increase of 6.7 percent over the prior year.
  • Revenue per available room (RevPAR) for the continuing operations hotels in the fourth quarter was $36.63, an increase of 10.2 percent over the same 2013 period, and $40.39 for the year, an increase of 6.8 percent over the prior year.
  • Adjusted EBITDA was $2.4 million for the quarter, compared to $2.1 million in the fourth quarter 2013, and $13.4 million for the full year 2014, compared to $12.4 million for the prior year.
  • Adjusted funds from operations ("AFFO") was $(0.4) million for the quarter, compared to $(0.8) million in the fourth quarter 2013, and $1.5 million for the year, compared to $(0.4) million for the prior year.
  • Sold three non-core hotels in the fourth quarter and 13 hotels for the full year.

Fourth Quarter Operating and Financial Results

Supertel's fourth quarter 2014 revenue from continuing operations rose 9.7 percent to $13.2 million compared to the same year-ago period. Revenue per available room (RevPAR) improved by 10.2 percent to $36.63 over the RevPAR for the fourth quarter 2013. Improving overall market conditions in the Washington D.C. market, increased construction projects in the Midwest and significant capital investments in core hotels have all contributed to the revenue growth.

The company had a 2014 fourth quarter net loss attributable to common shareholders of $(3.8) million, or $(0.80) per basic and diluted share primarily due to the non-cash impact of a $5.7 million change in the fair value of derivative liabilities, compared to a net loss of $(2.2) million or $(0.76) per basic and diluted share for the same 2013 period. The change in fair value is recorded as a derivative gain or loss. When the value of the derivatives increases, a loss is recorded and when it decreases, a gain is recorded. One of the key drivers of the value of the derivatives is the market value of the common stock price.

Funds from operations (FFO) was $(0.6) million for the 2014 fourth quarter, compared to $4.8 million in the same 2013 period. Adjusted funds from operations (AFFO), which is FFO adjusted to exclude gains and losses on derivative liabilities, acquisition and termination expense, and the terminated equity transactions expense, in the 2014 fourth quarter was $(0.4) million, compared to $(0.8) million in the same 2013 period.

Earnings before interest, taxes, depreciation and amortization (EBITDA) were $(0.3) million for the 2014 fourth quarter, compared to $1.6 million in the same year-ago period. Adjusted EBITDA was $2.4 million, compared to $2.1 million for the 2013 fourth quarter. Adjusted EBITDA is EBITDA before noncontrolling interest, net gain/loss on disposition of assets, impairment, preferred stock dividends declared and undeclared, unrealized gain/loss on derivatives, acquisition and termination expense, gain on debt conversion and the expenses of the terminated equity transactions.

In the fourth quarter 2014, the 47-hotel same store portfolio reported an increase in revenue per available room (RevPAR) of 10.2 percent to $36.63, driven by a 7.4 percent improvement in occupancy to 58.4 percent, coupled with a 2.6 percent increase in average daily rate (ADR) to $62.70, compared to the 2013 fourth quarter. 

Full-Year Operating and Financial Results

Revenues from continuing operations in 2014 increased $3.6 million or 6.7 percent compared to 2013. The increase can be partially attributed to continued strength in the core midscale portfolio driven primarily by Choice branded properties. Strong construction activity in the Midwest portfolio also contributed to the increase as the mild fall/early winter weather allowed construction and railroad crews to continue working on existing projects. Additionally, the two Alexandria, Virginia properties benefited significantly from local market recovery.

Net loss attributable to common shareholders for 2014 was $(19.7) million, or $(5.05) per basic and diluted share, compared with a 2013 net loss attributable to common shareholders of $(4.7) million, or $(1.63) per basic and diluted share for the same period. Of the loss, $14.4 million was the non-cash impact of an increase in the valuation of the derivative liabilities for the year. The fair value of the derivative liabilities increased by an aggregate of $14.4 million and decreased by an aggregate of $10.0 million during 2014 and 2013, respectively. The change in fair value is recorded as a derivative gain or loss. The loss in the current year is primarily due to a change in the conversion price of the Series C Preferred stock and exercise price of the related warrants following the completion of the company's 2014 second quarter subscription rights offering.

For the full year 2014, the company recorded $2.9 million of impairment charges, including $1.6 million against discontinued operations properties and $1.3 million against continuing operations properties, compared to $7.1 million of total impairment charges in 2013.

FFO for the full year 2014 was $(13.0) million, compared to $7.9 million for the same 2013 period. Adjusted FFO for 2014 was $1.5 million, compared to $(0.4) million reported at December 31, 2013, an increase of $1.9 million. The increase in adjusted FFO is primarily a result of strengthened industry demand and operating efficiencies. 

Earnings before interest, taxes, depreciation and amortization (EBITDA) was $(4.6) million compared with $12.0 million for 2013. Adjusted EBITDA, which is EBITDA before noncontrolling interest, net gain/loss on disposition of assets, impairment, preferred stock dividends, unrealized gain/loss on derivatives, acquisition expense and terminated equity transactions, increased to $13.4 million, compared to $12.4 million for 2013, an increase of $1.0 million.

The portfolio of 47 same store hotels in 2014, compared with the same period a year earlier, had a 6.8 percent increase in RevPAR to $40.39, caused by a 5.7 percent increase in occupancy to 63.3 percent, and a 1.0 percent increase in ADR to $63.78.

Transaction Highlights

On June 6, 2014, the company concluded a rights offering, a total of 1,787,204 subscription rights to purchase an equal number of common shares were exercised for $2,849,526. Real Estate Strategies (RES) applied the amount owed to it under a $2.0 million loan to purchase 1,250,000 of the common stock issued.

Disposition Program

During 2014 the company sold 13 hotels with an aggregate of 1,265 rooms for combined gross proceeds of $22.3 million. The proceeds were used to pay off underlying loans.

             
Sale Date 2014  Hotel  Location  Rooms  Sale Price (in millions)
03/10/14  Super 8  Shawano, WI  55  $1.1
04/24/14  Baymont Inn & Suites  Brooks, KY  65  $1.7
05/06/14  Super 8  Omaha (West Dodge), NE  101  $1.6
06/04/14  Super 8  Boise, ID  108  $2.8
06/11/14  Super 8  Clarinda, IA  40  $1.7
06/23/14  Super 8  Norfolk, NE  64  $1.4
07/15/14  Savannah Suites  Jonesboro, GA  172  $1.4
08/21/14  Savannah Suites  Stone Mountain, GA  140  $1.5
09/19/14  Super 8  Moberly, MO  60  $1.7
09/30/14  Super 8  Omaha ("M" Street), NE  116  $1.9
10/15/14  Days Inn  Sioux Falls (Empire), SD  79  $2.3
10/17/14  Days Inn  Shreveport, LA  148  $1.3
11/06/14  Super 8  Terre Haute, IN  117  $1.9
         1,265  $22.3
          

Following the close of the 2014 fourth quarter, the company sold the following hotels:

         
Sale Date 2015 Hotel Location Rooms Sale Price (in millions)
01/15/15 Super 8 West Plains, MO 49 $1.5
01/29/15 Super 8 Green Bay, WI 83 $2.2
03/16/15 Super 8 Columbus, GA 74 $0.9
03/19/15 Sleep Inn & Suites Omaha, NE 90 $2.9
      296 $7.5
          

Proceeds from the sales were used to pay down associated debt and reduce the balance of the revolving credit facility.

Currently, the company is marketing eight hotels for sale and expects to generate approximately $24.6 million in gross proceeds.

Capital Reinvestment

The company invested $3.4 million in capital improvements throughout the portfolio in 2014 to upgrade its properties and maintain brand standards. Notable capital improvements in 2014 included a lobby and fitness center expansion and renovation at the Green Bay, Wisconsin Super 8; interior pool enhancements and exterior patio upgrades at the Fort Wayne, Indiana Comfort Suites; guestroom and lobby renovations at the Pittsburg, Kansas Super 8; and guestroom renovations at the Alexandria, Virginia Comfort Inn.

Balance Sheet

On December 30, 2014 the company converted the rate on the $4.1 million mortgage loan with GE Capital from 3.73 percent variable to 4.75 percent fixed.

In 2014, the company reduced debt by $25.4 million to $92.7 million, in connection with the sale of non-core assets. As of December 31, 2014, Supertel had $74.3 million in outstanding debt on its continuing operations hotels with an average term of 2.0 years and weighted average annual interest rate of 6.5 percent. 

After the close of the fourth quarter, the company entered into a modification agreement with GE Franchise Finance Commercial LLC (GE) to extend the maturity date of the $10.7 million loan to December 15, 2015. 

Dividends

The company did not declare a dividend on common stock in 2014. The company's board of directors elected to suspend the payment of monthly dividends commencing December 31, 2013 on the outstanding shares of its 8.00% Series A Cumulative Convertible Preferred Stock (NASDAQ: SPPRP), quarterly dividends on the outstanding shares of its 10.00% Series B Preferred Cumulative Stock (NASDAQ: SPPRO), and the quarterly dividends on the outstanding shares of its 6.25% Series C Cumulative Convertible Preferred Stock to preserve capital and improve liquidity. The board of directors will continue to monitor the dividend policy.

Outlook

"The results in the fourth quarter 2014, and full year 2014, reflect a significant improvement in the company's hotel portfolio contribution," said Bill Blackham, recently appointed Supertel Chief Executive Officer. "While the hotel portfolio RevPAR increases of 6.8 percent lagged the 8.3 percent increase for total industry chain scales in 2014, it is significant to note that the portfolio experienced a 10.2 percent RevPAR increase in the fourth quarter compared to 8.9 percent for total industry chain scales. The portfolio experienced a respectable flow through in our continuing operations hotels of 66.6 percent from increased revenues. This was enhanced by continuing operating efficiencies through asset management, causing property operating income margin expansion for the year to increase from 20.6 percent in 2013 to 24.3 percent in 2014. Additionally, the portfolio's quality improved as a result of the dispositions of non-strategic hotels in both 2014 and in prior periods.

"The true performance for the company in 2014 is also less apparent due to the $14.4 million charge for changes in the derivatives' fair value in 2014, compared to a $10 million gain in 2013, which is an ongoing GAAP required non-cash valuation adjustment affecting our income statement and is really not connected to our operating performance," Blackham noted. "Simply eliminating this and other non-cash, non-routine charges results in an Adjusted EBITDA of $13.4 million in 2014 compared to $12.4 million in 2013. It is also important to communicate that underwriting standards in the debt markets became more relaxed in 2014 with improving economic conditions and the company is in a much better position to refinance its debts going forward in the near term as maturities arise."

About Supertel Hospitality, Inc.

Supertel Hospitality, Inc. (NASDAQ: SPPR) is a self-administered real estate investment trust that specializes in the ownership of select-service hotels. The company currently owns 52 hotels comprising 4,502 rooms in 20 states. Supertel's hotels are franchised by a number of the industry's most well-regarded brand families including Hilton, Choice and Wyndham. For more information or to make a hotel reservation, visit www.supertelinc.com.

Forward Looking Statement

Certain matters within this press release are discussed using forward-looking language as specified in the Private Securities Litigation Reform Act of 1995, and, as such, may involve known and unknown risks, uncertainties and other factors that may cause the actual results or performance to differ from those projected in the forward-looking statement. These risks are discussed in the Company's filings with the Securities and Exchange Commission.

 
Selected Financial Data:
Balance Sheet
As of December 31, 2014 and 2013
(In thousands, except share and per share data)
 
   As of
   December 31,  December 31,
   2014  2013
           
           
ASSETS          
 Investments in hotel properties  $ 182,262  $ 183,160
 Less accumulated depreciation    68,533    65,933
      113,729    117,227
            
 Cash and cash equivalents    173    45
 Accounts receivable, net of allowance for doubtful accounts of $25 and $20    1,190    1,083
 Prepaid expenses and other assets    4,262    4,000
 Deferred financing costs, net    1,637    2,601
 Investment in hotel properties, held for sale, net    25,453    47,129
           
   $ 146,444  $ 172,085
           
LIABILITIES AND EQUITY          
LIABILITIES          
 Accounts payable, accrued expenses and other liabilities  $ 6,666  $ 7,745
 Derivative liabilities, at fair value    20,337    5,907
 Debt related to hotel properties held for sale    18,410    41,087
 Long-term debt    74,277    76,958
     119,690    131,697
           
 Redeemable preferred stock          
  10% Series B, 800,000 shares authorized; $.01 par value, 332,500 shares outstanding, liquidation preference of $8,312    7,662    7,662
           
EQUITY          
Shareholders' equity          
 Preferred stock, 40,000,000 shares authorized;          
  8% Series A, 2,500,000 shares authorized, $.01 par value, 803,270 shares outstanding, liquidation preference of $8,033
   8    8
  6.25% Series C, 3,000,000 shares authorized, $.01 par value, 3,000,000 shares outstanding, liquidation preference of $30,000    30    30
 Common stock, $.01 par value, 200,000,000 shares authorized; 4,692,965 and 2,897,539 shares outstanding    47    29
 Additional paid-in capital    137,900    135,293
 Accumulated deficit    (118,983)    (102,747)
  Total shareholders' equity    19,002    32,613
           
 Noncontrolling interest          
  Noncontrolling interest in consolidated partnership, redemption value $25 and $87    90    113
           
  Total equity    19,092    32,726
           
   $ 146,444  $ 172,085
           
       
 
 
Statement of Operations
For the three and twelve months ended December 31, 2014 and 2013, respectively
(In thousands, except per share data)
          
   Three months   Twelve months  
   ended December 31,   ended December 31,  
   Unaudited   Unaudited          
   2014   2013   2014   2013  
REVENUES                         
 Room rentals and other hotel services  $ 13,157   $ 11,993   $ 57,409   $ 53,782  
                          
EXPENSES                         
 Hotel and property operations    10,322     9,898     43,256     42,044  
 Depreciation and amortization    1,593     1,582     6,437     6,258  
 General and administrative    1,202     938     4,192     3,923  
 Acquisition and termination expense    0     (15 )   0     713  
 Terminated equity transactions    0     (32 )   76     1,050  
     13,117     12,371     53,961     53,988  
                          
                          
EARNINGS (LOSS) BEFORE NET GAINS (LOSSES) ON DISPOSITIONS OF ASSETS, OTHER INCOME,INTEREST EXPENSE, AND INCOME TAXES  $ 40   $ (378 ) $ 3,448   $ (206 )
                          
Net gain (loss) on dispositions of assets    (36 )   (1 )   1     (47 )
Derivative gain (loss)    (212 )   5,534     (14,430 )   10,028  
Other income (loss)    3     23     116     34  
Interest expense    (1,697 )   (1,394 )   (7,019 )   (5,399 )
Loss on debt extinguishment    (18 )   (89 )   (158 )   (458 )
Impairment losses    (1,388 )   (2,266 )   (1,269 )   (2,438 )
                          
EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES  $ (3,308 ) $ 1,429   $ (19,311 ) $ 1,514  
                       
                          
Income tax (expense) benefit    0     0     0     0  
                          
EARNINGS (LOSS) FROM CONTINUING OPERATIONS                         
$ (3,308 ) $ 1,429   $ (19,311 ) $ 1,514  
                          
Gain (loss) from discontinued operations    413     (2,794 )   3,052     (2,867 )
                          
NET LOSS  $ (2,895 ) $ (1,365 ) $ (16,259 ) $ (1,353 )
                          
Loss attributable to noncontrolling interest    4     2     23     2  
                          
NET LOSS ATTRIBUTABLE TO CONTROLLING INTERESTS  $ (2,891 ) $ (1,363 ) $ (16,236 ) $ (1,351 )
                          
Preferred stock dividend declared and undeclared    (879 )   (838 )   (3,452 )   (3,349 )
                          
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS  $ (3,770 ) $ (2,201 ) $ (19,688 ) $ (4,700 )
                          
NET EARNINGS (LOSS) PER COMMON SHARE - BASIC AND DILUTED:                         
EPS from continuing operations  $ (0.89 ) $ 0.21   $ (5.84 ) $ (0.64 )
EPS from discontinued operations  $ 0.09   $ (0.97 ) $ 0.79   $ (0.99 )
EPS Basic and Diluted  $ (0.80 ) $ (0.76 ) $ (5.05 ) $ (1.63 )
                 
                 
 
 
Reconciliation of Non-GAAP Financial Measures
Funds From Operations
(Unaudited - In thousands, except per share data)
       
   Three months  Twelve months
   ended December 31,  ended December 31,
   2014  2013  2014  2013
Weighted average number of shares outstanding for EPS                    
 basic    4,691    2,891    3,897    2,890
 diluted    4,691   2,891    3,897    2,890
Weighted average number of shares outstanding for FFO per share                    
 basic    4,691    2,891    3,897    2,890
 diluted    4,691    10,392    3,897    10,392
                     
Reconciliation of Weighted average number of shares for EPS diluted to FFO per share diluted:                    
 EPS diluted shares    4,691    2,891    3,897    2,890
 Common stock issuable upon exercise or conversion of:                    
 Restricted stock    0    1    0    2
 Warrants    0    3,750    0    3,750
 Series A Preferred Stock    0    3,750    0    3,750
  FFO, Number of Diluted Shares    4,691    10,392    3,897    10,392
                     
Denominator:                    
Weighted average number of common shares - basic Adjusted FFO    4,691    2,891    3,897    2,890
 Restricted stock    0    0    5    0
 Convertible loan    0    0    551    0
 Preferred stock    0    0    12,134    0
 Warrants    0    0    3,750    0
Weighted average number of common shares - diluted Adjusted FFO    4,691    2,891    20,337    2,890
                     
Reconciliation of net loss to FFO and Adjusted FFO, basic and diluted                    
 Net loss attributable to common shareholders  $ (3,770)  $ (2,201)  $ (19,688)  $ (4,700)
 Depreciation and amortization, including discontinued operations    1,593    1,743    6,549    7,294
 Net (gain) loss on disposition of assets    26    (144)    (2,750)    (1,806)
 Impairment    1,523    5,363    2,921    7,086
FFO available to common shareholders-basic  $ (628)  $ 4,761  $ (12,968)  $ 7,874
 Series C Preferred Stock    0    0    0    1,875
FFO available to common shareholders-diluted  $ (628)  $ 4,761  $ (12,968)  $ 9,749
                     
FFO available to common shareholders-basic  $ (628)  $ 4,761  $ (12,968)  $ 7,874
 Unrealized (gain) loss on derivatives    212    (5,534)    14,430    (10,028)
 Acquisition and termination expense    0    (15)    0    713
 Gain on debt conversion    0    0    (88)    0
 Terminated equity transactions    0    (32)    76    1,050
Adjusted FFO - basic  $ (416)  $ (820)  $ 1,450  $ (391)
 Convertible debt    0    0    85    0
 Series C Preferred Stock    0    0    1,949    0
Adjusted FFO- diluted  $ (416)  $ (820)  $ 3,484  $ (391)
                     
FFO per share - basic  $ (0.13)  $ 1.65  $ (3.33)  $ 2.72
Adjusted FFO per share - basic  $ (0.09)  $ (0.28)  $ 0.37  $ (0.14)
FFO per share - diluted  $ (0.13)  $ 0.46  $ (3.33)  $ 0.94
Adjusted FFO per share - diluted  $ (0.09)  $ (0.28)  $ 0.17  $ (0.14)
             
             

FFO and Adjusted FFO ("AFFO") are non-GAAP financial measures. We consider FFO and AFFO to be market accepted measures of an equity REIT's operating performance, which are necessary, along with net earnings (loss), for an understanding of our operating results. FFO, as defined under the National Association of Real Estate Investment Trusts (NAREIT) standards, consists of net income computed in accordance with GAAP, excluding gains (or losses) from sales of real estate assets, plus depreciation, amortization and impairment of real estate assets. We believe our method of calculating FFO complies with the NAREIT definition. AFFO is FFO adjusted to exclude gains or losses on derivative liabilities and gain on debt conversion, which are non-cash charges against income and which do not represent results from our core operations. AFFO also adds back acquisition costs and equity offering expense. FFO and AFFO do 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 and AFFO should not be considered as alternatives to net income (loss) (computed in accordance with GAAP) as an indicator of our liquidity, nor are they indicative of funds available to fund our cash needs, including our ability to pay dividends or make distributions. All REITs do not calculate FFO and AFFO in the same manner; therefore, our calculation may not be the same as the calculation of FFO and AFFO for similar REITs.

Diluted FFO per share and diluted Adjusted FFO per share are computed after adjusting the numerator and denominator of the basic computation for the effects of any dilutive potential common shares outstanding during the period. The Company's outstanding stock options and certain warrants to purchase common stock would be antidilutive and are not included in the dilution computation.

We use FFO and AFFO as performance measures to facilitate a periodic evaluation of our operating results relative to those of our peers. We consider FFO and AFFO to be useful additional measures of performance for an equity REIT because it facilitates an understanding of the operating performance of our properties without giving effect to real estate depreciation and amortization, which assume that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, we believe that FFO and AFFO provide a meaningful indication of our performance.

 
 
EBITDA and Adjusted EBITDA
(Unaudited - In thousands)
 
  Three months ended December 31, Twelve months ended December 31,
  2014 2013 2014 2013
             
RECONCILIATION OF NET LOSS TO EBITDA AND ADJUSTED EBITDA            
Net loss attributable to common shareholders $(3,770) $(2,201) $(19,688)  (4,700)
 Interest expense, including discontinued operations  1,874  1,987  8,256  8,277
 Loss on debt extinguishment  18  108  278  1,164
 Income tax benefit, including discontinued operations  -  -  -  -
 Depreciation and amortization,including discontinued operations  1,593  1,742  6,549  7,294
  EBITDA  (285)  1,636
  (4,605)
  12,035
 Noncontrolling interest  (4)  (2)
  (23)
  (2)
 Net gain on disposition of assets  26  (144)  (2,750)  (1,806)
 Impairment  1,523  5,363  2,921  7,086
 Preferred stock dividend declared and undeclared  879  838  3,452  3,349
 Unrealized (gain) loss on derivatives  212  (5,534)  14,430  (10,028)
 Acquisition and termination expense  -  (15)  -  713
 Gain on debt conversion  -  -  (88)  -
 Terminated equity transactions  -  (32)  76  1,050
  Adjusted EBITDA $2,351 $2,110 $13,413 $12,397
               
               

EBITDA and Adjusted EBITDA are financial measures that are not calculated in accordance with accounting principles generally accepted in the United States of America ("GAAP"). We calculate EBITDA and Adjusted EBITDA by adding back to net earnings (loss) available to common shareholders certain non-operating expenses and non-cash charges which are based on historical cost accounting and we believe may be of limited significance in evaluating current performance. We believe these adjustments can help eliminate the accounting effects of depreciation and amortization and financing decisions and facilitate comparisons of core operating profitability between periods, even though EBITDA and Adjusted EBITDA also do not represent an amount that accrues directly to common shareholders. In calculating Adjusted EBITDA, we add back noncontrolling interest, net (gain) loss on disposition of assets, preferred stock dividends, acquisition expenses and equity offering expense which are cash charges. We also add back impairment and unrealized gain or loss on derivatives and gain on debt conversion, which are non-cash charges.

EBITDA and Adjusted EBITDA do not represent cash generated from operating activities determined by GAAP and should not be considered as alternatives to net income, cash flow from operations or any other operating performance measure prescribed by GAAP. EBITDA and Adjusted EBITDA are not measures of our liquidity, nor are they indicative of funds available to fund our cash needs, including our ability to make cash distributions. Neither do the measurements reflect cash expenditures for long-term assets and other items that have been and will be incurred. EBITDA and Adjusted 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 our operating performance. EBITDA and Adjusted EBITDA, as presented, may not be comparable to similarly titled measures of other companies.

Property Operating Income (POI) - Continuing and Discontinued Operations

This presentation includes non-GAAP financial measures, and should not be considered as an alternative to loss from continuing operations or loss from discontinued operations, net of tax. The company believes that the presentation of hotel property operating income (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. Same store results for the quarter are for 47 hotels in continuing operations.

        
        
Unaudited-In thousands, except statistical data:  Three months    Twelve months  
   ended December 31,    ended December 31,  
   2014   2013    2014   2013  
Total Same Store Hotels:                      
 Revenue per available room (RevPAR):  $36.63   $33.23    $40.39   $37.81  
 Average daily room rate (ADR):  $62.70   $61.10    $63.78   $63.16  
 Occupancy percentage:   58.4 %  54.4 %   63.3 %  59.9 %
                       
Revenue from room rentals and other hotel services consists of:                      
Room rental revenue  $12,665   $11,487    $55,385   $51,854  
Telephone revenue   2    3     9    11  
Other hotel service revenues   490    503     2,015    1,917  
 Total revenue from room rentals and other hotel services  $13,157   $11,993    $57,409   $53,782  
                       
Hotel and property operations expense                      
 Total hotel and property operations expense  $10,322   $9,898    $43,256   $42,044  
                       
Property Operating Income ("POI")                      
 Total property operating income  $2,835   $2,095    $14,153   $11,738  
                       
POI as a percentage of revenue from room rentals and other hotel services                      
 Total POI as a percentage of revenue   21.5 %  17.5 %   24.7 %  21.8 %
                       
                       
                       
Discontinued Operations                      
                       
Room rentals and other hotel services                      
 Total room rental and other hotel services  $2,318   $4,754    $14,969   $25,228  
                       
Hotel and property operations expense                      
 Total hotel and property operations expense  $1,601   $3,823    $11,545   $20,680  
                       
Property Operating Income ("POI")                      
 Total property operating income  $717   $931    $3,424   $4,548  
                       
POI as a percentage of revenue from room rentals and other hotel services                      
 Total POI as a percentage of revenue   30.9 %  19.6 %   22.9 %  18.0 %
                       
                       
 
 
 POI from continuing operations is reconciled to net loss as follows:
(Unaudited - In thousands)
   
   Three months    Twelve months  
   ended December 31,    ended December 31,  
   2014   2013    2014   2013  
Net loss  $ (2,895 ) $ (1,365 )  $ (16,259 ) $ (1,353 )
Depreciation and amortization, including discontinued operations    1,593     1,742      6,549     7,294  
Net gain on disposition of assets, including discontinued operations    27     (142 )    (2,750 )   (1,806 )
Derivative (gain) loss    212     (5,534 )    14,430     (10,028 )
Other income    (3 )   (23 )    (116 )   (34 )
Interest expense, including discontinued operations    1,874     1,987      8,256     8,277  
Loss on debt extinguishment    18     108      278     1,164  
General and administrative expense    1,203     937      4,192     3,923  
Acquisition and termination expense    0     (15 )    0     713  
Terminated equity transactions    0     (32 )    76     1,050  
Impairment losses    1,523     5,363      2,921     7,086  
Room rentals and other hotel services - discontinued operations    (2,318 )   (4,754 )    (14,969 )   (25,228 )
Hotel and property operations expense - discontinued operations    1,601     3,823      11,545     20,680  
POI--continuing operations  $ 2,835   $ 2,095    $ 14,153   $ 11,738  
                           
                           
 
 
 POI from discontinued operations is reconciled to loss from discontinued operations, net of tax, as follows:
(Unaudited - In thousands)
                         
   Three months    Twelve months  
   ended December 31,    ended December 31,  
   2014   2013    2014   2013  
Gain (loss) from discontinued operations  $ 413   $ (2,794 )  $ 3,052   $ (2,867 )
Depreciation and amortization from discontinued operations    0     161      112     1,036  
Net gain on disposition of assets from discontinued operations    (8 )   (144 )    (2,749 )   (1,853 )
Interest expense from discontinued operations    177     592      1,237     2,878  
Loss on debt extinguishment    0     20      120     706  
Impairment losses from discontinued operations    135     3,096      1,652     4,648  
Income tax benefit from discontinued operations    0     0      0     0  
POI - discontinued operations  $ 717   $ 931    $ 3,424   $ 4,548 
                  
                  
                 
   Three months  Twelve months
   ended December 31,  ended December 31,
   2014  2013  2014  2013
POI--continuing operations    2,835    2,095    14,153    11,738
POI--discontinued operations    717    931    3,424    4,548
Total - POI  $ 3,552  $ 3,026  $ 17,577  $ 16,286
                     
Total POI as a percentage of revenues    23.0%    18.1%    24.3%    20.6%
             

Results of Operations
For three and twelve months ended December 31, 2014 and 2013, respectively

The following table represents our RevPAR, ADR and occupancy by region and by chain scale for the three and twelve months ended December 31, 2014 and 2013, respectively. The comparisons of same store operations are for 47* hotels owned as of October 1, 2013 and January 1, 2013, respectively and include 44 held for use hotels and three held for sale hotels that are classified in continuing operations. Same store calculations exclude nine properties which are held for sale and included in discontinued operations.

 
 
Region  Three months ended December 31, 2014  Three months ended December 31, 2013
                     
   RevPAR  Occupancy   ADR  RevPAR  Occupancy   ADR
Mountain  $35.72  62.8 % $56.86  $29.30  52.7 % $55.61
West North Central   33.41  61.2 %  54.62   30.61  58.9 %  52.00
East North Central   41.80  59.4 %  70.37   38.21  56.3 %  67.81
Middle Atlantic/New England   40.72  70.0 %  58.18   38.09  67.8 %  56.21
South Atlantic   38.55  53.2 %  72.48   34.91  48.8 %  71.52
East South Central   36.98  56.7 %  65.24   34.21  53.9 %  63.52
West South Central   21.04  60.6 %  34.70   15.92  43.2 %  36.86
Total Same Store Hotels  $36.63  58.4 % $62.70  $33.23  54.4 % $61.10
                   

 

States included in the Regions  
Mountain  Montana
West North Central  Iowa, Kansas, Missouri, Nebraska and South Dakota
East North Central  Indiana and Wisconsin
Middle Atlantic  Pennsylvania
South Atlantic  Florida, Maryland, North Carolina, Virginia and West Virginia
East South Central  Kentucky and Tennessee
West South Central  Louisiana
    
                         
                         
Region  Twelve months ended December 31, 2014  Twelve months ended December 31, 2013
                               
   RevPAR  Occupancy  ADR  RevPAR  Occupancy  ADR
Mountain  $ 43.83  72.6 %  $ 60.37  $ 39.78  68.6 %  $ 58.03
West North Central    35.08  64.7 %    54.20    33.30  62.9 %    52.92
East North Central    45.32  64.4 %    70.36    43.31  62.8 %    68.91
Middle Atlantic    42.47  71.0 %    59.85    41.95  69.8 %    60.12
South Atlantic    45.40  61.1 %    74.31    41.90  56.2 %    74.58
East South Central    39.48  59.6 %    66.20    36.36  56.6 %    64.25
West South Central    21.76  59.6 %    36.49    17.66  44.0 %    40.13
Total Same Store Hotels  $ 40.39  63.3 %  $ 63.78  $ 37.81  59.9 %  $ 63.16
                               

*The following properties have been removed from the same store continuing operations portfolio during the 2014 reporting period and classified as held for sale in discontinued operations:

Boise, Idaho Super 8
Columbus, Georgia Super 8
Terre Haute, Indiana Super 8
Green Bay, Wisconsin Super 8

The following property has been removed from the held for sale portfolio during the reporting period and reclassified as held for use, and is now included in the continuing operations presentation:

Sioux Falls, South Dakota (Airport) Days Inn

 
                             
Brand  Three months ended December 31, 2014  Three months ended December 31, 2013
                     
   RevPAR  Occupancy   ADR  RevPAR  Occupancy   ADR
Upscale                        
 Hilton Garden Inn  $67.84  60.5 % $112.14  $65.24  56.1 % $116.39
Total Upscale  $67.84  60.5 % $112.14  $65.24  56.1 % $116.39
Upper Midscale                        
 Comfort Inn/ Suites   43.85  60.4 %  72.65   39.84  56.4 %  70.64
 Other Upper Midscale (1)   32.46  57.9 %  56.10   27.26  45.1 %  60.45
Total Upper Midscale  $43.36  60.2 % $71.96  $39.29  55.9 % $70.29
Midscale                        
 Sleep Inn   26.71  46.3 %  57.67   19.44  37.1 %  52.44
 Quality Inn   32.75  47.5 %  68.96   28.16  43.0 %  65.46
Total Midscale  $30.19  47.0 % $64.24  $24.46  40.5 % $60.40
Economy                        
 Days Inn   27.39  54.4 %  50.38   24.06  47.5 %  50.70
 Super 8   32.73  61.4 %  53.33   29.91  59.0 %  50.68
 Other Economy (2)   36.24  51.8 %  69.93   35.64  51.6 %  69.07
Total Economy  $31.43  58.3 % $53.91  $28.66  54.7 % $52.35
                         
Total Same Store Hotels  $36.63  58.4 % $62.70  $33.23  54.4 % $61.10
                   
 
Brand  Twelve months ended December 31, 2014  Twelve months ended December 31, 2013
                     
   RevPAR  Occupancy   ADR  RevPAR  Occupancy   ADR
Upscale                        
 Hilton Garden Inn  $75.49  66.6 % $113.30  $77.38  63.0 % $122.92
Total Upscale  $75.49  66.6 % $113.30  $77.38  63.0 % $122.92
Upper Midscale                        
 Comfort Inn/ Suites   47.75  64.8 %  73.72   44.54  61.8 %  72.10
 Other Upper Midscale   30.82  49.7 %  61.98   30.23  46.8 %  64.59
Total Upper Midscale  $47.02  64.1 % $73.32  $43.92  61.1 % $71.85
Midscale                        
 Sleep Inn   36.05  54.7 %  65.89   32.43  49.4 %  65.71
 Quality Inn   37.18  51.6 %  71.99   31.09  44.1 %  70.56
Total Midscale  $36.70  52.9 % $69.31  $31.66  46.3 % $68.36
Economy                        
 Days Inn   31.71  61.1 %  51.88   29.46  55.5 %  53.09
 Super 8   34.78  65.7 %  52.97   32.64  63.7 %  51.25
 Other Economy   44.57  59.8 %  74.55   42.05  54.3 %  77.40
Total Economy  $34.78  63.7 % $54.59  $32.57  60.3 % $54.04
                         
Total Same Store Hotels  $40.39  63.3 % $63.78  $37.81  59.9 % $63.16
                   

Contact Information