SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 13, 2015
CONDOR HOSPITALITY TRUST, INC.
(Exact name of registrant as specified in its charter)
|
Maryland |
001-34087 |
52-1889548 |
|
(State or other jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
1800 W. Pasewalk Ave.
Ste. 200,
Norfolk, NE 68701
(Address and zip code of
principal executive offices)
Registrant’s telephone number, including area code: (402) 371-2520
Supertel Hospitality, Inc.
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2 below):
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐Pre-commencement communications pursuant to Rule 13e4© under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.01. Completion of Acquisition or Disposition of Assets.
On July 13, 2015, Condor Hospitality Trust, Inc. (the “Company”), through certain subsidiaries of the Company, closed on the sale of two non-core hotel properties to Baywood Hotels, Inc., as previously disclosed in the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on April 17, 2015.
The sale of the two non-core hotel properties, a 150 room Comfort Inn and a 200 room Days Inn, both in Alexandria, Virginia, generated net cash proceeds of approximately $10.0 million for the Company after the repayment of the $8.3 million of the associated mortgage debt.
Forward Looking Statements
This Current Report on Form 8-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may involve known and unknown risks, uncertainties and other factors that may cause actual results to differ from those reflected in the forward-looking statement. For a description of these factors, please review the information under the heading “Risk Factors” included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, filed with the U.S. Securities Exchange Commission.
Item 7.01. Regulation FD Disclosure
On July 16, 2015, the Company issued a press release reporting the sale of two non-core hotel properties. A copy of that press release is furnished with this Current Report on Form 8-K (“Current Report”) as Exhibit 99.2.
The information in Item 7.01 of this Current Report, including Exhibit 99.2 attached hereto, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information in Item 7.01 of this Current Report shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act regardless of any general incorporation language in such filing.
Item 9.01. Financial Statements and Exhibits.
(b) Pro Forma Financial information.
See Exhibit 99.1 which contains an unaudited pro forma consolidated balance sheet as of March 31, 2015, and an unaudited pro forma consolidated statement of operation for the year ended December 31, 2014 and for the three months ended March 31, 2015. Such pro forma financial information is incorporated by reference herein.
(d) Exhibits.
Exhibit 99.1
Unaudited Pro Forma Consolidated Balance Sheet as of March 31, 2015
Notes to Unaudited Pro Forma Consolidated Balance Sheet as of March 31, 2015
Unaudited Pro Forma Consolidated Statement of Operations for the three months ended March 31, 2015 and twelve months ended December 31, 2014
Notes to Unaudited Pro Forma Consolidated Statement of Operations for the three months ended March 31, 2015 and twelve months ended December 31, 2014
Exhibit 99.2
Press Release dated July 16, 2015
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
CONDOR HOSPITALITY TRUST
|
By: |
/s/ Corrine L. Scarpello |
|
Corrine L. Scarpello |
|
|
Chief Financial Officer |
|
Dated this 17th day of July, 2015
EXHIBIT INDEX
|
Exhibit |
Description |
|
99.1 |
Unaudited Pro Forma Consolidated Balance Sheet as of March 31, 2015 |
|
|
Notes to Unaudited Pro Forma Consolidated Balance Sheet as of March 31, 2015 |
|
|
Unaudited Pro Forma Consolidated Statement of Operations for the three months ended March 31, 2015 and twelve months ended December 31, 2014 |
|
|
Notes to Unaudited Pro Forma Consolidated Statement of Operations for the three months ended March 31, 2015 and twelve months ended December 31, 2014 |
|
|
|
|
99.2 |
Press Release dated July 16, 2015 |
Unaudited Pro Forma Consolidated Financial Information
Condor Hospitality Trust, Inc.
Pro Forma Consolidated Balance Sheet
As of March 31, 2015
(Unaudited, Amounts in Thousands Except per Share Data)
The accompanying unaudited pro forma consolidated balance sheet as of March 31, 2015 for the Company presents the disposition of two non-core hotel properties as if the disposition occurred on March 31, 2015. On July 13, 2015, the Company closed on the sale of the two hotel properties.
This unaudited pro forma consolidated balance sheet should be read in conjunction with (i) the Company’s unaudited financial statements as of and for the three months ended March 31, 2015 included in our Quarterly Report on Form 10-Q, filed with the SEC on May 7, 2015, (ii) the Company’s Current Report on Form 8-K, filed with the Securities and Exchanges Commission on April 17, 2015, related to this disposition, and (iii) the notes to the unaudited pro forma consolidated balance sheet included in this Form 8-K. In management’s opinion, adjustments necessary to reflect the effects of the disposition have been made based on management’s best estimate.
The following unaudited pro forma consolidated balance sheet is not necessarily indicative of the financial condition of the Company assuming such disposition had been completed as of March 31, 2015, nor is it indicative of the future financial condition of the Company.
|
As of March 31, 2015 |
||||||||
|
(A) |
(B) |
Pro Forma |
||||||
|
ASSETS |
||||||||
|
Investments in hotel properties |
$ |
157,154 |
$ |
- |
$ |
157,154 | ||
|
Less accumulated depreciation |
63,862 |
- |
63,862 | |||||
| 93,292 |
- |
93,292 | ||||||
|
Cash and cash equivalents |
320 | 9,776 | 10,096 | |||||
|
Accounts receivable, net of allowance for doubtful accounts |
1,397 |
- |
1,397 | |||||
|
Prepaid expenses and other assets |
5,312 |
- |
5,312 | |||||
|
Deferred financing costs, net |
1,399 |
- |
1,399 | |||||
|
Investment in hotel properties, held for sale, net |
37,880 | (18,506) | 19,374 | |||||
|
$ |
139,600 |
$ |
(8,730) |
$ |
130,870 | |||
|
LIABILITIES AND EQUITY |
||||||||
|
LIABILITIES |
||||||||
|
Accounts payable, accrued expenses and other liabilities |
$ |
7,793 |
$ |
- |
$ |
7,793 | ||
|
Derivative liabilities, at fair value |
15,514 |
- |
15,514 | |||||
|
Debt related to hotel properties held for sale |
21,162 | (8,300) | 12,862 | |||||
|
Long-term debt |
64,532 |
- |
64,532 | |||||
| 109,001 | (8,300) | 100,701 | ||||||
|
Redeemable preferred stock |
||||||||
|
10% Series B |
7,662 |
- |
7,662 | |||||
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EQUITY |
||||||||
|
Shareholders' equity |
||||||||
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Preferred stock |
||||||||
|
8% Series A |
8 |
- |
8 | |||||
|
6.25% Series C |
30 |
- |
30 | |||||
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Common stock |
49 |
- |
49 | |||||
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Additional paid-in capital |
138,293 |
- |
138,293 | |||||
|
Accumulated deficit |
(115,814) | (430) | (116,244) | |||||
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Total shareholders' equity |
22,566 | (430) | 22,136 | |||||
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Noncontrolling interest |
||||||||
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Noncontrolling interest in consolidated partnership |
371 |
- |
371 | |||||
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Total equity |
22,937 | (430) | 22,507 | |||||
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COMMITMENTS AND CONTINGENCIES |
||||||||
|
$ |
139,600 |
$ |
(8,730) |
$ |
130,870 | |||
Condor Hospitality Trust, Inc.
Notes and Management’s Assumptions to the
Pro Forma Consolidated Balance Sheet
As of March 31, 2015
(Unaudited, Amounts in Thousands Except per Share Data)
|
(A) |
Represents the Company’s unaudited consolidated balance sheet as of March 31, 2015 as filed in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2015. |
|
(B) |
Represents the adjustment to reflect the sale of two hotels, which includes the sale of assets with a net book value of approximately $18.5 million, the repayment of the consolidated mortgage debt with an aggregate principal balance of $8.3 million, and the net proceeds of approximately $10.0 million after the repayment of the debt. |
Condor Hospitality Trust, Inc.
Pro Forma Consolidated Statement of Operations
For the three months ended March 31, 2015
(Unaudited, Amounts in Thousands Except per Share Data)
The accompanying unaudited pro forma consolidated statement of operations for the three months ended March 31, 2015 for the Company presents the disposition of two non-core hotel properties as if the disposition occurred on January 1, 2015. On July 13, 2015, the Company closed on the sale of the two hotel properties.
This unaudited pro forma consolidated statement of operations should be read in conjunction with (i) the Company’s unaudited financial statements as of and for the three months ended March 31, 2015 included in our Quarterly Report on Form 10-Q, filed with the SEC on May 7, 2015, (ii) the Company’s Current Report on Form 8-K, filed with the Securities and Exchanges Commission on April 17, 2015, related to this disposition, and (iii) the notes to the unaudited pro forma consolidated statement of operations included in this Form 8-K. In management’s opinion, adjustments necessary to reflect the effects of the disposition have been made based on management’s best estimate.
The following unaudited pro forma consolidated statement of operations is not necessarily indicative of the actual results of the Company assuming such disposition had been completed as of March 31, 2015, nor is it indicative of the results of operations for future periods.
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For the Three Months Ending March 31, 2015 |
||||||||
|
(A) |
(B) |
Pro Forma |
||||||
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REVENUES |
||||||||
|
Room rentals and other hotel services |
$ |
12,346 |
$ |
(1,092) |
$ |
11,254 | ||
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EXPENSES |
||||||||
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Hotel and property operations |
9,988 | (966) | 9,022 | |||||
|
Depreciation and amortization |
1,480 | (109) | 1,371 | |||||
|
General and administrative |
1,385 |
- |
1,385 | |||||
|
Terminated equity transactions |
- |
- |
- |
|||||
| 12,853 | (1,075) | 11,778 | ||||||
|
LOSS BEFORE NET GAIN (LOSS) ON DISPOSITIONS OF ASSETS, OTHER INCOME, INTEREST EXPENSE AND INCOME TAXES |
(507) | (17) | (524) | |||||
|
Net gain (loss) on dispositions of assets |
13 |
- |
13 | |||||
|
Unrealized derivative gain |
4,823 |
- |
4,823 | |||||
|
Other income |
95 |
- |
95 | |||||
|
Interest expense |
(1,527) | 344 | (1,183) | |||||
|
Loss on debt extinguishment |
(7) |
- |
(7) | |||||
|
Impairment |
(777) | 862 | 85 | |||||
|
EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES |
2,113 | 1,189 | 3,302 | |||||
|
Income tax expense |
- |
- |
- |
|||||
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EARNINGS (LOSS) FROM CONTINUING OPERATIONS |
$ |
2,113 |
$ |
1,189 |
$ |
3,302 | ||
|
NET EARNINGS (LOSS) PER COMMON SHARE- BASIC AND DILUTED |
||||||||
|
EPS Basic - Total |
$ |
0.45 |
$ |
0.71 | ||||
|
EPS Diluted - Total |
$ |
0.09 |
$ |
0.14 | ||||
|
Weighted Average Common Shares Outstanding |
||||||||
|
Basic |
4,747,012 | 4,747,012 | ||||||
|
Diluted |
23,506,158 | 23,506,158 | ||||||
Condor Hospitality Trust, Inc.
Notes and Management’s Assumptions to the
Pro Forma Consolidated Statement of Operations
for the three months ended March 31, 2015
(Unaudited, Amounts in Thousands Except per Share Data)
|
(A) |
Represents the Company’s unaudited consolidated statement of operations for the three months ended March 31, 2015 as filed in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, excluding discontinued operations. |
|
(B) |
Represents the classification from continuing operations of the operating results related to the sale of two hotel properties. The reclassification of these hotel properties resulted in an increase of approximately $1.2 million of earnings from continuing operations. |
Condor Hospitality Trust, Inc.
Pro Forma Consolidated Statement of Operations
For the year ended December 31, 2014
(Unaudited, Amounts in Thousands Except per Share Data)
This accompanying unaudited pro forma consolidated statement of operations for the year ended December 31, 2014 for the Company presents the disposition of the sale of two non-core hotel properties as if the disposition occurred on January 1, 2014. On July 13, 2015, the Company closed on the sale of the two hotel properties.
The unaudited pro forma consolidated statement of operations should be read in conjunction with (i) the Company’s audited financial statements as of and for the year end December 31, 2014 included in our Annual Report on Form 10-K, filed with the SEC on March 23, 2015, (ii) the Company’s Current Report on Form 8-K, filed with the Securities and Exchanges Commission on April 17, 2015, related to this disposition, and (iii) the notes to the pro forma consolidated statement of operations included in this Form 8-K. In management’s opinion, adjustments necessary to reflect the effects of the disposition have been made based on management’s best estimate.
The following unaudited pro forma consolidated statement of operations is not necessarily indicative of the actual results of the Company assuming such disposition had been completed as of December31, 2014, nor is it indicative of the results of operations for future periods.
|
For the Year Ending December 31, 2014 |
||||||||
|
(A) |
(B) |
Pro Forma |
||||||
|
REVENUES |
||||||||
|
Room rentals and other hotel services |
$ |
57,409 |
$ |
(5,366) |
$ |
52,043 | ||
|
EXPENSES |
||||||||
|
Hotel and property operations |
43,256 | (4,111) | 39,145 | |||||
|
Depreciation and amortization |
6,437 | (623) | 5,814 | |||||
|
General and administrative |
4,192 |
- |
4,192 | |||||
|
Terminated equity transactions |
76 |
- |
76 | |||||
| 53,961 | (4,734) | 49,227 | ||||||
|
EARNINGS (LOSS) BEFORE NET GAIN (LOSS) ON DISPOSITIONS OF ASSETS, OTHER INCOME, INTEREST EXPENSE AND INCOME TAXES |
3,448 | (632) | 2,816 | |||||
|
Net gain (loss) on dispositions of assets |
1 | 1 | 2 | |||||
|
Unrealized derivative loss |
(14,430) |
- |
(14,430) | |||||
|
Other income |
116 |
- |
116 | |||||
|
Interest expense |
(7,019) | 1,392 | (5,627) | |||||
|
Loss on debt extinguishment |
(158) |
- |
(158) | |||||
|
Impairment |
(1,269) |
- |
(1,269) | |||||
|
EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES |
(19,311) | 761 | (18,550) | |||||
|
Income tax expense |
- |
- |
- |
|||||
|
EARNINGS (LOSS) FROM CONTINUING OPERATIONS |
$ |
(19,311) |
$ |
761 |
$ |
(18,550) | ||
|
NET EARNINGS (LOSS) PER COMMON SHARE- BASIC AND DILUTED |
||||||||
|
EPS Basic - Total |
$ |
(4.96) |
$ |
(4.69) | ||||
|
EPS Diluted - Total |
$ |
(4.96) |
$ |
(4.69) | ||||
|
Weighted Average Common Shares Outstanding |
||||||||
|
Basic |
3,897,092 | 3,897,092 | ||||||
|
Diluted |
3,897,092 | 3,897,092 | ||||||
Condor Hospitality Trust, Inc.
Notes and Management’s Assumptions to the
Pro Forma Consolidated Statement of Operations
for the year ended December 31, 2014
(Unaudited, Dollar Amounts in Thousands Except per Share Data)
|
(A) |
Represents the Company’s audited consolidated statement of operations for the year ended December 31, 2014 as filed in our Annual Report on Form 10-K for the year ended December 31, 2014, excluding discontinued operations. |
|
(B) |
Represents the classification from continuing operations of the operating results related to the two hotel property sales. The reclassification of these hotel properties resulted in a reduction of approximately $0.8 million of loss from continuing operations. |
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CONDOR |
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1800 West Pasewalk Avenue, Suite 200 |
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|
Norfolk, NE 68701 |
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Phone (402) 371-2520 |
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Hospitality Trust, Inc. |
Phone (402) 371-4229 |
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www.condorhospitality.com |
Contact: Ms. Krista Arkfeld
Director of Corporate Communications
karkfeld@trustcondor.com
(402) 371-2520
Condor Hospitality Trust Closes Sale of Two Hotels as Part of Accelerated Strategy
NORFOLK, Neb., July 16, 2015—Condor Hospitality Trust, Inc. (NASDAQ), a real estate investment trust (REIT), announced today that it has closed on the previously announced sale of two hotels, a Comfort Inn Landmark and a Days Inn, both located in Alexandria, Va., for $19 million to Baywood Hotels, a privately held hotel ownership and management company. The company retired $8.3 million in debt and the net proceeds will be used for general corporate purposes, including future acquisitions.
“We have accelerated our initiative to recycle capital from our portfolio of economy and economy extended-stay hotels in order to reinvest the capital as we create a portfolio of newer premium-branded, upper midscale and upscale select-service, extended-stay and limited-service hotels located primarily in the nation’s top 20-50 MSAs,” said Bill Blackham, Condor’s CEO. “We currently have 17 being marketed for consideration of being sold including the two Alexandria hotels that just closed. As the lodging industry continues to enjoy continued
expansion, the economy sector is now experiencing compression on rate with increased demand and that has expanded the buyer interest and hotel values in this segment.”
“Condor has an active acquisition pipeline, and we anticipate continuing the accelerated pace of capital recycling which we project will further strengthen our balance sheet through debt reduction and increasing liquidity, thereby enhancing the strategy underway to significantly grow the company through acquiring a much higher quality portfolio with the objective of increasing shareholder value,” Blackham concluded.
ABOUT CONDOR HOSPITALITY
Condor Hospitality Trust is a self-administered real estate investment trust that specializes in the investment and ownership of upper midscale and upscale, premium-branded select-service, extended stay and limited service hotels. The company currently owns 46 hotels comprising 19 states. Condor Hospitality’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.condorhospitality.com. The company recently changed its name to Condor Hospitality Trust, Inc. from Supertel Hospitality, Inc.
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.