Supertel Franchise Increases Revenues
Posted on: 20/11/2006
Supertel Hospitality, Inc., a real estate investment trust which owns 85 hotels in 19 mid-western and eastern states, today announced its results for the third quarter ended September 30, 2006. The Company posted revenue of $22.5 million and net income of $2.2 million for the quarter ended September 30, 2006 compared to revenue of $17.4 million and net income of $2.0 million for the year ago period.
The Company posted revenue of $58.4 million and net income of $3.7 million for the nine months ended September 30, 2006 compared to revenue of $45.8 million and net income of $3.0 million for the year ago period.
"In the last 12 months Supertel has added 15 hotels to our portfolio which fit our model of providing clean, friendly and affordable accommodations while simultaneously providing opportunities to implement operational efficiencies to improve the bottom line," said Paul J. Schulte, chairman, president and chief executive officer of Supertel Hospitality, Inc.
"We continue to seek acquisitions in the economy and mid-scale limited service segment of the hospitality lodging industry and during the last quarter we were able to enter the Georgia and South Carolina markets with the acquisition of six extended stay facilities operating under the name of Savannah Suites."
The Company had net income of $2.2 million for the three months ended September 30, 2006 compared to net income of $2.0 million from continuing operations for the year ago period. Net income available to common shareholders was $1.9 million, or $0.15 per diluted share, for the three months ended September 30, 2006, compared with net income available to common shareholders of $2.0 million, or $0.16 per diluted share, for the year ago period. The net income available to common shareholders was reduced by $304,000 of preferred stock dividends which were not incurred in the year ago period.
Revenues for the three months ended September 30, 2006 compared to the three months ended September 30, 2005, increased $5.1 million or 29.4%, of which $4.8 million was due to the acquisition of fifteen additional hotel properties which have been owned for less than 12 months at the end of the quarter.
The increase in room revenues was also due, in part, to an increase in average daily rate (ADR) of $0.89 or 1.6% offset by a 0.4% decrease in occupancy, which resulted in a $0.39 or 1.0% increase of revenue per available room (RevPAR) for the third quarter of 2006, compared to the year ago period.
Hotel and property operations expenses for the three months ended September 30, 2006 increased $3.5 million or 31.0%. The expenses generated by the fifteen additional hotels for the third quarter of 2006 were $3.0 million. The remaining increase of $500,000 is primarily due to payroll, maintenance and utilities expense.
Interest expense increased by $735,000, this is due primarily to increased debt used for hotel acquisitions. The depreciation and amortization expense increased $527,000 for the third quarter of 2006 over the same period in 2005, which is primarily related to the fifteen additional hotels as well as asset additions outpacing the amount of assets exceeding their useful life.
The Company believes property operating income, which is revenue from room rentals and other hotel services less hotel and property operations expenses, is a useful measure of the Company's operating efficiency of its hotel properties. Property operating income increased by $1.6 million or 26.6% for the third quarter of 2006, compared to the year ago period.
The general and administrative expense for the three months ended September 30, 2006 increased $128,000 or 22.2%. This is primarily related to salaries, shareholder relation expenses and professional fees.
Funds from operations (FFO) available to common shareholders were $4.1 million, or $0.34 per basic share and $0.30 per diluted share for the third quarter of 2006, compared to $3.6 million or $0.30 for both the basic and diluted share calculations, for the same quarter of 2005.
The Company had net income of $3.7 million for the nine months ended September 30, 2006 compared to net income of $3.0 million from continuing operations for the year ago period. Net income available to common shareholders was $2.7 million, or $0.23 per diluted share, for the nine months ended September 30, 2006, compared with net income available to common shareholders of $3.0 million, or $0.25 per diluted share, for the year ago period. The net income available to common shareholders was reduced by $912,000 preferred stock dividends which were not incurred in the year ago period.
Revenues for the nine months ended September 30, 2006 compared to the year ago period, increased $12.6 million or 27.4%, of which $10.5 million was due to acquisition of fifteen additional hotel properties which have been owned for less than 12 months as of September 30, 2006. The increase in revenue was also due, in part, to an increase in ADR of $2.47 or 4.6% and a 1.6% increase in occupancy, which resulted in a $2.12 or 6.1% increase in RevPAR for the nine months ended September 30, 2006, compared to the year-ago period.
Hotel and property operations expenses for the nine months ended September 30, 2006 increased $8.6 million or 27.5%. The expenses generated by the fifteen additional hotels for the same period were $7.0 million. The remaining increase of $1.6 million is primarily due to increases in payroll, advertising, franchise fees and utilities expense.
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