Company Quick10K Filing
Quick10K
Condor Hospitality Trust
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$9.82 12 $117
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-05-23 Shareholder Vote
8-K 2019-05-01 Officers
8-K 2019-03-31 Earnings, Exhibits
8-K 2019-03-05 Enter Agreement, Officers, Exhibits
8-K 2018-12-31 Earnings, Exhibits
8-K 2018-11-15 Earnings, Exhibits
8-K 2018-11-12 Earnings, Exhibits
8-K 2018-09-27 Other Events, Exhibits
8-K 2018-08-28 Officers
8-K 2018-08-07 Earnings, Exhibits
8-K 2018-06-29 Enter Agreement, Exhibits
8-K 2018-05-22 Officers, Code of Ethics, Shareholder Vote, Exhibits
8-K 2018-05-11 Regulation FD, Exhibits
8-K 2018-04-13 Officers, Exhibits
8-K 2018-03-23 Officers
8-K 2018-03-21 Regulation FD, Exhibits
8-K 2018-03-20 Other Events
8-K 2018-02-23 Off-BS Arrangement, Sale of Shares, Off-BS Arrangement, Other Events
8-K 2018-02-05 Earnings, Other Events
8-K 2018-01-10 Earnings, Regulation FD, Exhibits
SQM Chemical & Mining Co of Chile 9,100
SIX Six Flags Entertainment 4,650
CSOD Cornerstone Ondemand 3,190
TOCA Tocagen 233
SCON Superconductor Technologies 6
LPNT Lifepoint Health 0
PRE Partnerre 0
CMTA Clementia Pharmaceuticals 0
MGHL Morgan Group Holding 0
PGUS Progreen 0
CDOR 2019-03-31
Part I. Financial Information
Note 1. Organization and Summary of Significant Accounting Policies
Note 2. Investment in Hotel Properties
Note 3. Acquisition of Hotel Properties
Note 4. Investment in Unconsolidated Joint Venture
Note 5. Dispositions of Hotel Properties
Note 6. Long-Term Debt
Note 7. Convertible Debt At Fair Value
Note 8. Fair Value Measurements and Derivative Instruments
Note 9. Common Stock
Note 10. Preferred Stock
Note 11. Noncontrolling Interest in The Operating Partnership
Note 12. Stock-Based Compensation
Note 13. Income Taxes
Note 14. Earnings per Share
Note 15. Commitments and Contingencies
Item 2. Management’S Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-10.3 cdor-20190331xex10_3.htm
EX-31.1 cdor-20190331xex31_1.htm
EX-31.2 cdor-20190331xex31_2.htm
EX-32.1 cdor-20190331xex32_1.htm

Condor Hospitality Trust Earnings 2019-03-31

CDOR 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 cdor-20190331x10q.htm 10-Q 20190331 10Q Q1

.

 





 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



FORM 10-Q

 

    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2019



OR

 

    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



For the transition period from ______ to ______.

 



Commission file number: 001-34087

 

CONDOR HOSPITALITY TRUST, INC.



(Exact name of registrant as specified in its charter)

 

Maryland

(State or other jurisdiction of

incorporation or organization)

 

52-1889548

(IRS Employer

Identification Number)



4800 Montgomery Lane Ste. 220, Bethesda, MD 20814

(Address of principal executive offices)

Telephone number: (402) 371-2520

 



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  YES      NO 



Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  YES      NO 



Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definitions of “large accelerated file,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12-b2 of the Exchange Act.





 

Large accelerated filer 

Accelerated filer 

Non-accelerated filer 

Small reporting company 



Emerging growth company    



If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act  YES      NO



Indicate by check mark whether the registrant is a shell company (as described in Rule 12b-2 of the Exchange Act).YES    NO



As of May 1, 2019 there were 11,920,775 shares  of common stock, par value $.01 per share, outstanding.



 



 


 

Condor Hospitality Trust, Inc. and Subsidiaries

Table of Contents

 







 

 

 



 

 

Page

Number



 

 

 

Part I.

FINANCIAL INFORMATION

 



 

 

 

Item 1.

Financial Statements

 



 

 

 



Consolidated Balance Sheets as of March 31, 2019 and December 31, 2018

3



 

 



Consolidated Statements of Operations for the Three Months ended March 31, 2019 and 2018

4



 

 



Consolidated Statements of Equity for the Three  Months ended March 31, 2019 and 2018

5



 

 



Consolidated Statements of Cash Flows for the Three  Months ended March 31, 2019 and 2018

6



 

 

 



Notes to Consolidated Financial Statements

7



 

 

 

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

27



 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

37



 

 

Item 4.

Controls and Procedures

37



 

 

Part II.

OTHER INFORMATION

 



 

 

Item 1.

Legal Proceedings

38



 

 

Item 1A.

Risk Factors

38



 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

38



 

 

Item 3.

Defaults Upon Senior Securities

38



 

 

Item 4.

Mine Safety Disclosures

38



 

 

Item 5.

Other Information

38



 

 

Item 6.

Exhibits

39

 



 

2

 


 

PART I.  FINANCIAL INFORMATION

 

Condor Hospitality Trust, Inc. and Subsidiaries

Consolidated Balance Sheets

(Unaudited - In thousands, except share and per share data)





 



   



 

 

 

 

 

 



 

As of



 

March 31, 2019

 

December 31, 2018



 

 

 

 

 

 

Assets

 

 

 

 

 

 

Investment in hotel properties, net

 

$

228,897 

 

$

230,178 

Investment in unconsolidated joint venture

 

 

6,179 

 

 

5,866 

Cash and cash equivalents

 

 

4,586 

 

 

4,151 

Restricted cash, property escrows

 

 

5,627 

 

 

5,005 

Accounts receivable, net

 

 

2,214 

 

 

1,290 

Prepaid expenses and other assets

 

 

1,962 

 

 

2,227 

Derivative assets, at fair value

 

 

448 

 

 

639 

Investment in hotel properties held for sale, net

 

 

 -

 

 

4,092 

Total Assets

 

$

249,913 

 

$

253,448 



 

 

 

 

 

 

Liabilities and Equity

 

 

 

 

 

 



 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

Accounts payable, accrued expenses, and other liabilities

 

$

6,642 

 

$

5,336 

Dividends and distributions payable

 

 

2,480 

 

 

2,330 

Convertible debt, at fair value

 

 

1,048 

 

 

1,000 

Long-term debt, net of deferred financing costs

 

 

134,127 

 

 

135,810 

Long-term debt related to hotel properties held for sale, net of deferred financing costs

 

 

 -

 

 

1,120 

Total Liabilities

 

 

144,297 

 

 

145,596 



 

 

 

 

 

 

Equity

 

 

 

 

 

 

Shareholders' Equity

 

 

 

 

 

 

Preferred stock, 40,000,000 shares authorized:

 

 

 

 

 

 

6.25% Series E, 925,000 shares authorized, $.01 par value, 925,000 shares outstanding, liquidation preference of $9,395 and $9,250

 

 

10,050 

 

 

10,050 

Common stock, $.01 par value, 200,000,000 shares authorized; 11,917,743 and 11,886,003 shares outstanding

 

 

119 

 

 

119 

Additional paid-in capital

 

 

232,082 

 

 

231,805 

Accumulated deficit

 

 

(137,423)

 

 

(134,970)

Total Shareholders' Equity

 

 

104,828 

 

 

107,004 

Noncontrolling interest in consolidated partnership (Condor Hospitality Limited Partnership), redemption value of $523 and $435

 

 

788 

 

 

848 

Total Equity

 

 

105,616 

 

 

107,852 



 

 

 

 

 

 

Total Liabilities and Equity

 

$

249,913 

 

$

253,448 











See accompanying notes to consolidated financial statements.



 

3

 


 

Condor Hospitality Trust, Inc. and Subsidiaries

Consolidated Statements of Operations

(Unaudited - In thousands, except per share data)













 

 

 

 

 

 



 

 

 



 

Three months ended March 31,



 

2019

 

2018

Revenue

 

 

 

 

 

 

Room rentals and other hotel services

 

$

15,903 

 

$

16,679 

Operating Expenses

 

 

 

 

 

 

Hotel and property operations

 

 

9,793 

 

 

10,414 

Depreciation and amortization

 

 

2,362 

 

 

2,259 

General and administrative

 

 

1,663 

 

 

1,869 

Acquisition and terminated transactions

 

 

 

 

19 

Total operating expenses

 

 

13,825 

 

 

14,561 

Operating income

 

 

2,078 

 

 

2,118 

Net gain (loss) on disposition of assets

 

 

39 

 

 

(24)

Equity in earnings of joint venture

 

 

513 

 

 

229 

Net gain (loss) on derivatives and convertible debt

 

 

(237)

 

 

447 

Other expense, net

 

 

(29)

 

 

(14)

Interest expense

 

 

(2,163)

 

 

(1,928)

Impairment recovery, net

 

 

 -

 

 

93 

Earnings before income taxes

 

 

201 

 

 

921 

Income tax expense

 

 

(186)

 

 

(129)

Net earnings

 

 

15 

 

 

792 

Loss (earnings) attributable to noncontrolling interest

 

 

 

 

(6)

Net earnings attributable to controlling interests

 

 

16 

 

 

786 

Dividends declared on preferred stock

 

 

(145)

 

 

(144)

Net earnings (loss) attributable to common shareholders

 

$

(129)

 

$

642 



 

 

 

 

 

 

Earnings (Loss) per Share

 

 

 

 

 

 

Total - Basic Earnings (Loss) per Share

 

$

(0.01)

 

$

0.05 

Total - Diluted Earnings (Loss) per Share

 

$

(0.01)

 

$

0.05 



 

 

 

 

 

 

See accompanying notes to consolidated financial statements.



 



 

4

 


 

Condor Hospitality Trust, Inc. and Subsidiaries

Consolidated Statements of Equity

(Unaudited - In thousands, except per share amounts)









 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Three months ended March 31, 2018



 

Shares of Preferred stock

 

Preferred stock

 

Shares of Common stock

 

Common stock

 

Additional paid-in capital

 

Accumulated deficit

 

Total Shareholders' equity

 

Noncontrolling interest

 

Total equity

Balance at December 31, 2017

 

 

925 

 

$

10,050 

 

 

11,834 

 

$

118 

 

$

230,727 

 

$

(130,489)

 

$

110,406 

 

$

1,408 

 

$

111,814 

Stock-based compensation

 

 

 -

 

 

 -

 

 

27 

 

 

 

 

241 

 

 

 -

 

 

242 

 

 

 -

 

 

242 

Issuance of common stock

 

 

 -

 

 

 -

 

 

12 

 

 

 -

 

 

103 

 

 

 -

 

 

103 

 

 

 -

 

 

103 

Issuance of common units

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

50 

 

 

50 

Dividends and distributions declared

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock ($0.195 per share)

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

(2,317)

 

 

(2,317)

 

 

 -

 

 

(2,317)

Series E Preferred dividends declared

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

(144)

 

 

(144)

 

 

 -

 

 

(144)

Common unit distribution declared ($0.00375 per unit)

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

(18)

 

 

(18)

Net earnings

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

786 

 

 

786 

 

 

 

 

792 

Balance at March 31, 2018

 

 

925 

 

$

10,050 

 

 

11,873 

 

$

119 

 

$

231,071 

 

$

(132,164)

 

$

109,076 

 

$

1,446 

 

$

110,522 







 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Three months ended March 31, 2019



 

Shares of Preferred stock

 

Preferred stock

 

Shares of Common stock

 

Common stock

 

Additional paid-in capital

 

Accumulated deficit

 

Total Shareholders' equity

 

Noncontrolling interest

 

Total equity

Balance at December 31, 2018

 

 

925 

 

$

10,050 

 

 

11,886 

 

$

119 

 

$

231,805 

 

$

(134,970)

 

$

107,004 

 

$

848 

 

$

107,852 

Stock-based compensation

 

 

 -

 

 

 -

 

 

32 

 

 

 -

 

 

271 

 

 

 -

 

 

271 

 

 

 -

 

 

271 

Issuance of common stock

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Issuance of common units

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Dividends and distributions declared

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Series E Preferred dividends declared

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

(145)

 

 

(145)

 

 

 -

 

 

(145)

Common Stock ($0.195 per share)

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

(2,324)

 

 

(2,324)

 

 

 -

 

 

(2,324)

Common unit distribution declared ($0.00375 per unit)

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

(11)

 

 

(11)

Redemption of common units

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 

 

 -

 

 

 

 

(48)

 

 

(42)

Net earnings

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

16 

 

 

16 

 

 

(1)

 

 

15 

Balance at March 31, 2019

 

 

925 

 

$

10,050 

 

 

11,918 

 

$

119 

 

$

232,082 

 

$

(137,423)

 

$

104,828 

 

$

788 

 

$

105,616 



See accompanying notes to consolidated financial statements.

 

5

 


 

Condor Hospitality Trust, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited – In thousands)

 









 

 

 

 

 

 



 

Three months ended March 31,



 

 

2019

 

 

2018

Cash flows from operating activities:

 

 

 

 

 

 

Net earnings

 

$

15 

 

$

792 

Adjustments to reconcile net earnings to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization expense

 

 

2,362 

 

 

2,259 

Net (gain) loss on disposition of assets

 

 

(39)

 

 

24 

Net (gain) loss on derivatives and convertible debt

 

 

237 

 

 

(447)

Equity in earnings of joint venture

 

 

(513)

 

 

(229)

Amortization of deferred financing costs

 

 

373 

 

 

353 

Impairment recovery, net

 

 

 -

 

 

(93)

Stock-based compensation expense

 

 

336 

 

 

402 

Provision for deferred taxes

 

 

180 

 

 

122 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Increase in assets

 

 

(838)

 

 

(31)

Increase (decrease) in liabilities

 

 

959 

 

 

(217)

Net cash provided by operating activities

 

 

3,072 

 

 

2,935 



 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

Additions to hotel properties

 

 

(791)

 

 

(661)

Distributions in excess of cumulative earnings from joint venture

 

 

200 

 

 

360 

Hotel acquisitions

 

 

 -

 

 

(35,623)

Net proceeds from sale of hotel assets

 

 

4,189 

 

 

7,875 

Net cash provided by (used in) investing activities

 

 

3,598 

 

 

(28,049)



 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

Deferred financing costs

 

 

(283)

 

 

(150)

Proceeds from long-term debt

 

 

1,500 

 

 

34,818 

Principal payments on long-term debt

 

 

(4,393)

 

 

(7,770)

Proceeds from common stock issuance

 

 

 -

 

 

103 

Redemption of common units

 

 

(42)

 

 

 -

Tax withholdings on stock compensation

 

 

(65)

 

 

(161)

Cash dividends paid to common shareholders

 

 

(2,318)

 

 

(2,308)

Cash dividends paid to common unit holders

 

 

(12)

 

 

(17)

Cash dividends paid to preferred shareholders

 

 

 -

 

 

(144)

Net cash provided by (used in) financing activities

 

 

(5,613)

 

 

24,371 



 

 

 

 

 

 

Increase (decrease) in cash, cash equivalents, and restricted cash

 

 

1,057 

 

 

(743)

Cash, cash equivalents, and restricted cash beginning of period

 

 

9,156 

 

 

10,335 

Cash, cash equivalents, and restricted cash end of period

 

$

10,213 

 

$

9,592 



 

 

 

 

 

 

Supplemental cash flow information:

 

 

 

 

 

 

Interest paid

 

$

1,690 

 

$

1,515 

Income taxes paid, net of refunds

 

$

66 

 

$

22 



 

 

 

 

 

 

Schedule of noncash investing and financing activities:

 

 

 

 

 

 

Fair value of operating partnership common units issued in acquisitions

 

$

 -

 

$

50 











See accompanying notes to consolidated financial statements.



 

6

 


 

Condor Hospitality Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited – In thousands, except share and per share data)

 

NOTE 1.  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



Description of Business



Condor Hospitality Trust, Inc. (“Condor”), a Maryland corporation, is a self-administered real estate investment trust (“REIT”) for federal income tax purposes that specializes in the investment and ownership of high-quality select-service, limited-service, extended stay, and compact full service hotels.  As of March 31,  2019, the Company owned 15 hotels in eight states, including one hotel owned through an 80% interest in an unconsolidated joint venture (the Atlanta JV”).    References to the “Company”, “we,” “our,” and “us” herein refer to Condor Hospitality Trust, Inc., including, as the context requires, its direct and indirect subsidiaries.



The Company, through its wholly owned subsidiary Condor Hospitality REIT Trust, owns a controlling interest in Condor Hospitality Limited Partnership (the operating partnership”), for which we serve as general partner.  The operating partnership, including its various subsidiaries, holds substantially all of the Company’s assets (with the exception of the furniture and equipment of all properties held by TRS Leasing, Inc.) and conducts all of its operations. At March 31, 2019, the Company owned 99.5% of the common operating units (“common units”) of the operating partnership with the remaining common units owned by other limited partners.



In order for the income from our hotel property investments to constitute “rents from real properties” for purposes of the gross income tests required by the Internal Revenue Service (“IRS”) for REIT qualification, the income we earn cannot be derived from the operation of any of our hotels.  Therefore, the operating partnership and its subsidiaries lease our hotel properties to the Company’s wholly owned taxable REIT subsidiary, TRS Leasing, Inc., and its wholly owned subsidiaries (the “TRS”). The TRS in turn engages third-party eligible independent contractors to manage the hotels. The operating partnership, the TRS, and their respective subsidiaries are consolidated into the Company’s financial statements.



Historically, as a result of the geographic areas in which we operate, the operations of our hotels have been seasonal in nature.  Generally, occupancy rates, revenue, and operating income have been greater in the second and third quarters of the calendar year than in the first and fourth quarters, with the exception of our hotels located in Florida, which experience peak demand in the first and fourth quarters annually. 



Basis of Presentation



The consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and include the accounts of the Company, as well as the accounts of the operating partnership and its subsidiaries and our wholly owned TRS and its subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. 



We evaluate each of our investments and contractual relationships to determine whether they meet the guidelines for consolidation. Entities are consolidated if the determination is made that we are the primary beneficiary in a variable interest entity (“VIE”) or we maintain control of the asset through our voting interest or other rights in the operation of the entity.  The Company has concluded that our operating partnership meets the criteria to be considered a VIE of which the Company is the primary beneficiary and, accordingly, the Company consolidates the operating partnership. The Company’s sole significant asset is its investment in the operating partnership, and consequently, substantially all of the Company’s assets and liabilities represent those assets and liabilities of the operating partnership. All of the Company’s debt is an obligation of the operating partnership.



The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and with the general instructions to Form 10-Q and Rule 10-01 of Regulation S-X.  Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements.  These unaudited consolidated financial statements include all adjustments considered necessary for a fair presentation of the consolidated financial statements for the periods presented. Interim results are not necessarily indicative of full-year performance for the year ending December 31, 2019 or any future period. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and

7

 


 

Condor Hospitality Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited – In thousands, except share and per share data)

 

accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.



Estimates, Risks, and Uncertainties



The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that effect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements as well as revenue and expenses recognized during the reporting period.  Actual results could differ from those estimates.  Because the state of the economy and the real estate market can significantly impact hotel operating performance and the estimated fair value of our assets, it is possible that the estimates and assumptions that have been utilized in the preparation of the consolidated financial statements could change.



Investment in Hotel Properties



At the time of acquisition, the Company allocates the purchase price of assets to asset classes based on the fair value of the acquired real estate, furniture, fixtures, and equipment, and intangible assets, if any, and the fair value of liabilities assumed, including debt. Acquisition date fair values are determined based on replacement costs, appraised values, and estimated fair values using methods similar to those used by independent appraisers including discounted cash flows and capitalization rates. 



Effective January 1, 2018, we adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) No. 2017-01, Clarifying the Definition of a Business.  As such, if substantially all of the fair value of the gross assets acquired are concentrated in a single identifiable asset or group of similar identifiable assets, the set is not considered a business. When we conclude that an acquisition meets this threshold, acquisition costs will be capitalized as part of our allocation of the purchase price of the acquired hotel properties.  This guidance is applied prospectively.  We concluded that all hotel acquisitions completed in 2018 were the acquisition of assets and as such acquisition costs were capitalized as part of these transactions (see Note 3). 



The Company’s investments in hotel properties are recorded at cost and are depreciated using the straight-line method over an estimated useful life of 15 to 40 years for buildings and improvements and 3 to 12 years for furniture and equipment.    



Renovations and/or replacements that improve or extend the life of the hotel properties are capitalized and depreciated over their useful lives. Repairs and maintenance are expensed as incurred.



The initial fees incurred to enter into the franchise agreements are capitalized and amortized over the life of the franchise agreements using the straight-line method.  Amortization expense is included in depreciation and amortization in the consolidated statements of operations.



On an ongoing basis, the Company reviews the carrying value of each held for use hotel to determine if certain circumstances, known as triggering events, exist indicating impairment to the carrying value of the hotel or that depreciation periods should be modified.  These triggering events include a significant change in the cash flows of or a significant adverse change in the business climate for a hotel.  If facts or circumstances support the possibility of impairment, the Company will prepare an estimate of the undiscounted future cash flows, without interest charges, of the specific hotel and determine if the investment in such hotel is recoverable based on these undiscounted future cash flows. If the investment is not recoverable based on this analysis, an impairment charge will be taken, if necessary, to reduce the carrying value of the hotel to the hotel’s estimated fair value.



8

 


 

Condor Hospitality Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited – In thousands, except share and per share data)

 

Investment in Joint Venture



If it is determined that we do not have a controlling interest in a joint venture, either through our financial interest in a VIE or through our voting interest in a voting interest entity (“VOE”) and we have the ability to provide significant influence, the equity method of accounting is used. Under this method, the investment, originally recorded at cost, is adjusted to recognize our share of net earnings or losses of the affiliate as they occur, with losses limited to the extent of our investment in, advances to, and commitments to the investee. Pursuant to our Atlanta JV agreement, allocations of the profits and losses of our Atlanta JV may be allocated disproportionately to nominal ownership percentages due to specified preferred return rate thresholds.



Distributions received from a joint venture are classified in the consolidated statements of cash flows using the cumulative distributions approach. Distributions are classified as cash inflows from operating activities unless cumulative distributions, including those from prior periods not designated as a return of investment, exceed cumulative recognized equity in earnings of the joint venture. Excess distributions are classified as cash inflows from investing activities as a return of investment.



On an annual basis or at interim periods if events and circumstances indicate that the investment may be impaired, the Company reviews the carrying value of its investment in unconsolidated joint venture to determine if circumstances indicate impairment to the carrying value of the investment that is other than temporary. The investment is considered impaired if its estimated fair value is less than the carrying amount of the investment and that impairment is other than temporary.



Assets Held for Sale and Discontinued Operations



A hotel is considered held for sale (a) when a contract for sale is entered into, a substantial, nonrefundable deposit has been committed by the purchaser, and sale is expected to occur within one year, or (b) if management has committed to and is actively engaged in a plan to sell the property, the property is available for sale in its current condition, and it is probable the sale will be completed within one year.  If a hotel is considered held for sale as of the most recent balance sheet presented or was sold prior to that balance sheet date, the hotel property and the debt it collateralizes are shown as held for sale in all periods presented. Depreciation of our hotels is discontinued at the time they are considered held for sale. 



Only disposals representing a strategic shift in operations that have a major effect on an entity’s operations and financial results are presented as discontinued operations.  None of the dispositions completed in 2018 or 2019 to date have met this definition, and we anticipate that most of our hotel dispositions will not be classified as discontinued operations as most will not fit this definition.



At the end of each reporting period, if the fair value of a held for sale property less costs to sell is lower than the carrying value of the hotel, the Company will record an impairment loss.  Impairment losses on held for sale properties may be subsequently recovered up to the amount of the cumulative impairment losses taken while the property is held for sale should future revisions to fair value estimates be required.  If active marketing ceases or the property no longer meets the criteria to be classified as held for sale, the property is reclassified to held for use and measured at the lower of its (a) carrying amount before the property was classified as held for sale, adjusted for any depreciation expense that would have been recognized had the property been continuously classified as held for use, or (b) its fair value at the date of the decision not to sell.



Cash and Cash Equivalents and Restricted Cash



Cash and cash equivalents includes cash and highly liquid investments with original maturities of three months or less when acquired, and are carried at costs which approximates fair value.



Restricted cash consists of cash held in escrow for the replacement of furniture and fixtures or for real estate taxes and property insurance as required under certain loan agreements. 



9

 


 

Condor Hospitality Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited – In thousands, except share and per share data)

 

Revenue Recognition



Revenue consists of amounts derived from hotel operations, including the sales of rooms, food and beverage, and other ancillary services. Room revenue is recognized over a customer's hotel stay at the daily contract rate.   Revenue from food and beverage and other ancillary services is generated when a customer chooses to purchase goods or services separately from a hotel room and revenue is recognized on these distinct goods and services at the contract rate at the point in time or over the time period that goods or services are provided to the customer and the related performance obligations are fulfilled. Certain ancillary services are provided by third parties and the Company assesses whether it is the principal or agent in these arrangements. If the Company is the agent, revenue is recognized based upon the commission earned from the third party. If the Company is the principal, the Company recognizes revenue based upon the gross sales price.  Accounts receivable primarily represents receivables from hotel guests who occupy hotel rooms and utilize hotel services. The Company maintains an allowance for doubtful accounts sufficient to cover estimated potential credit losses.



Sales, use, occupancy, and similar taxes collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from revenue in the consolidated statements of operations.



Hotel operating revenues can be disaggregated into the following categories to demonstrate how economic factors affect the nature, amount, timing, and uncertainty of revenue and cash flows:







 

 

 

 

 

 



 

Three months ended March 31,



 

2019

 

2018

Rooms

 

$

15,151 

 

$

15,927 

Food and beverages

 

 

359 

 

 

375 

Other

 

 

393 

 

 

377 

Total revenue

 

$

15,903 

 

$

16,679 



Income Taxes



The Company qualifies and intends to continue to qualify as a REIT under the applicable provisions of the Internal Revenue Code (the “Code”), as amended.  In general, under such Code provisions, an entity which has made the required election and, in the taxable year, meets certain requirements and distributes to its shareholders at least 90% of its REIT taxable income, will not be subject to federal income tax to the extent of the income currently distributed to shareholders.  A REIT will incur a 100% tax on the net gain derived from any sale or other disposition of property that the REIT holds primarily for sale to customers in the ordinary course of a trade or business. We do not believe any of our hotels were held primarily for sale in the ordinary course of our trade or business. However, if the IRS would successfully assert that we held such hotels primarily for sale in the ordinary course of our business, the gain from such sales could be subject to a 100% prohibited transaction tax.



Taxable income from non-REIT activities managed through the TRS is subject to federal, state, and local income taxes.  We account for the federal income taxes of our TRS using the asset and liability method.  Under this method, deferred income taxes are recognized for temporary differences between the financial reporting bases of assets and liabilities of the TRS and their respective tax bases and for operating loss and tax credit carryforwards based on enacted tax rates expected to be in effect when such amounts are realized or settled.  However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on the consideration of available evidence, including tax planning strategies and projections for future taxable income over the periods in which the remaining deferred tax assets are deductible.  In assessing the realizability of deferred tax assets, the Company considers whether it is more likely than not (defined as a likelihood of more than 50%) that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income.



10

 


 

Condor Hospitality Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited – In thousands, except share and per share data)

 

Fair Value Measurements



Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are utilized to determine the value of certain liabilities and equity instruments, to perform impairment assessments, to account for hotel acquisitions, in the valuation of stock-based compensation, and for disclosure purposes. Fair value measurements are classified into a three-tiered fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:



Level 1: Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.



Level 2: Directly or indirectly observable inputs other than quoted prices included in Level 1. Level 2 inputs may include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and model-derived valuations whose inputs are observable.



Level 3: Unobservable inputs for which there is little or no market data, which require a reporting entity to develop its own assumptions.    



Our estimates of fair value are determined using available market information and appropriate valuation methods.  Considerable judgment is necessary to interpret market data and develop estimated fair value.  The use of different market assumptions or valuation techniques may have a material effect on estimated fair value measurements.  We classify assets and liabilities in the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement.



With the exception of fixed rate debt (see Note 8) and other financial instruments carried at fair value, the carrying amounts of the Company’s financial instruments approximates their fair values due to their short-term nature or variable market-based interest rates.



Fair Value Option



Under U.S. GAAP, the Company has the irrevocable option to report most financial assets and financial liabilities at fair value on an instrument by instrument basis, with changes in fair value reported in net earnings.  This option was elected for the treatment of the Company’s convertible debt entered into on March 16, 2016 (see Note 7).



Recently Adopted Accounting Standards



In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU replaced most existing revenue recognition guidance in U.S. GAAP when it became effective.  The original updated accounting guidance was effective for annual and interim reporting periods in fiscal years beginning after December 15, 2016, however, in July 2015, the FASB approved a one year delay of the effective date to fiscal years beginning after December 15, 2017.  As such, the standard was effective for the Company on January 1, 2018 and was adopted on that date using the modified retrospective transition method.  Due to the short-term nature of the Company’s revenue streams, the adoption of this standard had no impact on the Company’s revenue or net income, and therefore, no adjustment was recorded to the Company’s opening accumulated deficit.  The adoption of this standard resulted in additional disclosures.  Furthermore, for real estate sales to third parties, primarily a result of disposition of real estate in exchange for cash with few contingencies, the standard did not impact the recognition of our accounting for these sales.



In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Payment, which clarifies and provides specific guidance on eight cash flow classification issues with an objective to reduce the current diversity in practice. This guidance is effective for the Company for years beginning after December 15, 2017.  The Company has adopted ASU 2016-15 for the year beginning on January 1, 2018.  The adoption of ASU 2016-15 did not have a material impact on our consolidated financial statements.

11

 


 

Condor Hospitality Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited – In thousands, except share and per share data)

 



In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which clarifies how companies should present restricted cash and restricted cash equivalents in the statement of cash flows. This guidance requires companies to show the changes in the total of cash, cash equivalents, and restricted cash equivalents in the statement of cash flows. This guidance is effective for the Company for years beginning after December 15, 2017, including interim periods within those years.  The Company has adopted ASU 2016-18 for the year beginning on January 1, 2018.  The adoption of ASU No. 2016-18 changed the presentation of the consolidated statements of cash flows for the Company to include changes to cash and cash equivalents and restricted cash for all periods presented.



In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which clarifies the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions of assets or business combinations. As a result of the standard, we anticipate that the majority of our hotel purchases will be considered asset purchases as opposed to business combinations and as such the related acquisition costs will be capitalized. However, the determination will be made on a transaction-by-transaction basis.  This standard is applied on a prospective basis and, therefore, it does not affect the accounting for any of our previous transactions.  This standard was effective for annual periods beginning after December 15, 2017, although early adoption is permitted.  The Company has adopted ASU 2017-01 for the year beginning on January 1, 2018.



In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which superseded most existing lease guidance in U.S. GAAP. ASU 2016-02 requires, among other changes to the lease accounting guidance, lessees to recognize most leases on-balance sheet via a right of use asset and lease liability and additional qualitative and quantitative disclosures. In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases, to clarify how to apply certain aspects of the new leases standard, and ASU 2018-11, Leases (Topic 842): Targeted Improvements, to give companies another option for transition and to provide lessors with a practical expedient to reduce the cost and complexity of implementing the new standard. The transition option allows companies to not apply the new leases standard in the comparative periods they present in their financial statements in the year of adoption. The Company adopted this standard on January 1, 2019.  The Company elected the practical expedients allowed under the guidance and retained the original lease classification and historical accounting for initial direct costs for leases existing prior to the adoption date. The Company also elected not to restate prior periods for the impact of the adoption of the new standard. The adoption of this standard has resulted in the recognition of right-of-use assets and related liabilities to account for the Company's future obligations under the operating leases for which the Company is the lessee. See Notes 2 and 15 to the accompanying consolidated financial statements for additional disclosures related to the adoption of this standard.



NOTE 2.  INVESTMENT IN HOTEL PROPERTIES



Investment in hotel properties consisted of the following at March 31, 2019 and December 31, 2018:





 

 

 

 

 

 

 

 

 

 

 

 



As of



 

March 31, 2019

 

December 31, 2018



 

Total

 

Held for sale

 

Held for use

 

Total

Land

 

$

20,201 

 

$

2,304 

 

$

20,200 

 

$

22,504 

Buildings, improvements, vehicle

 

 

206,880 

 

 

4,462 

 

 

206,821 

 

 

211,283 

Furniture and equipment

 

 

21,399 

 

 

719 

 

 

20,554 

 

 

21,273 

Initial franchise fees

 

 

1,784 

 

 

25 

 

 

1,784 

 

 

1,809 

Construction-in-progress

 

 

174 

 

 

 

 

323 

 

 

330 

Right of use asset

 

 

289 

 

 

 -

 

 

 -

 

 

 -

Investment in hotel properties

 

 

250,727 

 

 

7,517 

 

 

249,682 

 

 

257,199 

Less accumulated depreciation

 

 

(21,830)

 

 

(3,425)

 

 

(19,504)

 

 

(22,929)

Investment in hotel properties, net

 

$

228,897 

 

$

4,092 

 

$

230,178 

 

$

234,270 



 

 

 

 

 

 

 

 

 

 

 

 



On January 1, 2019, the Company adopted ASU 842, Leases, and applied it prospectively. At adoption, the Company also elected the practical expedients which permitted it to not reassess its prior conclusions about lease identification, classification, and initial direct costs. Consequently on January 1, 2019, the Company recognized

12

 


 

Condor Hospitality Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited – In thousands, except share and per share data)

 

right-of-use assets and related liabilities related to its operating leases. Since most of the Company's leases do not provide an implicit rate, the Company used incremental borrowing rates, with a weighted average rate of 5.19% at March 31, 2019.  The right-of-use assets and liabilities are amortized to rent expense, included in either Hotel and property operations expenses or General and administrative expenses depending on the nature of the lease, over the term of the underlying lease agreements.  The weighted average remaining life of the Company’s operating leases, including options to extend when it is reasonably certain the Company will exercise such options, was 3.7 years at March 31, 2019.



As of March 31, 2019, the Company's right-of-use assets, net of $289 are included in Investment in hotel properties, net and its related lease liabilities of $296 are presented in Accounts payable, accrued expenses, and other liabilities in the Company's consolidated balance sheets. The adoption of this standard had minimal impact on the Company's statements of operations.







NOTE 3.  ACQUISITION OF HOTEL PROPERTIES



During the three months ended March 31, 2018, the Company acquired two wholly owned hotel properties.  The allocation of the purchase price based on fair value was as follows: 





 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Date of acquisition

 

Land

 

Buildings, improvements, and vehicle

 

Furniture and equipment

 

Intangible asset

 

Total purchase price & acquisition costs (1)

 

Debt at acquisition (2)

 

Issuance of  common units (3)

 

Net cash paid

TownePlace Suites

01/18/2018

 

$

1,435 

 

$

16,459 

 

$

1,729 

 

$

190 

 

$

19,813 

 

$

19,813 

 

$

 -

 

$

 -

Austin, TX

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Home2 Suites

02/21/2018

 

 

998 

 

 

13,485 

 

 

1,854 

 

 

53 

 

 

16,390 

 

 

14,818 

 

 

50 

 

 

1,522 

Summerville, SC

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

$

2,433 

 

$

29,944 

 

$

3,583 

 

$

243 

 

$

36,203 

 

$

34,631 

 

$

50 

 

$

1,522 



(1)

Contractual purchase price of $19,750 and $16,325 for Austin TownePlace Suites and Summerville Home2 Suites, respectively.

(2)

All debt was drawn from the $150,000 secured revolving credit facility  (the credit facility”) at acquisition.

(3)

Total issuance of 259,685 common units.  Common units may be redeemed at a rate of one common share for 52 common units (see Note 11).



Included in the consolidated statement of operations for the three months ended March 31, 2018 are total revenues of $1,413 and total operating income of $529 related to the results of operations for the two hotels acquired in 2018 since the date of acquisition.



All purchase price allocations were determined using Level 3 fair value inputs.



Pro Forma Results



The following condensed pro forma financial data is presented as if the two acquisitions completed in 2018  were completed on January 1, 2017.   Supplemental pro forma earnings were adjusted to exclude all acquisition expenses recognized in the periods presented as if these acquisition costs had been incurred in prior periods but were not adjusted to remove the results of hotels sold during and between the periods.  Results for periods prior to the Company’s ownership are based on information provided by the prior owners, adjusted for differences in interest expense, depreciation expense, and management fees following the Company’s ownership and have not been audited or reviewed by our independent auditors.  All hotels were in operation for all of the periods presented.



The condensed pro forma financial data is not necessarily indicative of what the actual results of operations of the Company would have been assuming the acquisitions had been consummated on January 1, 2017, nor do they purport to represent the results of operations for future periods.

13

 


 

Condor Hospitality Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited – In thousands, except share and per share data)

 







 

 



Three months ended March 31,



2018

Total revenue

$

17,322 

Operating income

$

2,280 

Net earnings (loss) attributable to common shareholders

$

671 

Net earnings (loss) per share - Basic

$

0.06 

Net earnings (loss) per share - Diluted

$

0.06 

 

NOTE 4.  INVESTMENT IN UNCONSOLIDATED JOINT VENTURE



On August 1, 2016, the Company entered into a joint venture, the Atlanta JV, with Three Wall Capital LLC and certain of its affiliates (“TWC”) to acquire an Aloft hotel in downtown Atlanta, Georgia.  The Atlanta Aloft acquisition had a total purchase price of $43,550 and closed on August 22, 2016.  The Company accounts for the Atlanta JV under the equity method.  Condor owns 80% of the Atlanta JV with TWC owning the remaining 20%.  The Atlanta JV is comprised of two companies: Spring Street Hotel Property II LLC, of which the operating partnership indirectly owns an 80% equity interest, and Spring Street Hotel OpCo II LLC, of which our TRS indirectly owns an 80% equity interest.  TWC owns the remaining 20% equity interest in these two companies.



The purchase was partially funded with a $33,750 term loan secured by the property.  The term loan, obtained from LoanCore Capital Credit REIT LLC, has an initial term of 24 months with three 12-month extension periods, which may be exercised at the Atlanta JV’s option subject to certain conditions and fees.  The first of these extension options was exercised by the Atlanta JV on September 9, 2018.  The interest rate is a floating rate calculated on the one-month LIBOR plus 5.0%, and as a condition at the time of the extension, the Atlanta JV purchased a LIBOR cap of 3.0%.  The term loan remains outstanding at March 31, 2019 and has a current interest rate of 7.50%.  The loan is non-recourse to the Atlanta JV, subject to specified exceptions.  The loan is also non-recourse to Condor, except for certain customary carve-outs which are guaranteed by the Company.



Under the Atlanta JV agreement, the Atlanta JV is managed by TWC in accordance with business plans and budgets approved by both partners.  Major decisions as detailed in the agreement also require joint approval.  Condor may remove TWC as manager of the Atlanta JV and appoint a new manager only upon the occurrence of certain events.  The Atlanta Aloft hotel is managed by Boast Hotel Management Company LLC (“Boast”), an affiliate of TWC.  The Atlanta JV paid to Boast total management fees of $116 and $98 for the three months ended March 31, 2019 and 2018, respectively.



Net cash flow from the Atlanta JV is distributed each quarter first with a 10% annual preferred return on capital contributions to Condor, second with a 10% annual preferred return on capital contributions to TWC, and third with any remainder distributed to the partners based on their pro-rata equity ownership. Profits are allocated in the same proportion as net cash flow. Losses are allocated based on pro-rata equity ownership. Cash distributions totaling $200 and $360 in the three months ended March 31, 2019 and 2018, respectively, were received by the Company from the Atlanta JV. The Atlanta JV agreement also includes buy-sell rights for both members (generally after three years of hotel ownership for Condor and after five years for TWC) and Condor has a purchase option for TWC’s Atlanta JV ownership interest exercisable between the third and fifth anniversary of the hotel closing.



The following table represents the total assets, liabilities, and equity, including the Company’s share, of the Atlanta JV as of March 31, 2019 and December 31, 2018:

14

 


 

Condor Hospitality Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited – In thousands, except share and per share data)

 







 

 

 

 

 

 



 

As of



 

March 31, 2019

 

December 31, 2018

Investment in hotel properties, net

 

$

46,611 

 

$

46,933 

Cash and cash equivalents

 

 

989 

 

 

913 

Restricted cash, property escrows

 

 

731 

 

 

366 

Accounts receivable, prepaid expenses, and other assets

 

 

375 

 

 

294 

Total Assets

 

$

48,706 

 

$

48,506 



 

 

 

 

 

 

Accounts payable, accrued expenses, and other liabilities

 

$

1,127 

 

$

1,375 

Land option liability

 

 

6,190 

 

 

6,190 

Long-term debt, net of deferred financing costs

 

 

33,665 

 

 

33,608 

Total Liabilities

 

 

40,982 

 

 

41,173 

Condor equity

 

 

6,179 

 

 

5,866 

TWC equity

 

 

1,545 

 

 

1,467 

Total Equity

 

 

7,724 

 

 

7,333 

Total Liabilities and Equity

 

$

48,706 

 

$

48,506 



The table below provides the components of net earnings, including the Company’s share of the Atlanta JV, for the three months ended March 31, 2019 and 2018.





 

 

 

 

 

 



 

Three months ended March 31,



 

2019

 

2018

Revenue

 

 

 

 

 

 

Room rentals and other hotel services

 

$

3,874 

 

$

3,272 

Operating Expenses

 

 

 

 

 

 

Hotel and property operations

 

 

2,177 

 

 

2,005 

Depreciation and amortization

 

 

371 

 

 

357 

Total operating expenses

 

 

2,548 

 

 

2,362 

Operating income

 

 

1,326 

 

 

910 

Net loss on derivative

 

 

(1)

 

 

(9)

Interest expense

 

 

(684)

 

 

(615)

Net earnings

 

$

641 

 

$

286 



 

 

 

 

 

 

Condor allocated earnings

 

$

513 

 

$

229 

TWC allocated earnings

 

 

128 

 

 

57 

Net earnings

 

$

641 

 

$

286 











NOTE 5.  DISPOSITIONS OF HOTEL PROPERTIES



As of March 31, 2019, the Company had no hotels classified as held for sale.  At December 31, 2018, the Company had one hotel held for sale.    During the three months ended March 31, 2019 and 2018, the Company sold one hotel and two hotels, respectively, resulting in total gains of $62 and $37,  respectively.    One of the hotels sold during the first quarter of 2018 had been previously impaired and a recovery of impairment totaling $93 was recognized upon the sale. 







NOTE 6.  LONG-TERM DEBT



Long-term debt related to wholly owned properties, including debt related to hotel properties held for sale, consisted of the following loans payable at March 31, 2019 and December 31, 2018:



15

 


 

Condor Hospitality Trust, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited – In thousands, except share and per share data)

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lender

 

 

Balance at March 31, 2019

 

Interest rate at March 31, 2019

 

Maturity

 

Amortization provision

 

Properties encumbered at March 31, 2019

 

Balance at December 31, 2018

Fixed rate debt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Morgan Stanley Bank of America Merrill Lynch Trust 2014-C18

 

$

8,772 

 

4.54%

 

08/2024

 

25 years

 

 

$

8,817 

Great Western Bank (1)

 

 

13,556 

 

4.33%

 

12/2021 (5)

 

25 years

 

 

 

13,615 

Great Western Bank (1)

 

 

1,135 

 

4.33%

 

12/2021 (5)

 

7 years

 

 -

 

 

1,171 

Total fixed rate debt

 

 

23,463 

 

 

 

 

 

 

 

 

 

 

23,603 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

Variable rate debt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wells Fargo

 

 

25,937 

 

4.88% (2)

 

11/2022 (6)

 

30 years

 

 

 

26,048 

KeyBank credit facility (3)

 

 

86,845 

 

5.49% (4)

 

04/2020 (7)

 

Interest only

 

 

 

89,487 

Total variable rate debt

 

 

112,782 

 

 

 

 

 

 

 

14 

 

 

115,535