Gross proceeds for the four hotels aggregated $16.6 million, with $3.4 million of net proceeds used to reduce debt and the remainder for general corporate purposes.
"We began the fourth quarter with 29 hotels in our disposition program," said Ed Rohling, Lodgian president and chief executive officer. "With the sale of these four properties, we are making steady progress on our disposition program. We have received excellent interest from potential buyers on many of the remaining 25 properties held for sale and already are in active negotiations on a significant number of the properties. Due to the time required for due diligence, we do not expect to complete the sale of any additional hotels before the end of 2006."
The four properties that Lodgian has sold during the 2006 fourth quarter are:
• Quality Hotel, Metairie, La. -- The 205-room hotel was sold for $9.0 million, with net proceeds of $5.7 million. As part of the transaction, Lodgian provided the buyer with a $2.8 million mezzanine loan. HREC Investment Advisors represented Lodgian in this transaction.
• Former Holiday Inn Jekyll Island, Ga. -- After completing demolition, Lodgian sold its leasehold interest in the land for $1.1 million. The company may be entitled to receive a percentage of the property's future earnings as well as a percentage of the proceeds from an eventual sale of the hotel, depending upon the achievement of certain performance thresholds. In addition, Lodgian was reimbursed $530,000 in demolition expenses. The new owners are in the planning stages of constructing a new hotel on the 14-acre site.
• Holiday Inn and Azalea Inn, Valdosta, Ga. -- Following the close of the third quarter, Lodgian sold these two hotels. Located in Valdosta, Ga., the 167-room Holiday Inn and the 108-room Azalea Inn were sold for gross proceeds of $6.5 million. Hunter Realty represented Lodgian in this transaction.
Below is a reconciliation of GAAP net loss from operations with EBITDA (a non-GAAP financial measure) for the four properties for the trailing 12 months ended September 30, 2006:
(in thousands)
Valdosta
Holiday Azalea Quality Jekyll Island
Inn Inn Hotel Holiday Inn
-------- -------- -------- --------
Net (loss)/income from operations ($15) ($1,239) $1,426 ($1,108)
Depreciation and amortization 47 60 0 731
Interest expense 206 98 0 0
Provision for income taxes (131) (764) 771 (543)
--------------------------------------
EBITDA $107 ($1,845) $2,197 ($920)
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