Fourth quarter 2008 total revenue for 35 continuing operations hotels declined approximately 5.0 percent to $54.2 million, compared to the 2007 fourth quarter.
Lodgian, Inc. (AMEX:LGN) , one of the nation's largest independent owners and operators of full-service hotels, today reports results for the fourth quarter and full year ended December 31, 2008.
Fourth Quarter 2008 Highlights for 35 Continuing Operations Hotels
-- Reduced corporate overhead by $1.2 million in the 2008 fourth quarter
compared to the 2007 fourth quarter.
-- Increased revenue per available room (RevPAR) index by 3.9 percent in
the 2008 fourth quarter over the 2007 fourth quarter, to 101.7
percent.
-- Experienced a 4.9 percent decrease in RevPAR in the 2008 fourth
quarter over the 2007 fourth quarter, compared to a 9.8 percent
decrease in the same period for the U.S. industry as a whole,
according to Smith Travel Research.
Full Year 2008 Highlights for 35 Continuing Operations Hotels
-- Increased RevPAR index by 1.9 percent in 2008 compared to 2007, to
100.1 percent.
-- Reduced corporate overhead by $5.1 million from 2007 to 2008.
-- Achieved a 61 basis point increase in Adjusted EBITDA margin in 2008
over the prior year, with Adjusted EBITDA increasing $1.1 million to
$48.0 million.
Statistics for 35 Continuing Operations Hotels
4Q 4Q % Year Year %
2008* 2007* Change 2008* 2007* Change
------------------------------------------------------------------------
Rooms revenue $38,732 $40,730 -4.9% $178,623 $179,716 -0.6%
------------------------------------------------------------------------
RevPAR $63.27 $66.51 -4.9% $73.32 $73.97 -0.9%
------------------------------------------------------------------------
Total revenue $54,150 $56,978 -5.0% $240,428 $242,558 -0.9%
------------------------------------------------------------------------
Loss from
continuing
operations $(4,947) $(4,103) n/m $(12,911) $(5,581) n/m
------------------------------------------------------------------------
EBITDA $7,909 $10,501 -24.7% $37,390 $42,569 -12.2%
------------------------------------------------------------------------
Adjusted EBITDA
(defined below) $9,415 $11,272 -16.5% $47,953 $46,886 2.3%
------------------------------------------------------------------------
Consolidated Financial Results
------------------------------------------------------------------------
Loss from
continuing
operations $(4,947) $(4,103) n/m $(12,911) $(5,581) n/m
------------------------------------------------------------------------
Income/(loss)
from
discontinued
operations $297 $(3,970) n/m $927 $(2,865) n/m
------------------------------------------------------------------------
Loss
attributable
to common
stock $(4,650) $(8,073) n/m $(11,984) $(8,446) n/m
------------------------------------------------------------------------
Loss per share
attributable
to common
stock $(0.22) $(0.34) n/m $(0.55) $(0.35) n/m
------------------------------------------------------------------------
*Dollars in thousands except for RevPAR and per share data
Fourth Quarter 2008 Results
Fourth quarter 2008 total revenue for 35 continuing operations hotels declined approximately 5.0 percent to $54.2 million, compared to the 2007 fourth quarter. Loss from continuing operations was $(4.9) million, compared to $(4.1) million in the 2007 fourth quarter.
Net loss attributable to common shares was $(4.7) million, or $(0.22) per share, compared to a net loss of $(8.1) million, or $(0.34) per share in the 2007 fourth quarter.
EBITDA from continuing operations hotels declined $(2.6) million to $7.9 million, compared to the prior year's fourth quarter. Adjusted EBITDA for the same properties decreased approximately 16.5 percent, from $11.3 million in the fourth quarter of 2007 to $9.4 million in the 2008 fourth quarter. Adjusted EBITDA margins for the 35 continuing operations hotels declined 240 basis points to 17.4 percent during the 2008 fourth quarter, compared to the 2007 fourth quarter.
Full Year 2008 Results
2008 total revenue for continuing operations hotels declined 0.9 percent to $240.4 million from $242.6 million in 2007. During 2008, the impact of displacement related to renovations at 11 hotels was approximately $2.1 million, compared to displacement of $1.9 million in 2007. Loss from continuing operations was $(12.9) million, compared to $(5.6) million in 2007, due primarily to impairment losses of $9.5 million recorded during 2008 compared to $1.6 million of impairment losses recorded during 2007.
Net loss attributable to common shares was $(12.0) million, or $(0.55) per share, compared to a net loss of $(8.4) million, or $(0.35) per diluted share in 2007.
EBITDA from continuing operations hotels declined $5.2 million to $37.4 million, compared to the prior year. Adjusted EBITDA for the same properties increased 2.3 percent, from $46.9 million in 2007 to $48.0 million in 2008. Adjusted EBITDA margins for the 35 continuing operations hotels increased 61 basis points to 19.9 percent for the 2008 full year.
Management Comments
"The recession gained significant momentum in the fourth quarter," said Peter Cyrus, Lodgian interim president and chief executive officer. "While our RevPAR was down for both the fourth quarter and the full year, we outperformed the industry as a whole. We improved our market share, reflected by a 1.9 percent increase in the RevPAR index for our continuing operations hotels for the full year and a strong 3.9 percent improvement in the fourth quarter.
"Our continuing operations portfolio is generally in good condition and should compete effectively in each respective market," he noted. "We completed $43.3 million in renovations in 2008, but have only $25.7 million budgeted for 2009. These capital expenditures are for completion of renovations for recently renewed license extensions and for other necessary projects."
Asset Disposition Program
During the year, Lodgian sold five hotels for gross proceeds of $25.0 million. Of the net proceeds, $7.5 million was used for debt reduction and the remainder for general corporate purposes.
As of December 31, 2008, a total of six properties remained classified as held for sale and were in varying stages of the sale process.
Balance Sheet Update
Of the 35 continuing operations hotels, 33 were encumbered by mortgage debt as of December 31, 2008. Additionally, two held for sale hotels were encumbered. These 35 hotels served as collateral for various mortgage debt facilities totaling $332.6 million at December 31, 2008. During 2008, Lodgian paid down its mortgage debt by $26.8 million, or 7.5 percent of the outstanding debt, through a combination of defeasance, asset sales and principal amortization. A summary of mortgage debt facilities is included in the supplemental information attached to this release.
Lodgian has approximately $128 million of mortgage debt maturing in July 2009. This maturity cannot be extended without the approval of the loan servicers, which extension has been requested but not yet granted. In an effort to refinance the debt prior to the maturity date, the company retained Jones Lang LaSalle in 2008 to assist in refinancing the debt.
"We are looking at all options, including working with national and international lenders on a portfolio and individual property basis, but to date we have been unable to secure refinancing," said James MacLennan, executive vice president and chief financial officer. "To assist this refinancing effort, we are also seeking financing on certain unencumbered assets."
In addition to the July 2009 maturity, the company has three other 2009 debt maturities which in the aggregate total approximately $169.5 million of mortgage debt. Each of these debt facilities has extension options of one to three years, and the company expects to exercise those extension options.
During 2008, Lodgian acquired approximately 2.1 million shares of common stock at an average price of $9.27 per share, for a total of approximately $19.3 million. The company did not acquire any stock in the 2008 fourth quarter.
At year-end 2008, Lodgian had $28.6 million in unrestricted and restricted cash on its balance sheet, as well as $11.4 million held by lenders for various capital expenditure projects.
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