First quarter 2009 total revenue for continuing operations declined 15.2 percent to $49.2 million, compared to the same 2008 period.
Statistics for 35 Continuing Operations Hotels
1Q 1Q % Change
2009* 2008*
Rooms revenue $36,635 $43,848 -16.5%
RevPAR $61.17 $72.37 -15.5%
Total revenue $49,176 $57,972 -15.2%
Loss from continuing operations $(6,131) $(5,989) -2.4%
EBITDA $6,328 $6,325 0.0%
Adjusted EBITDA (defined below) $6,874 $8,466 -18.8%
Consolidated Financial Results
Loss from continuing operations $(6,131) $(5,989) -2.4%
Loss from discontinued operations $(951) $(1,529) 37.8%
Net loss attributable to common
stock $(6,922) $(7,518) 7.9%
Net loss per share attributable
to common stock $(0.32) $(0.33) 3.0%
*Dollars in thousands except for RevPAR and per share data.
First Quarter 2009 Results
First quarter 2009 total revenue for continuing operations declined 15.2 percent to $49.2 million, compared to the same 2008 period. During the 2009 first quarter, the displacement of total revenue resulting from renovations at three properties was $0.7 million, compared to $0.9 million in the 2008 first quarter. Loss from continuing operations was $(6.1) million in the 2009 first quarter, compared to $(6.0) million in the 2008 first quarter.
Net loss attributable to common shares was $(6.9) million, or $(0.32) per diluted share in the 2009 first quarter, compared to a net loss of $(7.5) million, or $(0.33) per diluted share in the 2008 first quarter.
EBITDA from continuing operations was flat to the prior year's first quarter at $6.3 million. Adjusted EBITDA for the same group of properties decreased 18.8 percent, from $8.5 million in the 2008 first quarter to $6.9 million in the 2009 first quarter. Adjusted EBITDA margins for the continuing operations hotels decreased by 60 basis points to 14.0 percent during the 2009 first quarter compared to the 2008 first quarter, due to lower revenues.
Management Comments
"Our hotels fared reasonably well in a poor market in January and February, posting RevPAR index increases in each of those two months, giving us 10 consecutive months of improvement," said Peter Cyrus, Lodgian interim president and chief executive officer. "Discount pricing intensified in March, resulting in a relatively flat RevPAR Index for the quarter, off just 20 basis points compared to the 2008 first quarter," he said.
"We continue to be very focused on cost control and revenue improvement. In the first quarter, we reduced total rooms payroll by over 10 percent and increased our food and beverage margins by 260 basis points," he said. "We have renegotiated pricing with numerous vendors at both the corporate and property levels and are beginning to see the benefits of those efforts."
Asset Disposition Program
During the first quarter, the Holiday Inn in East Hartford, Conn. was sold for gross proceeds of $3.5 million. There were no net proceeds from the sale of this hotel due to seller financing and the cost of buying out the land lease.
Following the close of the first quarter, the Holiday Inn Select in Windsor, Ontario was sold for gross proceeds of CAD$7.0 million (USD$5.6 million). The net proceeds of USD$5.2 million were used for general corporate purposes.
As of May 1, 2009, a total of four properties remained classified as held for sale and were in varying stages of the sale process. One of these hotels is the Holiday Inn in Phoenix, Ariz. To date, the company's efforts to sell this property have been unsuccessful, and the hotel's operating performance continues to decline, primarily due to oversupply in the local market. Management has concluded that the hotel's market value is less than the $9.4 million of mortgage debt which encumbers the property. Accordingly, the company recently began discussions with the lender aimed at returning the property on a consensual basis by a deed in lieu of foreclosure. The mortgage debt on this hotel is non-recourse to Lodgian, except in certain limited circumstances and is not cross-collateralized with any other of the company's mortgage debt. The company does not believe the debt recourse provisions of this loan will be triggered by this transaction.
Balance Sheet Update
As of March 31, 2009, 35 hotels were encumbered as collateral for various mortgage debt facilities totaling approximately $331.5 million. A summary of mortgage debt facilities is included in the supplemental information attached to this release.
"In connection with the upcoming debt maturities in July 2009, we continue to pursue a number of options, including refinancing of the existing encumbered hotels, financing certain unencumbered assets and seeking an extension of the current facilities," said James MacLennan, executive vice president and chief financial officer.
"To date, however, we have been unable to secure refinancing, and we expect it will remain difficult to refinance the debt prior to the July 1 maturity date. We are currently engaged in discussions with the servicers of the maturing debt to seek extensions to allow us additional time to secure financing. We cannot currently predict whether our efforts to obtain extensions will be successful."
Reverse Stock Split Update
On April 29, 2009, the company's shareholders approved a reverse split of the company's common stock at split ratios ranging from 1-for-5 to 1-for-10 in half share increments. However, at this time, the Board of Directors has elected to defer a decision on effecting the reverse stock split pending resolution of the company's efforts to extend or refinance the debt that matures in July of this year.
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