Lodgian, Inc. (NYSE Amex Equities: LGN) today reports results for the fourth quarter and full year ended December 31, 2009.
Fourth Quarter 2009 Results
Fourth quarter 2009 total revenue for our 33 continuing operations hotels declined approximately 18.2 percent to $41.8 million, compared to the 2008 fourth quarter. Occupancy decreased 10.6 percent to 57.2 percent, while average daily rate decreased 9.1 percent to $90.56 in the 2009 fourth quarter. Loss from continuing operations was $(8.4) million, compared to $(4.9) million in the 2008 fourth quarter.
Net loss attributable to common shares was $(2.3) million, or $(0.11) per share, compared to a net loss of $(4.7) million, or $(0.22) per share in the 2008 fourth quarter. The lower net loss in the 2009 fourth quarter was due to net income from discontinued operations of $5.7 million, which was driven by a net $6.1 million gain on property sales.
EBITDA from continuing operations hotels declined $(3.7) million to $3.7 million, compared to the prior year's fourth quarter.
Adjusted EBITDA for the same properties decreased from $8.8 million in the fourth quarter of 2008 to $4.0 million in the 2009 fourth quarter. Adjusted EBITDA margins for the 33 continuing operations hotels declined 750 basis points to 9.7 percent during the 2009 fourth quarter, compared to the 2008 fourth quarter, due to the significant decline in revenue.
Full Year 2009 Results
2009 total revenue for continuing operations hotels declined 17.4 percent to $188.5 million from $228.2 million in 2008. Occupancy decreased 9.9 percent to 63.1 percent, while average daily rate decreased 9.0 percent to $96.56 in 2009. Loss from continuing operations was $(50.3) million, compared to $(8.0) million in 2008, due to impairment losses of $30.7 million recorded during 2009 compared to $4.5 million of impairment losses recorded during 2008, as well as the significant decline in revenue.
Net loss attributable to common shares was $(52.4) million, or $(2.46) per share, compared to a net loss of $(12.0) million, or $(0.55) per diluted share in 2008.
EBITDA from continuing operations hotels declined to $(2.5) million, compared to $40.2 million the prior year, due largely to the previously discussed impairment losses. Adjusted EBITDA for the same properties decreased from $45.8 million in 2008 to $28.3 million in 2009. Adjusted EBITDA margins for the 33 continuing operations hotels decreased 500 basis points to 15.0 percent for the 2009 full year due to the significant revenue decline.
"Competition remains fierce as hotels in segments above the hotels in our portfolio continue to discount deeply to attract our guests," said Dan Ellis, Lodgian president and chief executive officer. "This has especially impacted our contract business. This pricing war, combined with a very strong 2008 fourth quarter in which we outperformed the industry, impacted our continuing operations hotels' RevPAR, which was down 18.2 percent, compared to an industry average of 11.7 percent. Our RevPAR market share declined to 98.9 percent, compared to 102.5 percent in the previous year's fourth quarter. We continue to compete aggressively, but will not take on business solely for the sake of revenue when there is essentially no profit."
Pending Merger Transaction
As previously announced on January 22, 2010, the company entered into a definitive agreement to be acquired by LSREF Lodging Investments, LLC ("Purchaser"), in a transaction valued at approximately $270 million, including assumed debt.
Under the terms of the agreement, Purchaser will acquire all of the outstanding common stock of Lodgian for $2.50 per share in an all-cash transaction. The price represents a premium of approximately 67.2 percent over Lodgian's average closing share price during the trading period of one calendar month prior to January 15, 2010 and 64.3 percent over Lodgian's average closing share price during the trading period of six calendar months prior to January 15, 2010.
Lodgian's Board of Directors has unanimously approved the merger agreement and has recommended approval of the transaction by Lodgian shareholders.
Further information can be found in the preliminary proxy statement filed on February 16, 2010.
Asset Disposition Program
During the year, Lodgian sold five hotels for gross proceeds of $21.9 million. Of the proceeds, $6.8 million was used for debt reduction and the remainder for general corporate purposes.
As of December 31, 2009, one property remains classified as held for sale.
Balance Sheet Update
Of the 33 continuing operations hotels, 31 were encumbered by mortgage debt as of December 31, 2009. These 31 hotels served as collateral for various mortgage debt facilities totaling $287.7 million at December 31, 2009. In February 2010, the six hotels which secured the Merrill Lynch Fixed Rate Pool 3 ("Pool 3") were transferred to a court-appointed receiver. A summary of mortgage debt facilities, including Pool 3, is included in the supplemental information attached to this release.
During the 2009 fourth quarter, the company surrendered control of the Crowne Plaza in Worcester, Mass. to a court-appointed receiver. As a result, all assets and liabilities were excluded from the company's consolidated balance sheet as of December 31, 2009. The company does not believe the limited recourse provisions of the loan secured by the Crowne Plaza will be triggered by this transaction.
Lodgian has approximately $56 million of mortgage debt maturing in 2010, comprising two single-asset mortgages and the Merrill Lynch Fixed Rate Pool 1. With respect to the Merrill Lynch Fixed Rate Pool 1, which is the largest maturity in 2010 with a principal balance of $34.5 million, Jones Lang LaSalle continues to pursue refinancing options for this pool on behalf of the company.
At year-end 2009, Lodgian had $31.8 million in unrestricted and restricted cash on its balance sheet, as well as $6.2 million held by lenders for various capital expenditure projects.
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