SYS-CON MEDIA Authors: Kevin Benedict, Gilad Parann-Nissany, Michael Bushong, Eric Brown

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Supertel Hospitality Reports 2013 Fourth Quarter, Full-Year Results

NORFOLK, NE -- (Marketwired) -- 03/17/14 -- Supertel Hospitality, Inc. (NASDAQ: SPPR), a real estate investment trust (REIT), today announced its results for the fourth quarter and year ended December 31, 2013.

2013 Fourth Quarter and Full-Year Highlights

  • Improved net loss per common share for 2013 by $3.01 per share, a 64.9 percent increase over the prior year to $(1.63).
  • Revenue from continuing operations in the fourth quarter was $12.6 million, a 6.4 percent decline compared to the same period last year and $56.2 million for the full year, a decrease of 3.5 percent over the prior year.
  • Net loss attributable to common shareholders improved by $5.0 million to $(2.2) million for the fourth quarter of 2013 compared to the same period in 2012.
  • Adjusted funds from operations (AFFO) improved by $5.6 million during the fourth quarter of 2013 compared to the same period in 2012.
  • RevPAR for the same store hotels for the fourth quarter was $32.30, a decrease of 6.9 percent over the same year ago period, and for the year $35.58, a decrease of 5.5 percent compared to the prior year.
  • Sold 17 non-core hotels in 2013 for gross proceeds of $22.0 million and used the net proceeds primarily to pay off the underlying loans.
  • Recruited industry veteran Jeffrey Dougan to the COO position, replacing the retiring Steve Gilbert.
  • Added strength to our financial team with the hiring of Patrick Beans as SVP and Treasurer, replacing the retiring Dave Walter.

Fourth Quarter Operating & Financial Results

Revenues from continuing operations for the three months ended December 31, 2013 declined 6.4 percent, to $12.6 million from $13.4 million in the prior year. The effects of rebranding four hotels and the performance of the two hotels in the Washington D.C. market continue to negatively impact revenue. This was partially offset by a decline in expenses of $0.25 million during the fourth quarter.

For the three months ended December 31, 2013, net loss attributable to common shareholders improved by $5.0 million, bringing the net loss to $(2.2) million, or $(0.76) per diluted share, compared to $(7.3) million, or $(2.51) per diluted share, for the same period in 2012. The fourth quarter of 2013 included non-cash impairment charges of $5.4 million and was offset by unrealized gain on derivatives of $5.5 million. This compares to an impairment charge of $1.9 million and a gain on the derivatives of $1.3 million in the fourth quarter of 2012. Also included in the fourth quarter results of 2013 was no income tax expense or benefit compared to an income tax expense of $6.0 million, this change was due to the recording of tax valuation allowances recorded in December 2012 and in each subsequent quarter through December 2013. The initial recording of the valuation allowance in December 31, 2012 resulted in the $6.0 million tax expense which created the variance between years as noted above.

Funds from operations (FFO) was $4.8 million for the 2013 fourth quarter, compared to $(5.2) million in the same 2012 period. Adjusted funds from operations (AFFO), which is FFO adjusted to exclude gains and losses on derivative liabilities, acquisition costs and equity offering expense, in the 2013 fourth quarter was $(0.8) million, compared to $(6.5) million in the same 2012 period, an increase of $5.7 million over the prior period which is due to the change in income tax expense/benefit related to the establishment of a valuation allowance as noted above.

Earnings before interest, taxes, depreciation and amortization (EBITDA) was $1.6 million compared with $3.2 million for the 2012 fourth quarter. Adjusted EBITDA, which is EBITDA before noncontrolling interest, net gain/loss on disposition of assets, impairment, preferred stock dividends, unrealized gain/loss on derivatives, acquisition expense and equity offering expense, declined to $2.1 million, compared to $2.7 million for the 2012 fourth quarter, a decrease of $0.6 million due to reduction in total property operating income (POI).

In the 2013 fourth quarter, the 50-hotel, same store portfolio's RevPAR declined 6.9 percent to $32.30, with a 1.5 percent decline in ADR to $60.37, and a 5.5 percent occupancy decline to 53.5 percent, compared to the 2012 fourth quarter.

"The required rebranding of four of our seasoned hotels to flags lower in the chain scale during the year continued to have a negative impact on the RevPAR and occupancy for our same store hotels, more than offsetting gains for some of our other hotels and markets during the fourth quarter," said Kelly Walters, Supertel's President and Chief Executive Officer. "We believe the performance of the rebranded hotels is stabilizing as our guests rediscover the hotels after the identity transition. Further, we expect to see improvement in the bottom line results for our same store hotels in 2014."

Full-Year Financial Results

Income from continuing operations for the twelve months ended December 31, 2013 was $0.7 million, compared to loss from continuing operations of $(11.1) million for 2012. After recognition of discontinued operations, noncontrolling interests and dividends for preferred stock shareholders, the net loss attributable to common shareholders was $(4.7) million or $(1.63) per diluted share, for the year ended December 31, 2013, compared to net loss attributable to common shareholders of $(13.4) million or $(4.64) per diluted share for 2012.

During 2013 revenues from continuing operations decreased $(2.0) million or 3.5 percent compared to 2012. Hotel revenue includes a $1.0 million increase from the new hotel purchased in May 2012, reflecting a full year of operations in 2013 versus seven months in 2012. This revenue increase is offset by an approximate $3.0 million decrease in revenue from six hotels. Four of these hotels were rebranded to brands that charge lower daily rates and require new reservation systems, which will take time to stabilize; and two of these hotels were impacted by general weakness in the Washington D.C. market. Hotel and property operations expenses from continuing operations for the year ended 2013 increased $0.8 million or 1.8 percent. The increase in hotel operating expenses reflects a full year of operations in 2013 of the hotel purchased in May 2012 versus seven months of operations in 2012. In addition, the decrease in variable expenses due to the reduction in revenue was primarily offset by brand required bedding program upgrades.

For full-year 2013, the company recorded $7.1 million of impairment charges, including $4.4 million against discontinued operations hotels and $2.7 million against continuing operations properties compared to $10.2 million of total impairment charges in 2012.

FFO for the full year 2013 was $7.9 million, compared to $(2.3) million for the same 2012 period. Adjusted FFO for 2013 was $(0.4) million, compared to $(1.8) million reported at December 31, 2012, an increase of $1.4 million. The $5.6 million reduction in tax expense related to the impact of the tax valuation allowance as described above and decreases in interest expense, are offset by the decrease in total property operating income and expenses related to debt extinguishment which resulted in a net increase of $1.4 million.

Earnings before interest, taxes, depreciation and amortization (EBITDA) was $12.0 million compared with $11.1 million for 2012. Adjusted EBITDA, which is EBITDA before noncontrolling interest, net gain/loss on disposition of assets, impairment, preferred stock dividends, unrealized gain/loss on derivatives, acquisition expense and equity offering expense, declined to $12.4 million, compared to $17.1 million for 2012, a reduction of $4.7 million due to decreased total company property operating income.

The portfolio of 49 same store hotels in 2013, compared with the same period a year earlier, had a 5.5 percent decline in RevPAR to $35.58, caused by a 5.9 percent decline in occupancy to 59.0 percent, partially offset by a 0.4 percent increase in ADR to $60.32. The RevPAR and occupancy decline are due primarily to rebranding of four hotels and general weakness in the Washington D.C. market impacting two hotels. Excluding the four rebranded hotels and the two hotels in the Washington D.C. market, RevPAR for the same-store portfolio in 2013 was $36.03, a 0.5 percent increase, compared to the same period in 2012.

Disposition Program

During 2013 the company sold 17 hotels for gross proceeds of $22 million. Proceeds were used primarily to improve the balance sheet by reducing debt and lowering annual debt service. The sold properties included:

  • 120-room Days Inn (North) Fredericksburg, VA sold on February 12, 2013.
  • 63-room GuestHouse Inn in Ellenton, FL sold on February 13, 2013
  • 40-room Super 8 hotel in Fort Madison, IA sold on April 18, 2013.
  • 151-room Masters Inn in Tuscaloosa, AL sold on May 1, 2013.
  • 128-room Masters Inn in Garden City, GA sold on May 21, 2013.
  • 40-room Super 8 hotel in Pella, IA sold on May 23, 2013.
  • 150-room Masters Inn in Charleston, SC sold on June 21, 2013.
  • 112-room Masters Inn in Cayce (Columbia/I-26), SC sold on June 24, 2013.
  • 63-room Super 8 hotel in Columbus, NE sold on June 24, 2013.
  • 156-room Days Inn in Fredericksburg (South), VA sold on June 27, 2013.
  • 117-room Masters Inn in Tampa, FL sold on July 11, 2013.
  • 51-room Quality Inn in Minocqua, WI sold on July 18, 2013.
  • 69-room Comfort Suites in Louisville, KY sold on August 22, 2013.
  • 63-room Sleep Inn in Louisville, KY sold on August 22, 2013.
  • 77-room Super 8 in Jefferson City, MO sold on September 12, 2013.
  • 109-room Masters Inn (Knox Abbott) in Cayce, SC sold on December 3, 2013.
  • 40-room Super 8 in Wayne, NE sold on December 11, 2013.

On March 10, 2014, following the close of the fourth quarter, the company sold the 55-room Super 8 in Shawano, Wisconsin for $1.1 million.

The company is marketing 19 hotels for sale and expects to generate approximately $41.7 million in gross proceeds to be used primarily to pay off the underlying loans in the amount of $24.1 million with remaining cash used to reduce short term borrowings and fund operations.

Capital Reinvestment

During 2013, the company invested approximately $5.3 million in capital improvements and renovations. During 2014 the company expects to invest approximately $6.0 million in its hotels for capital improvements and renovations.

Balance Sheet

The company continued to improve its balance sheet in 2013 through mortgage debt reduction, loan-term extensions, covenant modifications and obtaining new debt refinancing. During 2013 the debt was reduced on all hotel properties, including the revolving credit facility, by $15.0 million from $133.0 million to $118.0 million.

As of December 31, 2013, Supertel had $93.9 million in outstanding debt on its continuing operations hotels with an average term of 2.8 years and weighted average annual interest rate of 6.2 percent.

Dividends

The company did not declare a dividend on common stock for December 2013. The company's board of directors elected commencing December 31, 2013 to suspend the payment of the monthly dividends on the outstanding shares of its 8.00% Series A Cumulative Convertible Preferred Stock (NASDAQ: SPPRP), quarterly dividends on the outstanding shares of its 10.00% Series B Preferred Cumulative Stock (NASDAQ: SPPRO), and the quarterly dividends on the outstanding shares of its 6.25% Series C Cumulative Convertible Preferred Stock to preserve capital and improve liquidity. The board of directors will continue to monitor the dividend policy on a quarterly basis.

Outlook 2014

"The long reinvention of Supertel continues in 2014 with no change to the business plan which is to transition the company methodically up the chain scale toward newer and more upscale hotels, while continuing to systematically liquidate our older, non-core properties and pay down our mortgage debt," Walters said. "In September of 2013, we felt Supertel was positioned to recapitalize the company through a public offering of common stock to fund the planned acquisition of eight hotels. Unfortunately, the prevailing market conditions were such that we did not reach the level of commitments necessary to successfully complete the recapitalization plan. Immediately following the withdrawal of the stock offering, we began exploring alternative strategies to raise the much needed growth capital.

"We remain positive on the hotel business for at least the next three years, a view which is supported by the industry's leading forecasters. The business recovery we have witnessed to date has not been nearly as robust in the secondary and tertiary markets as it has been in the nation's largest cities, but there are positive signs in many of the smaller markets, and the outlook for economy hotels is now stronger than it has been since the recovery began in 2010."

About Supertel Hospitality, Inc.

Supertel Hospitality, Inc. (NASDAQ: SPPR) is a self-administered real estate investment trust that specializes in the ownership of select-service hotels. The company currently owns 68 hotels comprising 6,009 rooms in 21 states. Supertel's hotels are franchised by a number of the industry's most well-regarded brand families, including Hilton, Choice and Wyndham. For more information or to make a hotel reservation, visit www.supertelinc.com.

Forward Looking Statement

Certain matters within this press release are discussed using forward-looking language as specified in the Private Securities Litigation Reform Act of 1995, and, as such, may involve known and unknown risks, uncertainties and other factors that may cause the actual results or performance to differ from those projected in the forward-looking statement. These risks are discussed in the Company's filings with the Securities and Exchange Commission.

SELECTED FINANCIAL DATA:

                         Supertel Hospitality, Inc.
                               Balance Sheet
               As of December 31, 2013 and December 31, 2012
          (Dollars in thousands, except share and per share data)



                                                           As of
                                                December 31,   December 31,
                                                    2013           2012
                                               -------------  -------------


ASSETS
  Investments in hotel properties              $     202,588  $     202,224
  Less accumulated depreciation                       69,715         65,562
                                               -------------  -------------
                                                     132,873        136,662

  Cash and cash equivalents                               45            891
  Accounts receivable, net of allowance for
   doubtful accounts of $20 and $201                   1,083          2,070
  Prepaid expenses and other assets                    4,000          5,151
  Deferred financing costs, net                        2,601          2,644
  Investment in hotel properties, held for
   sale, net                                          31,483         54,429
                                               -------------  -------------

                                               $     172,085  $     201,847
                                               =============  =============

LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
  Accounts payable, accrued expenses and other
   liabilities                                 $       7,745  $       8,778
  Derivative liabilities, at fair value                5,907         15,935
  Debt related to hotel properties held for
   sale                                               24,120         43,312
  Long-term debt                                      93,925         89,509
                                               -------------  -------------
                                                     131,697        157,534
                                               -------------  -------------

  Redeemable preferred stock
    10% Series B, 800,000 shares authorized;
     $.01 par value, 332,500 shares
     outstanding, liquidation preference of
     $8,312                                            7,662          7,662

SHAREHOLDERS' EQUITY
Preferred stock, 40,000,000 shares authorized;
  8% Series A, 2,500,000 shares authorized,
   $.01 par value, 803,270 shares outstanding,
   liquidation preference of $8,033                        8              8
  6.25% Series C, 3,000,000 shares authorized,
   $.01 par value, 3,000,000 shares
   outstanding, liquidation preference of
   $30,000                                                30             30
Common stock, $.01 par value, 200,000,000
 shares authorized; 2,897,539 and 2,893,241
 shares outstanding                                       29             29
Common stock warrants                                      0            252
Additional paid-in capital                           135,293        134,994
Distributions in excess of retained earnings        (102,747)       (98,777)
                                               -------------  -------------
  Total shareholders' equity                          32,613         36,536

Noncontrolling interest in consolidated
 partnership, redemption value $87 and $99               113            115

                                               -------------  -------------
  Total equity                                        32,726         36,651
                                               -------------  -------------

                                               $     172,085  $     201,847
                                               =============  =============



                         Supertel Hospitality, Inc.
                           Results of Operations
     For the three and twelve months ended December 31, 2013 and 2012,
                                respectively
               (Dollars in thousands, except per share data)

                                     Three months          Twelve months
                                  ended December 31,    ended December 31,
                                 --------------------  --------------------
                                 Unaudited  Unaudited
                                    2013       2012       2013       2012
                                 ---------  ---------  ---------  ---------
REVENUES
  Room rentals and other hotel
   services                      $  12,566  $  13,431  $  56,163  $  58,205
                                 ---------  ---------  ---------  ---------

EXPENSES
  Hotel and property operations     10,418     10,669     44,156     43,373
  Depreciation and amortization      1,653      1,688      6,517      6,591
  General and administrative           937        951      3,923      3,908
  Acquisition, termination
   expense                             (14)        62        713        240
  Equity offering expense              (32)         0      1,050          0
                                 ---------  ---------  ---------  ---------
                                    12,962     13,370     56,359     54,112
                                 ---------  ---------  ---------  ---------

EARNINGS (LOSS) BEFORE NET GAINS
 (LOSSES) ON DISPOSITIONS OF
 ASSETS, OTHER INCOME, INTEREST
 EXPENSE, AND INCOME TAXES       $    (396) $      61  $    (196) $   4,093

Net gain (loss) on dispositions
 of assets                              (1)        (5)       (47)         3
Other income (loss)                  5,557      1,334     10,062       (144)
Interest expense                    (1,546)    (1,477)    (5,963)    (5,691)
Loss on debt extinguishment            (89)       (87)      (458)      (138)
Impairment losses                   (2,495)      (364)    (2,666)    (2,833)

EARNINGS (LOSS) FROM CONTINUING
 OPERATIONS BEFORE INCOME TAXES  $   1,030  $    (538) $     732  $  (4,710)

Income tax (expense) benefit             0     (6,088)         0     (6,437)
                                 ---------  ---------  ---------  ---------

EARNINGS (LOSS) FROM CONTINUING
 OPERATIONS                      $   1,030  $  (6,626) $     732  $ (11,147)

Gain (loss) from discontinued
 operations                         (2,395)       203     (2,085)       927
                                 ---------  ---------  ---------  ---------

NET (LOSS)                       $  (1,365) $  (6,423) $  (1,353) $ (10,220)

Noncontrolling interest                  2         11          2         10
                                 ---------  ---------  ---------  ---------

NET (LOSS) ATTRIBUTABLE TO
 CONTROLLING INTERESTS           $  (1,363) $  (6,412) $  (1,351) $ (10,210)

Preferred stock dividend
 declared and undeclared              (838)      (838)    (3,349)    (3,169)

                                 ---------  ---------  ---------  ---------
NET (LOSS) ATTRIBUTABLE TO
 COMMON SHAREHOLDERS             $  (2,201) $  (7,250) $  (4,700) $ (13,379)
                                 =========  =========  =========  =========

NET EARNINGS (LOSS) PER COMMON
 SHARE - BASIC AND DILUTED:
EPS from continuing operations   $    0.07  $   (2.58) $   (0.91) $   (4.96)
                                 =========  =========  =========  =========
EPS from discontinued operations $   (0.83) $    0.07  $   (0.72) $    0.32
                                 =========  =========  =========  =========
EPS Basic and Diluted            $   (0.76) $   (2.51) $   (1.63) $   (4.64)
                                 =========  =========  =========  =========



               RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
             (Unaudited - In thousands, except per share data)

                                     Three months          Twelve months
                                  ended December 31,    ended December 31,
                                 --------------------  --------------------
                                    2013       2012       2013       2012
                                 ---------  ---------  ---------  ---------
Weighted average number of
 shares outstanding for EPS
  basic                              2,891      2,887      2,890      2,885
  diluted                            2,895      2,887      2,890      2,885
Weighted average number of
 shares outstanding for FFO per
 share
  basic                              2,891      2,887      2,890      2,885
  diluted                           10,395      2,887     10,392      2,885

Reconciliation of Weighted
 average number of shares for
 EPS diluted to FFO per share
 diluted:
  EPS diluted shares                 2,895      2,887      2,890      2,885
  Common stock issuable upon
   exercise or conversion of:
  Restricted stock                       0          0          2          0
  Warrants                           3,750          0      3,750          0
  Series A Preferred Stock           3,750          0      3,750          0
                                 ---------  ---------  ---------  ---------
    FFO, Number of Diluted
     Shares                         10,395      2,887     10,392      2,885
                                 =========  =========  =========  =========

Reconciliation of net loss to
 FFO-Unaudited
  Net loss attributable to
   common shareholders           $  (2,201) $  (7,250) $  (4,700) $ (13,379)
  Depreciation and amortization,
   including discontinued
   operations                        1,743      2,135      7,294      8,787
  Net gains on disposition of
   assets                             (144)    (2,006)    (1,806)    (7,833)
  Impairment                         5,363      1,923      7,086     10,172
                                 ---------  ---------  ---------  ---------
FFO available to common
 shareholders                    $   4,761  $  (5,198) $   7,874  $  (2,253)
                                 ---------  ---------  ---------  ---------
  Unrealized (gain) loss on
   derivatives                       5,534      1,332     10,028       (247)
  Acquisitions expense                  14        (62)      (713)      (240)
  Equity offering expense               32          0     (1,050)         0
                                 ---------  ---------  ---------  ---------
Adjusted FFO                     $    (819) $  (6,468) $    (391) $  (1,766)
                                 =========  =========  =========  =========

FFO per share - basic            $    1.65  $   (1.80) $    2.72  $   (0.78)
                                 =========  =========  =========  =========
Adjusted FFO per share - basic   $   (0.28) $   (2.24) $   (0.14) $   (0.61)
                                 =========  =========  =========  =========
FFO per share - diluted          $    0.50  $   (1.80) $    0.94  $   (0.78)
                                 =========  =========  =========  =========
Adjusted FFO per share - diluted $   (0.28) $   (2.24) $   (0.14) $   (0.61)
                                 =========  =========  =========  =========

FFO and Adjusted FFO ("AFFO") are non-GAAP financial measures. We consider FFO and AFFO to be market accepted measures of an equity REIT's operating performance, which are necessary, along with net earnings (loss), for an understanding of our operating results. FFO, as defined under the National Association of Real Estate Investment Trusts (NAREIT) standards, consists of net income computed in accordance with GAAP, excluding gains (or losses) from sales of real estate assets, plus depreciation, amortization and impairment of real estate assets. We believe our method of calculating FFO complies with the NAREIT definition. AFFO is FFO adjusted to exclude gains or losses on derivative liabilities, which are non-cash charges against income and which do not represent results from our core operations. AFFO also adds back acquisition costs and equity offering expense. FFO and AFFO do not represent amounts available for management's discretionary use because of needed capital replacement or expansion, debt service obligations, or other commitments and uncertainties. FFO and AFFO should not be considered as alternatives to net income (loss) (computed in accordance with GAAP) as an indicator of our liquidity, nor are they indicative of funds available to fund our cash needs, including our ability to pay dividends or make distributions. All REITs do not calculate FFO and AFFO in the same manner; therefore, our calculation may not be the same as the calculation of FFO and AFFO for similar REITs.

Diluted FFO per share and diluted Adjusted FFO per share are computed after adjusting the numerator and denominator of the basic computation for the effects of any dilutive potential common shares outstanding during the period. The Company's outstanding stock options and certain warrants to purchase common stock would be antidilutive and are not included in the dilution computation.

We use FFO and AFFO as performance measures to facilitate a periodic evaluation of our operating results relative to those of our peers. We consider FFO and AFFO to be useful additional measures of performance for an equity REIT because it facilitates an understanding of the operating performance of our properties without giving effect to real estate depreciation and amortization, which assume that the value of real estate assets diminishes predictably over time. Since real estate values have historically risen or fallen with market conditions, we believe that FFO and AFFO provide a meaningful indication of our performance.


                         EBITDA and Adjusted EBITDA
(Unaudited - In thousands)

                                     Three months          Twelve months
                                  ended December 31,    ended December 31,
                                 --------------------  --------------------
                                    2013       2012       2013       2012
                                 ---------  ---------  ---------  ---------

RECONCILIATION OF NET EARNINGS
 (LOSS) TO ADJUSTED EBITDA
  Net loss available to common
   shareholders                  $  (2,201) $  (7,250) $  (4,700) $ (13,379)
  Interest expense, including
   discontinued operations           1,987      2,374      8,277      9,869
  Loss on debt extinguishment          108         87      1,164        191
  Income tax benefit, including
   discontinued operations               -       (502)         -       (727)
  Income tax valuation allowance         -      6,337          -      6,337
  Depreciation and amortization,
   including discontinued
   operations                        1,743      2,135      7,294      8,787
                                 ---------  ---------  ---------  ---------
    EBITDA                           1,637      3,181     12,035     11,078
  Noncontrolling interest               (2)       (11)        (2)       (10)
  Net gain on disposition of
   assets                             (144)    (2,006)    (1,806)    (7,833)
  Impairment                         5,363      1,923      7,086     10,172
  Preferred stock dividend
   declared and undeclared             838        838      3,349      3,169
  Unrealized (gain) loss on
   derivatives                      (5,534)    (1,332)   (10,028)       247
  Acquisition expense                  (14)        62        713        240
  Equity offering expense              (32)         -      1,050          -
                                 ---------  ---------  ---------  ---------
    Adjusted EBITDA              $   2,112  $   2,655  $  12,397  $  17,063
                                 =========  =========  =========  =========

EBITDA and Adjusted EBITDA are financial measures that are not calculated in accordance with accounting principles generally accepted in the United States of America ("GAAP"). We calculate EBITDA and Adjusted EBITDA by adding back to net earnings (loss) available to common shareholders certain non-operating expenses and non-cash charges which are based on historical cost accounting and we believe may be of limited significance in evaluating current performance. We believe these adjustments can help eliminate the accounting effects of depreciation and amortization and financing decisions and facilitate comparisons of core operating profitability between periods, even though EBITDA and Adjusted EBITDA also do not represent an amount that accrues directly to common shareholders. In calculating Adjusted EBITDA, we add back noncontrolling interest, net (gain) loss on disposition of assets, preferred stock dividends, acquisition expenses and equity offering expense which are cash charges. We also add back impairment and unrealized gain or loss on derivatives, which are non-cash charges.

EBITDA and Adjusted EBITDA do not represent cash generated from operating activities determined by GAAP and should not be considered as alternatives to net income, cash flow from operations or any other operating performance measure prescribed by GAAP. EBITDA and Adjusted EBITDA are not measures of our liquidity, nor are they indicative of funds available to fund our cash needs, including our ability to make cash distributions. Neither do the measurements reflect cash expenditures for long-term assets and other items that have been and will be incurred. EBITDA and Adjusted EBITDA may include funds that may not be available for management's discretionary use due to functional requirements to conserve funds for capital expenditures, property acquisitions, and other commitments and uncertainties. To compensate for this, management considers the impact of these excluded items to the extent they are material to operating decisions or the evaluation of our operating performance. EBITDA and Adjusted EBITDA, as presented, may not be comparable to similarly titled measures of other companies.

Property Operating Income (POI) - Continuing and Discontinued Operations

This presentation includes non-GAAP financial measures, and should not be considered as an alternative to loss from continuing operations or loss from discontinued operations, net of tax. The company believes that the presentation of hotel property operating income (POI) is helpful to investors, and represents a more useful description of its core operations, as it better communicates the comparability of its hotels' operating results. Same store results for the quarter are for 50 hotels in continuing operations. Same store for the full year includes 49 hotels in continuing operations and excludes one hotel purchased during 2012.



Unaudited-In thousands, except
 statistical data:                   Three months          Twelve months
                                  ended December 31,    ended December 31,
                                 --------------------  --------------------
                                    2013       2012       2013       2012
Total Continuing Operations:
  Revenue per available room
   (RevPAR):                     $   32.30  $   34.69  $   36.61  $   38.38
  Average daily room rate (ADR): $   60.37  $   61.26  $   61.96  $   61.11
  Occupancy percentage:              53.50%     56.60%     59.10%     62.80%

Revenue from room rentals and
 other hotel services consists
 of:
Room rental revenue              $  12,045  $  12,943  $  54,172  $  56,405
Telephone revenue                        3          3         11         15
Other hotel service revenues           518        485      1,980      1,785
  Total revenue from room
   rentals
                                 ---------  ---------  ---------  ---------
  and other hotel services       $  12,566  $  13,431  $  56,163  $  58,205
                                 =========  =========  =========  =========

Hotel and property operations
 expense
  Total hotel and property
   operations expense            $  10,418  $  10,669  $  44,156  $  43,373
                                 =========  =========  =========  =========

Property Operating Income
 ("POI")
  Total property operating
   income                        $   2,148  $   2,762  $  12,007  $  14,832
                                 =========  =========  =========  =========

POI as a percentage of revenue
 from room rentals and other
 hotel services
  Total POI as a percentage of
   revenue                           17.09%     20.56%     21.38%     25.48%
                                 =========  =========  =========  =========

---------------------------------------------------------------------------
Discontinued Operations

Room rentals and other hotel
 services
  Total room rental and other
   hotel services                $   4,181  $   7,734  $  22,847  $  37,145
                                 =========  =========  =========  =========

Hotel and property operations
 expense
  Total hotel and property
   operations expense            $   3,303  $   6,892  $  18,568  $  31,109
                                 =========  =========  =========  =========

Property Operating Income
 ("POI")
  Total property operating
   income                        $     878  $     842  $   4,279  $   6,036
                                 =========  =========  =========  =========


POI as a percentage of revenue
 from room rentals and other
 hotel services
  Total POI as a percentage of
   revenue                           21.00%     10.89%     18.73%     16.25%
                                 =========  =========  =========  =========



(Unaudited - In thousands, except statistical data)

POI from continuing operations is reconciled to net loss as follows:


                                     Three months          Twelve months
                                  ended December 31,    ended December 31,
                                 --------------------  --------------------
                                    2013       2012       2013       2012
                                 ---------  ---------  ---------  ---------
Net loss                         $  (1,365) $  (6,423) $  (1,353) $ (10,220)
Depreciation and amortization,
 including discontinued
 operations                          1,743      2,135      7,294      8,787
Net gain on disposition of
 assets, including discontinued
 operations                           (144)    (2,006)    (1,806)    (7,833)
Other (income) expense              (5,557)    (1,334)   (10,062)       144
Interest expense, including
 discontinued operations             1,987      2,374      8,277      9,869
Loss on debt extinguishment            108         87      1,164        191
General and administrative
 expense                               937        951      3,923      3,908
Acquisition expense                    (14)        62        713        240
Equity offering expense                (32)         0      1,050          0
Impairment losses                    5,363      1,923      7,086     10,172
Income tax expense, including
 discontinued operations                 0      5,835          0      5,610
Room rentals and other hotel
 services - discontinued
 operations                         (4,181)    (7,734)   (22,847)   (37,145)
Hotel and property operations
 expense - discontinued
 operations                          3,303      6,892     18,568     31,109
                                 ---------  ---------  ---------  ---------
POI--continuing operations       $   2,148  $   2,762  $  12,007  $  14,832
                                 =========  =========  =========  =========



POI from discontinued operations is reconciled to loss from discontinued
 operations, net of tax, as follows:


                                     Three months          Twelve months
                                  ended December 31,    ended December 31,
                                 --------------------  --------------------
                                    2013       2012       2013       2012
                                 ---------  ---------  ---------  ---------
Gain (loss) from discontinued
 operations                      $  (2,395) $     203  $  (2,085) $     927
Depreciation and amortization
 from discontinued operations           90        447        777      2,196
Net gain on disposition of
 assets from discontinued
 operations                           (145)    (2,011)    (1,853)    (7,830)
Interest expense from
 discontinued operations               441        897      2,314      4,178
Loss on debt extinguishment             19          0        706         53
Impairment losses from
 discontinued operations             2,868      1,559      4,420      7,339
Income tax benefit from
 discontinued operations                 0       (253)         0       (827)
                                 ---------  ---------  ---------  ---------
POI - discontinued operations    $     878  $     842  $   4,279  $   6,036
                                 =========  =========  =========  =========



                                     Three months          Twelve months
                                  ended December 31,    ended December 31,
                                 --------------------  --------------------
                                    2013       2012       2013       2012
                                 ---------  ---------  ---------  ---------
POI--continuing operations           2,148      2,762     12,007     14,832
POI--discontinued operations           878        842      4,279      6,036
                                 ---------  ---------  ---------  ---------
Total - POI                      $   3,026  $   3,604  $  16,286  $  20,868
                                 =========  =========  =========  =========

Total POI as a percentage of
 revenues                             18.1%      17.0%      20.6%      21.9%
                                 =========  =========  =========  =========

The comparisons of same store operations are for 50 hotels in continuing operations as of October 1, 2012 for the three months ended December 31, 2013. Same store operations for the year ended December 31, 2013 include 49 hotels in continuing operations as of January 1, 2012 and exclude 19 properties held for sale, and one property which was acquired during the second quarter of 2012.


                         Supertel Hospitality, Inc.
                       Operating Statistics by Region
       For three months ended December 31, 2013 and 2012, respectively

(Unaudited - except per share data)


                     Three months ended             Three months ended
                      December 31, 2013              December 31, 2012
               ------------------------------ ------------------------------
                Room                           Room
Region         Count RevPAR Occupancy    ADR  Count RevPAR Occupancy    ADR
               ----- ------ ---------  ------ ----- ------ ---------  ------
Mountain         214 $25.63      49.7% $51.59   214 $30.89      59.9% $51.59
West North
 Central       1,064  30.36      58.3%  52.04 1,064  29.54      56.8%  51.96
East North
 Central         923  35.48      54.5%  65.09   923  34.93      54.0%  64.73
Middle
 Atlantic        142  38.09      67.8%  56.21   142  44.35      71.1%  62.37
South Atlantic 1,171  33.95      48.7%  69.67 1,171  39.85      58.6%  67.98
East South
 Central         364  34.21      53.9%  63.52   364  39.80      58.9%  67.56
West South
 Central         176  15.92      43.2%  36.86   176  16.58      35.9%  46.21
               ----- ------ ---------  ------ ----- ------ ---------  ------
Total Same
 Store Hotels  4,054 $32.30      53.5% $60.37 4,054 $34.69      56.6% $61.26
               ===== ====== =========  ====== ===== ====== =========  ======


States included in the Regions
Mountain            Idaho and Montana
West North Central  Iowa, Kansas, Missouri, and Nebraska
East North Central  Indiana and Wisconsin
Middle Atlantic     Pennsylvania
South Atlantic      Florida, Georgia, Maryland, North Carolina,
                    Virginia and West Virginia
East South Central  Kentucky and Tennessee
West South Central  Louisiana



                         Supertel Hospitality, Inc.
                       Operating Statistics by Region
      For twelve months ended December 31, 2013 and 2012, respectively


                            Twelve months ended       Twelve months ended
                             December 31, 2013         December 31, 2012
                         ------------------------- -------------------------
Same Store
Region                   RevPAR Occupancy    ADR   RevPAR Occupancy    ADR
                         ------ ---------  ------- ------ ---------  -------
Mountain                 $32.80      61.7% $ 53.20 $35.81      68.5% $ 52.27
West North Central        32.99      62.3%   52.97  32.28      62.3%   51.85
East North Central        39.32      60.6%   64.85  37.48      59.1%   63.41
Middle Atlantic           41.95      69.8%   60.12  44.67      73.2%   61.06
South Atlantic            37.33      55.6%   67.10  43.37      66.5%   65.18
East South Central        36.36      56.6%   64.25  43.56      63.5%   68.56
West South Central        17.66      44.0%   40.13  20.41      43.3%   47.10
                         ------ ---------  ------- ------ ---------  -------
Total Same Store Hotels  $35.58      59.0% $ 60.32 $37.65      62.7% $ 60.05
                         ====== =========  ======= ====== =========  =======

South Atlantic
 Acquisitions             77.38      63.0%  122.92  85.90      69.8%  123.03
                         ------ ---------  ------- ------ ---------  -------
Total Acquisitions       $77.38      63.0% $122.92 $85.90      69.8% $123.03
                         ====== =========  ======= ====== =========  =======

Total Continuing
 Operations              $36.61      59.1% $ 61.96 $38.38      62.8% $ 61.11
                         ====== =========  ======= ====== =========  =======

States included in the Regions
Mountain            Idaho and Montana
West North Central  Iowa, Kansas, Missouri, and Nebraska
East North Central  Indiana and Wisconsin
Middle Atlantic     Pennsylvania
South Atlantic      Florida, Georgia, Maryland, North Carolina, Virginia and
                    West Virginia
East South Central  Kentucky and Tennessee
West South Central  Louisiana




                         Supertel Hospitality, Inc.
                        Operating Statistics by Brand
       For three months ended December 31, 2013 and 2012, respectively
(Unaudited - except per share data)

                    Three months ended              Three months ended
                    December 31, 2013               December 31, 2012
             ------------------------------- -------------------------------
Same Store    Room                            Room
Brand        Count RevPAR Occupancy    ADR   Count RevPAR Occupancy    ADR
             ----- ------ ---------  ------- ----- ------ ---------  -------
Select
 Service
Upscale
  Hilton
   Garden
   Inn         100 $65.24      56.1% $116.39   100 $74.41      61.5% $121.08
             ----- ------ ---------  ------- ----- ------ ---------  -------
Total
 Upscale       100  65.24      56.1%  116.39   100  74.41      61.5%  121.08
             ----- ------ ---------  ------- ----- ------ ---------  -------
Upper
 Midscale
  Comfort
   Inn/
   Comfort
   Suites    1,298 $39.84      56.4% $ 70.64 1,298 $41.32      57.8% $ 71.50
  Other
   Upper
   Midscale
   (1)          59  27.26      45.1%   60.45    59  63.81      78.8%   80.96
             ----- ------ ---------  ------- ----- ------ ---------  -------
Total Upper
 Midscale    1,357 $39.29      55.9% $ 70.29 1,357 $42.30      58.7% $ 72.06
             ----- ------ ---------  ------- ----- ------ ---------  -------
Midscale
  Sleep Inn     90  19.44      37.1%   52.44    90  26.38      43.5%   60.62
  Quality
   Inn         122  28.16      43.0%   65.46   122  31.19      44.9%   69.50
             ----- ------ ---------  ------- ----- ------ ---------  -------
Total
 Midscale      212 $24.46      40.5% $ 60.40   212 $29.15      44.3% $ 65.79
             ----- ------ ---------  ------- ----- ------ ---------  -------
Economy
  Days Inn     556  22.55      44.7%   50.50   556  27.12      54.4%   49.88
  Super 8    1,628  28.40      56.3%   50.43 1,628  28.28      56.5%   50.04
  Other
   Economy
   (2)         201  35.64      51.6%   69.07   201  42.28      60.4%   69.94
             ----- ------ ---------  ------- ----- ------ ---------  -------
Total
 Economy     2,385 $27.64      53.2% $ 51.97 2,385 $29.19      56.4% $ 51.80
             ----- ------ ---------  ------- ----- ------ ---------  -------

Total Same
 Store       4,054 $32.30      53.5% $ 60.37 4,054 $34.69      56.6% $ 61.26
             ===== ====== =========  ======= ===== ====== =========  =======

(1) Includes Clarion brands
(2) Includes Rodeway and Independent brands



                         Supertel Hospitality, Inc.
                        Operating Statistics by Brand
      For twelve months ended December 31, 2013 and 2012, respectively

                     Twelve months ended            Twelve months ended
                      December 31, 2013              December 31, 2012
               ------------------------------ ------------------------------
Same Store      Room                           Room
Brand          Count RevPAR Occupancy   ADR   Count RevPAR Occupancy   ADR
               ----- ------ --------- ------- ----- ------ --------- -------
Select Service
Upper Midscale
  Comfort Inn/
   Comfort
   Suites      1,298 $44.54     61.8% $ 72.10 1,298 $46.37     65.1% $ 71.21
  Other Upper
   Midscale
   (1)            59  30.23     46.8%   64.59    59  68.79     83.2%   82.72
               ----- ------ --------- ------- ----- ------ --------- -------
Total Upper
 Midscale      1,357 $43.92     61.1% $ 71.85 1,357 $47.34     65.9% $ 71.84
               ----- ------ --------- ------- ----- ------ --------- -------
Midscale
  Sleep Inn       90  32.43     49.4%   65.71    90  34.79     51.6%   67.47
  Quality Inn    122  31.09     44.1%   70.56   122  33.88     47.1%   71.95
               ----- ------ --------- ------- ----- ------ --------- -------
Total Midscale   212 $31.66     46.3% $ 68.36   212 $34.27     49.0% $ 69.95
               ----- ------ --------- ------- ----- ------ --------- -------
Economy
  Days Inn       556  28.25     53.1%   53.25   556  31.00     59.7%   51.95
  Super 8      1,628  30.85     61.5%   50.18 1,628  30.70     62.0%   49.48
  Other
   Economy (2)   201  42.05     54.3%   77.40   201  50.43     69.1%   72.96
               ----- ------ --------- ------- ----- ------ --------- -------
Total Economy  2,385 $31.19     58.9% $ 52.94 2,385 $32.43     62.1% $ 52.23
               ----- ------ --------- ------- ----- ------ --------- -------

Total Same
 Store         3,954 $35.58     59.0% $ 60.32 3,954 $37.65     62.7% $ 60.05
               ===== ====== ========= ======= ===== ====== ========= =======

Upscale
 Acquisitions
  Hilton
   Garden Inn    100 $77.38     63.0% $122.92   100 $85.90     69.8% $123.03
               ----- ------ --------- ------- ----- ------ --------- -------
Total Upscale
 Acquisitions    100 $77.38     63.0% $122.92   100 $85.90     69.8% $123.03
               ----- ------ --------- ------- ----- ------ --------- -------

Total
 Continuing
 Operations    4,054 $36.61     59.1% $ 61.96 4,054 $38.38     62.8% $ 61.11
               ===== ====== ========= ======= ===== ====== ========= =======

(1) Includes Clarion brands
(2) Includes Rodeway and Independent brands

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