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Supertel stock could be delisted
September 30 2011

Supertel has until 19 March 2012 to get its stock price above the US$1 per share threshold or else it faces a potential Nasdaq delisting.

Highlights
  • Supertel’s stock closed at US$0.77 per share Thursday.
  • The real-estate investment trust has plans to sell 18 underperforming properties during the next 12 to 18 months in an effort to reduce debt.
  • “Growth of the same-store portfolio has been slow, but as they sell underperforming assets, and if the economy picks up, they should be OK,” said Will Marks, an analyst who follows Supertel’s stock.

NORFOLK, Nebraska—The capital markets carnage in the United States has put Supertel Hospitality’s Nasdaq listing at risk.

The real-estate investment trust has disclosed that it received a notice from Nasdaq warning that its stock price has closed below US$1 per share for 30 consecutive business days, a violation of listing requirements.

Supertel’s stock last closed above US$1 per share on 5 August, when it finished the day at US$1.01 per share. During the past 52 weeks, the stock has traded in a range of 77 cents per share to US$2 a share.

While the notice has no immediate effect on the stock, Supertel has until 19 March 2012 to regain compliance by having its stock close at or above US$1 for 10 consecutive business days. If that doesn’t happen, Supertel would face a possible Nasdaq delisting.

The company can appeal a Nasdaq delisting decision and gain an additional 180 days to meet the minimum stock price requirement.

Hotel Assets Ad Will Appear Here

Supertel’s stock closed Thursday at US$0.77 per share, and is down 51.3% year-to-date. Its share price to start the year was US$1.58. Since 1 August, about the time the world’s capital markets were thrown in flux, the Baird/STR Hotel Stock Index is down 18.5% to 1728.33 at the market’s close on Thursday. For the year, the index is down 28%.

“If it persists then we will address it accordingly,” Krista L. Arkfeld, Supertel’s director of corporate communications, said in an email. She declined further comment.

Since Kelly Walters was announced as president and CEO on 2 April 2009 (when the stock closed at 88 cents per share) Supertel’s stock is down 12.5%.

Assets for sale
For the most part, the ups and downs of the company’s stock are largely out of the hands of Supertel’s executives, said Will Marks, an analyst with JMP Securities who follows the stock. That said, the company has announced a plan to help bolster its balance sheet.

The REIT, Marks said, previously announced a strategy of selling underperforming properties during the next 12 to 18 months in an effort to reduce debt. Debt related to the properties held for sale totaled US$28.36 million as of 30 June, Supertel disclosed in a 10 August U.S. Securities and Exchange Commission filing

Through the six months ending 30 June, Supertel said it sold three properties resulting in an aggregate net gain of US$400,000.

Supertel has 18 hotels classified as held for sale, according to the SEC filing. Selling these properties could be a tough task given the economic climate, Marks said.

“With the recent turn in the economy, it will be more of a challenge,” he said of the potential hotel transactions.

Supertel noted as much in the SEC filing. “The marketing process has been affected by deteriorating economic conditions and we have experienced some decreases in expected pricing. If this trend continues to worsen, we may be unable to complete the disposition of identified properties in a manner that would generate cash flow in line with management’s estimates … ,” the company said.

As of 21 September, the company owned 101 hotels comprising 8,856 rooms. The portfolio consists of such brands as Comfort Inn/Comfort Suites, Days Inn, Hampton Inn, Holiday Inn Express, and Super 8.

“Growth of the same-store portfolio has been slow, but as they sell underperforming assets, and if the economy picks up, they should be OK,” Marks said.

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