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Condor (CDOR) Closes 5th Legacy Hotel Sale of 2017 for $7.6M

Zacks

Condor Hospitality Trust, Inc. CDOR announced the sale of a non-core 40-room legacy hotel – Key West Inn – located at 201 Ocean Drive, Key Largo, FL, for $7.6 million. This marks the company’s fifth legacy hotel sale of 2017, a move that comes as part of the company’s capital recycling efforts.

Per Bill Blackham, Condor’s chief executive officer, this disposition reflects the company’s “ability to capture the intrinsic value of certain legacy hotels”, particularly “the value of the redevelopment opportunity of the land and marina in Key Largo.” The company plans to apply the proceeds to outstanding debt on its $150 million secured credit facility.

Notably, Condor Hospitality has reaped approximately $20.1 million from the five hotel sales, year to date. The move to sale non-core assets is a strategic fit, as it offers the company scope to apply the proceeds to the existing debt, and in turn enjoy flexibility in the acquisition of additional superior select-service hotels. Hence, the capital recycling initiatives are anticipated to help the company achieve a favorable portfolio mix.

The company has already placed under contract the two residual legacy hotels of the seven it had earlier committed to dispose of in 2017. In fact, it finally expects to end the year with only six of the legacy hotels left behind. This is a notable achievement when compared with 55 such hotels which the company had at the beginning of 2015.

However, shares of Condor Hospitality underperformed the Zacks categorized REIT and Equity Trust – Other industry over the past one month. Condor’s shares descended 6.1% against the industry’s decline of 2.5%.



Condor Hospitality currently has a Zacks Rank #3 (Hold).

Stocks to Consider

Investors can also consider better-ranked stocks in the REIT space like Equity LifeStyle Properties, Inc. ELS, Sunstone Hotel Investors, Inc. SHO and PS Business Parks, Inc. PSB. All the three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Equity LifeStyle Properties currently has a long-term growth rate of 4.7%.

Sunstone Hotel’s estimates for 2017 funds from operations (“FFO”) per share moved north nearly 2.6% to $1.20, over the past 30 days.

Moreover, PS Business Parks’ estimates for 2017 FFO per share climbed 1.3% to $6.01, over the past seven days.

Note: All EPS numbers presented in this write up represent funds from operations (“FFO”) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.


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