Three months ago, Supertel Hospitality Inc. was on a list to be dropped from the Nasdaq exchange because its stock price was too low.
Tuesday, top officers of the Norfolk, Neb., company said the pieces are in place for a comeback, despite three consecutive losing years, a $4.6 million loss in the first three months of 2012 and a stock price that’s down once again.
“We have a very exciting time before us,” said John Sabin, one of four new members of Supertel’s board of directors, adding, “It is not without great challenge. ... At the end of the day, there is value in this company.”
Sabin, chief financial officer of the McLean, Va., investment firm Revolution LLC, spoke during the annual meeting of Supertel shareholders, attended by about 30 people at the Durham Museum in Omaha.
It was the first annual meeting for the new directors, who came on board because of a $30 million investment in Supertel by an Argentine real estate company, IRSA Inversiones y Representaciones Sociedad Anónima, now its largest shareholder.
Another new Supertel director is Daniel Elsztain of New York City, who is a director of IRSA and a member of its founding family. “We are very happy and excited with this investment. These people know about hotels in this country.”
Supertel Chairman William Latham said the IRSA investment was a sign of its confidence in Supertel’s future.
IRSA made a similar investment in Hersha Hospitality Trust several years ago, boosting its performance. Supertel hopes to replicate that.
Kelly Walters became president and CEO of the company in 2009. He has brought in new management companies to operate the hotels and set in motion the sale of dozens of older, lower-level motels. Supertel plans to buy $40 million worth of upscale hotels this year.
Walters acknowledged that the stock price is below what he would like. “If we fix the business, the market will correct,” he said.
In January the stock market reacted favorably to IRSA’s investment, sending Supertel’s stock price to $1.35 per share. But it dropped after the latest financial announcement. Tuesday, the price closed at 90 cents per share, up 8 cents for the day.
Of the $30 million from IRSA, Supertel used $10 million to reduce its debt and will use the remaining $20 million toward buying upscale hotels, Walters said, borrowing about 50 percent of the purchase prices. Over the next five or so years, the company will sell about four properties for each one it buys.
Of its 97 hotels and motels, 28 are for sale, including its Super 8 motel at 7111 Spring St. in Omaha. Supertel is buying the $11.5 million Hilton Garden Inn on Solomon’s Island, Md., its first purchase under its new management.
The other new directors are James Friend, president and CEO at Friend Development Group; Donald Landry, president and owner of Top Ten, a hospitality industry consulting company.
Former directors Richard Frandeen, Patrick Jung, Paul Schulte and Jeffrey Zwerdling resigned in January, keeping the number of directors at nine. Schulte, 78, of Norfolk, Neb., was founder of Supertel and chairman and CEO until 2009.
Walters said the recession triggered the recent losses. “The next 12 months are critical for us,” he said, as the new strategy begins to take effect.
At the meeting, shareholders voted to increase the number of shares of stock that Supertel can sell from 100 million to 200 million, compared with the current 23 million now owned by shareholders. Walters said new shares might be sold to raise money for more purchases, a long-range plan that would make Supertel profitable so it could resume paying the dividends that were suspended in 2009.
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