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Condor Hospitality Trust Earnings Supplement

November 15, 2018

BETHESDA, Md.--(BUSINESS WIRE)--Nov 15, 2018--Condor Hospitality Trust, Inc. (NYSE American: CDOR), a hotel-focused real estate investment trust (REIT) headquartered and incorporated in the state of Maryland, issued its earnings release on November 12, 2018 for the third quarter ended September 30, 2018. Based on subsequent inquiries from analysts and investors, the Company has decided to supplement the earnings release with the following information:

Condor Outperformed Peers Except CLDT:

While CDOR experienced slightly negative RevPAR in Q3 2018, CDOR achieved RevPAR outperformance above all other select-service peers except CLDT in the third quarter. Additionally, Condor’s year-to-date RevPAR growth of 2.8% far exceeds the year-to-date RevPAR growths achieved by its peer group.

Specific Market Challenges Drove Down CDOR RevPAR:

The majority of Condor’s hotels experienced positive RevPAR growth quarter-over-quarter. The Leawood, Southaven, and Lexington hotels experienced softness in their respective markets that had an outsized effect on Condor’s portfolio RevPAR growth. The Austin TownePlace Suites’ year-over-year RevPAR growth was negatively affected by the positive impact of hurricane relief business in 2017 not replicated in 2018. The Home2 Summerville continues to ramp exceeding underwriting expectations. Condor’s total portfolio of 15 high-quality assets experienced 1.2% positive RevPAR growth in the third quarter. The eight hotels that had positive RevPAR growth experienced 4.4% quarter-over-quarter growth, well above industry averages.

Margin Declines Driven by Property Taxes:

Condor’s New Investment Platform hotels experienced a decline in EBITDA margin primarily driven by an approximate $300k increase in property taxes, a non-operating expense increase representing nearly 200 bps of margin decline. The Company has filed appeals with respect to the increased assessments which gave rise to the higher real estate taxes. Had Condor not experienced the impact of higher property taxes, the portfolio would have achieved expanded EBITDA margin in the third quarter.

The above information concerns only completed financial reporting periods. As advised in the earnings release, Condor has initiated a process to evaluate strategic alternatives to enhance shareholder value and until the conclusion of this process, Condor is suspending the issuance of earnings guidance and the holding of earnings conference calls.

About Condor Hospitality Trust, Inc.

Condor Hospitality Trust, Inc. (NYSE American: CDOR), is a self-administered real estate investment trust incorporated in the state of Maryland that specializes in the investment and ownership of upper midscale and upscale, premium-branded select-service, extended stay and limited-service hotels. The Company currently owns 16 hotels in 8 states. Condor’s hotels are franchised by a number of the industry’s most well-regarded brand families including Hilton, Marriott, and InterContinental Hotels Group. For more information or to make a hotel reservation, visit www.condorhospitality.com.

Forward-Looking Information

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 events, results or performance to differ from those presented in the forward-looking statement. These forward-looking statements are based on assumptions that management has made in light of experience in the business in which the Company operates, as well as other factors management believes to be appropriate under the circumstances. As you read and consider this release, you should understand that these statements are not guarantees of events, performance or results. They involve risks, uncertainties (some of which are beyond the Company’s control) and assumptions. Although management believes that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect events, performance or results and cause them to differ materially from those anticipated in the forward-looking statements. These factors include among other things, risk factors described from time to time in the Company’s filings with the Securities and Exchange Commission. The Company cautions that any forward-looking statement included in this press release is made as of the date of this press release and the Company does not undertake to update any forward-looking statement.

Reconciliation of Non-GAAP Financial Measures (Unaudited)

Non-GAAP financial measures are measures of our historical financial performance that are different from measures calculated and presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). We report Earnings Before Interest, Taxes, Depreciation, and Amortization (“EBITDA”), EBITDA for real estate (“EBITDA re ”), Adjusted EBITDA re, and Hotel EBITDA as non-GAAP measures that we believe are useful to investors as key measures of our operating results and which management uses to facilitate a periodic evaluation of our operating results relative to those of our peers. Our non-GAAP measures should not be considered as an alternative to U.S. GAAP net earnings as an indication of financial performance or to U.S. GAAP cash flows from operating activities as a measure of liquidity. Additionally, these measures are not indicative of funds available to fund cash needs or our ability to make cash distributions as they have not been adjusted to consider cash requirements for capital expenditures, property acquisitions, debt service obligations, or other commitments.

EBITDA, EBITDA re, Adjusted EBITDA re, and Hotel EBITDA

The following table reconciles net earnings (loss) to EBITDA, EBITDA re, Adjusted EBITDA re, and Hotel EBITDA for the three and nine months ended September 30, 2018 and 2017 (in thousands). All amounts presented our portion of the results of our unconsolidated Atlanta JV.

We calculate EBITDA, EBITDA re, and Adjusted EBITDA re by adding back to net earnings or loss certain non-operating expenses and certain non-cash charges which are based on historical cost accounting that 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. In calculating EBITDA, we add back to net earnings or loss interest expense, loss on debt extinguishment, income tax expense, and depreciation and amortization expense. NAREIT adopted EBITDA re in order to promote an industry-wide measure of REIT operating performance. We adjust EBITDA by adding back net gain/loss on disposition of assets and impairment charges to calculate EBITDA re. To calculate Adjusted EBITDA re, we adjust EBITDA re to add back acquisition and terminated transactions expense and equity transactions expense, which are cash charges. We also add back stock –based compensation expense and gain/loss on derivatives and convertible debt, which are non-cash charges. EBITDA, EBITDA re, and Adjusted EBITDA re, as presented, may not be comparable to similarly titled measures of other companies.

We believe EBITDA, EBITDA re, and Adjusted EBITDA re to be useful additional measures of our operating performance, excluding the impact of our capital structure (primarily interest expense), our asset base (primarily depreciation and amortization expense), and other items we do not believe are representative of the results from our core operations.

The Company further excludes general and administrative expenses, other non-operating income or expense, and certain hotel and property operations expenses that are not allocated to individual properties in assessing hotel performance (primarily certain general liability and other insurance costs, land lease costs, and office and banking fees) from Adjusted EBITDA re to calculate Hotel EBITDA. Hotel EBITDA, as presented, may not be comparable to similarly titled measures of other companies.

Hotel EBITDA is intended to isolate property level operational performance over which the Company’s hotel operators have direct control. We believe Hotel EBITDA is helpful to investors as it better communicates the comparability of our hotels’ operating results for all of the Company’s hotel properties and is used by management to measure the performance of the Company’s hotels and the effectiveness of the operators of the hotels.

Same-Store Revenue and Hotel EBITDA

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