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Supertel Refinances Loan

Zacks Equity Research

Supertel Hospitality, Inc. (SPPR), a real estate investment trust (:REIT), recently announced the refinancing of debt through a new loan of $30.6 million. The loan bears a fixed annual interest of 5.83% over an 18-year amortization schedule.

The new loan is secured by 22 hotels. Proceeds from the loan have been utilized to pay the company's debt with Greenwich Capital due in December 2012. This repayment enables the company to continue with its next phase of portfolio repositioning efforts through the divestiture of non-strategic assets and investment in premium-branded select-service hotels.

Moving forward, Supertel Hospitality intends to strengthen its liquidity and improve its financial flexibility through the asset sale transactions. With this transaction, the company’s debt service obligations will decline by approximately $1.1 million annually. Ten hotels which were previously secured for the Greenwich Capital loan are now unencumbered, leading to additional financing and sale opportunities for the company in future.

Earlier in October 2012, Supertel Hospitality had obtained a $6.15 million loan with Cantor Commercial Real Estate, secured by the 100-room Hilton Garden Inn in Solomons Island (Dowell), Maryland. The proceeds were utilized to fund future acquisitions.

Based in Norfolk, Nebraska, Supertel Hospitality primarily owns select-service hotels. Presently, the company owns 94 hotels comprising 8,283 rooms in 23 states.

Supertel Hospitality currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We also have a long-term Neutral recommendation on the stock. One of its competitors, Ashford Hospitality Trust, Inc. (AHT) also holds a Zacks #3 Rank.

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