929545--3/31/2006--SUPERTEL_HOSPITALITY

related topics

{investment, property, distribution}

{tax, income, asset}

{loan, real, estate}

{provision, law, control}

{regulation, change, law}

{debt, indebtedness, cash}

{cost, contract, operation}

{condition, economic, financial}

{personnel, key, retain}

{stock, price, share}

{financial, litigation, operation}

{acquisition, growth, future}

{cost, regulation, environmental}

Our failure to qualify as a REIT under the federal tax laws would result in adverse tax consequences. An economic recession and industry downturn could adversely affect our results of operations. We have restrictive debt covenants that could adversely affect our ability to run our business. Our restrictive debt covenants may jeopardize our tax status as a REIT. Our failure to have distributed old Supertel Hospitality, Inc. s earnings and profits may compromise our tax status. Our sale of assets acquired in a 1999 merger within ten years of the merger will result in tax. Our debt service obligations could require us to liquidate our properties and may reduce cash available for distribution to our shareholders. Our ability to make distributions to our shareholders is subject to fluctuations in our financial performance and operating results as well as capital improvement requirements. Our returns depend on management of our hotels by third parties. Our ability to make distributions to our shareholders may be affected by factors in the hotel industry that are beyond our control. Investment Concentration in Particular Segments of Single Industry Investment risks in the real estate industry generally may adversely affect our ability to make distributions to our shareholders. General Risks of Investing in Real Estate Increases in property taxes could adversely affect our cash flow. Increases in occupancy taxes and other local taxes could adversely affect our cash flow. Operating our hotels under franchise agreements could adversely affect distributions to our shareholders. Our inability to obtain financing could limit our growth. Noncompliance with governmental regulations could adversely affect our operating results. Americans with Disabilities Act and Other Changes in Governmental Rules and Regulations Mold claims could adversely affect our financial condition. Provisions of our articles of incorporation and Virginia law may limit the ability of a third party to acquire control of our company. Authority to Issue Preferred Stock Our ownership limitation may prevent you from engaging in certain transfers of our capital stock. We may not be able to complete development of new hotels on time or within budget. Hotels that we develop have no operating history and may not achieve levels of occupancy that result in levels of operating income that provide us with an attractive return on our investment. Property ownership through joint ventures and partnerships could limit our control of those investments. Our business could be disrupted if we need to find a new manager upon termination of an existing management agreement. If we decide to sell hotels, we may not be able to sell those hotels on favorable terms. We depend on key personnel.

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929545--3/31/2006--SUPERTEL_HOSPITALITY_INC