10.9 percent Full Year Pro Forma RevPAR growth;
$0.97 Full Year Adjusted FFO per share
42.2 percent Full Year Adjusted FFO growth;
36.9 percent Full Year Adjusted EBITDA growth
Summit Hotel Properties, Inc. (NYSE:INN) (the “Company”) today
announced results for the fourth quarter and full year ended
December 31, 2014.
“We are thrilled with the significant growth of our portfolio
during 2014 that outpaced a strong industry environment,” said Dan
Hansen, Summit’s President and CEO. “The acquisitions,
dispositions, rebranding and renovation work our team has completed
over the last several years has created a best-in-class nationwide
portfolio of premium-branded, select-service hotels. Our strong
2014 results included 42.2 percent AFFO growth and 36.9 percent
Adjusted EBITDA growth. The robust RevPAR growth of our hotels
again outpaced the overall U.S. and upscale segment by more than
100 basis points, highlighting the strength and quality of our
portfolio.”
Full Year 2014
Highlights
- Pro Forma RevPAR: Pro forma
revenue per available room (“RevPAR”) in 2014 grew to $93.83, an
increase of 10.9 percent over 2013. Pro forma average daily rate
(“ADR”) grew to $123.98, an increase of 6.5 percent from 2013. Pro
forma occupancy increased by 4.1 percent to 75.7 percent.
- Pro Forma Hotel EBITDA: Pro
forma hotel EBITDA in 2014 grew to $147.7 million, an increase of
13.7 percent over 2013.
- Pro Forma Hotel EBITDA Margin:
Pro forma hotel EBITDA margin in 2014 expanded by 94 basis points
to 35.4 percent compared with 2013. Pro forma hotel EBITDA margin
is defined as pro forma hotel EBITDA as a percentage of pro forma
total revenue.
- Same-Store RevPAR: Same-store
RevPAR in 2014 grew to $84.42, an increase of 9.7 percent over
2013. Same-store ADR in 2014 grew to $111.94, an increase of 6.4
percent from 2013. Same-store occupancy increased by 3.1 percent in
2014 to 75.4 percent.
- Adjusted EBITDA: Adjusted EBITDA
increased to $127.9 million in 2014 from $93.4 million in 2013, an
increase of $34.5 million or 36.9 percent.
- Adjusted FFO: Adjusted Funds
from Operations (“AFFO”) for the full year 2014 increased by
42.2 percent to $84.3 million, or $0.97 per diluted unit, which is
a 20.3 percent increase from the full year 2013.
- Net Income: Net Income
attributable to common stockholders in 2014 increased to $4.3
million, or $0.05 per diluted share, compared to a net loss
attributable to common stockholders in 2013 of $8.7 million, or a
loss of $0.12 per diluted share.
- Capital Investment: The Company
invested $35.6 million in renovations during 2014 and added an
additional 15 guestrooms to its portfolio through better
utilization of existing space.
- Acquisitions: The Company
acquired six hotels in 2014 with an aggregate of 990 guestrooms for
a total purchase price of $214.7 million.
- Dispositions: The Company sold
four hotels in 2014 with an aggregate of 450 guestrooms and three
parcels of land for a total sales price of $19.8 million.
Fourth Quarter 2014
Highlights
- Pro Forma RevPAR: Pro forma
RevPAR in the fourth quarter of 2014 grew to $88.15, an increase of
9.4 percent over the same period in 2013. Pro forma ADR grew to
$123.96, an increase of 7.1 percent from the same period of 2013.
Pro forma occupancy increased by 2.1 percent in the fourth quarter
of 2014 to 71.1 percent.
- Pro Forma Hotel EBITDA: Pro
forma hotel EBITDA for the fourth quarter of 2014 grew to $32.5
million, an increase of 13.8 percent over the same period in
2013.
- Pro Forma Hotel EBITDA Margin:
Pro forma hotel EBITDA margin in the fourth quarter of 2014
expanded by 146 basis points to 32.9 percent compared with the same
period in 2013.
- Same-Store RevPAR: Same-store
RevPAR in the fourth quarter of 2014 grew to $78.51, an increase of
10.4 percent over the same period in 2013. Same-store ADR grew to
$110.52 in the fourth quarter of 2014, an increase of 7.7 percent
from the fourth quarter of 2013. Same-store occupancy increased by
2.5 percent in the fourth quarter of 2014 to 71.0 percent.
- Adjusted EBITDA: Adjusted EBITDA
increased to $28.4 million in the fourth quarter of 2014 from $21.3
million in the same period in 2013, an increase of $7.0 million or
33.1 percent.
- Adjusted FFO: AFFO for the
fourth quarter of 2014 increased 45.9 percent over the same period
in 2013 to $17.5 million or $0.20 per diluted unit.
- Net Income: Net income
attributable to common stockholders in the fourth quarter of 2014
increased to $0.6 million, or $0.01 per diluted share, compared to
a net loss attributable to common stockholders in the same period
of 2013 of $6.0 million, or a loss of $0.07 per diluted share.
INN vs. Industry Results(% change)
Fourth
Quarter 2014 Full Year 2014
Occupancy ADR
RevPAR
Occupancy ADR
RevPAR INN Pro Forma (90)
2.1% 7.1% 9.4% 4.1% 6.5%
10.9% INN Same-Store (65) 2.5% 7.7%
10.4% 3.1% 6.4% 9.7% Overall US * 4.2%
4.5% 8.9% 3.6% 4.6% 8.3% Upscale * 3.2% 5.2% 8.6% 3.3% 5.0% 8.4%
*Source: Smith Travel Research Quarterly Hotel
Review, Volume 14, Issue Q4 and Monthly Hotel Review, Volume 14,
Issue M12
The Company’s results for the three months and years ended
December 31, 2014 and 2013 included the following:
For the Three Months Ended December 31,
For the Years Ended December 31, 2014
2013 2014 2013
Unaudited ($ in thousands, except per unit and RevPAR data)
Total revenues (continuing operations)
$ 99,141 $ 77,956 $ 403,466 $ 298,958
Net income (loss) attributable to common
stockholders
$ 578 $ (6,026 ) $ 4,283 $ (8,712 ) EBITDA 1 $ 27,801 $
21,911 $ 113,039 $ 82,995 Adjusted EBITDA 1 $ 28,353 $ 21,306 $
127,914 $ 93,436 FFO 1 $ 16,828 $ 4,567 $ 78,256 $ 48,556
Adjusted FFO 1 $ 17,542 $ 12,021 $ 84,330 $ 59,290 FFO per
diluted unit 1, 2 $ 0.19 $ 0.05 $ 0.90 $ 0.66 Adjusted FFO per
diluted unit 1, 2 $ 0.20 $ 0.14 $ 0.97 $ 0.81
Pro Forma
3
RevPAR $ 88.15 $ 80.59 $ 93.83 $ 84.62 RevPAR growth 9.4 % 10.9 %
Hotel EBITDA $ 32,542 $ 28,592 $ 147,663 $ 129,881 Hotel
EBITDA margin 32.9 % 31.4 % 35.4 % 34.5 % Hotel EBITDA margin
growth 146 bps 94 bps
1
See tables later in this press release for
a discussion and reconciliation of net income (loss) to non-GAAP
financial measures, including earnings before interest, taxes,
depreciation and amortization (“EBITDA”), adjusted EBITDA, funds
from operations (“FFO”), FFO per diluted unit, adjusted FFO
(“AFFO”), and AFFO per diluted unit, as well as a discussion of
hotel EBITDA (hotel revenues less hotel operating expenses).
Non-GAAP financial measures and fourth quarter 2014 financial
information are unaudited.
2
Based on 86,690,000 weighted average
diluted units and 86,212,000 weighted average diluted units for the
three months ended December 31, 2014 and 2013, respectively, and
86,590,000 weighted average diluted units and 73,241,000 weighted
average diluted units for the year ended December 31, 2014 and
2013, respectively. In this press release, references to “per
share” or “diluted units” mean diluted shares of the Company’s
common stock and common units of limited partnership interest in
Summit Hotel OP, LP, the Company’s operating partnership, held by
limited partners other than the Company. In general, common units
held by limited partners other than the Company are redeemable for
cash or, at the Company’s option, shares of the Company’s common
stock on a one-for-one basis.
3
Unless stated otherwise in this release,
all pro forma information includes operating and financial results
for 90 hotels owned as of December 31, 2014 as if each hotel had
been owned by the Company since January 1, 2013. As a result, all
pro forma information includes operating and financial results for
hotels acquired since January 1, 2013 for periods prior to the
Company’s ownership. Non-GAAP financial measures are unaudited.
Acquisitions
During 2014, the Company acquired six hotels with an aggregate
of 990 guestrooms for a total purchase price of $214.7 million. Pro
forma RevPAR for the full year 2014 for the 25 hotels acquired
since January 2013 was $111.20 or 31.7 percent higher as compared
to RevPAR of $84.42 for the 65 hotels classified as same-store
during 2014.
2014 Date
Hotel
Location Rooms
Acquired Purchase Price
(in millions)
Manager 01/09/14 Hilton Garden Inn Houston
(Galleria), Texas 182 $ 37.5 American Liberty 01/10/14 Hampton Inn
Santa Barbara (Goleta), Calif. 98 27.9 Pillar 01/24/14 Four Points
by Sheraton San Francisco, Calif. 101 21.3 Pillar 03/14/14
DoubleTree by Hilton San Francisco, Calif. 210 39.1 Stonebridge
08/15/14 Hilton Garden Inn Houston (Energy Corridor), Texas 190
36.0 American Liberty 09/09/14 Hampton Inn & Suites Austin,
Texas 209 53.0 Interstate Hotels & Resorts
Total 990 $ 214.7
Dispositions
During 2014, the Company sold four hotels with a total of 450
guestrooms and three parcels of land for a total sales price of
$19.8 million.
“The nearly 32.0 percent premium reflected in the RevPAR of our
acquisition hotels highlights the increasing quality of our
portfolio,” Hansen said. “Our ability to source high quality
acquisitions in today’s competitive market and dispose of less
strategic assets has been a key in the successful transformation of
our portfolio and has allowed us to enhance shareholder value.”
Capital Investment
The Company invested $5.5 million and $35.6 million in
renovations during the fourth quarter and full year 2014,
respectively. Among the properties renovated during the year, the
scope of work ranged from common space improvements to complete
guestroom renovations, including furniture, soft goods and guest
bathrooms. These renovations also included the addition of 15
guestrooms to better utilize existing space.
In addition, the Company capitalized $6.9 million of other
capital improvements at its hotels in 2014.
“Throughout 2014 we continued to successfully execute our
strategy to invest in our properties through a detailed and well
thought out renovation process. Our team has been a terrific
steward of capital and has worked closely with our third party
management teams to continue to share best practices to improve
operating efficiencies, evidenced by our RevPAR growth, improved
margins and increasing AFFO on a per share basis by 20.3 percent in
2014,” commented Hansen.
Balance Sheet and Capital
Activity
At December 31, 2014, the Company had the following:
- Total outstanding debt of $626.5
million, with a weighted average interest rate of 4.35 percent, and
$38.6 million of cash and cash equivalents.
- The Company’s maximum borrowing
capacity was $300.0 million under the senior unsecured credit
facility, including both the revolver and term portions of the
facility with $200.0 million outstanding, $13.8 million in standby
letters of credit and $86.2 million available to borrow.
- Total net debt, which the Company
defines as total outstanding debt less cash and cash equivalents,
to trailing twelve month adjusted EBITDA was 4.6x.
Dividends
On January 30, 2015, the Company declared a quarterly cash
dividend of:
- $0.1175 per share on its common stock
and per common unit of limited partnership interest in Summit Hotel
OP, LP, the Company’s operating partnership.
- $0.578125 per share on its 9.25 percent
Series A Cumulative Redeemable Preferred Stock.
- $0.4921875 per share on its 7.875
percent Series B Cumulative Redeemable Preferred Stock.
- $0.4453125 per share on its 7.125
percent Series C Cumulative Redeemable Preferred Stock.
The dividends were payable on February 27, 2015 to holders of
record as of February 16, 2015.
2015 Outlook
The Company is providing guidance for the first quarter and full
year 2015 based on its 90 current hotels.¹ Except as described in
footnote one below, the guidance assumes no additional hotels are
acquired or sold and no additional issuances of equity
securities.
FIRST QUARTER 2015 ($ in thousands, except RevPAR and per
unit data)
Low-end
High-end Pro forma RevPAR (90) 1 $ 95.50 $ 97.50 Pro forma
RevPAR growth (90) 1 9.0 % 11.0 % RevPAR (same-store 84) 2 $ 92.00
$ 94.00 RevPAR growth (same-store 84) 2 9.0 % 11.0 % Adjusted FFO $
19,100 $ 20,800 Adjusted FFO per diluted unit 3 $ 0.22 $ 0.24
FULL YEAR 2015 ($ in thousands, except RevPAR
and per unit data)
Low-end High-end Pro forma RevPAR
(90) 1 $ 99.00 $ 101.00 Pro forma RevPAR growth (90) 1 5.5 % 7.5 %
RevPAR (same-store 84) 2 $ 95.00 $ 97.00 RevPAR growth (same-store
84) 2 5.5 % 7.5 % Adjusted FFO $ 91,900 $ 97,100 Adjusted FFO per
diluted unit 3 $ 1.06 $ 1.12 Capital improvements $ 28,000 $ 38,000
1
Pro forma information includes operating
results for 90 hotels owned as of February 20, 2015 as if each
hotel had been owned by the Company since January 1, 2014. As a
result, these pro forma operating and financial measures include
operating results for certain hotels for periods prior to the
Company’s ownership.
2
Same-store information provided in the
2015 outlook includes operating results for 84 hotels owned by the
Company as of January 1, 2014.
3
Assumes weighted average diluted units
outstanding of 86,678,000 for first quarter and full year of
2015.
2014 Earnings Conference
Call
The Company will conduct its quarterly conference call on
Tuesday, March 3, 2015 at 9:00 a.m. ET. To participate in the
conference call please dial 877-930-8101. The conference
identification code for the call is 90828535. Additionally, a live
webcast of the call will be available through the Company’s
website, www.shpreit.com. A replay of the conference call will be
available until 11:59 p.m. ET on Monday, March 9, 2015 by dialing
855-859-2056; conference identification code 90828535. A replay of
the conference call will also be available on the Company’s website
until May 4, 2015.
About Summit Hotel
Properties
Summit Hotel Properties, Inc. is a publicly-traded real estate
investment trust focused primarily on acquiring and owning
premium-branded, select-service hotels in the upscale and upper
midscale segments of the lodging industry. As of February 20, 2015,
the Company’s portfolio consisted of 90 hotels with a total of
11,463 guestrooms located in 21 states. Since its initial public
offering in February 2011, the Company has acquired 49 hotel
properties, totaling 6,938 guestrooms for aggregate purchase prices
of $1.0 billion.
For additional information, please visit the Company’s website,
www.shpreit.com, and follow the
Company on Twitter at @SummitHotel_INN.
Forward-Looking
Statements
This press release contains statements that are “forward-looking
statements” within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act
of 1934, as amended, pursuant to the safe harbor provisions of the
Private Securities Reform Act of 1995. Forward-looking statements
are generally identifiable by use of forward-looking terminology
such as “may,” “will,” “should,” “potential,” “intend,” “expect,”
“seek,” “anticipate,” “estimate,” “approximately,” “believe,”
“could,” “project,” “predict,” “forecast,” “continue,” “plan,”
“likely,” “would” or other similar words or expressions.
Forward-looking statements are based on certain assumptions and can
include future expectations, future plans and strategies, financial
and operating projections or other forward-looking information.
Examples of forward-looking statements include the following: the
Company’s ability to realize embedded growth from the deployment of
renovation capital; projections of the Company’s revenues and
expenses, capital expenditures or other financial items;
descriptions of the Company’s plans or objectives for future
operations, acquisitions, dispositions, financings or services;
forecasts of the Company’s future financial performance and
potential increases in average daily rate, occupancy, RevPAR, room
supply and demand, FFO and AFFO; the Company’s outlook with respect
to pro forma RevPAR, pro forma RevPAR growth, RevPAR, RevPAR
growth, AFFO, AFFO per diluted unit and renovation capital
deployed; and descriptions of assumptions underlying or relating to
any of the foregoing expectations regarding the timing of their
occurrence. These forward-looking statements are subject to various
risks and uncertainties, not all of which are known to the Company
and many of which are beyond the Company’s control, which could
cause actual results to differ materially from such statements.
These risks and uncertainties include, but are not limited to, the
state of the U.S. economy, supply and demand in the hotel industry
and other factors as are described in greater detail in the
Company’s filings with the Securities and Exchange Commission
(“SEC”). Unless legally required, the Company disclaims any
obligation to update any forward-looking statements, whether as a
result of new information, future events or otherwise.
For information about the Company’s business and financial
results, please refer to the “Management’s Discussion and Analysis
of Financial Condition and Results of Operations” and “Risk
Factors” sections of the Company’s Annual Report on Form 10-K for
the year ended December 31, 2014 filed with the SEC, and its
quarterly and other periodic filings with the SEC. The Company
undertakes no duty to update the statements in this release to
conform the statements to actual results or changes in the
Company’s expectations.
SUMMIT HOTEL PROPERTIES, INC. Consolidated
Balance Sheets
(Amounts in thousands)
December 31, 2014 2013
ASSETS Investment in hotel properties, net $ 1,339,415 $
1,149,967 Investment in hotel properties under development 253 -
Land held for development 8,183 13,748 Assets held for sale 300
12,224 Cash and cash equivalents 38,581 46,706 Restricted cash
34,395 38,498 Trade receivables 7,681 7,231 Prepaid expenses and
other 6,181 8,876 Derivative financial instruments 66 253 Deferred
charges, net 9,641 10,270 Deferred tax asset, net 176 49 Other
assets 14,152 6,654 Total assets $ 1,459,024 $
1,294,476
LIABILITIES AND EQUITY Liabilities:
Debt $ 626,533 $ 435,589 Accounts payable 7,271 7,583 Accrued
expenses 38,062 27,154 Derivative financial instruments
1,957 1,772 Total liabilities 673,823 472,098
Equity: Total stockholders' equity 779,611 809,840
Non-controlling interests in operating partnership 5,590 4,722
Non-controlling interests in joint venture - 7,816
Total equity 785,201 822,378 Total liabilities
and equity $ 1,459,024 $ 1,294,476
SUMMIT HOTEL PROPERTIES, INC. Consolidated
Statements of Operations
(Amounts in thousands, except per share
amounts)
For the Three Months Ended December 31, For the
Years Ended December 31, 2014 2013
2014 2013 Revenues: Unaudited Room
revenue $ 93,085 $ 73,505 $ 380,472 $ 283,279 Other hotel
operations revenue 6,056 4,451
22,994 15,679 Total revenues 99,141
77,956 403,466 298,958
Expenses: Hotel operating expenses: Rooms 25,108
21,210 101,150 80,391 Other direct 14,778 11,480 55,388 39,815
Other indirect 26,891 21,422
104,959 78,136 Total hotel operating expenses
66,777 54,112 261,497 198,342 Depreciation and amortization 16,406
13,934 65,312 51,184 Corporate general and administrative 4,520
2,875 19,884 12,929 Hotel property acquisition costs (9 ) 332 769
1,886 Loss on impairment of assets - -
8,847 1,369 Total expenses
87,694 71,253 356,309
265,710 Operating income 11,447
6,703 47,157 33,248 Other
income (expense) Interest expense (6,923 ) (5,260 ) (26,968 )
(20,137 ) Other income (expense) (97 ) (1,674 )
986 (1,592 ) Total other expense, net
(7,020 ) (6,934 ) (25,982 ) (21,729 )
Income (loss) from continuing operations
before income taxes
4,427 (231 ) 21,175 11,519 Income tax benefit (expense)
90 (3,625 ) (744 ) (4,894 )
Income (loss) from continuing operations 4,517 (3,856 )
20,431 6,625 Income (loss) from discontinued operations
214 1,780 492 (728
) Net income (loss) 4,731 (2,076 ) 20,923 5,897
Income (loss) attributable to non-controlling interests: Operating
partnership 6 (189 ) 51 (297 ) Joint venture -
(8 ) 1 316
Net income (loss) attributable to Summit
Hotel Properties, Inc.
4,725 (1,879 ) 20,871 5,878 Preferred dividends
(4,147 ) (4,147 ) (16,588 ) (14,590 )
Net income (loss) attributable to common stockholders $ 578
$ (6,026 ) $ 4,283 $ (8,712 ) Basic and diluted net
income (loss) per share $ 0.01 $ ( 0.07 ) $ 0.05 $
(0.12 ) Weighted average common shares outstanding: Basic
85,391 84,767 85,242 70,327 Diluted 85,745 84,767 85,566 70,327
SUMMIT HOTEL
PROPERTIES, INC. Discontinued Operations Summary
(Amounts in thousands)
For the Three Months Ended December 31, For the
Years Ended December 31, 2014 2013
2014 2013 Unaudited Revenues $ - $ 2,329 $
3,128 $ 19,458 Hotel operating expenses - 1,944 2,304 14,859
Depreciation and amortization - (30 ) 13 1,960 Loss on impairment
of assets - 390 400 7,675
Operating income (loss) - 25 411 (5,036 ) Interest
expense - - - (174 ) Other income 226 3,068
55 3,945 Income (loss) before
taxes 226 3,093 466 (1,265 ) Income tax (expense) benefit
(12 ) (1,313 ) 26 537
Income (loss) from discontinued operations $ 214 $ 1,780
$ 492 $ (728 )
Income (loss) from discontinued operations
attributable to non-controlling interest
$ 3 $ 85 $ 6 $ (25 )
Income (loss) from discontinued operations
attributable to common stockholders
$ 211 $ 1,695 $ 486 $ (703 )
SUMMIT HOTEL PROPERTIES, INC.
Reconciliation of Net Income (Loss) to Non-GAAP Measures – Funds
From Operations
(Amounts in thousands except per diluted
unit)
(Unaudited)
For the Three Months Ended December 31, For the
Years Ended December 31, 2014 2013
2014 2013 Net income (loss) $
4,731 $ (2,076 ) $ 20,923 $ 5,897 Preferred dividends (4,147 )
(4,147 ) (16,588 ) (14,590 ) Depreciation and amortization 16,406
13,904 65,325 53,144 Loss on impairment of assets - 390 9,247 9,044
Gain on disposal of assets (162 ) (3,420 ) (446 ) (4,308 )
Non-controlling interest in joint venture - 8 (1 ) (316 )
Adjustments related to joint venture - (92 )
(204 ) (315 )
Funds From Operations $
16,828 $ 4,567 $
78,256 $ 48,556
Per diluted unit 1
$ 0.19 $ 0.05 $ 0.90 $ 0.66
Equity based compensation $ 681 $ 508 $ 3,524 $ 2,124 Hotel
property acquisition costs (9 ) 332 769 1,886 Debt transaction
costs 41 1,585 41 1,697 (Gain) loss on derivative 1 - 1 (2 )
Deferred tax asset valuation allowance - 5,029 - 5,029
Expenses related to improvement of
internal controls
- - 956 -
Expenses related to the transition of
directors and executive officers
- - 783 -
Adjusted Funds From Operations $ 17,542
$ 12,021 $ 84,330
$ 59,290
Per diluted unit 1
$ 0.20 $ 0.14 $ 0.97 $ 0.81
Weighted average diluted units 1 86,690 86,212
86,590 73,241
1
The Company includes the outstanding
common units of limited partnership interest (“OP units”) in Summit
Hotel OP, LP, the Company’s operating partnership, held by limited
partners other than the Company because the OP units are redeemable
for cash or, at the Company’s option, shares of the Company’s
common stock on a one-for-one basis.
SUMMIT HOTEL
PROPERTIES, INC. Reconciliation of Net Income (Loss) to
Non-GAAP Measures – EBITDA
(Amounts in thousands)
(Unaudited)
For the Three Months Ended December 31, For the
Years Ended December 31, 2014 2013
2014 2013 Net income (loss) $
4,731 $ (2,076 ) $ 20,923 $ 5,897 Depreciation and amortization
16,406 13,904 65,325 53,144 Interest expense 6,923 5,260 26,968
20,311 Interest income (181 ) (31 ) (690 ) (83 ) Income tax expense
(78 ) 4,938 718 4,357 Non-controlling interest in joint venture - 8
(1 ) (316 ) Adjustments related to joint venture -
(92 ) (204 ) (315 )
EBITDA $
27,801 $ 21,911 $
113,039 $ 82,995
Equity based compensation $ 681 $ 508 $ 3,524 $ 2,124 Hotel
property acquisition costs (9 ) 332 769 1,886 Loss on impairment of
assets - 390 9,247 9,044 Debt transaction costs 41 1,585 41 1,697
Gain on disposal of assets (162 ) (3,420 ) (446 ) (4,308 ) (Gain)
loss on derivatives 1 - 1 (2 )
Expenses related to improvement of
internal controls
- - 956 -
Expenses related to the transition of
directors and executive officers
- - 783 -
ADJUSTED EBITDA $ 28,353 $
21,306 $ 127,914 $
93,436
SUMMIT HOTEL PROPERTIES, INC.
Pro Forma 1 Operational
and Statistical Data
(Dollars in thousands, except operating
metrics)
(Unaudited)
For the Three Months Ended December 31, For the
Years Ended December 31, 2014 2013
2014 2013 Revenues: Room revenue $
92,958 $ 84,880 $ 392,421 $ 353,605 Other hotel operations revenue
6,049 6,148 24,723 23,324 Total
revenues 99,007 91,028 417,144 376,929
Expenses: Hotel operating expenses Rooms 24,991 23,476
104,238 100,132 Other direct 14,709 13,817 57,079 49,592 Other
indirect 26,765 25,143 108,164 97,324
Total operating expenses 66,465 62,436 269,481
247,048
Hotel EBITDA $ 32,542
$ 28,592 $ 147,663 $
129,881
2014
Year endedDecember 31,
2014
Q1 Q2 Q3
Q4 Revenues: Room revenue $ 90,538 $ 103,890 $
105,035 $ 92,958 $ 392,421 Other revenue 5,867
6,425 6,382 6,049 24,723
Total revenues $ 96,405 $ 110,315 $ 111,417
$ 99,007 $ 417,144
Hotel EBITDA
$ 32,290 $ 41,107
$ 41,724 $ 32,542
$ 147,663 EBITDA margin 33.5 % 37.3 % 37.4 %
32.9 % 35.4 % Rooms occupied 744,353 833,196 837,650 749,892
3,165,091 Rooms available 1,030,320 1,042,716 1,054,589 1,054,596
4,182,221 Occupancy 72.2 % 79.9 % 79.4 % 71.1 % 75.7 % ADR $
121.63 $ 124.69 $ 125.39 $ 123.96 $ 123.98 RevPAR $ 87.87 $ 99.63 $
99.60 $ 88.15 $ 93.83
1
Pro forma information includes operating results for 90
hotels owned as of December 31, 2014 as if each hotel had been
owned by the Company since January 1, 2013. As a result, these pro
forma operating and financial measures include operating results
for certain hotels for periods prior to the Company’s ownership.
SUMMIT HOTEL
PROPERTIES, INC.
Pro Forma 1 and
Same-Store 2 Statistical Data
(Unaudited)
For the Three Months Ended December 31, For the
Years Ended December 31, Pro Forma 1 (90
hotels) 2014 2013 2014
2013 Rooms occupied 749,892 733,509 3,165,091
3,036,665 Rooms available 1,054,596 1,053,185 4,182,221 4,178,609
Occupancy 71.1 % 69.6 % 75.7 % 72.7 % ADR $ 123.96 $ 115.72
$ 123.98 $ 116.45 RevPAR $ 88.15 $ 80.59 $ 93.83 $ 84.62
Occupancy growth 2.1 % 4.1 % ADR growth 7.1 % 6.5 % RevPAR growth
9.4 % 10.9 %
For the Three Months Ended December 31, For the Years
Ended December 31, Same-Store 2 (65
hotels) 2014 2013 2014 2013 Rooms
occupied 485,984 473,600 2,046,086 1,982,913 Rooms available
684,112 683,100 2,713,007 2,710,337 Occupancy 71.0 % 69.3 %
75.4 % 73.2 % ADR $ 110.52 $ 102.59 $ 111.94 $ 105.22 RevPAR $
78.51 $ 71.13 $ 84.42 $ 76.98 Occupancy growth 2.5 % 3.1 %
ADR growth 7.7 % 6.4 % RevPAR growth 10.4 % 9.7 %
1
Pro forma information includes operating results for 90
hotels owned as of December 31, 2014 as if each hotel had been
owned by the Company since January 1, 2013. As a result, these pro
forma operating and financial measures include operating results
for certain hotels for periods prior to the Company’s ownership.
2
Same-store information includes operating results for 65 hotels
owned by the Company as of January 1, 2013 and at all times during
the three months and year ended December 31, 2014 and 2013.
Non-GAAP Financial
Measures
Funds From Operations (“FFO”) and Adjusted FFO
(“AFFO”)
As defined by the National Association of Real Estate Investment
Trusts (“NAREIT”), FFO represents net income or loss (computed in
accordance with GAAP), excluding gains (or losses) from sales of
property, impairment, items classified by GAAP as extraordinary,
the cumulative effect of changes in accounting principles, plus
depreciation and amortization, and adjustments for unconsolidated
partnerships and joint ventures. We present FFO because we consider
it an important supplemental measure of our operational performance
and believe it is frequently used by securities analysts, investors
and other interested parties in the evaluation of REITs, many of
which present FFO when reporting their results. FFO is intended to
exclude GAAP historical cost depreciation and amortization, which
assumes that the value of real estate assets diminishes ratably
over time. Historically, however, real estate values have risen or
fallen with market conditions. Because FFO excludes depreciation
and amortization unique to real estate, gains and losses from
property dispositions and impairment losses, it provides a
performance measure that, when compared year over year, reflects
the effect to operations from trends in occupancy, room rates,
operating costs, development activities and interest costs,
providing perspective not immediately apparent from net income. Our
computation of FFO differs from the NAREIT definition and may
differ from the methodology for calculating FFO utilized by other
equity REITs and, accordingly, may not be comparable to such other
REITs because the amount of depreciation and amortization we add
back to net income or loss includes amortization of deferred
financing costs and amortization of franchise royalty fees. FFO
should not be considered as an alternative to net income (loss)
(computed in accordance with GAAP) as an indicator of our
liquidity, nor is it indicative of funds available to fund our cash
needs, including our ability to pay dividends or make
distributions.
We further adjust FFO for certain additional items that are not
included in the definition of FFO, such as hotel transaction and
pursuit costs, equity based compensation, loan transaction costs,
prepayment penalties and certain other expenses, which we refer to
as AFFO. We believe that AFFO provides investors with another
financial measure that may facilitate comparisons of operating
performance between periods and between REITs.
We caution investors that amounts presented in accordance with
our definitions of FFO and AFFO may not be comparable to similar
measures disclosed by other companies, since not all companies
calculate these non-GAAP measures in the same manner. FFO and AFFO
should be considered along with, but not as an alternative to, net
income (loss) as a measure of our operating performance. FFO and
AFFO may include funds that may not be available for our
discretionary use due to functional requirements to conserve funds
for capital expenditures, property acquisitions, debt service
obligations and other commitments and uncertainties. Although we
believe that FFO and AFFO can enhance your understanding of our
financial condition and results of operations, these non-GAAP
financial measures are not necessarily better indicators of any
trend as compared to a comparable GAAP measure such as net income
(loss). Above we have included a quantitative reconciliation of FFO
and AFFO to the most directly comparable GAAP financial performance
measure, which is net income (loss). Dollar amounts in such
reconciliation are in thousands.
EBITDA, Adjusted EBITDA and Hotel EBITDA
EBITDA represents net income or loss, excluding: (i) interest,
(ii) income tax expense and (iii) depreciation and amortization. We
believe EBITDA is useful to investors in evaluating our operating
performance because it provides investors with an indication of our
ability to incur and service debt, to satisfy general operating
expenses, to make capital expenditures and to fund other cash needs
or reinvest cash into our business. We also believe it helps
investors meaningfully evaluate and compare the results of our
operations from period to period by removing the effect of our
asset base (primarily depreciation and amortization) from our
operating results. Our management also uses EBITDA as one measure
in determining the value of acquisitions and dispositions. We
further adjust EBITDA by adding back hotel transaction and pursuit
costs, equity based compensation, impairment losses and certain
other nonrecurring expenses. We believe that adjusted EBITDA
provides investors with another financial measure that may
facilitate comparisons of operating performance between periods and
between REITs.
With respect to hotel EBITDA, we believe that excluding the
effect of corporate-level expenses, non-cash items, and the portion
of these items related to discontinued operations, provides a more
complete understanding of the operating results over which
individual hotels and operators have direct control. We believe the
property-level results provide investors with supplemental
information on the ongoing operational performance of our hotels
and effectiveness of the third-party management companies operating
our business on a property-level basis.
We caution investors that amounts presented in accordance with
our definitions of EBITDA, adjusted EBITDA and hotel EBITDA may not
be comparable to similar measures disclosed by other companies,
since not all companies calculate these non-GAAP measures in the
same manner. EBITDA, adjusted EBITDA and hotel EBITDA should not be
considered as an alternative measure of our net income (loss) or
operating performance. EBITDA, adjusted EBITDA and hotel EBITDA may
include funds that may not be available for our discretionary use
due to functional requirements to conserve funds for capital
expenditures and property acquisitions and other commitments and
uncertainties. Although we believe that EBITDA, adjusted EBITDA and
hotel EBITDA can enhance your understanding of our financial
condition and results of operations, these non-GAAP financial
measures are not necessarily a better indicator of any trend as
compared to a comparable GAAP measure such as net income (loss).
Above we include a quantitative reconciliation of EBITDA and
adjusted EBITDA to the most directly comparable GAAP financial
performance measure, which is net income (loss). Because hotel
EBITDA is specific to individual hotels or groups of hotels and not
to the Company as a whole, it is not directly comparable to any
GAAP measure. Accordingly, hotel EBITDA has not been reconciled
back to net income or loss, or any other GAAP measure, and hotel
EBITDA should not be relied on as a measure of performance for our
portfolio of hotels taken as a whole. Dollar amounts in such
reconciliation are in thousands.
Summit Hotel Properties, Inc.Elisabeth Eisleben,
512-538-2306Director of Investor Relationseeisleben@shpreit.com
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