13.3 percent Same-Store RevPAR growth; $0.27
Adjusted FFO per share
42.1 percent Adjusted FFO per share growth;
26.9 percent Adjusted EBITDA growth
Summit Hotel Properties, Inc. (NYSE:INN) (the “Company”) today
announced results for the first quarter 2015.
“The first quarter was outstanding for our portfolio with high
demand continuing to drive strong rate growth,” said Dan Hansen,
Summit’s President and CEO. “Our same-store portfolio has exceeded
the Smith Travel Upscale chain scale for twelve consecutive
quarters, which is a credit to our best-in-class asset management
team and the strategic capital investments in our properties.”
First Quarter 2015
Highlights
- Pro Forma RevPAR: Pro forma
revenue per available room (“RevPAR”) in the first quarter of 2015
grew to $98.30, an increase of 11.9 percent over the same period of
2014. Pro forma average daily rate (“ADR”) grew to $132.36 in the
first quarter of 2015, an increase of 8.8 percent from the same
period of 2014. Pro forma occupancy increased by 2.8 percent to
74.3 percent.
- Pro Forma Hotel EBITDA: Pro
forma hotel EBITDA in the first quarter of 2015 grew to $38.4
million, an increase of 18.9 percent over the same period in
2014.
- Pro Forma Hotel EBITDA Margin:
Pro forma hotel EBITDA margin expanded by 216 basis points in the
first quarter of 2015 to 35.7 percent compared with the same period
of 2014. 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 the first quarter of 2015 grew to $95.52, an increase of
13.3 percent over the same period in 2014. Same-store ADR in the
first quarter of 2015 grew to $128.54, an increase of 9.5 percent
from the same period of 2014. Same-store occupancy increased by 3.4
percent in the first quarter of 2015 to 74.3 percent compared to
the same period in 2014.
- Adjusted EBITDA: Adjusted EBITDA
increased to $34.5 million in the first quarter of 2015 from $27.2
million in the same period of 2014, an increase of $7.3 million or
26.9 percent.
- Adjusted FFO: Adjusted Funds
from Operations (“AFFO”) for the first quarter of 2015 increased by
39.6 percent to $23.2 million, or $0.27 per diluted unit, which is
a 42.1 percent increase from the same period of 2014.
- Net Income: Net Income
attributable to common stockholders in the first quarter of 2015
increased to $6.4 million, or $0.07 per diluted share, compared to
a net loss attributable to common stockholders in the same period
of 2014 of $0.7 million, or a loss of $0.01 per diluted share.
- Capital Investment: The Company
invested $16.1 million in capital improvements during the first
quarter of 2015 and added an additional five guestrooms to its
portfolio through better utilization of existing space.
INN vs. Industry Results (% change)
First
Quarter 2015 Occupancy
ADR RevPAR INN
Pro Forma (90) 2.8 % 8.8 %
11.9 % INN Same-Store (84) 3.4 %
9.5 % 13.3 % Overall US * 3.1 % 4.7 %
8.0 % Upscale * 1.7 % 5.2 % 7.0 %
*Source: Smith Travel Research Monthly Hotel
Review, Volume 15, Issue M3
The Company’s results for the three months ended March 31, 2015
and 2014 included the following:
For the Three Months Ended March 31,
2015 2014 Unaudited ($ in thousands, except
per unit and RevPAR data) Total revenues (continuing operations) $
107,648 $ 89,544 Net income (loss) attributable to common
stockholders $ 6,387 $ (689 ) EBITDA 1 $ 33,370 $ 25,183
Adjusted EBITDA 1 $ 34,510 $ 27,191 FFO 1 $ 22,609 $ 14,588
Adjusted FFO 1 $ 23,246 $ 16,657 FFO per diluted unit 1, 2 $
0.26 $ 0.17 Adjusted FFO per diluted unit 1, 2 $ 0.27 $ 0.19
Pro Forma
3
RevPAR $ 98.30 $ 87.87 RevPAR growth 11.9 % Hotel EBITDA $
38,380 $ 32,289 Hotel EBITDA margin 35.7 % 33.5 % Hotel EBITDA
margin growth 216 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 are unaudited.
2
Based on 86,875,000 weighted average
diluted units and 86,585,000 weighted average diluted units for the
three months ended March 31, 2015 and 2014, 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 March 31, 2015 as if each hotel had been
owned by the Company since January 1, 2014. As a result, all pro
forma information includes operating and financial results for
hotels acquired since January 1, 2014 for periods prior to the
Company’s ownership. Non-GAAP financial measures are unaudited.
Capital Investment
The Company invested $16.1 million into capital improvements
during the first quarter of 2015. Among the properties renovated
during the quarter, the scope of work ranged from common space
improvements to complete guestroom renovations, including
furniture, soft goods and guest bathrooms.
The Company completed a full renovation of its Fairfield Inn
& Suites located in Louisville, Ky. during the first quarter of
2015. The Company added five additional guestrooms to the hotel
during the renovation to better utilize existing space, bringing
the total number of guestrooms to 140. All common areas were
re-designed and upgraded with new furniture, artwork, lighting and
window treatments. The Company upgraded the meeting and event space
with new furniture and AV technology, including 72” televisions, to
better serve the business guests. All guestrooms were updated
including all new furniture and beds, carpeting, 42” flat screen
televisions, wall coverings, window treatments and lighting. The
fitness center was upgraded, including new weights, benches and
cardio equipment featuring personal viewing screens. The renovation
was completed in March of 2015 for a total cost of $2.6
million.
“Our team continues to find unique and creative ways to enhance
the value of our hotels,” commented Hansen. “Targeted investment in
areas that improve our guest experience and the continued financial
success that follows is beginning to show the value of our
properties.”
Balance Sheet and Capital
Activity
At March 31, 2015, the Company had the following:
- Total outstanding debt of $628.8
million, with a weighted average interest rate of 4.33 percent, and
$28.5 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 $205.0 million outstanding, $13.8 million in standby
letters of credit and $81.2 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 4.4x.
At April 24, 2015, the Company had the following:
- Total outstanding debt of $662.9
million, with a weighted average interest rate of 4.22 percent and
an average term to maturity of five years.
- 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 $100.0 million outstanding, $0.8 million in standby
letters of credit and $199.2 million available to borrow.
Dividends
On April 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 are payable on May 29, 2015 to holders of record
as of May 15, 2015.
Subsequent Events
- On April 7, 2015, the Company closed on
a new $125.0 million seven-year unsecured term loan facility (the
“Term Loan”). The Term Loan was fully drawn at closing and proceeds
were applied to the principal balance of the Company’s $225.0
million senior unsecured revolving credit facility. The Term Loan
has an accordion option which provides the Company with the ability
to increase the Term Loan capacity to $200.0 million, subject to
certain conditions.
-
On April 13, 2015, the Company acquired the newly-constructed
211-guestroom Hampton Inn & Suites located in downtown
Minneapolis, Minn. for $39.0 million, or $185,000 per key.
- On April 21, 2015, the Company
exercised $15.0 million of the $75.0 million accordion feature of
the Term Loan. The exercise of this feature increased the aggregate
Term Loan commitments to $140.0 million. Proceeds from the
accordion were used to repay borrowings under the Company’s $225.0
million senior unsecured revolving credit facility.
2015 Outlook
The Company is providing guidance for the second quarter and
full year 2015 based on its 91 current hotels.¹ Except as described
in footnote one below, the guidance assumes no additional hotels
are acquired or sold and no additional issuances of equity
securities.
SECOND QUARTER 2015 ($ in thousands, except RevPAR
and per unit data)
Low-end
High-end Pro forma RevPAR (91) 1 $ 105.50 $ 107.50 Pro forma
RevPAR growth (91) 1 6.00 % 8.00 % RevPAR (same-store 84) 2 $
101.50 $ 103.50 RevPAR growth (same-store 84) 2 6.00 % 8.00 %
Adjusted FFO $ 27,900 $ 29,400 Adjusted FFO per diluted unit 3 $
0.32 $ 0.34
FULL YEAR 2015 ($ in thousands,
except RevPAR and per unit data)
Low-end High-end Pro
forma RevPAR (91) 1 $ 99.50 $ 101.50 Pro forma RevPAR growth (91) 1
6.00 % 8.00 % RevPAR (same-store 84) 2 $ 95.50 $ 97.50 RevPAR
growth (same-store 84) 2 6.00 % 8.00 % Adjusted FFO $ 95,600 $
100,800 Adjusted FFO per diluted unit 3 $ 1.10 $ 1.16 Capital
improvements $ 32,000 $ 38,000
1
Pro forma outlook information includes
operating results for 91 hotels owned as of April 24, 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 86,977,000 for the second quarter and full year of
2015.
First Quarter 2015 Earnings Conference
Call
The Company will conduct its quarterly conference call on
Tuesday, May 5, 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 33540641. 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 Tuesday, May 12, 2015 by dialing
855-859-2056; conference identification code 33540641. A replay of
the conference call will also be available on the Company’s website
until August 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 April 24,
2015, the Company’s portfolio consisted of 91 hotels with a total
of 11,679 guestrooms located in 21 states.
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)
March 31, December 31, 2015 2014
ASSETS (Unaudited) Investment in hotel properties, net $
1,336,665 $ 1,339,415 Investment in hotel properties under
development 319 253 Land held for development 8,183 8,183 Assets
held for sale 1,292 300 Cash and cash equivalents 28,541 38,581
Restricted cash 34,192 34,395 Trade receivables 12,384 7,681
Prepaid expenses and other 6,563 6,181 Derivative financial
instruments - 66 Deferred charges, net 9,134 9,641 Deferred tax
asset, net 190 176 Other assets 16,759 14,152 Total
assets $ 1,454,222 $ 1,459,024
LIABILITIES AND
EQUITY Liabilities: Debt $ 628,773 $ 626,533 Accounts payable
6,130 7,271 Accrued expenses 35,814 38,062 Derivative financial
instruments 2,653 1,957 Total liabilities
673,370 673,823 Equity: Total stockholders' equity
775,442 779,611 Non-controlling interests in operating partnership
5,410 5,590 Total equity 780,852
785,201 Total liabilities and equity $ 1,454,222 $ 1,459,024
SUMMIT HOTEL PROPERTIES, INC. Consolidated
Statements of Operations
(Amounts in thousands, except per share
amounts)
(Unaudited)
For the Three Months Ended March 31, 2015
2014 Revenues: Room revenue $ 101,425 $ 84,552 Other
hotel operations revenue 6,223 4,992
Total revenues 107,648 89,544
Expenses: Hotel operating expenses: Rooms 25,506 23,692 Other
direct 15,035 12,020 Other indirect 28,727
24,207 Total hotel operating expenses 69,268 59,919
Depreciation and amortization 15,264 15,061 Corporate general and
administrative 4,515 4,205 Hotel property acquisition costs
- 692 Total expenses 89,047
79,877 Operating income 18,601
9,667 Other income (expense) Interest expense
(7,247 ) (6,729 ) Other income (expense) (264 ) 87
Total other expense, net (7,511 ) (6,642 )
Income from continuing operations before income taxes 11,090
3,025 Income tax expense (499 ) (78 )
Income from continuing operations 10,591 2,947 Income from
discontinued operations - 378
Net income 10,591 3,325 Income (loss) attributable to
non-controlling interests: Operating partnership 57 (10 ) Joint
venture - (123 ) Net income
attributable to Summit Hotel Properties, Inc. 10,534 3,458
Preferred dividends (4,147 ) (4,147 ) Net
income (loss) attributable to common stockholders $ 6,387 $
(689 ) Basic and diluted net income (loss) per share $ 0.07
$ (0.01 ) Weighted average common shares outstanding:
Basic 85,704 85,097 Diluted 86,875 85,097
SUMMIT HOTEL PROPERTIES, INC. Discontinued Operations
Summary
(Amounts in thousands)
(Unaudited)
For the Three Months Ended March
31,
2015 2014 Revenues $ - $ 1,088
Hotel operating expenses - 770 Depreciation and amortization
- 4 Operating income - 314 Other income
- 63 Income before taxes - 377
Income tax benefit - 1 Income
from discontinued operations $ - $ 378
Income from discontinued operationsattributable to non-controlling
interest $ - $ 5 Income from
discontinued operationsattributable to common stockholders $
- $ 373
SUMMIT HOTEL
PROPERTIES, INC. Reconciliation of Net Income to Non-GAAP
Measures – Funds From Operations
(Amounts in thousands except per diluted
unit)
(Unaudited)
For the Three Months Ended March 31, 2015
2014 Net income $ 10,591 $ 3,325 Preferred
dividends (4,147 ) (4,147 ) Depreciation and amortization 15,264
15,065 Amortization of deferred financing costs 398 369 (Gain) loss
on disposal of assets 503 (61 ) Non-controlling interest in joint
venture - 123 Adjustments related to joint venture -
(86 )
Funds From Operations $ 22,609
$ 14,588 FFO per diluted unit 1 $ 0.26
$ 0.17 Equity based compensation 636 467 Hotel
property acquisition costs - 692 Loss on derivative financial
instruments 1 - Expenses related to improvement of internal
controls - 910
Adjusted Funds From
Operations $ 23,246 $ 16,657
AFFO per diluted unit 1 $ 0.27 $ 0.19
Weighted average diluted units 1 86,875 86,585
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 to Non-GAAP Measures – EBITDA
(Amounts in thousands)
(Unaudited)
For the Three Months Ended March 31, 2015
2014 Net income $ 10,591 $ 3,325 Depreciation and
amortization 15,264 15,065 Interest expense 7,247 6,729 Interest
income (231 ) (50 ) Income tax expense 499 77 Non-controlling
interest in joint venture - 123 Adjustments related to joint
venture - (86 )
EBITDA $
33,370 $ 25,183
Equity based compensation 636 467 Hotel property acquisition costs
- 692 (Gain) loss on disposal of assets 503 (61 ) Loss on
derivative financial instruments 1 - Expenses related to
improvement of internal controls - 910
ADJUSTED EBITDA $ 34,510 $
27,191 SUMMIT HOTEL
PROPERTIES, INC.
Pro Forma 1 Operational
and Statistical Data
(Dollars in thousands, except operating
metrics)
(Unaudited)
For the Three Months Ended March 31, 2015
2014 Revenues: Room revenue $ 101,425 $ 90,538 Other
hotel operations revenue 6,223 5,867 Total revenues
107,648 96,405 Expenses: Hotel operating
expenses Rooms 25,506 23,609 Other direct 15,035 13,917 Other
indirect 28,727 26,590 Total operating expenses
69,268 64,116
Hotel EBITDA $
38,380 $ 32,289
2014 2015
Trailing TwelveMonths
EndedMarch 31, 2015
Q2 Q3 Q4 Q1 Revenues:
Room revenue $ 103,890 $ 105,035 $ 92,958 $ 101,425 $ 403,308 Other
revenue 6,425 6,382 6,049
6,223 25,079 Total revenues $ 110,315
$ 111,417 $ 99,007 $ 107,648 $ 428,387
Hotel EBITDA $ 41,107
$ 41,724 $ 32,542
$ 38,380 $ 153,753 EBITDA
margin 37.3 % 37.4 % 32.9 % 35.7 % 35.9 % Rooms occupied
833,196 837,650 749,892 766,267 3,187,005 Rooms available 1,042,716
1,054,589 1,054,596 1,031,825 4,183,726 Occupancy 79.9 %
79.4 % 71.1 % 74.3 % 76.2 % ADR $ 124.69 $ 125.39 $ 123.96 $ 132.36
$ 126.55 RevPAR $ 99.63 $ 99.60 $ 88.15 $ 98.30 $ 96.40
1
Pro forma information includes operating
results for 90 hotels owned as of March 31, 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.
SUMMIT HOTEL PROPERTIES, INC.
Pro Forma 1 and
Same-Store 2 Statistical Data
(Unaudited)
For the Three Months Ended March 31,
Pro Forma 1 (90
hotels)
2015 2014 Rooms occupied 766,267 744,353 Rooms
available 1,031,825 1,030,320 Occupancy 74.3 % 72.2 % ADR $
132.36 $ 121.63 RevPAR $ 98.30 $ 87.87 Occupancy growth 2.8
% ADR growth 8.8 % RevPAR growth 11.9 %
For the Three Months Ended March 31,
Same-Store 2 (84
hotels)
2015 2014 Rooms occupied 700,372 676,217 Rooms
available 942,455 941,220 Occupancy 74.3 % 71.8 % ADR $
128.54 $ 117.36 RevPAR $ 95.52 $ 84.32 Occupancy growth 3.4
% ADR growth 9.5 % RevPAR growth 13.3 %
1
Pro forma information includes operating
results for 90 hotels owned as of March 31, 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 includes operating
results for 84 hotels owned by the Company as of January 1, 2014
and at all times during the three months ended March 31, 2015 and
2014.
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 in addition to the amount of depreciation and
amortization we add back to net income or loss, we also add back
the amortization of deferred financing costs and amortization of
franchise application 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
Summit Hotel Properties (NYSE:INN)
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Summit Hotel Properties (NYSE:INN)
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