UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date
of Report (Date of earliest event reported):
May 4, 2015
SUMMIT HOTEL PROPERTIES, INC. (Exact
Name of Registrant as Specified in its Charter)
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Maryland
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001-35074
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27-2962512
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(State
or Other Jurisdiction
of
Incorporation or Organization)
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(Commission
File Number)
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(I.R.S.
Employer Identification No.)
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12600 Hill Country Boulevard, Suite R-100
Austin, Texas 78738
(Address
of Principal Executive Offices) (Zip Code)
(512) 538-2300
(Registrants’
telephone number, including area code)
Not
applicable
(Former name or former address, if changed
since last report.)
Check the
appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any
of the following provisions:
⃞
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
⃞
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
⃞
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
⃞
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item 2.02.
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Results of Operations and Financial Condition.
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On May 4, 2015, Summit Hotel Properties, Inc. (the “Company”) issued a
press release announcing the consolidated operating results of the
Company and its subsidiaries for the quarter ended March 31, 2015.
A copy of the press release is furnished as Exhibit 99.1 to this report.
Item 9.01.
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Financial Statements and Exhibits.
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(d)
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Exhibits
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99.1
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Press release issued on May 4, 2015.
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SIGNATURE
Pursuant to
the requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
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SUMMIT HOTEL PROPERTIES, INC.
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(Registrant)
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By:
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/s/ Christopher R. Eng
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Christopher R. Eng
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Senior Vice President, General Counsel
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Date:
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May 4, 2015
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Chief Risk Officer and Secretary
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EXHIBIT INDEX
Exhibit No.
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Description
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99.1
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Press release issued May 4, 2015.
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Exhibit 99.1
Summit
Hotel Properties Reports First Quarter 2015 Results
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
AUSTIN, Texas--(BUSINESS WIRE)--May 4, 2015--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
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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INN vs. Industry Results (% change)
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First Quarter 2015
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Occupancy
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ADR
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RevPAR
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INN Pro Forma (90)
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2.8
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%
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8.8
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%
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11.9
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%
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INN Same-Store (84)
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3.4
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%
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9.5
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%
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13.3
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%
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Overall US *
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3.1
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%
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4.7
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%
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8.0
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%
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Upscale *
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1.7
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%
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5.2
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%
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7.0
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%
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*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:
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For the Three Months Ended March 31,
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2015
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2014
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Unaudited
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($ in thousands, except per unit and RevPAR data)
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Total revenues (continuing operations)
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$
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107,648
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$
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89,544
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Net income (loss) attributable to common stockholders
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$
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6,387
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$
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(689
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)
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EBITDA 1
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$
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33,370
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$
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25,183
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Adjusted EBITDA 1
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$
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34,510
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$
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27,191
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FFO 1
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$
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22,609
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$
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14,588
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Adjusted FFO 1
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$
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23,246
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$
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16,657
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FFO per diluted unit 1, 2
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$
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0.26
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$
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0.17
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Adjusted FFO per diluted unit 1, 2
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$
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0.27
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$
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0.19
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Pro Forma 3
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RevPAR
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$
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98.30
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$
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87.87
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RevPAR growth
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11.9
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%
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Hotel EBITDA
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$
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38,380
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$
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32,289
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Hotel EBITDA margin
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35.7
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%
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33.5
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%
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Hotel EBITDA margin growth
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216 bps
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1
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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.
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2
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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.
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3
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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.
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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:
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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.
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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.
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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:
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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.
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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:
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$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.
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$0.578125 per share on its 9.25 percent Series A Cumulative Redeemable
Preferred Stock.
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$0.4921875 per share on its 7.875 percent Series B Cumulative
Redeemable Preferred Stock.
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$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
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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.
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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.
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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 $225.0 million senior unsecured revolving credit
facility.
2015 Outlook
The Company is providing guidance for the second quarter and full year
2015 based on its 91 current hotels.¹ Except as described in footnote
one below, the guidance assumes no additional hotels are acquired or
sold and no additional issuances of equity securities.
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SECOND QUARTER 2015
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($ in thousands, except RevPAR and per unit data)
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Low-end
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High-end
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Pro forma RevPAR (91) 1
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$
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105.50
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$
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107.50
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Pro forma RevPAR growth (91) 1
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6.00
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%
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8.00
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%
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RevPAR (same-store 84) 2
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$
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101.50
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$
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103.50
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RevPAR growth (same-store 84) 2
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6.00
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%
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8.00
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%
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Adjusted FFO
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$
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27,900
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$
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29,400
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Adjusted FFO per diluted unit 3
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$
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0.32
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$
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0.34
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FULL YEAR 2015
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($ in thousands, except RevPAR and per unit data)
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Low-end
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High-end
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Pro forma RevPAR (91) 1
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$
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99.50
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$
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101.50
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Pro forma RevPAR growth (91) 1
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6.00
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%
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8.00
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%
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RevPAR (same-store 84) 2
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$
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95.50
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$
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97.50
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RevPAR growth (same-store 84) 2
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6.00
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%
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8.00
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%
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Adjusted FFO
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$
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95,600
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$
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100,800
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Adjusted FFO per diluted unit 3
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$
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1.10
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$
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1.16
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Capital improvements
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$
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32,000
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$
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38,000
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1
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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.
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2
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Same-store information provided in the 2015 outlook includes
operating results for 84 hotels owned by the Company as of January
1, 2014.
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3
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Assumes weighted average diluted units outstanding of
86,977,000 for the second quarter and full year of 2015.
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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.
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SUMMIT HOTEL PROPERTIES, INC.
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Consolidated Balance Sheets
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(Amounts in thousands)
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March 31,
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December 31,
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2015
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2014
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ASSETS
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(Unaudited)
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Investment in hotel properties, net
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$
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1,336,665
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$
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1,339,415
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Investment in hotel properties under development
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319
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253
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Land held for development
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8,183
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8,183
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Assets held for sale
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1,292
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300
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Cash and cash equivalents
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28,541
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38,581
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Restricted cash
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34,192
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34,395
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Trade receivables
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12,384
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7,681
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Prepaid expenses and other
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6,563
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6,181
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Derivative financial instruments
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-
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66
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Deferred charges, net
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9,134
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9,641
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Deferred tax asset, net
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190
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176
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Other assets
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16,759
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14,152
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Total assets
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$
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1,454,222
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$
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1,459,024
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LIABILITIES AND EQUITY
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Liabilities:
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Debt
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$
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628,773
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$
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626,533
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Accounts payable
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6,130
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7,271
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Accrued expenses
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35,814
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38,062
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Derivative financial instruments
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2,653
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1,957
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Total liabilities
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673,370
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673,823
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Equity:
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Total stockholders' equity
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775,442
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779,611
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Non-controlling interests in operating partnership
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5,410
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5,590
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Total equity
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780,852
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785,201
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Total liabilities and equity
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$
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1,454,222
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$
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1,459,024
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SUMMIT HOTEL PROPERTIES, INC.
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Consolidated Statements of Operations
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(Amounts in thousands, except per share amounts)
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(Unaudited)
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|
For the Three Months Ended March 31,
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2015
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|
2014
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Revenues:
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Room revenue
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$
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101,425
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$
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84,552
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Other hotel operations revenue
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|
|
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6,223
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|
|
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4,992
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Total revenues
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|
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107,648
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|
|
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 operations attributable to
non-controlling interest
|
|
|
$
|
|
|
-
|
|
|
$
|
5
|
|
|
|
|
|
|
|
Income from discontinued operations attributable 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 Twelve Months Ended March 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.
CONTACT:
Summit Hotel Properties, Inc.
Elisabeth Eisleben,
512-538-2306
Director of Investor Relations
eeisleben@shpreit.com
Summit Hotel Properties (NYSE:INN)
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