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):
June 2, 2015
SUMMIT
HOTEL PROPERTIES, INC.
(Exact
Name of Registrant as Specified in its Charter)
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 1.01. Entry into a Material Definitive Agreement
On June 2, 2015, Summit Hotel OP, LP, the operating partnership of
Summit Hotel Properties, Inc. and certain affiliated entities
(collectively the “Company”), entered into two separate agreements to
sell a portfolio of 26 hotels containing an aggregate of 2,793
guestrooms to affiliates of American Realty Capital Hospitality Trust,
Inc. (“ARCH”) for an aggregate cash purchase price of approximately
$351.4 million, subject to closing pro rations and adjustments. The
Company anticipates deploying a portion of the sales proceeds through
1031 exchanges to defer certain taxable gains. The 26 hotels will be
sold in three separate closings, which are expected to occur in the
third quarter of 2015 (10 hotels), the fourth quarter of 2015 (10
hotels) and the first quarter of 2016 (6 hotels). ARCH may terminate
either agreement, with or without cause, prior to the expiration of the
due diligence period on July 15, 2015. Each closing is subject to the
satisfaction of customary closing conditions. The closing of the hotels
being sold by the Company at any particular closing is not conditioned
on the sale of the other hotels at that closing or any other
closing. Accordingly, the Company can give no assurance that all 26
hotels or any of them will be sold on the terms described above. If any
of the hotels are not sold, the cash purchase price will be adjusted by
the parties in accordance with the applicable agreement.
The following table lists the 26 hotels in the portfolio:
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Hotel
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Location
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Number of Rooms
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Hotels to be sold at first closing (expected closing in the
third quarter of 2015):
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Hampton Inn
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Medford, OR
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75
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DoubleTree
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Baton Rouge, LA
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127
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Fairfield Inn & Suites
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Baton Rouge, LA
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78
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SpringHill Suites
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Baton Rouge, LA
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78
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TownePlace Suites
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Baton Rouge, LA
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90
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Hampton Inn & Suites
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El Paso, TX
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139
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Hampton Inn
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Ft. Wayne, IN
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118
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Residence Inn
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Ft. Wayne, IN
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109
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Courtyard by Marriott
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Flagstaff, AZ
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164
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SpringHill Suites
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Flagstaff, AZ
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112
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Hotels to be sold at second closing (expected closing in the
fourth quarter of 2015):
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Residence Inn
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Jackson, MS
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100
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Holiday Inn Express
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Vernon Hills, IL
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119
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Courtyard by Marriott
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Germantown, TN
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93
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Courtyard by Marriott
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Jackson, MS
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117
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Fairfield Inn & Suites
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Germantown, TN
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80
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Residence Inn
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Germantown, TN
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78
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Aloft
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Jacksonville, FL
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136
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Staybridge Suites
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Ridgeland, MS
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92
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Homewood Suites
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Ridgeland, MS
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91
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Courtyard by Marriott
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El Paso, TX
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90
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Hotels to be sold at third closing (expected closing in the first
quarter of 2016):
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Fairfield Inn & Suites
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Spokane, WA
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84
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Fairfield Inn & Suites
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Denver, CO
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160
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SpringHill Suites
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Denver, CO
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124
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Hampton Inn
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Ft. Collins, CO
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75
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Fairfield Inn & Suites
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Bellevue, WA
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144
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Hilton Garden Inn
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Ft. Collins, CO
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120
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Item 7.01. Regulation FD Disclosure
On June 8, 2015, the Company issued a press release announcing the
proposed sale to ARCH of the 26 hotels described in Item 1.01. A copy
of the press release is furnished as Exhibit 99.1 to this report.
In addition, on June 8, 2015, the Company posted an updated investor
presentation to its website, www.shpreit.com, which discusses the
proposed sale of the hotels to ARCH. A copy of the updated investor
presentation is furnished as Exhibit 99.2 to this report.
Forward Looking Statements
The Current Report on Form 8-K contains statements that are
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995 and other federal securities
laws. These forward-looking statements are based upon the Company’s
expectations, but these statements are not guaranteed to
occur. Investors should not place undue reliance upon forward-looking
statements. These statements relate to, among other things, the
Company’s pending sale of hotels to ARCH. No assurances can be given
that the dispositions will be completed when expected, on the terms
described or at all. These actions are subject to numerous conditions,
many of which are beyond the control of the Company, including, without
limitation, general economic conditions, market conditions and other
factors, including those set forth in the Risk Factors section of the
Company’s periodic reports and other documents filed with the Securities
and Exchange Commission (the “SEC”). Copies are available on the SEC’s
website, www.sec.gov. The Company undertakes no obligation to update
these statements after the date of this Current Report on Form 8-K.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
99.1 Press release issued June 8, 2015
99.2 Summit Hotel Properties, Inc. Investor Presentation
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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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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June 8, 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 June 8, 2015.
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99.2
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Summit Hotel Properties, Inc. Investor Presentation.
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Exhibit 99.1
Summit
Hotel Properties Announces Pending Sale of 26 Hotels for $351.4 Million
AUSTIN, Texas--(BUSINESS WIRE)--June 8, 2015--Summit Hotel Properties,
Inc. (NYSE:INN) (the “Company”) today announced that it has entered into
multiple purchase and sale agreements with affiliates of American Realty
Capital Hospitality Trust, Inc. (“ARCH”) for the sale of 26 hotels, for
a combined price of approximately $351.4 million. The total sales price
represents a capitalization rate in the mid 7 percent range based on
trailing twelve month net operating income as of March 31, 2015, which
includes planned capital improvements at the properties.
“We are very excited at the opportunity to recycle capital on a larger
scale. This proposed transaction will enable us to continue to improve
our asset mix and upgrade our portfolio with additional accretive
acquisitions with strong growth profiles and diverse demand generators.
Recycling capital to create long-term value for our shareholders is a
proven strategy for us and one we consider to be a core strength,”
commented Summit’s President and CEO, Dan Hansen.
Based on trailing twelve month hotel EBITDA, the 26 hotels, containing
2,793 guestrooms, represent approximately 19.6 percent of the Company’s
pro forma hotel EBITDA. The trailing twelve month RevPAR among the 26
properties of $81.30 was 19.7 percent below the pro forma RevPAR for the
remaining 64 hotels of $101.26 as of March 31, 2015.
“Through this transformational transaction, we expect to completely
deploy the disposition proceeds into acquisitions that will continue to
improve our portfolio and provide future growth for our shareholders,”
said Hansen.
The Company has identified a robust pipeline of acquisitions and has
approximately $100 million of acquisitions under contract, which are
estimated to close prior to the first tranche of dispositions in
September 2015.
The sale of the properties is scheduled to close in three separate
tranches, with the current estimated sale dates in September 2015,
October 2015 and January 2016. The agreements are subject to customary
and standard closing conditions.
Those hotels included in the agreements for sale are as follows:
LOCATION
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ROOMS
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ESTIMATED SALE
DATE
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Hampton Inn - Medford, OR
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75
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Sep-15
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DoubleTree - Baton Rouge, LA
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127
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Sep-15
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Fairfield Inn & Suites - Baton Rouge, LA
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78
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Sep-15
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SpringHill Suites - Baton Rouge, LA
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78
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Sep-15
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TownePlace Suites - Baton Rouge, LA
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90
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Sep-15
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Hampton Inn & Suites - El Paso, TX
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139
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Sep-15
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Hampton Inn - Ft. Wayne, IN
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118
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Sep-15
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Residence Inn - Ft. Wayne, IN
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109
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Sep-15
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Courtyard - Flagstaff, AZ
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164
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Sep-15
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SpringHill Suites - Flagstaff, AZ
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112
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Sep-15
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Residence Inn - Jackson, MS
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100
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Oct-15
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Holiday Inn Express - Vernon Hills, IL
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119
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Oct-15
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Courtyard - Germantown, TN
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93
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Oct-15
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Courtyard - Jackson, MS
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117
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Oct-15
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Fairfield Inn & Suites - Germantown, TN
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80
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Oct-15
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Residence Inn - Germantown, TN
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78
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Oct-15
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Aloft - Jacksonville, FL
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136
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Oct-15
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Staybridge Suites - Ridgeland, MS
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92
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Oct-15
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Homewood Suites - Ridgeland, MS
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91
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Oct-15
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Courtyard - El Paso, TX
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90
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Oct-15
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Fairfield Inn & Suites - Spokane, WA
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84
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Jan-16
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Fairfield Inn & Suites - Denver, CO
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160
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Jan-16
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SpringHill Suites - Denver, CO
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124
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Jan-16
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Hampton Inn - Ft. Collins, CO
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75
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Jan-16
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Fairfield Inn & Suites - Bellevue, WA
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144
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Jan-16
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Hilton Garden Inn - Ft. Collins, CO
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120
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Jan-16
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2,793
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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 June 8, 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 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.
CONTACT:
Summit Hotel Properties, Inc.
Elisabeth Eisleben,
512-538-2306
Director of Investor Relations
eeisleben@shpreit.com
Exhibit 99.2
Summit Hotel Properties
Investor Presentation June 2015
FORWARD LOOKING STATEMENTS
We make forward-looking statements in this presentation that are subject
to risks and uncertainties. These forward-looking statements include
information about possible or assumed future results of our business,
financial condition, liquidity, results of operations, plans and
objectives. When we use the words “believe,” “expect,” “anticipate,”
“estimate,” “plan,” “continue,” “intend,” “should,” “may” or similar
expressions, we intend to identify forward-looking statements.
Statements regarding the following subjects, among others, may be
forward-looking by their nature: • our ability to increase our dividend
per share of common stock; • the state of the U.S. economy generally or
in specific geographic regions in which we operate, and the effect of
general economic conditions on the lodging industry and our business in
particular; • market trends in our industry, interest rates, real estate
values and the capital markets; • our business and investment strategy
and, particularly, our ability to identify and complete hotel
acquisitions; • our projected operating results; • actions and
initiatives of the U.S. government and changes to U.S. government
policies and the execution and impact of these actions, initiatives and
policies; • our ability to manage our relationships with our management
companies and franchisors; • our ability to maintain our existing and
future financing arrangements; • changes in the value of our properties;
• impact of and changes in governmental regulations, tax law and rates,
accounting guidance and similar matters; • our ability to satisfy the
requirements for qualification as a REIT under the U.S. Tax Code; • our
ability to repay or refinance our indebtedness as it matures or becomes
callable by lenders; • availability of qualified personnel; • our
ability to make distributions to our stockholders in the future; •
general volatility of the market price of our securities; and • degree
and nature of our competition. The forward-looking statements are based
on our beliefs, assumptions and expectations of our future performance,
taking into account information currently available to us. You should
not place undue reliance on these forward-looking statements. These
beliefs, assumptions and expectations can change as a result of many
possible events or factors, not all of which are known to us. These
factors are discussed under “Item 1A. Risk Factors” in our Annual Report
on Form 10-K for the year ended December 31, 2014 and in other documents
we have filed with the Securities and Exchange Commission. If a change
occurs, our business, financial condition, liquidity and results of
operations may vary materially from those expressed in our
forward-looking statements. Any forward-looking statement speaks only as
of the date on which it is made. New risks and uncertainties arise over
time, and it is not possible for us to predict those events or how they
may affect us. Except as required by law, we are not obligated to, and
do not intend to, publicly update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise. This presentation may contain statistics and other data that
may have been obtained from or compiled from information made available
by third-parties.
SUMMIT HIGHLIGHTS •
Recently Announced Portfolio Sale • Unique Focus on Premium
Select-Service • Portfolio Transformation Driving Growth • Recycling
Capital to Improve Portfolio Quality • Attractive Dividend Yield •
Strong, Conservative Balance Sheet 1
PORTFOLIO DISPOSITION –
RECENT NEWS TRANSACTION HIGHLIGHTS Seller: Summit Hotel OP, LP (and
affiliates) Buyer: American Realty Capital Hospitality Trust, Inc.
Hotels: 26 Guestrooms: 2,793 Sales Price: $351.4 million Sales Price per
Key: $125,800 Estimated Capital Improvements: $12.4 million
Capitalization Rate (TTM): 7.3% • On June 2, 2015, the Company entered
into purchase and sale agreements to sell 26 hotels for a total price of
$351.4 million, which represents a capitalization rate of 7.3 percent on
the twelve months ended March 31, 2015 • The sale of the properties is
scheduled to close in three separate tranches, with estimated sale dates
in September 2015, October 2015 and January 2016 • The Company has
identified a robust pipeline of acquisitions and has approximately $100
million of acquisitions under contract, which are estimated to close
prior to the first tranche of dispositions in September 2015 2
PORTFOLIO DISPOSITION –
TRANSFORMATIONAL EVENT The pro forma portfolio (64) represents a premium
across all operating metrics as compared to the selected disposition
portfolio (26) $81.30 $101.26 $65 $75 $85 $95 $105 Dispositions (26) Pro
Forma (64) RevPAR +25% 3 Top 25 Top 50 56% 37% Other 7% Current
Portfolio (90) EBITDA Concentration By MSA Dispositions (26) Portfolio
Post Disposition (64) Top 25 49% Top 50 31% Other 20% $10,800 $14,300
$10,000 $11,500 $13,000 $14,500 $16,000 Dispositions (26) Pro Forma (64)
Hotel EBITDA per Key +32% 35.1% 36.1% 34.5% 35.0% 35.5% 36.0% 36.5%
Dispositions (26) Pro Forma (64) Hotel EBITDA margins +104 bps Top 25
20% Top 50 Other 9% 71% Note: All metrics reflect hotel count, guestroom
count and trailing twelve month financial results as of March 31, 2015 3
PORTFOLIO DISPOSITION –
SELECTED FINANCIAL DATA For the Trailing Twelve Months ended March 31,
2015 Financial Summary Current Portfolio Disposition Portfolio Pro Forma
Portfolio Hotel count 90 26 64 Guestroom count 11,468 2,793 8,675
Occupancy 76.2% 76.1% 76.2% ADR $126.55 $106.79 $132.91 RevPAR $96.40
$81.30 $101.26 Room revenue * $ 403,308 $ 82,880 $ 320,428 Other revenue
* 25,079 3,020 22,060 Total revenue * $ 428,387 $ 85,899 $ 342,488 Hotel
EBITDA * $ 153,753 $ 30,118 $ 123,635 Hotel EBITDA margin % 35.9% 35.1%
36.1% Hotel EBITDA per Key $ 13,400 $ 10,800 $ 14,300 * Amounts in
thousands 4
PORTFOLIO DISPOSITION –
HOTEL SCHEDULE LOCATION ROOMS ESTIMATED SALE DATE Hampton Inn - Medford,
OR 75 Sep-15 DoubleTree - Baton Rouge, LA 127 Sep-15 Fairfield Inn &
Suites - Baton Rouge, LA 78 Sep-15 SpringHill Suites - Baton Rouge, LA
78 Sep-15 TownePlace Suites - Baton Rouge, LA 90 Sep-15 Hampton Inn &
Suites - El Paso, TX 139 Sep-15 Hampton Inn - Ft. Wayne, IN 118 Sep-15
Residence Inn - Ft. Wayne, IN 109 Sep-15 Courtyard - Flagstaff, AZ 164
Sep-15 SpringHill Suites - Flagstaff, AZ 112 Sep-15 Residence Inn -
Jackson, MS 100 Oct-15 Holiday Inn Express - Vernon Hills, IL 119 Oct-15
Courtyard - Germantown, TN 93 Oct-15 Courtyard - Jackson, MS 117 Oct-15
Fairfield Inn & Suites - Germantown, TN 80 Oct-15 Residence Inn -
Germantown, TN 78 Oct-15 Aloft - Jacksonville, FL 136 Oct-15 Staybridge
Suites - Ridgeland, MS 92 Oct-15 Homewood Suites - Ridgeland, MS 91
Oct-15 Courtyard - El Paso, TX 90 Oct-15 Fairfield Inn & Suites -
Spokane, WA 84 Jan-16 Fairfield Inn & Suites - Denver, CO 160 Jan-16
SpringHill Suites - Denver, CO 124 Jan-16 Hampton Inn - Ft. Collins, CO
75 Jan-16 Fairfield Inn & Suites - Bellevue, WA 144 Jan-16 Hilton Garden
Inn - Ft. Collins, CO 120 Jan-16 2,793 5
OVER 20 YEARS OF EXECUTION
2011 (IPO) 2014 - forward 2012 2013 1991 - 2011 2011 (IPO) 2012 2013
2014 - forward - Predecessor company founded to acquire, develop and
operate select-service hotels - Approximately $311.0 million of capital
investments from 2007 until our IPO in February 2011 - Prior to IPO, 93
hotels were acquired and 27 hotels sold - Priced 26.0 million share IPO
in February of 2011, generating gross proceeds of $253.5 million -
Acquired five hotels, totaling 567 guestrooms for a total purchase price
of $50.0 million - Expanded credit facility to allow us additional
flexibility and capacity for acquisitions - $50.0 million of preferred
stock issued at a rate of 9.25% - Acquired 19 hotels, totaling 2,348
guestrooms for a total purchase price of $265.4 million - $112.5 million
of common stock issued at $8.15 per share - $75.0 million of preferred
stock issued at a rate of 7.875% - Sold five hotels and two land parcels
for a total sales price of $27.8 million - Acquired 19 hotels, totaling
3,033 guestrooms for a total purchase price of $475.6 million - $314.0
million of common stock issued at an average price of $9.10 per share -
$85.0 million of preferred stock issued at a rate of 7.125% - Sold 15
hotels and five land parcels for a total sales price of $58.6 million -
Acquired six hotels in 2014, totaling 990 guestrooms for an aggregate
purchase price of $214.7 million - Sold four hotels and three parcels of
land in 2014 for a total sales price of $19.8 million - Acquired one
hotel YTD in 2015, totaling 211 guestrooms for a purchase price of $39.0
million 6
EXPERIENCED LEADERSHIP
DRIVING SUCCESS Executive Lodging Experience Operations Experience REIT
Experience Background Daniel P. Hansen President & Chief Executive
Officer 11 years 10 years 4 years Prior to joining Summit, Mr. Hansen
spent 11 years with Merrill Lynch in various leadership positions. Mr.
Hansen was previously the President and Chief Financial Officer of the
company’s predecessor, Summit Hotel Properties, LLC after serving as
Chief Development Officer. Mr. Hansen holds a B.A. in economics from
South Dakota State University and serves on boards and advisory councils
for the lodging industry and several hotel brands. Craig J. Aniszewski
Executive Vice President & Chief Operating Officer 30 years 30 years 4
years Prior to joining Summit, Mr. Aniszewski spent 13 years with
Marriott International, Inc., where he held sales and operations
positions in both select-service and full-service convention and resort
hotels. Mr. Aniszewski joined The Summit Group in January 1997. Mr.
Aniszewski served as Executive Vice President and Chief Operating
Officer overseeing the 1,800 employee management company and was
responsible for all facets of owning and operating US hotels in 19
states. Greg A. Dowell Executive Vice President & Chief Financial
Officer 0.5 years 17 years 11 years Prior to joining Summit, Mr. Dowell
held the position of Senior Executive Vice President and Chief Operating
Officer at American Campus Communities (NYSE:ACC). During his 13-year
tenure, Dowell managed all aspects of operations, facilities management,
human resources, information technology and various aspects of
accounting and systems development. He played a key role in the
development of ACC’s specialized operating platform which facilitated
American Campus Communities becoming the first student housing REIT to
be publicly traded in 2004. Prior to joining ACC, Dowell spent ten years
in progressive capacities with Century Development. 7
EXCEPTIONAL EXECUTION OF
STRATEGY 2011 (IPO) 2012 2012 2013 2014 Properties 84 4.8% 88 2.3% 90
Keys 9,019 20.9% 10,908 5.1% 11,463 Occupancy ¹ 70.7% 3.7% 73.3% 3.3%
75.7% ADR ¹ $ 97.90 14.6% $ 112.23 10.5% $ 123.98 RevPAR ¹ $ 69.22 18.8%
$ 82.25 14.1% $ 93.83 Hotel EBITDA ¹ / Key $ 8,200 / key 26.8% $ 10,400
/ key 24.0% $ 12,900 / key Hotel EBITDA margin ¹ 31.1% 342 bps 34.6% 84
bps 35.4% Market Cap ² $ 488.2 M 58.9% $ 775.9 M 39.0% $ 1.1 B TEV ² $
911.8 M 50.8% $ 1.4 B 36.5% $ 1.9 B 90-Day Average Daily Dollar Volume 3
$ 2.1 M 175.3% $ 5.9 M 66.4% $ 9.8 M 1 Pro forma information includes
trailing twelve month operating results as reported for the years ended
December 31, 2012, 2013 and 2014 as if each hotel had been owned by the
Company since January 1 of the previous year. As a result, these pro
forma operating measures include operating results for certain hotels
for periods prior to the Company’s ownership 2 Assumes a stock price of
$9.50, $9.00 and $12.44 as of close on December 31, 2012, 2013 and 2014,
respectively 3 Represents the last 90 trading days of each fiscal year.
The 2014 metric represents the 90 trading days ended March 6, 2015 8
PORTFOLIO TRANSFORMATION –
IPO THROUGH MARCH 2015 Since IPO, we have upgraded the quality of our
portfolio by acquiring assets in desirable markets while completing
non-strategic dispositions 84 127 70 80 90 100 110 120 130 Dispositions
Pro forma Portfolio Average Guestrooms per Hotel $53.91 $96.40 $35.00
$45.00 $55.00 $65.00 $75.00 $85.00 $95.00 Dispositions Pro forma
Portfolio RevPAR $5,100 $13,400 $2,000 $4,000 $6,000 $8,000 $10,000
$12,000 $14,000 Dispositions Pro forma Portfolio Hotel EBITDA per Key
25.4% 35.9% 22% 24% 26% 28% 30% 32% 34% 36% 38% Dispositions Pro forma
Portfolio Hotel EBITDA margin 1,050 bps 163% 79% 1 1 2 1 2 1 2 2 51% 1
Pro forma information includes trailing twelve month operating results
for 90 hotels owned as of March 31, 2015 as if each hotel had been owned
by the Company since April 1, 2014. As a result, these pro forma
operating measures include operating results for certain hotels for
periods prior to the Company’s ownership 2 Disposition data is for the
trailing twelve months prior to sale for the 24 hotels sold as of March
31, 2015 9
PREMIUM SELECT-SERVICE
PORTFOLIO 1 As of June 5, 2015 10 Our portfolio consists of 91 premium
select-service hotels with top brands, in top markets exhibiting
multiple demand drivers and barriers to entry 10
DIFFERENTIATED INVESTMENT
THESIS Unique Approach to Asset Management Strategic Relationships
Create Robust Pipeline Focused on Upscale & Diversified Market
Methodology Upper Midscale Properties Summit is one of few publicly
traded lodging REITs to focus on Upscale and Upper Midscale hotels on a
national basis. We believe we can create better value for shareholders
by pursuing acquisitions in “beltway markets” with great locations, high
barriers to entry and strong demand generators. Relationships with
Marriott, Hilton, Hyatt and IHG as well as individual owners, banks and
special servicers provide us with attractive acquisition opportunities.
We take an aggressive, in-house approach to the oversight and
development of our portfolio; we maintain a disciplined strategy to
maximize value for our investors in our existing properties, our
acquisitions and our renovations. 11
WHY PREMIUM
SELECT-SERVICE…? PROVEN OUTPERFORMANCE Historical RevPAR Growth: Luxury
/ Upper Upscale vs. Upscale / Upper-midscale $66 $94 $50 $60 $70 $80 $90
$100 1998 2014 +43% STR Upscale RevPAR ($) $101 $124 $50 $75 $100 $125
$150 1998 2014 +23% STR Upper Upscale RevPAR ($) • Since 1998, STR
Upscale RevPAR growth has outpaced STR Upper Upscale RevPAR growth by
approximately 87% • The rise of premium select-service is a direct
result of an enhanced guest experience through continual product
evolution • Premium select-service RevPAR growth outperformed Luxury and
Upper Upscale RevPAR growth in every quarter throughout 2014 and the
first quarter of 2015 • Premium select-service continues to outperform.
STR reported first quarter 2015 average Upscale and Upper-midscale
RevPAR growth of 7.8% and average Luxury and Upper Upscale RevPAR growth
of 6.2% 7.9% 8.7% 5.5% 6.8% 7.6% 5.9% 7.0% 6.4% 6.3% 5.5% 8.8% 6.8% 6.2%
7.8% 7.5% 5.4% 6.5% 5.3% 4.8% 4.8% 4.3% 6.4% 8.3% 9.6% 8.9% 7.8% 0.0%
2.0% 4.0% 6.0% 8.0% 10.0% 12.0% Mar-12 Jun-12 Sep-12 Dec-12 Mar-13
Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 STR Luxury &
Upper Upscale Average STR Upscale & Upper Midscale Average Source: PwC
Hospitality Directions U.S. January 2015, Smith Travel Research 12
SUMMIT’S TRACK RECORD OF
OUTPERFORMING RevPAR Performance 2 : INN Same-Store vs. STR Upscale •
Summit’s same-store portfolio RevPAR growth has exceeded the STR Upscale
RevPAR growth benchmark for twelve consecutive quarters • The average
margin of RevPAR growth outperformance has been approximately 190 basis
points for more than two years • Based on the Company’s outlook, RevPAR
growth outperformance is expected to continue throughout 2015 6.6% 8.0%
6.2% 6.1% 8.4% 8.9% 11.3% 10.4% 13.3% 8.0% 6.0% 5.4% 5.3% 4.6% 6.4% 8.5%
9.9% 8.6% 7.0% 6.6% +[VALUE] +[VALUE] 0.0% 2.0% 4.0% 6.0% 8.0% 10.0%
12.0% 14.0% Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14
Mar-15 FYE 2015E INN Same Store STR Upscale INN Same-Store Avg STR
Upscale Avg 2015 Outlook 1 + 190 bps 1 Assumes the high-end of the
Company’s same-store RevPAR growth outlook 2 Smith Travel Research.
Except where noted, RevPAR growth results are for the quarter ended 13
CLEAR AND CONSISTENT
MISSION New Orleans, LA 9% San Francisco, CA 8% Denver, CO 6% Dallas, TX
5% Minneapolis, MN 5% Indianapolis, IN 5% Phoenix, AZ 5% Houston, TX 4%
Louisville, KY 4% Altanta, GA 4% Austin, TX 3% Portland, OR 3%
Flagstaff, AZ 3% Nashville, TN 3% Orlando, FL 3% Jackson, MS 2% Baton
Rouge, LA 2% 21 Others 26% 1 Trailing twelve month pro forma hotel
EBITDA as of March 31, 2015 2 Includes nine IHG, two Starwood and one
Carlson branded hotels owned as of March 31, 2015 14
“SUMMITIZATION” By MSA Tier
By Franchisor We have executed on our strategy and remain focused on our
mission: Maximize Shareholder Returns Through a Portfolio With the Top
Brands in Top Markets EBITDA Diversification ¹ By Market • No single
market makes up more than 10% of our portfolio EBITDA • No single hotel
makes up more than 4% of our portfolio EBITDA [PER CENT AGE] 31% 17%
Other 10% [CATEG ORY NAME] [PERCE NTAGE] [CATEG ORY NAME] [PERCE NTAGE]
[CATEG ORY NAME] [PERCE NTAGE] [CATEG ORY NAME] [PERCE NTAGE] 2 15 Our
Asset and Revenue Management teams have more than 13 decades combined
experience in the lodging industry, six decades combined with Summit •
Unlike many competitors, we have Corporate Revenue Managers. •
Continuous monitoring of industry trends and results in comparison to
our own. • Regular on-site meetings to offer recommendations and
solutions to improve efficiency and ensure compliance. • We are an owner
that thinks like an operator and utilizes our hands-on experience to
hold our management companies more accountable. • Our exhaustive,
“boots-onthe- ground” approach to due diligence maximizes value creation
and positions us to best manage the asset going forward. • Increased
focus on daily operations. • Real-time data allows our team to
proactively respond to opportunities not being captured as well as to
correct any operational issues. • We have the ability the negotiate
favorable management terms • We currently utilize ten independent
management companies. • We believe the use of independent platforms
allows for a complete focus on value creation and total return. Driving
SHAREHOLDER VALUE 16
CAPITAL RECYCLING Upgrading
Asset Quality to Drive Stronger Results Strategic dispositions of legacy
assets to improve the quality of our portfolio and build shareholder
value $3,000 $600 $12,600 $5,300 $0 $3,000 $6,000 $9,000 $12,000 Total
Revenue Hotel EBITDA San Antonio, TX Austin, TX 1 Amounts in thousands 2
Includes trailing twelve month operating results as of September 30,
2014 3 Includes pro forma trailing twelve month operating results as of
March 31, 2015 4 Represents post-renovation capitalization
rate Disposition 2 Acquisition 3 Country Inn & Suites San Antonio, TX
Hampton Inn & Suites Austin, TX Properties 1 1 Land Parcels 3 -
Guestrooms 126 209 Transaction Amount 1 $ 7,900 $ 53,000 Renovation
Estimate 1 $ 1,800 $ 2,400 Occupancy 74.2% 86.5% ADR $ 84.69 $ 177.90
RevPAR $ 62.86 $ 153.92 RevPAR Index 95.1 113.7 Total Revenue 1 $ 3,000
$ 12,600 Hotel EBITDA 1 $ 600 $ 5,300 Hotel EBITDA Margin 19.4% 41.9%
Capitalization Rate 4 4.2% 8.6% 16
VALUE CREATION THROUGH
STRATEGIC RENOVATIONS $74.20 $81.13 $79.67 $95.70 $97.97 25.0% 27.0%
29.0% 31.0% 33.0% 35.0% 37.0% 39.0% $65 $70 $75 $80 $85 $90 $95 $100
2011 2012 2013 2014 2015 RevPAR Hotel EBITDA margins 17 ¹ Operating
results from prior owner are presented for 2011 and 2012; the Company’s
results are presented for 2013, 2014 and trailing twelve months ended
March 31, 2015 Acquisition / Renovation Hyatt Place Orlando, Florida
(Universal Studios & Convention Center) • Two properties, with a total
of 300 guestrooms, acquired in January 2013 • Acquisition price of $24.1
million or $80,300 per key • Total investment of $92,700 per key post
renovation of $3.7 million 23.0% RevPAR growth + 747 bps margin 17
VALUE CREATION THROUGH
BRAND CONVERSION Upside From Renovation 1 $10,000 $12,500 $2,600 $3,800
$104.50 $133.68 $95 $100 $105 $110 $115 $120 $125 $130 $135 $0 $2,000
$4,000 $6,000 $8,000 $10,000 $12,000 Pre-Conversion ¹ Post Brand
Conversion ² RevPAR *in millions Total Revenue Hotel EBITDA RevPAR 18
DoubleTree by Hilton San Francisco, CA 1 Includes trailing twelve month
operating results as of December 31, 2013 2 Includes trailing twelve
month operating results as of March 31, 2015 3 Represents
post-renovation capitalization rate on 2015 estimates 4 Amounts in
thousands Acquisition 1 Post Conversion 2 Purchase Price 4 $ 39,060 $
43,560 Per Key $ 186,000 $ 207,600 Guestrooms 210 210 Revenue 4 $ 10,000
$ 12,500 Hotel EBITDA Margin 25.7% 30.3% Capitalization Rate 5.6% 8.5% 3
Strategic brand conversion to improve the quality of our portfolio and
build shareholder value +27.9% 18
STRONG AND WELL COVERED
DIVIDEND 1 SNL data based on closing price on June 2, 2015 2 SNL data
based on 2015 FactSet Consensus FFO estimates as of June 1, 2015 Current
Dividend Yield 1 Price per Key Valuation 3 5.6% Total Enterprise Value /
2015E EBITDA 1 4.5% 4.3% 4.3% 4.3% 4.1% 4.0% 3.8% 3.5% 2.9% 1.5% 1.3%
1.3% 0.0% 0% 1% 2% 3% 4% 5% 6% AHT CHSP HT RLJ CLDT LHO HST DRH INN PEB
FCH SHO AHP BEE 60.6% 52.3% 52.2% 51.9% 49.8% 49.3% 49.2% 49.0% 41.5%
40.7% 18.0% 15.3% 12.2% 0.0% 0% 10% 20% 30% 40% 50% 60% CHSP LHO RLJ HST
PEB HT CLDT DRH INN AHT FCH SHO AHP BEE 100% 100% 96% 92% 90% 78% 74%
61% 56% 55% 51% 50% 46% 40% 2% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
100% AHP RLJ LHO HT AHT BEE SHO DRH FCH PEB RHP INN HST CHSPCLDT - - -
$26 $10 - - - - - $3 $90 $8 - $94 $50 $12 - $109 - $19 - - $75 - - - - -
- - $140 - $25 - $- $25 $50 $75 $100 $125 $150 $175 $200 19
CONSERVATIVE CAPITAL
STRUCTURE 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Unsecured Revolving Credit Facility Unsecured Term Loan 7-Year Unsecured
Term Loan 5-Year Secured Non-Recourse Loans Secured Recourse Loans Debt
Maturity Schedule 5 REIT Credit Statistics and Debt Overview Total Debt
1 $662.9 million Total Debt / Total Enterprise Value 32.7% Net Debt /
2015E EBITDA ² 4.3x Weighted Average Debt Maturity 5 5.0 years Weighted
Average Interest Rate 5 4.22% Interest Coverage Ratio 3 5.1x FY 2015E
FFO Payout Ratio 4 41% 1 Debt balances as of April 30, 2015 2 Calculated
using consensus 2015E EBITDA of $146.1 million as of June 1, 2015 3
Interest coverage ratio calculated by dividing 2015E consensus EBITDA by
total debt multiplied by weighted average interest rate 4 2015 estimates
are based on consensus of $1.14 FFO per share and assumes annual common
dividend of $0.47 per share 5 INN debt balances as of April 30, 2015.
SNL data as of June 1, 2015 20 2015 – 2019 Debt Maturities (% of Total
Debt) 5 *in millions 20
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