EX-99.2 4 a14-24965_1ex99d2.htm EX-99.2

Exhibit 99.2

 

UNAUDITED PRO FORMA CONSOLIDATED

FINANCIAL INFORMATION OF

SUMMIT HOTEL PROPERTIES, INC.

 

Summit Hotel Properties, Inc. (the “Company”) is a self-managed hotel investment company that was organized on June 30, 2010 as a Maryland corporation. The Company holds both general and limited partnership interests in Summit Hotel OP, LP (the “Operating Partnership”), a Delaware limited partnership also organized on June 30, 2010.

 

Unless stated otherwise or the context otherwise requires, references in this report to “we”, “our”, “us”, “our company” or “the company” mean Summit Hotel Properties, Inc. and its consolidated subsidiaries.

 

On September 9, 2014, we purchased the Hampton Inn & Suites Austin — Downtown/ Convention Center (the “Austin Hampton Inn”) in Austin, Texas.  The hotel has 209 guestrooms and we completed the acquisition for a purchase price of $53.0 million.  We funded the acquisition with borrowings under our senior unsecured revolving credit facility.

 

The unaudited pro forma consolidated statements of operations for the Company for the six months ended June 30, 2014 and the year ended December 31, 2013 are presented as if the acquisition of the Austin Hampton Inn had been completed on January 1, 2013.

 

The unaudited pro forma consolidated financial information is not necessarily indicative of what our consolidated results of operations would have been assuming the acquisition of the Austin Hampton Inn had been completed on January 1, 2013, nor is it indicative of the consolidated results of operations for future periods. In management’s opinion, all adjustments necessary to reflect the effects of the acquisition of the Austin Hampton Inn have been made. The unaudited pro forma consolidated financial information should be read in conjunction with the historical consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 and Quarterly Report on Form 10-Q for the quarter ended September 30, 2014.

 


 

Summit Hotel Properties, Inc.

Unaudited Pro Forma Consolidated Statement of Operations

For the Six Months Ended June 30, 2014

(in thousands, except per share amounts)

 

 

 

Historical Summit
Hotel Properties, Inc.

 

Historical Austin
Hampton Inn

(1)

Pro Forma
Adjustments

 

Pro Forma
Summit Hotel
Properties, Inc.

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

Room

 

$

184,232

 

$

6,023

 

$

—

 

$

190,255

 

Other hotel operations revenue

 

10,837

 

496

 

—

 

11,333

 

Total revenues

 

195,069

 

6,519

 

—

 

201,588

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

Hotel operating expenses:

 

 

 

 

 

 

 

 

 

Room

 

49,677

 

940

 

—

 

50,617

 

Other direct

 

25,234

 

886

 

—

 

26,120

 

Other indirect

 

51,617

 

1,933

 

179

(2) (3) (4)

53,729

 

Total hotel operating expenses

 

126,528

 

3,759

 

179

 

130,466

 

Depreciation and amortization

 

32,075

 

355

 

438

(5)

32,868

 

Corporate general and administrative

 

9,622

 

—

 

—

 

9,622

 

Hotel property acquisition costs

 

709

 

—

 

—

 

709

 

Loss on impairment of assets

 

660

 

—

 

—

 

660

 

Total expenses

 

169,594

 

4,114

 

617

 

174,325

 

Operating income (loss)

 

25,475

 

2,405

 

(617

)

27,263

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

Interest expense

 

(13,206

)

(315

)

(224

)(6)

(13,745

)

Other income

 

286

 

—

 

—

 

286

 

Total other expense, net

 

(12,920

)

(315

)

(224

)

(13,459

)

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations before income taxes

 

12,555

 

2,090

 

(841

)

13,804

 

Income tax expense

 

(407

)

—

 

—

 

(407

)

Income (loss) from continuing operations

 

12,148

 

2,090

 

(841

)

13,397

 

 

 

 

 

 

 

 

 

 

 

Income attributable to non-controlling interests:

 

 

 

 

 

 

 

 

 

Operating partnership

 

47

 

—

 

15

(7)

62

 

Joint venture

 

1

 

—

 

—

 

1

 

Net income (loss) from continuing operations attributable to Summit Hotel Properties, Inc.

 

12,100

 

2,090

 

(856

)

13,334

 

Preferred dividends

 

(8,294

)

—

 

—

 

(8,294

)

Net income (loss) from continuing operations attributable to common stockholders

 

$

3,806

 

$

2,090

 

$

(856

)

$

5,040

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

Basic and diluted net income per share from continuing operations

 

$

0.04

 

 

 

 

 

$

0.06

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

85,136

 

 

 

 

 

85,136

 

Diluted

 

85,596

 

 

 

 

 

85,596

 

 


 

Summit Hotel Properties, Inc.

Unaudited Pro Forma Consolidated Statement of Operations

For the Year Ended December 31, 2013

(in thousands, except per share amounts)

 

 

 

Historical Summit
Hotel Properties, Inc.

 

Historical Austin
Hampton Inn

(1)

Pro Forma
Adjustments

 

Pro Forma
Summit Hotel
Properties, Inc.

 

 

 

 

 

 

 

 

 

 

 

Revenues:

 

 

 

 

 

 

 

 

 

Room

 

$

283,279

 

$

10,826

 

$

—

 

$

294,105

 

Other hotel operations revenue

 

15,679

 

1,022

 

—

 

16,701

 

Total revenues

 

298,958

 

11,848

 

—

 

310,806

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

Hotel operating expenses:

 

 

 

 

 

 

 

 

 

Room

 

80,391

 

1,665

 

—

 

82,056

 

Other direct

 

39,815

 

1,800

 

—

 

41,615

 

Other indirect

 

78,136

 

3,481

 

354

(2) (3) (4)

81,971

 

Total hotel operating expenses

 

198,342

 

6,946

 

354

 

205,642

 

Depreciation and amortization

 

51,184

 

782

 

804

(5)

52,770

 

Corporate general and administrative

 

12,929

 

—

 

—

 

12,929

 

Hotel property acquisition costs

 

1,886

 

—

 

—

 

1,886

 

Loss on impairment of assets

 

1,369

 

—

 

—

 

1,369

 

Total expenses

 

265,710

 

7,728

 

1,158

 

274,596

 

Operating income (loss)

 

33,248

 

4,120

 

(1,158

)

36,210

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

Interest expense

 

(20,137

)

(652

)

(446

)(6)

(21,235

)

Other expense

 

(1,592

)

—

 

—

 

(1,592

)

Total other expense, net

 

(21,729

)

(652

)

(446

)

(22,827

)

Income (loss) from continuing operations before income taxes

 

11,519

 

3,468

 

(1,604

)

13,383

 

Income tax expense

 

(4,894

)

—

 

—

 

(4,894

)

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

6,625

 

3,468

 

(1,604

)

8,489

 

 

 

 

 

 

 

 

 

 

 

Income (loss) attributable to non-controlling interests:

 

 

 

 

 

 

 

 

 

Operating partnership

 

(272

)

—

 

64

(7)

(208

)

Joint venture

 

316

 

—

 

—

 

316

 

Net income (loss) from continuing operations attributable to Summit Hotel Properties, Inc.

 

6,581

 

3,468

 

(1,668

)

8,381

 

Preferred dividends

 

(14,590

)

—

 

—

 

(14,590

)

 

 

 

 

 

 

 

 

 

 

Net income (loss) from continuing operations attributable to common stockholders

 

$

(8,009

)

$

3,468

 

$

(1,668

)

$

(6,209

)

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

Basic and diluted net loss per share from continuing operations

 

$

(0.11

)

 

 

 

 

$

(0.09

)

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

70,327

 

 

 

 

 

70,327

 

Diluted

 

70,737

 

 

 

 

 

70,737

 

 


 

Summit Hotel Properties, Inc.

Notes to Unaudited Pro Forma Financial Information

(dollars in thousands)

 

(1)

The unaudited pro forma financial information for the six months ended June 30, 2014 and the year ended December 31, 2013, presents the acquisition of the 209 guestroom Austin Hampton Inn as if it occurred on January 1, 2013 for a purchase price of $53.0 million, funded with borrowings under our senior unsecured revolving credit facility.

 

 

 

The following is a summary of assets and liabilities acquired, including the Company’s allocation of the aggregate purchase price for the Austin Hampton Inn, and the net cash disbursed to complete the acquisition.

 

Assets and Liabilities Acquired

 

Hotel buildings and improvements

 

$

52,460

 

Furniture, fixtures and equipment

 

1,300

 

Total purchase price

 

53,760

 

Other assets

 

17

 

Total assets acquired

 

53,777

 

Other liabilities

 

(1,727

)

Net assets acquired

 

$

52,050

 

 

Net Cash Disbursed

 

Purchase price

 

$

53,000

 

Acquisition costs

 

13

 

Net working capital

 

(950

)

 

 

$

52,063

 

 

 

 

 

Cash

 

$

13

 

Draw on revolving credit facility

 

52,050

 

 

 

$

52,063

 

 

(2)

The pro forma adjustment represents the difference between the franchise fees previously paid by the property prior to the acquisition by us and the franchise fees that we are contractually obligated to pay.

 

 

(3)

The pro forma adjustment represents the difference between the property taxes incurred by the property prior to the acquisition by us and the property taxes that we expect to incur as a result of the increase in the basis of the net assets acquired.

 

 

(4)

The pro forma adjustment represents the difference between the management fees previously paid by the property prior to the acquisition by us and the fees that we are contractually obligated to pay.

 

 

(5)

The pro forma adjustment represents the difference between the depreciation recorded by the property prior to the acquisition by us and the amount of depreciation that we expect to record based on our basis in the net assets acquired.  We will record depreciation expense using the straight-line method over a 39 year period for buildings and improvements and an unfavorable lease liability and over a five-year period for furniture, fixtures and equipment.

 

 

(6)

The pro forma adjustment represents the difference between the interest expense paid by the property prior to the acquisition by us based on the former debt structure of the hotel and the interest expense that we expect to incur as a result of the borrowings under our senior unsecured revolving credit facility that were drawn to complete the acquisition.

 

 

(7)

The pro forma adjustment represents the allocation of the pro forma net income of the property to the non-controlling interest of the Company.