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): November 5, 2013
|
SUMMIT HOTEL PROPERTIES, INC. |
||
|
Maryland |
001-35074 |
27-2962512 |
|
(State or Other Jurisdiction of Incorporation or Organization) |
(Commission File Number)
|
(I.R.S. Employer Identification No.)
|
|
SUMMIT HOTEL OP, LP |
||
|
Delaware |
000-54273 |
20-0617340 |
|
(State or Other Jurisdiction of Incorporation or Organization) |
(Commission File Number)
|
(I.R.S. Employer Identification No.)
|
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. Results of Operations and Financial Condition.
On November 5, 2013, Summit Hotel Properties, Inc. (the “Company”) issued a press release announcing the consolidated operating results of the Company and its subsidiaries, including its operating partnership, Summit Hotel OP, LP, for the quarter ended September 30, 2013.
A copy of the press release is furnished as Exhibit 99.1 to this report.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
99.1 Press release issued on November 5, 2013.
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.
|
SUMMIT HOTEL PROPERTIES, INC. |
||||
|
(Registrant) |
||||
|
|
|
By: |
/s/ Christopher R. Eng |
|
|
Christopher R. Eng |
||||
|
Date: |
November 5, 2013 |
Vice President, General Counsel and Secretary |
||
|
SUMMIT HOTEL OP, LP |
||||
|
(Registrant) |
||||
|
By: |
SUMMIT HOTEL GP, LLC, |
|||
|
its General Partner |
||||
|
By: |
SUMMIT HOTEL PROPERTIES, INC., |
|||
|
its Sole Member |
||||
|
|
|
By: |
/s/ Christopher R. Eng |
|
|
Christopher R. Eng |
||||
|
Date: |
November 5, 2013 |
Vice President, General Counsel and Secretary |
||
EXHIBIT INDEX
|
Exhibit No. |
Description |
||
| 99.1 |
Press release issued November 5, 2013. |
||
Exhibit 99.1
Summit Hotel Properties Reports Third Quarter 2013 Results
6.2 Percent Same-Store RevPAR Growth; 73.7 Percent Adjusted EBITDA Growth
AUSTIN, Texas--(BUSINESS WIRE)--November 5, 2013--Summit Hotel Properties, Inc. (NYSE: INN) (the “Company”) today announced results for the third quarter ended September 30, 2013.
Third Quarter Highlights
In September, the Company completed a public offering of 17.25 million shares of common stock, raising net proceeds of $152.2 million. The effect of the offering on previously announced guidance would have reduced estimated Adjusted FFO guidance per diluted unit from a range of $0.24 - $0.26 down to $0.23 - $0.25.
“This follow-on offering positions us well for sustained growth, providing us with capital to acquire strategic hotels over the next several quarters,” said Dan Hansen, Summit’s President and CEO. “The short-term dilutive effect will resolve itself quickly as we execute on hotel acquisitions. Since the offering was completed, we have acquired two hotels and have three under purchase agreement, as well as a very active pipeline of both single assets and small portfolios.”
“Our results were within our expected range but several items affected them both on the positive and negative side,” he noted. “Our RevPAR growth was within our range when excluding the five recently acquired New Orleans properties. Adjusted FFO per diluted unit was aided by a tax benefit of approximately $0.02 per diluted unit. Several factors also influenced operating results at a small number of hotels in some markets during the quarter, including the sequestration, the uncertainty of a government shutdown and sub-par performance. We have addressed the operating shortcomings at those hotels with our third-party management companies and expect to see improvements. We remain positive about the Company’s 2014 outlook.”
The Company’s results included the following:
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| ($ in thousands, except per unit and RevPAR data) | ||||||||||||||||
| Total Revenues | $ | 82,174 | $ | 43,070 | $ | 221,002 | $ | 116,591 | ||||||||
|
EBITDA 1 |
$ | 17,990 | $ | 14,492 | $ | 60,911 | $ | 35,385 | ||||||||
|
Adjusted EBITDA 1 |
$ | 26,485 | $ | 15,245 | $ | 71,956 | $ | 40,691 | ||||||||
|
FFO 1 |
$ | 17,284 | $ | 9,001 | $ | 43,990 | $ | 22,468 | ||||||||
|
Adjusted FFO 1 |
$ | 17,847 | $ | 9,742 | $ | 47,269 | $ | 25,477 | ||||||||
|
FFO per diluted unit 1 |
$ | 0.24 | $ | 0.24 | $ | 0.64 | $ | 0.60 | ||||||||
|
Adjusted FFO per diluted unit 1 |
$ | 0.25 | $ | 0.26 | $ | 0.69 | $ | 0.68 | ||||||||
|
Pro Forma 2 |
||||||||||||||||
| RevPAR | $ | 83.56 | $ | 80.88 | $ | 83.76 | $ | 79.62 | ||||||||
| RevPAR growth | 3.3 | % | 5.2 | % | ||||||||||||
| Hotel EBITDA | $ | 28,596 | $ | 27,151 | $ | 87,183 | $ | 81,348 | ||||||||
| Hotel EBITDA margin | 34.8 | % | 34.2 | % | 35.6 | % | 34.9 | % | ||||||||
| Hotel EBITDA margin growth | 60 bps | 67 bps | ||||||||||||||
1 See tables later in this press release for a reconciliation of net income (loss) to earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted EBITDA, funds from operations (“FFO”), FFO per diluted unit, adjusted FFO and adjusted FFO per diluted unit. EBITDA, adjusted EBITDA, FFO, FFO per diluted unit, adjusted FFO and adjusted FFO per diluted unit, as well as hotel EBITDA (hotel revenues less hotel operating expenses), are non-GAAP financial measures. See further discussions of these non-GAAP measures later in this press release.
2 Pro forma information includes operating results for 82 hotels owned as of September 30, 2013 as if each hotel had been owned by the Company since January 1, 2012, which excludes the following ten hotels that were held for sale at September 30, 2013: the 63-guestroom Fairfield Inn, Boise, Id.; the 63-guestroom Hampton Inn, Boise, Id.; the 60-guestroom AmericInn Hotel & Suites, Salina, Kan.; the 63-guestroom Fairfield Inn, Salina, Kan.; the 89-guestroom AmericInn Hotel & Suites, Fort Smith, Ark.; the 57-guestroom Aspen Hotel & Suites, Fort Smith, Ark.; the 178-guestroom Hampton Inn, Fort Smith, Ark.; the 57-guestroom Fairfield Inn, Emporia, Kan.; the 58-guestroom Holiday Inn Express, Emporia, Kan.; and the 78-guestroom SpringHill Suites, Little Rock, Ark. As a result, these pro forma operating measures include operating results for certain hotels for periods prior to the Company’s ownership.
| 9/30/2013 | 9/30/2012 | growth | |||||||
| Number of Hotels | 92 | 73 | 26.0% | ||||||
| Number of Guestrooms | 10,913 | 7,533 | 44.9% | ||||||
| Total Revenue (000’s) | $82,174 | $43,070 | 90.8% | ||||||
| Adjusted EBITDA (000’s) | $26,485 | $15,245 | 73.7% | ||||||
“Our acquisition activity in 2013, including the two recently acquired Southern California hotels, will help drive significant earnings per share growth in 2014,” Hansen said.
“Our same-store and pro forma (excluding New Orleans) RevPAR growth for the quarter was at or above comparable STR results,” Hansen stated. “We previously noted the significant RevPAR growth in 2012 would create difficult RevPAR comparisons for the second half of 2013. Our same-store hotels generated 12.9 percent and 15.3 percent RevPAR growth in the third and fourth quarters of 2012, respectively.”
|
Q3 2013 Overall STR 1 Results |
||||||
| Occupancy | ADR | RevPAR | ||||
| Overall US | 1.4% | 4.0% | 5.5% | |||
| Upscale | 0.9% | 4.3% | 5.3% | |||
| Upper Midscale | 1.2% | 3.0% | 4.2% | |||
1 STR Quarterly Hotel Review, Volume 13, Issue Q3
Year-to-Date Highlights
Capital Markets
During the third quarter of 2013, the Company raised $152.2 million in net proceeds from a common stock offering.
During the third quarter of 2013, the Company closed on $80.1 million in debt financing including the following transactions:
Capital Investment
Acquisitions
During the third quarter of 2013, the Company announced four pending acquisitions including: the 115-guestroom Hampton Inn & Suites, Ventura (Camarillo), Calif.; the 108-guestroom Hampton Inn & Suites, San Diego (Poway), Calif.; the 98-guestroom Hampton Inn, Santa Barbara (Goleta), Calif.; and the 182-guestroom Hilton Garden Inn, Houston, Texas.
Subsequent to the third quarter’s end, the Company closed on two of the four announced acquisitions. On October 1, 2013 and October 8, 2013, the Company closed on the Ventura Hampton Inn & Suites and the San Diego Hampton Inn & Suites, respectively.
The conversion of the 213-guestroom hotel to a Hyatt Place in downtown Minneapolis is nearly complete and expected to close prior to year-end 2013.
Renovation Capital
The Company invested $12.3 million on renovations during the third quarter of 2013 at eleven properties. Projects ranged from lobby and public space improvements to complete guestroom renovations, including furniture, soft goods, and guest bathrooms.
“The capital we have invested in the renovations of our hotels continues to yield exceptional results,” Hansen said. “We see ongoing RevPAR growth premiums from these upgraded hotels and will maintain investment in our portfolio where opportunities are presented.”
Dispositions
During the third quarter of 2013, the Company sold three hotels and a parcel of land that it no longer considers strategic for a total sale price of $8.0 million. In addition, the Company reclassified ten non-strategic hotels to held for sale; with plans to divest these hotels in the next several quarters.
Balance Sheet
Subsequent Events
Current Portfolio
As of November 5, 2013, the Company owns 92 hotels totaling 11,002 guestrooms in 24 states, with 21 brands. Since its initial public offering in February 2011, the Company has acquired 42 hotel properties, totaling 5,735 guestrooms for a total purchase price of $760.5 million.
Estimated Sources and Uses of Cash
On page 17 of this release, the Company provides a schedule of estimated sources and uses of cash. The schedule reflects components of the Company’s balance sheet as of September 30, 2013, as well as subsequently completed or announced hotel acquisitions and dispositions and completed or anticipated financing transactions. The schedule assumes dividends will be paid out of operating cash flow. No assurance can be given that anticipated transactions will be completed within the expected time frame, or at all. The timing of these transactions may change. In addition, the Company may choose not to complete anticipated transactions for various reasons, including reasons beyond the control of the Company.
Fourth Quarter 2013 Outlook
The Company provides guidance for the fourth quarter based on 87 current hotels.1 This outlook includes activity subsequent to quarter end. Except as described in footnote 1 below, it assumes no additional hotels are acquired or sold in the fourth quarter and no additional issuances of equity securities.
“We expect to see an effect of 45 to 50 basis points of RevPAR disruption due to the government shutdown and the on-going sequestration in the fourth quarter,” Hansen said. “The fourth quarter historically is the slowest for both Summit and the hotel industry, with November and December being the most difficult to predict due to the holiday season. As a result, we have less opportunity to recover the revenue lost in October. This is expected to affect RevPAR and margins. We view this largely as a unique event, assuming the government can get its debt-limit issues under control without further disruptions.”
| Low-end | High-end | |||||||||
|
Pro forma RevPAR (87) 1, 4 |
$ | 75.00 | $ | 76.50 | ||||||
| Pro forma RevPAR Growth (87) 1, 4 | 2.5 | % | 4.5 | % | ||||||
| RevPAR (same-store 47) | $ | 64.50 | $ | 66.00 | ||||||
| RevPAR Growth (same-store 47) | 1.5 | % | 3.5 | % | ||||||
|
Adjusted FFO 2 |
$ | 10,300 | $ | 12,100 | ||||||
|
Adjusted FFO per diluted unit 3 |
$ | 0.12 | $ | 0.14 | ||||||
| Renovation capital deployed | $ | 15,000 | $ | 19,000 | ||||||
| Income tax expense | $ | 300 | $ | 500 | ||||||
1 In addition to the Company’s portfolio of 92 hotels (10,913 guestrooms) at September 30, 2013, includes the following five properties purchased subsequent to September 30, 2013 or currently under contract: the 115-guestroom Hampton Inn & Suites, Ventura (Camarillo), Calif.; the 108-guestroom Hampton Inn & Suites, San Diego (Poway), Calif.; the 98-guestroom Hampton Inn, Santa Barbara (Goleta), Calif.; the 178-guestroom Hilton Garden Inn, Houston, Texas; and the 213-guestroom Hyatt Place, Minneapolis, Minn. Also excludes the following ten properties sold subsequent to September 30, 2013 or held for sale at September 30, 2013: the 63-guestroom Fairfield Inn, Boise, Id.; the 63-guestroom Hampton Inn, Boise, Id.; the 60-guestroom AmericInn Hotel & Suites, Salina, Kan.; the 63-guestroom Fairfield Inn, Salina, Kan.; the 89-guestroom AmericInn Hotel & Suites, Fort Smith, Ark.; the 57-guestroom Aspen Hotel & Suites, Fort Smith, Ark; the 178-guestroom Hampton Inn, Fort Smith, Ark; the 57-guestroom Fairfield Inn, Emporia, Kan.; the 58-guestroom Holiday Inn Express, Emporia, Kan.; and the 78-guestroom SpringHill Suites, Little Rock, Ark.
2 Adjusted FFO guidance on 95 hotels assumes additional charges in the range of $0.1 million to $0.3 million that are associated with the consolidation of the Company’s corporate office from Sioux Falls, S.D. to Austin, Texas during fourth quarter 2013.
3 Assumed weighted average diluted common units of 86,210,000 for fourth quarter 2013.
4 Fourth quarter RevPAR guidance anticipates 110 to 160 basis points of RevPAR disruption and $0.6 million to $1.0 million of EBITDA disruption in the fourth quarter due to renovation work at eleven hotels.
Full Year 2013 Outlook
The Company provides guidance for full year 2013 based on 87 current hotels.1 Except as described in footnote 1 below, it assumes no additional hotels will be acquired or sold in 2013 and no additional issuances of equity securities.
| Low-end | High-end | |||||||||
|
Pro forma RevPAR (87) 1 |
$ | 82.00 | $ | 84.00 | ||||||
|
Pro Forma RevPAR Growth (87) 1 |
4.0 | % | 6.0 | % | ||||||
| RevPAR (same-store 47) | $ | 72.50 | $ | 74.00 | ||||||
| RevPAR Growth (same-store 47) | 5.5 | % | 7.5 | % | ||||||
|
Adjusted FFO 2 |
$ | 57,900 | $ | 59,300 | ||||||
|
Adjusted FFO per diluted unit 3 |
$ | 0.79 | $ | 0.81 | ||||||
| Renovation capital deployed | $ | 44,000 | $ | 48,000 | ||||||
| Income tax benefit | $ | 100 | $ | 300 | ||||||
1 In addition to the Company’s portfolio of 92 hotels (10,913 guestrooms) at September 30, 2013, includes the following five properties purchased subsequent to September 30, 2013 or currently under contract: the 115-guestroom Hampton Inn & Suites, Ventura (Camarillo), Calif.; the 108-guestroom Hampton Inn & Suites, San Diego (Poway), Calif.; the 98-guestroom Hampton Inn, Santa Barbara (Goleta), Calif.; the 178-guestroom Hilton Garden Inn, Houston, Texas; and the 213-guestroom Hyatt Place, Minneapolis, Minn. Also excludes the following ten properties sold subsequent to September 30, 2013 or held for sale at September 30, 2013: the 63-guestroom Fairfield Inn, Boise, Id.; the 63-guestroom Hampton Inn, Boise, Id.; the 60-guestroom AmericInn Hotel & Suites, Salina, Kan.; the 63-guestroom Fairfield Inn, Salina, Kan.; the 89-guestroom AmericInn Hotel & Suites, Fort Smith, Ark.; the 57-guestroom Aspen Hotel & Suites, Fort Smith, Ark.; the 178-guestroom Hampton Inn, Fort Smith, Ark.; the 57-guestroom Fairfield Inn, Emporia, Kan.; the 58-guestroom Holiday Inn Express, Emporia, Kan.; and the 78-guestroom SpringHill Suites, Little Rock, Ark.
2 Adjusted FFO guidance on 95 hotels assumes additional charges in the range of $0.4 million to $0.6 million that are associated with the consolidation of the Company’s corporate office from Sioux Falls, S.D. to Austin, Texas prior to the end of 2013.
3 Assumed weighted average diluted common units of 73,241,000 for full year 2013.
Earnings Call
The Company will conduct its quarterly conference call on Wednesday, November 6, 2013 at 9:00am EST. To participate in the conference call please dial 877-474-9504. The participant passcode for the call is 65328081. 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 11:59pm EST Wednesday, November 13, 2013 by dialing 888-286-8010; participant passcode 14235131. A replay of the conference call will also be available on the Company’s website until February 6, 2014.
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 November 5, 2013, the Company’s portfolio consisted of 92 hotels with a total of 11,002 guestrooms located in 24 states. Additional information about Summit may be found at the Company’s website, www.shpreit.com.
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” 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: 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, funds from operations and adjusted funds from operations; US GDP growth; estimated sources and uses of available capital; 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”), including, without limitation, the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. 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, 2012 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.
The following condensed consolidated balance sheets and statements of operations are those of Summit Hotel OP, LP (the Operating Partnership) and Summit Hotel Properties, Inc.’s (the REIT) consolidated operating partnership. Such financial results for the periods presented are identical to those of the REIT; however, we believe the reconciliation of FFO, AFFO, EBITDA and Adjusted EBITDA to net income (loss) presented in the Operating Partnership’s statement of operations is more beneficial, as it eliminates the presentation of noncontrolling interests represented by the equity interests held by limited partners of the Operating Partnership, other than the REIT. In addition, FFO and AFFO results on a total per common unit basis provides for a more consistent period over period presentation now and in future periods.
| SUMMIT HOTEL PROPERTIES | ||||||||
| Condensed Consolidated Balance Sheets | ||||||||
| September 30, 2013 and December 31, 2012 | ||||||||
|
Amounts in thousands |
||||||||
| September 30, | December 31, | |||||||
| 2013 | 2012 | |||||||
| ASSETS | ||||||||
| Investment in hotel properties, net | $ | 1,082,395 | $ | 734,362 | ||||
| Investment in hotel properties under development | 20,549 | 10,303 | ||||||
| Land held for development | 13,748 | 15,802 | ||||||
| Assets held for sale | 33,463 | 4,836 | ||||||
| Cash and cash equivalents | 45,474 | 13,980 | ||||||
| Restricted cash | 35,437 | 3,624 | ||||||
| Trade receivables | 9,685 | 5,478 | ||||||
| Prepaid expenses and other | 21,006 | 5,311 | ||||||
| Derivative financial instruments | 98 | - | ||||||
| Deferred charges, net | 9,543 | 8,895 | ||||||
| Deferred tax asset | 4,962 | 3,997 | ||||||
| Other assets | 3,442 | 4,201 | ||||||
| TOTAL ASSETS | $ | 1,279,802 | $ | 810,789 | ||||
| LIABILITIES AND EQUITY | ||||||||
| LIABILITIES | ||||||||
| Debt | $ | 400,255 | $ | 312,613 | ||||
| Accounts payable | 9,276 | 5,013 | ||||||
| Accrued expenses | 30,767 | 18,985 | ||||||
| Derivative financial instruments | 2,047 | 641 | ||||||
| TOTAL LIABILITIES | 442,345 | 337,252 | ||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| EQUITY | 837,457 | 473,537 | ||||||
| TOTAL LIABILITIES AND EQUITY | $ | 1,279,802 | $ | 810,789 | ||||
| SUMMIT HOTEL PROPERTIES | ||||||||||||||||
| Condensed Consolidated Statements of Operations | ||||||||||||||||
|
Amounts in thousands |
||||||||||||||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| REVENUE | ||||||||||||||||
| Room revenue | $ | 78,010 | $ | 41,312 | $ | 209,774 | $ | 111,677 | ||||||||
| Other hotel operations revenue | 4,164 | 1,758 | 11,228 | 4,914 | ||||||||||||
| Total Revenues | 82,174 | 43,070 | 221,002 | 116,591 | ||||||||||||
| EXPENSES | ||||||||||||||||
| Hotel operating expenses | ||||||||||||||||
| Rooms | 21,927 | 11,388 | 59,182 | 31,490 | ||||||||||||
| Other direct | 11,072 | 5,603 | 28,336 | 15,047 | ||||||||||||
| Other indirect | 20,601 | 11,292 | 56,171 | 30,905 | ||||||||||||
| Other | 183 | 155 | 543 | 473 | ||||||||||||
| Total hotel operating expenses | 53,783 | 28,438 | 144,232 | 77,915 | ||||||||||||
| Depreciation and amortization | 14,029 | 7,647 | 37,623 | 22,094 | ||||||||||||
| Corporate general and administrative | ||||||||||||||||
| Salaries and other compensation | 1,874 | 1,645 | 6,589 | 3,563 | ||||||||||||
| Other | 1,072 | 824 | 3,456 | 2,758 | ||||||||||||
| Hotel property acquisition costs | 114 | 245 | 1,553 | 1,573 | ||||||||||||
| Loss on impairment of assets | 1,369 | - | 1,369 | - | ||||||||||||
| Total Expenses | 72,241 | 38,799 | 194,822 | 107,903 | ||||||||||||
| Income (loss) from operations | 9,933 | 4,271 | 26,180 | 8,688 | ||||||||||||
| OTHER INCOME (EXPENSE) | ||||||||||||||||
| Interest income | 16 | 18 | 52 | 20 | ||||||||||||
| Other income | (103 | ) | 22 | 120 | 497 | |||||||||||
| Interest expense | (5,948 | ) | (3,938 | ) | (14,877 | ) | (11,150 | ) | ||||||||
| Debt transaction costs | (103 | ) | (228 | ) | (112 | ) | (651 | ) | ||||||||
| Gain (loss) on disposal of assets | 5 | (12 | ) | 11 | (199 | ) | ||||||||||
| Gain (loss) on derivative financial instruments | - | - | 2 | (2 | ) | |||||||||||
| Total Other Income (Expense) | (6,133 | ) | (4,138 | ) | (14,804 | ) | (11,485 | ) | ||||||||
| Income (loss) from continuing operations before income taxes | 3,800 | 133 | 11,376 | (2,797 | ) | |||||||||||
| Income tax (expense) benefit | (2,684 | ) | (21 | ) | 894 | 195 | ||||||||||
| Income (loss) from continuing operations | 1,116 | 112 | 12,270 | (2,602 | ) | |||||||||||
| Income (loss) from discontinued operations | (1,697 | ) | 1,529 | (4,297 | ) | 1,081 | ||||||||||
| Net income (loss) | (581 | ) | 1,641 | 7,973 | (1,521 | ) | ||||||||||
| Net income (loss) attributable to noncontrolling interests in joint venture | 272 | - | 324 | - | ||||||||||||
| Net income (loss) attributable to Summit Hotel OP, LP | (853 | ) | 1,641 | 7,649 | (1,521 | ) | ||||||||||
| Preferred dividends | (4,147 | ) | (1,156 | ) | (10,443 | ) | (3,469 | ) | ||||||||
| Net income (loss) attributable to common unit holders | $ | (5,000 | ) | $ | 485 | $ | (2,794 | ) | $ | (4,990 | ) | |||||
| Weighted average common units outstanding | ||||||||||||||||
| Basic | 70,917 | 37,393 | 68,476 | 37,385 | ||||||||||||
| Diluted | 71,374 | 37,586 | 68,870 | 37,492 | ||||||||||||
| SUMMIT HOTEL PROPERTIES | ||||||||||||||||
| Discontinued Operations Summary | ||||||||||||||||
|
Amounts in thousands |
||||||||||||||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| REVENUE | $ | 4,874 | $ | 9,107 | $ | 17,129 | $ | 26,199 | ||||||||
| Hotel operating expenses | 3,653 | 6,315 | 12,913 | 19,143 | ||||||||||||
| Depreciation and amortization | 406 | 857 | 1,617 | 3,067 | ||||||||||||
| Loss on impairment of assets | 5,785 | - | 7,285 | 2,098 | ||||||||||||
| Income (loss) from hotel operations | (4,970 | ) | 1,935 | (4,686 | ) | 1,891 | ||||||||||
| Interest expense | 24 | 111 | 175 | 729 | ||||||||||||
| (Gain) loss on disposal of assets | 783 | - | (877 | ) | - | |||||||||||
| Income (loss) before taxes | (5,777 | ) | 1,824 | (3,984 | ) | 1,162 | ||||||||||
| Income tax (expense) benefit | 4,080 | (295 | ) | (313 | ) | (81 | ) | |||||||||
| Income (loss) from discontinued operations | $ | (1,697 | ) | $ | 1,529 | $ | (4,297 | ) | $ | 1,081 | ||||||
| SUMMIT HOTEL PROPERTIES | ||||||||||||||||
| FFO | ||||||||||||||||
|
Amounts in thousands, except per common unit |
||||||||||||||||
|
(Unaudited) |
||||||||||||||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| NET INCOME (LOSS) | (581 | ) | 1,641 | 7,973 | (1,521 | ) | ||||||||||
| Preferred dividends | (4,147 | ) | (1,156 | ) | (10,443 | ) | (3,469 | ) | ||||||||
| Depreciation and amortization | 14,435 | 8,504 | 39,240 | 25,161 | ||||||||||||
| Loss on impairment of assets | 7,154 | - | 8,654 | 2,098 | ||||||||||||
| (Gain) loss on disposal of assets | 778 | 12 | (888 | ) | 199 | |||||||||||
| Noncontrolling interest in joint venture | (272 | ) | - | (324 | ) | - | ||||||||||
| Adjustments related to joint venture | (83 | ) | - | (222 | ) | - | ||||||||||
| Funds From Operations | $ | 17,284 | $ | 9,001 | $ | 43,990 | $ | 22,468 | ||||||||
| Per common unit | $ | 0.24 | $ | 0.24 | $ | 0.64 | $ | 0.60 | ||||||||
| Equity based compensation | 346 | 268 | 1,616 | 783 | ||||||||||||
| Hotel property acquisition costs | 114 | 245 | 1,553 | 1,573 | ||||||||||||
| Debt transaction costs | 103 | 228 | 112 | 651 | ||||||||||||
| (Gain) loss on derivative | - | - | (2 | ) | 2 | |||||||||||
| Adjusted Funds From Operations | $ | 17,847 | $ | 9,742 | $ | 47,269 | $ | 25,477 | ||||||||
| Per common share/unit | $ | 0.25 | $ | 0.26 | $ | 0.69 | $ | 0.68 | ||||||||
| Weighted average diluted common units | 71,374 | 37,586 | 68,870 | 37,492 | ||||||||||||
| SUMMIT HOTEL PROPERTIES | ||||||||||||||||
| EBITDA | ||||||||||||||||
|
Amounts in thousands |
||||||||||||||||
|
(Unaudited) |
||||||||||||||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| NET INCOME (LOSS) | $ | (581 | ) | $ | 1,641 | $ | 7,973 | $ | (1,521 | ) | ||||||
| Depreciation and amortization | 14,435 | 8,504 | 39,240 | 25,161 | ||||||||||||
| Interest income | (16 | ) | (18 | ) | (52 | ) | (20 | ) | ||||||||
| Interest expense | 5,972 | 4,049 | 15,052 | 11,879 | ||||||||||||
| Income tax expense (benefit) | (1,396 | ) | 316 | (581 | ) | (114 | ) | |||||||||
| Noncontrolling interest in joint venture | (272 | ) | - | (324 | ) | - | ||||||||||
| Adjustments related to joint venture | (152 | ) | - | (397 | ) | - | ||||||||||
| EBITDA | $ | 17,990 | $ | 14,492 | $ | 60,911 | $ | 35,385 | ||||||||
| Equity based compensation | 346 | 268 | 1,616 | 783 | ||||||||||||
| Hotel property acquisition costs | 114 | 245 | 1,553 | 1,573 | ||||||||||||
| Loss on impairment of assets | 7,154 | - | 8,654 | 2,098 | ||||||||||||
| Debt transaction costs | 103 | 228 | 112 | 651 | ||||||||||||
| (Gain) loss on disposal of assets | 778 | 12 | (888 | ) | 199 | |||||||||||
| (Gain) loss on derivatives | - | - | (2 | ) | 2 | |||||||||||
| ADJUSTED EBITDA | $ | 26,485 | $ | 15,245 | $ | 71,956 | $ | 40,691 | ||||||||
| SUMMIT HOTEL PROPERTIES | ||||||||||||||||
|
Pro Forma Hotel Operational Data1 |
||||||||||||||||
| Schedule of Property Level Results | ||||||||||||||||
|
Amounts in thousands |
||||||||||||||||
|
(Unaudited) |
||||||||||||||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| REVENUE | ||||||||||||||||
| Room Revenue | $ | 78,010 | $ | 75,528 | $ | 232,257 | $ |
221,429 |
||||||||
| Other hotel operations revenue | 4,164 | 3,856 | 12,685 |
11,506 |
||||||||||||
| Total Revenue | 82,173 | 79,384 | 244,943 |
232,935 |
||||||||||||
| EXPENSES | ||||||||||||||||
| Hotel operating expenses | ||||||||||||||||
| Rooms | 21,843 | 21,295 | 64,733 | 61,265 | ||||||||||||
| Other direct | 11,030 | 10,753 | 30,994 | 29,275 | ||||||||||||
| Other indirect | 20,522 | 20,007 | 61,439 | 60,127 | ||||||||||||
| Other | 182 | 178 | 594 | 920 | ||||||||||||
| Total Operating expenses | 53,577 | 52,233 | 157,760 | 151,587 | ||||||||||||
| Hotel EBITDA | $ | 28,596 | $ | 27,151 | $ | 87,183 | $ | 81,348 | ||||||||
1 For purposes of this press release, pro forma information includes operating results for 82 hotels owned as of September 30, 2013 as if each hotel had been owned by the Company since January 1, 2012, which excludes the following ten hotels that were held for sale at September 30, 2013: the 63-guestroom Fairfield Inn, Boise, Id.; the 63-guestroom Hampton Inn, Boise, Id.; the 60-guestroom AmericInn Hotel & Suites, Salina, Kan.; the 63-guestroom Fairfield Inn, Salina, Kan.; the 89-guestroom AmericInn Hotel & Suites, Fort Smith, Ark.; the 57-guestroom Aspen Hotel & Suites, Fort Smith, Ark.; the 178-guestroom Hampton Inn, Fort Smith, Ark.; the 57-guestroom Fairfield Inn, Emporia, Kan.; the 58-guestroom Holiday Inn Express, Emporia, Kan.; and the 78-guestroom SpringHill Suites, Little Rock, Ark. As a result, these pro forma operating measures include operating results for certain hotels prior to the Company’s ownership.
| SUMMIT HOTEL PROPERTIES | ||||||||||||||||
|
Pro Forma1 and Same-Store2 Statistical Data for the Hotels |
||||||||||||||||
|
(Unaudited) |
||||||||||||||||
| Pro forma three months ended September 30, | Pro forma nine months ended September 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Total Portfolio (82 hotels) | ||||||||||||||||
| Rooms Occupied | 697,150 | 709,654 | 2,064,458 | 2,054,632 | ||||||||||||
| Rooms Available | 933,555 | 933,800 | 2,772,993 | 2,781,221 | ||||||||||||
| Occupancy | 74.7 | % | 76.0 | % | 74.4 | % | 73.9 | % | ||||||||
| ADR | $ | 111.90 | $ | 106.43 | $ | 112.50 | $ | 107.77 | ||||||||
| RevPAR | $ | 83.56 | $ | 80.88 | $ | 83.76 | $ | 79.62 | ||||||||
| Occupancy Growth | -132 bps | 57 bps | ||||||||||||||
| ADR Growth | 5.1 | % | 4.4 | % | ||||||||||||
| RevPAR Growth | 3.3 | % | 5.2 | % | ||||||||||||
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Same-Store (47 hotels) | ||||||||||||||||
| Rooms Occupied | 363,307 | 361,124 | 1,048,190 | 1,033,061 | ||||||||||||
| Rooms Available | 478,768 | 478,860 | 1,420,692 | 1,426,291 | ||||||||||||
| Occupancy | 75.9 | % | 75.4 | % | 73.8 | % | 72.4 | % | ||||||||
| ADR | $ | 104.61 | $ | 99.14 | $ | 102.74 | $ | 97.59 | ||||||||
| RevPAR | $ | 79.38 | $ | 74.76 | $ | 75.80 | $ | 70.68 | ||||||||
| Occupancy Growth | 47 bps | 135 bps | ||||||||||||||
| ADR Growth | 5.5 | % | 5.3 | % | ||||||||||||
| RevPAR Growth | 6.2 | % | 7.2 | % | ||||||||||||
1 For purposes of this press release, pro forma information includes operating results for 82 hotels owned as of September 30, 2013 as if each hotel had been owned by the Company since January 1, 2012, which excludes the following ten hotels that were held for sale at September 30, 2013: the 63-guestroom Fairfield Inn, Boise, Id.; the 63-guestroom Hampton Inn, Boise, Id.; the 60-guestroom AmericInn Hotel & Suites, Salina, Kan.; the 63-guestroom Fairfield Inn, Salina, Kan.; the 89-guestroom AmericInn Hotel & Suites, Fort Smith, Ark.; the 57-guestroom Aspen Hotel & Suites, Fort Smith, Ark.; the 178-guestroom Hampton Inn, Fort Smith, Ark.; the 57-guestroom Fairfield Inn, Emporia, Kan.; the 58-guestroom Holiday Inn Express, Emporia, Kan.; and the 78-guestroom SpringHill Suites, Little Rock, Ark. As a result, these pro forma operating measures include operating results for certain hotels prior to the Company’s ownership.
2 For purposes of this press release, same-store information includes operating results for hotel properties owned at all times by the Company during the three-month and nine-month periods ended September 30, 2013 and 2012 and excludes ten hotels that were held for sale at September 30, 2013.
| SUMMIT HOTEL PROPERTIES | ||||||||||||||||||||
|
Pro Forma Statistical Data for the Hotels1 |
||||||||||||||||||||
|
Amounts in thousands, except ADR and RevPAR |
||||||||||||||||||||
|
(Unaudited) |
||||||||||||||||||||
| 2012 | 2013 | LTM ended | ||||||||||||||||||
| Q4 | Q1 | Q2 | Q3 | 09/30/13 | ||||||||||||||||
| Room Revenue | $ | 67,279 | $ | 73,283 | $ | 80,964 | $ | 78,010 | $ | 299,536 | ||||||||||
| Other Revenue | 3,862 | 4,231 | 4,291 | 4,164 | 16,547 | |||||||||||||||
| Total Revenue | $ | 71,141 | $ | 77,514 | $ | 85,255 | $ | 82,174 | $ | 316,083 | ||||||||||
| Hotel EBITDA | $ | 20,882 | $ | 27,054 | $ | 31,532 | $ | 28,597 | $ | 108,065 | ||||||||||
| Rooms occupied | 637,667 | 648,113 | 719,195 | 697,150 | 2,702,125 | |||||||||||||||
| Rooms available | 933,319 | 915,879 | 923,559 | 933,555 | 3,706,312 | |||||||||||||||
| Occupancy | 68.3 | % | 70.8 | % | 77.9 | % | 74.7 | % | 72.9 | % | ||||||||||
| ADR | $ | 105.51 | $ | 113.07 | $ | 112.58 | $ | 111.90 | $ | 110.85 | ||||||||||
| RevPAR | $ | 72.09 | $ | 80.01 | $ | 87.67 | $ | 83.56 | $ | 80.82 | ||||||||||
1 For purposes of this press release, pro forma information includes operating results for 82 hotels owned as of September 30, 2013 as if each hotel had been owned by the Company since January 1, 2012, which excludes the following ten hotels that were held for sale at September 30, 2013: the 63-guestroom Fairfield Inn, Boise, Id.; the 63-guestroom Hampton Inn, Boise, Id.; the 60-guestroom AmericInn Hotel & Suites, Salina, Kan.; the 63-guestroom Fairfield Inn, Salina, Kan.; the 89-guestroom AmericInn Hotel & Suites, Fort Smith, Ark.; the 57-guestroom Aspen Hotel & Suites, Fort Smith, Ark.; the 178-guestroom Hampton Inn, Fort Smith, Ark.; the 57-guestroom Fairfield Inn, Emporia, Kan.; the 58-guestroom Holiday Inn Express, Emporia, Kan.; and the 78-guestroom SpringHill Suites, Little Rock, Ark. As a result, these pro forma operating measures include operating results for certain hotels prior to the Company’s ownership.
| SUMMIT HOTEL PROPERTIES | ||||||||||
| Estimated Sources and Uses of Cash | ||||||||||
| September 30, 2013 and Subsequent Events | ||||||||||
|
Amounts in thousands |
||||||||||
| Sources | Uses | |||||||||
| Net Cash Available at September 30, 2013 | ||||||||||
| Cash and Cash Equivalents | $ | 45,470 | $ | - | ||||||
| Completed Transactions (Subsequent to September 30, 2013) | ||||||||||
| Unsecured Revolving Credit Facility Borrowing Capacity (1) | 225,000 | - | ||||||||
| Outstanding Borrowings on Revolving Credit Facility (2, 3) | (700 | ) | - | |||||||
| Hotel Acquisitions | ||||||||||
| Ventura (Camarillo), Calif. Hampton Inn & Suites (4) | - | 15,750 | ||||||||
| San Diego (Poway), Calif. Hampton Inn & Suites (5) | - | 15,150 | ||||||||
| Hotel Dispositions | ||||||||||
| Various Hotels (6, 7) | 6,200 | - | ||||||||
| Land Parcel Dispositions | ||||||||||
| El Paso, Texas (8) | 2,400 | - | ||||||||
| Anticipated Transactions | ||||||||||
| Hotel Acquisitions | ||||||||||
| Santa Barbara (Goleta), Calif. Hampton Inn (10) | - | 27,900 | ||||||||
| Houston, Texas Hilton Garden Inn (11) | - | 37,500 | ||||||||
| Minneapolis, Minn. Hyatt Place (12) | - | 10,700 | ||||||||
| Hotel Dispositions | ||||||||||
| Various Hotels (13, 14, 15, 16, 17, 18, 19, 20) | 24,100 | - | ||||||||
| Land Parcel Dispositions | ||||||||||
| Houston, Texas (9) | 2,500 | - | ||||||||
| Boise, Id. (21) | 750 | - | ||||||||
| Debt Financings | ||||||||||
| Unsecured Term Debt Facility (1) | 75,000 | - | ||||||||
| Santa Barbara (Goleta), Calif. Hampton Inn loan assumption (10) | 12,100 | - | ||||||||
| Houston, Texas Hilton Garden Inn loan assumption (11) | 17,900 | - | ||||||||
| Anticipated Capital Expenditures | ||||||||||
| Scheduled Q4 2013 Cap Ex (22) | - | 17,000 | ||||||||
| Estimated Net Cash Available After Completed and Anticipated Transactions Described Above | ||||||||||
| Cash and Cash Equivalents | - | 62,420 | ||||||||
| Unsecured Credit Facility Borrowing Capacity (1) | - | 225,000 | ||||||||
| Outstanding Borrowings on Revolving Credit Facility (2, 3) | - | (700 | ) | |||||||
| Total | $ | 410,720 | $ | 410,720 | ||||||
Note: The Company ’s announced or anticipated acquisitions, dispositions, and financing activities outlined above are subject to satisfactory completion of the Company’s and lender’s due diligence and satisfaction of customary closing conditions, and the Company can give no assurance that the anticipated activities will be consummated.
SUMMIT HOTEL PROPERTIES
Estimated Sources and Uses of Cash
Non-GAAP Financial Measures
FFO and Adjusted FFO (“AFFO”)
As defined by the National Association of Real Estate Investment Trusts, or NAREIT, funds from operations, or FFO, represents net income or loss (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus depreciation and amortization. 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 may differ from the methodology for calculating FFO utilized by other equity REITs and, accordingly, may not be comparable to such other REITs because the amount of depreciation and amortization we add back to net income or loss includes amortization of deferred financing costs and amortization of franchise royalty fees. FFO should not be considered as an alternative to net income (loss) (computed in accordance with GAAP) as an indicator of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends or make distributions.
We further adjust FFO for certain additional items that are not included in the definition of FFO, such as hotel transaction and pursuit costs, equity based compensation, loan transaction costs, prepayment penalties and certain other expenses, which we refer to as AFFO. We believe that AFFO provides investors with another financial measure that may facilitate comparisons of operating performance between periods and between REITs.
We caution investors that amounts presented in accordance with our definitions of FFO and AFFO may not be comparable to similar measures disclosed by other companies, since not all companies calculate this non-GAAP measure in the same manner. FFO and AFFO should not be considered as an alternative measure of our net income (loss) or 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, this non-GAAP financial measure is not necessarily a better indicator 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 and 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 an investor 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 this non-GAAP measure 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, this non-GAAP financial measure is 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, adjusted EBITDA and hotel EBITDA to the most directly comparable GAAP financial performance measure, which is net income (loss). Dollar amounts in such reconciliation are in thousands.
CONTACT:
Summit Hotel Properties, Inc.
Stuart Becker,
512-538-2303
Chief Financial Officer
www.shpreit.com