Summit Hotel Properties Third Quarter Total Revenues Up 26.7%

2012-11-08
  • Send
  • PDF
  • Print
  • Bookmark
  • Text Size:
  •  Repost This Article
  • Summit Hotels Pro forma RevPAR for the quarter ended September 30, 2012, increased 11.6 percent to $72.24 as a result of a 5.6 percent increase in average daily rate (ADR) to $97.72 and a 5.7 percent increase in occupancy to 73.9 percent.

    Summit Hotel Properties, Inc. (NYSE: INN) announced results for the third quarter ended September 30, 2012. The Company’s results include the following:

    “Management’s Discussion and Analysis of Financial Condition and Results of Operations”

    Third Quarter Highlights

    • Pro forma RevPAR: Pro forma RevPAR for the quarter ended September 30, 2012, increased 11.6 percent to $72.24 as a result of a 5.6 percent increase in average daily rate (ADR) to $97.72 and a 5.7 percent increase in occupancy to 73.9 percent.
    • Pro forma Hotel EBITDA: Pro forma Hotel EBITDA was $17.4 million for the third quarter, an increase of 20.9 percent over third quarter 2011.
    • Pro forma Hotel EBITDA Margin: Pro forma Hotel EBITDA Margin for the third quarter was 33.9 percent, an improvement of 261 basis points over the comparable period of 2011. Hotel EBITDA Margin is defined as Hotel EBITDA as a percentage of total revenue.
    • Adjusted EBITDA: Adjusted EBITDA was $15.2 million, an increase of 25.8 percent as compared to third quarter 2011.
    • Adjusted FFO: Adjusted FFO for the third quarter 2012 was $9.7 million or $0.26 per diluted share/unit. Included in AFFO is $0.3 million of income tax expense. The Company anticipates a tax benefit in the fourth quarter and for the full year. Therefore, after adjusting for the tax expense, the Company views its third quarter AFFO results as $0.27 per diluted share/unit.
    • Acquisition: The Company acquired a 96 room Residence Inn by Marriott, located in Dallas (Arlington), TX for a purchase price of $15.5 million on July 2, 2012.
    • Dividends: The Company declared third quarter 2012 dividends of $0.1125 per common share on October 31, 2012, representing an annualized yield of approximately 5.4 percent based on the closing price of the Company’s common stock on the NYSE on November 6, 2012, and $0.5781 per share on the Company’s 9.25% Series A Cumulative Redeemable Preferred Stock.
     

    Third Quarter and Year-to-Date Results

     
        Third Quarter     Year-to-Date
    2012     2011 2012     2011
    ($ in thousands, except per share/unit data)
     
    Total revenue $   51,234 $   40,437 $   138,425 $   109,663
    EBITDA (1) $ 14,491 $ 11,887 $ 35,386 $ 30,368
    Adjusted EBITDA (1) $ 15,246 $ 12,120 $ 40,691 $ 32,125
    FFO (1) $ 9,001 $ 8,433 $ 22,469 $ 14,931
    Adjusted FFO (1) $ 9,743 $ 8,666 $ 25,999 $ 22,591
    FFO per diluted share/unit (1) $ 0.24 $ 0.23 $ 0.60 $ 0.47
    Adjusted FFO per diluted share/unit (1) $ 0.26 $ 0.23 $ 0.70 $ 0.49
     

    Pro Forma (2)

    RevPAR $ 72.24 $ 64.75 $ 68.28 $ 62.14
    RevPAR growth 11.6% 9.9%
    Hotel EBITDA $ 17,369 $ 14,366 $ 47,556 $ 40,446
    Hotel EBITDA margin 33.9% 31.3% 32.9% 31.0%
    Hotel EBITDA margin growth 261 bps 199 bps
     
    (1)   See tables later in this press release for a reconciliation to net income (loss) of earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted EBITDA, funds from operations (“FFO”), FFO per diluted share/unit, adjusted FFO and adjusted FFO per diluted share/unit. EBITDA, adjusted EBITDA, FFO, FFO per diluted share/unit, adjusted FFO and adjusted FFO per diluted share/unit, as well as hotel EBITDA, are non-GAAP financial measures. See further discussions of these non-GAAP measures and reconciliations to net income (loss) later in this press release.
    (2) For purposes of this press release, pro forma information includes operating results for the Company’s 73 hotels owned as of September 30, 2012, as if such hotels had been owned by the Company since January 1, 2011. As a result, these pro forma operating measures include operating results for certain hotels for periods prior to the Company’s ownership.
     

    Recent Developments

    Capital Markets

    On October 3, 2012, the Company closed on its initial follow on public offering of 12,000,000 shares of its common stock, par value $0.01 per share, an increase of 20.0 percent over the previously announced offering size of 10,000,000 shares, at a price of $8.15 per share. The underwriters of the Company’s offering fully exercised their option to purchase an additional 1,800,000 shares. The total number of shares sold, including the option shares, was 13,800,000. Total net proceeds of approximately $107.0 million were realized after deducting the underwriting discount and other estimated offering expenses.

    On November 6, 2012, the Company increased the commitment on its revolving credit facility to $150 million. The increased revolving credit facility increases the capital the Company has available for future acquisitions and capital investments. The actual amount of borrowing capacity available under the facility depends on the value of the properties comprising the borrowing base that secure the credit facility.

    Acquisitions

    The Company continues to actively acquire hotels, having closed the acquisition of nine hotels, totaling 1,141 rooms, with an average purchase price per key of $82,901 since September 30, 2012.

    The hotels purchased include:

                   
    Hotel       Location     Rooms
    Hyatt Place-Arlington       Dallas (Arlington), TX     127
    Hyatt Place-Park Meadows Denver (Lone Tree), CO 127
    Hyatt Place-Denver Tech Center Denver (Englewood), CO 126
    Hyatt House-Denver Tech Center Denver (Englewood), CO 135
    Hyatt Place-Owings Mills Baltimore (Owings Mills), MD 123
    Hyatt Place-Lombard Chicago (Lombard), IL 151
    Hyatt Place-Phoenix Phoenix, AZ 127
    Hyatt Place-Scottsdale Scottsdale, AZ 127
    Hilton Garden Inn - Fort Worth       Fort Worth, TX     98
            Total     1,141
     

    During 2012, the Company has acquired 16 hotels totaling 2,477 rooms, an increase of 22.3 percent over the number of rooms at December 31, 2011. As of November 6, 2012, the Company owns 82 hotels totaling 8,674 rooms.

    Other

    On October 30, 2012, we entered into an agreement with an affiliate of Hyatt Hotels Corporation to fund $20 million in the form of a first lien mortgage loan on a hotel property in downtown Minneapolis, MN. The $20 million represents a portion of the total acquisition and renovation costs expected to be incurred to convert the property to a Hyatt Place hotel. Subject to certain conditions, including the successful conversion of the property estimated to be completed in the summer of 2013, we plan to purchase the property and enter into a management agreement with a Hyatt affiliate.

    “We had exceptional performance in the third quarter, exceeding expectations,” said Dan Hansen, president and CEO. “Our RevPAR and EBITDA growth were industry leading. We believe our performance combined with our recent acquisition of nine hotels, our successful follow on common stock offering, and our robust pipeline for future acquisitions position us to provide solid shareholder returns.”

    Capital Investments

    The Company deployed $5.3 million in capital for renovations during the third quarter. The major improvements and capital invested during the third quarter included: Baton Rouge, LA Springhill Suites by Marriott - $0.7 million; Nashville, TN Springhill Suites by Marriott - $0.7 million; Jackson (Ridgeland), MS Homewood Suites - $0.6 million; Baton Rouge, LA Fairfield Inn by Marriott - $0.5 million; Fort Smith, AR Hampton Inn - $0.5 million; El Paso, TX Courtyard by Marriott - $0.4 million; El Paso, TX Hampton Inn & Suites - $0.4 million. Varying in scope, the major improvements listed above include renovation to guestrooms, common areas, and exteriors of the hotels. The Company anticipates deploying up to $11.0 million on renovations and other non-recurring capital expenditures in the fourth quarter.

    Dispositions

    The Company continued its strategy of recycling capital by selling hotels or land that it no longer considers relevant to its strategy of owning hotels with best brands in best markets. In August 2012, the Company sold the 52 room AmericInn Hotel & Suites in Missoula, MT for approximately $1.9 million.

    Year-to-Date Highlights

    For the nine-months ended September 30, 2012, pro forma RevPAR increased 9.9 percent to $68.28 as a result of pro forma ADR growth of 3.5 percent to $96.22 and a 6.2 percent increase in pro forma occupancy to 71.0 percent. RevPAR improvement was the result of the positive effect of recent renovations, the recent rebranding of 10 hotels, and general economic improvement in many of the Company’s markets. Pro forma Hotel EBITDA year to date was $47.6 million, a 17.6 percent increase over the comparable period in 2011. Pro forma Hotel EBITDA margin was 32.9 percent for the period, a 199 basis points margin expansion over the same period in 2011. The Company’s pro forma Hotel EBITDA margin expansion was 243 basis points after adjusting for the $0.6 million one-time hotel management fee concessions agreed to by Interstate Hotels and Resorts during second quarter 2011.

    Adjusted EBITDA was $40.7 million for the first nine-months of 2012, a 26.7 percent increase over the same period in 2011.

    Balance Sheet

    As of September 30, 2012, the Company had total outstanding debt of $312.3 million, including $69.9 million outstanding on its senior secured credit facility, and the Company had $10.3 million of cash and cash equivalents. As of November 6, 2012, the Company had $69.4 million outstanding on its senior secured credit facility with additional borrowing capacity of $43.0 million on its credit facility and 15 unencumbered hotels available to further expand capacity on its credit facility. The Company’s weighted average interest rate on its secured debt was 5.02% as of November 6, 2012.

    2012 Outlook

    The Company is providing fourth quarter guidance and increasing its 2012 full year outlook to reflect performance in the third quarter and to include its recent acquisitions including the 96 room Residence Inn by Marriott, Dallas (Arlington), TX, 127 room Hyatt Place, Dallas (Arlington), TX, 127 room Hyatt Place-Park Meadows, Denver (Lone Tree), CO, 126 room Hyatt Place-Denver Tech Center, Denver (Englewood), CO, 135 room Hyatt House-Denver Tech Center, Denver (Englewood), CO, 123 room Hyatt Place-Owings Mills, Baltimore (Owings Mills), MD, 151 room Hyatt Place-Lombard, Chicago (Lombard), IL, 127 room Hyatt Place-Phoenix, Phoenix, AZ, 127 room Hyatt Place-Scottsdale, Scottsdale, AZ and 98 room Hilton Garden Inn, Fort Worth, TX and the issuance of 13,800,000 additional common shares described above. The Company’s outlook is based on 82 current hotels owned and assumes no additional hotels acquired or sold for the remainder of 2012 and no additional issuances of equity securities.

       
    Fourth Quarter 2012
    Low-end     High-end
     
    RevPAR $   63.50 $   64.75
    RevPAR growth 7.0% 9.0%
    RevPAR (same-store 61 hotels) $ 55.50 $ 56.50
    RevPAR growth (same-store 61 hotels) 8.0% 10.0%
    Adjusted FFO $ 5,700 $ 6,600
    Adjusted FFO per diluted share/unit $ 0.11 $ 0.13
    Renovation capital deployed $ 8,000 $ 11,000
     
           
    Updated Previous
    2012 Full Year Outlook 2012 Full Year Outlook
    Low-end     High-end Low-end     High-end

    RevPAR

    $   65.50   66.75 $   71.53 $   72.87

    RevPAR Growth

    7.0% 9.0% 6.50% 8.50%

    RevPAR (same-store 61 hotels)

    $ 62.00 $ 63.25 $ 61.54 $ 62.70

    RevPAR Growth (Same-store 61 hotels)

    8.0% 10.0% 6.50% 8.50%
    Adjusted FFO $ 31,900 $ 32,500 $ 28,600 $ 29,800
    Adjusted FFO per diluted share/unit $ 0.78 $ 0.80 $ 0.77 $ 0.80
    Renovation Capital Deployed $ 25,000 $ 28,000 $ 20,000 $ 25,000
     
    (1)   Assumptions include US 2012 GDP growth of 1.75% to 2.0%.
    (2) Fourth quarter and full year same-store RevPAR guidance anticipates 150 basis points of RevPAR disruption and $0.2 million of EBITDA disruption in the fourth quarter of 2012 due to renovation work.
    (3) Fourth quarter 2012 AFFO guidance includes an anticipated $0.8 million to $1.0 million income tax benefit; resulting in a similar anticipated income tax benefit for the full year.
    (4) Assumed weighted average diluted common shares/units of 51,086,000 for fourth quarter and 40,912,000 for the full year 2012.
     

    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 6, 2012, the Company’s portfolio consisted of 82 hotels with a total of 8,674 rooms located in 21 states. 

     
     
    SUMMIT HOTEL PROPERTIES
    Condensed Consolidated Balance Sheets
    September 30, 2012 (Unaudited) and December 31, 2011
           
    2012 2011
    ASSETS
     
    Cash and cash equivalents $   10,287,841 $   10,537,132
    Restricted cash 4,275,143 1,464,032
    Trade receivables 6,666,212 3,424,630
    Prepaid expenses and other 4,390,302 4,268,393
    Land held for development 19,006,473 20,294,973
    Property and equipment, net 572,525,464 498,876,238
    Deferred charges and other assets, net 8,986,646 8,923,906
    Deferred tax benefit 2,708,849 2,195,820
    Other assets     4,257,462     4,019,870
    TOTAL ASSETS $   633,104,392 $   554,004,994
     
     
    LIABILITIES AND EQUITY
     
    LIABILITIES
    Accounts payable $ 1,254,050 $ 1,670,994
    Derivative liabilities 522,564 -
    Accrued expenses 17,723,139 15,781,577
    Mortgages and notes payable     312,250,257     217,103,728
    TOTAL LIABILITIES     331,750,010     234,556,299
     
    COMMITMENTS AND CONTINGENCIES
       
    EQUITY     301,354,382     319,448,695
       
    TOTAL LIABILITIES AND EQUITY $   633,104,392 $   554,004,994
     

     

       
    SUMMIT HOTEL PROPERTIES
    Condensed Consolidated Statements of Operations

    (Unaudited)

     
        Company and
    Company Predecessor
    Three months     Three months     Nine months Nine months
    ended 09/30/12 ended 09/30/11 ended 09/30/12 ended 09/30/11
     
    REVENUE
    Room revenue $ 50,062,745 $ 39,589,802 $ 135,132,550 $ 107,360,347
    Other hotel operations revenue   1,171,162     846,774     3,292,311     2,302,943  
    Total Revenue   51,233,907     40,436,576     138,424,861     109,663,290  
     
    EXPENSES
    Hotel operating expenses
    Rooms 13,990,364 11,789,795 39,036,709 32,498,487
    Other direct 5,957,531 5,371,116 15,983,050 14,839,145
    Other indirect 13,690,221 10,354,525 37,492,154 28,486,700
    Other   226,496     243,434     669,500     590,557  
    Total hotel operating expenses 33,864,612 27,758,870 93,181,413 76,414,889
    Depreciation and amortization 8,503,841 8,108,644 24,836,200 21,226,273
    Corporate general and administrative:
    Salaries and other compensation 1,645,359 791,044 3,563,325 2,168,560
    Other 823,480 625,609 2,757,611 2,166,420
    Loan transaction costs 227,577 - 650,687 -
    Hotel property acquisition costs   245,782     181,892     1,573,015     181,892  
    Total Expenses   45,310,651     37,466,059     126,562,251     102,158,034  
     
    INCOME (LOSS) FROM OPERATIONS   5,923,256     2,970,517     11,862,610     7,505,256  
     
    OTHER INCOME (EXPENSE)
    Interest income 17,863 553 19,554 21,919
    Other income 22,697 - 497,273 -
    Interest expense (4,048,676 ) (3,337,485 ) (11,747,874 ) (14,231,174 )
    Gain (loss) on disposal of assets (12,206 ) - (198,795 ) (36,031 )
    Gain (loss) on derivatives   (775 )   -     (1,787 )   -  
    Total Other Income (Expense)   (4,021,097 )   (3,336,932 )   (11,431,629 )   (14,245,286 )
     
    INCOME (LOSS) FROM CONTINUING OPERATIONS
    BEFORE INCOME TAXES 1,902,159 (366,415 ) 430,981 (6,740,030 )
     
    INCOME TAX (EXPENSE) BENEFIT   (313,199 )   1,688     98,657     (821,206 )
     
    INCOME (LOSS) FROM CONTINUING OPERATIONS 1,588,960 (364,727 ) 529,638 (7,561,236 )
     
    INCOME (LOSS) FROM DISCONTINUED OPERATIONS   51,866     406,149     (2,050,413 )   385,842  
     
    NET INCOME (LOSS)   1,640,826     41,422     (1,520,775 )   (7,175,394 )
     
    PREFERRED DIVIDENDS   (1,156,250 )   -     (3,468,750 )   -  
     
    NET INCOME (LOSS) ATTRIBUTABLE TO
    COMMON UNIT HOLDERS $ 484,576   $ 41,422   $ (4,989,525 ) $ (7,175,394 )
     
     
    Basic and diluted net income (loss) per unit: $ 0.01   $ 0.00   $ (0.13 ) $ (0.03 )
     
    Weighted-average common units outstanding:
     
    Basic   37,393,288     37,378,000     37,384,795     37,378,000  
     
    Diluted   37,586,027     37,378,000     37,384,795     37,378,000  
     

     

     
    SUMMIT HOTEL PROPERTIES

    FFO

    (Unaudited)
                   
    Company and
    Company Predecessor
    Three months Three months Nine months Nine months
    ended 09/30/12 ended 09/30/11 ended 09/30/12 ended 09/30/11
     
    NET INCOME (LOSS) $ 1,640,826 $ 41,422 $ (1,520,775 ) $ (7,175,394 )
    Preferred dividends (1,156,250 ) - (3,468,750 ) -
    Depreciation and amortization 8,503,841 8,391,915 25,161,462 22,069,954
    Loss on impairment of assets - - 2,098,000 -
    (Gain) loss on disposal of assets   12,206     -   198,795     36,031  
    Funds From Operations $ 9,000,623 $ 8,433,337 $ 22,468,732 $ 14,930,591
    Per Common share/unit $ 0.24 $ 0.23 $ 0.60 $ 0.40
     
     
    Equity based compensation 268,684 51,201 783,253 353,685
    Hotel property acquisition costs 245,782 181,892 1,573,015 181,892
    Loan transaction costs 227,577 - 650,687 -
    Unrealized (gain) loss on derivatives 775 - 1,787 -
    Operating expenses as result of IPO (1) - - - 710,000
    Corporate G&A related to IPO (1) - - - 476,000
    Interest expense on prepayment penalties (1) - - 521,773 5,600,000
    Income tax expense as result of IPO (1)   -     -   -     339,000  
    Adjusted Funds From Operations $ 9,743,441 $ 8,666,430 $ 25,999,247 $ 22,591,168
    Per Common share/unit $ 0.26 $ 0.23 $ 0.69 $ 0.60
     
    Weighted average diluted Common shares/units 37,586,027 37,378,000 37,491,872 37,378,000
     
    Note:  
     
    (1) Includes non-recurring expenses related to the transfer and assumption of indebtedness and other contractual obligations of our predecessor in connection with the IPO and our formation transactions in 2011.
     

     

     
    SUMMIT HOTEL PROPERTIES
    EBITDA

    (Unaudited)

     
            Company and
    Company Predecessor
    Three months     Three months     Nine months Nine months
    ended 09/30/12 ended 09/30/11 ended 09/30/12 ended 09/30/11
     
    NET INCOME (LOSS) $ 1,640,826 $ 41,422 $ (1,520,775 ) $ (7,175,394 )
    Depreciation and amortization 8,503,841 8,391,915 25,161,462 22,069,954
    Interest expense 4,048,676 3,456,335 11,878,610 14,641,320
    Interest income (17,863 ) (553 ) (19,554 ) (21,919 )
    Income tax expense (benefit)   315,765     (1,813 )   (113,888 )   853,700  
    EBITDA $ 14,491,245 $ 11,887,306 $ 35,385,855 $ 30,367,661
     
     
    Equity based compensation 268,684 51,201 783,253 353,685
    Hotel property acquisition costs 245,782 181,892 1,573,015 181,892
    Loan transaction costs 227,577 - 650,687 -
    Unrealized (gain) loss on derivatives 775 - 1,787 -
    (Gain) loss on disposal of assets 12,206 - 198,795 36,031
    Loss on impairment of assets - - 2,098,000 -
    Operating expenses as result of IPO (1) - - - 710,000
    Corporate G&A related to IPO (1)   -     -     -     476,000  
    ADJUSTED EBITDA $ 15,246,269 $ 12,120,399 $ 40,691,392 $ 32,125,269
     
    Note:  
     
    (1) Includes non-recurring expenses related to the transfer and assumption of indebtedness and other contractual obligations of our predecessor in connection with the IPO and our formation transactions in 2011.
     

     

     
    SUMMIT HOTEL PROPERTIES
    Pro Forma Hotel Operational Data (1)
    Schedule of Property Level Results

    (Unaudited)

     
            Company and
    Company Predecessor
    Three months     Three months     Nine months Nine months
    ended 09/30/12 ended 09/30/11 ended 09/30/12 ended 09/30/11
     
    REVENUE
    Room revenue $ 50,062,745 $ 44,910,387 $ 141,002,892 $ 127,685,513
    Other hotel operation



    Logos, product and company names mentioned are the property of their respective owners.

  • Send
  • PDF
  • Print
  • Bookmark
  • Go Back
  • Text Size:

  • comments powered by Disqus
    Ads by Nevistas

    Newsletters
    Hotel
    Industry News
     
    Hospitality
    Newsletter
     
    Hospitality
    Trends
     
    Hospitality
    Technology
     
    Your Email Address
     
    Advertise Here