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Summit Hotel Properties Inc

SUMMIT HOTEL PROPERTIES REPORTS FIRST QUARTER 2024 RESULTS

Operating Income of $23.5 million for First Quarter 2024

Adjusted EBITDAre Grows 10% to $48.8 million; Adjusted FFO Increases 14% to $0.24 per Share

Sale of Three Hotels for $84.0 Million Further Deleverages Balance Sheet Subsequent to Quarter End

Common Dividend Increased 33% to Annualized $0.32 per Share

AUSTIN, Texas , May 1, 2024 /PRNewswire/ -- Summit Hotel Properties, Inc. (NYSE: INN) (the "Company"), today announced results for the three months ended March 31, 2024.

"We are pleased with our strong first quarter financial results, highlighted by 10 percent Adjusted EBITDAre growth and 14 percent Adjusted FFO growth.  RevPAR increased 1.5 percent in our pro forma portfolio during the quarter which exceeded the total U.S. and upscale RevPAR growth rates by 130 basis points and 140 basis points, respectively. Hotel EBITDA margins expanded 80 basis points from the first quarter of last year driven by strong cost controls that led to a decrease in operating expenses on a per occupied room basis year-over-year," said Jonathan P. Stanner, the Company's President and Chief Executive Officer.

"Subsequent to quarter end, we successfully completed the sale of three assets for $84.0 million at an attractive blended capitalization rate of 6.8 percent. The dispositions will further deleverage the balance sheet, enhance our liquidity position, and better position the Company for future growth.   We have updated our full year 2024 outlook to incorporate our strong first quarter results and a continued positive outlook for the remainder of 2024, which results in an increase in Adjusted EBITDAre and Adjusted FFO after consideration of adjustments related to recent asset sales.  Finally, our Board of Directors has authorized an increase of our common dividend to $0.32 per share on an annualized basis, an increase of 33 percent, which reflects the confidence we have in our operating results and the durability of our cash flows," continued Mr. Stanner.

First Quarter 2024 Summary

  • Net Loss: Net loss attributable to common stockholders was $2.1 million, or $0.02 per diluted share, compared to a net loss of $5.2 million, or $0.05 per diluted share, for the first quarter of 2023.
  • Pro forma RevPAR: Pro forma RevPAR increased 1.5 percent to $124.18 compared to the first quarter of 2023. Pro forma ADR decreased 1.4 percent to $173.01 compared to the same period in 2023, and pro forma occupancy increased 3.0 percent to 71.8 percent.
  • Same Store RevPAR: Same Store RevPAR increased 1.7 percent to $123.19 compared to the first quarter of 2023. Same store ADR decreased 1.3 percent to $171.91 and same store occupancy increased 3.1 percent to 71.7 percent.
  • Pro Forma Hotel EBITDA (1): Pro forma hotel EBITDA increased 5.6 percent to $68.6 million from $65.0 million in the same period in 2023. Pro forma hotel EBITDA margin expanded approximately 80 basis points to 36.5 percent from 35.7 percent in the same period of 2023.
  • Same Store Hotel EBITDA (1): Same store hotel EBITDA increased 5.9 percent to $66.7 million from $63.0 million in the same period in 2023. Same store hotel EBITDA margin expanded approximately 90 basis points to 36.2 percent from 35.3 percent in the same period of 2023.
  • Adjusted EBITDAre(1): Adjusted EBITDAre increase 9.8 percent to $48.8 million from $44.4 million in the first quarter of 2023.
  • Adjusted FFO(1): Adjusted FFO was $30.0 million, or $0.24 per diluted share, compared to $26.3 million, or $0.22 per diluted share, in the first quarter of 2023.

The Company's results for the three months ended March 31, 2024 and 2023 are as follows (in thousands, except per share amounts and metrics):

For the Three Months Ended

March 31,


2024


2023



Net loss attributable to common stockholders

$             (2,116)


$             (5,228)

Net loss per diluted share

$               (0.02)


$               (0.05)

Total revenues

$          188,142


$          182,383

EBITDAre (1)

$            61,199


$            55,340

Adjusted EBITDAre (1)

$            48,801


$            44,427

FFO (1)

$            25,488


$            22,076

Adjusted FFO (1)

$            29,996


$            26,260

FFO per diluted share and unit (1) (2)

$                 0.21


$                 0.18

Adjusted FFO per diluted share and unit (1) (2)

$                 0.24


$                 0.22





Pro Forma (2)




RevPAR

$            124.18


$            122.33

RevPAR Growth

1.5 %



Hotel EBITDA

$            68,562


$            64,956

Hotel EBITDA Margin

36.5 %


35.7 %

Hotel EBITDA Margin Growth

               81bps







Same Store (3)




RevPAR

$            123.19


$            121.15

RevPAR Growth

1.7 %



Hotel EBITDA

$            66,724


$            63,007

Hotel EBITDA Margin

36.2 %


35.3 %

Hotel EBITDA Margin Growth

               87bps





(1)

See tables later in this press release for a discussion and reconciliation of net income (loss) to non-GAAP financial measures, including earnings before interest, taxes, depreciation, and amortization ("EBITDA"), EBITDAre, adjusted EBITDAre, funds from operations ("FFO"), FFO per diluted share and unit, adjusted FFO ("AFFO"), and AFFO per diluted share and unit, as well as a reconciliation of operating income (loss) to hotel EBITDA. See "Non-GAAP Financial Measures" at the end of this release.



(2)

Unless stated otherwise in this release, all pro forma information includes operating and financial results for 99 hotels owned as of March 31, 2024, as if each hotel had been owned by the Company since January 1, 2023 and remained open for the entirety of the measurement period. As a result, all pro forma information includes operating and financial results for hotels acquired since January 1, 2023, which may include periods prior to the Company's ownership. Pro forma and non-GAAP financial measures are unaudited.



(3)

All same store information includes operating and financial results for 97 hotels owned as of March 31, 2024, and at all times during the three months ended March 31, 2024, and 2023.

Transaction Activity

Subsequent to quarter-end, the Company completed the sale of three hotels containing 529 guestrooms for a gross sales price of $84 million. The aggregate sales price for the transactions represents a blended 6.8 percent capitalization rate based the estimated net operating income after a FF&E reserve for the full year 2024 and after consideration of approximately $13 million of foregone near-term required capital expenditures. Net proceeds from the transaction were used to repay debt and other general corporate purposes, which included reducing the Company's corporate revolving credit facility balance from $55 million to zero. Sales transactions details below:

  • The Company sold the Courtyard and SpringHill Suites New Orleans Warehouse Arts District, containing 410 guestrooms, for a gross sales price of $73 million in April. The aggregate sales price for the transaction represents a 6.7 percent capitalization rate based on the estimated net operating income after a 5.0 percent FF&E reserve for the full year 2024 and after consideration of approximately $10 million of foregone near-term required capital expenditures. The transaction will result in an estimated net gain on sale of $28 million which will be recorded in the second quarter.

  • Through its joint venture with GIC, the Company sold the 119-guestroom Hilton Garden Inn College Station for a gross sales price of $11 million in April. The sales price for the transaction represents a 7.9 percent capitalization rate based on the estimated net operating income after a 4.0 percent FF&E reserve for the full year 2024 and after consideration of approximately $3 million of foregone near-term required capital expenditures. Net proceeds from the transaction were used to repay debt and other general corporate purposes of the joint venture, including a partial repayment of the GIC joint venture term loan by $6 million.

Sold Hotels

Keys

Date

Price

Capex (1)

RevPAR

Cap Rate (2)

Courtyard & SpringHill Suites New Orleans Warehouse Arts District

410

April 2024

73,000

10,250

114

6.7 %

Hilton Garden Inn College Station

119

April 2024

11,000

2,975

86

7.9 %

Total

529


$ 84,000

$ 13,225

$          108

6.8 %



(1)

Reflects estimated near-term foregone capital expenditures for dispositions and near-term capital requirements for acquisitions.

(2)

Capitalization rate for the full year 2024 and after consideration of estimated near-term capital expenditure requirements.

Capital Markets and Balance Sheet

The Company continues to enhance its balance sheet including successfully closing the following previously announced transactions:

  • In February 2024, the Company completed a new $200 million senior unsecured term loan financing (the "2024 Term Loan"). The 2024 Term Loan provides for a fully extended maturity date of February 2029 and interest rate pricing ranging from 135 basis points to 235 basis points over the applicable adjusted term SOFR. Proceeds from the 2024 Term Loan financing, along with asset sale proceeds, cash on hand, and revolver availability, were used to repay in full the Company's $225 million term loan that was scheduled to mature in February 2025.

  • In January 2024, subsidiaries of the GIC joint venture entered into a $100 million interest rate swap to fix one-month term SOFR at 3.77 percent until January 2026, which compares to the current term SOFR rate of 5.32. The interest rate swap has an effective date of October 1, 2024.

On a pro rata basis as of March 31, 2024, the Company had the following outstanding indebtedness and liquidity available:

  • Outstanding debt of $1.2 billion with a weighted average interest rate of 4.84 percent. After giving effect to interest rate derivative agreements, $848.8 million, or 73 percent, of our outstanding debt had an average fixed interest rate, and $309.7 million, or 27 percent, had a variable interest rate.

  • Unrestricted cash and cash equivalents of $49.6 million.

On a pro rata basis as of April 30, 2024, the Company currently estimates it has the following outstanding indebtedness and liquidity available:

  • As a result of the 2024 Term Loan financing, the Company has no significant debt maturities until 2026 and has an average length to maturity of approximately 3.3 years.

  • Outstanding debt of $1.1 billion with a weighted average interest rate of 4.67 percent. After giving effect to interest rate derivative agreements, $848.8 million, or 77 percent, of our outstanding debt had an average fixed interest rate, and $251.6 million, or 23 percent, had a variable interest rate.

  • Unrestricted cash and cash equivalents of $68.1 million.

  • Total liquidity of $434.7 million, including unrestricted cash and cash equivalents and revolving credit facility availability.

Common Dividend Increased 33% to Annualized $0.32 Per Share

On May 1, 2024, the Company declared a 33 percent increase to its quarterly cash dividend rate to $0.08 per share on its common stock and per common unit of limited partnership interest in Summit Hotel OP, LP. The quarterly dividend of $0.08 per share represents an annualized dividend yield of 5.3 percent, based on the closing price of shares of the common stock on April 30, 2024.

In addition, the Board of Directors declared a quarterly cash dividend of:

  • $0.390625 per share on its 6.25% Series E Cumulative Redeemable Preferred Stock
  • $0.3671875 per share on its 5.875% Series F Cumulative Redeemable Preferred Stock.
  • $0.328125 per unit on its 5.25% Series Z Cumulative Perpetual Preferred Units

The dividends are payable on May 31, 2024, to holders of record as of May 17, 2024.

2024 Outlook

The Company's updated outlook for the full year 2024 based on 96 lodging assets, 54 of which were wholly owned as of May 1, 2024. The updated outlook incorporates all transaction activity closed to date, including the three hotels sold subsequent to quarter end, and there are no additional acquisitions, dispositions, or capital markets activities assumed in the Company's full year 2024 outlook beyond the transactions already completed.  The Company estimates that the sold hotels subsequent to quarter-end would have contributed approximately $4.0 million of Adjusted EBITDAre for the remainder of 2024.

FYE 2024 Outlook



Low


High


Variance to
Prior Midpoint


% Change to
Prior Midpoint

Pro Forma RevPAR Growth (1)


2.00 %


4.00 %


— %


— %

Adjusted EBITDAre


$        188,000


$        200,000


$                  —


— %

Adjusted FFO


$        111,000


$        123,000


$                  —


— %

Adjusted FFO per Diluted Unit


$              0.90


$              1.00


$                  —


— %

Capital Expenditures, Pro Rata


$          65,000


$          85,000


$                  —


— %



(1)

All pro forma information includes operating and financial results for 96 lodging assets owned as of May 1, 2024, as if each property had been owned by the Company since January 1, 2023 and will continue to be owned through the entire year ending December 31, 2024. As a result, the pro forma information includes operating and financial results for lodging assets acquired since January 1, 2023, which may include periods prior to the Company's ownership. Pro forma and non-GAAP financial measures are unaudited.

First Quarter 2024 Earnings Conference Call

The Company will conduct its quarterly conference call on Thursday, May 2, 2024, at 9:00 AM ET.

  1. To access the conference call, please pre-register using this link. Registrants will receive a confirmation with dial-in details.

  2. A live webcast of the conference call can be accessed using this link. A replay of the webcast will be available in the Investors section of the Company's website, www.shpreit.com, until July 31, 2024.

Supplemental Disclosures

In conjunction with this press release, the Company has furnished a financial supplement with additional disclosures on its website. Visit www.shpreit.com for more information. The Company has no obligation to update any of the information provided to conform to actual results or changes in portfolio, capital structure or future expectations.

About Summit Hotel Properties

Summit Hotel Properties, Inc. is a publicly traded real estate investment trust focused on owning premium-branded lodging facilities with efficient operating models primarily in the upscale segment of the lodging industry. As of May 1, 2024, the Company's portfolio consisted of 96 assets, 54 of which are wholly owned, with a total of 14,256 guestrooms located in 24 states.

For additional information, please visit the Company's website, www.shpreit.com, and follow on Twitter at @SummitHotel_INN and on Facebook at facebook.com/SummitHotelProperties.

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 Litigation 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 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, redemptions or services; forecasts of the Company's future financial performance and potential increases in average daily rate, occupancy, RevPAR, room supply and demand, EBITDAre, Adjusted EBITDAre, FFO and AFFO; the Company's outlook with respect to pro forma RevPAR, pro forma RevPAR growth, RevPAR, RevPAR growth, AFFO, AFFO per diluted share and 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, 2023, 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.

 

Summit Hotel Properties, Inc.

Condensed Consolidated Balance Sheets

(In thousands)



March 31, 2024


December 31, 2023



(Unaudited)



ASSETS





Investments in lodging property, net


$        2,715,009


$        2,729,049

Investment in lodging property under development


2,364


1,451

Assets held for sale, net


64,019


73,740

Cash and cash equivalents


63,435


37,837

Restricted cash


8,916


9,931

Right-of-use assets, net


34,244


34,814

Trade receivables, net


27,985


21,348

Prepaid expenses and other


17,183


8,865

Deferred charges, net


6,495


6,659

Other assets


21,182


15,554

Total assets


$        2,960,832


$        2,939,248






LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND EQUITY





Liabilities:





Debt, net of debt issuance costs


$        1,452,002


$        1,430,668

Lease liabilities, net


25,413


25,842

Accounts payable


7,303


4,827

Accrued expenses and other


81,719


81,215

Total liabilities


1,566,437


1,542,552






Redeemable non-controlling interests


50,219


50,219






Total stockholders' equity


907,758


911,195

Non-controlling interests


436,418


435,282

Total equity


1,344,176


1,346,477

Total liabilities, redeemable non-controlling interests and equity


$        2,960,832


$        2,939,248

 

Summit Hotel Properties, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share amounts)



For the Three Months Ended

March 31,



2024


2023

Revenues:





Room


$           167,431


$           163,089

Food and beverage


10,833


10,630

Other


9,878


8,664

Total revenues


188,142


182,383






Expenses:





Room


35,973


35,909

Food and beverage


8,202


7,955

Other lodging property operating expenses


56,261


56,125

Property taxes, insurance and other


14,285


14,724

Management fees


4,897


4,805

Depreciation and amortization


36,799


36,908

Corporate general and administrative


8,311


8,005

Recoveries of credit losses


—


(250)

Total expenses


164,728


164,181

Gain on disposal of assets, net


75


—

Operating income


23,489


18,202






Other income (expense):





Interest expense


(21,582)


(20,909)

Interest income


458


306

Other income (loss), net


685


(41)

Total other expense, net


(20,439)


(20,644)

Income (loss) from continuing operations before income taxes


3,050


(2,442)

Income tax (expense) benefit


(217)


472

Net income (loss)


2,833


(1,970)

Less - (Income) loss attributable to non-controlling interests


(322)


1,369

Net income (loss) attributable to Summit Hotel Properties, Inc. before preferred dividends and distributions


2,511


(601)

Less - Distributions to and accretion of redeemable non-controlling interests


(657)


(657)

Less - Preferred dividends


(3,970)


(3,970)

Net loss attributable to common stockholders


$              (2,116)


$              (5,228)






Loss per share:





Basic and Diluted


$                (0.02)


$                (0.05)

Weighted-average common shares outstanding:





Basic and Diluted


105,720


105,312

 

Summit Hotel Properties, Inc.

Reconciliation of Net Income (Loss) to Non-GAAP Measures - Funds From Operations

(Unaudited)

(In thousands, except per share and unit amounts)



For the Three Months Ended

March 31,



2024


2023

Net income (loss)


$                2,833


$              (1,970)

Preferred dividends


(3,970)


(3,970)

Distributions to and accretion of redeemable non-controlling interests


(657)


(657)

(Income) loss related to non-controlling interests in consolidated joint ventures


(638)


680

Net loss applicable to Common Stock and Common Units


(2,432)


(5,917)

Real estate-related depreciation


35,603


35,727

(Gain) loss on disposal of assets and other dispositions, net


(75)


48

Adjustments related to non-controlling interests in consolidated joint ventures


(7,608)


(7,782)

FFO applicable to Common Stock and Common Units


25,488


22,076

Recoveries of credit losses


—


(250)

Amortization of debt issuance costs


1,619


1,399

Amortization of franchise fees


164


142

Amortization of intangible assets, net


911


903

Equity-based compensation


1,848


1,468

Debt transaction costs


564


87

Non-cash interest income, net (1)


(133)


(130)

Non-cash lease expense, net


73


133

Casualty (gains) losses, net


(274)


536

Deferred income tax (benefit) expense


(3)


63

Other non-cash items, net


312


711

Adjustments related to non-controlling interests in consolidated joint ventures


(573)


(878)

AFFO applicable to Common Stock and Common Units


$             29,996


$             26,260

FFO per share of Common Stock and Common Units


$                  0.21


$                  0.18

AFFO per share of Common Stock and Common Units


$                  0.24


$                  0.22

Weighted-average diluted shares of Common Stock and Common Units:





FFO and AFFO (2)


122,599


122,010



(1)

Non-cash interest income relates to the amortization of the discount on a note receivable. The discount on the note receivable was recorded at inception of the related loan based on the estimated value of the embedded purchase option in the note receivable.



(2)

The Company includes the outstanding OP units issued by Summit Hotel OP, LP, the Company's operating partnership, held by limited partners other than the Company because the OP units are redeemable for cash or, at the Company's option, shares of the Company's common stock on a one-for-one basis.

 

Summit Hotel Properties, Inc.

Reconciliation of Weighted Average Diluted Common Shares

(Unaudited)

(In thousands)



For the Three Months Ended

March 31,



2024


2023

Weighted-average shares of Common Stock outstanding


105,720


105,312

Dilutive effect of unvested restricted stock awards


223


138

Dilutive effect of shares of Common Stock issuable upon conversion of convertible debt


25,278


24,324

Adjusted weighted diluted shares of Common Stock


131,221


129,774






Non-GAAP adjustment for dilutive effects of Common Units


15,951


15,977

Non-GAAP adjustment for dilutive effects of restricted stock awards


705


583

Non-GAAP adjustment for dilutive effect of shares of Common Stock issuable upon conversion of convertible debt


(25,278)


(24,324)

Non-GAAP weighted diluted share of Common Stock and Common Units


122,599


122,010

 

Summit Hotel Properties, Inc.

Reconciliation of Net Income (Loss) to Non-GAAP Measures - EBITDAre

(Unaudited)

(In thousands)



 For the Three Months Ended
March 31,



2024


2023

Net income (loss)


$                2,833


$              (1,970)

Depreciation and amortization


36,799


36,908

Interest expense


21,582


20,909

Interest income on cash deposits


(157)


(83)

Income tax expense (benefit)


217


(472)

EBITDA


61,274


55,292

(Gain) loss on disposal of assets and other dispositions, net


(75)


48

EBITDAre


61,199


55,340

Recoveries of credit losses


—


(250)

Amortization of key money liabilities


(121)


(136)

Equity-based compensation


1,848


1,468

Debt transaction costs


564


87

Non-cash interest income, net (1)


(133)


(130)

Non-cash lease expense, net


73


133

Casualty (gains) losses, net


(274)


536

(Income) loss related to non-controlling interests in consolidated joint ventures


(638)


680

Other non-cash items, net


312


711

Adjustments related to non-controlling interests in consolidated joint ventures


(14,029)


(14,012)

Adjusted EBITDAre


$             48,801


$             44,427



(1)

Non-cash interest income relates to the amortization of the discount on a note receivable. The discount on the note receivable was recorded at inception of the related loan based on the estimated value of the embedded purchase option in the note receivable.

 

Summit Hotel Properties, Inc.

Pro Forma Hotel Operating Data

(Unaudited)

(Dollars in thousands)



For the Three Months Ended

March 31,

Pro Forma Operating Data


2024


2023

Pro forma room revenue


$            167,073


$            162,771

Pro forma other hotel operations revenue


$              20,692


$              19,171

Pro forma total revenues


187,765


181,942

Pro forma total hotel operating expenses


$            119,203


$            116,986

Pro forma hotel EBITDA


68,562


64,956

Pro forma hotel EBITDA Margin


36.5 %


35.7 %






Reconciliations of Non-GAAP financial measures to comparable GAAP financial measures










Revenue:





Total revenues


$            188,142


$            182,383

Total revenues - acquisitions (1)


—


3,438

Total revenues - dispositions (2)


(377)


(3,879)

Pro forma total revenues


187,765


181,942






Hotel Operating Expenses:





Hotel operating expenses


$            119,618


$            119,518

Hotel operating expenses - acquisitions (1)


—


1,489

Hotel operating expenses - dispositions (2)


(415)


(4,021)

Pro forma hotel operating expense


119,203


116,986






Hotel EBITDA:





Operating income


23,489


18,202

Gain on disposal of assets, net


(75)


—

Recoveries of credit losses


—


(250)

Corporate general and administrative


8,311


8,005

Depreciation and amortization


36,799


36,908

Hotel EBITDA


68,524


62,865

Hotel EBITDA - acquisitions (1)


(1,838)


—

Hotel EBITDA - dispositions (2)


38


142

Same Store hotel EBITDA


$              66,724


$              63,007

Hotel EBITDA - acquisitions (3)


1,838


1,949

Pro forma hotel EBITDA


$              68,562


$              64,956



(1)

For any hotels acquired by the Company after January 1, 2023 (the "Acquired Hotels"), the Company has excluded the financial results of each of the Acquired Hotels for the period the Acquired Hotels were purchased by the Company to March 31, 2024 (the "Acquisition Period") in determining same-store hotel EBITDA.



(2)

For hotels sold by the Company between January 1, 2023, and March 31, 2024 (the "Disposed Hotels"), the Company has excluded the financial results of each of the Disposed Hotels for the period beginning on January 1, 2023, and ending on the date the Disposed Hotels were sold by the Company (the "Disposition Period") in determining same-store hotel EBITDA.



(3)

Unaudited pro forma information includes operating results for 99 hotels owned as of March 31, 2024, as if all such hotels had been owned by the Company since January 1, 2023. For hotels acquired by the Company after January 1, 2023 (the "Acquired Hotels"), the Company has included in the pro forma information the financial results of each of the Acquired Hotels for the period from January 1, 2023, to March 31, 2024. The financial results for the Acquired Hotels include information provided by the third-party owner of such Acquired Hotel prior to purchase by the Company and have not been audited or reviewed by our auditors or adjusted by us. The pro forma information is included to enable comparison of results for the current reporting period to results for the comparable period of the prior year and are not indicative of future results.

 

Summit Hotel Properties, Inc.

Pro Forma Hotel Operating Data

(Unaudited)

(In thousands, except operating statistics)











Trailing Twelve



2023


2024


Months Ended

Pro Forma Operating Data (1)


Q2


Q3


Q4


Q1


March 31, 2024

Pro forma room revenue


$          172,120


$          160,094


$          155,615


$          167,073


$                   654,902

Pro forma other hotel operations revenue


20,216


20,051


20,300


20,692


81,259

Pro forma total revenues


192,336


180,145


175,915


187,765


736,161

Pro forma total hotel operating expenses


121,556


118,121


113,714


119,203


472,594

Pro forma hotel EBITDA


70,780


62,024


62,201


68,562


263,567

Pro forma hotel EBITDA Margin


36.8 %


34.4 %


35.4 %


36.5 %


35.8 %












Pro Forma Statistics (1)











Rooms sold


1,016,494


999,226


956,235


965,659


3,937,614

Rooms available


1,345,344


1,360,189


1,360,220


1,345,435


5,411,188

Occupancy


75.6 %


73.5 %


70.3 %


71.8 %


72.8 %

ADR


$             169.33


$             160.22


$             162.74


$             173.01


$                     166.32

RevPAR


$             127.94


$             117.70


$             114.40


$             124.18


$                     121.03












Actual Statistics











Rooms sold


1,039,045


1,014,851


970,959


969,479


3,994,334

Rooms available


1,376,796


1,383,189


1,381,867


1,351,150


5,493,002

Occupancy


75.5 %


73.4 %


70.3 %


71.8 %


72.7 %

ADR


$             167.64


$             159.35


$             161.78


$             172.70


$                     165.34

RevPAR


$             126.51


$             116.91


$             113.67


$             123.92


$                     120.23












Reconciliations of Non-GAAP financial measures to comparable GAAP financial measures
















Revenue:











Total revenues


$          194,493


$          181,816


$          177,435


$          188,142


$                   741,886

Total revenues - acquisitions (1)


1,278


—


—


—


1,278

Total revenues - dispositions (2)


(3,435)


(1,671)


(1,520)


(377)


(7,003)

Pro forma total revenues


192,336


180,145


175,915


187,765


736,161












Hotel Operating Expenses:











Hotel operating expenses


123,864


119,566


115,157


119,618


478,205

Hotel operating expenses - acquisitions (1)


789


—


—


—


789

Hotel operating expenses - dispositions (2)


(3,097)


(1,445)


(1,443)


(415)


(6,400)

Pro forma hotel operating expenses


121,556


118,121


113,714


119,203


472,594












Hotel EBITDA:











Operating income


23,681


16,476


428


23,489


64,074

Loss (gain) on disposal of assets, net


320


16


1


(75)


262

Loss on impairment and write-off of assets


—


—


16,661


—


16,661

Recoveries of credit losses


—


(250)


(730)


—


(980)

Hotel acquisition and transition costs


18


—


(11)


—


7

Corporate general and administrative


9,100


8,126


7,305


8,311


32,842

Depreciation and amortization


37,510


37,882


38,624


36,799


150,815

Hotel EBITDA


70,629


62,250


62,278


68,524


263,681

Hotel EBITDA - acquisitions (1)


(69)


(505)


(876)


(1,838)


(3,288)

Hotel EBITDA - dispositions (2)


(338)


(226)


(77)


38


(603)

Same store hotel EBITDA


70,222


61,519


61,325


66,724


259,790

Hotel EBITDA - acquisitions (3)


558


505


876


1,838


3,777

Pro forma hotel EBITDA


$             70,780


$             62,024


$             62,201


$             68,562


$                   263,567



(1)

For any hotels acquired by the Company after October 1, 2023 (the "Acquired Hotels"), the Company has excluded the financial results of each of the Acquired Hotels for the period the Acquired Hotels were purchased by the Company to March 31, 2024 (the "Acquisition Period") in determining same-store hotel EBITDA.



(2)

For hotels sold by the Company between October 1, 2023, and March 31, 2024 (the "Disposed Hotels"), the Company has excluded the financial results of each of the Disposed Hotels for the period beginning on April 1, 2023 and ending on the date the Disposed Hotels were sold by the Company (the "Disposition Period") in determining same-store hotel EBITDA.



(3)

Unaudited pro forma information includes operating results for 99 hotels owned as of March 31, 2024, as if all such hotels had been owned by the Company since October 1, 2023. For hotels acquired by the Company after July 1, 2023 (the "Acquired Hotels"), the Company has included in the pro forma information the financial results of each of the Acquired Hotels for the period from July 1, 2023, to March 31, 2024. The financial results for the Acquired Hotels include information provided by the third-party owner of such Acquired Hotel prior to purchase by the Company and have not been audited or reviewed by our auditors or adjusted by us. The pro forma information is included to enable comparison of results for the current reporting period to results for the comparable period of the prior year and are not indicative of future results.

 

Summit Hotel Properties, Inc.

Pro Forma and Same Store Data

(Unaudited)



For the Three Months Ended

March 31,



2024


2023

Pro Forma (1)





Rooms sold


965,659


927,262

Rooms available


1,345,435


1,330,560

Occupancy


71.8 %


69.7 %

ADR


$          173.01


$          175.54

RevPAR


$          124.18


$          122.33






Occupancy change


3.0 %



ADR change


(1.4) %



RevPAR change


1.5 %















For the Three Months Ended

March 31,



2024


2023

Same-Store (2)





Rooms sold


953,275


914,654

Rooms available


1,330,238


1,315,530

Occupancy


71.7 %


69.5 %

ADR


$          171.91


$          174.25

RevPAR


$          123.19


$          121.15






Occupancy change


3.1 %



ADR change


(1.3) %



RevPAR change


1.7 %





(1)

Unaudited pro forma information includes operating results for 99 hotels owned as of March 31, 2024, as if each hotel had been owned by the Company since January 1, 2023. As a result, these pro forma operating and financial measures include operating results for certain hotels for periods prior to the Company's ownership.



(2)

Same-store information includes operating results for 97 hotels owned by the Company as of January 1, 2023, and at all times during the three months ended March 31, 2024, and 2023.

 

Summit Hotel Properties, Inc.

Reconciliation of Net Income to Non-GAAP Measures - EBITDA for Financial Outlook

(in thousands)

(Unaudited)








Low


High

Net income


$             29,100


$             43,900

Depreciation and amortization


149,300


149,300

Interest expense


83,200


83,200

Interest income


(200)


(200)

Income tax expense


2,900


2,900

EBITDA


$           264,300


$           279,100

Gain on disposal of assets and other dispositions, net


(28,300)


(28,300)

EBITDAre


$           236,000


$           250,800

Equity-based compensation


8,300


8,300

Debt transaction costs


900


900

Other non-cash items, net


(10,300)


(10,300)

Loss related to non-controlling interests in consolidated joint ventures


3,400


600

Adjustments related to non-controlling interests in consolidated joint ventures


(50,300)


(50,300)

Adjusted EBITDAre


$           188,000


$           200,000

 

Summit Hotel Properties, Inc.

Reconciliation of Net Income to Non-GAAP Measures – Funds From Operations for Financial Outlook

(in thousands except per share and unit)

(Unaudited)








FYE 2024 Outlook



Low


High

Net income


$             29,100


$             43,900

Preferred dividends


(15,900)


(15,900)

Distributions to and accretion of redeemable non-controlling interests


(2,600)


(2,600)

Loss related to non-controlling interests in consolidated joint ventures


3,400


600

Net income applicable to Common Stock and Common Units


$             14,000


$             26,000

Real estate-related depreciation


147,600


147,600

Gain on disposal of assets and other dispositions, net


(28,300)


(28,300)

Adjustments related to non-controlling interests in consolidated joint ventures


(32,300)


(32,300)

FFO applicable to Common Stock and Common Units


$           101,000


$           113,000

Amortization of debt issuance costs


6,000


6,000

Amortization of franchise fees


600


600

Equity-based compensation


8,300


8,300

Debt transaction costs


900


900

Other non-cash items, net


(9,300)


(9,300)

Adjustments related to non-controlling interests in consolidated joint ventures


3,500


3,500

AFFO applicable to Common Stock and Common Units


$           111,000


$           123,000

Weighted average diluted shares of Common Stock and Common Units for FFO and AFFO


122,900


122,900

FFO per Common Stock and Common Units


$                  0.82


$                  0.92

AFFO per Common Stock and Common Units


$                  0.90


$                  1.00

 

Non-GAAP Financial Measures

We disclose certain "non-GAAP financial measures," which are measures of our historical financial performance. Non-GAAP financial measures are financial measures not prescribed by Generally Accepted Accounting Principles ("GAAP"). These measures are as follows: (i) Funds From Operations ("FFO") and Adjusted Funds from Operations ("AFFO"), (ii) Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA"), Earnings before Interest, Taxes, Depreciation and Amortization for Real Estate ("EBITDAre"), Adjusted EBITDAre, and hotel EBITDA (as described below). We caution investors that amounts presented in accordance with our definitions of non-GAAP financial measures may not be comparable to similar measures disclosed by other companies, since not all companies calculate these non-GAAP financial measures in the same manner. Our non-GAAP financial measures should be considered along with, but not as alternatives to, net income (loss) as a measure of our operating performance. Our non-GAAP financial measures 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 our non-GAAP financial measures can enhance the understanding of our financial condition and results of operations, these non-GAAP financial measures are not necessarily better indicators of any trend as compared to a comparable measure prescribed by GAAP such as net income (loss).

Funds From Operations ("FFO") and Adjusted FFO ("AFFO")

As defined by Nareit, FFO represents net income or loss (computed in accordance with GAAP), excluding preferred dividends, gains (or losses) from sales of real property, impairment losses on real estate assets, items classified by GAAP as extraordinary, the cumulative effect of changes in accounting principles, plus depreciation and amortization related to real estate assets, and adjustments for unconsolidated partnerships, and joint ventures. AFFO represents FFO excluding amortization of deferred financing costs, franchise fees, equity-based compensation expense, debt transaction costs, premiums on redemption of preferred shares, losses from net casualties, non-cash lease expense, non-cash interest income and non-cash income tax related adjustments to our deferred tax assets. Unless otherwise indicated, we present FFO and AFFO applicable to our common shares and common units. We present FFO and AFFO because we consider FFO and AFFO 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 and AFFO when reporting their results. FFO and AFFO are 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 and AFFO exclude depreciation and amortization related to real estate assets, gains and losses from real property dispositions and impairment losses on real estate assets, FFO and AFFO provide performance measures that, when compared year over year, reflect the effect to operations from trends in occupancy, guestroom rates, operating costs, development activities and interest costs, providing perspective not immediately apparent from net income. Our computation of FFO differs slightly from the computation of Nareit-defined FFO related to the reporting of corporate depreciation and amortization expense. Our computation of FFO may also differ from the methodology for calculating FFO used by other equity REITs and, accordingly, may not be comparable to such other REITs. FFO and AFFO 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. Where indicated in this release, FFO is based on our computation of FFO and not the computation of Nareit-defined FFO unless otherwise noted.

EBITDA, EBITDAre, Adjusted EBITDAre, and Hotel EBITDA

In September 2017, Nareit proposed a standardized performance measure, called EBITDAre, which is based on EBITDA and is expected to provide additional relevant information about REITs as real estate companies in support of growing interest among generalist investors. The conclusion was reached that, while dedicated REIT investors have long been accustomed to utilizing the industry's supplemental measures such as FFO and net operating income ("NOI") to evaluate the investment quality of REITs as real estate companies, it would be helpful to generalist investors for REITs as real estate companies to also present EBITDAre as a more widely known and understood supplemental measure of performance. EBITDAre is intended to be a supplemental non-GAAP performance measure that is independent of a company's capital structure and will provide a uniform basis for one measurement of the enterprise value of a company compared to other REITs.

EBITDAre, as defined by Nareit, is calculated as EBITDA, excluding: (i) loss and gains on disposition of property and (ii) asset impairments, if any. We believe EBITDAre 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.

We make additional adjustments to EBITDAre when evaluating our performance because we believe that the exclusion of certain additional non-recurring or unusual items described below provides useful supplemental information to investors regarding our ongoing operating performance. We believe that the presentation of Adjusted EBITDAre, when combined with the primary GAAP presentation of net income, 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.

With respect to hotel EBITDA, we believe that excluding the effect of corporate-level expenses and non-cash items 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, EBITDAre, adjusted EBITDAre, and hotel EBITDA may not be comparable to similar measures disclosed by other companies, since not all companies calculate these non-GAAP measures in the same manner. EBITDA, EBITDAre, adjusted EBITDAre, and hotel EBITDA should not be considered as an alternative measure of our net income (loss) or operating performance. EBITDA, EBITDAre, adjusted EBITDAre, 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, EBITDAre, adjusted EBITDAre, and hotel EBITDA can enhance your understanding of our financial condition and results of operations, these non-GAAP financial measures are not necessarily a better indicator of any trend as compared to a comparable GAAP measure such as net income (loss). Above, we include a quantitative reconciliation of EBITDA, EBITDAre, adjusted EBITDAre and hotel EBITDA to the most directly comparable GAAP financial performance measure, which is net income (loss) and operating income (loss).

 

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SOURCE Summit Hotel Properties, Inc.