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Operating Income of $16.5 Million
Adjusted EBITDAre Reaches $46.3 Million; Adjusted FFO Per Share of $0.22
Full Year 2023 Adjusted EBITDAre and Adjusted FFO Guidance Midpoint Increased
AUSTIN, Texas, Nov. 1, 2023 /PRNewswire/ -- Summit Hotel Properties, Inc. (NYSE: INN) (the "Company"), today announced results for the three and nine months ended September 30, 2023.
"We are pleased with our financial results for the third quarter as stable top-line trends accelerated in September driven by strong urban and midweek demand. Operating expenses grew less than one percent on a per occupied room basis which enabled us to maintain gross operating profit margin compared to a year ago despite cost inflationary headwinds. Given our strong third quarter financial results and the encouraging operating trends that have continued into October, we are increasing the midpoint of our adjusted EBITDA and adjusted FFO guidance range for the full year," said Jonathan P. Stanner, the Company's President and Chief Executive Officer. "Furthermore, we are proud of the continued progress on our various balance sheet initiatives during the quarter, including the refinancing of our $200 million joint venture credit facility during the quarter which maintains existing pricing. We now have no material debt maturities until 2025, a weighted average cost of debt less than 4.8 percent and, inclusive of preferred equity, approximately 80 percent of our balance sheet has fixed rate interest rates," commented Mr. Stanner.
Third Quarter 2023 Summary
The Company's results for the three and nine months ended September 30, 2023, are as follows (in thousands, except per share amounts):
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
(unaudited) | |||||||
Net loss attributable to common stockholders | $ (5,438) | $ (517) | $ (11,419) | $ (4,954) | |||
Net loss per diluted share | $ (0.05) | $ (0.00) | $ (0.11) | $ (0.05) | |||
Total revenues | $ 181,816 | $ 178,252 | $ 558,692 | $ 503,369 | |||
EBITDAre (1) | $ 55,359 | $ 54,935 | $ 172,301 | $ 156,111 | |||
Adjusted EBITDAre (1) | $ 46,315 | $ 47,218 | $ 143,580 | $ 134,731 | |||
FFO (1) | $ 22,669 | $ 28,085 | $ 72,592 | $ 69,711 | |||
Adjusted FFO (1) | $ 26,546 | $ 30,867 | $ 85,891 | $ 83,630 | |||
FFO per diluted share and unit (1) | $ 0.19 | $ 0.23 | $ 0.59 | $ 0.57 | |||
Adjusted FFO per diluted share and unit (1) | $ 0.22 | $ 0.25 | $ 0.70 | $ 0.69 | |||
Pro Forma (2) | |||||||
RevPAR | $ 116.91 | $ 114.22 | $ 121.75 | $ 112.92 | |||
RevPAR Growth | 2.4 % | 7.8 % | |||||
Hotel EBITDA | $ 62,300 | $ 60,715 | $ 198,540 | $ 183,277 | |||
Hotel EBITDA margin | 34.3 % | 34.5 % | 35.5 % | 35.7 % | |||
Hotel EBITDA margin growth | -25 bps | -25 bps | |||||
Same Store (3) | |||||||
RevPAR | $ 117.85 | $ 115.14 | $ 120.99 | $ 112.29 | |||
RevPAR Growth | 2.4 % | 7.7 % | |||||
Hotel EBITDA | $ 61,360 | $ 59,707 | $ 188,810 | $ 174,768 | |||
Hotel EBITDA margin | 35.4 % | 35.5 % | 35.8 % | 35.9 % | |||
Hotel EBITDA margin growth | -12 bps | -10 bps | |||||
(1) | See tables later in this press release for a discussion and reconciliation of net 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 101 hotels owned as of September 30, 2023, as if each hotel had been owned by the Company since January 1, 2022, 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, 2022, 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 95 hotels owned as of September 30, 2023, and at all times during the three and nine months ended September 30, 2023, and 2022. |
Year-to-Date 2023 Summary
Pending Transaction Activity
The Company has entered into a contract to sell the 123-guestroom Hyatt Place Baltimore / Owings Mills. The gross sales price for the pending disposition is $8.3 million and the transaction is expected to close in the fourth quarter of 2023. The sales price for the transaction represents a 4.6 percent capitalization rate based on net operating income after a 4 percent FF&E reserve for the trailing 12 months ended September 30, 2023. The Company expects to forego future near-term required capital expenditures at the hotel as a result of the sale, which would reduce the all-in capitalization rate to approximately 2.9 percent.
The buyer's earnest money is non-refundable as of November 1, 2023, however the Company can make no assurances that it will be able to complete the sale transaction based on the current contractual terms or at all.
Capital Markets & Balance Sheet
On September 19, 2023, the Company's joint venture with GIC successfully completed the refinancing of its $200 million senior credit facility (the "Credit Facility"), which is comprised of a $125 million revolving credit facility (the "Revolver") and a $75 million term loan (the "Term Loan"). The new credit agreement provides for a fully extended maturity date of September 2028 for both the Revolver and Term Loan. The interest rate pricing from the prior credit facility has been maintained at SOFR + 215 basis points for the Revolver and SOFR + 210 basis points for the Term Loan. Other terms of the agreement are similar to the joint venture's previous credit facility agreement. As a result of this refinancing, the Company has no material debt maturities until the first quarter of 2025 and its average length to maturity is over three years when including extension options. Approximately 80 percent of the Company's pro rata debt and preferred equity capital has a fixed interest rate after giving effect to interest rate derivative agreements.
On a pro rata basis, the Company currently has the following outstanding indebtedness and liquidity available:
Common and Preferred Dividend Declaration
On October 26, 2023, the Company declared a quarterly cash dividend of $0.06 per share on its common stock and per common unit of limited partnership interest in Summit Hotel OP, LP. The quarterly dividend of $0.06 per share represents an annualized dividend yield of 4.3 percent based on the closing price of shares of the common stock on October 31, 2023.
In addition, the Board of Directors declared a quarterly cash dividend of:
The dividends are payable on November 30, 2023, to holders of record as of November 16, 2023.
2023 Outlook
The Company is updating its previously provided outlook for the full year 2023 based on 101 lodging assets, 57 of which are wholly owned as of November 1, 2023. The updated outlook does not contemplate the pending disposition of the Hyatt Place Owings Mills expected to close late in the fourth quarter of 2023. There are no additional acquisitions, dispositions, or capital markets activities assumed in the Company's full year 2023 outlook beyond the transactions already completed.
FYE 2023 Outlook | ||||||||
Low | High | Variance toPrior Midpoint | % Change toPrior Midpoint | |||||
Pro Forma RevPAR (1) | $ 119.25 | $ 121.00 | $ - | - | ||||
Pro Forma RevPAR Growth (1) | 6.25 % | 7.75 % | - | - | ||||
Adjusted EBITDAre | $ 186,500 | $ 191,600 | $ 1,050 | 0.6 % | ||||
Adjusted FFO | $ 109,000 | $ 114,200 | $ 1,450 | 1.3 % | ||||
Adjusted FFO per Diluted Unit | $ 0.89 | $ 0.93 | $ 0.01 | 1.2 % | ||||
Capital Expenditures, Pro Rata | $ 65,000 | $ 75,000 | $ - | - | ||||
(1) | All pro forma information includes operating and financial results for 101 lodging assets owned as of November 1, 2023, as if each property had been owned by the Company since January 1, 2022, and will continue to be owned through the entire year ending December 31, 2023. As a result, the pro forma information includes operating and financial results for lodging assets acquired since January 1, 2022, which may include periods prior to the Company's ownership. Pro forma and non-GAAP financial measures are unaudited. |
Third Quarter 2023 Earnings Conference Call
The Company will conduct its quarterly conference call on Thursday, November 2, 2023, at 1:00 PM ET.
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 properties with efficient operating models primarily in the upscale segment of the lodging industry. As of November 1, 2023, the Company's portfolio consisted of 101 assets, 57 of which are wholly owned, with a total of 15,035 guestrooms located in 24 states.
For additional information, please visit the Company's website, www.shpreit.com, and follow on X, formerly 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, 2022, 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) | |||
September 30,2023 | December 31,2022 | ||
(unaudited) | |||
ASSETS | |||
Investments in lodging property, net | $ 2,831,247 | $ 2,841,856 | |
Assets held for sale, net | 9,163 | 29,166 | |
Cash and cash equivalents | 55,307 | 51,255 | |
Restricted cash | 11,268 | 10,553 | |
Right-of-use assets, net | 35,215 | 35,023 | |
Trade receivables, net | 24,209 | 21,015 | |
Prepaid expenses and other | 12,973 | 8,378 | |
Deferred charges, net | 7,066 | 7,074 | |
Other assets | 28,741 | 17,950 | |
Total assets | $ 3,015,189 | $ 3,022,270 | |
LIABILITIES, REDEEMABLENON-CONTROLLING INTERESTS AND EQUITY | |||
Liabilities: | |||
Debt, net of debt issuance costs | $ 1,444,637 | $ 1,451,796 | |
Lease liabilities, net | 26,102 | 25,484 | |
Accounts payable | 6,880 | 5,517 | |
Accrued expenses and other | 92,209 | 81,304 | |
Total liabilities | 1,569,828 | 1,564,101 | |
Redeemable non-controlling interests | 50,219 | 50,219 | |
Equity: | |||
Total stockholders' equity | 942,096 | 959,813 | |
Non-controlling interests | 453,046 | 448,137 | |
Total equity | 1,395,142 | 1,407,950 | |
Total liabilities, redeemable non-controlling interests and equity | $ 3,015,189 | $ 3,022,270 | |
Summit Hotel Properties, Inc. | |||||||
Condensed Consolidated Statements of Operations | |||||||
(Unaudited) | |||||||
(In thousands, except per share amounts) | |||||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Revenues: | |||||||
Room | $ 161,712 | $ 160,133 | $ 498,982 | $ 455,747 | |||
Food and beverage | 9,949 | 8,854 | 30,848 | 22,180 | |||
Other | 10,155 | 9,265 | 28,862 | 25,442 | |||
Total revenues | 181,816 | 178,252 | 558,692 | 503,369 | |||
Expenses: | |||||||
Room | 37,510 | 37,525 | 112,207 | 101,718 | |||
Food and beverage | 7,684 | 7,060 | 23,679 | 17,187 | |||
Other lodging property operating expenses | 55,826 | 54,883 | 169,780 | 154,871 | |||
Property taxes, insurance and other | 14,369 | 13,373 | 43,308 | 40,036 | |||
Management fees | 4,177 | 4,308 | 13,974 | 13,145 | |||
Depreciation and amortization | 37,882 | 38,130 | 112,300 | 112,462 | |||
Corporate general and administrative | 8,126 | 6,532 | 25,225 | 23,743 | |||
Transaction costs | - | 56 | 24 | 737 | |||
Recoveries of credit losses | (250) | (850) | (500) | (1,100) | |||
Total expenses | 165,324 | 161,017 | 499,997 | 462,799 | |||
(Loss) gain on disposal of assets, net | (16) | (5) | (336) | 20,479 | |||
Operating income | 16,476 | 17,230 | 58,359 | 61,049 | |||
Other income (expense): | |||||||
Interest expense | (22,020) | (17,645) | (65,177) | (46,202) | |||
Interest income | 474 | 65 | 1,190 | 1,461 | |||
Other income (loss), net | 661 | (481) | 458 | 1,638 | |||
Total other expense, net | (20,885) | (18,061) | (63,529) | (43,103) | |||
(Loss) income from continuing operations before income taxes | (4,409) | (831) | (5,170) | 17,946 | |||
Income tax expense | (1,360) | (210) | (1,679) | (4,647) | |||
Net (loss) income | (5,769) | (1,041) | (6,849) | 13,299 | |||
Loss (income) attributable to non-controlling interests | 4,955 | 5,148 | 9,306 | (4,481) | |||
Net (loss) income attributable to Summit Hotel Properties, Inc. before preferred dividends and distributions | (814) | 4,107 | 2,457 | 8,818 | |||
Distributions to and accretion of redeemable non-controlling interests | (656) | (656) | (1,970) | (1,866) | |||
Preferred dividends | (3,968) | (3,968) | (11,906) | (11,906) | |||
Net loss attributable to common stockholders | $ (5,438) | $ (517) | $ (11,419) | $ (4,954) | |||
Loss per share: | |||||||
Basic and Diluted | $ (0.05) | $ (0.00) | $ (0.11) | $ (0.05) | |||
Weighted-average common shares outstanding: | |||||||
Basic and Diluted | 105,650 | 105,232 | 105,510 | 105,110 | |||
Summit Hotel Properties, Inc. | |||||||
Reconciliation of Net Loss to Non-GAAP Measures – Funds From Operations | |||||||
(Unaudited) | |||||||
(In thousands, except per share and unit amounts) | |||||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Net (loss) income | $ (5,769) | $ (1,041) | $ (6,849) | $ 13,299 | |||
Preferred dividends | (3,968) | (3,968) | (11,906) | (11,906) | |||
Distributions to and accretion of redeemable non-controlling interests | (656) | (656) | (1,970) | (1,866) | |||
Loss (income) related to non-controlling interests in consolidated joint ventures | 4,442 | 3,730 | 8,093 | (5,219) | |||
Net loss applicable to Common Stock and Common Units | $ (5,951) | $ (1,935) | $ (12,632) | $ (5,692) | |||
Real estate-related depreciation | 36,697 | 36,804 | 108,751 | 108,959 | |||
Loss (gain) on disposal of assets and other dispositions, net | 16 | 5 | 384 | (20,479) | |||
Adjustments related to non-controlling interests in consolidated joint ventures | (8,093) | (6,789) | (23,911) | (13,077) | |||
FFO applicable to Common Stock and Common Units | $ 22,669 | $ 28,085 | $ 72,592 | $ 69,711 | |||
Recoveries of credit losses | (250) | (850) | (500) | (1,100) | |||
Amortization of debt issuance costs | 1,594 | 1,413 | 4,379 | 4,238 | |||
Amortization of franchise fees | 153 | 167 | 439 | 504 | |||
Amortization of intangible assets, net | 911 | 892 | 2,733 | 2,732 | |||
Equity-based compensation | 1,867 | 1,231 | 5,913 | 7,070 | |||
Transaction costs and other | - | 56 | 24 | 737 | |||
Debt transaction costs | 90 | 1,131 | 352 | 1,166 | |||
Non-cash interest income, net (1) | (134) | - | (397) | (113) | |||
Non-cash lease expense, net | 106 | 115 | 368 | 374 | |||
Casualty losses, net | 380 | 750 | 1,851 | 1,054 | |||
Other non-cash items, net | - | - | 768 | - | |||
Adjustments related to non-controlling interests in consolidated joint ventures | (840) | (2,123) | (2,631) | (2,743) | |||
AFFO applicable to Common Stock and Common Units | $ 26,546 | $ 30,867 | $ 85,891 | $ 83,630 | |||
FFO per share of Common Stock and Common Units | $ 0.19 | $ 0.23 | $ 0.59 | $ 0.57 | |||
AFFO per share of Common Stock and Common Units | $ 0.22 | $ 0.25 | $ 0.70 | $ 0.69 | |||
Weighted-average diluted shares of Common Stock and Common Units | |||||||
FFO and AFFO (2) | 122,513 | 121,265 | 122,312 | 121,289 | |||
(1) | Non-cash interest income relates to the amortization of the discount on certain notes receivable. The discount on these notes receivable was recorded at inception of the related loans based on the estimated value of the embedded purchase options in the notes 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 September 30, | For the Nine Months Ended September 30, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Weighted-average shares of Common Stock outstanding | 105,650 | 105,232 | 105,510 | 105,110 | |||
Dilutive effect of unvested restricted stock awards | 44 | 49 | 187 | 195 | |||
Dilutive effect of Common Units of Operating Partnership | 15,970 | 15,984 | 15,974 | 15,984 | |||
Dilutive effect of shares of Common Stock issuable upon conversion of convertible debt | 24,801 | 24,086 | 24,557 | 24,086 | |||
Adjusted weighted diluted shares of Common Stock | 146,465 | 145,351 | 146,228 | 145,375 | |||
Non-GAAP adjustment for dilutive effects of restricted stock awards | 849 | - | 641 | - | |||
Non-GAAP adjustment for dilutive effect of shares of Common Stock issuable upon conversion of convertible debt | (24,801) | (24,086) | (24,557) | (24,086) | |||
Non-GAAP weighted diluted share of Common Stock and Common Units | 122,513 | 121,265 | 122,312 | 121,289 | |||
Summit Hotel Properties, Inc. | |||||||
Reconciliation of Net Loss to Non-GAAP Measures – EBITDAre | |||||||
(Unaudited) | |||||||
(In thousands) | |||||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Net (loss) income | $ (5,769) | $ (1,041) | $ (6,849) | $ 13,299 | |||
Depreciation and amortization | 37,882 | 38,130 | 112,300 | 112,462 | |||
Interest expense | 22,020 | 17,645 | 65,177 | 46,202 | |||
Interest income | (150) | (14) | (390) | (20) | |||
Income tax expense | 1,360 | 210 | 1,679 | 4,647 | |||
EBITDA | $ 55,343 | $ 54,930 | $ 171,917 | $ 176,590 | |||
Loss (gain) on disposal of assets and other dispositions, net | 16 | 5 | 384 | (20,479) | |||
EBITDAre | $ 55,359 | $ 54,935 | $ 172,301 | $ 156,111 | |||
Recoveries of credit losses | (250) | (850) | (500) | (1,100) | |||
Amortization of key money liabilities | (121) | (144) | (378) | (267) | |||
Equity-based compensation | 1,867 | 1,231 | 5,913 | 7,070 | |||
Transaction costs and other | - | 56 | 24 | 737 | |||
Debt transaction costs | 90 | 1,131 | 352 | 1,166 | |||
Non-cash interest income, net (1) | (134) | - | (397) | (113) | |||
Non-cash lease expense, net | 106 | 115 | 368 | 374 | |||
Casualty losses, net | 380 | 750 | 1,851 | 1,054 | |||
Loss (income) related to non-controlling interests in consolidated joint ventures | 4,442 | 3,730 | 8,093 | (5,219) | |||
Other non-cash items, net | - | - | 713 | - | |||
Adjustments related to non-controlling interests in consolidated joint ventures | (15,424) | (13,736) | (44,760) | (25,082) | |||
Adjusted EBITDAre | $ 46,315 | $ 47,218 | $ 143,580 | $ 134,731 | |||
(1) | Non-cash interest income relates to the amortization of the discount on certain notes receivable. The discount on these notes receivable was recorded at inception of the related loans based on the estimated value of the embedded purchase options in the notes receivable. |
Summit Hotel Properties, Inc. | ||||||||
Pro Forma Hotel Operating Data | ||||||||
(Unaudited) | ||||||||
(In thousands) | ||||||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||
Pro Forma Operating Data (1,2) | 2023 | 2022 | 2023 | 2022 | ||||
Pro forma room revenue | $ 161,713 | $ 157,960 | $ 499,694 | $ 461,743 | ||||
Pro forma other hotel operating revenue | 20,104 | 17,964 | 59,602 | 51,016 | ||||
Pro forma total revenues | 181,817 | 175,924 | 559,296 | 512,759 | ||||
Pro forma total hotel operating expenses | 119,517 | 115,209 | 360,756 | 329,482 | ||||
Pro forma hotel EBITDA | $ 62,300 | $ 60,715 | $ 198,540 | $ 183,277 | ||||
Pro forma hotel EBITDA Margin | 34.3 % | 34.5 % | 35.5 % | 35.7 % | ||||
Reconciliations of Non-GAAP financial measures to comparable GAAP financial measures | ||||||||
Revenue: | ||||||||
Total revenues | $ 181,816 | $ 178,252 | $ 558,692 | $ 503,369 | ||||
Total revenues - acquisitions (1) | (1) | 1,934 | 4,715 | 21,091 | ||||
Total revenues - dispositions (2) | 2 | (4,262) | (4,111) | (11,701) | ||||
Pro forma total revenues | 181,817 | 175,924 | 559,296 | 512,759 | ||||
Hotel Operating Expenses: | ||||||||
Total hotel operating expenses | 119,566 | 117,149 | 362,948 | 326,957 | ||||
Hotel operating expenses - acquisitions (1) | (2) | 1,131 | 2,277 | 12,585 | ||||
Hotel operating expenses - dispositions (2) | (47) | (3,071) | (4,469) | (10,060) | ||||
Pro forma hotel operating expenses | 119,517 | 115,209 | 360,756 | 329,482 | ||||
Hotel EBITDA: | ||||||||
Operating income | 16,476 | 17,230 | 58,359 | 61,049 | ||||
Loss (gain) on disposal of assets, net | 16 | 5 | 336 | (20,479) | ||||
Recoveries of credit losses | (250) | (850) | (500) | (1,100) | ||||
Transaction costs | - | 56 | 24 | 737 | ||||
Corporate general and administrative | 8,126 | 6,532 | 25,225 | 23,743 | ||||
Depreciation and amortization | 37,882 | 38,130 | 112,300 | 112,462 | ||||
Hotel EBITDA | 62,250 | 61,103 | 195,744 | 176,412 | ||||
Hotel EBITDA - acquisitions (1) | (938) | (205) | (7,292) | (3) | ||||
Hotel EBITDA - dispositions (2) | 49 | (1,191) | 358 | (1,641) | ||||
Same store hotel EBITDA | $ 61,361 | $ 59,707 | $ 188,810 | $ 174,768 | ||||
Hotel EBITDA - acquisitions (3) | 939 | 1,008 | 9,730 | 8,509 | ||||
Pro forma hotel EBITDA | $ 62,300 | $ 60,715 | $ 198,540 | $ 183,277 | ||||
(1) | For any hotels acquired by the Company after January 1, 2022 (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 September 30, 2023 (the "Acquisition Period") in determining same-store hotel EBITDA. |
(2) | For hotels sold by the Company between January 1, 2022, and September 30, 2023 (the "Disposed Hotels"), the Company has excluded the financial results of each of the Disposed Hotels for the period beginning on January 1, 2022, 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 101 hotels owned as of September 30, 2023, as if all such hotels had been owned by the Company since January 1, 2022. For hotels acquired by the Company after January 1, 2022 (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, 2022, to September 30, 2023. 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) | ||||||||||||
2022 | 2023 | Trailing Twelve | ||||||||||
Pro Forma Operating Data (1,2) | Q4 | Q1 | Q2 | Q3 | Months Ended Sept 30, 2023 | |||||||
Pro forma room revenue | $ 152,776 | $ 164,144 | $ 173,837 | $ 161,713 | $ 652,470 | |||||||
Pro forma other hotel operating revenue | 18,597 | 19,225 | 20,273 | 20,104 | 78,199 | |||||||
Pro forma total revenues | 171,373 | 183,369 | 194,110 | 181,817 | 730,669 | |||||||
Pro forma total hotel operating expenses | 108,447 | 118,246 | 122,993 | 119,517 | 469,203 | |||||||
Pro forma hotel EBITDA | $ 62,926 | $ 65,123 | $ 71,117 | $ 62,300 | $ 261,466 | |||||||
Pro forma hotel EBITDA Margin | 36.7 % | 35.5 % | 36.6 % | 34.3 % | 35.8 % | |||||||
Pro Forma Statistics (1,2) | ||||||||||||
Rooms sold | 948,793 | 940,790 | 1,032,690 | 1,014,851 | 3,937,124 | |||||||
Rooms available | 1,382,983 | 1,353,060 | 1,368,094 | 1,383,189 | 5,487,326 | |||||||
Occupancy | 68.6 % | 69.5 % | 75.5 % | 73.4 % | 71.7 % | |||||||
ADR | $ 161.02 | $ 174.47 | $ 168.33 | $ 159.35 | $ 165.72 | |||||||
RevPAR | $ 110.47 | $ 121.31 | $ 127.06 | $ 116.91 | $ 118.90 | |||||||
Actual Statistics | ||||||||||||
Rooms sold | 963,151 | 950,214 | 1,039,045 | 1,014,851 | 3,967,261 | |||||||
Rooms available | 1,410,358 | 1,380,060 | 1,376,796 | 1,383,189 | 5,550,403 | |||||||
Occupancy | 68.3 % | 68.9 % | 75.5 % | 73.4 % | 71.5 % | |||||||
ADR | $ 159.50 | $ 171.63 | $ 167.64 | $ 159.35 | $ 164.50 | |||||||
RevPAR | $ 108.92 | $ 118.18 | $ 126.51 | $ 116.91 | $ 117.58 | |||||||
Reconciliations of Non-GAAP financial measures to comparable GAAP financial measures: | ||||||||||||
Revenue: | ||||||||||||
Total revenues | $ 172,326 | $ 182,383 | $ 194,493 | $ 181,816 | $ 731,018 | |||||||
Total revenues from acquisitions (1) | 2,090 | 3,438 | 1,278 | (1) | 6,805 | |||||||
Total revenues from dispositions (2) | (3,043) | (2,452) | (1,661) | 2 | (7,154) | |||||||
Pro forma total revenues | 171,373 | 183,369 | 194,110 | 181,817 | 730,669 | |||||||
Hotel Operating Expenses: | ||||||||||||
Total hotel operating expenses | 110,277 | 119,518 | 123,864 | 119,566 | 473,225 | |||||||
Total hotel operating expenses from acquisitions (1) | 900 | 1,489 | 790 | (2) | 3,177 | |||||||
Total hotel operating expenses from dispositions (2) | (2,730) | (2,761) | (1,661) | (47) | (7,199) | |||||||
Pro forma total hotel operating expenses | 108,447 | 118,246 | 122,993 | 119,517 | 469,203 | |||||||
Hotel EBITDA: | ||||||||||||
Operating income | 6,733 | 18,202 | 23,681 | 16,476 | 65,092 | |||||||
Loss on disposal of assets and other dispositions, net | 164 | - | 320 | 16 | 500 | |||||||
Loss on write down of assets | 10,420 | - | - | - | 10,420 | |||||||
Recoveries of credit losses | - | (250) | - | (250) | (500) | |||||||
Transaction costs | 12 | 6 | 18 | - | 36 | |||||||
Corporate general and administrative | 7,022 | 7,999 | 9,100 | 8,126 | 32,247 | |||||||
Depreciation and amortization | 37,698 | 36,908 | 37,510 | 37,882 | 149,998 | |||||||
Hotel EBITDA | 62,049 | 62,865 | 70,629 | 62,250 | 257,793 | |||||||
Hotel EBITDA from acquisitions (1) | (2,899) | (3,909) | (2,445) | (938) | (10,191) | |||||||
Hotel EBITDA from dispositions (2) | (313) | 309 | - | 49 | 45 | |||||||
Same store hotel EBITDA | $ 58,837 | $ 59,265 | $ 68,184 | $ 61,361 | $ 247,647 | |||||||
Hotel EBITDA from acquisitions (3) | 4,089 | 5,858 | 2,933 | 939 | 13,819 | |||||||
Pro forma hotel EBITDA | $ 62,926 | $ 65,123 | $ 71,117 | $ 62,300 | $ 261,466 | |||||||
(1) | For any hotels acquired by the Company after October 1, 2022 (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 September 30, 2023 (the "Acquisition Period") in determining same-store hotel EBITDA. |
(2) | For hotels sold by the Company between October 1, 2022, and September 30, 2023 (the "Disposed Hotels"), the Company has excluded the financial results of each of the Disposed Hotels for the period beginning on October 1, 2022, 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 101 hotels owned as of September 30, 2023, as if all such hotels had been owned by the Company since October 1, 2022. For hotels acquired by the Company after October 1, 2022 (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 October 1, 2022, to September 30, 2023. 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 September 30, | For the Nine Months Ended September 30, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Pro Forma (101) | |||||||
Rooms sold | 1,014,851 | 989,042 | 2,988,331 | 2,871,416 | |||
Rooms available | 1,383,189 | 1,382,944 | 4,104,343 | 4,089,153 | |||
Occupancy | 73.4 % | 71.5 % | 72.8 % | 70.2 % | |||
ADR | $ 159.35 | $ 159.71 | $ 167.22 | $ 160.81 | |||
RevPAR | $ 116.91 | $ 114.22 | $ 121.75 | $ 112.92 | |||
Occupancy change | 2.6 % | 3.7 % | |||||
ADR change | -0.2 % | 4.0 % | |||||
RevPAR change | 2.4 % | 7.8 % | |||||
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Same-Store (95) | |||||||
Rooms sold | 977,982 | 955,889 | 2,868,368 | 2,770,747 | |||
Rooms available | 1,326,333 | 1,326,272 | 3,935,629 | 3,935,537 | |||
Occupancy | 73.7 % | 72.1 % | 72.9 % | 70.4 % | |||
ADR | $ 159.83 | $ 159.75 | $ 166.01 | $ 159.50 | |||
RevPAR | $ 117.85 | $ 115.14 | $ 120.99 | $ 112.29 | |||
Occupancy change | 2.3 % | 3.5 % | |||||
ADR change | 0.0 % | 4.1 % | |||||
RevPAR change | 2.4 % | 7.7 % | |||||
(1) | Unaudited pro forma information includes operating results for 101 hotels owned as of September 30, 2023, as if each hotel had been owned by the Company since January 1, 2022. 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 95 hotels owned by the Company as of January 1, 2022, and at all times during the three and nine months ended September 30, 2023, and 2022. |
Summit Hotel Properties, Inc. | ||||
Reconciliation of Net (Loss) Income to Non-GAAP Measures – EBITDA for Financial Outlook | ||||
(in thousands) | ||||
(Unaudited) | ||||
FYE 2023 Outlook | ||||
Low | High | |||
Net loss | $ (15,800) | $ (9,400) | ||
Depreciation and amortization | 150,900 | 150,900 | ||
Interest expense | 86,400 | 86,300 | ||
Interest income | (400) | (400) | ||
Income tax expense | 2,900 | 2,900 | ||
EBITDA | $ 224,000 | $ 230,300 | ||
Loss on disposal of assets and other dispositions, net | 400 | 400 | ||
EBITDAre | $ 224,400 | $ 230,700 | ||
Recoveries of credit losses | (500) | (500) | ||
Amortization of key money liabilities | (400) | (400) | ||
Equity-based compensation | 7,700 | 7,700 | ||
Transaction costs and other | 100 | 100 | ||
Debt transaction costs | 400 | 400 | ||
Other non-cash items, net | 2,500 | 2,500 | ||
Loss related to non-controlling interests in consolidated joint ventures | 12,000 | 10,800 | ||
Adjustments related to non-controlling interests in consolidated joint ventures | (59,700) | (59,700) | ||
Adjusted EBITDAre | $ 186,500 | $ 191,600 | ||
Summit Hotel Properties, Inc. | ||||
Reconciliation of Net (Loss) Income to Non-GAAP Measures – Funds From Operations for Financial Outlook | ||||
(In thousands except per share and unit) | ||||
(Unaudited) | ||||
FYE 2023 Outlook | ||||
Low | High | |||
Net loss | $ (15,800) | $ (9,400) | ||
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 | 12,000 | 10,800 | ||
Net loss applicable to Common Stock and Common Units | $ (22,300) | $ (17,100) | ||
Real estate-related depreciation | 149,200 | 149,200 | ||
Loss on disposal of assets and other dispositions, net | 400 | 400 | ||
Adjustments related to non-controlling interests in consolidated joint ventures | (32,600) | (32,600) | ||
FFO applicable to Common Stock and Common Units | $ 94,700 | $ 99,900 | ||
Recoveries of credit losses | (500) | (500) | ||
Amortization of debt issuance costs | 5,300 | 5,300 | ||
Amortization of franchise fees | 600 | 600 | ||
Amortization of intangible assets, net | 2,700 | 2,700 | ||
Equity-based compensation | 7,700 | 7,700 | ||
Transaction costs and other | 100 | 100 | ||
Debt transaction costs | 400 | 400 | ||
Other non-cash items, net | 600 | 600 | ||
Adjustments related to non-controlling interests in consolidated joint ventures | (2,600) | (2,600) | ||
AFFO applicable to Common Stock and Common Units | $ 109,000 | $ 114,200 | ||
Wtd avg diluted shares of Common Stock and Common Units for FFO and AFFO | 122,500 | 122,500 | ||
FFO per share of Common Stock and Common Units | $ 0.77 | $ 0.82 | ||
AFFO per share of Common Stock and Common Units | $ 0.89 | $ 0.93 | ||
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") and 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, transaction costs, debt transaction costs, premiums on redemption of preferred shares, losses from net casualties, non-cash interest income and non-cash income tax related adjustments to our deferred tax asset. 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, and certain transaction costs related to lodging property acquisition activities and debt, 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 depreciation and amortization expense on assets at our corporate offices, which is de minimus. 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.
