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Summit Hotel Properties, Inc. Reports Fourth Quarter And Full Year 2011 Results

SUBSEQUENT EVENTS

  • Acquisition of Courtyard by Marriott, Atlanta, GA: On January 23, 2012, the company acquired a 150-room Courtyard by Marriott in downtown Atlanta, GA for a total purchase price of $28.5 million, or $190,000 per key.
  • ING Refinancing: On February 13, 2012, the company’s operating partnership consolidated and refinanced four loans with ING Life Insurance and Annuity Company. The four loans collectively had an aggregate outstanding balance of approximately $69.5 million as of December 31, 2011. The loans were consolidated into a single 7-year term loan with a principal balance of $67.5 million and maturity date of March 1, 2032. The consolidated and refinanced loan amortizes over 20 years.
  • Acquisition of Hilton Garden Inn, Birmingham, AL: On February 28, 2012, the company acquired a 130-room Hilton Garden Inn, located in the Liberty Park area of Birmingham for a total purchase price of approximately $11.5 million, or $88,000 per key.
  • Acquisition of Hilton Garden Inn, Birmingham, AL: On February 28, 2012, the company acquired a 95-room Hilton Garden Inn, located in the Lakeshore area of Birmingham for a total purchase price of approximately $8.6 million, or $91,000 per key.

Fourth Quarter Operating and Financial Results

For the fourth quarter of 2011, the company’s total portfolio (70 hotels) had $34.6 million in revenues, a 12.1 percent increase compared to revenues of $30.8 million for the fourth quarter of 2010 for the company’s total portfolio (65 hotels). RevPAR for the fourth quarter of 2011 rose 3.3 percent, led by a 2.4 percent increase in average daily rate (ADR) to $88.68 and a 0.9 percent increase in occupancy to 58.5 percent. Income from hotel operations for the fourth quarter of 2011 was $7.2 million, an increase of 12.5 percent compared to $6.4 million for the fourth quarter of 2010. Hotel operating margins were 20.84 percent for the fourth quarter of 2011, an expansion of 7 bps when compared to 20.77 percent for the fourth quarter of 2010. Hotel operating margins for the fourth quarter of 2011 expanded by 326 basis points when adjustments for additional public company costs (including hotel and revenue management fees, accounting and information technology expenses and royalty fees imposed by certain franchisors as a requirement of consent at IPO) of $1.0 million were applied to income from hotel operations for the fourth quarter of 2010 on a pro forma basis. These costs were not incurred by the company’s private company predecessor in the fourth quarter of 2010. As previously reported, the company amended its management agreement with Interstate Management Company (“Interstate”) to address the operational challenges experienced at the hotels during the second quarter 2011, which resulted in a one-time $565,000 reduction in other indirect hotel operating expenses that would have otherwise been incurred under the management agreement during the period. The amendment to the hotel management agreement provided Interstate the opportunity to earn the $565,000 as an additional incentive fee in future periods, which Interstate earned in full during the fourth quarter of 2011.

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