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Summit Hotel Properties Reports Second Quarter Results

Capital Investments The Company deployed $4.4 million in capital for renovations during the quarter, a significantly lesser amount than in the previous two quarters. The Company generally tends to undertake hotel work and expenditure during the seasonally slow periods for its hotels. Major improvements and capital invested during the second quarter includes: Fort Worth, TX Fairfield Inn & Suites by Marriott - $1.1 million; Fort Wayne, IN Hampton Inn - $0.7 million; Denver, CO Fairfield Inn & Suites by Marriott - $0.4 million; Provo, UT Hampton Inn - $0.4 million; Atlanta (Duluth), GA Hilton Garden Inn - $0.4 million. Varying in scope, the major improvements listed above include renovation to guestrooms, common areas, and exteriors of the hotels.

Capital Structure
  • On April 4, 2012, the Company refinanced two loans with General Electric Capital Corporation formerly financed with National Western Life Insurance Company; mortgage loans on the Scottsdale, AZ Courtyard by Marriott and the Scottsdale, AZ Springhill Suites by Marriott with principal loan balances of $9.8 and $5.3 million respectively. Both new loans bear a fixed interest rate of 6.03% and have a maturity date of May 1, 2017. The transaction resulted in an interest rate reduction of 197 basis points as compared to the previous loan’s interest rate and $1.5 million of net proceeds from the refinancing after repaying the two previous loans including a prepayment penalty of $0.5 million.
  • On May 16, 2012, the Company entered into an amendment to its $125.0 million senior secured revolving credit facility. The amendment includes the following:
    • Reduction in LIBOR spread of 75 basis points and elimination of the LIBOR floor of 50 basis points.
    • The option for increased leverage on borrowing base assets from 55% to 60% of appraised value.
    • Extended maturity date from April 29, 2014 to May 16, 2015.
    • The maximum leverage ratio covenant and fixed charge coverage ratio covenant were adjusted to provide flexibility on acquisitions in the near term.
    • The unused fee was reduced by 12.5 basis points.
  • On June 24, 2012, the Company refinanced a loan with Chambers Bank with a principal balance of $1.5 million, a fixed interest rate of 6.50%, and maturity date of June 24, 2014.
  • On June 29, 2012, the Company refinanced a loan with Bank of the Ozarks with a new principal balance of $8.9 million which resulted in $2.5 million of net proceeds after repaying the previous loan. In addition, the revised maturity date on the loan is July 10, 2017 and the loan has a 25 year amortization. Lastly, the interest rate was fixed at 5.75% for years 1-3 and will reset annually at LIBOR plus 375 basis points with a floor of 5.50% in years 4-5.

Dispositions: On May 16, 2012, the Company sold for an aggregate of $16.5 million the following three hotels all located in Twin Falls, ID.
  • 111 room AmericInn Hotel and Suites
  • 91 room Holiday Inn Express & Suites
  • 75 room Hampton Inn

On May 30, 2012, the Company sold a parcel of land in Twin Falls, ID for $0.3 million.On June 28, 2012, the Company sold a parcel of land in Boise, ID for $1.4 million.

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