Summit Hotel Properties Reports Second Quarter Results

Balance sheet As of June 30, 2012, the Company had total outstanding debt of $298.4 million, including $54.4 million outstanding on its senior secured credit facility. As of August 9, 2012, the Company had additional borrowing capacity of $43.8 million on its credit facility. In addition, the Company had $11.6 million of cash and cash equivalents. As of quarter end, the Company’s weighted average interest rate was 5.02%.

2012 Outlook The Company is updating its 2012 outlook to include its recent acquisition of the 96 room Residence Inn – Dallas (Arlington), TX, the 103 room Courtyard by Marriott – Dallas (Arlington), TX, the 112 room Hilton Garden Inn – Nashville (Smyrna), TN and the 83 room Hampton Inn & Suites – Nashville (Smyrna), TN and the recent disposition of three hotels in Twin Falls, ID, including the 111 room AmericInn Hotel and Suites, 91 room Holiday Inn Express and the 75 room Hampton Inn. The Company’s outlook is based on current hotels owned (73 hotels) and assumes no additional hotels acquired or sold for the remainder of 2012 and no additional issuances of equity securities. RevPAR outlook excludes the AmericInn Hotel and Suites in Missoula, MT, which is currently held for sale. The outlook reflects recently revised downward U.S. GDP growth of 1.5% to 2.5% for the remainder of 2012.

			Third Quarter, 2012												Revised 2012 Full Year Outlook
			Low-end						High-end						Low-End						High-End
Pro Forma RevPAR (73 hotels)			$		68.96				$		70.26				$		71.53				$		72.87
Growth					6.5	%					8.5	%					6.5	%					8.5	%
RevPAR (61 hotels)			$		66.81				$		68.07				$		61.54				$		62.70
Growth					6.5	%					8.5	%					6.5	%					8.5	%
AFFO			$		8,800,000				$		9,600,000				$		28,600,000				$		29,800,000
AFFO/Sh.			$		0.24				$		0.26				$		0.77				$		0.80
Cap Renovation			$		5,000,000				$		8,000,000				$		20,000,000				$		25,000,000

Earnings Call The Company will conduct its quarterly conference call on Friday, August 10, 2012 at 9:00am EDT. To participate in the conference call please dial 866-510-0705. The participant passcode for the call is 56026047. Additionally, a live webcast of the call will be available through the Company’s website, www.shpreit.com. A replay of the conference call will be available until Friday, August 17, 2012 by dialing 888-286-8010; participant passcode 14085000. A replay of the conference call will be available on the Company’s website until November 15, 2012.

About Summit Hotel Properties Summit Hotel Properties, Inc. is a publicly traded real estate investment trust focused primarily on acquiring and owning premium-branded select-service hotels in the upscale and upper midscale segments of the lodging industry. As of June 30, 2012, the Company’s portfolio consisted of 73 hotels with a total of 7,489 guestrooms located in 20 states. Additional information about Summit may be found at the Company’s website, www.shpreit.com.

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 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” 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: 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 or services; forecasts of the Company’s future economic performance and potential increases in average daily rate, occupancy, RevPAR and room supply and demand; US GDP growth 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”), including, without limitation, the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 and the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012. 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, 2011 and its quarterly and other periodic filings with the SEC.

The following condensed consolidated balance sheets and statements of operations are those of Summit Hotel OP, LP (the Operating Partnership), Summit Hotel Properties, Inc’s. (the REIT’s) consolidated operating partnership. Such financial results for the periods presented are identical to those of the REIT; however, we believe the reconciliation of FFO, AFFO, EBITDA and Adjusted EBITDA to net income (loss) presented in the Operating Partnership’s statement of operations is more beneficial, as it eliminates the presentation of non-controlling interests represented by the equity interests held by limited partners of the Operating Partnership, other than the REIT. In addition, FFO and AFFO results on a total per common unit basis provides for a more consistent period over period presentation now and in future periods.

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
Condensed Consolidated Balance Sheets
June 30, 2012 (Unaudited) and December 31, 2011
			2012					2011
ASSETS
Cash and cash equivalents			$		11,623,207			$		10,537,132
Restricted cash					3,107,998					1,464,032
Trade receivables					6,946,025					3,424,630
Prepaid expenses and other					3,329,337					4,268,393
Land held for development					19,006,473					20,294,973
Assets held for sale					1,629,412					-
Property and equipment, net					558,546,155					498,876,238
Deferred charges and other assets, net					9,574,069					8,923,906
Deferred tax benefit					2,971,350					2,195,820
Other assets					4,758,390					4,019,870
TOTAL ASSETS			$		621,492,416			$		554,004,994
LIABILITIES AND EQUITY
LIABILITIES
Accounts payable			$		1,933,060			$		1,670,994
Derivative liabilities					280,841					-
Liabilities related to assets held for sale					55,410					-
Accrued expenses					15,351,899					15,781,577
Mortgages and notes payable					298,432,922					217,103,728
TOTAL LIABILITIES					316,054,132					234,556,299
COMMITMENTS AND CONTINGENCIES
EQUITY					305,438,284					319,448,695
TOTAL LIABILITIES AND EQUITY			$		621,492,416			$		554,004,994

SUMMIT HOTEL PROPERTIES
Condensed Consolidated Statements of Operations
(Unaudited)
																		Company and
			Company															Predecessor
			Three months					Three months					Six months					Six months
			ended 06/30/12					ended 06/30/11					ended 06/30/12					ended 06/30/11
REVENUE
Room revenue			$	46,153,920				$	36,233,265				$	85,069,804				$	67,770,544
Other hotel operations revenue				1,126,223					763,619					2,121,149					1,456,169
Total Revenue				47,280,143					36,996,884					87,190,953					69,226,713
EXPENSES
Hotel operating expenses
Rooms				13,318,174					11,252,600					25,046,345					20,708,692
Other direct				5,274,760					4,856,876					10,025,519					9,468,029
Other indirect				12,617,580					8,849,929					23,801,932					18,132,175
Other				232,318					201,047					443,004					347,123
Total hotel operating expenses				31,442,832					25,160,452					59,316,800					48,656,019
Depreciation and amortization				8,143,923					6,546,156					16,332,359					13,116,629
Corporate general and administrative:
Salaries and other compensation				711,770					699,014					1,523,408					1,066,032
Other				912,622					751,749					1,772,117					1,513,482
Equity based compensation				388,695					175,656					514,569					302,484
Loan transaction costs				423,110					-					423,110					-
Hotel property acquisition costs				747,295					-					1,327,233					-
Total Expenses				42,770,247					33,333,027					81,209,596					64,654,646
INCOME (LOSS) FROM OPERATIONS				4,509,896					3,663,857					5,981,357					4,572,067
OTHER INCOME (EXPENSE)
Interest income				300					10,280					1,691					21,366
Other income				474,576					-					474,576					-
Interest expense				(4,270,723	)				(2,923,852	)				(7,699,198	)				(10,893,689	)
Gain (loss) on disposal of assets				(186,589	)				(36,031	)				(186,589	)				(36,031	)
Unrealized gain (loss) on derivatives				(1,012	)				-					(1,012	)				-
Total Other Income (Expense)				(3,983,448	)				(2,949,603	)				(7,410,532	)				(10,908,354	)
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES				526,448					714,254					(1,429,175	)				(6,336,287	)
INCOME TAX (EXPENSE) BENEFIT				144,101					(329,981	)				411,856					(822,894	)
INCOME (LOSS) FROM CONTINUING OPERATIONS				670,549					384,273					(1,017,319	)				(7,159,181	)
INCOME (LOSS) FROM DISCONTINUED OPERATIONS				(1,027,340	)				219,588					(2,144,282	)				(57,635	)
NET INCOME (LOSS)				(356,791	)				603,861					(3,161,601	)				(7,216,816	)
PREFERRED DIVIDENDS				(1,156,250	)				-					(2,312,500	)				-
NET INCOME (LOSS) ATTRIBUTABLE TO
COMMON UNIT HOLDERS				(1,513,041	)				603,861					(5,474,101	)				(7,216,816	)
Basic and diluted net income (loss) per unit				($0.04	)			$0.02						($0.15	)				($0.19	)
Weighted-average common units outstanding:
Basic and diluted				37,383,096					37,378,000					37,380,548					37,378,000

SUMMIT HOTEL PROPERTIES
FFO
(Unaudited)
																		Company and
			Company															Predecessor
			Three months					Three months					Six months					Six months
			ended 06/30/12					ended 06/30/11					ended 06/30/12					ended 06/30/11
NET INCOME (LOSS)				(356,791	)				603,861					(3,161,601	)				(7,216,816	)
Preferred Dividends				(1,156,250	)				-					(2,312,500	)				-
Depreciation and amortization				8,177,333					6,819,608					16,657,621					13,678,039
Loss on Impairment				1,166,000					-					2,098,000					-
Gain (loss) on disposal of assets				186,589					36,031					186,589					36,031
Funds From Operations				8,016,881					7,459,500					13,468,109					6,497,254
Per Common share/unit			$	0.21				$	0.20				$	0.36				$	0.17
Equity based Compensation				388,695					175,656					514,569					302,484
Hotel property acquisition costs				747,295					-					1,327,233					-
Loan transaction costs				423,110					-					423,110					-
Gain (loss) on derivatives				1,012					-					1,012					-
Operating expenses as result of IPO (1)				-					-					-					710,000
Corporate G&A related to IPO (1)				-					-					-					476,000
Interest expense on prepayment penalties (1)				521,773					-					521,773					5,600,000
Income tax expense as result of IPO (1)				-					-					-					339,000
Adjusted Funds From Operations				10,098,766					7,635,156					16,255,806					13,924,738
Per Common share/unit			$	0.27				$	0.20				$	0.43				$	0.37
Number of weighted average Common shares/units				37,383,096					37,378,000					37,380,548					37,378,000

(1)		Includes non-recurring expenses related to the transfer and assumption of indebtedness and other contractual obligations of our predecessor in connection with the IPO and our formation transactions.

SUMMIT HOTEL PROPERTIES
EBITDA
(Unaudited)
																Company and
			Company													Predecessor
			Three months				Three months					Six months				Six months
			ended 06/30/12				ended 06/30/11					ended 06/30/12				ended 06/30/11
NET INCOME (LOSS)			(356,791	)			603,861					(3,161,601	)			(7,216,816	)
Depreciation and amortization			8,177,333				6,819,608					16,657,621				13,678,039
Interest Expense			4,304,431				3,007,640					7,829,934				11,184,985
Interest Income			(300	)			(10,280	)				(1,691	)			(21,366	)
Income Tax			(146,662	)			344,177					(429,653	)			855,513
EBITDA			11,978,011				10,765,006					20,894,610				18,480,355
Equity based compensation			388,695				175,656					514,569				302,484
Hotel property acquisition costs			747,295				-					1,327,233				-
Loan transaction costs			423,110				-					423,110				-
Unrealized gain (loss) on derivatives			1,012				-					1,012				-
Gain (loss) on disposal of assets			186,589				36,031					186,589				36,031
Loss on impairment of assets			1,166,000				-					2,098,000				-
Operating expenses as result of IPO (1)			-				-					-				710,000
Corporate G&A related to IPO (1)			-				-					-				476,000
ADJUSTED EBITDA			14,890,712				10,976,693					25,445,123				20,004,870

(1)		Includes non-recurring expenses related to the transfer and assumption of indebtedness and other contractual obligations of our predecessor in connection with the IPO and our formation transactions.

SUMMIT HOTEL PROPERTIES
Pro Forma Hotel Operational Data
Schedule of Property Level Results
(Unaudited)
																Company and
			Company													Predecessor
			Three months				Three months					Six months				Six months
			ended 06/30/12				ended 06/30/11					ended 06/30/12				ended 06/30/11
REVENUE
Room revenue			$	47,459,645			$	42,530,684				$	89,687,626			$	81,224,487
Other hotel operations revenue				1,145,594				1,032,579					2,246,190				2,016,987
Total Revenue				48,605,239				43,563,263					91,933,816				83,241,474
EXPENSES
Hotel operating expenses
Rooms				13,682,972				13,209,776					26,292,222				24,693,251
Other direct (1)				5,419,241				5,701,637					10,524,217				11,289,772
Other indirect (1)				12,963,188				10,389,206					24,985,908				21,620,987
Other				238,681				236,015					465,040				413,913
Total hotel operating expenses				32,304,083				29,536,636					62,267,387				58,017,923
Hotel EBITDA				16,301,156				14,026,627					29,666,429				25,223,551

Note:
		(1)		For purposes of this press release, pro forma RevPAR, pro forma RevPAR growth, pro forma Hotel EBITDA, pro forma Hotel EBITDA margin and pro forma Hotel EBITDA margin growth includes operating results for the Company’s 72 hotels owned as of June 30, 2012, excluding 3 hotels sold including Twin Falls, ID AmericInn & Suites, Twin Falls, ID Hampton Inn, and Twin Falls, ID Holiday Inn Express & Suites and the Missoula, MT AmericInn Hotel & Suites held for sale, as if such hotels had been owned since January 1, 2011. As a result, these pro forma operating measures include operating results for certain hotels prior to the Company’s period of ownership.
		(2)		Includes expenses related to our predecessor in connection with the IPO

SUMMIT HOTEL PROPERTIES
Pro Forma and Same-Store Statistical Data for the Hotels
(Unaudited)
													Company and
			Company										Predecessor
			Pro Forma			Pro Forma				Pro Forma			Pro Forma
			Three months			Three months				Six months			Six months
			ended 06/30/12			ended 06/30/11				ended 06/30/12			ended 06/30/11
Total Portfolio (72 hotels)
Rooms Occupied			496,847			467,968				939,344			875,398
Rooms Available			676,797			677,404				1,354,655			1,343,804
Occupancy			73.4%			69.1%				69.3%			65.1%
ADR			$95.52			$90.88				$95.48			$92.79
RevPAR			$70.12			$62.78				$66.21			$60.44
Occupancy Growth			6.3%							6.4%
ADR Growth			5.1%							2.9%
RevPAR Growth			11.7%							9.5%

Note:

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