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TheStreet Open House

Summit Hotel Properties Reports 2012 Results

Dispositions

The Company continued its strategy of recycling capital by selling hotels or land that it no longer considers strategic.

  • On May 16, 2012, the Company sold the following three hotels all located in Twin Falls, ID for $16.5 million.
    • 111 guestroom AmericInn Hotel and Suites
    • 91 guestroom Holiday Inn Express & Suites
    • 75 guestroom 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 two parcels of land in Boise, ID for $1.4 million.
  • On August 15, 2012, the Company sold the 52 guestroom AmericInn Hotel & Suites in Missoula, MT for $1.9 million.
  • On December 11, 2012, the Company sold the 92 guestroom Courtyard in Missoula, MT for $7.7 million.

On February 26, 2013, the Company owns 86 hotels totaling 9,486 guestrooms. Since its initial public offering in February of 2011, the Company has acquired 28 hotel properties, totaling 3,593 guestrooms for a total purchase price of $412.1 million.

Capital Markets

During 2012, in order to maintain its strong balance sheet and continue its strategic growth plan, the Company completed several capital market transactions. The Company raised $178.9 million in net proceeds from common and preferred stock offerings.

  • On October 3, 2012, the Company completed a public offering of 12,000,000 shares of its common stock at a public offering price of $8.15 per share. The underwriters fully exercised their option to purchase an additional 1,800,000 shares. The total number of shares sold, including the option shares, was 13,800,000. Total net proceeds of $106.4 million were realized after deducting the underwriting discount and other estimated offering expenses.
  • On December 11, 2012, the Company completed a public offering of 3,000,000 shares of its 7.875% Series B Cumulative Redeemable Preferred Stock, resulting in net proceeds, after deducting the underwriting discount and estimated offering costs, of $72.5 million.

The Company amended its $125.0 million senior secured revolving credit facility on May 16, 2012. The amendment included 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.

In addition to the amendments listed above, on November 6, 2012, the Company increased the commitment on its senior secured revolving credit facility to $150.0 million; increasing the capital the Company has available for future acquisitions and capital investments. The actual amount of borrowing capacity available under the facility depends on the value of the properties comprising the borrowing base.

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