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Summit Hotel Properties Reports Second Quarter 2013 Results

Summit Hotel Properties, Inc. (NYSE: INN) (the “Company”) today announced results for the second quarter of 2013.

Second Quarter Highlights
  • Same-Store RevPAR: Same-store revenue per available room (“RevPAR”) in the second quarter of 2013 grew to $75.76, an increase of 8.0 percent over the same period in 2012. Same-store average daily rate (“ADR”) grew to $99.96, an increase of 4.9 percent from the second quarter of 2012. Same-store occupancy grew by 219 basis points to 75.8 percent.
  • Pro Forma RevPAR: Pro forma RevPAR in the second quarter of 2013 grew to $85.43, an increase of 5.8 percent over the same period in 2012. Pro forma ADR grew to $110.58, an increase of 3.9 percent from the second quarter of 2012. Pro forma occupancy grew by 140 basis points to 77.3 percent. Pro forma RevPAR grew by 7.0 percent when excluding the recently acquired five hotels in the New Orleans market.
  • Pro Forma Hotel EBITDA: Pro forma hotel EBITDA for the second quarter of 2013 was $32.8 million, an increase of 7.2 percent over the same period of 2012.
  • Pro Forma Hotel EBITDA Margin: Pro forma hotel EBITDA margin expanded 38 basis points compared with the same period in 2012. Pro forma hotel EBITDA margin expanded by 118 basis points when excluding the recently acquired five hotels in the New Orleans market. Pro forma hotel EBITDA margin is defined as pro forma hotel EBITDA as a percentage of pro forma total revenue.
  • Adjusted EBITDA: The Company’s adjusted EBITDA increased to $26.7 million from $14.9 million in the same period in 2012, an increase of $11.8 million or 79.3 percent. Adjusted EBITDA for the quarter includes $0.2 million of charges associated with the consolidation of the Company’s corporate offices to Austin, TX.
  • Adjusted FFO: The Company’s Adjusted FFO for the quarter was $17.6 million or $0.26 per diluted unit.
  • Acquisitions: During the second quarter, the Company acquired seven hotels with 1,096 guestrooms, for a total purchase price of $185.4 million.
  • Dividends: On August 1, 2013, the Company declared an $0.1125 per share quarterly dividend on its common stock, a $0.578125 per share quarterly dividend on its 9.25% Series A Cumulative Redeemable Preferred Stock, a $0.4921875 per share quarterly dividend on its 7.875% Series B Cumulative Redeemable Preferred Stock, and a $0.4453125 per share partial quarterly dividend on its 7.125% Series C Cumulative Redeemable Preferred Stock. Based on the closing price on August 5, 2013, annualized dividend yield on the Company’s common stock was 4.6%.

The Company’s results included the following:
Three Months Ended June 30, Six Months Ended June 30,
2013     2012 2013     2012
($ in thousands, except per unit and RevPAR data)
Total Revenues $ 83,096 $ 43,478 $ 146,307 $ 80,798
EBITDA ¹ $ 25,093 $ 11,979 $ 43,035 $ 20,895
Adjusted EBITDA ¹ $ 26,700 $ 14,892 $ 45,577 $ 25,446
FFO ¹ $ 15,952 $ 8,018 $ 26,714 $ 13,469
Adjusted FFO ¹ $ 17,585 $ 9,578 $ 29,422 $ 15,735
FFO per diluted unit ¹ $ 0.23 $ 0.21 $ 0.40 $ 0.36
Adjusted FFO per diluted unit ¹ $ 0.26 $ 0.26 $ 0.44 $ 0.42

Pro Forma ²
RevPAR $ 85.43 $ 80.72 $ 81.66 $ 77.00
RevPAR growth 5.8% 6.1%
Hotel EBITDA $ 32,809 $ 30,603 $ 60,793 $ 55,992
Hotel EBITDA margin 36.8% 36.4% 35.7% 34.8%
Hotel EBITDA margin growth 38 bps 90 bps

See tables later in this press release for a reconciliation of net income (loss) to earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted EBITDA, funds from operations (“FFO”), FFO per diluted unit, adjusted FFO and adjusted FFO per diluted unit. EBITDA, adjusted EBITDA, FFO, FFO per diluted unit, adjusted FFO and adjusted FFO per diluted unit, as well as hotel EBITDA (hotel revenues less hotel operating expenses), are non-GAAP financial measures. See further discussions of these non-GAAP measures later in this press release.

Pro forma information includes operating results for 92 hotels owned as of June 30, 2013 as if each hotel had been owned by the Company since January 1, 2012, which excludes the following three hotels that were held for sale at June 30, 2013: the 63–guestroom Fairfield Inn, Boise, ID; the 63–guestroom Hampton Inn, Boise, ID; and the 78–guestroom SpringHill Suites, Lithia Springs, GA. As a result, these pro forma operating measures include operating results for certain hotels for periods prior to the Company’s ownership.
      6/30/2013     6/30/2012     growth
Number of Hotels     95     73     30.1%
Number of Guestrooms 11,127 7,489 48.6%
Total Revenue (000’s) $83,096 $43,478 91.1%
Adjusted EBITDA (000’s)     $26,700     $14,892     79.3%

“We continue to remain positive in our view of the second half of 2013 and into 2014,” said Dan Hansen, President and CEO. “Our same-store hotels had a very solid 8.0% RevPAR growth despite some softening in May and June. Investors should be reminded that we had impressive same-store RevPAR growth in the second quarter of 2012. Our same-stores grew RevPAR 12.8% in second quarter of 2012. Our strong second quarter 2013 RevPAR growth was the result of completed renovation work and general economic improvement in many of our markets. Our acquisitions performed well during the quarter with the exception of our five hotels recently acquired in New Orleans. As we discussed previously, our New Orleans hotels, as a group, had outsized growth in second quarter of 2012. These hotels had an exceptionally strong convention calendar last year, and will have a tough comparison in the third quarter of 2013 as well. However, the New Orleans conference calendar is developing well for fourth quarter of 2013 and for the full year of 2014. We expect strong performance from this cluster.”

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