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Summit Hotel Properties Reports Second Quarter 2014 Results

Stocks in this article: INN

Summit Hotel Properties, Inc. (NYSE:INN) (the “Company”) today announced results for the second quarter ended June 30, 2014.

“We’re very excited about the terrific performance of our portfolio in the second quarter,” said Dan Hansen, Summit’s President and CEO. “We believe that our 11.4 percent pro forma RevPAR growth validates our investment strategy of tactical acquisitions, capital investment and best in class asset management.”

Second Quarter 2014 Highlights

  • Pro Forma RevPAR: Pro forma revenue per available room (“RevPAR”) in the second quarter of 2014 grew to $97.93, an increase of 11.4 percent over the same period in 2013. Pro forma average daily rate (“ADR”) grew to $122.51, an increase of 6.7 percent from 2013. Pro forma occupancy grew by 4.4 percent to 79.9 percent.
  • Pro Forma Hotel EBITDA: Pro forma hotel EBITDA for the second quarter of 2014 was $38.9 million, an increase of 14.7 percent over the same period in 2013.
  • Pro Forma Hotel EBITDA Margin: Pro forma hotel EBITDA margin in the second quarter of 2014 expanded by 103 basis points compared with the same period in 2013. Pro forma hotel EBITDA margin is defined as pro forma hotel EBITDA as a percentage of pro forma total revenue.
  • Same-Store RevPAR: Same-store RevPAR in the second quarter of 2014 grew to $88.28, an increase of 8.9 percent over the same period in 2013. Same-store ADR grew to $111.91, an increase of 6.3 percent from the second quarter of 2013. Same-store occupancy grew by 2.5 percent to 78.9 percent.
  • Adjusted EBITDA: Adjusted EBITDA increased to $35.6 million in the second quarter of 2014 from $26.7 million in the same period in 2013, an increase of $8.9 million or 33.5 percent.
  • Adjusted FFO: Adjusted FFO (“AFFO”) for the second quarter of 2014 increased 39.0 percent over the same period of 2013 to $24.4 million or $0.28 per diluted unit.
  • Capital Reinvestment: The Company invested $6.0 million during the second quarter of 2014 and added an additional 14 guestrooms to its portfolio through strategic renovations to better utilize existing space.
  • Dividends: On August 1, 2014, the Company declared an increased quarterly dividend of $0.1175 per share on its common stock, which reflects a $0.02 increase on an annualized basis.
Second Quarter 2014 INN vs. STR Results
    Occupancy   ADR   RevPAR
INN Pro Forma (89)   4.4%   6.7%   11.4%
INN Same-Store (66)   2.5%   6.3%   8.9%
Overall US *   3.6%   4.4%   8.2%
Upscale *   3.2%   5.2%   8.5%

*Source: Smith Travel Research Monthly Hotel Review, Volume 14, Issue Q2.

The Company’s unaudited results included the following:

Three months ended June 30, Six months ended June 30,
2014   2013 2014   2013
($ in thousands, except per unit and RevPAR data)
Total Revenue $ 105,525 $ 79,105 $ 195,069 $ 138,828
EBITDA 1 $ 32,616 $ 25,093 $ 57,799 $ 43,035
Adjusted EBITDA 1 $ 35,636 $ 26,700 $ 62,828 $ 45,577
FFO 1 $ 22,513 $ 15,952 $ 37,102 $ 26,714
Adjusted FFO 1 $ 24,441 $ 17,585 $ 41,099 $ 29,422
FFO per diluted unit 1, 2 $ 0.26 $ 0.23 $ 0.43 $ 0.40
Adjusted FFO per diluted unit 1, 2 $ 0.28 $ 0.26 $ 0.47 $ 0.44

Pro Forma 3

RevPAR $ 97.93 $ 87.92 $ 91.88 $ 83.86
RevPAR growth 11.4 % 9.6 %
Hotel EBITDA $ 38,916 $ 33,917 $ 68,870 $ 62,209
Hotel EBITDA margin 36.9 % 35.9 % 34.9 % 34.6 %
Hotel EBITDA margin growth 103 bps 36 bps

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

2 Based on 86,735,000 weighted average diluted units and 68,952,000 weighted average diluted units for the three months ended June 30, 2014 and June 30, 2013, respectively, and 86,660,000 weighted average diluted units and 67,598,000 weighted average diluted units for the six months ended June 30, 2014 and June 30, 2014, respectively. In this press release, references to “diluted units” mean diluted shares of the Company’s common stock and common units of limited partnership interest in Summit Hotel OP, LP, the Company’s operating partnership, held by limited partners other than the Company. In general, common units held by limited partners other than the Company are redeemable for cash or, at the Company’s option, shares of the Company’s common stock on a one-for-one basis.

3 Unless stated otherwise in this release, all pro forma information includes operating and financial results for 89 hotels owned as of June 30, 2014 as if each hotel had been owned by the Company since January 1, 2013 and excludes the 178-guestroom Hampton Inn located in Fort Smith, Ark. that was held for sale at June 30, 2014. As a result, all pro forma information includes operating and financial results for hotels acquired since January 1, 2013 for periods prior to the Company’s ownership.

“The first six months of 2014 have been really strong for both Summit and the industry as a whole,” commented Hansen. “The increased momentum that began late in 2013 has continued with robust demand in both the business and leisure segments, which we believe puts our portfolio in an excellent position for continued growth.”

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