Net Income Increases to $30.8 Million for Second Quarter 2024
Adjusted EBITDAre Grows 6% to Reach All-Time
Quarterly Record High of $55.9
Million
Adjusted FFO Increases 10% to $0.29 per Share
AUSTIN,
Texas, July 29, 2024 /PRNewswire/ -- Summit Hotel
Properties, Inc. (NYSE: INN) (the "Company"), today announced
results for the three and six months ended June 30, 2024.
"We are pleased with our strong second quarter financial results
as year-over-year RevPAR growth of 3.4% in our pro forma portfolio
exceeded the national average for the thirteenth consecutive
quarter. Our top line results were driven by strong group
demand growth, the continued recovery of business transient travel
and our outsized exposure to urban markets. Continued
successful expense management drove pro forma hotel EBITDA margin
expansion of 120 basis points and Adjusted EBITDAre and Adjusted
FFO grew 6% and 10%, respectively year-over-year," said
Jonathan P. Stanner, the Company's
President and Chief Executive Officer. "During the
quarter we closed on the previously announced sale of three hotels
for $84 million, a continuation of
our balance sheet deleveraging efforts which have improved the
overall quality of our portfolio, eliminated significant near-term
capital needs, and better positioned the Company for future
growth," continued Mr. Stanner.
Second Quarter 2024 Summary
- Net Income: Net income attributable to common
stockholders was $30.8 million, or
$0.23 per diluted share, compared to
a net loss of $0.8 million, or
$0.01 per diluted share, for the
second quarter of 2023.
- Pro forma RevPAR: Pro forma RevPAR increased 3.4
percent to $132.41 compared to the
second quarter of 2023. Pro forma ADR increased 0.9 percent to
$170.46 compared to the same period
in 2023, and pro forma occupancy increased 2.4 percent to 77.7
percent.
- Same Store RevPAR: Same Store RevPAR increased 3.3
percent to $132.59 compared to the
second quarter of 2023. Same store ADR increased 0.9 percent to
$170.53 and same store occupancy
increased 2.4 percent to 77.8 percent.
- Pro Forma Hotel EBITDA(1): Pro forma
hotel EBITDA increased 7.0 percent to $73.1
million from $68.3 million in
the same period in 2023. Pro forma hotel EBITDA margin expanded
approximately 120 basis points to 38.0 percent.
- Same Store Hotel EBITDA(1): Same store
hotel EBITDA increased 6.9 percent to $72.4
million from $67.7 million in
the same period in 2023. Same store hotel EBITDA margin expanded
approximately 118 basis points to 38.0 percent.
- Adjusted EBITDAre(1): Adjusted
EBITDAre increased 5.7 percent to $55.9 million from $52.9
million in the second quarter of 2023.
- Adjusted FFO(1): Adjusted FFO increased
9.7 percent to $36.4 million, or
$0.29 per diluted share, compared to
$33.2 million, or $0.27 per diluted share, in the second quarter of
2023.
Year-to-Date 2024 Summary
- Net Income: Net income attributable to common
stockholders was $28.7 million, or
$0.21 per diluted share, compared to
a net loss of $6.0 million, or
$0.06 per diluted share, in the same
period of 2023.
- Pro forma RevPAR: Pro forma RevPAR increased 2.3
percent to $128.14 compared to the
same period of 2023. Pro forma ADR decreased 0.2 percent to
$171.52, and pro forma occupancy
increased 2.5 percent to 74.7 percent.
- Same Store RevPAR: Same Store RevPAR increased 2.3
percent to $127.72 compared to the
same period of 2023. Same store ADR decreased 0.2 percent to
$170.99, and same store occupancy
increased 2.5 percent to 74.7 percent.
- Pro Forma Hotel EBITDA(1): Pro forma
hotel EBITDA increased 5.9 percent to $138.8
million from $131.0 million,
and pro formal hotel EBITDA margin expanded 93 basis points to 37.2
percent.
- Same Store Hotel EBITDA(1): Same store
hotel EBITDA increased 6.0 percent to $136.2
million from $128.5 million,
and same store hotel EBITDA margin expanded 94 basis points to 37.0
percent.
- Adjusted EBITDAre(1): Adjusted
EBITDAre increased 7.6 percent to $104.7 million from $97.3
million in the same period of 2023.
- Adjusted FFO(1): Adjusted FFO increased
11.7 percent to $66.4 million,
or $0.54 per diluted share, compared
to $59.4 million, or
$0.49 per diluted share, in the same
period of 2023.
The Company's results for the three and six months ended
June 30, 2024 and 2023 are as follows
(in thousands, except per share amounts and metrics):
|
For the Three Months
Ended
June 30,
|
|
For the Six Months
Ended
June 30,
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
|
|
Net income (loss)
attributable to common stockholders
|
$
30,849
|
|
$
(753)
|
|
$
28,733
|
|
$
(5,981)
|
|
Net income (loss) per
diluted share
|
$
0.23
|
|
$
(0.01)
|
|
$
0.21
|
|
$
(0.06)
|
|
Total
revenues
|
$
193,903
|
|
$
194,493
|
|
$
382,045
|
|
$
376,876
|
|
EBITDAre
(1)
|
$
69,755
|
|
$
61,602
|
|
$
130,954
|
|
$
116,942
|
|
Adjusted EBITDAre
(1)
|
$
55,920
|
|
$
52,896
|
|
$
104,721
|
|
$
97,323
|
|
FFO
(1)
|
$
34,934
|
|
$
27,847
|
|
$
60,422
|
|
$
49,923
|
|
Adjusted FFO
(1)
|
$
36,370
|
|
$
33,151
|
|
$
66,366
|
|
$
59,411
|
|
FFO per diluted share
and unit (1) (2)
|
$
0.28
|
|
$
0.23
|
|
$
0.49
|
|
$
0.41
|
|
Adjusted FFO per
diluted share and unit (1) (2)
|
$
0.29
|
|
$
0.27
|
|
$
0.54
|
|
$
0.49
|
|
|
|
|
|
|
|
|
|
Pro Forma
(2)
|
|
|
|
|
|
|
|
|
RevPAR
|
$
132.41
|
|
$
128.10
|
|
$
128.14
|
|
$
125.28
|
|
RevPAR
Growth
|
3.4 %
|
|
|
|
2.3 %
|
|
|
|
Hotel EBITDA
|
$
73,095
|
|
$
68,303
|
|
$
138,752
|
|
$
131,015
|
|
Hotel EBITDA
Margin
|
38.0 %
|
|
36.8 %
|
|
37.2 %
|
|
36.2 %
|
|
Hotel EBITDA Margin
Growth
|
120 bps
|
|
|
|
93 bps
|
|
|
|
|
|
|
|
|
|
|
|
Same Store
(3)
|
|
|
|
|
|
|
|
|
RevPAR
|
$
132.59
|
|
$
128.38
|
|
$
127.72
|
|
$
124.82
|
|
RevPAR
Growth
|
3.3 %
|
|
|
|
2.3 %
|
|
|
|
Hotel EBITDA
|
$
72,387
|
|
$
67,746
|
|
$
136,205
|
|
$
128,509
|
|
Hotel EBITDA
Margin
|
38.0 %
|
|
36.8 %
|
|
37.0 %
|
|
36.0 %
|
|
Hotel EBITDA Margin
Growth
|
118 bps
|
|
|
|
94 bps
|
|
|
|
|
(1) See tables later
in this press release for a discussion and reconciliation of net
income (loss) to non-GAAP financial measures, including earnings
before interest, taxes, depreciation, and amortization ("EBITDA"),
EBITDAre, adjusted EBITDAre, funds from operations ("FFO"), FFO per
diluted share and unit, adjusted FFO ("AFFO"), and AFFO per diluted
share and unit, as well as a reconciliation of operating income
(loss) to hotel EBITDA. See "Non-GAAP Financial Measures" at the
end of this release.
|
|
|
(2) Unless stated
otherwise in this release, all pro forma information includes
operating and financial results for 96 hotels owned as of June 30,
2024, as if each hotel had been owned by the Company since January
1, 2023 and remained open for the entirety of the measurement
period. As a result, all pro forma information includes operating
and financial results for hotels acquired since January 1, 2023,
which may include periods prior to the Company's ownership. Pro
forma and non-GAAP financial measures are unaudited.
|
|
|
(3) All same store
information includes operating and financial results for 94 hotels
owned as of June 30, 2024, and at all times during the three
and six months ended June 30, 2024, and 2023.
|
Transaction Activity
During the quarter, the Company completed the sale of three
hotels containing 529 guestrooms for a gross sales price of
$84 million. The aggregate sales
price for the transactions represented a blended 6.8 percent
capitalization rate based on the estimated net operating income
after a FF&E reserve for the full year 2024 and after
consideration of approximately $13
million of foregone near-term required capital expenditures.
Net proceeds from the transaction, which generated a net gain on
sale of approximately $28.0 million,
were used to repay debt and for other general corporate
purposes.
|
Sold
Hotels
|
Keys
|
Date
|
Price
|
Capex (1)
|
RevPAR
|
|
Courtyard &
SpringHill Suites New Orleans Warehouse Arts District
|
410
|
April 2024
|
73,000
|
10,250
|
114
|
|
Hilton Garden Inn
College Station
|
119
|
April 2024
|
11,000
|
2,975
|
86
|
|
Total
|
529
|
|
$
84,000
|
$
13,225
|
$
108
|
|
|
(1) Reflects estimated near-term foregone capital
expenditures for dispositions and near-term capital requirements
for acquisitions.
|
Over the last fifteen months, the Company and its affiliates
have sold nine hotels for a combined sales price of $131 million at a blended capitalization rate of
approximately 5%, inclusive of an estimated $44 million of foregone capital needs, based on
the trailing twelve month net operating income at the time of each
sale. The combined RevPAR for the sold hotels was
$87 which is a nearly 30% discount to
the current pro forma portfolio. The Company's disposition
activity has facilitated nearly a full turn reduction in its Net
Debt : Adjusted EBITDAre leverage ratio, enhanced the quality and
growth profile of the portfolio, and significantly reduced
near-term capital requirements.
Capital Markets and Balance Sheet
During the second quarter, the Company further deleveraged its
balance sheet by repaying over $105
million of pro rata indebtedness with proceeds from asset
sales and available cash on hand.
On a pro rata basis as of June 30,
2024, the Company had the following outstanding indebtedness
and liquidity available:
- Outstanding debt of $1.1 billion
with a weighted average interest rate of 4.73 percent. After giving
effect to interest rate derivative agreements, $799.0 million, or 76 percent, of our outstanding
debt had a fixed interest rate, and $254.3
million, or 24 percent, had a variable interest rate.
- Unrestricted cash and cash equivalents of $37.7 million.
- Total liquidity of $328.1
million, including unrestricted cash and cash equivalents
and revolving credit facility availability.
Common and Preferred Dividend Declaration
On July 25, 2024, the Company
declared a quarterly cash dividend of $0.08 per share on its common stock and per
common unit of limited partnership interest in Summit Hotel OP, LP.
The quarterly dividend of $0.08 per
share represents an annualized dividend yield of 5.2 percent, based
on the closing price of shares of the common stock on July 26, 2024.
In addition, the Board of Directors declared a quarterly cash
dividend of:
- $0.390625 per share on its 6.25%
Series E Cumulative Redeemable Preferred Stock
- $0.3671875 per share on its
5.875% Series F Cumulative Redeemable Preferred Stock.
- $0.328125 per unit on its 5.25%
Series Z Cumulative Perpetual Preferred Units
The dividends are payable on August 30,
2024, to holders of record as of August 16, 2024.
2024 Outlook
The Company is revising its full year 2024 outlook to reflect a
moderating RevPAR growth environment, particularly around peak
summer travel periods as leisure trends continue to
normalize. The revised Adjusted EBITDAre range incorporates a
high-end that has been tightened and a slight decrease to the
midpoint of the range as continued successful profitability
initiatives and reduced expense growth have helped offset lower
revenue growth expectations. The Adjusted FFO and Adjusted
FFO per share ranges have been tightened with midpoints
maintained.
The full year 2024 outlook is based on 96 lodging assets
currently owned, 54 of which were wholly owned as of July 29, 2024. The updated outlook incorporates
all transaction activity closed to date and there are no additional
acquisitions, dispositions, or capital markets activities assumed
in the Company's full year 2024 outlook beyond the transactions
already completed.
|
|
FYE 2024
Outlook
|
|
|
Low
|
|
High
|
|
Variance to
Prior
Midpoint
|
|
% Change to
Prior
Midpoint
|
|
Pro Forma RevPAR Growth
(1)
|
|
1.00 %
|
|
2.50 %
|
|
(1.25) %
|
|
— %
|
|
Adjusted
EBITDAre
|
|
$
188,000
|
|
$
196,000
|
|
$
(2,000)
|
|
(1.0) %
|
|
Adjusted FFO
|
|
$
112,000
|
|
$
122,000
|
|
$
—
|
|
— %
|
|
Adjusted FFO per
Diluted Unit
|
|
$
0.91
|
|
$
0.99
|
|
$
—
|
|
— %
|
|
Capital Expenditures,
Pro Rata
|
|
$
65,000
|
|
$
85,000
|
|
$
—
|
|
— %
|
|
|
(1) All pro forma information includes operating and
financial results for 96 lodging assets owned as of July 29,
2024, as if each property had been owned by the Company since
January 1, 2023 and will continue to be owned through the entire
year ending December 31, 2024. As a result, the pro forma
information includes operating and financial results for lodging
assets acquired since January 1, 2023, which may include periods
prior to the Company's ownership. Pro forma and non-GAAP financial
measures are unaudited.
|
Second Quarter 2024 Earnings Conference Call
The Company will conduct its quarterly conference call on
July 30, 2024, at 9:00 AM ET.
- To access the conference call, please pre-register using this
link. Registrants will receive a confirmation with dial-in
details.
- A live webcast of the conference call can be accessed using
this link. A replay of the webcast will be available in the
Investors section of the Company's website, www.shpreit.com, until
October 31, 2024.
Supplemental Disclosures
In conjunction with this press release, the Company has
furnished a financial supplement with additional disclosures on its
website. Visit www.shpreit.com for more information. The Company
has no obligation to update any of the information provided to
conform to actual results or changes in portfolio, capital
structure or future expectations.
About Summit Hotel Properties
Summit Hotel Properties, Inc. is a publicly traded real estate
investment trust focused on owning premium-branded lodging
facilities with efficient operating models primarily in the upscale
segment of the lodging industry. As of July 29, 2024, the
Company's portfolio consisted of 96 assets, 54 of which are wholly
owned, with a total of 14,256 guestrooms located in 24 states.
For additional information, please visit the Company's website,
www.shpreit.com, and follow on Twitter at @SummitHotel_INN and on
Facebook at facebook.com/SummitHotelProperties.
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 Litigation 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," "likely," "would" 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: the Company's ability to realize growth from
the deployment of renovation capital; 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, dispositions, financings, redemptions or
services; forecasts of the Company's future financial performance
and potential increases in average daily rate, occupancy, RevPAR,
room supply and demand, EBITDAre, Adjusted EBITDAre, FFO and AFFO;
the Company's outlook with respect to pro forma RevPAR, pro forma
RevPAR growth, RevPAR, RevPAR growth, AFFO, AFFO per diluted share
and unit and renovation capital deployed; 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"). 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, 2023, filed with the SEC, and its
quarterly and other periodic filings with the SEC. 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, Inc.
Condensed
Consolidated Balance Sheets
(In
thousands)
|
|
|
June 30,
2024
|
|
December 31,
2023
|
|
|
(Unaudited)
|
|
|
|
ASSETS
|
|
|
|
|
|
Investments in lodging
property, net
|
|
$
2,702,038
|
|
$
2,729,049
|
|
Investment in lodging
property under development
|
|
3,955
|
|
1,451
|
|
Assets held for sale,
net
|
|
9,715
|
|
73,740
|
|
Cash and cash
equivalents
|
|
45,873
|
|
37,837
|
|
Restricted
cash
|
|
6,766
|
|
9,931
|
|
Right-of-use assets,
net
|
|
33,851
|
|
34,814
|
|
Trade receivables,
net
|
|
27,967
|
|
21,348
|
|
Prepaid expenses and
other
|
|
14,142
|
|
8,865
|
|
Deferred charges,
net
|
|
6,357
|
|
6,659
|
|
Other assets
|
|
20,571
|
|
15,554
|
|
Total
assets
|
|
$
2,871,235
|
|
$
2,939,248
|
|
|
|
|
|
|
LIABILITIES,
REDEEMABLE NON-CONTROLLING INTERESTS AND EQUITY
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
Debt, net of debt
issuance costs
|
|
$
1,345,492
|
|
$
1,430,668
|
|
Lease liabilities,
net
|
|
25,158
|
|
25,842
|
|
Accounts
payable
|
|
6,637
|
|
4,827
|
|
Accrued expenses and
other
|
|
84,412
|
|
81,215
|
|
Total
liabilities
|
|
1,461,699
|
|
1,542,552
|
|
|
|
|
|
|
Redeemable
non-controlling interests
|
|
50,219
|
|
50,219
|
|
|
|
|
|
|
Total stockholders'
equity
|
|
931,947
|
|
911,195
|
|
Non-controlling
interests
|
|
427,370
|
|
435,282
|
|
Total
equity
|
|
1,359,317
|
|
1,346,477
|
|
Total liabilities,
redeemable non-controlling interests and equity
|
|
$
2,871,235
|
|
$
2,939,248
|
|
Summit Hotel
Properties, Inc.
Condensed
Consolidated Statements of Operations
(Unaudited)
(In thousands,
except per share amounts)
|
|
|
For the Three Months
Ended
June 30,
|
|
For the Six Months
Ended
June 30,
|
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Room
|
|
$
173,025
|
|
$
174,181
|
|
$
340,456
|
|
$
337,270
|
|
Food and
beverage
|
|
10,069
|
|
10,269
|
|
20,902
|
|
20,899
|
|
Other
|
|
10,809
|
|
10,043
|
|
20,687
|
|
18,707
|
|
Total
revenues
|
|
193,903
|
|
194,493
|
|
382,045
|
|
376,876
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
Room
|
|
38,044
|
|
38,788
|
|
74,017
|
|
74,697
|
|
Food and
beverage
|
|
7,639
|
|
8,040
|
|
15,841
|
|
15,995
|
|
Other lodging property
operating expenses
|
|
57,470
|
|
57,829
|
|
113,731
|
|
113,954
|
|
Property taxes,
insurance and other
|
|
13,287
|
|
14,215
|
|
27,572
|
|
28,939
|
|
Management
fees
|
|
4,434
|
|
4,992
|
|
9,331
|
|
9,797
|
|
Depreciation and
amortization
|
|
36,458
|
|
37,510
|
|
73,257
|
|
74,418
|
|
Corporate general and
administrative
|
|
8,704
|
|
9,100
|
|
17,015
|
|
17,099
|
|
Transaction
costs
|
|
—
|
|
260
|
|
—
|
|
266
|
|
Recovery of credit
losses
|
|
—
|
|
—
|
|
—
|
|
(250)
|
|
Total
expenses
|
|
166,036
|
|
170,734
|
|
330,764
|
|
334,915
|
|
Gain (loss) on
disposal of assets, net
|
|
28,342
|
|
(320)
|
|
28,417
|
|
(320)
|
|
Operating
income
|
|
56,209
|
|
23,439
|
|
79,698
|
|
41,641
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
(20,830)
|
|
(22,248)
|
|
(42,412)
|
|
(43,157)
|
|
Interest
income
|
|
565
|
|
411
|
|
1,023
|
|
717
|
|
Gain on extinguishment
of debt
|
|
3,000
|
|
—
|
|
3,000
|
|
—
|
|
Other income,
net
|
|
2,129
|
|
79
|
|
2,814
|
|
38
|
|
Total other expense,
net
|
|
(15,136)
|
|
(21,758)
|
|
(35,575)
|
|
(42,402)
|
|
Income (loss) from
continuing operations before income taxes
|
|
41,073
|
|
1,681
|
|
44,123
|
|
(761)
|
|
Income tax (expense)
benefit
|
|
(2,375)
|
|
(791)
|
|
(2,592)
|
|
(319)
|
|
Net income
(loss)
|
|
38,698
|
|
890
|
|
41,531
|
|
(1,080)
|
|
Less - (income) loss
attributable to non-controlling interests
|
|
(3,224)
|
|
2,982
|
|
(3,546)
|
|
4,351
|
|
Net income
attributable to Summit Hotel Properties, Inc. before preferred
dividends
|
|
35,474
|
|
3,872
|
|
37,985
|
|
3,271
|
|
Less - Distributions to
and accretion of redeemable non-controlling interests
|
|
(657)
|
|
(657)
|
|
(1,314)
|
|
(1,314)
|
|
Less - Preferred
dividends
|
|
(3,968)
|
|
(3,968)
|
|
(7,938)
|
|
(7,938)
|
|
Net income (loss)
attributable to common stockholders
|
|
$
30,849
|
|
$
(753)
|
|
28,733
|
|
(5,981)
|
|
|
|
|
|
|
|
|
|
|
Income (loss) per
common share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
0.29
|
|
$
(0.01)
|
|
$
0.27
|
|
$
(0.06)
|
|
Diluted
|
|
$
0.23
|
|
$
(0.01)
|
|
$
0.21
|
|
$
(0.06)
|
|
Weighted-average
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
105,918
|
|
105,562
|
|
105,819
|
|
105,438
|
|
Diluted
|
|
149,451
|
|
105,562
|
|
149,112
|
|
105,438
|
|
Summit Hotel
Properties, Inc.
Reconciliation of
Net Income (Loss) to Non-GAAP Measures - Funds From
Operations
(Unaudited)
(In thousands,
except per share and unit amounts)
|
|
|
For the Three
Months
Ended June 30,
|
|
For the Six
Months
Ended June 30,
|
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Net income
(loss)
|
|
$
38,698
|
|
$
890
|
|
$
41,531
|
|
$
(1,080)
|
|
Preferred
dividends
|
|
(3,968)
|
|
(3,968)
|
|
(7,938)
|
|
(7,938)
|
|
Distributions to and
accretion of redeemable non-controlling interests
|
|
(657)
|
|
(657)
|
|
(1,314)
|
|
(1,314)
|
|
Loss related to
non-controlling interest in consolidated joint ventures
|
|
1,375
|
|
2,971
|
|
737
|
|
3,651
|
|
Net income (loss)
applicable to Common Stock and Common Units
|
|
35,448
|
|
(764)
|
|
33,016
|
|
(6,681)
|
|
Real estate-related
depreciation
|
|
35,266
|
|
36,327
|
|
70,869
|
|
72,054
|
|
(Gain) loss on disposal
of assets and other dispositions, net
|
|
(28,342)
|
|
320
|
|
(28,417)
|
|
368
|
|
Adjustments related to
non-controlling interests in consolidated joint ventures
|
|
(7,438)
|
|
(8,036)
|
|
(15,046)
|
|
(15,818)
|
|
FFO applicable to
Common Stock and Common Units
|
|
34,934
|
|
27,847
|
|
60,422
|
|
49,923
|
|
Recoveries of credit
losses
|
|
—
|
|
—
|
|
—
|
|
(250)
|
|
Amortization of debt
issuance costs
|
|
1,621
|
|
1,386
|
|
3,240
|
|
2,785
|
|
Amortization of
franchise fees
|
|
161
|
|
144
|
|
325
|
|
286
|
|
Amortization of
intangible assets, net
|
|
911
|
|
919
|
|
1,822
|
|
1,822
|
|
Equity-based
compensation
|
|
2,635
|
|
2,578
|
|
4,483
|
|
4,046
|
|
Transaction costs and
other
|
|
—
|
|
18
|
|
—
|
|
24
|
|
Debt transaction
costs
|
|
17
|
|
241
|
|
581
|
|
328
|
|
Gain on extinguishment
of debt
|
|
(3,000)
|
|
—
|
|
(3,000)
|
|
—
|
|
Non-cash interest
income, net (1)
|
|
(133)
|
|
(133)
|
|
(266)
|
|
(263)
|
|
Non-cash lease expense,
net
|
|
149
|
|
129
|
|
222
|
|
262
|
|
Casualty (gain)
loss
|
|
(607)
|
|
935
|
|
(881)
|
|
1,471
|
|
Other non-cash items,
net
|
|
50
|
|
—
|
|
359
|
|
768
|
|
Adjustments related to
non-controlling interests in consolidated joint ventures
|
|
(368)
|
|
(913)
|
|
(941)
|
|
(1,791)
|
|
AFFO applicable to
Common Stock and Common Units
|
|
$
36,370
|
|
$
33,151
|
|
$
66,366
|
|
$
59,411
|
|
FFO per share of
Common Stock and Common Units
|
|
$
0.28
|
|
$
0.23
|
|
$
0.49
|
|
$
0.41
|
|
AFFO per share of
Common Stock and Common Units
|
|
$
0.29
|
|
$
0.27
|
|
$
0.54
|
|
$
0.49
|
|
Weighted-average
diluted shares of Common Stock and Common Units:
|
|
|
|
|
|
|
|
|
|
FFO and AFFO
(2)
|
|
123,834
|
|
122,432
|
|
123,664
|
|
122,223
|
|
|
(1) Non-cash
interest income relates to the amortization of the discount on a
note receivable. The discount on the note receivable was recorded
at inception of the related loan based on the estimated value of
the embedded purchase option in the note receivable.
|
|
|
(2) The Company
includes the outstanding OP units issued by Summit Hotel OP, LP,
the Company's operating partnership, held by limited partners other
than the Company because the OP units are redeemable for cash or,
at the Company's option, shares of the Company's common stock on a
one-for-one basis.
|
|
Summit Hotel
Properties, Inc.
Reconciliation of
Weighted Average Diluted Common Shares
(Unaudited)
(In
thousands)
|
|
|
For the Three
Months
Ended June 30,
|
|
For the Six
Months
Ended June 30,
|
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Weighted-average shares
of Common Stock outstanding
|
|
105,918
|
|
105,562
|
|
105,819
|
|
105,438
|
|
Dilutive effect of
unvested restricted stock awards
|
|
1,072
|
|
29
|
|
1,000
|
|
122
|
|
Dilutive effect of
performance stock awards
|
|
896
|
|
—
|
|
896
|
|
—
|
|
Dilutive effect of
Common Units of Operating Partnership
|
|
15,948
|
|
15,977
|
|
15,949
|
|
15,977
|
|
Dilutive effect of
shares of Common Stock issuable upon conversion of convertible
debt
|
|
25,617
|
|
24,540
|
|
25,448
|
|
24,433
|
|
Adjusted weighted
diluted shares of Common Stock
|
|
149,451
|
|
146,108
|
|
149,112
|
|
145,970
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjustment for
dilutive effects of restricted stock awards
|
|
—
|
|
864
|
|
—
|
|
686
|
|
Non-GAAP adjustment for
dilutive effect of shares of Common Stock issuable upon conversion
of convertible debt
|
|
(25,617)
|
|
(24,540)
|
|
(25,448)
|
|
(24,433)
|
|
Non-GAAP weighted
diluted share of Common Stock and Common Units
|
|
123,834
|
|
122,432
|
|
123,664
|
|
122,223
|
|
Summit Hotel
Properties, Inc.
Reconciliation of
Net Income (Loss) to Non-GAAP Measures -
EBITDAre
(Unaudited)
(In
thousands)
|
|
|
For the Three
Months
Ended June 30,
|
|
For the Six
Months
Ended June 30,
|
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Net income
(loss)
|
|
$
38,698
|
|
$
890
|
|
$
41,531
|
|
$
(1,080)
|
|
Depreciation and
amortization
|
|
36,458
|
|
37,510
|
|
73,257
|
|
74,418
|
|
Interest
expense
|
|
20,830
|
|
22,248
|
|
42,412
|
|
43,157
|
|
Interest income on cash
deposits
|
|
(264)
|
|
(157)
|
|
(421)
|
|
(240)
|
|
Income tax
expense
|
|
2,375
|
|
791
|
|
2,592
|
|
319
|
|
EBITDA
|
|
98,097
|
|
61,282
|
|
159,371
|
|
116,574
|
|
(Gain) loss on disposal
of assets and other dispositions, net
|
|
(28,342)
|
|
320
|
|
(28,417)
|
|
368
|
|
EBITDAre
|
|
69,755
|
|
61,602
|
|
130,954
|
|
116,942
|
|
Recoveries of credit
losses
|
|
—
|
|
—
|
|
—
|
|
(250)
|
|
Amortization of key
money liabilities
|
|
(121)
|
|
(121)
|
|
(242)
|
|
(257)
|
|
Equity-based
compensation
|
|
2,635
|
|
2,578
|
|
4,483
|
|
4,046
|
|
Transaction costs and
other
|
|
—
|
|
18
|
|
—
|
|
24
|
|
Debt transaction
costs
|
|
17
|
|
241
|
|
581
|
|
328
|
|
Gain on extinguishment
of debt
|
|
(3,000)
|
|
—
|
|
(3,000)
|
|
—
|
|
Non-cash interest
income, net (1)
|
|
(133)
|
|
(133)
|
|
(266)
|
|
(263)
|
|
Non-cash lease expense,
net
|
|
149
|
|
129
|
|
222
|
|
262
|
|
Casualty (gain)
loss
|
|
(607)
|
|
935
|
|
(881)
|
|
1,471
|
|
Loss related to
non-controlling interest in consolidated joint ventures
|
|
1,375
|
|
2,971
|
|
737
|
|
3,651
|
|
Other non-cash items,
net
|
|
50
|
|
—
|
|
362
|
|
705
|
|
Adjustments related to
non-controlling interests in consolidated joint ventures
|
|
(14,200)
|
|
(15,324)
|
|
(28,229)
|
|
(29,336)
|
|
Adjusted
EBITDAre
|
|
$
55,920
|
|
$
52,896
|
|
$ 104,721
|
|
$
97,323
|
|
|
(1) Non-cash interest income relates to the
amortization of the discount on a note receivable. The discount on
the note receivable was recorded at inception of the related loan
based on the estimated value of the embedded purchase option in the
note receivable.
|
|
Summit Hotel
Properties, Inc.
Pro Forma Hotel
Operating Data
(Unaudited)
(Dollars in
thousands)
|
|
|
For the Three Months
Ended
June 30,
|
|
For the Six Months
Ended
June 30,
|
|
Pro Forma Operating
Data
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
|
Pro forma room
revenue
|
|
$
171,776
|
|
$
166,170
|
|
$
332,481
|
|
$
323,245
|
|
Pro forma other hotel
operations revenue
|
|
$
20,739
|
|
$
19,619
|
|
$
40,927
|
|
$
38,366
|
|
Pro forma total
revenues
|
|
192,515
|
|
185,789
|
|
373,408
|
|
361,611
|
|
Pro forma total hotel
operating expenses
|
|
$
119,420
|
|
$
117,486
|
|
$
234,656
|
|
$
230,596
|
|
Pro forma hotel
EBITDA
|
|
73,095
|
|
68,303
|
|
138,752
|
|
131,015
|
|
Pro forma hotel EBITDA
Margin
|
|
38.0 %
|
|
36.8 %
|
|
37.2 %
|
|
36.2 %
|
|
|
|
|
|
|
|
|
|
|
Reconciliations of
Non-GAAP financial measures to comparable GAAP financial
measures
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
|
$
193,903
|
|
$
194,493
|
|
$
382,045
|
|
$
376,876
|
|
Total revenues -
acquisitions (1)
|
|
—
|
|
1,278
|
|
—
|
|
4,716
|
|
Total revenues -
dispositions (2)
|
|
(1,388)
|
|
(9,982)
|
|
(8,637)
|
|
(19,981)
|
|
Pro forma total
revenues
|
|
192,515
|
|
185,789
|
|
373,408
|
|
361,611
|
|
|
|
|
|
|
|
|
|
|
Hotel Operating
Expenses:
|
|
|
|
|
|
|
|
|
|
Hotel operating
expenses
|
|
$
120,874
|
|
$
123,864
|
|
$
240,492
|
|
$
243,382
|
|
Hotel operating
expenses - acquisitions (1)
|
|
1
|
|
790
|
|
1
|
|
2,279
|
|
Hotel operating
expenses - dispositions (2)
|
|
(1,455)
|
|
(7,168)
|
|
(5,837)
|
|
(15,065)
|
|
Pro forma hotel
operating expense
|
|
119,420
|
|
117,486
|
|
234,656
|
|
230,596
|
|
|
|
|
|
|
|
|
|
|
Hotel
EBITDA:
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
56,209
|
|
23,439
|
|
79,698
|
|
41,641
|
|
(Gain) loss on disposal
of assets and other dispositions, net
|
|
(28,342)
|
|
320
|
|
(28,417)
|
|
320
|
|
Recoveries of credit
losses
|
|
—
|
|
—
|
|
—
|
|
(250)
|
|
Transaction
costs
|
|
—
|
|
260
|
|
—
|
|
266
|
|
Corporate general and
administrative
|
|
8,704
|
|
9,100
|
|
17,015
|
|
17,099
|
|
Depreciation and
amortization
|
|
36,458
|
|
37,510
|
|
73,257
|
|
74,418
|
|
Hotel
EBITDA
|
|
73,029
|
|
70,629
|
|
141,553
|
|
133,494
|
|
Hotel EBITDA -
acquisitions (1)
|
|
(709)
|
|
(69)
|
|
(2,547)
|
|
(69)
|
|
Hotel EBITDA -
dispositions (2)
|
|
67
|
|
(2,814)
|
|
(2,801)
|
|
(4,916)
|
|
Same Store hotel
EBITDA
|
|
$
72,387
|
|
$
67,746
|
|
$
136,205
|
|
$
128,509
|
|
Hotel EBITDA -
acquisitions (3)
|
|
708
|
|
557
|
|
2,547
|
|
2,506
|
|
Pro forma hotel
EBITDA
|
|
$
73,095
|
|
$
68,303
|
|
$
138,752
|
|
$
131,015
|
|
|
(1) For any hotels
acquired by the Company after July 1, 2023 (the "Acquired Hotels"),
the Company has excluded the financial results of each of the
Acquired Hotels for the period the Acquired Hotels were purchased
by the Company to June 30, 2024 (the "Acquisition Period") in
determining same-store hotel EBITDA.
|
|
|
(2) For hotels sold
by the Company between July 1, 2023, and June 30, 2024 (the
"Disposed Hotels"), the Company has excluded the financial results
of each of the Disposed Hotels for the period beginning on January
1, 2023, and ending on the date the Disposed Hotels were sold by
the Company (the "Disposition Period") in determining same-store
hotel EBITDA.
|
|
|
(3) Unaudited pro
forma information includes operating results for 96 hotels owned as
of June 30, 2024, as if all such hotels had been owned by the
Company since January 1, 2023. For hotels acquired by the Company
after January 1, 2023 (the "Acquired Hotels"), the Company has
included in the pro forma information the financial results of each
of the Acquired Hotels for the period from January 1, 2023, to
June 30, 2024. The financial results for the Acquired Hotels
include information provided by the third-party owner of such
Acquired Hotel prior to purchase by the Company and have not been
audited or reviewed by our auditors or adjusted by us. The pro
forma information is included to enable comparison of results for
the current reporting period to results for the comparable period
of the prior year and are not indicative of future
results.
|
|
Summit Hotel
Properties, Inc.
Pro Forma Hotel
Operating Data
(Unaudited)
(In thousands,
except operating statistics)
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Trailing
Twelve
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2023
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2024
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Months
Ended
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Pro Forma Operating
Data (1)
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Q3
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Q4
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Q1
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Q2
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June 30,
2024
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Pro forma room
revenue
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$
157,247
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$
150,382
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$
160,705
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$
171,776
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$
640,110
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Pro forma other hotel
operations revenue
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19,617
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19,861
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20,188
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20,739
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80,405
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Pro forma total
revenues
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176,864
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170,243
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180,893
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192,515
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720,515
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Pro forma total hotel
operating expenses
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115,348
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110,014
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115,236
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119,420
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460,018
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Pro forma hotel
EBITDA
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61,516
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60,229
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65,657
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73,095
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260,497
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Pro forma hotel EBITDA
Margin
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34.8 %
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35.4 %
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36.3 %
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38.0 %
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36.2 %
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Pro Forma Statistics
(1)
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Rooms sold
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977,432
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926,797
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930,768
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1,007,709
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3,842,706
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Rooms
available
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1,311,521
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1,311,552
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1,297,296
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1,297,296
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5,217,665
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Occupancy
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74.5 %
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70.7 %
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71.7 %
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77.7 %
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73.6 %
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ADR
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$
160.88
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$
162.26
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$
172.66
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$
170.46
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$
166.58
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RevPAR
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$
119.90
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$
114.66
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$
123.88
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$
132.41
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$
122.68
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Actual
Statistics
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Rooms sold
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1,014,851
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970,959
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969,479
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1,014,864
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3,970,153
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Rooms
available
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1,383,189
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1,381,867
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1,351,150
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1,306,712
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5,422,918
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Occupancy
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73.4 %
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70.3 %
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71.8 %
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77.7 %
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73.2 %
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ADR
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$
159.35
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$
161.78
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$
172.70
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$
170.49
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$
166.05
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RevPAR
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$
116.91
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$
113.67
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$
123.92
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$
132.41
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$
121.57
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Reconciliations of
Non-GAAP financial measures to comparable GAAP financial
measures
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Revenue:
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Total
revenues
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$
181,816
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$
177,435
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$
188,142
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$
193,903
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$
741,296
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Total revenues -
acquisitions (1)
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—
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—
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—
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—
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—
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Total revenues -
dispositions (2)
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(4,952)
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(7,192)
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(7,249)
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(1,388)
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(20,781)
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Pro forma total
revenues
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176,864
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170,243
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180,893
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192,515
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720,515
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Hotel Operating
Expenses:
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Hotel operating
expenses
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119,566
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115,157
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119,618
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120,874
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475,215
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Hotel operating
expenses - acquisitions (1)
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—
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—
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—
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1
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1
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Hotel operating
expenses - dispositions (2)
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(4,218)
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(5,143)
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(4,382)
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(1,455)
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(15,198)
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Pro forma hotel
operating expenses
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115,348
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110,014
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115,236
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119,420
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460,018
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Hotel
EBITDA:
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Operating
income
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16,476
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428
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23,489
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56,209
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96,602
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Loss (gain) on disposal
of assets, net
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16
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1
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(75)
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(28,342)
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(28,400)
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Loss on impairment and
write-off of assets
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—
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16,661
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—
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—
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16,661
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Recoveries of credit
losses
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(250)
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(730)
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—
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—
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(980)
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Hotel acquisition and
transition costs
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—
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(11)
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—
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—
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(11)
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Corporate general and
administrative
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8,126
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7,305
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8,311
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8,704
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32,446
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Depreciation and
amortization
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37,882
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38,624
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36,799
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36,458
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149,763
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Hotel
EBITDA
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62,250
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62,278
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68,524
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73,029
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266,081
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Hotel EBITDA -
acquisitions (1)
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(505)
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(876)
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(1,838)
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(709)
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(3,928)
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Hotel EBITDA -
dispositions (2)
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(734)
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(2,049)
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(2,868)
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67
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(5,584)
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Same store hotel
EBITDA
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61,011
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59,353
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63,818
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72,387
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256,569
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Hotel EBITDA -
acquisitions (3)
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505
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876
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1,839
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708
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3,928
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Pro forma hotel
EBITDA
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$
61,516
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$
60,229
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$
65,657
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$
73,095
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$
260,497
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(1) For any hotels
acquired by the Company after January 1, 2024 (the "Acquired
Hotels"), the Company has excluded the financial results of each of
the Acquired Hotels for the period the Acquired Hotels were
purchased by the Company to June 30, 2024 (the "Acquisition
Period") in determining same-store hotel EBITDA.
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(2) For hotels sold
by the Company between January 1, 2024, and June 30, 2024
(the "Disposed Hotels"), the Company has excluded the financial
results of each of the Disposed Hotels for the period beginning on
July 1, 2023 and ending on the date the Disposed Hotels were sold
by the Company (the "Disposition Period") in determining same-store
hotel EBITDA.
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(3) Unaudited pro
forma information includes operating results for 96 hotels owned as
of June 30, 2024, as if all such hotels had been owned by the
Company since January 1, 2024. For hotels acquired by the Company
after October 1, 2023 (the "Acquired Hotels"), the Company has
included in the pro forma information the financial results of each
of the Acquired Hotels for the period from
October 1, 2023, to June 30, 2024. The financial
results for the Acquired Hotels include information provided by the
third-party owner of such Acquired Hotel prior to purchase by the
Company and have not been audited or reviewed by our auditors or
adjusted by us. The pro forma information is included to enable
comparison of results for the current reporting period to results
for the comparable period of the prior year and are not indicative
of future results.
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Summit Hotel
Properties, Inc.
Pro Forma and Same
Store Data
(Unaudited)
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For the Three Months
Ended
June 30,
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For the Six Months
Ended
June 30,
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2024
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2023
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2024
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2023
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Pro Forma
(1)
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Rooms sold
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1,007,709
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983,908
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1,938,477
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1,880,927
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Rooms
available
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1,297,296
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1,297,205
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2,594,592
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2,580,155
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Occupancy
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77.7 %
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75.8 %
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74.7 %
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72.9 %
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ADR
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$
170.46
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$
168.89
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$ 171.52
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$ 171.85
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RevPAR
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$
132.41
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$
128.10
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$ 128.14
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$ 125.28
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Occupancy
change
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2.4 %
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2.5 %
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ADR
change
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0.9 %
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(0.2) %
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RevPAR
change
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3.4 %
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2.3 %
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For the Three Months
Ended
June 30,
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For the Six Months
Ended
June 30,
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2024
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2023
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2024
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2023
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Same-Store
(2)
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Rooms sold
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996,856
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973,841
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1,915,240
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1,858,252
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Rooms
available
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1,282,099
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1,282,008
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2,564,198
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2,549,928
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Occupancy
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77.8 %
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76.0 %
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74.7 %
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72.9 %
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ADR
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$
170.53
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$
169.01
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$ 170.99
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$ 171.27
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RevPAR
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$
132.59
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$
128.38
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$ 127.72
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$ 124.82
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Occupancy
change
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2.4 %
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2.5 %
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ADR
change
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0.9 %
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(0.2) %
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RevPAR
change
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3.3 %
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2.3 %
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(1) Unaudited pro
forma information includes operating results for 96 hotels owned as
of June 30, 2024, as if each hotel had been owned by the Company
since January 1, 2023. As a result, these pro forma operating and
financial measures include operating results for certain hotels for
periods prior to the Company's ownership.
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(2) Same-store
information includes operating results for 94 hotels owned by the
Company as of January 1, 2023, and at all times during the three
and six months ended June 30, 2024, and 2023.
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Summit Hotel
Properties, Inc.
Reconciliation of
Net Income to Non-GAAP Measures - EBITDA for Financial
Outlook
(in
thousands)
(Unaudited)
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Low
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High
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Net income
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$
33,800
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$
46,100
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Depreciation and
amortization
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147,900
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147,900
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Interest
expense
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83,000
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82,800
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Interest
income
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(400)
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(400)
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Income tax
expense
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2,800
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2,800
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EBITDA
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$
267,100
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$
279,200
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Gain on disposal of
assets and other dispositions, net
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(28,400)
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(28,400)
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EBITDAre
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$
238,700
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$
250,800
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Equity-based
compensation
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8,300
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8,300
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Debt transaction
costs
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(2,200)
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(2,200)
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Other non-cash items,
net
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(10,800)
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(10,800)
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Loss related to
non-controlling interests in consolidated joint ventures
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3,700
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1,400
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Adjustments related to
non-controlling interests in consolidated joint ventures
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(49,700)
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(51,500)
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Adjusted
EBITDAre
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$
188,000
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$
196,000
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Summit Hotel
Properties, Inc.
Reconciliation of
Net Income to Non-GAAP Measures – Funds From Operations for
Financial Outlook
(in thousands except
per share and unit)
(Unaudited)
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FYE 2024
Outlook
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Low
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High
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Net income
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$
33,800
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$
46,100
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Preferred
dividends
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(15,900)
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(15,900)
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Distributions to and
accretion of redeemable non-controlling interests
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(2,600)
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(2,600)
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Loss related to
non-controlling interests in consolidated joint ventures
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3,700
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1,400
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Net income
applicable to Common Stock and Common Units
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$
19,000
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$
29,000
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Real estate-related
depreciation
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145,200
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145,200
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Gain on disposal of
assets and other dispositions, net
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(28,400)
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(28,400)
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Adjustments related to
non-controlling interests in consolidated joint ventures
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(31,600)
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(31,600)
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FFO applicable to
Common Stock and Common Units
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$
104,200
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$
114,200
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Amortization of debt
issuance costs
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6,500
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6,500
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Amortization of
franchise fees
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600
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600
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Equity-based
compensation
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8,300
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8,300
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Debt transaction
costs
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(2,200)
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(2,200)
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Other non-cash items,
net
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(8,800)
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(8,800)
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Adjustments related to
non-controlling interests in consolidated joint ventures
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3,400
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3,400
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|
AFFO applicable to
Common Stock and Common Units
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|
$
112,000
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$
122,000
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|
Weighted average
diluted shares of Common Stock and Common Units for FFO and
AFFO
|
|
122,900
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|
122,900
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FFO per Common Stock
and Common Units
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|
$
0.85
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$
0.93
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|
AFFO per Common Stock
and Common Units
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|
$
0.91
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$
0.99
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Non-GAAP Financial Measures
We disclose certain "non-GAAP financial measures," which are
measures of our historical financial performance. Non-GAAP
financial measures are financial measures not prescribed by
Generally Accepted Accounting Principles ("GAAP"). These measures
are as follows: (i) Funds From Operations ("FFO") and Adjusted
Funds from Operations ("AFFO"), (ii) Earnings before Interest,
Taxes, Depreciation and Amortization ("EBITDA"), Earnings before
Interest, Taxes, Depreciation and Amortization for Real Estate
("EBITDAre"), Adjusted EBITDAre, and hotel EBITDA (as
described below). We caution investors that amounts presented in
accordance with our definitions of non-GAAP financial measures may
not be comparable to similar measures disclosed by other companies,
since not all companies calculate these non-GAAP financial measures
in the same manner. Our non-GAAP financial measures should be
considered along with, but not as alternatives to, net income
(loss) as a measure of our operating performance. Our non-GAAP
financial measures may include funds that may not be available for
our discretionary use due to functional requirements to conserve
funds for capital expenditures, property acquisitions, debt service
obligations and other commitments and uncertainties. Although we
believe that our non-GAAP financial measures can enhance the
understanding of our financial condition and results of operations,
these non-GAAP financial measures are not necessarily better
indicators of any trend as compared to a comparable measure
prescribed by GAAP such as net income (loss).
Funds From Operations ("FFO") and Adjusted FFO
("AFFO")
As defined by Nareit, FFO represents net income or loss
(computed in accordance with GAAP), excluding preferred dividends,
gains (or losses) from sales of real property, impairment losses on
real estate assets, items classified by GAAP as extraordinary, the
cumulative effect of changes in accounting principles, plus
depreciation and amortization related to real estate assets, and
adjustments for unconsolidated partnerships, and joint ventures.
AFFO represents FFO excluding amortization of deferred financing
costs, franchise fees, equity-based compensation expense, debt
transaction costs, premiums on redemption of preferred shares,
losses from net casualties, non-cash lease expense, non-cash
interest income and non-cash income tax related adjustments to our
deferred tax assets. Unless otherwise indicated, we present FFO and
AFFO applicable to our common shares and common units. We present
FFO and AFFO because we consider FFO and AFFO an important
supplemental measure of our operational performance and believe it
is frequently used by securities analysts, investors, and other
interested parties in the evaluation of REITs, many of which
present FFO and AFFO when reporting their results. FFO and AFFO are
intended to exclude GAAP historical cost depreciation and
amortization, which assumes that the value of real estate assets
diminishes ratably over time. Historically, however, real estate
values have risen or fallen with market conditions. Because FFO and
AFFO exclude depreciation and amortization related to real estate
assets, gains and losses from real property dispositions and
impairment losses on real estate assets, FFO and AFFO provide
performance measures that, when compared year over year, reflect
the effect to operations from trends in occupancy, guestroom rates,
operating costs, development activities and interest costs,
providing perspective not immediately apparent from net income. Our
computation of FFO differs slightly from the computation of
Nareit-defined FFO related to the reporting of corporate
depreciation and amortization expense. Our computation of FFO may
also differ from the methodology for calculating FFO used by other
equity REITs and, accordingly, may not be comparable to such other
REITs. FFO and AFFO should not be considered as an alternative to
net income (loss) (computed in accordance with GAAP) as an
indicator of our liquidity, nor is it indicative of funds available
to fund our cash needs, including our ability to pay dividends or
make distributions. Where indicated in this release, FFO is based
on our computation of FFO and not the computation of Nareit-defined
FFO unless otherwise noted.
EBITDA, EBITDAre, Adjusted EBITDAre, and Hotel
EBITDA
In September 2017, Nareit proposed
a standardized performance measure, called EBITDAre, which is based
on EBITDA and is expected to provide additional relevant
information about REITs as real estate companies in support of
growing interest among generalist investors. The conclusion was
reached that, while dedicated REIT investors have long been
accustomed to utilizing the industry's supplemental measures such
as FFO and net operating income ("NOI") to evaluate the investment
quality of REITs as real estate companies, it would be helpful to
generalist investors for REITs as real estate companies to also
present EBITDAre as a more widely known and understood supplemental
measure of performance. EBITDAre is intended to be a supplemental
non-GAAP performance measure that is independent of a company's
capital structure and will provide a uniform basis for one
measurement of the enterprise value of a company compared to other
REITs.
EBITDAre, as defined by Nareit, is calculated as EBITDA,
excluding: (i) loss and gains on disposition of property and (ii)
asset impairments, if any. We believe EBITDAre is useful to an
investor in evaluating our operating performance because it
provides investors with an indication of our ability to incur and
service debt, to satisfy general operating expenses, to make
capital expenditures and to fund other cash needs or reinvest cash
into our business. We also believe it helps investors meaningfully
evaluate and compare the results of our operations from period to
period by removing the effect of our asset base (primarily
depreciation and amortization) from our operating results.
We make additional adjustments to EBITDAre when evaluating our
performance because we believe that the exclusion of certain
additional non-recurring or unusual items described below provides
useful supplemental information to investors regarding our ongoing
operating performance. We believe that the presentation of Adjusted
EBITDAre, when combined with the primary GAAP presentation of net
income, is useful to an investor in evaluating our operating
performance because it provides investors with an indication of our
ability to incur and service debt, to satisfy general operating
expenses, to make capital expenditures and to fund other cash needs
or reinvest cash into our business. We also believe it helps
investors meaningfully evaluate and compare the results of our
operations from period to period by removing the effect of our
asset base (primarily depreciation and amortization) from our
operating results.
With respect to hotel EBITDA, we believe that excluding the
effect of corporate-level expenses and non-cash items provides a
more complete understanding of the operating results over which
individual hotels and operators have direct control. We believe the
property-level results provide investors with supplemental
information on the ongoing operational performance of our hotels
and effectiveness of the third-party management companies operating
our business on a property-level basis.
We caution investors that amounts presented in accordance with
our definitions of EBITDA, EBITDAre, adjusted EBITDAre, and hotel
EBITDA may not be comparable to similar measures disclosed by other
companies, since not all companies calculate these non-GAAP
measures in the same manner. EBITDA, EBITDAre, adjusted EBITDAre,
and hotel EBITDA should not be considered as an alternative measure
of our net income (loss) or operating performance. EBITDA,
EBITDAre, adjusted EBITDAre, and hotel EBITDA may include funds
that may not be available for our discretionary use due to
functional requirements to conserve funds for capital expenditures
and property acquisitions and other commitments and uncertainties.
Although we believe that EBITDA, EBITDAre, adjusted EBITDAre, and
hotel EBITDA can enhance your understanding of our financial
condition and results of operations, these non-GAAP financial
measures are not necessarily a better indicator of any trend as
compared to a comparable GAAP measure such as net income (loss).
Above, we include a quantitative reconciliation of EBITDA,
EBITDAre, adjusted EBITDAre and hotel EBITDA to the most directly
comparable GAAP financial performance measure, which is net income
(loss) and operating income (loss).
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SOURCE Summit Hotel Properties, Inc.
