Annual Same-Store RevPAR increases 8.2 percent
Adjusted FFO per share soars 28.0 percent to $1.25 per share for 2015
Portfolio Transformation Continues
AUSTIN, Texas, Feb. 24, 2016 — Summit Hotel Properties, Inc. (NYSE: INN) (the "Company") today announced results for the fourth quarter and full year ended December 31, 2015.
"We are thrilled with the overall performance of our portfolio in 2015," said Dan Hansen, the Company's President and Chief Executive Officer. "In each of the last four years, our portfolio of premium select-service hotels has outperformed the Smith Travel Research upscale RevPAR growth rate by an average of nearly 200 basis points. This track record of outperformance demonstrates our ability to actively manage the portfolio and drive shareholder value," commented Mr. Hansen.
Full Year 2015 Highlights
- Pro Forma RevPAR: Pro forma revenue per available room ("RevPAR") grew to $104.31, an increase of 7.3 percent over the same period of 2014. Pro forma average daily rate ("ADR") grew to $134.83, an increase of 5.7 percent from the same period of 2014. Pro forma occupancy increased by 1.4 percent to 77.4 percent.
- Pro Forma Hotel EBITDA: Pro forma hotel EBITDA grew to $167.2 million, an increase of 10.8 percent over the same period in 2014.
- Pro Forma Hotel EBITDA Margin: Pro forma hotel EBITDA margin expanded by 70 basis points to 36.2 percent compared with the same period of 2014.
- Same-Store RevPAR: Same-store RevPAR grew to $98.77, an increase of 8.2 percent over the same period in 2014. Same-store ADR grew to $128.48, an increase of 6.0 percent from the same period of 2014. Same-store occupancy increased by 2.1 percent to 76.9 percent compared to the same period in 2014.
- Adjusted EBITDA: Adjusted EBITDA increased to $153.6 million in 2015 from $127.9 million in the same period of 2014, an increase of $25.6 million or 20.0 percent.
- Adjusted FFO: Adjusted Funds from Operations ("AFFO") increased to $108.6 million, or $1.25 per diluted share and unit, which is a per diluted share and unit increase of 28.0 percent compared with 2014.
- Net Income: Net income attributable to common stockholders increased to $107.8 million, or $1.24 per diluted share, compared with $4.3 million, or $0.05 per diluted share, in the same period of 2014. Net income attributable to common stockholders includes a $65.1 million pretax gain on disposal of assets primarily related to the sale of ten hotels.
- Acquisitions: The Company acquired seven hotels consisting of 1,042 guestrooms for a total purchase price of $237.8 million.
- Dispositions: The Company sold ten hotels consisting of 1,090 guestrooms for a total sales price of $150.1 million.
The Company's results for the three and twelve months ended December 31, 2015 and 2014 included the following:
For the Three Months Ended December 31,
For the Year Ended December 31,
2015
2014
2015
2014
(In thousands except per share/unit and RevPAR data)
(Unaudited)
Total revenue
$ 110,039
$ 99,141
$ 463,455
$ 403,466
Net income attributable to common stockholders
$ 80,012
$ 578
$ 107,849
$ 4,283
EBITDA (1)
$ 108,370
$ 27,801
$ 219,277
$ 113,039
Adjusted EBITDA (1)
$ 33,614
$ 28,353
$ 153,554
$ 127,914
FFO applicable to common shares and units (1)
$ 32,774
$ 16,828
$ 110,491
$ 78,256
Adjusted FFO (1)
$ 23,685
$ 17,542
$ 108,608
$ 84,330
FFO per diluted share and unit (1) (2)
$ 0.38
$ 0.19
$ 1.27
$ 0.90
Adjusted FFO per diluted share and unit (1) (2)
$ 0.27
$ 0.20
$ 1.25
$ 0.97
Pro Forma (3)
RevPAR
$ 97.13
$ 92.04
$ 104.31
$ 97.25
RevPAR growth
5.5%
7.3%
Hotel EBITDA
$ 37,095
$ 33,635
$ 167,219
$ 150,884
Hotel EBITDA margin
33.9%
33.1%
36.2%
35.5%
Hotel EBITDA margin growth
81 bps
70 bps
Fourth Quarter 2015 Highlights
- Pro Forma RevPAR: Pro forma RevPAR grew to $97.13, an increase of 5.5 percent over the same period in 2014. Pro forma ADR grew to $131.27, an increase of 2.6 percent from 2014. Pro forma occupancy increased by 2.9 percent to 74.0 percent.
- Pro Forma Hotel EBITDA: Pro forma hotel EBITDA was $37.1 million, an increase of 10.3 percent over the same period in 2014.
- Pro Forma Hotel EBITDA Margin: Pro forma hotel EBITDA margin expanded by 81 basis points to 33.9 percent compared with the same period in 2014.
- Same-Store RevPAR: Same-store RevPAR grew to $91.45, an increase of 6.6 percent over the same period in 2014. Same-store ADR grew to $124.59, an increase of 2.9 percent from the fourth quarter of 2014. Same-store occupancy increased by 3.6 percent to 73.4 percent.
- Adjusted EBITDA: Adjusted EBITDA increased to $33.6 million from $28.4 million in the same period in 2014, an increase of $5.3 million or 18.6 percent.
- Adjusted FFO: AFFO increased 35.0 percent to $23.7 million, or $0.27 per diluted share and unit.
- Net Income: Net income attributable to common stockholders increased to $80.0 million, or $0.92 per diluted share, compared to $0.6 million, or $0.01 per diluted share, in the same period of 2014. Net income attributable to common stockholders includes a $65.8 million pretax gain on disposal of assets primarily related to the sale of ten hotels.
- Acquisitions: The Company acquired two hotels consisting of 335 guestrooms for a total purchase price of $83.0 million.
- Dispositions: The Company sold ten hotels consisting of 1,090 guestrooms for a total sales price of $150.1 million.
Acquisitions
During 2015, the Company acquired seven hotels consisting of 1,042 guestrooms for a total purchase price of $237.8 million. Pro forma RevPAR for the full year 2015 for the seven hotels was $127.58 as compared to $98.77 for the 74 hotels classified as same-store in 2015, representing a 29.2 percent RevPAR premium. The Company entered into management agreements with Interstate Hotels & Resorts for the acquisitions completed in 2015.
Dispositions
On October 15, 2015, the Company completed the sale of ten hotels consisting of 1,090 guestrooms, which was the first of three scheduled tranches, for a combined purchase price of $150.1 million to an affiliate of American Realty Capital Hospitality Trust, Inc. ("ARCH").
On December 29, 2015, the Company and ARCH agreed to terminate the purchase and sale agreement related to the second tranche of ten hotels containing an aggregate of 996 guestrooms for $89.1 million. As a result of the purchase and sale agreement termination, the Company retained the $9.1 million earnest money deposit.
On February 11, 2016, the Company completed the sale of the third tranche of six hotels containing 707 guestrooms to ARCH for an aggregate sales price of $108.3 million. Simultaneous with the sale, the Company entered into a $27.5 million loan agreement with ARCH and $20.0 million of the loan proceeds were applied by ARCH toward the purchase price of the six hotels. The loan has an initial maturity date of February 11, 2017, and two, one-year extension options that may be exercised by ARCH subject to certain conditions. Interest accrues at a rate of 13.0 percent in year one, 14.0 percent during the first one-year extension period, and 15.0 percent during the second one-year extension period, of which 9.0 percent shall be paid monthly and the remainder will accrue and is required to be paid at maturity or prior to the exercise of any extension period. In addition, the loan has a principal payment requirement of $5.0 million to be paid by ARCH in 2016.
On February 11, 2016, the Company entered into an agreement with ARCH to reinstate the purchase and sale agreement dated June 2, 2015, relating to the second tranche of ten hotels containing 996 guestrooms for an aggregate purchase price of $89.1 million. As part of the agreement, ARCH made a $7.5 million non-refundable earnest money deposit using a portion of the loan proceeds and the Company has the right to continue to market and sell the hotels. The closing of the sale is required to occur on or before December 30, 2016. Capital Investment The Company invested $8.8 million and $43.2 million in capital improvements during the fourth quarter and full year of 2015, respectively. Among the properties renovated during the quarter, the scope of work ranged from common space improvements to complete guestroom renovations, including furniture, soft goods and guest bathrooms. Balance Sheet and Capital Activity At December 31, 2015, the Company had the following:
- Total outstanding debt of $677.1 million with a weighted average interest rate of 3.90 percent.
- Maximum borrowing capacity of $300.0 million under its former $300.0 million senior unsecured credit facility, including both the revolver and term loan portions of the facility, with $170.0 million outstanding and $130.0 million available to borrow. On January 15, 2016, the Company replaced its former $300.0 million senior unsecured credit facility with a new $450.0 million senior unsecured credit facility. Proceeds from the new credit facility were applied to the Company's former $300.0 million senior unsecured credit facility.
- Total net debt, which the Company defines as total outstanding debt less cash and cash equivalents, to trailing twelve month adjusted EBITDA was 4.2x.
At February 19, 2016, the Company had the following:
- Total outstanding debt of $689.8 million with a weighted average interest rate of 3.80 percent.
- Maximum borrowing capacity of $416.9 million under its $450.0 million senior unsecured credit facility, including both the revolver and term loan portions of the facility, with $190.0 million outstanding and $226.9 million available to borrow. The Company expects to add two hotels to the unencumbered pool in the first quarter of 2016, resulting in an anticipated borrowing capacity of $450.0 million under its senior unsecured credit facility.
- Total net debt to trailing twelve month adjusted EBITDA was 4.3x.
Subsequent Events On January 15, 2016, the Company closed on a new $450 million senior unsecured credit facility. The increased credit facility is comprised of a $300 million unsecured revolving line of credit and a $150 million unsecured term loan and replaced the Company's former $300 million senior unsecured credit facility. The $300 million revolving line of credit matures in March 2020 and can be extended to March 2021 at the Company's option, subject to certain conditions. The $150 million term loan matures in March 2021. The new credit facility includes a $150 million accordion feature that will allow the Company to request additional lender commitments up to a total of $600 million. As a result of the new credit facility, the Company has less than ten percent of its total debt maturing through 2018. On January 19 and January 20, 2016, the Company acquired two hotels for a total purchase price of $109.0 million and entered into management agreements with Interstate Hotels & Resorts. The 226-guestroom Courtyard by Marriott® located in Nashville, TN was acquired for $71.0 million. The 160-guestroom Residence Inn by Marriott® located in Atlanta, GA was acquired for $38.0 million. The hotels require minimal near term capital investment and the Company estimates a capitalization rate in the range of 8.25 and 8.75 percent on management's current estimate of the hotels 2016 net operating income. "Our portfolio transformation continues with the sale of six non-strategic hotels for $108.3 million and the redeployment of $109.0 million into two high-quality hotels which exhibit strong growth profiles in the vibrant and diverse midtown neighborhoods of Nashville and Atlanta," noted Mr. Hansen. "I am pleased with our ability to creatively complete the previously announced transaction while also reinstating the purchase and sale agreement of ten hotels for $89.1 million."
To view full financial release and corresponding tables please click the PDF icon or visit:
http://www.snl.com/Cache/1001207441.PDF?Y=&O=PDF&D=&FID=1001207441&T=&IID=4264301
