Same-Store RevPAR increases 4.5 percent
Adjusted FFO per share climbs 21.2 percent to $0.32 per share
Common Dividend Increase of 12.8 percent
AUSTIN, Texas, May 3, 2016 — Summit Hotel Properties, Inc. (NYSE: INN) (the "Company") today announced results for the first quarter 2016.
"We are extremely pleased with the results that our diverse portfolio of premium select-service hotels delivered in the first quarter," said Dan Hansen, the Company's President and Chief Executive Officer. "The strength of our portfolio is evidenced by same-store RevPAR growth of 4.5 percent, more than double that of the Smith Travel Research upscale RevPAR growth rate of 2.2 percent," commented Mr. Hansen.
First Quarter 2016 Highlights
- Pro Forma RevPAR: Pro forma revenue per available room ("RevPAR") grew to $108.08, an increase of 3.8 percent over the same period of 2015. Pro forma average daily rate ("ADR") grew to $140.97, an increase of 1.5 percent from the same period of 2015. Pro forma occupancy increased by 2.3 percent to 76.7 percent.
- Pro Forma Hotel EBITDA: Pro forma hotel EBITDA grew to $43.8 million, an increase of 10.3 percent over the same period in 2015.
- Pro Forma Hotel EBITDA Margin: Pro forma hotel EBITDA margin expanded by 112 basis points to 37.5 percent compared to the same period of 2015.
- Same-Store RevPAR: Same-store RevPAR grew to $106.76, an increase of 4.5 percent over the same period in 2015. Same-store ADR grew to $138.75, an increase of 1.2 percent from the same period of 2015. Same-store occupancy increased by 3.3 percent to 76.9 percent compared to the same period in 2015.
- Adjusted EBITDA: Adjusted EBITDA increased to $40.9 million from $34.5 million in the same period of 2015, an increase of $6.4 million or 18.6 percent.
- Adjusted FFO: Adjusted Funds from Operations ("AFFO") increased to $28.3 million, or $0.32 per diluted share, which is a per diluted share increase of 21.2 percent compared to the same period in 2015.
- Net Income: Net income attributable to common stockholders increased to $44.3 million, or $0.51 per diluted share, compared with $6.4 million, or $0.07 per diluted share, in the same period of 2015. Net income attributable to common stockholders includes a $36.8 million pretax gain on the sale of six hotels during the first quarter of 2016.
- Acquisitions: The Company acquired two hotels containing 386 guestrooms for a total purchase price of $109.0 million. The two hotels acquired had a RevPAR of $128.16 for the year-ended December 31, 2015.
- Dispositions: The Company sold six hotels containing 707 guestrooms for a total sales price of $108.3 million. The six hotels sold had a RevPAR of $94.49 for the year-ended December 31, 2015.
The Company's results for the three months ended March 31, 2016 and 2015 included the following:
Three months ended March 31,
2016
2015
(Unaudited)
($ in thousands, except per unit and RevPAR data)
Total revenue
$ 118,082
$ 107,648
Net income attributable to common stockholders
$ 44,338
$ 6,387
EBITDA (1)
$ 75,927
$ 33,370
Adjusted EBITDA (1)
$ 40,913
$ 34,510
FFO (1)
$ 25,864
$ 22,092
Adjusted FFO (1)
$ 28,279
$ 23,246
FFO per diluted share and unit (1) (2)
$ 0.30
$ 0.25
Adjusted FFO per diluted share and unit (1) (2)
$ 0.32
$ 0.27
Pro Forma (3)
RevPAR
$ 108.08
$ 104.15
RevPAR growth
3.8%
Hotel EBITDA
$ 43,813
$ 39,716
Hotel EBITDA margin
37.5%
36.4%
Hotel EBITDA margin growth
112 bps
(1)
See tables later in this press release for a discussion and reconciliation of net income to non-GAAP financial measures, including earnings before interest, taxes, depreciation and amortization ("EBITDA"), adjusted EBITDA, funds from operations ("FFO"), FFO per diluted share and unit, adjusted FFO ("AFFO"), and AFFO per diluted share and unit, as well as a discussion of hotel EBITDA (hotel revenues less hotel operating expenses). See "Non-GAAP Financial Measures" at the end of this release. Non-GAAP financial measures are unaudited.
(2)
Amounts are based on 87,170,000 weighted average diluted common shares and units and 86,875,000 weighted average diluted common shares and units for the three months ended March 31, 2016 and 2015, respectively. The Company includes the outstanding common units of limited partnership interests ("OP Units") in 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.
(3)
Unless stated otherwise in this release, all pro forma information includes operating and financial results for 83 hotels owned as of March 31, 2016, as if each hotel had been owned by the Company since January 1, 2015. As a result, all pro forma information includes operating and financial results for hotels acquired since January 1, 2015 for periods prior to the Company's ownership. Pro forma and non-GAAP financial measures are unaudited.
Summit vs. Industry Results (% change) *
For the Three Months Ended March 31, 2016
Occupancy
ADR
RevPAR
Summit Pro Forma (83)
2.3%
1.5%
3.8%
Summit Same-Store (74)
3.3%
1.2%
4.5%
STR Overall US
(0.5%)
3.2%
2.7%
STR Upscale
(0.9%)
3.2%
2.2%
*Source: Smith Travel Research Monthly Hotel Review, Volume 16, Issue M3
Acquisitions
In mid-January, the Company acquired two hotels for a total purchase price of $109.0 million and entered into management agreements with Interstate Hotels & Resorts for both hotels. 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 combined capitalization rate in the range of 8.25 and 8.75 percent based on management's current estimate of net operating income for the hotels in 2016.
Dispositions
On February 11, 2016, the Company completed the sale of six hotels containing 707 guestrooms to affiliates of American Realty Capital Hospitality Trust, Inc. ("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, 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.
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 sale 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 $9.7 million in capital improvements during the first quarter of 2016. 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
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 for the senior unsecured credit facility. As a result of the new credit facility, the Company has less than ten percent of its total debt maturing through 2018.
At March 31, 2016, the Company had the following:
- Total outstanding debt of $704.1 million with a weighted average interest rate of 3.76 percent.
- Maximum borrowing capacity of $450.0 million under its senior unsecured credit facility, including both the revolver and term loan portions of the facility, with $205.0 million outstanding and $245.0 million available to borrow.
- 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 April 21, 2016, the Company had the following:
- Total outstanding debt of $693.3 million with a weighted average interest rate of 3.78 percent.
- Maximum borrowing capacity of $450.0 million under its senior unsecured credit facility, including both the revolver and term loan portions of the facility, with $195.0 million outstanding and $255.0 million available to borrow.
- Total net debt to trailing twelve month adjusted EBITDA was 4.1x.
Common Dividend Increase
On April 29, 2016, the Company increased its quarterly cash dividend to $0.1325 per share on its common stock and per common unit of limited partnership interest in Summit Hotel OP, LP. The increase represents a 12.8 percent increase over the Company's previous quarterly common dividend of $0.1175 per share and an annualized yield of 4.6 percent based on the April 29, 2016 closing stock price.
In addition, the Company declared a quarterly cash dividend of:
- $0.578125 per share on its 9.25 percent Series A Cumulative Redeemable Preferred Stock.
- $0.4921875 per share on its 7.875 percent Series B Cumulative Redeemable Preferred Stock.
- $0.4453125 per share on its 7.125 percent Series C Cumulative Redeemable Preferred Stock.
The dividends are payable on May 31, 2016, to holders of record as of May 16, 2016.
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