Summit Hotel Properties | May 14, 2021

AUSTIN, Texas – May 14, 2021 – Summit Hotel Properties, Inc., has announced results for the first quarter ended March 31, 2021.

“Hotel demand, particularly leisure demand, improved significantly during the latter part of the first quarter driving March RevPAR to a new high of more than $65 since the onset of the pandemic, which exceeded February’s previous high by nearly 30%,” said Jonathan P. Stanner, the Company’s President and Chief Executive Officer. “We also completed the contribution of six hotels to our existing joint venture with GIC for $172 million subsequent to quarter end which generated net proceeds of $83 million.  The transaction creates additional investment capacity and flexibility, reduces leverage, and highlights our unique and differentiated investment partnership. We are increasingly optimistic about the outlook for our business as progress on vaccine distribution, easing of travel restrictions and return-to-office plans all facilitate improved demand patterns,” commented Mr. Stanner.

 

First Quarter 2021  Summary

  • Net Loss:   Net loss attributable to common stockholders was $35.1 million, or $0.34 per diluted share, compared with a net loss of $19.0 million, or $0.18 per diluted share, in the same period of 2020.
  • Pro Forma & Same Store RevPAR:  Revenue per available room (“RevPAR”) decreased 45.4 percent to $52.41 from the same period in 2020.  Average daily rate (“ADR”) decreased 33.4 percent to $104.12 compared to the same period in 2020, and occupancy decreased 18.0 percent to 50.3 percent.
  • Pro Forma Hotel EBITDA:  Pro forma hotel EBITDA was $7.7 million, a decrease of 74.0 percent from the same period in 2020.  Pro forma hotel EBITDA margin contracted to 13.3 percent from 27.4 percent in the same period of 2020.
  • Adjusted EBITDAre:  Adjusted EBITDAre decreased 76.7 percent to $6.2 million from $26.8 million in the same period of 2020.
  • Adjusted FFO:  Adjusted FFO was ($6.9) million, or ($0.07) per diluted share, compared to $13.3 million, or $0.13 per diluted share, in the same period of 2020.
  • Capital Improvements:   The Company invested $3.6 million in capital improvements during the first quarter.

 

The Company’s results for the three months ended March 31, 2021 and 2020 are as follows (in thousands, except per share amounts):

For the Three Months Ended
March 31,

2021

2020

(unaudited)

Net loss attributable to common stockholders                                        

$         (35,074)

$         (19,031)

Net loss per diluted share

$             (0.34)

$             (0.18)

Total revenues

$          57,854

$        108,385

EBITDAre(1)

$            5,268

$          27,104

Adjusted EBITDAre(1)

$            6,224

$          26,750

FFO (1)

$           (9,508)

$            9,798

Adjusted FFO (1)

$           (6,923)

$          13,269

FFO per diluted share and unit (1,2)

$             (0.09)

$              0.09

Adjusted FFO per diluted share and unit (1,2)

$             (0.07)

$              0.13

Pro Forma (3)

RevPAR

$            52.41

$            95.99

RevPAR Growth

-45.4%

Hotel EBITDA

$            7,716

$          29,725

Hotel EBITDA margin

13.3%

27.4%

Hotel EBITDA margin change

-1,409 bps

(1)

See tables later in this press release for a discussion and reconciliation of net 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 loss to hotel EBITDA.  See “Non-GAAP Financial Measures” at the end of this release.

(2)

Amounts are based on 104,440,000 weighted average diluted common shares and units and 104,298,000 weighted average diluted common shares and units for the three months ended March 31, 2021, and 2020, 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 in the determination of weighted average diluted common shares and units 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 72 hotels owned as of March 31, 2021, as if each hotel had been owned by the Company since January 1, 2020 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, 2020, which includes periods prior to the Company’s ownership.  Pro forma and non-GAAP financial measures are unaudited.

 

Asset Contribution to GIC Joint Venture Completed

On May 1, 2021, the Company contributed a portfolio of six hotels containing 846 guestrooms into its existing joint venture with an affiliate of GIC, Singapore’s sovereign wealth fund, which increased the joint venture’s investment to nearly $450 million since formation in 2019.  Total consideration for the portfolio was $172.0 million, or $203,000 per key, and GIC contributed $84.3 million in cash to complete the acquisition of their 49% interest.  Net proceeds from the transaction were used to repay $62.5 million of the Company’s senior debt, and $20.9 million was retained in cash that can be used for future investment opportunities increasing our acquisition allotment to $170.9 million.

Six-Hotel Portfolio Contribution Asset Listing:

  • 183 guestroom – Courtyard by Marriott Pittsburgh Downtown
  • 153 guestroom – Courtyard by Marriott Scottsdale North
  • 121 guestroom – SpringHill Suites by Marriott Scottsdale North
  • 138 guestroom – Hampton Inn & Suites Tampa/Ybor City/Downtown
  • 129 guestroom – Homewood Suites by Hilton Aliso Viejo – Laguna Beach
  • 122 guestroom – Homewood Suites by Hilton Tucson/St. Philip’s Plaza University

 

The Company’s senior debt repayment included $42.5 million on its term loan maturing in November 2022, resulting in a balance of $84.0 million and the full repayment of the balance on its $400 million revolving line of credit from $20 million to zero, resulting in approximately $440 million of total liquidity for the Company.

 

William (“Trey”) H. Conkling Named Executive Vice President & Chief Financial Officer

On April 28, 2021, the Company announced that William (“Trey”) H. Conkling will join the Company as Executive Vice President & Chief Financial Officer effective May 17, 2021.  Most recently, Mr. Conkling served as a Managing Director in the Real Estate, Gaming & Lodging Investment Banking group for Bank of America Merrill Lynch, where he oversaw the successful execution of transaction volume in excess of $190 billion including capital markets and mergers and acquisitions. Prior to joining Bank of America Merrill Lynch, Mr. Conkling was with the investment banking unit of Bear, Stearns & Co. and previously worked in asset management for Host Hotels & Resorts.

 

Board Expanded with Amina Belouizdad Appointed as Independent Director

On April 13, 2021, the Company announced Ms. Amina Belouizdad will be appointed to the Company’s Board of Directors effective May 13, 2021, following the annual meeting of the Company’s stockholders.  With the appointment, the Company’s Board will increase to eight members, six of whom being independent, including Ms. Belouizdad.  Ms. Belouizdad will sit on the Board’s Nominating and Corporate Governance and Compensation Committees.

“We are thrilled to add Trey Conkling to our management team and Amina Belouizdad to our Board of Directors.  Both are highly qualified individuals that have proven to be accomplished strategic thought leaders and bring vast experience and connectivity to our organization,” commented Mr. Stanner.

 

Capital Markets & Balance Sheet

On January 12, 2021, the Company closed on a $287.5 million 1.50% Convertible Senior Notes offering due February 2026 with an initial conversion price of $11.99 per share.  Concurrent with the offering, the Company used $21.1 million of the offering proceeds to enter into capped call transactions with various counterparties that effectively increased the conversion price to $15.26 per share, which represents a 75% premium over the last reported sale price of common stock on January 7, 2021.  Net proceeds from the offering were used to repay the Company’s then outstanding senior revolving credit facility balance from $160.0 million to zero and the $225 million senior term loan maturing in November 2022 down to $126.5 million.

On February 5, 2021, the Company amended the credit agreements for its $400 million revolving credit facility and three senior term loans totaling approximately $550 million to extend the covenant waiver period, increase liquidity, create investment capacity, and enhance overall flexibility.

On March 31, 2021, inclusive of its pro rata share of the Joint Venture credit facility, the Company had the following:

  • Pro rata outstanding debt of $1.1 billion with a weighted average interest rate of 3.33 percent.
  • After giving effect to interest rate derivative agreements, $832.4 million, or 77 percent, of our pro rata outstanding debt had fixed interest rates, and $252.3 million, or 23 percent, had variable interest rates.
  • Pro rata unrestricted cash and cash equivalents of $26.1 million.
  • Revolving credit facility availability of $320.0 million, plus an additional $50.0 million available to borrow subject to certain requirements.

 

On April 29, 2021, the joint venture, in which the Company is a 51 percent owner and general partner, completed an amendment of its existing $200 million credit facility that provides for a temporary waiver of financial covenants through the fourth quarter of 2021, and modifies certain financial covenant measures through the second quarter of 2023.  The amendment provides for additional credit availability for capital expenditures and other general joint venture purposes, permits equity-funded acquisitions up to $150 million, and contains customary restrictions and limitations related to distributions and dispositions.

On May 1, 2021, inclusive of the recent transaction activity and its pro rata share of the Joint Venture credit facility, the Company had the following:

  • Pro rata outstanding debt of $1.0 billion with a weighted average interest rate of 3.36 percent.
  • After giving effect to interest rate derivative agreements, $816.0 million, or 80 percent, of our pro rata outstanding debt had fixed interest rates, and $206.3 million, or 20 percent, had variable interest rates.
  • Pro rata unrestricted cash and cash equivalents of $48.0 million.
  • Revolving credit facility availability of $340.0 million, plus an additional $50.0 million available to borrow subject to certain requirements.

 

The Company’s balance sheet continues to be well positioned with no debt maturities until November 2022.

 

Dividends

On April 30, 2021, the Company declared a quarterly cash preferred dividend of $0.403125 per share on its 6.45% Series D Cumulative Redeemable Preferred Stock and $0.390625 per share on its 6.25% Series E Cumulative Redeemable Preferred Stock.  The preferred dividends are payable on May 28, 2021, to holders of record as of May 17, 2021.

 

First Quarter 2021 Earnings Conference Call

The Company will conduct its quarterly conference call on Wednesday, May 5, 2021, at 9:00 AM ET.  To participate in the conference call, dial 877-930-8101 approximately ten minutes before the call begins (8:50 AM ET).  The conference identification code for the call is 3758235.  Additionally, a live webcast of the quarterly conference call will be available through the Company’s website, www.shpreit.com.  A replay of the quarterly conference call webcast will be available until 12:00 PM ET Wednesday, May 12, 2021, by dialing 855-859-2056, conference identification code 3758235.  A replay will also be available in the Investor Relations section of the Company’s website until July 31, 2021.

View full release here.