Net Income of $28.9 million
Adjusted FFO climbs 6.7 percent to $30.2 million, $0.32 per share
Common Dividend increase of 4.6 percent
AUSTIN, Texas, May 3, 2017 – Summit Hotel Properties, Inc. (NYSE: INN) (the "Company"), today announced results for the first quarter 2017.
"We are pleased with the strong earnings performance of our company during the quarter which continues to be supported by a differentiated strategy of owning a diversified portfolio of premium-branded hotels with efficient operating models," said Dan Hansen, the Company's Chairman, President and Chief Executive Officer. "Our two acquisitions during the quarter demonstrate the success we have had in identifying and acquiring high-quality hotels at attractive cap rates to further enhance our portfolio. In addition, we had another opportunity to increase our common dividend this quarter. Our three dividend increases over the last five quarters represent a compound annual growth rate of 20.3 percent, which is a result of the continued strong cash flow being generated by our portfolio," commented Mr. Hansen.
First Quarter 2017 Highlights
- Net Income: Net income attributable to common stockholders decreased to $28.9 million, or $0.31 per diluted share, compared with $44.3 million, or $0.51 per diluted share, in the same period of 2016. When excluding the $19.5 million and $36.8 million pretax gain on disposal of assets in the first quarter 2017 and 2016, respectively, net income attributable to common stockholders in the first quarter 2017 increased by $1.9 million as compared to the same period in 2016.
- Pro Forma RevPAR: Pro forma revenue per available room ("RevPAR") grew to $112.50, an increase of 1.5 percent over the same period in 2016. Pro forma average daily rate ("ADR") grew to $146.17, an increase of 1.5 percent from the same period in 2016. Pro forma occupancy remained unchanged at 77.0 percent.
- Same-Store RevPAR: Same-store RevPAR grew to $109.78, an increase of 0.2 percent over the same period in 2016. Same-store ADR grew to $143.83, an increase of 0.8 percent from the same period in 2016. Same-store occupancy decreased by 0.6 percent to 76.3 percent compared with the same period in 2016.
- Pro Forma Hotel EBITDA: Pro forma hotel EBITDA declined to $43.9 million, a decrease of 2.7 percent over the same period in 2016. Pro forma hotel EBITDA margin contracted by 130 basis points to 36.5 percent from 37.8 percent in the same period of 2016.
- Adjusted EBITDA: Adjusted EBITDA increased to $41.1 million from $40.9 million in the same period of 2016, an increase of $0.2 million or 0.3 percent.
- Adjusted FFO: Adjusted Funds from Operations ("AFFO") increased to $30.2 million, or $0.32 per diluted share, an increase in AFFO of 6.7 percent over the same period in 2016.
- Acquisitions: The Company acquired two hotels containing 281 guestrooms for a total purchase price of $60.2 million, or $214,200 per key. The two hotels had RevPAR of $119.58 for the twelve months ended March 31, 2017.
- Dispositions: The Company sold one hotel containing 150 guestrooms for an aggregate sales price of $14.5 million, or $96,700 per key. The hotel had RevPAR of $86.59 for the twelve months ended March 31, 2017.
The Company's results for the three months ended March 31, 2017 and 2016 are as follows:
For the Three Months Ended March 31,
2017
2016
(Unaudited)
($ in thousands, except per unit and RevPAR data)
Net income attributable to common stockholders
$ 28,886
$ 44,338
Net income per diluted share and unit
$ 0.31
$ 0.51
Total revenues
$ 117,989
$ 118,082
EBITDA (1)
$ 59,140
$ 75,927
Adjusted EBITDA (1)
$ 41,056
$ 40,913
FFO (1)
$ 28,190
$ 25,864
Adjusted FFO (1)
$ 30,166
$ 28,279
FFO per diluted share and unit (1) (2)
$ 0.30
$ 0.30
Adjusted FFO per diluted share and unit (1) (2)
$ 0.32
$ 0.32
Pro Forma (3)
RevPAR
$ 112.50
$ 110.85
RevPAR growth
1.5%
Hotel EBITDA
$ 43,850
$ 45,069
Hotel EBITDA margin
36.5%
37.8%
(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. See "Non-GAAP Financial Measures" at the end of this release. Non-GAAP financial measures are unaudited.
(2)
Amounts are based on 93,623,000 weighted average diluted common shares and units and 87,170,000 weighted average diluted common shares and units for the three months ended March 31, 2017 and 2016, 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 82 hotels owned as of March 31, 2017, as if each hotel had been owned by the Company since January 1, 2016. As a result, all pro forma information includes operating and financial results for hotels acquired since January 1, 2016, which includes periods prior to the Company's ownership. Pro forma and non-GAAP financial measures are unaudited.
Acquisitions
On March 1, 2017, the Company completed the previously announced acquisition of the 129-guestroom Homewood Suites by Hilton Aliso Viejo – Laguna Beach located in Aliso Viejo, CA for a gross purchase price of $38.0 million, or $294,600 per key, and entered into a management agreement with Stonebridge Companies. Opened in 2016, the newly built hotel will require very limited capital expenditures. The Company estimates a capitalization rate of 8.1 percent based on management's current estimate of the hotel's 2017 net operating income. Centrally located in Orange County, CA, the Homewood Suites by Hilton is in close proximity to multiple business and leisure demand generators. National employers such as Microsoft, Pacific Life and QLogic have offices within walking distance of the hotel while Dell, Fluor, Rakuten and Microsemi are less than a mile away. The hotel is also a short driving distance to Laguna Beach, Newport Beach, and Dana Point and is situated between Disneyland and Legoland, thereby allowing families to visit both major attractions while staying in one central location.
On March 30, 2017, the Company acquired the 152-guestroom Hyatt Place Phoenix-Mesa located in Mesa, AZ for a gross purchase price of $22.2 million, or $146,100 per key, and entered into a management agreement with Interstate Hotels & Resorts. The Company plans to invest $1.1 million in capital improvements over the next two years and estimates a capitalization rate, including planned capital expenditures, of 8.3 percent based on management's current estimate of the hotel's 2017 net operating income. The Hyatt Place is adjacent to a variety of shopping, dining, and entertainment options, is within walking distance of the Chicago Cubs Sloan Park Spring Training Stadium and just a few miles from the Oakland A's Hohokam Stadium. Additionally, the hotel is only minutes away from Tempe, Scottsdale, Phoenix and Gilbert and has convenient access to local attractions including the Phoenix Zoo, Mesa Arts Center, the Arizona Museum of Natural History, and Arizona State University.
Dispositions
On March 30, 2017, the Company also completed the sale of the 150-guestroom Hyatt Place Atlanta Airport North located in East Point, GA for a total sales price of $14.5 million, or $96,700 per key. The sales price represents a capitalization rate of 7.9 percent based on the hotel's net operating income for the twelve months ended December 31, 2016. In conjunction with the sale, the company retired a $6.5 million mortgage loan that was scheduled to mature in August 2018.
Hotel Development
The Company has commenced development of a 168-guestroom Hyatt House hotel located in Orlando, FL. Set to open in 2018, the hotel is being developed on a parcel of land historically owned by the Company, adjacent to the Hyatt Place Orlando Universal, at an estimated development cost for construction of the hotel of approximately $30.0 million. To date, the Company has invested $5.1 million into the project, excluding land, and expects to fund the remainder through a combination of cash provided by operations, working capital, and advances on our $450.0 million senior unsecured credit facility.
Capital Investment
The Company invested $8.3 million in capital improvements during the three months ended March 31, 2017. For 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.
To view full financial release and corresponding tables please visit: http://investor.shpreit.com/file/Index?KeyFile=2000407153
