AUSTIN, Texas--(March 17, 2014)--Summit Hotel Properties, Inc. (NYSE: INN) (the "Company") today announced results for the fourth quarter and full year ended December 31, 2013.
"We are extremely pleased with the performance of our portfolio in 2013. Despite the significant revenue disruption we experienced as a result of the government shutdown in early October, our fourth quarter was particularly strong and finished well above our initial expectations. The uncertain and volatile economic conditions early in the quarter undoubtedly affected our outlook," said Dan Hansen, Summit's President and CEO. "We believe we are in a great position for revenue and earnings growth heading into what we consider the middle portion of the current lodging cycle. With our aggressive acquisition strategy and selective dispositions over the last several quarters, in addition to a solid balance sheet with ample liquidity, we believe our portfolio is in a prime position for outsized growth over the next several years."
The Company's results included the following:
¹ See tables later in this press release for a reconciliation of net income (loss) to earnings before interest, taxes, depreciation and amortization ("EBITDA"), adjusted EBITDA, funds from operations ("FFO"), FFO per diluted unit, adjusted FFO and adjusted FFO per diluted unit. EBITDA, adjusted EBITDA, FFO, FFO per diluted unit, adjusted FFO and adjusted FFO per diluted unit, as well as hotel EBITDA (hotel revenues less hotel operating expenses), are non-GAAP financial measures. See further discussions of these non-GAAP measures later in this press release.
² Unless expressly stated otherwise in this release, all pro forma information includes operating results for 84 hotels owned as of December 31, 2013 as if each hotel had been owned by the Company since January 1, 2012, which excludes the 213-guestroom Hyatt Place, Minneapolis, Minn. acquired on December 31, 2013, and also excludes the following three hotels located in Fort Smith, Ark. that were held for sale at December 31, 2013: the 89-guestroom AmericInn Hotel & Suites; the 57-guestroom Aspen Hotel & Suites; and the 178-guestroom Hampton Inn. As a result, these pro forma operating measures include operating results for certain hotels for periods prior to the Company's ownership.
Same-Store RevPAR: 2013 same-store revenue per available room ("RevPAR") grew to $73.79, an increase of 7.0 percent over the same period in 2012. Same-store average daily rate ("ADR") grew to $102.03, an increase of 4.9 percent from 2012. Same-store occupancy grew by 140 basis points to 72.3 percent.
Pro Forma RevPAR: 2013 pro forma RevPAR grew to $82.25, an increase of 5.7 percent over the same period in 2012. Pro forma ADR grew to $112.23, an increase of 4.5 percent from 2012. Pro forma occupancy grew by 81 basis points to 73.3 percent.
Pro Forma Hotel EBITDA: 2013 pro forma hotel EBITDA was $113.5 million, an increase of 8.5 percent over 2012.
Pro Forma Hotel EBITDA Margin: Pro forma hotel EBITDA margin expanded by 92 basis points compared with the same period in 2012. Pro forma hotel EBITDA margin is defined as pro forma hotel EBITDA as a percentage of pro forma total revenue.
Adjusted EBITDA: Adjusted EBITDA increased to $93.4 million from $52.1 million in the same period in 2012, an increase of $41.3 million or 79.3 percent. Adjusted EBITDA for the year includes $0.6 million of charges associated with the consolidation of the Company's corporate office to Austin, Texas.
Adjusted FFO: Adjusted funds from operations ("AFFO") for the full year 2013 was $59.3 million or $0.81 per diluted unit.
Acquisitions: During the twelve months of 2013, the Company acquired 19 hotels comprising 3,033 guestrooms, for a total purchase price of $475.6 million.
"2013 was a great year for us and I am very pleased with all that our team accomplished," Hansen stated. "After great results in 2012, during which our same-store hotels posted RevPAR growth of 11.7 percent, our 2013 same-store RevPAR growth of 7.0 percent highlights the strength and quality of our portfolio."
Fourth Quarter Highlights
Same-Store RevPAR: Same-store RevPAR in the fourth quarter of 2013 grew to $67.82, an increase of 6.1 percent over the same period in 2012. Same-store ADR improved to $99.76, an increase of 3.7 percent from the fourth quarter of 2012. Same-store occupancy grew by 157 basis points to 68.0 percent.
Pro Forma RevPAR: Pro forma RevPAR in the fourth quarter of 2013 grew to $77.12, an increase of 6.9 percent over the same period in 2012. Pro forma ADR grew to $110.68, an increase of 4.8 percent from the fourth quarter of 2012. Pro forma occupancy increased by 141 basis points to 69.7 percent.
Pro Forma Hotel EBITDA: Pro forma hotel EBITDA for the fourth quarter of 2013 was $24.1 million, an increase of 13.2 percent over the same period of 2012.
Pro Forma Hotel EBITDA Margin: Pro forma hotel EBITDA margin expanded by 165 basis points compared with the same period in 2012.
Adjusted EBITDA: Adjusted EBITDA increased to $21.3 million from $11.4 million in the same period in 2012, an increase of $9.9 million or 86.8 percent. Adjusted EBITDA for the quarter includes $0.2 million of charges associated with the consolidation of the Company's corporate office to Austin, Texas.
Adjusted FFO: Adjusted FFO for the quarter was $12.0 million, or $0.14 per diluted unit.
Acquisitions: During the fourth quarter of 2013, the Company acquired three hotels comprising 436 guestrooms, for a total purchase price of $63.4 million.
Dividends: On January 30, 2014, the Company declared an $0.1125 per share quarterly dividend on its common stock, a $0.578125 per share quarterly dividend on its 9.25 percent Series A Cumulative Redeemable Preferred Stock, a $0.4921875 per share quarterly dividend on its 7.875 percent Series B Cumulative Redeemable Preferred Stock, and a $0.4453125 per share quarterly dividend on its 7.125 percent Series C Cumulative Redeemable Preferred Stock. Based on the closing price of the Company's common stock on March 14, 2014, the annualized dividend yield on the Company's common stock was 4.9 percent.
During 2013, the Company raised $382.4 million in net proceeds from two common stock offerings and one preferred stock offering.
"The capital transactions we completed in 2013 allowed us to continue executing on our strategic growth," said Executive Vice President and CFO Stuart Becker. "We have a solid balance sheet with ample runway to execute on additional acquisitions which, in addition to our high quality portfolio today, we anticipate will help continue per share growth for our shareholders."
At December 31, 2013, the Company had total outstanding debt of $435.6 million. During 2013, the Company:
Closed on $187.7 million of term debt at an average interest rate of 4.83 percent. This amount excludes the $92.0 million interim loan with KeyBank N.A., which was closed in May 2013 and subsequently repaid in full in October 2013.
Retired $43.7 million of debt bearing an average interest rate of 5.40 percent. This also excludes the $92.0 million interim loan with KeyBank N.A.
As of March 14, 2014, the Company has $161.0 million drawn, including the $75.0 million term loan and $14.0 million in standby letters of credit, and has $117.3 million available to borrow on its revolving credit facility.Capital Investment
During 2013, the Company completed 19 acquisitions, comprising a total 3,033 guestrooms, for a total purchase price of $475.6 million. Full year 2013 pro forma RevPAR among the 19 hotels was $97.31 as compared to the Company's same-store RevPAR of $73.79 for the same period.
"We have built a portfolio of premium assets in strong growth markets, including 47 acquisitions since our 2011 IPO. These acquisitions are helping to create long-term shareholder value," Hansen said. "We are thrilled with our expansion on the West Coast over the last twelve months and look forward to the strong growth these properties will bring to our portfolio."
The Company invested $46.9 million on renovations in 2013; $18.4 million was deployed in the fourth quarter. Among the 17 major renovations completed in 2013, projects ranged from lobby and public space improvements to complete guestroom renovations, including furniture, soft goods and guest bathrooms.
One of the Company's largest capital projects in 2013 included two Hyatt Place properties acquired in January 2013 and located in Orlando, Fla. These properties were updated to include completely re-designed lobbies and common areas. They both now feature new bars and lounge areas for guests to enjoy. As well, all public restrooms were remodeled. All guestrooms were updated with new beds, carpeting and wall coverings. An additional guestroom was added at the Convention Center property to better utilize previously unused space. However, the Universal property was lacking the necessary office space for staff. The Company converted a guestroom at this property into an office, resulting in a net-zero change in guestroom count among the two properties. The swimming pools were also completely renovated with replastering, new outdoor pool decks and new poolside furniture. The fitness centers were renovated and updated with new equipment. These renovations were completed with a new roof and fresh exterior paint. The renovations totaled $3.7 million and were completed in the fourth quarter of 2013.
Another large project completed was the full renovation of the Courtyard by Marriott in New Orleans (Metairie), La. The guestrooms were updated with the new Marriott "Gen Next CYnergy Package." The new guestroom design features the new color palette and included all new furniture, beds, wall coverings, lighting, bath tile and wall paint. The renovation also included an exterior refinish and a complete renovation of the courtyard and garden area. The exercise room was updated with all new finishes and fitness equipment. While the lobby and bistro were renovated with the "Courtyard Refreshing Business" package in 2012, the common areas were updated to include new lighting, hallway carpet, tile and wall coverings. This renovation totaled approximately $2.8 million and was completed in September 2013.
"We continue to proactively deploy renovation capital into our portfolio where we see opportunities for improvement," Hansen said. "Our team has done an excellent job of executing on renovation projects and we are thrilled with the increased revenues, better margins and the improvement in competitive set index rankings we are realizing among our renovated properties."
During 2013, the Company sold fifteen hotels with a total of 1,143 guestrooms, and five parcels of land that it no longer considers strategic, for a total sale price of $58.6 million.
"We have now closed nine of the previously announced planned dispositions and feel great about the position of our portfolio," Hansen stated. "The capital we have generated through the sales of less strategic properties helps strengthen our balance sheet and enables us to continue executing on deals that are accretive to our portfolio and will create earnings growth."
At December 31, 2013, the Company had total outstanding debt of $435.6 million and $46.7 million of cash and cash equivalents. Subject to the borrowing base as of December 31, 2013, maximum borrowing capacity was $270.7 million under the senior unsecured credit facility, including both the revolver and term portions of the facility. At December 31, 2013, the Company had $75.0 million outstanding on its senior unsecured term facility, $0.2 million in standby letters of credit and $195.5 million available to borrow. In addition, the Company had 13 unencumbered hotels.
The Company's weighted average interest rate on its debt outstanding at December 31, 2013 was 5.03 percent.
At December 31, 2013, the Company's total net debt to trailing twelve month adjusted EBITDA was 4.2x.
Management identified a material weakness in controls related to individual hotels' balance sheets that largely resulted in reclassification entries within certain balance sheet line items.
On January 9, 2014, the Company acquired the 182-guestroom Hilton Garden Inn located in Houston, Texas for a purchase price of $37.5 million.
On January 10, 2014, the Company acquired the 98-guestroom Hampton Inn located in Santa Barbara (Goleta), Calif., for a purchase price of $27.9 million.
On January 17, 2014, the Company completed the disposition of the 89-guestroom AmericInn Hotel & Suites and the 57-guestroom Aspen Hotel & Suites located in Fort Smith, Ark. for a total sales price of $3.1 million.
On January 24, 2014, the Company acquired the 101-guestroom Four Points by Sheraton located in San Francisco, Calif., for a purchase price of $21.3 million.
On March 14, 2014, the Company acquired the 210-guestroom DoubleTree by Hilton located in San Francisco, Calif., for a purchase price of $39.1 million.
The Company provides guidance for the first quarter and full year 2014 based on 89 current hotels.¹ This outlook includes activity subsequent to December 31, 2013. Except as described in footnote 1 below, it assumes no additional hotels are acquired or sold and no additional issuances of equity securities.
¹ In addition to the Company's portfolio of 88 hotels (10,908 guestrooms) at December 31, 2013, includes the following four properties purchased subsequent to December 31, 2013: the 98-guestroom Hampton Inn, Santa Barbara (Goleta), Calif.; the 182-guestroom Hilton Garden Inn, Houston, Texas; the 101-guestroom Four Points by Sheraton, San Francisco, Calif.; and the 210-guestroom DoubleTree by Hilton San Francisco, Calif. Also excludes the following three properties located in Fort Smith, Ark. that were sold subsequent to or held for sale at December 31, 2013: the 89-guestroom AmericInn Hotel & Suites; the 57-guestroom Aspen Hotel & Suites; and the 178-guestroom Hampton Inn.
² First quarter RevPAR guidance anticipates 150 to 200 basis points of RevPAR disruption and $0.7 million to $0.9 million of EBITDA disruption in the first quarter due to renovation work at eleven hotels.
³ The Company includes the 178-guestroom Hampton Inn, Fort Smith, Ark. in Adjusted FFO calculations; this property however is excluded from all pro forma calculations as noted.
4 Assumed weighted average diluted common units of 86,585,000 for first quarter 2014; 86,616,000 for full year 2014.
Summit Hotel Properties, Inc. is a publicly traded real estate investment trust focused primarily on acquiring and owning premium-branded select-service hotels in the upscale and upper midscale segments of the lodging industry. As of March 17, 2014, the Company's portfolio consisted of 90 hotels with a total of 11,353 guestrooms located in 22 states. Since its initial public offering in February 2011, the Company has acquired 47 hotel properties, totaling 6,539 guestrooms for a total purchase price of $917.3 million.
For additional information, please visit the Company's website, www.shpreit.com and follow on Twitter at @SummitHotel_INN.