SIOUX FALLS, S.D.--(August 10, 2012)--Summit Hotel
Properties, Inc. (NYSE: INN) (the “Company”) today announced results
for the second quarter ended June 30, 2012. The Company’s results
include the following:
Second Quarter Highlights
- Pro forma RevPAR: Pro forma
RevPAR for the quarter ended June 30, 2012, increased 11.7 percent to
$70.12, as a result of a 5.1 percent increase in average daily rate
(“ADR”) to $95.52 and a 6.3 percent increase in occupancy to 73.4
percent.
- Pro forma Hotel EBITDA: Pro
forma Hotel EBITDA was $16.3 million for the second quarter, an
increase of 16.2 percent over second quarter 2011.
- Pro forma Hotel EBITDA Margin: Pro
forma Hotel EBITDA Margin for the second quarter was 33.5 percent, an
improvement of 134 basis points over the comparable period of 2011. The
Company’s pro forma Hotel EBITDA margin expansion was 264 basis points
when adjusting for the $0.6 million one-time hotel management fee
concessions agreed to by Interstate Hotels and Resorts during second
quarter 2011. Hotel EBITDA margin is defined as Hotel EBITDA as a
percentage of total revenue.
- Adjusted EBITDA: Adjusted
EBITDA was $14.9 million, an increase of 35.6 percent as compared to
second quarter 2011.
- Adjusted FFO: Adjusted FFO
for the second quarter 2012 was $10.1 million or $ 0.27 per diluted
share/unit, an increase of 32% as compared to second quarter 2011.
- Acquisitions: The Company
acquired three hotels during the second quarter 2012, including:
- 103 room Courtyard by Marriott
– Dallas (Arlington), TX
- 112 room Hilton Garden Inn –
Nashville (Smyrna), TN
- 83 room Hampton Inn &
Suites – Nashville (Smyrna), TN
- Dividends: The Company
declared second quarter 2012 dividends of $0.1125 per common share,
representing an annualized yield of approximately 5.57% based on the
closing sale price of the Company’s common stock on the NYSE on August
8, 2012, and $0.5781 per share on the Company’s 9.25% Series A
Cumulative Redeemable Preferred Stock.
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Second Quarter |
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Year-to-Date |
|
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2012 |
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2011 |
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2012 |
|
|
2011 |
|
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|
($
in thousands except per share/unit data) |
|
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Total Revenue |
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$
|
|
47,280
|
|
|
|
$
|
|
36,997
|
|
|
|
$
|
|
87,191
|
|
|
|
$
|
|
69,227
|
|
Net Income (Loss)
to Common Shareholders |
|
|
$
|
|
(1,513
|
)
|
|
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$
|
|
604
|
|
|
|
$
|
|
(5,474
|
)
|
|
|
$
|
|
(7,217
|
)
|
Per diluted
share/unit |
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$
|
|
(0.04
|
)
|
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$
|
|
0.02
|
|
|
|
$
|
|
(0.15
|
)
|
|
|
$
|
|
(0.03
|
)
|
EBITDA (1) |
|
|
$
|
|
11,978
|
|
|
|
$
|
|
10,765
|
|
|
|
$
|
|
20,895
|
|
|
|
$
|
|
18,480
|
|
Adjusted EBITDA
(1) |
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$
|
|
14,890
|
|
|
|
$
|
|
10,977
|
|
|
|
$
|
|
25,444
|
|
|
|
$
|
|
20,005
|
|
FFO (1) |
|
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$
|
|
8,017
|
|
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|
$
|
|
7,460
|
|
|
|
$
|
|
13,468
|
|
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|
$
|
|
6,497
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|
Adjusted FFO (1) |
|
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$
|
|
10,099
|
|
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|
$
|
|
7,635
|
|
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$
|
|
16,256
|
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|
$
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|
13,925
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|
FFO per diluted
share/unit (1) |
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$
|
|
0.21
|
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$
|
|
0.20
|
|
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$
|
|
0.36
|
|
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|
$
|
|
0.17
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|
Adjusted FFO per
diluted share/unit (1) |
|
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$
|
|
0.27
|
|
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|
$
|
|
0.20
|
|
|
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$
|
|
0.43
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$
|
|
0.37
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Pro forma (2)
|
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RevPAR |
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$
|
|
70.12
|
|
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$
|
|
62.78
|
|
|
|
$
|
|
66.21
|
|
|
|
$
|
|
60.44
|
|
RevPAR Growth |
|
|
|
|
11.7
|
%
|
|
|
|
|
|
|
|
9.5
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%
|
|
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|
Hotel EBITDA |
|
|
$
|
|
16,301
|
|
|
|
$
|
|
14,027
|
|
|
|
$
|
|
29,666
|
|
|
|
$
|
|
25,224
|
|
Hotel EBITDA
Margin |
|
|
|
|
33.5
|
%
|
|
|
|
|
32.2
|
%
|
|
|
|
|
32.3
|
%
|
|
|
|
|
30.3
|
%
|
Hotel EBITDA
Margin Growth (bps) |
|
|
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|
134
|
|
|
|
|
|
|
|
|
197
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(1)
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See tables later
in this press release for a reconciliation to net income (loss) of
earnings before interest, taxes, depreciation and amortization
(“EBITDA”), adjusted EBITDA, funds from operations (“FFO”), FFO per
diluted share/unit, adjusted FFO and adjusted FFO per diluted
share/unit. EBITDA, adjusted EBITDA, FFO, FFO per diluted share/unit,
adjusted FFO and adjusted FFO per diluted share/unit, as well as hotel
EBITDA, are non-GAAP financial measures. See further discussions of
these non-GAAP measures and reconciliations to net income/ (loss) later
in this press release. |
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(2)
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For purposes of
this press release, pro forma RevPAR, pro forma RevPAR growth, pro
forma Hotel EBITDA, pro forma Hotel EBITDA margin and pro forma Hotel
EBITDA margin growth includes operating results for the Company’s 72
hotels owned as of June 30, 2012, as if such hotels had been owned
since January 1, 2011 and exclude 3 hotels sold, including Twin Falls,
ID AmericInn & Suites, Twin Falls, ID Hampton Inn, and Twin Falls,
ID Holiday Inn Express & Suites, and the Missoula, MT AmericInn
Hotel & Suites, which is held for sale as of June 30, 2012. As a
result, these pro forma operating measures include operating results
for certain hotels for periods prior to the Company’s ownership. |
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|
“We continue to be pleased with the performance of our
company,” said Dan Hansen, president and CEO. “Very solid RevPAR growth
for the quarter was the result of several factors, including steadily
improving demand throughout many of our markets, continued muted hotel
supply growth and solid performance by our hotels we rebranded during
2011. We were also successful in bringing increased revenue to the
bottom line. Adjusted EBITDA growth of 35.6 percent and pro forma Hotel
EBITDA margin expansion of 264 basis points demonstrates focused
efforts by both our hotel management partners and our company.”
Capital Investments
The Company deployed $4.4 million in capital for renovations during the
quarter, a significantly lesser amount than in the previous two
quarters. The Company generally tends to undertake hotel work and
expenditure during the seasonally slow periods for its hotels. Major
improvements and capital invested during the second quarter includes:
Fort Worth, TX Fairfield Inn & Suites by Marriott - $1.1 million;
Fort Wayne, IN Hampton Inn - $0.7 million; Denver, CO Fairfield Inn
& Suites by Marriott - $0.4 million; Provo, UT Hampton Inn - $0.4
million; Atlanta (Duluth), GA Hilton Garden Inn - $0.4 million. Varying
in scope, the major improvements listed above include renovation to
guestrooms, common areas, and exteriors of the hotels.
Capital Structure
- On April 4, 2012, the Company
refinanced two loans with General Electric Capital Corporation formerly
financed with National Western Life Insurance Company; mortgage loans
on the Scottsdale, AZ Courtyard by Marriott and the Scottsdale, AZ
Springhill Suites by Marriott with principal loan balances of $9.8 and
$5.3 million respectively. Both new loans bear a fixed interest rate of
6.03% and have a maturity date of May 1, 2017. The transaction resulted
in an interest rate reduction of 197 basis points as compared to the
previous loan’s interest rate and $1.5 million of net proceeds from the
refinancing after repaying the two previous loans including a
prepayment penalty of $0.5 million.
- On May 16, 2012, the Company
entered into an amendment to its $125.0 million senior secured
revolving credit facility. The amendment includes the following:
- Reduction in LIBOR spread of 75
basis points and elimination of the LIBOR floor of 50 basis points.
- The option for increased
leverage on borrowing base assets from 55% to 60% of appraised value.
- Extended maturity date from
April 29, 2014 to May 16, 2015.
- The maximum leverage ratio
covenant and fixed charge coverage ratio covenant were adjusted to
provide flexibility on acquisitions in the near term.
- The unused fee was reduced by
12.5 basis points.
- On June 24, 2012, the Company
refinanced a loan with Chambers Bank with a principal balance of $1.5
million, a fixed interest rate of 6.50%, and maturity date of June 24,
2014.
- On June 29, 2012, the Company
refinanced a loan with Bank of the Ozarks with a new principal balance
of $8.9 million which resulted in $2.5 million of net proceeds after
repaying the previous loan. In addition, the revised maturity date on
the loan is July 10, 2017 and the loan has a 25 year amortization.
Lastly, the interest rate was fixed at 5.75% for years 1-3 and will
reset annually at LIBOR plus 375 basis points with a floor of 5.50% in
years 4-5.
Dispositions:
On May 16, 2012, the Company sold for an aggregate of $16.5 million the
following three hotels all located in Twin Falls, ID.
- 111 room AmericInn Hotel and Suites
- 91 room Holiday Inn Express &
Suites
- 75 room Hampton Inn
On May 30, 2012, the Company sold a parcel of land in Twin
Falls, ID for $0.3 million.
On June 28, 2012, the Company sold a parcel of land in Boise, ID for
$1.4 million.
Year-to-Date Highlights
For the six-months ended June 30, 2012, pro forma RevPAR increased 9.5
percent to $66.21 as a result of ADR growth of 2.9 percent to $95.48
and a 6.4 percent increase in occupancy to 69.3 percent. RevPAR
improvement was the result of the recent rebranding of 10 hotels,
positive effect of recent renovations to an additional 10 hotels and
general economic improvement in some of the Company’s markets. Adjusted
EBITDA was $25.4 million for the first six-month period of 2012, a 27.2
percent increase over the same period in 2011.
Subsequent Events
On July 2, 2012, the Company purchased the 96 room Residence Inn by
Marriott in Dallas (Arlington), TX. Including purchase price and
anticipated improvements the Company acquired the hotel for $15.5
million. This is the second hotel acquired by the Company in the
Dallas, TX sub-market of Arlington. Since its IPO in February, 2011,
the Company has acquired 12 additional hotels, adding 1,336 additional
guestrooms to its portfolio.
On July 16, 2012, the Company completed the conversion of its
previously branded Comfort Suites in Fort Worth, TX into a 70 room
Fairfield Inn and Suites by Marriott. This conversion completes the
rebranding of all eleven of the Company’s former Choice Hotels
International branded hotels.
On August 3, 2012, the Company expanded its capacity under its
$125 million Senior Secured Revolving Credit Facility to $112.0 million
by pledging three additional hotels under the borrowing base. The
additional collateral pledged includes: 1) 96 room Residence Inn –
Dallas (Arlington), TX, 2) 103 room Courtyard by Marriott – Dallas
(Arlington), TX, and 3) 90 room Courtyard by Marriott – El Paso, TX.
Following the increased availability under its credit facility the
Company continues to have seven unencumbered hotels.
“We have been very active in executing on our strategy of
deploying capital in the top fifty U.S. markets,” noted Dan Hansen. “In
addition to acquiring the best brands in markets that align with our
growth strategy, we have been successful in selling hotels and land
parcels in markets that no longer meet our investment criteria.”
Balance sheet
As of June 30, 2012, the Company had total outstanding debt of $298.4
million, including $54.4 million outstanding on its senior secured
credit facility. As of August 9, 2012, the Company had additional
borrowing capacity of $43.8 million on its credit facility. In
addition, the Company had $11.6 million of cash and cash equivalents.
As of quarter end, the Company’s weighted average interest rate was
5.02%.
2012 Outlook
The Company is updating its 2012 outlook to include its recent
acquisition of the 96 room Residence Inn – Dallas (Arlington), TX, the
103 room Courtyard by Marriott – Dallas (Arlington), TX, the 112 room
Hilton Garden Inn – Nashville (Smyrna), TN and the 83 room Hampton Inn
& Suites – Nashville (Smyrna), TN and the recent disposition of
three hotels in Twin Falls, ID, including the 111 room AmericInn Hotel
and Suites, 91 room Holiday Inn Express and the 75 room Hampton Inn.
The Company’s outlook is based on current hotels owned (73 hotels) and
assumes no additional hotels acquired or sold for the remainder of 2012
and no additional issuances of equity securities. RevPAR outlook
excludes the AmericInn Hotel and Suites in Missoula, MT, which is
currently held for sale. The outlook reflects recently revised downward
U.S. GDP growth of 1.5% to 2.5% for the remainder of 2012.
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|
|
Third Quarter, 2012 |
|
|
Revised 2012 Full Year Outlook |
|
|
|
Low-end |
|
|
High-end |
|
|
Low-End |
|
|
High-End |
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma RevPAR (73 hotels)
|
|
|
$
|
|
68.96
|
|
|
|
$
|
|
70.26
|
|
|
|
$
|
|
71.53
|
|
|
|
$
|
|
72.87
|
|
Growth |
|
|
|
|
6.5
|
%
|
|
|
|
|
8.5
|
%
|
|
|
|
|
6.5
|
%
|
|
|
|
|
8.5
|
%
|
RevPAR (61 hotels)
|
|
|
$
|
|
66.81
|
|
|
|
$
|
|
68.07
|
|
|
|
$
|
|
61.54
|
|
|
|
$
|
|
62.70
|
|
Growth |
|
|
|
|
6.5
|
%
|
|
|
|
|
8.5
|
%
|
|
|
|
|
6.5
|
%
|
|
|
|
|
8.5
|
%
|
AFFO |
|
|
$
|
|
8,800,000
|
|
|
|
$
|
|
9,600,000
|
|
|
|
$
|
|
28,600,000
|
|
|
|
$
|
|
29,800,000
|
|
AFFO/Sh. |
|
|
$
|
|
0.24
|
|
|
|
$
|
|
0.26
|
|
|
|
$
|
|
0.77
|
|
|
|
$
|
|
0.80
|
|
Cap Renovation |
|
|
$
|
|
5,000,000
|
|
|
|
$
|
|
8,000,000
|
|
|
|
$
|
|
20,000,000
|
|
|
|
$
|
|
25,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
Earnings Call
The Company will conduct its quarterly conference call on Friday,
August 10, 2012 at 9:00am EDT. To participate in the conference call
please dial 866-510-0705. The participant passcode for the call is
56026047. Additionally, a live webcast of the call will be available
through the Company’s website, www.shpreit.com. A replay of the conference call
will be available until Friday, August 17, 2012 by dialing
888-286-8010; participant passcode 14085000. A replay of the conference
call will be available on the Company’s website until November 15,
2012.
About Summit Hotel Properties
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 June 30, 2012, the Company’s
portfolio consisted of 73 hotels with a total of 7,489 guestrooms
located in 20 states. Additional information about Summit may be found
at the Company’s website, www.shpreit.com.
Forward-Looking Statements
This press release contains statements that are
“forward-looking statements” within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, pursuant to the safe harbor
provisions of the Private Securities Reform Act of 1995.
Forward-looking statements are generally identifiable by use of
forward-looking terminology such as “may,” “will,” “should,”
“potential,” “intend,” “expect,” “seek,” “anticipate,” “estimate,”
“approximately,” “believe,” “could,” “project,” “predict,” “forecast,”
“continue,” “plan” or other similar words or expressions.
Forward-looking statements are based on certain assumptions and can
include future expectations, future plans and strategies, financial and
operating projections or other forward-looking information. Examples of
forward-looking statements include the following: projections of the
Company’s revenues and expenses, capital expenditures or other
financial items; descriptions of the Company’s plans or objectives for
future operations, acquisitions or services; forecasts of the Company’s
future economic performance and potential increases in average daily
rate, occupancy, RevPAR and room supply and demand; US GDP growth and
descriptions of assumptions underlying or relating to any of the
foregoing expectations regarding the timing of their occurrence. These
forward-looking statements are subject to various risks and
uncertainties, not all of which are known to the Company and many of
which are beyond the Company’s control, which could cause actual
results to differ materially from such statements. These risks and
uncertainties include, but are not limited to, the state of the U.S.
economy, supply and demand in the hotel industry and other factors as
are described in greater detail in the Company’s filings with the
Securities and Exchange Commission (“SEC”), including, without
limitation, the Company’s Annual Report on Form 10-K for the year ended
December 31, 2011 and the Company's Quarterly Report on Form 10-Q for
the quarter ended June 30, 2012. Unless legally required, the Company
disclaims any obligation to update any forward-looking statements,
whether as a result of new information, future events or otherwise.
For information about the Company’s business and financial
results, please refer to the “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” and “Risk Factors”
sections of the Company’s Annual Report on Form 10-K for the year ended
December 31, 2011 and its quarterly and other periodic filings with the
SEC.
The following condensed consolidated balance sheets and
statements of operations are those of Summit Hotel OP, LP (the
Operating Partnership), Summit Hotel Properties, Inc’s. (the REIT’s)
consolidated operating partnership. Such financial results for
the periods presented are identical to those of the REIT; however, we
believe the reconciliation of FFO, AFFO, EBITDA and Adjusted EBITDA to
net income (loss) presented in the Operating Partnership’s statement of
operations is more beneficial, as it eliminates the presentation of
non-controlling interests represented by the equity interests held by
limited partners of the Operating Partnership, other than the REIT.
In addition, FFO and AFFO results on a total per common unit
basis provides for a more consistent period over period presentation
now and in future periods.
The Company undertakes no duty to update the statements in
this release to conform the statements to actual results or changes in
the Company’s expectations.
|
|
SUMMIT
HOTEL PROPERTIES |
Condensed
Consolidated Balance Sheets |
June
30, 2012 (Unaudited) and December 31, 2011 |
|
|
|
|
2012 |
|
|
2011 |
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents |
|
|
$
|
|
11,623,207
|
|
|
$
|
|
10,537,132
|
Restricted cash |
|
|
|
|
3,107,998
|
|
|
|
|
1,464,032
|
Trade receivables
|
|
|
|
|
6,946,025
|
|
|
|
|
3,424,630
|
Prepaid expenses
and other |
|
|
|
|
3,329,337
|
|
|
|
|
4,268,393
|
Land held for
development |
|
|
|
|
19,006,473
|
|
|
|
|
20,294,973
|
Assets held for
sale |
|
|
|
|
1,629,412
|
|
|
|
|
-
|
Property and
equipment, net |
|
|
|
|
558,546,155
|
|
|
|
|
498,876,238
|
Deferred charges
and other assets, net |
|
|
|
|
9,574,069
|
|
|
|
|
8,923,906
|
Deferred tax
benefit |
|
|
|
|
2,971,350
|
|
|
|
|
2,195,820
|
Other
assets |
|
|
|
|
4,758,390
|
|
|
|
|
4,019,870
|
TOTAL
ASSETS |
|
|
$
|
|
621,492,416
|
|
|
$
|
|
554,004,994
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND EQUITY |
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
Accounts payable |
|
|
$
|
|
1,933,060
|
|
|
$
|
|
1,670,994
|
Derivative
liabilities |
|
|
|
|
280,841
|
|
|
|
|
-
|
Liabilities
related to assets held for sale |
|
|
|
|
55,410
|
|
|
|
|
-
|
Accrued expenses |
|
|
|
|
15,351,899
|
|
|
|
|
15,781,577
|
Mortgages
and notes payable |
|
|
|
|
298,432,922
|
|
|
|
|
217,103,728
|
TOTAL
LIABILITIES |
|
|
|
|
316,054,132
|
|
|
|
|
234,556,299
|
|
|
|
|
|
|
|
COMMITMENTS AND
CONTINGENCIES |
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY |
|
|
|
|
305,438,284
|
|
|
|
|
319,448,695
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND EQUITY |
|
|
$
|
|
621,492,416
|
|
|
$
|
|
554,004,994
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUMMIT
HOTEL PROPERTIES |
Condensed
Consolidated Statements of Operations |
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company
and |
|
|
|
Company |
|
|
Predecessor |
|
|
|
Three
months |
|
|
Three
months |
|
|
Six
months |
|
|
Six
months |
|
|
|
ended 06/30/12 |
|
|
ended 06/30/11 |
|
|
ended 06/30/12 |
|
|
ended 06/30/11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUE |
|
|
|
|
|
|
|
|
|
|
|
|
Room revenue |
|
|
$
|
46,153,920
|
|
|
|
$
|
36,233,265
|
|
|
|
$
|
85,069,804
|
|
|
|
$
|
67,770,544
|
|
Other
hotel operations revenue |
|
|
|
1,126,223
|
|
|
|
|
763,619
|
|
|
|
|
2,121,149
|
|
|
|
|
1,456,169
|
|
Total
Revenue |
|
|
|
47,280,143
|
|
|
|
|
36,996,884
|
|
|
|
|
87,190,953
|
|
|
|
|
69,226,713
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
Hotel operating
expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Rooms |
|
|
|
13,318,174
|
|
|
|
|
11,252,600
|
|
|
|
|
25,046,345
|
|
|
|
|
20,708,692
|
|
Other direct |
|
|
|
5,274,760
|
|
|
|
|
4,856,876
|
|
|
|
|
10,025,519
|
|
|
|
|
9,468,029
|
|
Other indirect |
|
|
|
12,617,580
|
|
|
|
|
8,849,929
|
|
|
|
|
23,801,932
|
|
|
|
|
18,132,175
|
|
Other |
|
|
|
232,318
|
|
|
|
|
201,047
|
|
|
|
|
443,004
|
|
|
|
|
347,123
|
|
Total hotel
operating expenses |
|
|
|
31,442,832
|
|
|
|
|
25,160,452
|
|
|
|
|
59,316,800
|
|
|
|
|
48,656,019
|
|
Depreciation and
amortization |
|
|
|
8,143,923
|
|
|
|
|
6,546,156
|
|
|
|
|
16,332,359
|
|
|
|
|
13,116,629
|
|
Corporate general
and administrative: |
|
|
|
|
|
|
|
|
|
|
|
|
Salaries and
other compensation |
|
|
|
711,770
|
|
|
|
|
699,014
|
|
|
|
|
1,523,408
|
|
|
|
|
1,066,032
|
|
Other |
|
|
|
912,622
|
|
|
|
|
751,749
|
|
|
|
|
1,772,117
|
|
|
|
|
1,513,482
|
|
Equity based
compensation |
|
|
|
388,695
|
|
|
|
|
175,656
|
|
|
|
|
514,569
|
|
|
|
|
302,484
|
|
Loan transaction
costs |
|
|
|
423,110
|
|
|
|
|
-
|
|
|
|
|
423,110
|
|
|
|
|
-
|
|
Hotel
property acquisition costs |
|
|
|
747,295
|
|
|
|
|
-
|
|
|
|
|
1,327,233
|
|
|
|
|
-
|
|
Total
Expenses |
|
|
|
42,770,247
|
|
|
|
|
33,333,027
|
|
|
|
|
81,209,596
|
|
|
|
|
64,654,646
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME
(LOSS) FROM OPERATIONS |
|
|
|
4,509,896
|
|
|
|
|
3,663,857
|
|
|
|
|
5,981,357
|
|
|
|
|
4,572,067
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME
(EXPENSE) |
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
|
300
|
|
|
|
|
10,280
|
|
|
|
|
1,691
|
|
|
|
|
21,366
|
|
Other income |
|
|
|
474,576
|
|
|
|
|
-
|
|
|
|
|
474,576
|
|
|
|
|
-
|
|
Interest expense |
|
|
|
(4,270,723
|
)
|
|
|
|
(2,923,852
|
)
|
|
|
|
(7,699,198
|
)
|
|
|
|
(10,893,689
|
)
|
Gain (loss) on
disposal of assets |
|
|
|
(186,589
|
)
|
|
|
|
(36,031
|
)
|
|
|
|
(186,589
|
)
|
|
|
|
(36,031
|
)
|
Unrealized
gain (loss) on derivatives |
|
|
|
(1,012
|
)
|
|
|
|
-
|
|
|
|
|
(1,012
|
)
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Other Income (Expense) |
|
|
|
(3,983,448
|
)
|
|
|
|
(2,949,603
|
)
|
|
|
|
(7,410,532
|
)
|
|
|
|
(10,908,354
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME
(LOSS) FROM CONTINUING OPERATIONS |
|
|
|
|
|
|
|
|
|
|
|
|
BEFORE
INCOME TAXES |
|
|
|
526,448
|
|
|
|
|
714,254
|
|
|
|
|
(1,429,175
|
)
|
|
|
|
(6,336,287
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME
TAX (EXPENSE) BENEFIT |
|
|
|
144,101
|
|
|
|
|
(329,981
|
)
|
|
|
|
411,856
|
|
|
|
|
(822,894
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME (LOSS)
FROM CONTINUING OPERATIONS |
|
|
|
670,549
|
|
|
|
|
384,273
|
|
|
|
|
(1,017,319
|
)
|
|
|
|
(7,159,181
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INCOME
(LOSS) FROM DISCONTINUED OPERATIONS |
|
|
|
(1,027,340
|
)
|
|
|
|
219,588
|
|
|
|
|
(2,144,282
|
)
|
|
|
|
(57,635
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
INCOME (LOSS) |
|
|
|
(356,791
|
)
|
|
|
|
603,861
|
|
|
|
|
(3,161,601
|
)
|
|
|
|
(7,216,816
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PREFERRED
DIVIDENDS |
|
|
|
(1,156,250
|
)
|
|
|
|
-
|
|
|
|
|
(2,312,500
|
)
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
INCOME (LOSS) ATTRIBUTABLE TO |
|
|
|
|
|
|
|
|
|
|
|
|
COMMON
UNIT HOLDERS |
|
|
|
(1,513,041
|
)
|
|
|
|
603,861
|
|
|
|
|
(5,474,101
|
)
|
|
|
|
(7,216,816
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted net income (loss) per unit |
|
|
|
($0.04
|
)
|
|
|
$0.02 |
|
|
|
|
($0.15
|
)
|
|
|
|
($0.19
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average
common units outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
diluted |
|
|
|
37,383,096
|
|
|
|
|
37,378,000
|
|
|
|
|
37,380,548
|
|
|
|
|
37,378,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUMMIT
HOTEL PROPERTIES |
FFO
|
(Unaudited)
|
|
|
|
|
|
|
|
Company
and |
|
|
|
Company |
|
|
Predecessor |
|
|
|
Three
months |
|
|
Three
months |
|
|
|
Six
months |
|
|
Six
months |
|
|
|
ended 06/30/12 |
|
|
ended 06/30/11 |
|
|
|
ended 06/30/12 |
|
|
ended 06/30/11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS)
|
|
|
|
(356,791
|
)
|
|
|
|
603,861
|
|
|
|
|
(3,161,601
|
)
|
|
|
|
(7,216,816
|
)
|
Preferred
Dividends |
|
|
|
(1,156,250
|
)
|
|
|
|
-
|
|
|
|
|
(2,312,500
|
)
|
|
|
|
-
|
|
Depreciation and
amortization |
|
|
|
8,177,333
|
|
|
|
|
6,819,608
|
|
|
|
|
16,657,621
|
|
|
|
|
13,678,039
|
|
Loss on
Impairment |
|
|
|
1,166,000
|
|
|
|
|
-
|
|
|
|
|
2,098,000
|
|
|
|
|
-
|
|
Gain
(loss) on disposal of assets |
|
|
|
186,589
|
|
|
|
|
36,031
|
|
|
|
|
186,589
|
|
|
|
|
36,031
|
|
Funds From
Operations |
|
|
|
8,016,881
|
|
|
|
|
7,459,500
|
|
|
|
|
13,468,109
|
|
|
|
|
6,497,254
|
|
Per Common
share/unit |
|
|
$
|
0.21
|
|
|
|
$
|
0.20
|
|
|
|
$
|
0.36
|
|
|
|
$
|
0.17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity based
Compensation |
|
|
|
388,695
|
|
|
|
|
175,656
|
|
|
|
|
514,569
|
|
|
|
|
302,484
|
|
Hotel property
acquisition costs |
|
|
|
747,295
|
|
|
|
|
-
|
|
|
|
|
1,327,233
|
|
|
|
|
-
|
|
Loan transaction
costs |
|
|
|
423,110
|
|
|
|
|
-
|
|
|
|
|
423,110
|
|
|
|
|
-
|
|
Gain (loss) on
derivatives |
|
|
|
1,012
|
|
|
|
|
-
|
|
|
|
|
1,012
|
|
|
|
|
-
|
|
Operating
expenses as result of IPO (1) |
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
710,000
|
|
Corporate G&A
related to IPO (1) |
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
476,000
|
|
Interest expense
on prepayment penalties (1) |
|
|
|
521,773
|
|
|
|
|
-
|
|
|
|
|
521,773
|
|
|
|
|
5,600,000
|
|
Income
tax expense as result of IPO (1) |
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
339,000
|
|
Adjusted Funds
From Operations |
|
|
|
10,098,766
|
|
|
|
|
7,635,156
|
|
|
|
|
16,255,806
|
|
|
|
|
13,924,738
|
|
Per Common
share/unit |
|
|
$
|
0.27
|
|
|
|
$
|
0.20
|
|
|
|
$
|
0.43
|
|
|
|
$
|
0.37
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
weighted average Common shares/units |
|
|
|
37,383,096
|
|
|
|
|
37,378,000
|
|
|
|
|
37,380,548
|
|
|
|
|
37,378,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Includes
non-recurring expenses related to the transfer and assumption of
indebtedness and other contractual obligations of our predecessor in
connection with the IPO and our formation transactions. |
|
|
|
|
SUMMIT
HOTEL PROPERTIES |
EBITDA
|
(Unaudited)
|
|
|
|
|
|
|
|
Company
and |
|
|
|
Company
|
|
|
Predecessor |
|
|
|
Three
months |
|
|
Three
months |
|
|
|
Six
months |
|
|
Six
months |
|
|
|
ended 06/30/12 |
|
|
ended 06/30/11 |
|
|
|
ended 06/30/12 |
|
|
ended 06/30/11 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME (LOSS)
|
|
|
(356,791
|
)
|
|
|
603,861
|
|
|
|
|
(3,161,601
|
)
|
|
|
(7,216,816
|
)
|
Depreciation and
amortization |
|
|
8,177,333
|
|
|
|
6,819,608
|
|
|
|
|
16,657,621
|
|
|
|
13,678,039
|
|
Interest Expense |
|
|
4,304,431
|
|
|
|
3,007,640
|
|
|
|
|
7,829,934
|
|
|
|
11,184,985
|
|
Interest Income |
|
|
(300
|
)
|
|
|
(10,280
|
)
|
|
|
|
(1,691
|
)
|
|
|
(21,366
|
)
|
Income
Tax |
|
|
(146,662
|
)
|
|
|
344,177
|
|
|
|
|
(429,653
|
)
|
|
|
855,513
|
|
EBITDA |
|
|
11,978,011
|
|
|
|
10,765,006
|
|
|
|
|
20,894,610
|
|
|
|
18,480,355
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity based
compensation |
|
|
388,695
|
|
|
|
175,656
|
|
|
|
|
514,569
|
|
|
|
302,484
|
|
Hotel property
acquisition costs |
|
|
747,295
|
|
|
|
-
|
|
|
|
|
1,327,233
|
|
|
|
-
|
|
Loan transaction
costs |
|
|
423,110
|
|
|
|
-
|
|
|
|
|
423,110
|
|
|
|
-
|
|
Unrealized gain
(loss) on derivatives |
|
|
1,012
|
|
|
|
-
|
|
|
|
|
1,012
|
|
|
|
-
|
|
Gain (loss) on
disposal of assets |
|
|
186,589
|
|
|
|
36,031
|
|
|
|
|
186,589
|
|
|
|
36,031
|
|
Loss on
impairment of assets |
|
|
1,166,000
|
|
|
|
-
|
|
|
|
|
2,098,000
|
|
|
|
-
|
|
Operating
expenses as result of IPO (1) |
|
|
-
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
710,000
|
|
Corporate
G&A related to IPO (1) |
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476,000
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ADJUSTED EBITDA
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14,890,712
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10,976,693
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25,445,123
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20,004,870
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(1)
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Includes
non-recurring expenses related to the transfer and assumption of
indebtedness and other contractual obligations of our predecessor in
connection with the IPO and our formation transactions. |
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SUMMIT
HOTEL PROPERTIES |
Pro
Forma Hotel Operational Data |
Schedule
of Property Level Results |
(Unaudited)
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Company
and |
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Company |
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Predecessor |
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Three
months |
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Three
months |
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Six
months |
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Six
months |
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ended 06/30/12 |
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ended 06/30/11 |
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ended 06/30/12 |
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ended 06/30/11 |
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REVENUE |
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Room revenue |
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$
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47,459,645
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$
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42,530,684
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$
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89,687,626
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$
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81,224,487
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Other
hotel operations revenue |
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1,145,594
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1,032,579
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2,246,190
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2,016,987
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Total
Revenue |
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48,605,239
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43,563,263
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91,933,816
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83,241,474
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EXPENSES |
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Hotel operating
expenses |
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Rooms |
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13,682,972
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13,209,776
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26,292,222
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24,693,251
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Other direct (1) |
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5,419,241
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5,701,637
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10,524,217
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11,289,772
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Other indirect
(1) |
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12,963,188
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10,389,206
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24,985,908
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21,620,987
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Other |
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238,681
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236,015
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465,040
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413,913
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Total
hotel operating expenses |
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32,304,083
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29,536,636
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62,267,387
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58,017,923
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Hotel
EBITDA |
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16,301,156
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14,026,627
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29,666,429
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25,223,551
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Note:
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(1)
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For purposes of
this press release, pro forma RevPAR, pro forma RevPAR growth, pro
forma Hotel EBITDA, pro forma Hotel EBITDA margin and pro forma Hotel
EBITDA margin growth includes operating results for the Company’s 72
hotels owned as of June 30, 2012, excluding 3 hotels sold including
Twin Falls, ID AmericInn & Suites, Twin Falls, ID Hampton Inn, and
Twin Falls, ID Holiday Inn Express & Suites and the Missoula, MT
AmericInn Hotel & Suites held for sale, as if such hotels had been
owned since January 1, 2011. As a result, these pro forma operating
measures include operating results for certain hotels prior to the
Company’s period of ownership. |
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(2)
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Includes expenses
related to our predecessor in connection with the IPO |
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SUMMIT
HOTEL PROPERTIES |
Pro
Forma and Same-Store Statistical Data for the Hotels |
(Unaudited)
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Company and
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Company |
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Predecessor
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Pro Forma |
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Pro Forma |
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Pro Forma |
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Pro Forma |
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Three months |
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Three months |
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Six months |
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Six months |
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ended
06/30/12 |
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ended
06/30/11 |
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ended
06/30/12 |
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ended
06/30/11 |
Total
Portfolio (72 hotels) |
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Rooms Occupied |
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496,847
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467,968
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939,344
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875,398
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Rooms Available |
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676,797
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677,404
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1,354,655
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1,343,804
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Occupancy |
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73.4%
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69.1%
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69.3%
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65.1%
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ADR |
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$95.52
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$90.88
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$95.48
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$92.79
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RevPAR |
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$70.12
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$62.78
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$66.21
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$60.44
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Occupancy
Growth |
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6.3%
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6.4%
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ADR Growth
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5.1%
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2.9%
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RevPAR Growth
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11.7%
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9.5%
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Note:
For purposes of this press release, pro forma RevPAR, pro
forma RevPAR growth, pro forma Hotel EBITDA, pro forma Hotel EBITDA
margin and pro forma Hotel EBITDA margin growth includes operating
results for the Company’s 72 hotels owned as of June 30, 2012,
excluding 3 hotels sold including Twin Falls, ID AmericInn &
Suites, Twin Falls, ID Hampton Inn, and Twin Falls, ID Holiday Inn
Express & Suites and the Missoula, MT AmericInn Hotel & Suites
held for sale, as if such hotels had been owned since January 1, 2011.
As a result, these pro forma operating measures include operating
results for certain hotels prior to the Company’s period of ownership.
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Company and
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Company |
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Predecessor
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Three months |
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Three months |
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Six months |
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Six months |
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ended
06/30/12 |
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ended
06/30/11 |
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ended
06/30/12 |
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ended
06/30/11 |
Same Store (61
hotels) |
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Rooms Occupied |
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412,668
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386,661
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775,979
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726,961
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Rooms Available |
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563,957
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564,564
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1,127,975
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1,122,924
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Occupancy |
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73.2%
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68.5%
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68.8%
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64.7
% |
ADR |
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$93.29
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$88.32
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$92.76
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$90.39
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RevPAR |
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$68.27
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$60.49
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$63.81
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$58.51
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Occupancy
Growth |
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6.8%
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6.3%
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ADR Growth
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5.6%
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2.6%
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RevPAR Growth
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12.9%
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9.1%
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Note:
This schedule includes operating data for same store
properties owned at all times by the Company during the three-month and
six-month periods ended June 30, 2012 and 2011, excluding three hotels
held for sale (Twin Falls, ID AmericInn & Suites, Twin Falls, ID
Hampton Inn, Twin Falls, ID Holiday Inn Express & Suites, and
Missoula, MT AmericInn Hotel & Suites).
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SUMMIT
HOTEL PROPERTIES |
Pro
Forma Statistical Data for the Hotels |
(Unaudited)
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Pro
Forma Operating Data |
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2011 |
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2012 |
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Q3 |
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Q4 |
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FYE |
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Q1 |
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Q2 |
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Room Revenue |
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44,088,931
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36,906,089
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162,256,261
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41,832,422
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47,459,645
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Other
Revenue |
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1,016,334
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867,399
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3,847,115
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1,057,765
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1,145,594
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Total Revenue |
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45,105,265
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37,773,489
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166,103,376
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42,890,187
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48,605,239
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Hotel
EBITDA |
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13,984,346
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8,654,540
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47,981,234
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13,095,879
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16,301,156
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Rooms Occupied |
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478,001
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408,452
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1,761,851
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442,497
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496,847
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Rooms Available |
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684,726
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684,603
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2,713,133
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677,858
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676,797
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Occupancy |
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69.8
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%
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59.7
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%
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64.9
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%
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65.3
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%
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73.4
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%
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ADR |
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$92.24
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$90.36
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$92.09
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$94.54
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$95.52
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RevPAR |
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$64.39
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$53.91
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$59.80
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$61.71
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$70.12
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Note:
This schedule includes operating data for same store
properties owned as of June 30, 2012 for the Company, excluding three
hotels sold including Twin Falls, ID AmericInn & Suites, Twin
Falls, ID Hampton Inn, Twin Falls, ID Holiday Inn Express & Suites
and Missoula, MT AmericInn Hotel & Suites held for sale.
Non-GAAP Financial Measures
FFO and Adjusted FFO (“AFFO”)
As defined by the National Association of Real Estate
Investment Trusts, or NAREIT, funds from operations, or FFO, represents
net income or loss (computed in accordance with GAAP), excluding gains
(or losses) from sales of property, plus depreciation and amortization.
We present FFO because we consider it an important supplemental measure
of our operational performance and believe it is frequently used by
securities analysts, investors and other interested parties in the
evaluation of REITs, many of which present FFO when reporting their
results. FFO is intended to exclude GAAP historical cost depreciation
and amortization, which assumes that the value of real estate assets
diminishes ratably over time. Historically, however, real estate values
have risen or fallen with market conditions. Because FFO excludes
depreciation and amortization unique to real estate, gains and losses
from property dispositions and impairment losses, it provides a
performance measure that, when compared year over year, reflects the
effect to operations from trends in occupancy, room rates, operating
costs, development activities and interest costs, providing perspective
not immediately apparent from net income. Our computation of FFO may
differ from the methodology for calculating FFO utilized by other
equity REITs and, accordingly, may not be comparable to such other
REITs because the amount of depreciation and amortization we add back
to net income or loss includes amortization of deferred financing costs
and amortization of franchise royalty fees. Further, FFO does not
represent amounts available for management’s discretionary use because
of needed capital replacement or expansion, debt service obligations,
or other commitments and uncertainties. FFO should not be considered as
an alternative to net income (loss) (computed in accordance with GAAP)
as an indicator of our liquidity, nor is it indicative of funds
available to fund our cash needs, including our ability to pay
dividends or make distributions. We further adjust FFO for certain
additional items that are not included in NAREIT’s definition of FFO,
such as hotel transaction and pursuit costs, equity based compensation,
loan transaction costs, prepayment penalties and certain other
nonrecurring expenses, which we refer to as AFFO. We believe that AFFO
provides investors with another financial measure that may facilitate
comparisons of operating performance between periods and between REITs.
We caution investors that amounts presented in accordance with our
definitions of FFO and AFFO may not be comparable to similar measures
disclosed by other companies, since not all companies calculate this
non-GAAP measure in the same manner. FFO and AFFO should not be
considered as an alternative measure of our net income (loss) or
operating performance. FFO and AFFO may include funds that may not be
available for our discretionary use due to functional requirements to
conserve funds for capital expenditures and property acquisitions and
other commitments and uncertainties. Although we believe that FFO and
AFFO can enhance your understanding of our financial condition and
results of operations, this non-GAAP financial measure is not
necessarily a better indicator of any trend as compared to a comparable
GAAP measure such as net income (loss). Above we have included a
quantitative reconciliation of FFO and AFFO to the most directly
comparable GAAP financial performance measure, which is net income
(loss). Dollar amounts in such reconciliation are in thousands.
EBITDA and Adjusted EBITDA, and Hotel EBITDA
EBITDA represents net income or loss, excluding: (i) interest,
(ii) income tax expense and (iii) depreciation and amortization. We
believe EBITDA is useful to an investor in evaluating our operating
performance because it provides investors with an indication of our
ability to incur and service debt, to satisfy general operating
expenses, to make capital expenditures and to fund other cash needs or
reinvest cash into our business. We also believe it helps investors
meaningfully evaluate and compare the results of our operations from
period to period by removing the effect of our asset base (primarily
depreciation and amortization) from our operating results. Our
management also uses EBITDA as one measure in determining the value of
acquisitions and dispositions. We further adjust EBITDA by adding back
hotel transaction and pursuit costs, equity based compensation,
impairment losses, and certain other nonrecurring expenses. We believe
that adjusted EBITDA provides investors with another financial measure
that may facilitate comparisons of operating performance between
periods and between REITs.
With respect to hotel EBITDA, the Company believes that
excluding the effect of corporate-level expenses, non-cash items, and
the portion of these items related to discontinued operations, provides
a more complete understanding of the operating results over which
individual hotels and operators have direct control. We believe the
property-level results provide investors with supplemental information
on the ongoing operational performance of our hotels and effectiveness
of the third-party management companies operating our business on a
property-level basis.
We caution investors that amounts presented in accordance with
our definitions of EBITDA, adjusted EBITDA and hotel EBITDA may not be
comparable to similar measures disclosed by other companies, since not
all companies calculate this non-GAAP measure in the same manner.
EBITDA, adjusted EBITDA and hotel EBITDA should not be considered as an
alternative measure of our net income (loss) or operating performance.
EBITDA, adjusted EBITDA and hotel EBITDA may include funds that may not
be available for our discretionary use due to functional requirements
to conserve funds for capital expenditures and property acquisitions
and other commitments and uncertainties. Although we believe that
EBITDA, adjusted EBITDA and hotel EBITDA can enhance your understanding
of our financial condition and results of operations, this non-GAAP
financial measure is not necessarily a better indicator of any trend as
compared to a comparable GAAP measure such as net income (loss). Above
we include a quantitative reconciliation of EBITDA, adjusted EBITDA and
hotel EBITDA to the most directly comparable GAAP financial performance
measure, which is net income (loss). Dollar amounts in such
reconciliation are in thousands.
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