Summit Hotel Properties Reports First Quarter 2016 Net Income of $44.3 million Compared to $6.4 million in the Year Ago Quarter
May 4, 2016 8:41am
Same-Store RevPAR increases 4.5 percent
Adjusted FFO per share climbs 21.2 percent to $0.32 per share
Common Dividend Increase of 12.8 percent
AUSTIN, Texas, May 3, 2016 -- Summit Hotel Properties, Inc. (NYSE: INN) (the "Company") today announced results for the first quarter 2016.
"We are extremely pleased with the results that our diverse portfolio of premium select-service hotels delivered in the first quarter," said Dan Hansen, the Company's President and Chief Executive Officer. "The strength of our portfolio is evidenced by same-store RevPAR growth of 4.5 percent, more than double that of the Smith Travel Research upscale RevPAR growth rate of 2.2 percent," commented Mr. Hansen.
First Quarter 2016 Highlights
The Company's results for the three months ended March 31, 2016 and 2015 included the following:
Three months ended March 31,
($ in thousands, except per unit and RevPAR data)
Net income attributable to common stockholders
Adjusted EBITDA (1)
Adjusted FFO (1)
FFO per diluted share and unit (1) (2)
Adjusted FFO per diluted share and unit (1) (2)
Pro Forma (3)
Hotel EBITDA margin
Hotel EBITDA margin growth
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.
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.
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
Summit Pro Forma (83)
Summit Same-Store (74)
STR Overall US
*Source: Smith Travel Research Monthly Hotel Review, Volume 16, Issue M3
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.
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.
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:
At April 21, 2016, the Company had the following:
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:
The dividends are payable on May 31, 2016, to holders of record as of May 16, 2016.
To view full financial results and tables click on PDF icon or visit:
Tags: summit hotel properties,
q1 2016 financial results
Summit Hotel Properties, Inc. is a publicly-traded real estate investment trust focused primarily on owning premium-branded, select-service hotels in the Upscale segment of the lodging industry. As of May 3, 2016, the Company's portfolio consisted of 83 hotels with a total of 11,099 guestrooms located in 23 states.
For additional information, please visit the Company's website, www.shpreit.com
Contact: Adam Wudel, Vice President - Finance
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