Summit Hotel Properties Reports Q1 2017 Net Income of $28.9 Million Compared to $44.3 Million in Q1 2016
May 4, 2017 11:06am
Net Income of $28.9 million
Adjusted FFO climbs 6.7 percent to $30.2 million, $0.32 per share
Common Dividend increase of 4.6 percent
AUSTIN, Texas, May 3, 2017 - Summit Hotel Properties, Inc. (NYSE: INN) (the "Company"), today announced results for the first quarter 2017.
"We are pleased with the strong earnings performance of our company during the quarter which continues to be supported by a differentiated strategy of owning a diversified portfolio of premium-branded hotels with efficient operating models," said Dan Hansen, the Company's Chairman, President and Chief Executive Officer. "Our two acquisitions during the quarter demonstrate the success we have had in identifying and acquiring high-quality hotels at attractive cap rates to further enhance our portfolio. In addition, we had another opportunity to increase our common dividend this quarter. Our three dividend increases over the last five quarters represent a compound annual growth rate of 20.3 percent, which is a result of the continued strong cash flow being generated by our portfolio," commented Mr. Hansen.
First Quarter 2017 Highlights
The Company's results for the three months ended March 31, 2017 and 2016 are as follows:
For the Three Months Ended
($ in thousands, except per unit and
Net income attributable to common stockholders
Net income per diluted share and unit
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
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.
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.
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.
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.
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.
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.
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:
Tags: summit hotel properties,
q1 2017 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, 2017, the Company's portfolio consisted of 75 hotels with a total of 10,444 guestrooms located in 22 states.
For additional information, please visit the Company's website, www.shpreit.com.
Contact: Adam Wudel, Vice President - Finance
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