Summit Hotel Properties Reports Second Quarter 2016 Net Income of $17.7 million Compared to $12.1 million in the Year Ago Quarter
August 3, 2016 11:20am
Net Income increases to $17.7 million;
Pro Forma RevPAR increases 6.4 percent;
Adjusted FFO per share increases 22.5 percent to $0.42 per share
AUSTIN, Texas, Aug. 2, 2016-- Summit Hotel Properties, Inc. (NYSE: INN) (the "Company"), today announced results for the second quarter 2016.
"We are thrilled with the strong results our diversified portfolio of premium select-service hotels delivered in the second quarter. Our second quarter pro forma RevPAR growth of 6.4 percent, paired with an exceptional 156 basis points of margin expansion, once again exceeded the Smith Travel Research Upscale RevPAR growth rate of 3.1 percent marking outperformance in sixteen of the last seventeen quarters," said Dan Hansen, the Company's President and Chief Executive Officer. "In addition to our robust operating results, we continue to demonstrate our ability to strategically dispose of non-core hotels and recycle capital," commented Mr. Hansen.
Second Quarter 2016 Highlights
The Company's results for the three and six months ended June 30, 2016, and 2015 included the following:
Three months ended June 30,
Six months ended June 30,
($ 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. See "Non-GAAP Financial Measures" at the end of this release. Non-GAAP financial measures are unaudited.
Amounts are based on 87,355,000 weighted average diluted common shares and units and 87,008,000 weighted average diluted common shares and units for the three months ended June 30, 2016, and 2015, respectively, and 87,264,000 weighted average diluted common shares and units and 86,947,000 weighted average diluted common shares and units for the six months ended June 30, 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 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 80 hotels owned as of June 30, 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.
Year-To-Date 2016 Highlights
Summit vs. Industry Results (% change)
Three Months Ended June 30, 2016
Summit Pro Forma (80)
Summit Same-Store (71)
STR Overall US
Source: Smith Travel Research Quarterly Hotel Review, Volume 16, Issue Q2
On May 13, 2016, the Company completed the sale of the 128-guestroom Holiday Inn Express & Suites located in Irving (Las Colinas), Texas, for a total sales price of $10.5 million. The sales price represents a capitalization rate of 7.7 percent on the hotel's net operating income, including planned capital improvements, for the trailing twelve months ended March 31, 2016. The Company estimates that the hotel would have contributed approximately $0.2 million and $0.6 million of EBITDA from the sale date through the second quarter and full year 2016, respectively. This hotel was not part of the previously announced disposition of 26 hotels to affiliates of American Realty Capital Hospitality Trust, Inc. ("ARCH").
In addition to the sale mentioned above, the Company completed the sale of two hotels containing 255 guestrooms for a combined sales price of $14.5 million. The 136-guestroom Aloft in Jacksonville, Florida, and 119-guestroom Holiday Inn Express in Vernon Hills, Illinois were sold on June 1, 2016, and June 7, 2016, respectively. The combined sales price represents a capitalization rate of 6.1 percent on the hotels' net operating income, including planned capital improvements, for the trailing twelve months ended March 31, 2016. The Company estimates that the hotels would have contributed approximately $0.2 million and $0.7 million of EBITDA from the sale dates through the second quarter and full year 2016, respectively. Both of these hotels were sold to parties that are unrelated to ARCH, but were part of the previously announced disposition of 26 hotels to affiliates of ARCH.
The Company invested $8.5 million in capital improvements during the second 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.
6.45% Series D Preferred Stock Issuance
On June 28, 2016, the Company closed on a public offering of 3,000,000 shares of its 6.45% Series D Cumulative Redeemable Preferred Stock for gross proceeds of $75.0 million. The Company contributed the net proceeds to its operating partnership to reduce the outstanding balance of its senior unsecured revolving credit facility and for other general corporate purposes, which may include, among other things, redeeming the outstanding 9.25% Series A Preferred Stock on or after October 28, 2016, which is generally the date it becomes redeemable by the Company.
At June 30, 2016, the Company had the following:
During the quarter, the Company repaid two mortgage loans totaling $18.4 million with a weighted average interest of 5.86 percent with advances on its senior unsecured revolving credit facility. The three hotels that previously collateralized the repaid loans were added to the Company's unencumbered asset pool in the second quarter 2016.
At July 29, 2016, the Company had the following:
On July 29, 2016, the Company declared a quarterly cash dividend of:
The dividends are payable on August 31, 2016, to holders of record as of August 16, 2016.
On July 6, 2016, the Company completed the sale of the 122-guestroom Hyatt Place located in Irving (Las Colinas), Texas, for a total sales price of $14.0 million. The sales price represents a capitalization rate of 7.0 percent on the hotel's net operating income, including planned capital improvements, for the trailing twelve months ended June 30, 2016. The Company estimates that the hotel would have contributed approximately $0.3 million and $0.6 million of EBITDA from the sale date through the third quarter and full year 2016, respectively. This hotel was not part of the previously announced disposition of 26 hotels to affiliates of ARCH.
The Company is currently under contract to purchase a 157-guestroom hotel property for $61.4 million. The purchase is expected to close during August 2016.
On August 1, 2016, the Company repaid a mortgage loan that had an interest rate of 6.22 percent, a principal balance of $17.0 million and a maturity date of November 1, 2016. There was no prepayment penalty related to the early repayment of the mortgage loan and the Company expects to add the hotel to its unencumbered asset pool during the third quarter 2016. As a result of the loan repayment, the Company does not have any scheduled debt maturities for the next twelve months and only 2.4 percent of its total debt is scheduled to mature through 2018.
To view full financial release and corresponding tables please click the PDF icon or visit:
Tags: summit hotel properties
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 August 2, 2016, the Company's portfolio consisted of 79 hotels with a total of 10,594 guestrooms located in 23 states.
For additional information, please visit the Company's website, www.shpreit.com
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