AUSTIN, Texas, Feb. 25, 2020 /PRNewswire/ -- Summit Hotel
Properties, Inc. (NYSE: INN) (the "Company"), today announced
results for the quarter and year ended December 31, 2019.
"We are pleased with our fourth quarter and full year results as
RevPAR growth in our diversified portfolio of well-located hotels
exceeded both the Smith Travel Research Upscale and Total U.S.
growth rates by 150 basis points and 10 basis points, respectively,
for the full year 2019. We once again gained significant market
share during the year as our RevPAR index increased by 170 basis
points driven, in part, by the success of several creative revenue
management strategies and a continued commitment to investing
capital across our portfolio," said Dan
Hansen, the Company's Chairman, President and Chief
Executive Officer. "We had an extremely active year executing on
several opportunistic transactions that we believe will create
long-term shareholder value, including selling ten hotels at
attractive valuations. That capital was recycled into the
acquisition of five high-quality hotels through our newly
established joint venture with GIC, which will enhance our overall
return on investment and provides us a unique vehicle for
opportunistic external growth," commented Mr. Hansen.
Full Year 2019 Summary
- Net Income: Net income attributable to
common stockholders decreased 4.5 percent to $67.8 million, or $0.65 per diluted share, compared with
$71.0 million, or $0.68 per diluted share, in the same period of
2018.
- Pro Forma RevPAR: Pro forma revenue per available room
("RevPAR") increased 1.0 percent to $127.82 from the same period in 2018. Pro forma
average daily rate ("ADR") increased 0.5 percent to $161.96 compared to the same period in 2018 and
pro forma occupancy increased 0.5 percent to 78.9 percent.
- Same-Store RevPAR: Same-store RevPAR increased 1.1
percent to $124.21 from the same
period in 2018. Same-store ADR increased 0.5 percent to
$158.57 compared to the same period
in 2018 and occupancy increased 0.6 percent to 78.3 percent.
- Pro Forma Hotel EBITDA: Pro forma hotel EBITDA was
$215.4 million, a decrease of 0.3
percent from the same period in 2018. Pro forma hotel EBITDA
margin contracted by 78 basis points to 37.6 percent from 38.4
percent in the same period of 2018.
- Adjusted EBITDAre: Adjusted EBITDAre
decreased 5.7 percent to $185.3
million from $196.5 million in
the same period of 2018.
- Adjusted FFO: AFFO decreased 7.5 percent to
$130.4 million, or $1.25 per diluted share, from $141.0 million, or $1.35 per diluted share, in the same period of
2018.
- Acquisitions: The Company acquired five hotels
containing 798 guestrooms and two vacant parcels of land through
its joint venture with GIC for an aggregate purchase price of
$276.9 million.
- Dispositions: The Company sold 10 hotels
containing 1,170 guestrooms for an aggregate gross sales price of
$168.4 million. The 10
properties were sold at an average trailing twelve month
capitalization rate of 6.7 percent including estimated foregone
capital expenditures and resulted in the realization of an
aggregate net gain on sale of $45.6
million.
The Company's results for the three and twelve months ended
December 31, 2019 and 2018 are as
follows:
|
For the Three
Months Ended December 31,
|
|
For the Years
Ended December 31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
(unaudited)
|
|
|
Net income
attributable to common stockholders
|
$
5,532
|
|
$
2,047
|
|
$
67,772
|
|
$
70,973
|
Net income per
diluted share
|
$
0.05
|
|
$
0.02
|
|
$
0.65
|
|
$
0.68
|
Total
revenues
|
$
133,781
|
|
$
132,509
|
|
$
549,348
|
|
$
567,270
|
EBITDAre
(1)
|
$
42,129
|
|
$
43,839
|
|
$
181,148
|
|
$
192,533
|
Adjusted
EBITDAre (1)
|
$
40,917
|
|
$
45,015
|
|
$
185,263
|
|
$
196,480
|
FFO
(1)
|
$
25,936
|
|
$
29,522
|
|
$
122,491
|
|
$
131,324
|
Adjusted FFO
(1)
|
$
26,974
|
|
$
31,289
|
|
$
130,356
|
|
$
140,989
|
FFO per diluted share
and unit (1,2)
|
$
0.25
|
|
$
0.28
|
|
$
1.17
|
|
$
1.26
|
Adjusted FFO per
diluted share and unit (1,2)
|
$
0.26
|
|
$
0.30
|
|
$
1.25
|
|
$
1.35
|
|
|
|
|
|
|
|
|
Pro Forma
(3)
|
|
|
|
|
|
|
|
RevPAR
|
$
117.85
|
|
$
118.03
|
|
$
127.82
|
|
$
126.52
|
RevPAR
Growth
|
-0.2%
|
|
|
|
1.0%
|
|
|
Hotel
EBITDA
|
$
46,369
|
|
$
49,283
|
|
$
215,372
|
|
$
215,931
|
Hotel EBITDA
margin
|
34.7%
|
|
36.9%
|
|
37.6%
|
|
38.4%
|
Hotel EBITDA margin
growth
|
-218 bps
|
|
|
|
-78 bps
|
|
|
|
|
(1)
|
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"),
EBITDAre, adjusted EBITDAre, funds from operations ("FFO"), FFO per
diluted share and unit, adjusted FFO ("AFFO"), and AFFO per diluted
share and unit, as well as a reconciliation of operating income to
hotel EBITDA. See "Non-GAAP Financial Measures" at the end of
this release.
|
|
|
(2)
|
Amounts are based
on 104,385,000 weighted average diluted common shares and units and
104,143,000 weighted average diluted common shares and units for
the three months ended December 31, 2019, and 2018, respectively,
and 104,363,000 weighted average diluted common shares and units
and 104,315,000 weighted average diluted common shares and units
for the twelve months ended December 31, 2019, and 2018,
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.
|
|
|
(3)
|
Unless stated
otherwise in this release, all pro forma information includes
operating and financial results for 72 hotels owned as of December
31, 2019, as if each hotel had been owned by the Company since
January 1, 2018. As a result, all pro forma information
includes operating and financial results for hotels acquired since
January 1, 2018, which includes periods prior to the Company's
ownership. Pro forma and non-GAAP financial measures are
unaudited.
|
Fourth Quarter 2019 Summary
- Net Income: Net income attributable to
common stockholders increased to $5.5
million, or $0.05 per diluted
share, compared with $2.0 million, or
$0.02 per diluted share, in the same
period of 2018.
- Pro Forma RevPAR: Pro forma RevPAR decreased 0.2 percent
to $117.85 from the same period in
2018. Pro forma ADR declined 1.2 percent to $155.30 from the same period in 2018 and pro
forma occupancy increased 1.1 percent to 75.9 percent.
- Same-Store RevPAR: Same-store RevPAR increased 0.3
percent to $115.21 from the same
period in 2018. Same-store ADR decreased 1.3 percent to
$152.53 compared to the same period
in 2018 and same-store occupancy increased 1.6 percent to 75.5
percent.
- Pro Forma Hotel EBITDA: Pro forma hotel EBITDA was
$46.4 million, a decrease of 5.9
percent from the same period in 2018. Pro forma hotel EBITDA
margin contracted by 218 basis points to 34.7 percent from 36.9
percent in the same period of 2018.
- Adjusted EBITDAre: Adjusted EBITDAre
decreased 9.1 percent to $40.9
million from $45.0 million in
the same period of 2018.
- Adjusted FFO: AFFO decreased 13.8 percent to
$27.0 million, or $0.26 per diluted share, from $31.3 million, or $0.30 per diluted share, in the same period of
2018.
- Acquisitions: The Company acquired four hotels
located on the west coast through its joint venture with GIC for an
aggregate purchase price of $249
million.
- Dispositions: The Company completed the
disposition of two hotels located in Birmingham, AL for $21.8 million. The two properties were sold
at an average trailing twelve month capitalization rate of 5.3
percent including estimated foregone capital improvements and
resulted in the realization of an aggregate net gain on sale of
$4.9 million
2019 Transaction Activity
Acquisitions
During 2019, the Company acquired five hotels containing 798
guestrooms and two adjacent land parcels for an aggregate purchase
price of $276.9 million, all through
its joint venture with GIC, Singapore's sovereign wealth fund.
- 88-guestroom Hampton Inn & Suites Silverthorne
- 258-guestroom Residence Inn by Marriott Portland
Downtown/RiverPlace
- 169-guestroom Hilton Garden Inn San Francisco Airport
North
- 161-guestroom Hilton Garden Inn San Jose/Milpitas
- 122-guestroom Residence Inn Portland Hillsboro
Acquired in August 2019, the
88-guestroom Hampton Inn & Suites located in Silverthorne, Colorado is ideally situated
near popular ski destinations including Keystone, Breckenridge, Copper
Mountain, and Arapahoe
Basin, the hotel benefits from strong, year-round leisure demand
and a local corporate base. The Company also acquired four
hotels located on the west coast for $249
million in October 2019. The portfolio of four hotels
is located in three high-growth markets and includes the
258-guestroom Residence Inn by Marriott Portland
Downtown/RiverPlace, the 169-guestroom Hilton Garden Inn San
Francisco Airport North, the 161-guestroom Hilton Garden Inn San
Jose/Milpitas, and the 122-guestroom Residence Inn by Marriott Portland Hillsboro. Over the next
three years, the Company expects to invest approximately
$24 million of capital, $12 million on a pro rata basis, into the hotels
on behalf of the joint venture.
The hotels acquired in 2019 had an average RevPAR of
$159 in 2019, which represents a 25%
premium over the Company's pro forma portfolio average RevPAR, and
hotel EBITDA margin of 47.5 percent, which was 990 basis points
higher than the pro forma portfolio average for the same
period.
Dispositions
During 2019, the Company also sold 10 hotels containing 1,170
guestrooms in various markets for an aggregate gross sales price of
$168.4 million. The aggregate
gross sales price, plus estimated foregone capital investment,
represented an average trailing twelve-month capitalization rate of
6.7 percent at the time of sale. The transactions resulted in
an aggregate net gain on sale of $45.6
million.
- 113-guestroom SpringHill Suites by Marriott Minneapolis-St.
Paul Airport/Mall of America
- 146-guestroom Hampton Inn & Suites Minneapolis-St. Paul
Airport/Mall of America
- 189-guestroom Residence Inn by Marriott Salt Lake City
Downtown
- 127-guestroom Hyatt Place Dallas/Arlington
- 101-guestroom Hampton Inn Santa Barbara/Goleta
- 139-guestroom Hampton Inn Boston/Norwood
- 95-guestroom Hilton Garden Inn Birmingham/Lakeshore Drive
- 130-guestroom Hilton Garden Inn Birmingham SE/Liberty Park
- 66-guestroom Holiday Inn Express Charleston, WV
- 64-guestroom Country Inn & Suites by Radisson Charleston, WV
The hotels sold in 2019 had an average trailing twelve month
RevPAR of $102 at their respective
sale dates, which is 20% lower than the Company's pro forma
portfolio average RevPAR, and hotel EBITDA margin of 32.3 percent,
which was 530 basis points lower than the pro forma portfolio
average for the same period.
Capital Improvements
The Company invested $12.6 million
and $59.3 million in capital
improvements during the three and twelve months ended December 31, 2019, respectively, and anticipates
investing a total of $50 million to
$70 million in capital improvements
on a consolidated basis, and $45
million to $65 million on a
pro rata basis, across its portfolio during 2020.
Capital Markets & Balance Sheet
At December 31, 2019, inclusive of
its pro rata share of the Joint Venture credit facility, the
Company had the following:
- Pro rata outstanding debt of $954.1
million with a weighted average interest rate of 3.95
percent.
- After giving effect to interest rate derivative agreements,
$549.2 million, or 58 percent, of our
pro rata outstanding debt had fixed interest rates, and
$404.9 million, or 42 percent had
variable interest rates.
- Undrawn availability on its senior unsecured revolving credit
facility of $315.0 million.
- Pro rata net debt to trailing twelve-month pro forma adjusted
EBITDAre of 4.8x.
At February 18, 2020, inclusive of
its pro rata share of the Joint Venture credit facility, the
Company had the following:
- Pro rata outstanding debt of $943.5
million with a weighted average interest rate of 3.88
percent.
- After giving effect to interest rate derivative agreements,
$548.7 million, or 58 percent, of our
pro rata outstanding debt had fixed interest rates, and
$394.8 million, or 42 percent had
variable interest rates.
- Undrawn availability on its senior unsecured revolving credit
facility of $325.0 million.
- Pro rata net debt to trailing twelve-month pro forma adjusted
EBITDAre of 4.8x.
Also on February 18, 2020, the
Company repriced its $225 million
seven-year term loan, lowering the interest rate to 150 basis
points plus LIBOR based on the Company's current pricing level,
which represents a reduction of 40 basis points compared to the
prior rate of 190 basis points plus LIBOR. All other material
provisions of the loan remain unchanged, including the maturity
date of the loan which remains February
14, 2025. The Company expects to realize approximately
$0.9 million in annual interest
expense savings as a result of the transaction.
Dividends
On January 31, 2020, the Company
declared a quarterly cash dividend of $0.18 per share on its common stock and per
common unit of limited partnership interest in Summit Hotel OP,
LP. The annualized dividend of $0.72 per share and per unit represents an annual
dividend yield of 6.7 percent based on the February 24, 2020, closing stock price.
In addition, the Company declared a quarterly cash dividend
of:
- $0.403125 per share on its 6.45%
Series D Cumulative Redeemable Preferred Stock.
- $0.390625 per share on its 6.25%
Series E Cumulative Redeemable Preferred Stock.
The common and preferred dividends are payable on February 28, 2020 to holders of record as of
February 14, 2020.
2020 Outlook
The Company is providing its outlook for the full year 2020
based on 72 hotels, 67 of which were wholly owned, as of
February 25, 2020. There are no
future acquisitions, dispositions, or additional capital markets
activities assumed in the Company's outlook for full year 2019
beyond those previously mentioned.
FULL YEAR
2020
|
(Dollars in
thousands, except RevPAR and per unit data)
|
|
Low
|
|
High
|
Pro forma RevPAR (72)
1
|
$125.25
|
|
$129.00
|
Pro forma RevPAR
growth (72) 1
|
(2.00%)
|
|
1.00%
|
RevPAR (same-store
65) 2
|
$123.00
|
|
$126.75
|
RevPAR growth
(same-store 65) 2
|
(2.00%)
|
|
1.00%
|
Adjusted
EBITDAre
|
$177,600
|
|
$190,400
|
Adjusted
FFO
|
$120,100
|
|
$133,200
|
Adjusted FFO per
diluted unit 3
|
$1.15
|
|
$1.27
|
Capital
improvements
|
$50,000
|
|
$70,000
|
|
|
(1)
|
As of February 25,
2020, the Company owns a majority interest in 72 hotels, 67 of
which are wholly owned. Pro forma outlook information for the
full year 2020 includes operating estimates for 72 hotels as if
each hotel had been owned since January 1, 2019.
|
|
|
(2)
|
As of February 25,
2020, the Company owned 67 same-store hotels. The same-store
outlook information includes operating estimates for 67 hotels
owned by the Company since January 1, 2019.
|
|
|
(3)
|
Assumes weighted
average diluted common shares and units outstanding of 104,600,000
for the full year 2020.
|
Fourth Quarter and Full Year 2019 Earnings Conference
Call
The Company will conduct its quarterly conference call on
Wednesday, February 26, 2020, at
9:00 AM ET. To participate in
the conference call, please dial 877-930-8101. The conference
identification code for the call is 5687929. Additionally, a
live webcast of the quarterly conference call will be available
through the Company's website, www.shpreit.com. A replay of
the quarterly conference call webcast will be available until 12:00
PM ET Wednesday, March 4, 2020, by
dialing 855-859-2056, conference identification code 5687929.
A replay will also be available in the Investor Relations section
of the Company's website until April 30,
2020.
About Summit Hotel Properties
Summit Hotel Properties, Inc. is a publicly-traded real estate
investment trust focused on owning premium-branded hotels with
efficient operating models primarily in the Upscale segment of the
lodging industry. As of February 25,
2020, the Company's portfolio consisted of 72 hotels, 67 of
which were wholly owned, with a total of 11,288 guestrooms located
in 23 states.
For additional information, please visit the Company's website,
www.shpreit.com, and follow the Company on Twitter at
@SummitHotel_INN.
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 Litigation 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," "likely," "would" 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: the Company's ability to realize growth from
the deployment of renovation capital; 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, dispositions, financings, redemptions or
services; forecasts of the Company's future financial performance
and potential increases in average daily rate, occupancy, RevPAR,
room supply and demand, EBITDAre, Adjusted EBITDAre, FFO and AFFO;
the Company's outlook with respect to pro forma RevPAR, pro forma
RevPAR growth, RevPAR, RevPAR growth, AFFO, AFFO per
diluted share and unit and renovation capital deployed; 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"). 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, 2019,
filed with the SEC, and its quarterly and other periodic filings
with the SEC. 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, Inc.
|
Condensed
Consolidated Balance Sheets
|
(Dollars in
thousands)
|
|
|
December 31,
2019
|
|
December 31,
2018
|
|
|
|
|
ASSETS
|
|
|
|
Investment in hotel
properties, net
|
$
2,184,232
|
|
$
2,065,554
|
Undeveloped
land
|
1,500
|
|
2,267
|
Assets held for sale,
net
|
425
|
|
7,633
|
Investment in real
estate loans, net
|
30,936
|
|
30,700
|
Right-of-use
assets
|
29,884
|
|
-
|
Cash and cash
equivalents
|
42,238
|
|
44,088
|
Restricted
cash
|
27,595
|
|
28,468
|
Trade receivables,
net
|
13,281
|
|
13,978
|
Prepaid expenses and
other
|
8,844
|
|
10,111
|
Deferred charges,
net
|
4,709
|
|
4,691
|
Other
assets
|
12,039
|
|
14,807
|
Total
assets
|
$
2,355,683
|
|
$
2,222,297
|
LIABILITIES AND
EQUITY
|
|
|
|
Liabilities:
|
|
|
|
Debt, net of debt
issuance costs
|
$
1,016,163
|
|
$
958,712
|
Lease
liabilities
|
19,604
|
|
-
|
Accounts
payable
|
4,767
|
|
5,391
|
Accrued expenses and
other
|
71,759
|
|
66,050
|
Total
liabilities
|
1,112,293
|
|
1,030,153
|
|
|
|
|
Total stockholders'
equity
|
1,173,778
|
|
1,189,849
|
Non-controlling
interests in operating partnership
|
1,809
|
|
2,295
|
Non-controlling
interest in joint venture
|
67,803
|
|
-
|
Total
equity
|
1,243,390
|
|
1,192,144
|
Total liabilities and
equity
|
$
2,355,683
|
|
$
2,222,297
|
Summit Hotel
Properties, Inc.
|
Condensed
Consolidated Statements of Operations
|
(Dollars in
thousands, except per share amounts)
|
|
|
For the Three
Months Ended
December 31,
|
|
For the Years
Ended
December 31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Revenues:
|
|
|
|
|
|
|
|
Room
|
$
122,474
|
|
$
121,788
|
|
$
505,342
|
|
$
523,439
|
Food and
beverage
|
5,803
|
|
5,979
|
|
23,785
|
|
24,225
|
Other
|
5,504
|
|
4,742
|
|
20,221
|
|
19,606
|
Total
revenues
|
133,781
|
|
132,509
|
|
549,348
|
|
567,270
|
Expenses:
|
|
|
|
|
|
|
|
Room
|
28,093
|
|
28,752
|
|
112,244
|
|
119,724
|
Food and
beverage
|
4,771
|
|
4,602
|
|
18,552
|
|
19,191
|
Other hotel operating
expenses
|
40,049
|
|
37,499
|
|
158,181
|
|
159,173
|
Property taxes,
insurance and other
|
11,421
|
|
11,089
|
|
44,220
|
|
43,339
|
Management
fees
|
3,295
|
|
3,593
|
|
16,575
|
|
18,521
|
Depreciation and
amortization
|
26,928
|
|
25,872
|
|
99,445
|
|
101,013
|
Corporate general and
administrative
|
6,180
|
|
4,430
|
|
23,622
|
|
21,509
|
Loss on impairment of
assets
|
836
|
|
1,075
|
|
2,521
|
|
1,075
|
Total
expenses
|
121,573
|
|
116,912
|
|
475,360
|
|
483,545
|
Gain (loss) on
disposal of assets, net
|
5,763
|
|
(640)
|
|
45,418
|
|
41,474
|
Operating
income
|
17,971
|
|
14,957
|
|
119,406
|
|
125,199
|
Other income
(expense):
|
|
|
|
|
|
|
|
Interest
expense
|
(10,962)
|
|
(11,365)
|
|
(41,030)
|
|
(41,944)
|
Other income,
net
|
2,217
|
|
1,363
|
|
5,472
|
|
6,949
|
Total other
expense
|
(8,745)
|
|
(10,002)
|
|
(35,558)
|
|
(34,995)
|
Income from
continuing operations before income taxes
|
9,226
|
|
4,955
|
|
83,848
|
|
90,204
|
Income tax (expense)
benefit
|
(473)
|
|
802
|
|
(1,500)
|
|
922
|
Net income
|
8,753
|
|
5,757
|
|
82,348
|
|
91,126
|
Less: (Income) loss
attributable to non-controlling interests:
|
|
|
|
|
|
|
|
Operating
Partnership
|
(7)
|
|
(1)
|
|
(157)
|
|
(205)
|
Joint
venture
|
496
|
|
-
|
|
419
|
|
-
|
Net income
attributable to Summit Hotel Properties, Inc.
|
9,242
|
|
5,756
|
|
82,610
|
|
90,921
|
Preferred
dividends
|
(3,710)
|
|
(3,709)
|
|
(14,838)
|
|
(16,671)
|
Premium on redemption
of preferred stock
|
-
|
|
-
|
|
-
|
|
(3,277)
|
Net income
attributable to common stockholders
|
$
5,532
|
|
$
2,047
|
|
$
67,772
|
|
$
70,973
|
Earnings per
share:
|
|
|
|
|
|
|
|
Basic and
diluted
|
$
0.05
|
|
$
0.02
|
|
$
0.65
|
|
$
0.68
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
103,964
|
|
103,682
|
|
103,887
|
|
103,623
|
Diluted
|
104,008
|
|
103,759
|
|
103,939
|
|
103,842
|
Dividends per
share
|
$
0.18
|
|
$
0.18
|
|
$
0.72
|
|
$
0.72
|
|
|
|
|
|
|
|
|
Summit Hotel
Properties, Inc.
|
Reconciliation of Net
Income to Non-GAAP Measures – Funds From Operations
|
(Unaudited)
|
(Dollars in
thousands, except per share and unit amounts)
|
|
|
For the Three
Months Ended
December 31,
|
|
For the Years
Ended
December 31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
Net income
|
$
8,753
|
|
$
5,757
|
|
$
82,348
|
|
$
91,126
|
Preferred
dividends
|
(3,710)
|
|
(3,709)
|
|
(14,838)
|
|
(16,671)
|
Premium on redemption
of preferred stock
|
-
|
|
-
|
|
-
|
|
(3,277)
|
Loss from
non-controlling interest in consolidated joint venture
|
496
|
|
-
|
|
419
|
|
-
|
Net income
applicable to common shares and common units
|
$
5,539
|
|
$
2,048
|
|
$
67,929
|
|
$
71,178
|
Real estate-related
depreciation (1)
|
26,813
|
|
25,759
|
|
99,013
|
|
100,545
|
Loss on impairment of
assets
|
836
|
|
1,075
|
|
2,521
|
|
1,075
|
(Gain) loss on
disposal of assets, net
|
(5,763)
|
|
640
|
|
(45,418)
|
|
(41,474)
|
Adjustments related
to non-controlling interest in consolidated joint
venture
|
(1,489)
|
|
-
|
|
(1,554)
|
|
-
|
FFO applicable to
common shares and common units
|
$
25,936
|
|
$
29,522
|
|
$
122,491
|
|
$
131,324
|
Amortization of
lease-related intangible assets, net
|
22
|
|
95
|
|
127
|
|
712
|
Amortization of
deferred financing costs
|
444
|
|
478
|
|
1,485
|
|
1,973
|
Amortization of
franchise fees (1)
|
115
|
|
113
|
|
432
|
|
468
|
Equity-based
compensation
|
1,453
|
|
1,298
|
|
6,219
|
|
6,665
|
Debt transaction
costs
|
45
|
|
136
|
|
1,892
|
|
401
|
Premium on redemption
of preferred stock
|
-
|
|
-
|
|
-
|
|
3,277
|
Non-cash interest
income
|
(764)
|
|
(517)
|
|
(2,477)
|
|
(2,045)
|
Non-cash lease
expense, net
|
111
|
|
-
|
|
494
|
|
-
|
Casualty (recoveries)
losses, net
|
(321)
|
|
164
|
|
(239)
|
|
(1,786)
|
Adjustments related
to non-controlling interest in consolidated joint
venture
|
(67)
|
|
-
|
|
(68)
|
|
-
|
AFFO applicable to
common shares and common units
|
$
26,974
|
|
$
31,289
|
|
$
130,356
|
|
$
140,989
|
Weighted average
diluted common shares / common units (2)
|
104,385
|
|
104,143
|
|
104,363
|
|
104,315
|
FFO per common share /
common unit
|
$
0.25
|
|
$
0.28
|
|
$
1.17
|
|
$
1.26
|
AFFO per common share
/ common unit
|
$
0.26
|
|
$
0.30
|
|
$
1.25
|
|
$
1.35
|
|
|
(1)
|
The total of these
line items represents depreciation and amortization as reported on
the Company's Condensed Consolidated Statements of Operations for
the periods presented.
|
|
|
(2)
|
Non-cash interest
income relates to the amortization of the discount on certain notes
receivable. The discount on these notes receivable was
recorded at inception of the related loans based on the estimated
value of the embedded purchase options in the notes
receivable.
|
|
|
(3)
|
The Company
includes the outstanding OP units issued by 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.
|
Summit Hotel
Properties, Inc.
|
Reconciliation of
Net Income to Non-GAAP Measures – EBITDAre
|
(Unaudited)
|
(Dollars in
thousands)
|
|
|
For the Three
Months Ended
December 31,
|
|
For the Years
Ended
December 31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
Net income
|
$
8,753
|
|
$
5,757
|
|
$
82,348
|
|
$
91,126
|
Depreciation and
amortization
|
26,928
|
|
25,872
|
|
99,445
|
|
101,013
|
Interest
expense
|
10,962
|
|
11,365
|
|
41,030
|
|
41,944
|
Interest
income
|
(60)
|
|
(68)
|
|
(278)
|
|
(229)
|
Income tax expense
(benefit)
|
473
|
|
(802)
|
|
1,500
|
|
(922)
|
EBITDA
|
$
47,056
|
|
$
42,124
|
|
$
224,045
|
|
$
232,932
|
Loss on impairment of
assets
|
836
|
|
1,075
|
|
2,521
|
|
1,075
|
(Gain) loss on
disposal of assets, net
|
(5,763)
|
|
640
|
|
(45,418)
|
|
(41,474)
|
EBITDAre
|
$
42,129
|
|
$
43,839
|
|
$
181,148
|
|
$
192,533
|
Amortization of
lease-related intangible assets, net
|
22
|
|
95
|
|
127
|
|
712
|
Equity-based
compensation
|
1,453
|
|
1,298
|
|
6,219
|
|
6,665
|
Debt transaction
costs
|
45
|
|
136
|
|
1,892
|
|
401
|
Non-cash interest
income (1)
|
(764)
|
|
(517)
|
|
(2,477)
|
|
(2,045)
|
Non-cash lease
expense, net
|
111
|
|
-
|
|
494
|
|
-
|
Casualty (recoveries)
losses, net
|
(321)
|
|
164
|
|
(239)
|
|
(1,786)
|
Loss from
non-controlling interest in consolidated joint venture
|
496
|
|
-
|
|
419
|
|
-
|
Adjustments related
to non-controlling interest in consolidated joint
venture
|
(2,254)
|
|
-
|
|
(2,320)
|
|
-
|
Adjusted
EBITDAre
|
$
40,917
|
|
$
45,015
|
|
$
185,263
|
|
$
196,480
|
|
|
|
|
|
|
|
|
(1)
|
Non-cash interest
income relates to the amortization of the discount on certain notes
receivable. The discount on these notes receivable was
recorded at inception of the related loans based on the estimated
value of the embedded purchase options in the notes
receivable.
|
Summit Hotel
Properties, Inc.
|
Pro Forma Hotel
Operating Data
|
(Unaudited)
|
(Dollars in
thousands)
|
|
|
For the Three
Months Ended
December 31,
|
|
For the Years
Ended
December 31,
|
Pro Forma
Operating Data (1) (2)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Pro forma room
revenue
|
$
122,384
|
|
$
122,563
|
|
$
526,622
|
|
$
517,340
|
Pro forma other hotel
operations revenue
|
11,318
|
|
11,120
|
|
45,640
|
|
44,757
|
Pro forma total
revenues
|
133,702
|
|
133,683
|
|
572,262
|
|
562,097
|
Pro forma total hotel
operating expenses
|
87,333
|
|
84,400
|
|
356,890
|
|
346,166
|
Pro forma hotel
EBITDA
|
$
46,369
|
|
$
49,283
|
|
$
215,372
|
|
$
215,931
|
Pro forma hotel
EBITDA Margin
|
34.7%
|
|
36.9%
|
|
37.6%
|
|
38.4%
|
|
Reconciliations of
Non-GAAP financial measures to comparable GAAP financial
measures
|
|
Revenue:
|
|
|
|
|
|
|
|
Total
revenues
|
$
133,781
|
|
$
132,509
|
|
$
549,348
|
|
$
567,270
|
Total revenues -
acquisitions (1)
|
775
|
|
11,414
|
|
38,778
|
|
58,178
|
Total revenues -
dispositions (2)
|
(854)
|
|
(10,240)
|
|
(15,864)
|
|
(63,351)
|
Pro forma total
revenues
|
133,702
|
|
133,683
|
|
572,262
|
|
562,097
|
|
|
|
|
|
|
|
|
Hotel Operating
Expenses:
|
|
|
|
|
|
|
|
Total hotel operating
expenses
|
87,629
|
|
85,535
|
|
349,772
|
|
359,948
|
Hotel operating
expenses - acquisitions (1)
|
520
|
|
6,152
|
|
19,474
|
|
28,667
|
Hotel operating
expenses - dispositions (2)
|
(816)
|
|
(7,287)
|
|
(12,356)
|
|
(42,449)
|
Pro forma hotel
operating expenses
|
87,333
|
|
84,400
|
|
356,890
|
|
346,166
|
|
|
|
|
|
|
|
|
Hotel
EBITDA:
|
|
|
|
|
|
|
|
Operating
income
|
17,971
|
|
14,957
|
|
119,406
|
|
125,199
|
(Gain) loss on
disposal of assets, net
|
(5,763)
|
|
640
|
|
(45,418)
|
|
(41,474)
|
Loss on impairment of
assets
|
836
|
|
1,075
|
|
2,521
|
|
1,075
|
Corporate general and
administrative
|
6,180
|
|
4,430
|
|
23,622
|
|
21,509
|
Depreciation and
amortization
|
26,928
|
|
25,872
|
|
99,445
|
|
101,013
|
Hotel
EBITDA
|
46,152
|
|
46,974
|
|
199,576
|
|
207,322
|
Hotel EBITDA -
acquisitions (1)
|
255
|
|
5,262
|
|
19,304
|
|
29,511
|
Hotel EBITDA -
dispositions (2)
|
(38)
|
|
(2,953)
|
|
(3,508)
|
|
(20,902)
|
Pro forma hotel
EBITDA
|
$
46,369
|
|
$
49,283
|
|
$
215,372
|
|
$
215,931
|
|
|
(1)
|
Unaudited pro
forma information includes operating results for 72 hotels owned as
of December 31, 2019, as if all such hotels had been owned by the
Company since January 1, 2018. For hotels acquired by the
Company after January 1, 2018 (the "Acquired Hotels"), the Company
has included in the pro forma information the financial results of
each of the Acquired Hotels for the period from January 1, 2018, to
the date the Acquired Hotels were purchased by the Company (the
"Pre-acquisition Period"). The financial results for the
Pre-acquisition Period were provided by the third-party owner of
such Acquired Hotel prior to purchase by the Company and have not
been audited or reviewed by our auditors or adjusted by
us. The pro forma information is included to enable
comparison of results for the current reporting period to results
for the comparable period of the prior year and are not indicative
of future results.
|
|
|
(2)
|
For hotels sold by
the Company between January 1, 2018 and December 31, 2019 (the
"Disposed Hotels"), the unaudited pro forma information excludes
the financial results of each of the Disposed Hotels for the period
of ownership by the Company from January 1, 2018 through the date
that the Disposed Hotels were sold by the Company.
|
Summit Hotel
Properties, Inc.
|
Pro Forma Hotel
Operating Data
|
(Unaudited)
|
(Dollars in
thousands, except operating statistics)
|
|
|
2019
|
|
Year
Ended
|
Pro Forma
Operating Data (1) (2)
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
December 31,
2019
|
Pro forma room
revenue
|
$
130,512
|
|
$
140,368
|
|
$
133,358
|
|
$
122,384
|
|
$
526,622
|
Pro forma other hotel
operations revenue
|
11,244
|
|
11,872
|
|
11,206
|
|
11,318
|
|
45,640
|
Pro forma total
revenues
|
141,756
|
|
152,240
|
|
144,564
|
|
133,702
|
|
572,262
|
Pro forma total hotel
operating expenses
|
87,948
|
|
91,335
|
|
90,274
|
|
87,333
|
|
356,890
|
Pro forma hotel
EBITDA
|
$
53,808
|
|
$
60,905
|
|
$
54,290
|
|
$
46,369
|
|
$
215,372
|
Pro forma hotel
EBITDA Margin
|
38.0%
|
|
40.0%
|
|
37.6%
|
|
34.7%
|
|
37.6%
|
|
|
|
|
|
|
|
|
|
|
Pro Forma
Statistics (1) (2)
|
|
|
|
|
|
|
|
|
|
Rooms sold
|
780,232
|
|
844,867
|
|
838,378
|
|
788,040
|
|
3,251,517
|
Rooms
available
|
1,015,830
|
|
1,027,178
|
|
1,038,496
|
|
1,038,496
|
|
4,120,000
|
Occupancy
|
76.8%
|
|
82.3%
|
|
80.7%
|
|
75.9%
|
|
78.9%
|
ADR
|
$
167.27
|
|
$
166.14
|
|
$
159.07
|
|
$
155.30
|
|
$
161.96
|
RevPAR
|
$
128.48
|
|
$
136.65
|
|
$
128.41
|
|
$
117.85
|
|
$
127.82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual
Statistics
|
|
|
|
|
|
|
|
|
|
Rooms sold
|
796,661
|
|
808,354
|
|
793,599
|
|
790,751
|
|
3,189,365
|
Rooms
available
|
1,043,070
|
|
988,075
|
|
990,708
|
|
1,042,076
|
|
4,063,929
|
Occupancy
|
76.4%
|
|
81.8%
|
|
80.1%
|
|
75.9%
|
|
78.5%
|
ADR
|
$
160.80
|
|
$
162.87
|
|
$
155.13
|
|
$
154.88
|
|
$
158.45
|
RevPAR
|
$
122.81
|
|
$
133.25
|
|
$
124.27
|
|
$
117.53
|
|
$
124.35
|
|
Reconciliations of
Non-GAAP financial measures to comparable GAAP financial
measures
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
138,952
|
|
142,930
|
|
133,685
|
|
133,781
|
|
$
549,348
|
Total revenues from
acquisitions (1)
|
12,343
|
|
12,899
|
|
12,761
|
|
775
|
|
38,778
|
Total revenues from
dispositions (2)
|
(9,539)
|
|
(3,589)
|
|
(1,882)
|
|
(854)
|
|
(15,864)
|
Pro forma total
revenues
|
141,756
|
|
152,240
|
|
144,564
|
|
133,702
|
|
572,262
|
|
|
|
|
|
|
|
|
|
|
Hotel Operating
Expenses:
|
|
|
|
|
|
|
|
|
|
Total hotel operating
expenses
|
88,791
|
|
87,676
|
|
85,676
|
|
87,629
|
|
349,772
|
Total hotel operating
expenses from acquisitions (1)
|
6,239
|
|
6,570
|
|
6,145
|
|
520
|
|
19,474
|
Total hotel operating
expenses from dispositions (2)
|
(7,082)
|
|
(2,911)
|
|
(1,547)
|
|
(816)
|
|
(12,356)
|
Pro forma total
hotel operating expenses
|
87,948
|
|
91,335
|
|
90,274
|
|
87,333
|
|
356,890
|
|
|
|
|
|
|
|
|
|
|
Hotel
EBITDA:
|
|
|
|
|
|
|
|
|
|
Operating
income
|
22,801
|
|
59,390
|
|
19,244
|
|
17,971
|
|
119,406
|
(Gain) loss on
disposal of assets, net
|
(4,166)
|
|
(35,520)
|
|
31
|
|
(5,763)
|
|
(45,418)
|
Loss on impairment of
assets
|
-
|
|
1,685
|
|
-
|
|
836
|
|
2,521
|
Corporate general and
administrative
|
5,990
|
|
5,920
|
|
5,532
|
|
6,180
|
|
23,622
|
Depreciation and
amortization
|
25,536
|
|
23,779
|
|
23,202
|
|
26,928
|
|
99,445
|
Hotel
EBITDA
|
50,161
|
|
55,254
|
|
48,009
|
|
46,152
|
|
199,576
|
Hotel EBITDA from
acquisitions (1)
|
6,104
|
|
6,329
|
|
6,616
|
|
255
|
|
19,304
|
Hotel EBITDA from
dispositions (2)
|
(2,457)
|
|
(678)
|
|
(335)
|
|
(38)
|
|
(3,508)
|
Pro forma hotel
EBITDA
|
$
53,808
|
|
$
60,905
|
|
$
54,290
|
|
$
46,369
|
|
$
215,372
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Unaudited pro
forma information includes operating results for 72 hotels owned as
of December 31, 2019 as if all such hotels had been owned by the
Company since January 1, 2019. For hotels acquired by the
Company after January 1, 2019 (the "Acquired Hotels"), the Company
has included in the pro forma information the financial results of
each of the Acquired Hotels for the period from January 1, 2019 to
the date the Acquired Hotels were purchased by the Company (the
"Pre-acquisition Period"). The financial results for the
Pre-acquisition Period were provided by the third-party owner of
such Acquired Hotel prior to purchase by the Company and have not
been audited or reviewed by our auditors or adjusted by
us. The pro forma information is included to enable
comparison of results for the current reporting period to results
for the comparable period of the prior year and are not indicative
of future results.
|
|
|
(2)
|
For hotels sold by
the Company between January 1, 2019 and December 31, 2019 (the
"Disposed Hotels"), the pro forma information excludes the
financial results of each of the Disposed Hotels for the period of
ownership by the Company from January 1, 2019 through the date that
the Disposed Hotels were sold by the Company.
|
Summit Hotel
Properties, Inc.
|
Pro Forma and
Same-Store Data
|
(Unaudited)
|
|
|
For the Three
Months Ended
December 31,
|
|
For the Years
Ended
December 31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Pro Forma (72)
¹
|
|
|
|
|
|
|
|
Rooms sold
|
788,040
|
|
779,729
|
|
3,251,517
|
|
3,211,655
|
Rooms
available
|
1,038,496
|
|
1,038,404
|
|
4,120,000
|
|
4,089,087
|
Occupancy
|
75.9%
|
|
75.1%
|
|
78.9%
|
|
78.5%
|
ADR
|
$
155.30
|
|
$
157.19
|
|
$
161.96
|
|
$
161.08
|
RevPAR
|
$
117.85
|
|
$
118.03
|
|
$
127.82
|
|
$
126.52
|
|
|
|
|
|
|
|
|
Occupancy
change
|
1.1%
|
|
|
|
0.5%
|
|
|
ADR
change
|
-1.2%
|
|
|
|
0.5%
|
|
|
RevPAR
change
|
-0.2%
|
|
|
|
1.0%
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended
December 31,
|
|
For the Years
Ended
December 31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Same-Store (65)
¹
|
|
|
|
|
|
|
|
Rooms sold
|
706,835
|
|
695,321
|
|
2,908,141
|
|
2,890,403
|
Rooms
available
|
935,824
|
|
935,732
|
|
3,712,660
|
|
3,711,483
|
Occupancy
|
75.5%
|
|
74.3%
|
|
78.3%
|
|
77.9%
|
ADR
|
$
152.53
|
|
$
154.58
|
|
$
158.57
|
|
$
157.83
|
RevPAR
|
$
115.21
|
|
$
114.86
|
|
$
124.21
|
|
$
122.91
|
|
|
|
|
|
|
|
|
Occupancy
change
|
1.6%
|
|
|
|
0.6%
|
|
|
ADR
change
|
-1.3%
|
|
|
|
0.5%
|
|
|
RevPAR
change
|
0.3%
|
|
|
|
1.1%
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Unaudited pro
forma information includes operating results for 72 hotels owned as
of December 31, 2019, as if each hotel had been owned by the
Company since January 1, 2018. As a result, these pro forma
operating and financial measures include operating results for
certain hotels for periods prior to the Company's
ownership.
|
|
|
(2)
|
Same-store
information includes operating results for 65 hotels owned by the
Company as of January 1, 2018, and at all times during the three
and twelve months ended December 31, 2019, and 2018.
|
Summit Hotel
Properties, Inc.
|
Reconciliation of
Net Income to Non-GAAP Measures – Funds From Operations for
Financial Outlook
|
(Unaudited)
|
(Dollars in
thousands, except per share and unit)
|
|
|
|
For the Year
Ending
December 31, 2020
|
|
|
Low
|
|
High
|
Net income
|
|
$
26,500
|
|
$
39,600
|
Preferred
dividends
|
|
(14,900)
|
|
(14,900)
|
Income from
non-controlling interest in consolidated joint venture
|
|
(1,400)
|
|
(1,400)
|
Net income
applicable to common shares and units
|
|
10,200
|
|
23,300
|
Real estate-related
depreciation
|
|
109,600
|
|
109,600
|
Adjustments related
to non-controlling interest in consolidated joint
venture
|
|
(6,100)
|
|
(6,100)
|
FFO applicable to
common shares and common units
|
|
113,700
|
|
126,800
|
Amortization of
lease-related intangible assets, net
|
|
100
|
|
100
|
Amortization of
deferred financing costs
|
|
1,800
|
|
1,800
|
Amortization of
franchise fees
|
|
500
|
|
500
|
Equity-based
compensation
|
|
6,700
|
|
6,700
|
Debt transaction
costs
|
|
200
|
|
200
|
Non-cash interest
income
|
|
(3,000)
|
|
(3,000)
|
Non-cash lease
expense, net
|
|
400
|
|
400
|
Casualty recoveries,
net
|
|
-
|
|
-
|
Adjustments related
to non-controlling interest in consolidated joint
venture
|
|
(300)
|
|
(300)
|
AFFO applicable to
common shares and common units
|
|
$
120,100
|
|
$
133,200
|
Weighted average
diluted common shares/common units (1)
|
|
104,600
|
|
104,600
|
FFO per common
share and common unit
|
|
$
1.09
|
|
$
1.21
|
AFFO per common
share and common unit
|
|
$
1.15
|
|
$
1.27
|
|
|
(1)
|
The Company
includes the outstanding OP units issued by 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.
|
Summit Hotel
Properties, Inc.
|
Reconciliation of
Net Income to Non-GAAP Measures – EBITDA for Financial
Outlook
|
(Unaudited)
|
(Dollars in
thousands)
|
|
|
|
For the Year
Ending
December 31, 2020
|
|
|
Low
|
|
High
|
Net income
|
|
$
26,500
|
|
$
39,600
|
Depreciation and
amortization
|
|
110,100
|
|
110,100
|
Interest
expense
|
|
43,800
|
|
43,500
|
Interest
income
|
|
(300)
|
|
(300)
|
Income tax
expense
|
|
3,700
|
|
3,700
|
EBITDA
|
|
183,800
|
|
196,600
|
Loss on impairment of
assets
|
|
-
|
|
-
|
Gain on disposal of
assets, net
|
|
-
|
|
-
|
EBITDAre
|
|
183,800
|
|
196,600
|
Amortization of
lease-related intangible assets, net
|
|
100
|
|
100
|
Equity-based
compensation
|
|
6,700
|
|
6,700
|
Debt transaction
costs
|
|
200
|
|
200
|
Non-cash interest
income
|
|
(3,000)
|
|
(3,000)
|
Non-cash lease
expense, net
|
|
400
|
|
400
|
Casualty recoveries,
net
|
|
-
|
|
-
|
Income from
non-controlling interest in consolidated joint venture
|
|
(1,400)
|
|
(1,400)
|
Adjustments related
to non-controlling interest in consolidated joint
venture
|
|
(9,200)
|
|
(9,200)
|
Adjusted
EBITDAre
|
|
$
177,600
|
|
$
190,400
|
Non-GAAP Financial Measures
We disclose certain "non-GAAP financial measures," which are
measures of our historical financial performance. Non-GAAP
financial measures are financial measures not prescribed by
Generally Accepted Accounting Principles ("GAAP"). These measures
are as follows: (i) Funds From Operations ("FFO") and Adjusted
Funds from Operations ("AFFO"), (ii) Earnings before Interest,
Taxes, Depreciation and Amortization ("EBITDA"), Earnings before
Interest, Taxes, Depreciation and Amortization for Real Estate
("EBITDAre"), Adjusted EBITDAre, and hotel EBITDA (as
described below). We caution investors that amounts presented in
accordance with our definitions of non-GAAP financial measures may
not be comparable to similar measures disclosed by other companies,
since not all companies calculate these non-GAAP financial measures
in the same manner. Our non-GAAP financial measures should be
considered along with, but not as alternatives to, net income
(loss) as a measure of our operating performance. Our non-GAAP
financial measures may include funds that may not be available for
our discretionary use due to functional requirements to conserve
funds for capital expenditures, property acquisitions, debt service
obligations and other commitments and uncertainties. Although we
believe that our non-GAAP financial measures can enhance the
understanding of our financial condition and results of operations,
these non-GAAP financial measures are not necessarily better
indicators of any trend as compared to a comparable measure
prescribed by GAAP such as net income (loss).
Funds From Operations ("FFO") and Adjusted FFO
("AFFO")
As defined by Nareit, FFO represents net income or loss
(computed in accordance with GAAP), excluding preferred dividends,
gains (or losses) from sales of real property, impairment losses on
real estate assets, items classified by GAAP as extraordinary, the
cumulative effect of changes in accounting principles, plus
depreciation and amortization related to real estate assets, and
adjustments for unconsolidated partnerships, and joint ventures.
AFFO represents FFO excluding amortization of deferred financing
costs, franchise fees, equity-based compensation expense, debt
transaction costs, premiums on redemption of preferred shares,
losses from net casualties, non-cash lease expense, non-cash
interest income and non-cash income tax related adjustments to our
deferred tax assets. Unless otherwise indicated, we present FFO and
AFFO applicable to our common shares and common units. We present
FFO and AFFO because we consider FFO and AFFO 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 and AFFO when reporting their results. FFO and AFFO are
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 and
AFFO exclude depreciation and amortization related to real estate
assets, gains and losses from real property dispositions and
impairment losses on real estate assets, FFO and AFFO provide
performance measures that, when compared year over year, reflect
the effect to operations from trends in occupancy, guestroom rates,
operating costs, development activities and interest costs,
providing perspective not immediately apparent from net income. Our
computation of FFO differs slightly from the computation of
Nareit-defined FFO related to the reporting of corporate
depreciation and amortization expense. Our computation of FFO may
also differ from the methodology for calculating FFO used by other
equity REITs and, accordingly, may not be comparable to such other
REITs. FFO and AFFO 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. Where indicated in this release, FFO is
based on our computation of FFO and not the computation of
Nareit-defined FFO unless otherwise noted.
EBITDA, EBITDAre, Adjusted EBITDAre, and Hotel
EBITDA
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 team also uses EBITDA as one measure in
determining the value of acquisitions and dispositions.
EBITDAre and Adjusted EBITDAre
EBITDAre is based on EBITDA and is expected to provide
additional relevant information about REITs as real estate
companies in support of growing interest among generalist
investors. EBITDAre is intended to be a supplemental
non-GAAP performance measure that is independent of a company's
capital structure and will provide a uniform basis to measure the
enterprise value of a company compared to other REITs.
EBITDAre, as defined by Nareit, is calculated as EBITDA,
excluding: (i) loss and gains on disposition of property and (ii)
asset impairments, if any. We believe EBITDAre 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.
We make additional adjustments to EBITDAre when
evaluating our performance because we believe that the exclusion of
certain additional non-recurring or certain non-cash items
described below provides useful supplemental information to
investors regarding our ongoing operating performance. We believe
that the presentation of Adjusted EBITDAre, when combined
with the primary GAAP presentation of net income, 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.
Hotel EBITDA
With respect to hotel EBITDA, we believe that excluding the
effect of corporate-level expenses and non-cash items 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, EBITDAre, adjusted
EBITDAre, and hotel EBITDA may not be comparable to similar
measures disclosed by other companies, since not all companies
calculate these non-GAAP measures in the same manner. EBITDA,
EBITDAre, adjusted EBITDAre, and hotel EBITDA should
not be considered as an alternative measure of our net income
(loss) or operating performance. EBITDA, EBITDAre adjusted
EBITDAre, 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, EBITDAre, adjusted EBITDAre, and
hotel EBITDA can enhance your understanding of our financial
condition and results of operations, these non-GAAP financial
measures are 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,
EBITDAre, adjusted EBITDAre and hotel EBITDA to the
most directly comparable GAAP financial performance measure, which
is net income (loss) and operating income (loss).
View original content to download
multimedia:http://www.prnewswire.com/news-releases/summit-hotel-properties-reports-fourth-quarter-and-full-year-2019-results-301011149.html
SOURCE Summit Hotel Properties, Inc.