Fourth Quarter 2022 RevPAR Recapture Reaches
New High
Operating Income Triples Driving Adjusted
EBITDAre Growth of 100% to $180.8
Million in 2022
Nearly $1
Billion of Strategic Acquisitions Completed in 2022
AUSTIN,
Texas, Feb. 27, 2023 /PRNewswire/ -- Summit Hotel
Properties, Inc. (NYSE: INN) (the "Company"), today announced
results for the fourth quarter and full year ended December 31, 2022.
"We are pleased with the continued improvement of our operating
results during the fourth quarter which drove 2019 RevPAR recapture
to a new quarterly high of 97% highlighted by December results that
exceeded pre-pandemic levels for the first time in our pro forma
portfolio. The strong fourth quarter capped off another active year
for the Company as we completed nearly $1
billion of strategic transactions, reinstated our common
dividend, and made our initial investment in the rapidly growing
glamping segment of the hospitality space. Operating trends
have remained stable across our portfolio in early 2023 as January
results were in-line with expectations and pace for February and
March is accelerating," said Jonathan P.
Stanner, the Company's President and Chief Executive
Officer. "Prudent capital allocation continues to be foundational
to our investment strategy and subsequent to year-end we have
entered into contracts to sell six hotels and a vacant land parcel
for approximately $80 million.
Combined with our previously completed asset sale in 2022, we have
signed or closed sales totaling $155
million at a blended capitalization rate of 2.3% based on
trailing twelve-month net operating income and eliminated nearly
$44 million of near-term required
capital expenditures. These sales will further enhance our balance
sheet reducing net leverage, increasing our liquidity to nearly
$500 million, and resulting in no
maturities until the fourth quarter of 2024," commented Mr.
Stanner.
Fourth Quarter 2022 Summary
- Net Loss: Net loss attributable to common stockholders
was $12.0 million, or $0.11 per diluted share, compared to a net loss
of $15.3 million, or $0.15 per diluted share, for the fourth quarter
of 2021.
- Pro forma RevPAR: Pro forma RevPAR increased 17.9
percent to $109.01 compared to the
fourth quarter of 2021. Pro forma ADR increased 14.1 percent to
$159.62 compared to the same period
in 2021, and pro forma occupancy increased 3.3 percent to 68.3
percent.
- Pro Forma Hotel EBITDA: Pro forma hotel EBITDA
increased 27.1 percent to $62.1
million from $48.9 million in
the same period in 2021. Pro forma hotel EBITDA margin expanded 106
basis points to 36.0 percent from 35.0 percent in the same period
of 2021.
- Adjusted EBITDAre: Adjusted EBITDAre
increased 61.6 percent to $46.1
million from $28.5 million in
the fourth quarter of 2021.
- Adjusted FFO: Adjusted FFO was $30.3 million, or $0.25 per diluted share, compared to $14.8 million, or $0.14 per diluted share, in the fourth quarter of
2021.
- Capital Improvements: The Company invested
$27.7 million in capital improvements
during the fourth quarter and $22.2
million on a pro rata basis after consideration of joint
ventures.
The Company's results for the three months and years ended
December 31, 2022, and 2021 are as
follows (in thousands, except per share amounts):
|
For the Three Months
Ended
December 31,
|
|
For the Years
Ended
December 31,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
(unaudited)
|
Net loss attributable
to common stockholders
|
$ (11,975)
|
|
$ (15,275)
|
|
$ (16,929)
|
|
$ (83,714)
|
Net loss per diluted
share
|
$
(0.11)
|
|
$
(0.15)
|
|
$
(0.16)
|
|
$
(0.80)
|
Total
revenues
|
$ 172,326
|
|
$ 106,862
|
|
$ 675,695
|
|
$ 361,926
|
EBITDAre
(1)
|
$
54,498
|
|
$
26,312
|
|
$ 210,609
|
|
$
86,325
|
Adjusted
EBITDAre (1)
|
$
46,084
|
|
$
28,513
|
|
$ 180,815
|
|
$
90,495
|
FFO
(1)
|
$
25,542
|
|
$
8,140
|
|
$
95,253
|
|
$
17,300
|
Adjusted FFO
(1)
|
$
30,340
|
|
$
14,801
|
|
$ 113,970
|
|
$
36,782
|
FFO per diluted share
and unit (1)
|
$
0.21
|
|
$
0.08
|
|
$
0.79
|
|
$
0.16
|
Adjusted FFO per
diluted share and unit (1)
|
$
0.25
|
|
$
0.14
|
|
$
0.94
|
|
$
0.35
|
|
|
|
|
|
|
|
|
Pro Forma (103 Lodging
Assets) (2)
|
|
|
|
|
|
|
|
RevPAR
|
$
109.01
|
|
$
92.49
|
|
$
110.91
|
|
$
80.42
|
RevPAR
Growth
|
17.9 %
|
|
|
|
37.9 %
|
|
|
Hotel EBITDA
|
$
62,142
|
|
$
48,904
|
|
$
243,940
|
|
$
149,678
|
Hotel EBITDA
margin
|
36.0 %
|
|
35.0 %
|
|
35.4 %
|
|
31.4 %
|
Hotel EBITDA margin
growth
|
106 bps
|
|
|
|
401 bps
|
|
|
|
|
|
|
|
|
|
|
Same Store (71 Lodging
Assets) (3)
|
|
|
|
|
|
|
|
RevPAR
|
$
110.74
|
|
$
93.78
|
|
$
114.61
|
|
$
80.80
|
RevPAR
Growth
|
18.1 %
|
|
|
|
41.8 %
|
|
|
Hotel EBITDA
|
$
42,817
|
|
$
34,785
|
|
$
179,563
|
|
$
105,658
|
Hotel EBITDA
margin
|
34.5 %
|
|
33.5 %
|
|
35.5 %
|
|
29.8 %
|
Hotel EBITDA margin
growth
|
109 bps
|
|
|
|
576 bps
|
|
|
|
|
(1)
|
See tables later in
this press release for a discussion and reconciliation of net loss
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 loss to hotel
EBITDA. See "Non-GAAP Financial Measures" at the end of this
release.
|
|
|
(2)
|
Unless stated
otherwise in this release, all pro forma information includes
operating and financial results for 103 lodging assets owned as of
December 31, 2022, as if each had been owned by the Company since
January 1, 2021 and remained open for the entirety of the
measurement period. As a result, all pro forma information includes
operating and financial results for lodging assets acquired since
January 1, 2021, which may include periods prior to the Company's
ownership. Pro forma and non-GAAP measures are
unaudited.
|
|
|
(3)
|
All same store
information includes operating and financial results for 71 lodging
assets owned as of December 31, 2022, and at all times during the
three months and year ended December 31, 2022, and
2021.
|
Full Year 2022 Summary
- Net Loss: Net loss attributable to common
stockholders was $16.9 million, or
$0.16 per diluted share, compared to
a net loss of $83.7 million, or
$0.80 per diluted share, for the year
ended 2021.
- Pro Forma RevPAR: Pro forma revenue per available room
("RevPAR") increased 37.9 percent from 2021 to $110.91. Pro forma average daily rate ("ADR")
increased 25.9 percent from 2021 to $159.30, and pro forma occupancy increased 9.5
percent to 69.6 percent.
- Pro Forma Hotel EBITDA: Pro forma hotel EBITDA
increased 63.0 percent to $243.9
million from $149.7 million in
2021. Pro forma hotel EBITDA margin expanded 401 basis points to
35.4 percent from 31.4 percent in 2021.
- Adjusted EBITDAre: Adjusted EBITDAre
increased 99.8 percent to $180.8
million from $90.5 million for
the year ended 2021.
- Adjusted FFO: Adjusted FFO was $114.0 million, or $0.94 per diluted share, compared to $36.8 million, or $0.35 per diluted share, for the year ended
2021.
- Capital Improvements: The Company invested
$76.5 million in capital improvements
during 2022 and $63.6 million on a
pro rata basis after consideration of joint ventures.
Onera Partnership Update
Onera Fredericksburg Acquisition and Expansion
On October 26, 2022, the Company
acquired a 90 percent equity interest in the entity (the "Onera
Joint Venture") that owns Onera Fredericksburg, an 11-unit premium
glamping asset located in Fredericksburg,
Texas, for $4.5 million, based
on a total valuation of $5.0 million,
and an adjacent 6.4-acre land parcel for future expansion for
$0.7 million, based on a total
valuation of $0.8 million.
Onera Fredericksburg achieved 2022 RevPAR of $440, hotel EBITDA margin of more than 60%, and a
net operating income yield of 17% on the Onera Joint Venture's
$5.0 million acquisition price. The
Onera Joint Venture will pay a one-time incentive payment of up to
$2.0 million if the property meets a
certain unlevered yield threshold for the twelve-month period
ending July 31, 2023.
Additionally, the Onera Joint Venture expects to begin construction
on the adjacent 6.4-acre vacant land parcel in 2023, which will add
an additional 15-20 premium units that are expected to achieve a
mid-teens stabilized net operating income yield.
Onera Development Project Financed Utilizing Mezzanine Loan
Program
Subsequent to year-end, the Company utilized its mezzanine
lending platform to enter into an agreement with affiliates of
Onera to provide mezzanine financing of up to $4.6 million for the future development of a
high-end glamping asset. The loan has a fixed interest rate of 12%
that will be paid monthly. The Company has an option to purchase
90% of the development upon its expected completion in mid-2024 at
a pre-negotiated price.
Upon completion of the two development projects, the Onera Joint
Venture will have invested approximately $40 to $45 million
in high-end glamping projects that are estimated to achieve blended
stabilized net operating income yields in the mid-teens.
Pending Transaction Activity
The Company entered into three separate contracts subsequent to
year end to dispose of an aggregate of six hotels totaling 750
guestrooms and a vacant land parcel. The aggregate gross sales
price for the pending disposition activity is $79.9 million and the hotel transactions are
expected to close in the second quarter of 2023 with the vacant
land sale closing expected in the second half of 2023. The sales
price for all transactions represents a 3.9% capitalization rate
based on net operating income after a 4% FF&E reserve for the
year ended December 31, 2022. The
Company expects to forego between $33
million and $38 million of
future near-term required capital expenditures at the six hotels as
a result of the sales which would reduce the all-in capitalization
rate to approximately 2.6%. All of the pending dispositions are
wholly owned assets and net proceeds will be used to repay
outstanding debt, enhance the Company's liquidity profile, and
reduce overall balance sheet leverage.
Two-Hotel Portfolio Sale
The Company is under contract to sell two hotels totaling 283
guestrooms for a gross sales price of $50.5
million. The sales price represents a 3.9% capitalization
rate based on the portfolio's net operating income after a 4%
FF&E reserve for the year ended December
31, 2022. The hotels for sale are:
- 160-guestroom – Residence Atlanta Midtown/Peachtree at
17th
- 123-guestroom – Courtyard Kansas City Country Club Plaza
Four-Hotel Portfolio Sale
The Company is separately under contract to sell four hotels
totaling 467 guestrooms for a gross sales price of $28.1 million. The sales price represents a 4.2%
capitalization rate based on the portfolio's net operating income
after a 4% FF&E reserve for the year ended December 31, 2022. The hotels for sale are:
- 151-guestroom – Hyatt Place Chicago/Lombard/Oak Brook
- 126-guestroom – Hyatt Place Chicago/Hoffman Estates
- 97-guestroom – Hilton Garden Inn Minneapolis/Eden Prairie
- 93-guestroom – Holiday Inn Express & Suites Eden Prairie –
Minnetonka
The Company can make no assurances that it will be able to
complete the sale transactions based on the current contractual
terms or at all.
Capital Markets & Balance Sheet
On December 31, 2022, inclusive of
its pro rata share of the GIC Joint Venture credit facility, the
Company had the following:
- Outstanding debt of $1.2 billion
with a weighted average interest rate of 4.53 percent. After giving
effect to interest rate derivative agreements, $749.0 million, or 65 percent, of our outstanding
debt had an average fixed interest rate, and $401.1 million, or 35 percent, had a variable
interest rate.
- Unrestricted cash and cash equivalents of $38.1 million.
- Revolving credit facility availability of $385.0 million on its $400.0 million credit facility.
- Total liquidity of $423.1
million, including unrestricted cash and cash equivalents
and revolving credit facility availability.
On February 10, 2023, inclusive of
the recent transaction activity and its pro rata share of the GIC
Joint Venture credit facility but exclusive of pending disposition
activity, the Company had the following:
- Outstanding debt of $1.1 billion
with a weighted average interest rate of 4.70 percent. After giving
effect to interest rate derivative agreements, $748.7 million, or 65 percent, of our outstanding
debt had an average fixed interest rate, and $401.0 million, or 35 percent, had a variable
interest rate.
- Unrestricted cash and cash equivalents of $38.5 million.
- Revolving credit facility availability of $382.0 million on its $400.0 million credit facility.
- Total liquidity of $420.5 million
including unrestricted cash and cash equivalents and revolving
credit facility availability.
- Adjusted for pending disposition activity, an estimated total
liquidity of $500 million, including
unrestricted cash equivalents and revolving credit facility
availability.
The Company notified lenders of its intent to exercise the first
of four available maturity date extension options on its
$400 million senior revolving credit
facility during the fourth quarter. The extended maturity date of
September 30, 2023, is expected to
become effective in March of this year and the Company will have
three remaining six-month extension options at the Company's sole
discretion available that result in a fully extended maturity date
of March 31, 2025.
The Company also defeased its final 2023 debt maturity for
$32.3 million in the fourth quarter
of 2022, resulting in $6.7 million of
restricted cash being returned to the Company. The Company does not
have any remaining debt maturities after consideration of extension
options until the fourth quarter of 2024.
Dividends
On January 26, 2023, the Company
declared a quarterly cash dividend of $0.04 per share on its common stock and per
common unit of limited partnership interest in Summit Hotel OP,
LP.
In addition, the Board of Directors declared a quarterly cash
dividend of:
- $0.390625 per share on its 6.25%
Series E Cumulative Redeemable Preferred Stock
- $0.3671875 per share on its
5.875% Series F Cumulative Redeemable Preferred Stock.
- $0.328125 per unit on its 5.25%
Series Z Cumulative Perpetual Preferred Units
The common and preferred dividends are payable on February 28, 2023, to holders of record as of
February 14, 2023.
2023 Outlook
The Company is providing its outlook for the full year 2023
based on 103 lodging assets, 61 of which were wholly owned as of
February 27, 2023. There are no
pending acquisitions, dispositions, or additional capital markets
activities assumed in the Company's full year 2023 outlook.
|
|
FYE 2023
Outlook
|
|
|
Low
|
|
High
|
Pro Forma RevPAR (103
Lodging Assets) (1)
|
|
$
117.50
|
|
$
123.00
|
Pro Forma RevPAR
Growth
|
|
6.00 %
|
|
11.00 %
|
Adjusted
EBITDAre
|
|
$
190,400
|
|
$
205,900
|
Adjusted
FFO
|
|
$
112,100
|
|
$
128,100
|
Adjusted FFO per
Diluted Unit
|
|
$
0.92
|
|
$
1.05
|
Capital Expenditures,
Pro Rata
|
|
$
60,000
|
|
$
80,000
|
|
|
(1)
|
All pro forma
information includes operating and financial results for 103
lodging assets owned as of December 31, 2022, as if each property
had been owned by the Company since January 1, 2022 and will
continue to be owned through the entire year ending December 31,
2023. As a result, the pro forma information includes operating and
financial results for lodging assets acquired since January 1,
2022, which may include periods prior to the Company's ownership.
Pro forma and non-GAAP financial measures are
unaudited.
|
Fourth Quarter and Full Year 2022 Earnings Conference
Call
The Company will conduct its quarterly conference call on
Tuesday, February 28, 2023, at
9:00 AM ET. To participate in the
conference call, please follow the steps below:
- To access the conference call, please pre-register using this
link. Registrants will receive a confirmation with dial-in
details.
- A live webcast of the conference call can be accessed using
this link. A replay of the webcast will be available in the
Investors section of the Company's website, www.shpreit.com, until
April 30, 2023.
Supplemental Disclosures
In conjunction with this press release, the Company has
furnished a financial supplement with additional disclosures on its
website. Visit www.shpreit.com for more information.
The Company has no obligation to update any of the information
provided to conform to actual results or changes in portfolio,
capital structure or future expectations.
About Summit Hotel Properties
Summit Hotel Properties, Inc. is a publicly traded real estate
investment trust focused on owning premium-branded lodging assets
with efficient operating models primarily in the upscale segment of
the lodging industry. As of February 27,
2023, the Company's portfolio consisted of 103 lodging
assets, 61 of which are wholly owned, with a total of 15,334
guestrooms located in 24 states.
For additional information, please visit the Company's website,
www.shpreit.com, and follow on Twitter at @SummitHotel_INN and on
Facebook at facebook.com/SummitHotelProperties.
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, 2022,
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
(in
thousands)
|
|
|
December 31,
2022
|
|
December 31,
2021
|
|
|
|
|
ASSETS
|
|
|
|
Investments in lodging
property, net
|
$
2,792,552
|
|
$
2,091,973
|
Undeveloped
land
|
-
|
|
1,500
|
Assets held for sale,
net
|
78,576
|
|
425
|
Cash and cash
equivalents
|
51,255
|
|
64,485
|
Restricted
cash
|
10,553
|
|
32,459
|
Right-of-use assets,
net
|
35,023
|
|
26,942
|
Trade receivables,
net
|
21,015
|
|
14,476
|
Prepaid expenses and
other
|
8,378
|
|
24,496
|
Deferred charges,
net
|
7,074
|
|
4,347
|
Other
assets
|
17,844
|
|
3,799
|
Total
assets
|
$
3,022,270
|
|
$
2,264,902
|
LIABILITIES,
REDEEMABLE
NON-CONTROLLING INTERESTS AND EQUITY
|
|
|
|
Liabilities:
|
|
|
|
Debt, net of debt
issuance costs
|
$
1,451,796
|
|
$
1,069,797
|
Lease liabilities,
net
|
25,484
|
|
17,232
|
Accounts
payable
|
5,517
|
|
4,462
|
Accrued expenses and
other
|
81,304
|
|
66,219
|
Total
liabilities
|
1,564,101
|
|
1,157,710
|
|
|
|
|
|
|
|
|
Redeemable
non-controlling interests
|
50,219
|
|
-
|
Total stockholders'
equity
|
959,813
|
|
948,073
|
Non-controlling
interests
|
448,137
|
|
159,119
|
Total
equity
|
1,407,950
|
|
1,107,192
|
Total liabilities,
redeemable non-controlling interests and equity
|
$
3,022,270
|
|
$
2,264,902
|
Summit Hotel
Properties, Inc.
Condensed
Consolidated Statements of Operations
(in thousands,
except per share amounts)
|
|
|
For the Three Months
Ended
December 31,
|
|
For the Years
Ended
December 31,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Revenues:
|
(Unaudited)
|
|
|
|
|
Room
|
$
153,623
|
|
$
98,577
|
|
$
609,370
|
|
$
334,338
|
Food and
beverage
|
9,937
|
|
2,643
|
|
32,117
|
|
7,299
|
Other
|
8,766
|
|
5,642
|
|
34,208
|
|
20,289
|
Total
revenues
|
172,326
|
|
106,862
|
|
675,695
|
|
361,926
|
Expenses:
|
|
|
|
|
|
|
|
Room
expense
|
35,281
|
|
22,461
|
|
136,999
|
|
74,781
|
Food and beverage
expense
|
7,710
|
|
1,856
|
|
24,897
|
|
4,856
|
Other hotel operating
expenses
|
53,104
|
|
34,954
|
|
207,975
|
|
123,626
|
Property taxes,
insurance and other
|
9,885
|
|
8,777
|
|
49,921
|
|
41,350
|
Management
fees
|
4,297
|
|
3,101
|
|
17,442
|
|
9,858
|
Depreciation and
amortization
|
37,698
|
|
26,179
|
|
150,160
|
|
105,955
|
Corporate general and
administrative
|
7,022
|
|
11,145
|
|
30,765
|
|
29,428
|
Transaction
costs
|
12
|
|
-
|
|
749
|
|
3,849
|
Recoveries of credit
losses
|
-
|
|
-
|
|
(1,100)
|
|
(2,632)
|
Loss on write-down or
impairment of assets
|
10,420
|
|
-
|
|
10,420
|
|
4,361
|
Total
expenses
|
165,429
|
|
108,473
|
|
628,228
|
|
395,432
|
(Loss) gain on
disposal of assets, net
|
(164)
|
|
159
|
|
20,315
|
|
240
|
Operating income
(loss)
|
6,733
|
|
(1,452)
|
|
67,782
|
|
(33,266)
|
Other income
(expense):
|
|
|
|
|
|
|
|
Interest
expense
|
(19,379)
|
|
(10,801)
|
|
(65,581)
|
|
(43,368)
|
Other (expense)
income, net
|
(472)
|
|
1,746
|
|
2,627
|
|
9,523
|
Total other
expense
|
(19,851)
|
|
(9,055)
|
|
(62,954)
|
|
(33,845)
|
(Loss) income from
continuing operations before
income taxes
|
(13,118)
|
|
(10,507)
|
|
4,828
|
|
(67,111)
|
Income tax benefit
(expense)
|
1,036
|
|
(398)
|
|
(3,611)
|
|
(1,473)
|
Net (loss)
income
|
(12,082)
|
|
(10,905)
|
|
1,217
|
|
(68,584)
|
Loss (income) loss
attributable to non-
controlling interests
|
4,730
|
|
(107)
|
|
249
|
|
3,011
|
Net (loss) income
attributable to Summit Hotel
Properties, Inc.
|
(7,352)
|
|
(11,012)
|
|
1,466
|
|
(65,573)
|
Distributions to and
accretion of redeemable non-
controlling interests
|
(654)
|
|
-
|
|
(2,520)
|
|
-
|
Preferred
dividends
|
(3,969)
|
|
(4,263)
|
|
(15,875)
|
|
(15,431)
|
Premium on redemption
of preferred stock
|
-
|
|
-
|
|
-
|
|
(2,710)
|
Net loss attributable
to common stockholders
|
$ (11,975)
|
|
$
(15,275)
|
|
$ (16,929)
|
|
$ (83,714)
|
Loss per
share:
|
|
|
|
|
|
|
|
Basic and
diluted
|
$
(0.11)
|
|
$
(0.15)
|
|
$
(0.16)
|
|
$
(0.80)
|
Weighted average common
shares outstanding:
|
|
|
|
|
|
|
|
Basic and
diluted
|
105,235
|
|
104,559
|
|
105,142
|
|
104,471
|
Summit Hotel
Properties, Inc.
Reconciliation of Net Income (Loss) to Non-GAAP Measures – Funds
From
Operations
(in thousands,
except per share and unit amounts)
(Unaudited)
|
|
|
For the Three Months
Ended
December 31,
|
|
For the Year
Ended
December 31,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net (loss)
income
|
$
(12,082)
|
|
$
(10,905)
|
|
$
1,217
|
|
$
(68,584)
|
Preferred
dividends
|
(3,969)
|
|
(4,263)
|
|
(15,875)
|
|
(15,431)
|
Distributions to and
accretion of redeemable non-controlling
interests
|
(654)
|
|
-
|
|
(2,520)
|
|
-
|
Premium on redemption
of preferred stock
|
-
|
|
-
|
|
-
|
|
(2,710)
|
Loss (income) related
to non-controlling interests in
consolidated joint ventures
|
2,898
|
|
(124)
|
|
(2,321)
|
|
2,896
|
Net loss applicable
to common shares and common units
|
(13,807)
|
|
(15,292)
|
|
(19,499)
|
|
(83,829)
|
Real estate-related
depreciation (1)
|
36,533
|
|
26,041
|
|
145,492
|
|
105,462
|
Loss on write down or
impairment of assets
|
10,420
|
|
-
|
|
10,420
|
|
4,361
|
Loss (gain) on disposal
of assets, net
|
164
|
|
(159)
|
|
(20,315)
|
|
(240)
|
Adjustments related to
non-controlling interests in consolidated
joint ventures
|
(7,768)
|
|
(2,450)
|
|
(20,845)
|
|
(8,454)
|
FFO applicable to
common shares and common units
|
25,542
|
|
8,140
|
|
95,253
|
|
17,300
|
Recoveries of credit
losses
|
-
|
|
-
|
|
(1,100)
|
|
(2,632)
|
Amortization of
lease-related intangible assets
|
-
|
|
22
|
|
-
|
|
87
|
Amortization of
deferred financing costs
|
1,470
|
|
1,114
|
|
5,708
|
|
4,353
|
Amortization of
franchise fees (1)
|
159
|
|
138
|
|
663
|
|
493
|
Amortization of
intangible assets (1)
|
911
|
|
-
|
|
3,643
|
|
-
|
Equity-based
compensation
|
1,376
|
|
4,820
|
|
8,446
|
|
10,681
|
Executive transition
costs
|
-
|
|
1,065
|
|
-
|
|
1,065
|
Transaction
costs
|
12
|
|
-
|
|
749
|
|
3,849
|
Debt transaction
costs
|
362
|
|
60
|
|
1,528
|
|
220
|
Premium on redemption
of preferred stock
|
-
|
|
-
|
|
-
|
|
2,710
|
Non-cash interest
income (2)
|
-
|
|
(263)
|
|
(113)
|
|
(1,042)
|
Non-cash lease expense,
net
|
131
|
|
133
|
|
505
|
|
521
|
Casualty losses
(recoveries), net
|
1,451
|
|
(313)
|
|
2,505
|
|
468
|
Adjustments related to
non-controlling interests in consolidated
joint ventures
|
(657)
|
|
(115)
|
|
(3,400)
|
|
(1,291)
|
Special allocation
related to sale of joint venture asset
|
(417)
|
|
-
|
|
(417)
|
|
-
|
AFFO applicable to
common shares and common units
|
$
30,340
|
|
$
14,801
|
|
$
113,970
|
|
$
36,782
|
FFO per common share /
common unit
|
$
0.21
|
|
$
0.08
|
|
$
0.79
|
|
$
0.16
|
AFFO per common share
/ common unit
|
$
0.25
|
|
$
0.14
|
|
$
0.94
|
|
$
0.35
|
Weighted average
diluted common shares/common units for
FFO and AFFO (3)
|
121,923
|
|
105,433
|
|
121,163
|
|
105,455
|
|
|
(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
Weighted Average Diluted Common Shares
(in
thousands)
(Unaudited)
|
|
|
For the Three Months
Ended
December 31,
|
|
For the Year
Ended
December 31,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Weighted average
dilutive common shares outstanding
|
105,235
|
|
104,559
|
|
105,142
|
|
104,471
|
Dilutive effect of
restricted stock awards
|
105
|
|
381
|
|
221
|
|
402
|
Dilutive effect of
performance stock awards
|
52
|
|
-
|
|
7
|
|
-
|
Dilutive effect of
shares issuable upon conversion of convertible
debt
|
24,193
|
|
23,978
|
|
24,193
|
|
23,256
|
Adjusted weighted
average dilutive common shares
outstanding
|
129,585
|
|
128,918
|
|
129,563
|
|
128,129
|
|
|
|
|
|
|
|
|
Non-GAAP adjustment for
dilutive effect of common units
|
15,981
|
|
125
|
|
15,360
|
|
144
|
Non-GAAP adjustment for
dilutive effect of restricted stock
awards
|
550
|
|
368
|
|
433
|
|
438
|
Non-GAAP adjustment for
dilutive effect of shares issuable
upon conversion of convertible debt
|
(24,193)
|
|
(23,978)
|
|
(24,193)
|
|
(23,256)
|
Non-GAAP weighted
dilutive common shares/units
outstanding – FFO and AFFO
|
121,923
|
|
105,433
|
|
121,163
|
|
105,455
|
Summit Hotel
Properties, Inc.
Reconciliation of
Net (Loss) Income to Non-GAAP Measures –
EBITDAre
(in
thousands)
(Unaudited)
|
|
|
For the Three Months
Ended
December 31,
|
|
For the Year
Ended
December 31,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net (loss)
income
|
$ (12,082)
|
|
$ (10,905)
|
|
$
1,217
|
|
$ (68,584)
|
Depreciation and
amortization
|
37,698
|
|
26,179
|
|
150,160
|
|
105,955
|
Interest
expense
|
19,379
|
|
10,801
|
|
65,581
|
|
43,368
|
Interest
income
|
(45)
|
|
(2)
|
|
(65)
|
|
(8)
|
Income tax (benefit)
expense
|
(1,036)
|
|
398
|
|
3,611
|
|
1,473
|
EBITDA
|
43,914
|
|
26,471
|
|
220,504
|
|
82,204
|
Loss on write down or
impairment of assets
|
10,420
|
|
-
|
|
10,420
|
|
4,361
|
Loss (gain) on disposal
of assets, net
|
164
|
|
(159)
|
|
(20,315)
|
|
(240)
|
EBITDAre
|
54,498
|
|
26,312
|
|
210,609
|
|
86,325
|
Recoveries of credit
losses
|
-
|
|
-
|
|
(1,100)
|
|
(2,632)
|
Amortization of
lease-related intangible assets
|
-
|
|
22
|
|
-
|
|
87
|
Amortization of key
money liabilities
|
(96)
|
|
-
|
|
(363)
|
|
-
|
Equity-based
compensation
|
1,376
|
|
4,820
|
|
8,446
|
|
10,681
|
Executive transition
costs
|
-
|
|
1,065
|
|
-
|
|
1,065
|
Transaction
costs
|
12
|
|
-
|
|
749
|
|
3,849
|
Debt transaction
costs
|
362
|
|
60
|
|
1,528
|
|
220
|
Non-cash interest
income (1)
|
-
|
|
(263)
|
|
(113)
|
|
(1,042)
|
Non-cash lease expense,
net
|
131
|
|
133
|
|
505
|
|
521
|
Casualty losses
(recoveries), net
|
1,451
|
|
(313)
|
|
2,505
|
|
468
|
Loss (income) related
to non-controlling interests in
consolidated joint ventures
|
2,898
|
|
(124)
|
|
(2,321)
|
|
2,896
|
Adjustments related to
non-controlling interests in consolidated
joint ventures
|
(14,131)
|
|
(3,199)
|
|
(39,213)
|
|
(11,943)
|
Special allocation
related to sale of joint venture asset
|
(417)
|
|
-
|
|
(417)
|
|
-
|
Adjusted
EBITDAre
|
$
46,084
|
|
$
28,513
|
|
$
180,815
|
|
$
90,495
|
|
|
|
|
|
|
|
|
|
(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
(in
thousands)
(Unaudited)
|
|
|
|
|
For the Three Months
Ended
December 31,
|
|
For the Years
Ended
December 31,
|
|
Pro Forma Operating
Data (1,2)
|
2022
|
|
2021
|
|
2022
|
|
2021
|
|
Pro forma room
revenue
|
$ 153,767
|
|
$ 127,208
|
|
$ 619,051
|
|
$ 436,048
|
|
Pro forma other hotel
operations revenue
|
18,710
|
|
12,639
|
|
70,131
|
|
40,856
|
|
Pro forma total
revenues
|
172,477
|
|
139,847
|
|
689,182
|
|
476,904
|
|
Pro forma total hotel
operating expenses
|
110,335
|
|
90,943
|
|
445,242
|
|
327,226
|
|
Pro forma hotel
EBITDA
|
$
62,142
|
|
$
48,904
|
|
$
243,940
|
|
$
149,678
|
|
Pro forma hotel
EBITDA Margin
|
36.0 %
|
|
35.0 %
|
|
35.4 %
|
|
31.4 %
|
|
|
|
|
|
|
|
|
|
|
Reconciliations of
Non-GAAP financial measures to comparable GAAP financial
measures
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
Total
revenues
|
$ 172,326
|
|
$ 106,862
|
|
$ 675,695
|
|
$ 361,926
|
|
Total revenues -
acquisitions (1)
|
151
|
|
34,260
|
|
15,329
|
|
118,864
|
|
Total revenues -
dispositions (2)
|
-
|
|
(1,275)
|
|
(1,842)
|
|
(3,886)
|
|
Pro forma total
revenues
|
172,477
|
|
139,847
|
|
689,182
|
|
476,904
|
|
|
|
|
|
|
|
|
|
|
Hotel Operating
Expenses:
|
|
|
|
|
|
|
|
|
Total hotel operating
expenses
|
110,277
|
|
71,149
|
|
437,234
|
|
254,471
|
|
Hotel operating
expenses - acquisitions (1)
|
58
|
|
20,826
|
|
9,593
|
|
76,272
|
|
Hotel operating
expenses - dispositions (2)
|
-
|
|
(1,032)
|
|
(1,585)
|
|
(3,517)
|
|
Pro forma hotel
operating expenses
|
110,335
|
|
90,943
|
|
445,242
|
|
327,226
|
|
|
|
|
|
|
|
|
|
|
Hotel
EBITDA:
|
|
|
|
|
|
|
|
|
Operating income
(loss)
|
6,733
|
|
(1,452)
|
|
67,782
|
|
(33,266)
|
|
Loss (gain) on disposal
of assets, net
|
164
|
|
(159)
|
|
(20,315)
|
|
(240)
|
|
Loss on write down or
impairment of assets
|
10,420
|
|
-
|
|
10,420
|
|
4,361
|
|
Recoveries of credit
losses
|
-
|
|
-
|
|
(1,100)
|
|
(2,632)
|
|
Transaction
costs
|
12
|
|
-
|
|
749
|
|
3,849
|
|
Corporate general and
administrative
|
7,022
|
|
11,145
|
|
30,765
|
|
29,428
|
|
Depreciation and
amortization
|
37,698
|
|
26,179
|
|
150,160
|
|
105,955
|
|
Hotel
EBITDA
|
62,049
|
|
35,713
|
|
238,461
|
|
107,455
|
|
Hotel EBITDA -
acquisitions (1)
|
(19,232)
|
|
(685)
|
|
(58,641)
|
|
(1,428)
|
|
Hotel EBITDA -
dispositions (2)
|
-
|
|
(243)
|
|
(257)
|
|
(369)
|
|
Same store hotel
EBITDA
|
$
42,817
|
|
$
34,785
|
|
$
179,563
|
|
$
105,658
|
|
Hotel EBITDA -
acquisitions (3)
|
19,325
|
|
14,119
|
|
64,377
|
|
44,020
|
|
Pro forma hotel
EBITDA
|
$
62,142
|
|
$
48,904
|
|
$
243,940
|
|
$
149,678
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
For any hotels
acquired by the Company after January 1, 2021 (the "Acquired
Hotels"), the Company has excluded the financial results of each of
the Acquired Hotels for the period the Acquired Hotels were
purchased by the Company to December 31, 2022 (the "Acquisition
Period") in determining same-store hotel EBITDA.
|
|
|
(2)
|
For hotels sold by
the Company between January 1, 2021, and December 31, 2022 (the
"Disposed Hotels"), the Company has excluded the financial results
of each of the Disposed Hotels for the period beginning on January
1, 2020 and ending on the date the Disposed Hotels were sold by the
Company (the "Disposition Period") in determining same-store hotel
EBITDA.
|
|
|
(3)
|
Unaudited pro forma
information includes operating results for 103 hotels owned as of
December 31, 2022, as if all such hotels had been owned by the
Company since January 1, 2021. For hotels acquired by the Company
after January 1, 2021 (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, 2021, to
December 31, 2022. The financial results for the Acquired Hotels
include information 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.
|
Summit Hotel
Properties, Inc.
Pro Forma Hotel
Operating Data
(in thousands,
except operating statistics)
(Unaudited)
|
|
|
|
|
|
|
2022
|
|
|
Pro Forma Operating
Data (1,2)
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
Year Ended
12/31/2022
|
|
Pro forma room
revenue
|
$ 135,262
|
|
$ 169,519
|
|
$ 160,503
|
|
$ 153,767
|
|
$ 619,051
|
|
Pro forma other hotel
operations revenue
|
15,024
|
|
18,263
|
|
18,134
|
|
18,710
|
|
70,131
|
|
Pro forma total
revenues
|
150,286
|
|
187,782
|
|
178,637
|
|
172,477
|
|
689,182
|
|
Pro forma total hotel
operating expenses
|
100,696
|
|
116,910
|
|
117,301
|
|
110,335
|
|
445,242
|
|
Pro forma hotel
EBITDA
|
$
49,590
|
|
$
70,872
|
|
$
61,336
|
|
$
62,142
|
|
$
243,940
|
|
Pro forma hotel
EBITDA Margin
|
33.0 %
|
|
37.7 %
|
|
34.3 %
|
|
36.0 %
|
|
35.4 %
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma Statistics
(1,2)
|
|
|
|
|
|
|
|
|
|
|
Rooms sold
|
876,489
|
|
1,034,603
|
|
1,011,675
|
|
963,342
|
|
3,886,109
|
|
Rooms
available
|
1,365,325
|
|
1,395,182
|
|
1,410,544
|
|
1,410,583
|
|
5,581,634
|
|
Occupancy
|
64.2 %
|
|
74.2 %
|
|
71.7 %
|
|
68.3 %
|
|
69.6 %
|
|
ADR
|
$
154.32
|
|
$
163.85
|
|
$
158.65
|
|
$
159.62
|
|
$
159.30
|
|
RevPAR
|
$
99.07
|
|
$
121.50
|
|
$
113.79
|
|
$
109.01
|
|
$
110.91
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Actual
Statistics
|
|
|
|
|
|
|
|
|
|
|
Rooms sold
|
843,066
|
|
1,025,340
|
|
1,010,996
|
|
963,151
|
|
3,842,553
|
|
Rooms
available
|
1,313,661
|
|
1,382,673
|
|
1,409,716
|
|
1,410,358
|
|
5,516,408
|
|
Occupancy
|
64.2 %
|
|
74.2 %
|
|
71.7 %
|
|
68.3 %
|
|
69.7 %
|
|
ADR
|
$
152.79
|
|
$
162.68
|
|
$
158.39
|
|
$
159.50
|
|
$
158.58
|
|
RevPAR
|
$
98.05
|
|
$
120.64
|
|
$
113.59
|
|
$
108.92
|
|
$
110.46
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliations of
Non-GAAP financial measures to comparable GAAP financial
measures
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
$
141,869
|
|
$ 183,248
|
|
$ 178,252
|
|
$ 172,326
|
|
$ 675,695
|
|
Total revenues from
acquisitions (1)
|
9,551
|
|
5,242
|
|
385
|
|
151
|
|
15,329
|
|
Total revenues from
dispositions (2)
|
(1,134)
|
|
(708)
|
|
-
|
|
-
|
|
(1,842)
|
|
Pro forma total
revenues
|
150,286
|
|
187,782
|
|
178,637
|
|
172,477
|
|
689,182
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel Operating
Expenses:
|
|
|
|
|
|
|
|
|
|
|
Total hotel operating
expenses
|
95,734
|
|
114,074
|
|
117,149
|
|
110,277
|
|
437,234
|
|
Total hotel operating
expenses from acquisitions
(1)
|
6,030
|
|
3,353
|
|
152
|
|
58
|
|
9,593
|
|
Total hotel operating
expenses from dispositions
(2)
|
(1,068)
|
|
(517)
|
|
-
|
|
-
|
|
(1,585)
|
|
Pro forma total
hotel operating expenses
|
100,696
|
|
116,910
|
|
117,301
|
|
110,335
|
|
445,242
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel
EBITDA:
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
724
|
|
43,095
|
|
17,230
|
|
6,733
|
|
67,782
|
|
(Gain) loss on disposal
of assets, net
|
-
|
|
(20,484)
|
|
5
|
|
164
|
|
(20,315)
|
|
Loss on write down or
impairment of assets
|
-
|
|
-
|
|
-
|
|
10,420
|
|
10,420
|
|
Recoveries of credit
losses
|
-
|
|
(250)
|
|
(850)
|
|
-
|
|
(1,100)
|
|
Transaction
costs
|
-
|
|
681
|
|
56
|
|
12
|
|
749
|
|
Corporate general and
administrative
|
9,137
|
|
8,074
|
|
6,532
|
|
7,022
|
|
30,765
|
|
Depreciation and
amortization
|
36,274
|
|
38,058
|
|
38,130
|
|
37,698
|
|
150,160
|
|
Hotel
EBITDA
|
46,135
|
|
69,174
|
|
61,103
|
|
62,049
|
|
238,461
|
|
Hotel EBITDA from
acquisitions (1)
|
(12,304)
|
|
(14,815)
|
|
(12,290)
|
|
(19,232)
|
|
(58,641)
|
|
Hotel EBITDA from
dispositions (2)
|
(66)
|
|
(191)
|
|
-
|
|
-
|
|
(257)
|
|
Same store hotel
EBITDA
|
$
33,765
|
|
$
54,168
|
|
$
48,813
|
|
$
42,817
|
|
$
179,563
|
|
Hotel EBITDA from
acquisitions (3)
|
15,825
|
|
16,704
|
|
12,523
|
|
19,325
|
|
64,377
|
|
Pro forma hotel
EBITDA
|
$
49,590
|
|
$
70,872
|
|
$
61,336
|
|
$
62,142
|
|
$
243,940
|
|
|
|
|
(1)
|
For any hotels
acquired by the Company after January 1, 2022 (the "Acquired
Hotels"), the Company has excluded the financial results of each of
the Acquired Hotels for the period the Acquired Hotels were
purchased by the Company to December 31, 2022 (the "Acquisition
Period") in determining same-store hotel EBITDA.
|
|
|
(2)
|
For hotels sold by
the Company between January 1, 2022, and December 31, 2022 (the
"Disposed Hotels"), the Company has excluded the financial results
of each of the Disposed Hotels for the period beginning on January
1, 2022, and ending on the date the Disposed Hotels were sold by
the Company (the "Disposition Period") in determining same-store
hotel EBITDA.
|
|
|
(3)
|
Unaudited pro forma
information includes operating results for 103 hotels owned as of
December 31, 2022, as if all such hotels had been owned by the
Company since January 1, 2022. For hotels acquired by the Company
after January 1, 2022 (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, 2022, to December 31, 2022. The financial
results for the Acquired Hotels include information 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.
|
Summit Hotel
Properties, Inc.
Reconciliation of Net (Loss) Income to Non-GAAP Measures – EBITDA
for Financial Outlook
(in
thousands)
(Unaudited)
|
|
|
|
FYE 2023
Outlook
|
|
|
Low
|
|
High
|
Net (loss)
income
|
|
$
(9,100)
|
|
$
10,000
|
Depreciation and
amortization
|
|
150,100
|
|
150,100
|
Interest
expense
|
|
84,600
|
|
84,100
|
Income tax
expense
|
|
3,100
|
|
3,100
|
EBITDA and
EBITDAre
|
|
$
228,700
|
|
$
247,300
|
Equity-based
compensation
|
|
7,300
|
|
7,300
|
Debt transaction
costs
|
|
300
|
|
300
|
Other non-cash
expense
|
|
400
|
|
400
|
Loss related to
non-controlling interests in consolidated joint ventures
|
|
12,300
|
|
9,200
|
Adjustments related to
non-controlling interests in consolidated joint ventures
|
|
(58,600)
|
|
(58,600)
|
Adjusted
EBITDAre
|
|
$
190,400
|
|
$
205,900
|
Summit Hotel
Properties, Inc.
Reconciliation of Net (Loss) Income to Non-GAAP Measures – Funds
From Operations for Financial
Outlook
(In thousands except
per share and unit)
(Unaudited)
|
|
|
|
FYE 2023
Outlook
|
|
|
Low
|
|
High
|
Net (loss)
income
|
|
$
(9,100)
|
|
$
10,000
|
Preferred
dividends
|
|
(15,900)
|
|
(15,900)
|
Distributions to and
accretion of redeemable non-controlling interests
|
|
(2,600)
|
|
(2,600)
|
Loss related to
non-controlling interests in consolidated joint ventures
|
|
12,300
|
|
9,200
|
Net (loss) income
applicable to common shares and common units
|
|
$
(15,300)
|
|
$
700
|
Real estate-related
depreciation
|
|
145,800
|
|
145,800
|
Adjustments related to
non-controlling interests in consolidated joint ventures
|
|
(30,900)
|
|
(30,900)
|
FFO applicable to
common shares and common units
|
|
$
99,600
|
|
$
115,600
|
Amortization of
deferred financing costs
|
|
3,000
|
|
3,000
|
Amortization of
franchise fees
|
|
600
|
|
600
|
Equity-based
compensation
|
|
7,300
|
|
7,300
|
Debt transaction
costs
|
|
300
|
|
300
|
Other non-cash
expense
|
|
4,100
|
|
4,100
|
Adjustments related to
non-controlling interests in consolidated joint ventures
|
|
(2,800)
|
|
(2,800)
|
AFFO applicable to
common shares and common units
|
|
$
112,100
|
|
$
128,100
|
Weighted average
diluted common shares / common units for FFO and AFFO
|
|
122,400
|
|
122,400
|
FFO per common
share / common unit
|
|
$
0.81
|
|
$
0.94
|
AFFO per common
share / common unit
|
|
$
0.92
|
|
$
1.05
|
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") and 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,
transaction costs, debt transaction costs, premiums on redemption
of preferred shares, losses from net casualties, non-cash interest
income and non-cash income tax related adjustments to our deferred
tax asset. 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, and certain transaction costs related to lodging property
acquisition activities and debt, 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 depreciation and
amortization expense on assets at our corporate offices, which is
de minimus. 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
In September 2017, Nareit proposed
a standardized performance measure, called EBITDAre, which
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. The conclusion was
reached that, while dedicated REIT investors have long been
accustomed to utilizing the industry's supplemental measures such
as FFO and net operating income ("NOI") to evaluate the investment
quality of REITs as real estate companies, it would be helpful to
generalist investors for REITs as real estate companies to also
present EBITDAre as a more widely known and understood
supplemental measure of performance. 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 for one measurement of 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 unusual 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.
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
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SOURCE Summit Hotel Properties, Inc.