SUMMIT HOTEL PROPERTIES REPORTS THIRD QUARTER 2024 RESULTS

Four Points San Francisco Airport Hotel Sold for $17.7 Million Subsequent to Quarter-End

AUSTIN, Texas, Nov. 4, 2024 /PRNewswire/ -- Summit Hotel Properties, Inc. (NYSE:INN) (the "Company"), today announced results for the three and nine months ended September 30, 2024.

"We are pleased with our third quarter financial results highlighted by our third consecutive quarter of Adjusted FFO growth as our accretive capital recycling program strategy offset moderate top-line growth in the quarter, that was negatively affected by disruption from Hurricane Helene in September in several of our key markets.  Year-to-date, Adjusted FFO per share has increased by nearly eight percent driven by a 4.5 percent increase in Adjusted EBITDA despite being a net seller of assets.  Pro forma hotel EBITDA margins expanded by over 30 basis points during that period reflecting the efficiency of our hotels' operating models and the strength of our operating platform," said Jonathan P. Stanner, the Company's President and Chief Executive Officer.

"We also continued our capital recycling program subsequent to quarter-end, as we completed the sale of the Four Points San Francisco Airport for $17.7 million.  Over the last 18 months, we have sold 10 hotels generating nearly $150 million of proceeds at less than a 5% capitalization rate including foregone capital expenditures.  Our disposition activity has facilitated nearly a full turn reduction in leverage ratio, enhanced the quality and growth profile of the portfolio, significantly reduced near-term capital requirements, and created capacity for future external growth," continued Mr. Stanner.

Third Quarter 2024 Summary

Net Loss: Net loss attributable to common stockholders was $4.3 million, or $0.04 per diluted share, compared to a net loss of $5.4 million, or $0.05 per diluted share, for the third quarter of 2023.

Pro forma RevPAR: Pro forma RevPAR increased 0.1 percent to $120.02 compared to the third quarter of 2023. Pro forma ADR increased 1.3 percent to $162.95 compared to the same period in 2023, and pro forma occupancy decreased 1.2 percent to 73.7 percent.

Same Store RevPAR: Same Store RevPAR increased 0.2 percent to $120.28 compared to the third quarter of 2023. Same store ADR increased 1.2 percent to $163.06 and same store occupancy decreased 1.0 percent to 73.8 percent.

Pro Forma Hotel EBITDA(1): Pro forma hotel EBITDA decreased 2.9 percent to $59.7 million from $61.5 million in the same period in 2023. Pro forma hotel EBITDA margin contracted approximately 99 basis points to 33.8 percent.

Same Store Hotel EBITDA(1): Same store hotel EBITDA decreased 2.9 percent to $59.2 million from $61.0 million in the same period in 2023. Same store hotel EBITDA margin contracted approximately 101 basis points to 33.8 percent.

Adjusted EBITDAre(1): Adjusted EBITDAre decreased 2.1 percent to $45.3 million from $46.3 million in the third quarter of 2023.

Adjusted FFO(1): Adjusted FFO increased 4.0 percent to $27.6 million, or $0.22 per diluted share, compared to $26.5 million, or $0.22 per diluted share, in the third quarter of 2023.

Year-to-Date 2024 Summary

Net Income: Net income attributable to common stockholders was $24.5 million, or $0.21 per diluted share, compared to a net loss of $11.4 million, or $0.11 per diluted share, in the same period of 2023.

Pro forma RevPAR: Pro forma RevPAR increased 1.6 percent to $125.41 compared to the same period of 2023. Pro forma ADR increased 0.3 percent to $168.67, and pro forma occupancy increased 1.2 percent to 74.4 percent.

Same Store RevPAR: Same Store RevPAR increased 1.6 percent to $125.22 compared to the same period of 2023. Same store ADR increased 0.3 percent to $168.35, and same store occupancy increased 1.3 percent to 74.4 percent.

Pro Forma Hotel EBITDA(1): Pro forma hotel EBITDA increased 3.1 percent to $198.5 million from $192.5 million, and pro formal hotel EBITDA margin expanded 32 basis points to 36.1 percent.

Same Store Hotel EBITDA(1): Same store hotel EBITDA increased 3.1 percent to $195.5 million from $189.5 million, and same store hotel EBITDA margin expanded 32 basis points to 36.0 percent.

Adjusted EBITDAre(1): Adjusted EBITDAre increased 4.5 percent to $150.1 million from $143.6 million in the same period of 2023.

Adjusted FFO(1): Adjusted FFO increased 9.3 percent to $94.0 million, or $0.76 per diluted share, compared to $86.0 million, or $0.70 per diluted share, in the same period of 2023.

The Company's results for the three and nine months ended September 30, 2024 and 2023 are as follows (in thousands, except per share amounts and metrics):

For the Three Months Ended

September 30,

For the Nine Months Ended September 30,

2024

2023

2024

2023

Net (loss) income attributable to common stockholders

$            (4,272)

$            (5,438)

$         24,461

$       (11,419)

Net (loss) income per diluted share

$              (0.04)

$              (0.05)

$             0.21

$           (0.11)

Total revenues

$          176,807

$          181,816

$       558,852

$       558,692

EBITDAre (1)

$            53,745

$            55,359

$       184,699

$       172,301

Adjusted EBITDAre (1)

$            45,340

$            46,315

$       150,061

$       143,638

FFO (1)

$            23,135

$            22,669

$         83,557

$         72,592

Adjusted FFO (1)

$            27,610

$            26,546

$         93,976

$         85,957

FFO per diluted share and unit (1) (2)

$                 0.19

$                 0.19

$             0.67

$             0.59

Adjusted FFO per diluted share and unit (1) (2)

$                 0.22

$                 0.22

$             0.76

$             0.70

Pro Forma (2)

RevPAR

$            120.02

$            119.90

$         125.41

$         123.47

RevPAR Growth

0.1 %

1.6 %

Hotel EBITDA

$             59,745

$            61,516

$       198,497

$       192,531

Hotel EBITDA Margin

33.8 %

34.8 %

36.1 %

35.8 %

Hotel EBITDA Margin (Contraction) Growth

(99) bps

 32  bps

Same Store (3)

RevPAR

$            120.28

$            120.08

$         125.22

$         123.22

RevPAR Growth

0.2 %

1.6 %

Hotel EBITDA

$            59,245

$            61,011

$       195,451

$       189,520

Hotel EBITDA Margin

33.8 %

34.8 %

36.0 %

35.6 %

Hotel EBITDA Margin (Contraction) Growth

(101) bps

32  bps

(1) See tables later in this press release for a discussion and reconciliation of net income (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 income (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 96 hotels owned as of September 30, 2024, as if each hotel had been owned by the Company since January 1, 2023 and remained open for the entirety of the reporting period. As a result, all pro forma information includes operating and financial results for hotels acquired since January 1, 2023, which may include periods prior to the Company's ownership. Pro forma and non-GAAP financial measures are unaudited.

(3) All same store information includes operating and financial results for 94 hotels owned as of September 30, 2024, and at all times during the three and nine months ended September 30, 2024, and 2023.

Transaction Activity

Four Points San Francisco Airport Sold for $17.7 Million

Subsequent to the end of the third quarter, the Company completed the sale of the 101-guestroom Four Points by Sheraton San Francisco Airport for a gross sales price of $17.7 million. The hotel's net operating income at the time of sale was de minimis and net proceeds were used for debt repayment and general corporate purposes.

Over the last eighteen months, the Company and its affiliates have sold ten hotels for a combined sales price of nearly $150 million at a blended capitalization rate of less than 5%, inclusive of an estimated $47 million of foregone capital needs, based on the trailing twelve-month net operating income at the time of each sale.  The combined RevPAR for the sold hotels was $85 which is an approximate 30% discount to the current pro forma portfolio.  The Company's disposition activity has facilitated nearly a full turn reduction in its Net Debt : Adjusted EBITDAre leverage ratio, enhanced the quality and growth profile of the portfolio, and significantly reduced near-term capital requirements.

Sold Hotels (2023 & YTD 2024)

Count

Keys

Date

Price (1)

Capex (1)(2)

RevPAR (3)

Hyatt Place Chicago/Lombard

1

151

May 2023

$  10,500

$     5,700

$            76

Hyatt Place Chicago/Hoffman Estates

1

126

May 2023

3,000

7,200

68

Hilton Garden Inn Minneapolis/Eden Prairie

1

97

May 2023

8,200

4,300

81

Holiday Inn Express & Suites Minnetonka

1

93

May 2023

6,400

3,300

74

Hyatt Place Baltimore/Owings Mills

1

123

Dec 2023

8,250

5,200

69

Hyatt Place Dallas/Plano

1

127

Feb 2024

10,250

5,200

69

New Orleans (2) Convention Center

2

410

Apr 2024

73,000

10,250

111

Hilton Garden Inn College Station

1

119

Apr 2024

11,000

2,975

86

Four Points San Francisco Airport

1

101

Oct 2024

17,700

3,000

65

Total

10

1,347

$ 148,300

$   47,125

$            85

(1) In thousands.

(2) Reflects estimated near-term foregone capital expenditures for dispositions.

(3) Reflects RevPAR for the twelve-month period immediately prior to sale.

Capital Markets and Balance Sheet

On a pro rata basis as of September 30, 2024, the Company had the following outstanding indebtedness and liquidity available:

Outstanding debt of $1.0 billion with a weighted average interest rate of 4.68 percent. After giving effect to interest rate derivative agreements, $798.9 million, or 77 percent, of our outstanding debt had a fixed interest rate, and $243.9 million, or 23 percent, had a variable interest rate.

Unrestricted cash and cash equivalents of $41.4 million.

Total liquidity of over $400 million, including unrestricted cash and cash equivalents and revolving credit facility availability, which reflects a liquidity enhancement option available for the Company to exercise in its sole discretion.

Common and Preferred Dividend Declaration

On October 24, 2024, the Company declared a quarterly cash dividend of $0.08 per share on its common stock and per common unit of limited partnership interest in Summit Hotel OP, LP. The quarterly dividend of $0.08 per share represents an annualized dividend yield of 5.2 percent, based on the closing price of shares of the common stock on November 1, 2024.

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 dividends are payable on November 29, 2024, to holders of record as of November 15, 2024.

2024 Outlook

The Company is revising its full-year 2024 outlook to reflect the moderating RevPAR growth environment and disruption related to Hurricanes Helene and Milton in the third and fourth quarter.  The revised Adjusted EBITDAre range incorporates a high-end that has been modestly tightened and Adjusted FFO and Adjusted FFO per share ranges that have been tightened and midpoints maintained.

The full-year 2024 outlook is based on 95 lodging assets currently owned, 53 of which were wholly owned as of November 4, 2024. The updated outlook incorporates all transaction activity closed to date and there are no additional acquisitions, dispositions, or capital markets activities assumed in the Company's full-year 2024 outlook beyond the transactions already completed.  The revised 2024 outlook incorporates the sale of the 101-guestroom Four Points San Francisco Airport.

FYE 2024 Outlook

Low

High

Variance to Prior Midpoint

% Change to Prior Midpoint

Pro Forma RevPAR Growth (1)

1.00 %

2.00 %

(0.25) %

— %

Adjusted EBITDAre

$        188,000

$        194,000

$           (1,000)

(0.5) %

Adjusted FFO

$        113,000

$        121,000

$                 ,

— %

Adjusted FFO per Diluted Unit

$              0.92

$              0.98

$                 ,

— %

Capital Expenditures, Pro Rata

$          75,000

$          85,000

$             5,000

6.7 %

(1) All pro forma information includes operating and financial results for 95 lodging assets owned as of November 4, 2024, as if each property had been owned by the Company since January 1, 2023 and will continue to be owned through the entire year ending December 31, 2024. As a result, the pro forma information includes operating and financial results for lodging assets acquired since January 1, 2023, which may include periods prior to the Company's ownership. Pro forma and non-GAAP financial measures are unaudited.

Third Quarter 2024 Earnings Conference Call

The Company will conduct its quarterly conference call on November 5, 2024, at 9:00 AM ET.

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 January 31, 2025.

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 facilities with efficient operating models primarily in the upscale segment of the lodging industry. As of November 4, 2024, the Company's portfolio consisted of 95 assets, 53 of which are wholly owned, with a total of 14,154 guestrooms located in 24 states.

For additional information, please visit the Company's website, www.shpreit.com, and follow on X at

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, 2023, 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)

September 30, 2024

December 31, 2023

(Unaudited)

ASSETS

Investments in lodging property, net

$                  2,669,478

$                   2,736,975

Investment in lodging property under development

5,397

1,451

Assets held for sale, net

18,621

65,736

Cash and cash equivalents

51,698

37,837

Restricted cash

7,339

9,931

Right-of-use assets, net

33,454

34,814

Trade receivables, net

20,724

21,348

Prepaid expenses and other

16,647

8,865

Deferred charges, net

6,237

6,659

Other assets

7,688

15,632

Total assets

$                  2,837,283

$                   2,939,248

LIABILITIES, REDEEMABLE NON-CONTROLLING INTERESTS AND EQUITY

Liabilities:

Debt, net of debt issuance costs

$                  1,336,095

$                   1,430,668

Lease liabilities, net

24,879

25,842

Accounts payable

6,130

4,827

Accrued expenses and other

96,679

81,215

Total liabilities

1,463,783

1,542,552

Redeemable non-controlling interests

50,219

50,219

Total stockholders' equity

911,436

911,195

Non-controlling interests

411,845

435,282

Total equity

1,323,281

1,346,477

Total liabilities, redeemable non-controlling interests and equity

$                  2,837,283

$                   2,939,248

 

Summit Hotel Properties, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(In thousands, except per share amounts)

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

2024

2023

2024

2023

Revenues:

Room

$       157,408

$       161,712

$       497,864

$       498,982

Food and beverage

9,272

9,949

30,174

30,848

Other

10,127

10,155

30,814

28,862

Total revenues

176,807

181,816

558,852

558,692

Expenses:

Room

37,286

37,510

111,303

112,207

Food and beverage

7,289

7,684

23,130

23,679

Other lodging property operating expenses

56,330

55,826

170,061

169,780

Property taxes, insurance and other

13,250

14,369

40,822

43,308

Management fees

2,728

4,177

12,059

13,974

Depreciation and amortization

36,708

37,882

109,965

112,300

Corporate general and administrative

7,473

8,126

24,488

25,225

Transaction costs

10

—

10