Summit Hotel Properties, Inc. (NYSE: INN) (the “Company”) today
announced results for the fourth quarter and full year ended December
31, 2013.
“We are extremely pleased with the performance of our portfolio in 2013.
Despite the significant revenue disruption we experienced as a result of
the government shutdown in early October, our fourth quarter was
particularly strong and finished well above our initial expectations.
The uncertain and volatile economic conditions early in the quarter
undoubtedly affected our outlook,” said Dan Hansen, Summit’s President
and CEO. “We believe we are in a great position for revenue and earnings
growth heading into what we consider the middle portion of the current
lodging cycle. With our aggressive acquisition strategy and selective
dispositions over the last several quarters, in addition to a solid
balance sheet with ample liquidity, we believe our portfolio is in a
prime position for outsized growth over the next several years.”
The Company’s results included the following:
|
|
|
Three Months Ended December 31,
|
|
Twelve Months Ended December 31,
|
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
|
|
($ in thousands, except per unit and RevPAR data)
|
|
Total Revenues
|
|
$
|
77,956
|
|
$
|
45,109
|
|
$
|
298,958
|
|
$
|
161,700
|
|
EBITDA ¹
|
|
$
|
21,911
|
|
$
|
11,656
|
|
$
|
82,995
|
|
$
|
47,041
|
|
Adjusted EBITDA ¹
|
|
$
|
21,306
|
|
$
|
11,423
|
|
$
|
93,436
|
|
$
|
52,113
|
|
FFO ¹
|
|
$
|
4,568
|
|
$
|
5,661
|
|
$
|
48,556
|
|
$
|
28,130
|
|
Adjusted FFO ¹
|
|
$
|
12,021
|
|
$
|
7,571
|
|
$
|
59,290
|
|
$
|
33,570
|
|
FFO per diluted unit ¹
|
|
$
|
0.05
|
|
$
|
0.11
|
|
$
|
0.66
|
|
$
|
0.69
|
|
Adjusted FFO per diluted unit ¹
|
|
$
|
0.14
|
|
$
|
0.15
|
|
$
|
0.81
|
|
$
|
0.82
|
|
|
|
|
|
|
|
|
|
|
|
Pro Forma ²
|
|
|
|
|
|
|
|
|
|
RevPAR
|
|
$
|
77.12
|
|
$
|
72.13
|
|
$
|
82.25
|
|
$
|
77.83
|
|
RevPAR growth
|
|
|
6.9%
|
|
|
|
|
5.7%
|
|
|
|
Hotel EBITDA
|
|
$
|
24,100
|
|
$
|
21,290
|
|
$
|
113,522
|
|
$
|
104,611
|
|
Hotel EBITDA margin
|
|
|
30.9%
|
|
|
29.3%
|
|
|
34.6%
|
|
|
33.6%
|
|
Hotel EBITDA margin growth
|
|
165 bps
|
|
|
|
92 bps
|
|
|
|
|
|
|
|
|
|
|
|
|
¹ See tables later in this press release for a reconciliation
of net income (loss) to earnings before interest, taxes, depreciation
and amortization (“EBITDA”), adjusted EBITDA, funds from operations
(“FFO”), FFO per diluted unit, adjusted FFO and adjusted FFO per diluted
unit. EBITDA, adjusted EBITDA, FFO, FFO per diluted unit,
adjusted FFO and adjusted FFO per diluted unit, as well as hotel EBITDA
(hotel revenues less hotel operating expenses), are non-GAAP financial
measures. See further discussions of these non-GAAP measures
later in this press release.
² Unless expressly stated otherwise in this release, all pro
forma information includes operating results for 84 hotels owned as of
December 31, 2013 as if each hotel had been owned by the Company since
January 1, 2012, which excludes the 213-guestroom Hyatt Place,
Minneapolis, Minn. acquired on December 31, 2013, and also excludes the
following three hotels located in Fort Smith, Ark. that were held for
sale at December 31, 2013: the 89-guestroom AmericInn Hotel & Suites;
the 57-guestroom Aspen Hotel & Suites; and the 178-guestroom Hampton
Inn. As a result, these pro forma operating measures include operating
results for certain hotels for periods prior to the Company’s ownership.
2013 Highlights
-
Same-Store RevPAR: 2013 same-store revenue per available room
(“RevPAR”) grew to $73.79, an increase of 7.0 percent over the same
period in 2012. Same-store average daily rate (“ADR”) grew to $102.03,
an increase of 4.9 percent from 2012. Same-store occupancy grew by 140
basis points to 72.3 percent.
-
Pro Forma RevPAR: 2013 pro forma RevPAR grew to $82.25, an
increase of 5.7 percent over the same period in 2012. Pro forma ADR
grew to $112.23, an increase of 4.5 percent from 2012. Pro forma
occupancy grew by 81 basis points to 73.3 percent.
-
Pro Forma Hotel EBITDA: 2013 pro forma hotel EBITDA was $113.5
million, an increase of 8.5 percent over 2012.
-
Pro Forma Hotel EBITDA Margin: Pro forma hotel EBITDA margin
expanded by 92 basis points compared with the same period in 2012. Pro
forma hotel EBITDA margin is defined as pro forma hotel EBITDA as a
percentage of pro forma total revenue.
-
Adjusted EBITDA: Adjusted EBITDA increased to $93.4 million
from $52.1 million in the same period in 2012, an increase of $41.3
million or 79.3 percent. Adjusted EBITDA for the year includes $0.6
million of charges associated with the consolidation of the Company’s
corporate office to Austin, Texas.
-
Adjusted FFO: Adjusted funds from operations (“AFFO”) for the
full year 2013 was $59.3 million or $0.81 per diluted unit.
-
Acquisitions: During the twelve months of 2013, the Company
acquired 19 hotels comprising 3,033 guestrooms, for a total purchase
price of $475.6 million.
“2013 was a great year for us and I am very pleased with all that our
team accomplished,” Hansen stated. “After great results in 2012, during
which our same-store hotels posted RevPAR growth of 11.7 percent, our
2013 same-store RevPAR growth of 7.0 percent highlights the strength and
quality of our portfolio.”
|
Full Year 2013 INN vs. STR * Results
|
|
|
|
Occupancy
|
|
ADR
|
|
RevPAR
|
|
INN Same-store
|
|
2.0%
|
|
4.9%
|
|
7.0%
|
|
Overall US *
|
|
1.5%
|
|
3.9%
|
|
5.4%
|
|
Upscale *
|
|
1.2%
|
|
4.1%
|
|
5.3%
|
|
* STR Quarterly Hotel Review, Volume 13, Issue Q4.
|
|
|
Fourth Quarter Highlights
-
Same-Store RevPAR: Same-store RevPAR in the fourth quarter of
2013 grew to $67.82, an increase of 6.1 percent over the same period
in 2012. Same-store ADR improved to $99.76, an increase of 3.7 percent
from the fourth quarter of 2012. Same-store occupancy grew by 157
basis points to 68.0 percent.
-
Pro Forma RevPAR: Pro forma RevPAR in the fourth quarter of
2013 grew to $77.12, an increase of 6.9 percent over the same period
in 2012. Pro forma ADR grew to $110.68, an increase of 4.8 percent
from the fourth quarter of 2012. Pro forma occupancy increased by 141
basis points to 69.7 percent.
-
Pro Forma Hotel EBITDA: Pro forma hotel EBITDA for the fourth
quarter of 2013 was $24.1 million, an increase of 13.2 percent over
the same period of 2012.
-
Pro Forma Hotel EBITDA Margin: Pro forma hotel EBITDA margin
expanded by 165 basis points compared with the same period in 2012.
-
Adjusted EBITDA: Adjusted EBITDA increased to $21.3 million
from $11.4 million in the same period in 2012, an increase of $9.9
million or 86.8 percent. Adjusted EBITDA for the quarter includes $0.2
million of charges associated with the consolidation of the Company’s
corporate office to Austin, Texas.
-
Adjusted FFO: Adjusted FFO for the quarter was $12.0 million,
or $0.14 per diluted unit.
-
Acquisitions: During the fourth quarter of 2013, the Company
acquired three hotels comprising 436 guestrooms, for a total purchase
price of $63.4 million.
-
Dividends: On January 30, 2014, the Company declared an $0.1125
per share quarterly dividend on its common stock, a $0.578125 per
share quarterly dividend on its 9.25 percent Series A Cumulative
Redeemable Preferred Stock, a $0.4921875 per share quarterly dividend
on its 7.875 percent Series B Cumulative Redeemable Preferred Stock,
and a $0.4453125 per share quarterly dividend on its 7.125 percent
Series C Cumulative Redeemable Preferred Stock. Based on the closing
price of the Company’s common stock on March 14, 2014, the annualized
dividend yield on the Company’s common stock was 4.9 percent.
Capital Markets
During 2013, the Company raised $382.4 million in net proceeds from two
common stock offerings and one preferred stock offering.
“The capital transactions we completed in 2013 allowed us to continue
executing on our strategic growth,” said Executive Vice President and
CFO Stuart Becker. “We have a solid balance sheet with ample runway to
execute on additional acquisitions which, in addition to our high
quality portfolio today, we anticipate will help continue per share
growth for our shareholders.”
At December 31, 2013, the Company had total outstanding debt of $435.6
million. During 2013, the Company:
-
Closed on $187.7 million of term debt at an average interest rate of
4.83 percent. This amount excludes the $92.0 million interim loan with
KeyBank N.A., which was closed in May 2013 and subsequently repaid in
full in October 2013.
-
Retired $43.7 million of debt bearing an average interest rate of 5.40
percent. This also excludes the $92.0 million interim loan with
KeyBank N.A.
As of March 14, 2014, the Company has $161.0 million drawn, including
the $75.0 million term loan and $14.0 million in standby letters of
credit, and has $117.3 million available to borrow on its revolving
credit facility.
Capital Investment
Acquisitions
During 2013, the Company completed 19 acquisitions, comprising a total
3,033 guestrooms, for a total purchase price of $475.6 million. Full
year 2013 pro forma RevPAR among the 19 hotels was $97.31 as compared to
the Company’s same-store RevPAR of $73.79 for the same period.
“We have built a portfolio of premium assets in strong growth markets,
including 47 acquisitions since our 2011 IPO. These acquisitions are
helping to create long-term shareholder value,” Hansen said. “We are
thrilled with our expansion on the West Coast over the last twelve
months and look forward to the strong growth these properties will bring
to our portfolio.”
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
Purchase
|
|
|
|
Date
|
|
Hotel
|
|
Location
|
|
Rooms
|
|
Price *
|
|
Manager
|
|
01/22/13
|
|
Hyatt Place
|
|
Chicago (Hoffman Estates), Ill.
|
|
126
|
|
$
|
9.2
|
|
Hyatt
|
|
01/22/13
|
|
Hyatt Place
|
|
Orlando (Convention), Fla.
|
|
149
|
|
$
|
12.3
|
|
Hyatt
|
|
01/22/13
|
|
Hyatt Place
|
|
Orlando (Universal), Fla.
|
|
151
|
|
$
|
11.8
|
|
Hyatt
|
|
02/11/13
|
|
Holiday Inn Express & Suites
|
|
San Francisco, Calif.
|
|
252
|
|
$
|
60.5
|
|
IHG
|
|
03/11/13
|
|
Courtyard by Marriott
|
|
New Orleans (French Quarter), La.
|
|
140
|
|
$
|
25.7
|
|
Marriott
|
|
03/11/13
|
|
Courtyard by Marriott
|
|
New Orleans (Convention), La.
|
|
202
|
|
$
|
30.8
|
|
Marriott
|
|
03/11/13
|
|
Courtyard by Marriott
|
|
New Orleans (Metairie), La.
|
|
153
|
|
$
|
23.5
|
|
Marriott
|
|
03/11/13
|
|
Residence Inn
|
|
New Orleans (Metairie), La.
|
|
120
|
|
$
|
19.9
|
|
Marriott
|
|
03/11/13
|
|
SpringHill Suites
|
|
New Orleans (Convention), La.
|
|
208
|
|
$
|
33.1
|
|
Marriott
|
|
04/30/13
|
|
Hilton Garden Inn
|
|
Greenville, S.C.
|
|
120
|
|
$
|
15.3
|
|
Kana
|
|
05/21/13
|
|
Holiday Inn Express & Suites
|
|
Minneapolis (Minnetonka), Minn.
|
|
93
|
|
$
|
6.9
|
|
Interstate Hotels
|
|
05/21/13
|
|
Hilton Garden Inn
|
|
Minneapolis (Eden Prairie), Minn.
|
|
97
|
|
$
|
10.2
|
|
Interstate Hotels
|
|
05/23/13
|
|
Fairfield Inn & Suites
|
|
Louisville, Ky.
|
|
135
|
|
$
|
25.0
|
|
White Lodging
|
|
05/23/13
|
|
SpringHill Suites
|
|
Louisville, Ky.
|
|
198
|
|
$
|
39.1
|
|
White Lodging
|
|
05/23/13
|
|
Courtyard by Marriott
|
|
Indianapolis, Ind.
|
|
297
|
|
$
|
58.7
|
|
White Lodging
|
|
05/23/13
|
|
SpringHill Suites
|
|
Indianapolis, Ind.
|
|
156
|
|
$
|
30.2
|
|
White Lodging
|
|
10/01/13
|
|
Hampton Inn & Suites
|
|
Ventura (Camarillo), Calif.
|
|
115
|
|
$
|
15.8
|
|
Tsunami Hotel Mgmt.
|
|
10/08/13
|
|
Hampton Inn & Suites
|
|
San Diego (Poway), Calif.
|
|
108
|
|
$
|
15.2
|
|
Tsunami Hotel Mgmt.
|
|
12/31/13
|
|
Hyatt Place
|
|
Minneapolis, Minn.
|
|
213
|
|
$
|
32.5
|
|
Hyatt
|
|
|
|
Total
|
|
|
|
3,033
|
|
$
|
475.6
|
|
|
|
*in millions
|
|
|
Renovation Capital
The Company invested $46.9 million on renovations in 2013; $18.4 million
was deployed in the fourth quarter. Among the 17 major renovations
completed in 2013, projects ranged from lobby and public space
improvements to complete guestroom renovations, including furniture,
soft goods and guest bathrooms.
One of the Company’s largest capital projects in 2013 included two Hyatt
Place properties acquired in January 2013 and located in Orlando, Fla.
These properties were updated to include completely re-designed lobbies
and common areas. They both now feature new bars and lounge areas for
guests to enjoy. As well, all public restrooms were remodeled. All
guestrooms were updated with new beds, carpeting and wall coverings. An
additional guestroom was added at the Convention Center property to
better utilize previously unused space. However, the Universal property
was lacking the necessary office space for staff. The Company converted
a guestroom at this property into an office, resulting in a net-zero
change in guestroom count among the two properties. The swimming pools
were also completely renovated with replastering, new outdoor pool decks
and new poolside furniture. The fitness centers were renovated and
updated with new equipment. These renovations were completed with a new
roof and fresh exterior paint. The renovations totaled $3.7 million and
were completed in the fourth quarter of 2013.
Another large project completed was the full renovation of the Courtyard
by Marriott in New Orleans (Metairie), La. The guestrooms were updated
with the new Marriott “Gen Next CYnergy Package.” The new guestroom
design features the new color palette and included all new furniture,
beds, wall coverings, lighting, bath tile and wall paint. The renovation
also included an exterior refinish and a complete renovation of the
courtyard and garden area. The exercise room was updated with all new
finishes and fitness equipment. While the lobby and bistro were
renovated with the “Courtyard Refreshing Business” package in 2012, the
common areas were updated to include new lighting, hallway carpet, tile
and wall coverings. This renovation totaled approximately $2.8 million
and was completed in September 2013.
“We continue to proactively deploy renovation capital into our portfolio
where we see opportunities for improvement,” Hansen said. “Our team has
done an excellent job of executing on renovation projects and we are
thrilled with the increased revenues, better margins and the improvement
in competitive set index rankings we are realizing among our renovated
properties.”
Dispositions
During 2013, the Company sold fifteen hotels with a total of 1,143
guestrooms, and five parcels of land that it no longer considers
strategic, for a total sale price of $58.6 million.
“We have now closed nine of the previously announced planned
dispositions and feel great about the position of our portfolio,” Hansen
stated. “The capital we have generated through the sales of less
strategic properties helps strengthen our balance sheet and enables us
to continue executing on deals that are accretive to our portfolio and
will create earnings growth.”
Balance Sheet
-
At December 31, 2013, the Company had total outstanding debt of $435.6
million and $46.7 million of cash and cash equivalents. Subject to the
borrowing base as of December 31, 2013, maximum borrowing capacity was
$270.7 million under the senior unsecured credit facility, including
both the revolver and term portions of the facility. At December 31,
2013, the Company had $75.0 million outstanding on its senior
unsecured term facility, $0.2 million in standby letters of credit and
$195.5 million available to borrow. In addition, the Company had 13
unencumbered hotels.
-
The Company’s weighted average interest rate on its debt outstanding
at December 31, 2013 was 5.03 percent.
-
At December 31, 2013, the Company’s total net debt to trailing twelve
month adjusted EBITDA was 4.2x.
-
Management identified a material weakness in controls related to
individual hotels’ balance sheets that largely resulted in
reclassification entries within certain balance sheet line items.
Subsequent Events
-
On January 9, 2014, the Company acquired the 182-guestroom Hilton
Garden Inn located in Houston, Texas for a purchase price of $37.5
million.
-
On January 10, 2014, the Company acquired the 98-guestroom Hampton
Inn located in Santa Barbara (Goleta), Calif., for a purchase price
of $27.9 million.
-
On January 17, 2014, the Company completed the disposition of the
89-guestroom AmericInn Hotel & Suites and the 57-guestroom Aspen Hotel
& Suites located in Fort Smith, Ark. for a total sales price of $3.1
million.
-
On January 24, 2014, the Company acquired the 101-guestroom Four
Points by Sheraton located in San Francisco, Calif., for a purchase
price of $21.3 million.
-
On March 14, 2014, the Company acquired the 210-guestroom DoubleTree
by Hilton located in San Francisco, Calif., for a purchase price of
$39.1 million.
2014 Outlook
The Company provides guidance for the first quarter and full year 2014
based on 89 current hotels.¹ This outlook includes activity subsequent
to December 31, 2013. Except as described in footnote 1 below, it
assumes no additional hotels are acquired or sold and no additional
issuances of equity securities.
|
FIRST QUARTER 2014
|
|
|
|
Low-end
|
|
High-end
|
|
Pro forma RevPAR (89) 1, 2
|
|
$
|
84.50
|
|
$
|
86.50
|
|
Pro forma RevPAR growth (89) 1, 2
|
|
|
4.0%
|
|
|
6.0%
|
|
RevPAR (same-store 66)
|
|
$
|
76.50
|
|
$
|
78.50
|
|
RevPAR growth (same-store 66)
|
|
|
4.0%
|
|
|
6.0%
|
|
Adjusted FFO 3
|
|
$
|
14,700
|
|
$
|
16,500
|
|
Adjusted FFO per diluted unit 4
|
|
$
|
0.17
|
|
$
|
0.19
|
|
Renovation capital deployed
|
|
$
|
15,000
|
|
$
|
19,000
|
|
Income tax expense
|
|
$
|
500
|
|
$
|
800
|
|
|
|
|
|
|
|
FULL YEAR 2014
|
|
|
|
Low-end
|
|
High-end
|
|
Pro forma RevPAR (89) ¹
|
|
$
|
87.00
|
|
$
|
89.00
|
|
Pro Forma RevPAR growth (89) ¹
|
|
|
5.0%
|
|
|
7.0%
|
|
RevPAR (same-store 66)
|
|
$
|
79.50
|
|
$
|
81.50
|
|
RevPAR growth (same-store 66)
|
|
|
4.0%
|
|
|
6.0%
|
|
Adjusted FFO 3
|
|
$
|
72,800
|
|
$
|
79,700
|
|
Adjusted FFO per diluted unit 4
|
|
$
|
0.84
|
|
$
|
0.92
|
|
Renovation capital deployed
|
|
$
|
35,000
|
|
$
|
45,000
|
|
Income tax expense
|
|
$
|
2,000
|
|
$
|
3,000
|
|
|
|
|
|
|
¹ In addition to the Company’s portfolio of 88 hotels (10,908
guestrooms) at December 31, 2013, includes the following four properties
purchased subsequent to December 31, 2013: the 98-guestroom Hampton Inn,
Santa Barbara (Goleta), Calif.; the 182-guestroom Hilton Garden Inn,
Houston, Texas; the 101-guestroom Four Points by Sheraton, San
Francisco, Calif.; and the 210-guestroom DoubleTree by Hilton San
Francisco, Calif. Also excludes the following three properties
located in Fort Smith, Ark. that were sold subsequent to or held for
sale at December 31, 2013: the 89-guestroom AmericInn Hotel & Suites;
the 57-guestroom Aspen Hotel & Suites; and the 178-guestroom Hampton Inn.
² First quarter RevPAR guidance anticipates 150 to 200 basis
points of RevPAR disruption and $0.7 million to $0.9 million of EBITDA
disruption in the first quarter due to renovation work at eleven hotels.
³ The Company includes the 178-guestroom Hampton Inn, Fort
Smith, Ark. in Adjusted FFO calculations; this property however is
excluded from all pro forma calculations as noted.
4 Assumed weighted average diluted common units of
86,585,000 for first quarter 2014; 86,616,000 for full year 2014.
Earnings Call
The Company will conduct its quarterly conference call on Monday, March
17, 2014 at 8:30am EST. To participate in the conference call please
dial 866-318-8611. The participant passcode for the call is 25870971.
Additionally, a live webcast of the call will be available through the
Company’s website, www.shpreit.com.
A replay of the conference call will be available until 11:59pm EST
Monday, March 31, 2014 by dialing 888-286-8010; participant passcode
51957720. A replay of the conference call will also be available on the
Company’s website until May 26, 2014.
About Summit Hotel Properties
Summit Hotel Properties, Inc. is a publicly traded real estate
investment trust focused primarily on acquiring and owning
premium-branded select-service hotels in the upscale and upper midscale
segments of the lodging industry. As of March 17, 2014, the Company’s
portfolio consisted of 90 hotels with a total of 11,353 guestrooms
located in 22 states. Since its initial public offering in February
2011, the Company has acquired 47 hotel properties, totaling 6,539
guestrooms for a total purchase price of $917.3 million.
For additional information, please visit the Company’s website, www.shpreit.com
and follow 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 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” 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: 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 or services;
forecasts of the Company’s future financial performance and potential
increases in average daily rate, occupancy, RevPAR, room supply
and demand, funds from operations and adjusted funds from operations;
U.S. GDP growth; estimated sources and uses of available capital; 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,
2013 to be filed with the SEC on or about the date of this press release
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.
|
|
Consolidated Balance Sheets
|
|
December 31, 2013 and December 31, 2012
|
|
Amounts in thousands
|
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
2013
|
|
2012
|
|
ASSETS
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
Investment in hotel properties, net
|
|
$
|
1,149,967
|
|
$
|
734,362
|
|
Investment in hotel properties under development
|
|
|
-
|
|
|
10,303
|
|
Land held for development
|
|
|
13,748
|
|
|
15,802
|
|
Assets held for sale
|
|
|
12,224
|
|
|
4,836
|
|
Cash and cash equivalents
|
|
|
46,706
|
|
|
13,980
|
|
Restricted cash
|
|
|
38,498
|
|
|
3,624
|
|
Trade receivables
|
|
|
7,231
|
|
|
5,478
|
|
Prepaid expenses and other
|
|
|
8,876
|
|
|
5,311
|
|
Derivative financial instruments
|
|
|
253
|
|
|
-
|
|
Deferred charges, net
|
|
|
10,270
|
|
|
8,895
|
|
Deferred tax asset
|
|
|
49
|
|
|
3,997
|
|
Other assets
|
|
|
6,654
|
|
|
4,201
|
|
TOTAL ASSETS
|
|
$
|
1,294,476
|
|
$
|
810,789
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
Debt
|
|
$
|
435,589
|
|
$
|
312,613
|
|
Accounts payable
|
|
|
7,583
|
|
|
5,013
|
|
Accrued expenses
|
|
|
27,154
|
|
|
18,985
|
|
Derivative financial instruments
|
|
|
1,772
|
|
|
641
|
|
Deferred tax liability
|
|
|
-
|
|
|
-
|
|
TOTAL LIABILITIES
|
|
|
472,098
|
|
|
337,252
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMMITMENTS AND CONTINGENCIES
|
|
|
|
|
|
Total shareholders' equity
|
|
|
809,840
|
|
|
436,819
|
|
Noncontrolling interests in operating partnership
|
|
|
4,722
|
|
|
36,718
|
|
Noncontrolling interests in joint venture
|
|
|
7,816
|
|
|
-
|
|
EQUITY
|
|
|
822,378
|
|
|
473,537
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND EQUITY
|
|
$
|
1,294,476
|
|
$
|
810,789
|
|
|
|
|
|
|
|
SUMMIT HOTEL PROPERTIES, INC.
|
|
Consolidated Statements of Operations
|
|
Amounts in thousands
|
|
(Unaudited)
|
|
|
|
|
|
Three months ended December 31,
|
|
Twelve months ended December 31,
|
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
REVENUE
|
|
|
|
|
|
|
|
|
|
Room revenue
|
|
$
|
73,505
|
|
$
|
42,923
|
|
$
|
283,279
|
|
$
|
154,600
|
|
Other hotel operations revenue
|
|
|
4,451
|
|
|
2,186
|
|
|
15,679
|
|
|
7,100
|
|
Total revenues
|
|
|
77,956
|
|
|
45,109
|
|
|
298,958
|
|
|
161,700
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES
|
|
|
|
|
|
|
|
|
|
Hotel operating expenses
|
|
|
|
|
|
|
|
|
|
Rooms
|
|
|
21,210
|
|
|
13,640
|
|
|
80,391
|
|
|
45,130
|
|
Other direct
|
|
|
11,480
|
|
|
6,236
|
|
|
39,815
|
|
|
21,284
|
|
Other indirect
|
|
|
21,221
|
|
|
12,472
|
|
|
77,392
|
|
|
43,377
|
|
Other
|
|
|
201
|
|
|
177
|
|
|
744
|
|
|
651
|
|
Total hotel operating expenses
|
|
|
54,112
|
|
|
32,525
|
|
|
198,342
|
|
|
110,442
|
|
Depreciation and amortization
|
|
|
13,934
|
|
|
8,768
|
|
|
51,184
|
|
|
30,645
|
|
Corporate general and administrative
|
|
|
|
|
|
|
|
|
|
Salaries and other compensation
|
|
|
1,629
|
|
|
2,476
|
|
|
8,218
|
|
|
6,039
|
|
Other
|
|
|
1,255
|
|
|
776
|
|
|
4,711
|
|
|
3,534
|
|
Hotel property acquisition costs
|
|
|
332
|
|
|
1,478
|
|
|
1,886
|
|
|
3,050
|
|
Loss on impairment of assets
|
|
|
-
|
|
|
660
|
|
|
1,369
|
|
|
660
|
|
Total expenses
|
|
|
71,262
|
|
|
46,683
|
|
|
265,710
|
|
|
154,370
|
|
Income (loss) from operations
|
|
|
6,694
|
|
|
(1,574)
|
|
|
33,248
|
|
|
7,330
|
|
|
|
|
|
|
|
|
|
|
|
OTHER INCOME (EXPENSE)
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
32
|
|
|
15
|
|
|
83
|
|
|
35
|
|
Other income
|
|
|
(463)
|
|
|
234
|
|
|
(343)
|
|
|
731
|
|
Interest expense
|
|
|
(5,260)
|
|
|
(3,760)
|
|
|
(20,137)
|
|
|
(14,909)
|
|
Debt transaction costs
|
|
|
(1,585)
|
|
|
(10)
|
|
|
(1,697)
|
|
|
(661)
|
|
Gain (loss) on disposal of assets
|
|
|
352
|
|
|
-
|
|
|
363
|
|
|
(199)
|
|
Gain (loss) on derivative financial instruments
|
|
|
-
|
|
|
-
|
|
|
2
|
|
|
(2)
|
|
Total Other Income (Expense)
|
|
|
(6,924)
|
|
|
(3,521)
|
|
|
(21,729)
|
|
|
(15,005)
|
|
Income (loss) from continuing operations before income taxes
|
|
|
(230)
|
|
|
(5,095)
|
|
|
11,519
|
|
|
(7,675)
|
|
Income tax (expense) benefit
|
|
|
(3,625)
|
|
|
743
|
|
|
(4,894)
|
|
|
728
|
|
Income (loss) from continuing operations
|
|
|
(3,855)
|
|
|
(4,352)
|
|
|
6,625
|
|
|
(6,947)
|
|
Income (loss) from discontinued operations
|
|
|
1,780
|
|
|
3,603
|
|
|
(728)
|
|
|
4,677
|
|
Net income (loss)
|
|
|
(2,075)
|
|
|
(749)
|
|
|
5,897
|
|
|
(2,270)
|
|
Net income (loss) attributable to noncontrolling interests in:
|
|
|
|
|
|
|
|
|
|
Operating partnership
|
|
|
(208)
|
|
|
72
|
|
|
(297)
|
|
|
(1,194)
|
|
Joint venture
|
|
|
(8)
|
|
|
-
|
|
|
316
|
|
|
-
|
|
Net income (loss) attributable to Summit Hotel OP, LP
|
|
|
(1,859)
|
|
|
(821)
|
|
|
5,878
|
|
|
(1,076)
|
|
Preferred dividends
|
|
|
(4,147)
|
|
|
(1,156)
|
|
|
(14,590)
|
|
|
(4,625)
|
|
Net income (loss) attributable to common unit holders
|
|
|
(6,006)
|
|
|
(1,977)
|
|
|
(8,712)
|
|
|
(5,701)
|
|
Weighted average common units outstanding
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
84,767
|
|
|
45,667
|
|
|
70,327
|
|
|
33,717
|
|
Diluted
|
|
|
85,224
|
|
|
45,860
|
|
|
70,737
|
|
|
33,849
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUMMIT HOTEL PROPERTIES, INC.
|
|
Discontinued Operations Summary
|
|
Amounts in thousands
|
|
(Unaudited)
|
|
|
|
|
|
Three months ended December 31,
|
|
Twelve months ended December 31,
|
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
REVENUE
|
|
$
|
2,329
|
|
$
|
6,994
|
|
$
|
19,458
|
|
$
|
33,193
|
|
Hotel operating expenses
|
|
|
1,944
|
|
|
5,559
|
|
|
14,859
|
|
|
24,701
|
|
Depreciation and amortization
|
|
|
(30)
|
|
|
941
|
|
|
1,960
|
|
|
4,226
|
|
Loss on impairment of assets
|
|
|
390
|
|
|
207
|
|
|
7,675
|
|
|
2,305
|
|
Income (loss) from hotel operations
|
|
|
25
|
|
|
287
|
|
|
(5,036)
|
|
|
1,961
|
|
Interest expense
|
|
|
-
|
|
|
126
|
|
|
174
|
|
|
855
|
|
(Gain) loss on disposal of assets
|
|
|
(3,068)
|
|
|
(3,010)
|
|
|
(3,945)
|
|
|
(3,010)
|
|
Income (loss) before taxes
|
|
|
3,093
|
|
|
3,171
|
|
|
(1,265)
|
|
|
4,116
|
|
Income tax (expense) benefit
|
|
|
(1,313)
|
|
|
432
|
|
|
537
|
|
|
561
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from discontinued operations
|
|
$
|
1,780
|
|
$
|
3,603
|
|
$
|
(728)
|
|
$
|
4,677
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUMMIT HOTEL PROPERTIES, INC.
|
|
Reconciliation of Net Income to Non-GAAP Measures – Funds From
Operations
|
|
Amounts in thousands, except per common unit
|
|
(Unaudited)
|
|
|
|
|
|
Three months ended December 31,
|
|
Twelve months ended December 31,
|
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
NET INCOME (LOSS)
|
|
|
(2,075)
|
|
|
(749)
|
|
|
5,897
|
|
|
(2,270)
|
|
Preferred dividends
|
|
|
(4,147)
|
|
|
(1,156)
|
|
|
(14,590)
|
|
|
(4,625)
|
|
Depreciation and amortization
|
|
|
13,904
|
|
|
9,709
|
|
|
53,144
|
|
|
34,871
|
|
Loss on impairment of assets
|
|
|
390
|
|
|
867
|
|
|
9,044
|
|
|
2,965
|
|
(Gain) loss on disposal of assets
|
|
|
(3,420)
|
|
|
(3,010)
|
|
|
(4,308)
|
|
|
(2,811)
|
|
Noncontrolling interest in joint venture
|
|
|
8
|
|
|
-
|
|
|
(316)
|
|
|
-
|
|
Adjustments related to joint venture
|
|
|
(92)
|
|
|
-
|
|
|
(315)
|
|
|
-
|
|
Funds From Operations
|
|
$
|
4,568
|
|
$
|
5,661
|
|
$
|
48,556
|
|
$
|
28,130
|
|
Per common unit
|
|
$
|
0.05
|
|
$
|
0.11
|
|
$
|
0.66
|
|
$
|
0.69
|
|
|
|
|
|
|
|
|
|
|
|
Equity based compensation
|
|
|
508
|
|
|
422
|
|
|
2,124
|
|
|
1,205
|
|
Hotel property acquisition costs
|
|
|
332
|
|
|
1,478
|
|
|
1,886
|
|
|
3,050
|
|
Debt transaction costs
|
|
|
1,585
|
|
|
10
|
|
|
1,697
|
|
|
661
|
|
(Gain) loss on derivative
|
|
|
-
|
|
|
-
|
|
|
(2)
|
|
|
2
|
|
Interest expense related to prepayment penalties
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
522
|
|
Increase in deferred tax asset valuation allowance ¹
|
|
|
5,029
|
|
|
-
|
|
|
5,029
|
|
|
-
|
|
Adjusted Funds From Operations
|
|
$
|
12,021
|
|
$
|
7,571
|
|
$
|
59,290
|
|
$
|
33,570
|
|
Per common unit
|
|
$
|
0.14
|
|
$
|
0.15
|
|
$
|
0.81
|
|
$
|
0.82
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average diluted common units ²
|
|
|
86,212
|
|
|
51,086
|
|
|
73,241
|
|
|
40,912
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
¹ Represents a non-cash valuation allowance related to
deferred tax assets resulting from net operating loss carry forwards.
² The Company includes the outstanding units of limited
partnership interest (“OP units”) in Summit Hotel OP, LP, the Company’s
operating partnership, because the OP units are redeemable for shares of
the Company’s common stock.
|
SUMMIT HOTEL PROPERTIES, INC.
|
|
Reconciliation of Net Income to Non-GAAP Measures – EBITDA
|
|
Amounts in thousands
|
|
(Unaudited)
|
|
|
|
|
Three months ended December 31,
|
|
Twelve months ended December 31,
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
NET INCOME (LOSS)
|
$
|
(2,075)
|
|
$
|
(749)
|
|
$
|
5,897
|
|
$
|
(2,270)
|
|
Depreciation and amortization
|
|
13,904
|
|
|
9,709
|
|
|
53,144
|
|
|
34,871
|
|
Interest expense
|
|
5,260
|
|
|
3,886
|
|
|
20,311
|
|
|
15,764
|
|
Interest income
|
|
(32)
|
|
|
(15)
|
|
|
(83)
|
|
|
(35)
|
|
Income tax expense (benefit)
|
|
4,938
|
|
|
(1,175)
|
|
|
4,357
|
|
|
(1,289)
|
|
Noncontrolling interest in joint venture
|
|
8
|
|
|
-
|
|
|
(316)
|
|
|
-
|
|
Adjustments related to joint venture
|
|
(92)
|
|
|
-
|
|
|
(315)
|
|
|
-
|
|
EBITDA
|
$
|
21,911
|
|
$
|
11,656
|
|
$
|
82,995
|
|
$
|
47,041
|
|
|
|
|
|
|
|
|
|
|
Equity based compensation
|
|
508
|
|
|
422
|
|
|
2,124
|
|
|
1,205
|
|
Hotel property acquisition costs
|
|
332
|
|
|
1,478
|
|
|
1,886
|
|
|
3,050
|
|
Loss on impairment of assets
|
|
390
|
|
|
867
|
|
|
9,044
|
|
|
2,965
|
|
Debt transaction costs
|
|
1,585
|
|
|
10
|
|
|
1,697
|
|
|
661
|
|
(Gain) loss on disposal of assets
|
|
(3,420)
|
|
|
(3,010)
|
|
|
(4,308)
|
|
|
(2,811)
|
|
(Gain) loss on derivatives
|
|
-
|
|
|
-
|
|
|
(2)
|
|
|
2
|
|
Adjusted EBITDA
|
$
|
21,306
|
|
$
|
11,423
|
|
$
|
93,436
|
|
$
|
52,113
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUMMIT HOTEL PROPERTIES, INC.
|
|
Pro Forma¹ Operational Data
|
|
Amounts in thousands
|
|
(Unaudited)
|
|
|
|
|
|
Three months ended December 31,
|
|
Twelve months ended December 31,
|
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
REVENUE
|
|
|
|
|
|
|
|
|
|
Room revenue
|
|
$
|
73,578
|
|
$
|
68,796
|
|
$
|
311,347
|
|
$
|
295,469
|
|
Other hotel operations revenue
|
|
|
4,336
|
|
|
3,914
|
|
|
17,132
|
|
|
15,472
|
|
Total revenue
|
|
|
77,914
|
|
|
72,710
|
|
|
328,479
|
|
|
310,941
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES
|
|
|
|
|
|
|
|
|
|
Hotel operating expenses
|
|
|
|
|
|
|
|
|
|
Rooms
|
|
|
21,093
|
|
|
20,155
|
|
|
87,126
|
|
|
84,313
|
|
Other direct
|
|
|
11,417
|
|
|
10,909
|
|
|
43,150
|
|
|
39,763
|
|
Other indirect
|
|
|
21,104
|
|
|
20,166
|
|
|
83,875
|
|
|
81,038
|
|
Other
|
|
|
200
|
|
|
191
|
|
|
806
|
|
|
1,216
|
|
Total operating expenses
|
|
|
53,814
|
|
|
51,421
|
|
|
214,957
|
|
|
206,330
|
|
|
|
|
|
|
|
|
|
|
|
Hotel EBITDA
|
|
$
|
24,100
|
|
$
|
21,289
|
|
$
|
113,522
|
|
$
|
104,611
|
|
|
|
|
|
|
|
|
|
|
¹ Pro forma information includes operating results for 84
hotels owned as of December 31, 2013 as if each hotel had been owned by
the Company since January 1, 2012, which excludes the 213-guestroom
Hyatt Place, Minneapolis, Minn. acquired on December 31, 2013 and also
excludes the following three properties located in Fort Smith, Ark. that
were sold subsequent to or held for sale at December 31, 2013: the
89-guestroom AmericInn Hotel & Suites; the 57-guestroom Aspen Hotel &
Suites; and the 178-guestroom Hampton Inn. As a result, these pro forma
operating measures include operating results for certain hotels for
periods prior to the Company’s ownership.
|
SUMMIT HOTEL PROPERTIES, INC.
|
|
Pro Forma¹ Statistical Data
|
|
(Unaudited)
|
|
|
|
|
Pro forma three months ended December 31,
|
|
Pro forma twelve months ended December 31,
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
Pro forma (84 hotels)
|
|
|
|
|
|
|
|
|
Rooms occupied
|
|
664,805
|
|
|
651,174
|
|
|
2,774,289
|
|
|
2,751,359
|
|
Rooms available
|
|
954,101
|
|
|
953,835
|
|
|
3,785,504
|
|
|
3,796,158
|
|
Occupancy
|
|
69.7%
|
|
|
68.3%
|
|
|
73.3%
|
|
|
72.5%
|
|
ADR
|
$
|
110.68
|
|
$
|
105.65
|
|
$
|
112.23
|
|
$
|
107.39
|
|
RevPAR
|
$
|
77.12
|
|
$
|
72.13
|
|
$
|
82.25
|
|
$
|
77.83
|
|
|
|
|
|
|
|
|
|
|
Occupancy growth
|
141 bps
|
|
|
|
81 bps
|
|
|
|
ADR growth
|
|
4.8%
|
|
|
|
|
4.5%
|
|
|
|
RevPAR growth
|
|
6.9%
|
|
|
|
|
5.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
LTM ended
|
|
|
|
Q1
|
|
Q2
|
|
Q3
|
|
Q4
|
|
12/31/13
|
|
Pro forma (84 hotels)
|
|
|
|
|
|
|
|
|
|
|
|
Room revenue
|
|
$
|
74,836
|
|
$
|
82,786
|
|
$
|
80,147
|
|
$
|
73,578
|
|
$
|
311,347
|
|
Other revenue
|
|
|
4,266
|
|
|
4,323
|
|
|
4,207
|
|
|
4,336
|
|
|
17,132
|
|
Total revenue
|
|
$
|
79,102
|
|
$
|
87,109
|
|
$
|
84,354
|
|
$
|
77,914
|
|
$
|
328,479
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel EBITDA
|
|
$
|
27,594
|
|
$
|
32,213
|
|
$
|
29,616
|
|
$
|
24,100
|
|
$
|
113,522
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rooms occupied
|
|
|
661,101
|
|
|
734,476
|
|
|
713,907
|
|
|
664,805
|
|
|
2,774,289
|
|
Rooms available
|
|
|
933,480
|
|
|
943,852
|
|
|
954,071
|
|
|
954,101
|
|
|
3,785,504
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Occupancy
|
|
|
70.8%
|
|
|
77.8%
|
|
|
74.8%
|
|
|
69.7%
|
|
|
73.3%
|
|
ADR
|
|
$
|
113.20
|
|
$
|
112.71
|
|
$
|
112.26
|
|
$
|
110.68
|
|
$
|
112.23
|
|
RevPAR
|
|
$
|
80.17
|
|
$
|
87.71
|
|
$
|
84.01
|
|
$
|
77.12
|
|
$
|
82.25
|
|
|
|
|
|
|
|
|
|
|
|
|
¹ Pro forma information includes operating results for 84
hotels owned as of December 31, 2013 as if each hotel had been owned by
the Company since January 1, 2012, which excludes the 213-guestroom
Hyatt Place, Minneapolis, Minn. acquired on December 31, 2013 and also
excludes the following three properties located in Fort Smith, Ark. that
were sold subsequent to or held for sale at December 31, 2013: the
89-guestroom AmericInn Hotel & Suites; the 57-guestroom Aspen Hotel &
Suites; and the 178-guestroom Hampton Inn. As a result, these pro forma
operating measures include operating results for certain hotels for
periods prior to the Company’s ownership.
|
SUMMIT HOTEL PROPERTIES, INC.
|
|
Same-Store¹ Statistical Data
|
|
Amounts in thousands, except ADR and RevPAR
|
|
(Unaudited)
|
|
|
|
|
|
Three months ended December 31,
|
|
Twelve months ended December 31,
|
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
Same-Store (47 hotels)
|
|
|
|
|
|
|
|
|
|
Rooms occupied
|
|
|
325,494
|
|
|
318,029
|
|
|
1,373,684
|
|
|
1,351,090
|
|
Rooms available
|
|
|
478,768
|
|
|
478,829
|
|
|
1,899,460
|
|
|
1,905,120
|
|
Occupancy
|
|
|
68.0%
|
|
|
66.4%
|
|
|
72.3%
|
|
|
70.9%
|
|
ADR
|
|
$
|
99.76
|
|
$
|
96.20
|
|
$
|
102.03
|
|
$
|
97.26
|
|
RevPAR
|
|
$
|
67.82
|
|
$
|
63.90
|
|
$
|
73.79
|
|
$
|
68.98
|
|
|
|
|
|
|
|
|
|
|
|
Occupancy growth
|
|
157 bps
|
|
|
|
140 bps
|
|
|
|
ADR growth
|
|
|
3.7%
|
|
|
|
|
4.9%
|
|
|
|
RevPAR growth
|
|
|
6.1%
|
|
|
|
|
7.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
¹ For purposes of this press release, same-store information
includes operating results for hotel properties owned at all times by
the Company during the three-month and twelve-month periods ended
December 31, 2013 and 2012 and excludes the following three properties
located in Fort Smith, Ark. that were sold subsequent to or held for
sale at December 31, 2013: the 89-guestroom AmericInn Hotel & Suites;
the 57-guestroom Aspen Hotel & Suites; and the 178-guestroom Hampton Inn.
Non-GAAP Financial Measures
FFO and Adjusted FFO (“AFFO”)
As defined by the National Association of Real Estate Investment Trusts,
or NAREIT, funds from operations, or FFO, represents net income or loss
(computed in accordance with GAAP), excluding gains (or losses) from
sales of property, plus depreciation and amortization. We present FFO
because we consider it 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 when reporting their results. FFO is
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 excludes depreciation and
amortization unique to real estate, gains and losses from property
dispositions and impairment losses, it provides a performance measure
that, when compared year over year, reflects the effect to operations
from trends in occupancy, room rates, operating costs, development
activities and interest costs, providing perspective not immediately
apparent from net income. Our computation of FFO may differ from the
methodology for calculating FFO utilized by other equity REITs and,
accordingly, may not be comparable to such other REITs because the
amount of depreciation and amortization we add back to net income or
loss includes amortization of deferred financing costs and amortization
of franchise royalty fees. FFO 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.
We further adjust FFO for certain additional items that are not included
in the definition of FFO, such as hotel transaction and pursuit costs,
equity based compensation, loan transaction costs, prepayment penalties
and certain other expenses, which we refer to as AFFO. We believe that
AFFO provides investors with another financial measure that may
facilitate comparisons of operating performance between periods and
between REITs.
We caution investors that amounts presented in accordance with our
definitions of FFO and AFFO may not be comparable to similar measures
disclosed by other companies, since not all companies calculate this
non-GAAP measure in the same manner. FFO and AFFO should not be
considered as an alternative measure of our net income (loss) or
operating performance. FFO and AFFO 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 FFO and AFFO can enhance your understanding of our
financial condition and results of operations, this non-GAAP financial
measure is not necessarily a better indicator of any trend as compared
to a comparable GAAP measure such as net income (loss). Above we have
included a quantitative reconciliation of FFO and AFFO to the most
directly comparable GAAP financial performance measure, which is net
income (loss). Dollar amounts in such reconciliation are in thousands.
EBITDA and Adjusted EBITDA, and Hotel 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 also uses EBITDA as one
measure in determining the value of acquisitions and dispositions. We
further adjust EBITDA by adding back hotel transaction and pursuit
costs, equity based compensation, impairment losses, and certain other
nonrecurring expenses. We believe that adjusted EBITDA provides
investors with another financial measure that may facilitate comparisons
of operating performance between periods and between REITs.
With respect to hotel EBITDA, we believe that excluding the effect of
corporate-level expenses, non-cash items, and the portion of these items
related to discontinued operations, 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, adjusted EBITDA and hotel EBITDA may not be
comparable to similar measures disclosed by other companies, since not
all companies calculate this non-GAAP measure in the same manner.
EBITDA, adjusted EBITDA and hotel EBITDA should not be considered as an
alternative measure of our net income (loss) or operating performance.
EBITDA, adjusted EBITDA 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,
adjusted EBITDA and hotel EBITDA can enhance your understanding of our
financial condition and results of operations, this non-GAAP financial
measure is 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, adjusted EBITDA and hotel
EBITDA to the most directly comparable GAAP financial performance
measure, which is net income (loss). Dollar amounts in such
reconciliation are in thousands.
Copyright Business Wire 2014