Summit announces mixed 2023 results, plans for growth in 2024

Thursday, February 29, 2024

Summit Hotel Properties, Inc. (NYSE: INN), referred to here as “the Company,” has disclosed its financial performance for the fourth quarter and the entirety of the year ending December 31, 2023. Here’s a summary of the financial outcomes for 2023:

“We are proud of the Company’s many successes in 2023, led by RevPAR growth of 6.6 percent which outpaced the overall industry by approximately 170 basis points and was primarily driven by the strong performance of our urban hotels. We continue to enhance our portfolio through strategic asset sales, including the sale of six hotels since the beginning of 2023 for nearly $50 million at an attractive blended capitalization rate of 2.6 percent after foregone capital expenditures. A portion of those proceeds were recycled into two high quality hotels located in high-growth markets, at capitalization rates over 9 percent on a blended basis. The improved performance of our portfolio and our ongoing efforts to prudently allocate capital allowed us to increase our common dividend by 50 percent during the year,” said Jonathan P. Stanner, the Company’s President and Chief Executive Officer.

“Since the beginning of 2023, we have successfully completed approximately $1 billion of financing activity that has further enhanced our well-positioned balance sheet by extending debt maturity dates, maintaining attractive pricing and preserving overall flexibility to execute on our strategic initiatives. Most recently, our new $200 million term loan financing replaced our last remaining meaningful tranche of debt scheduled to mature in 2025. As a result, we have no significant debt maturities until 2026, nearly $400 million of liquidity, a weighted average cost of debt of approximately 4.75 percent and, inclusive of attractively priced interest rate swaps and preferred equity, approximately 80 percent of our balance sheet has fixed interest rates. Our outlook for 2024 remains positive, supported by stable demand trends and the expectation that growth in our urban markets will continue to lead portfolio performance, which we believe is positioned to once again outperform the broader industry in 2024,” commented Mr. Stanner.

• Net Loss: The Company reported a net loss of $28.0 million, translating to $0.27 per diluted share. This is an increase from the previous year’s net loss of $16.9 million, or $0.16 per diluted share.
• Pro Forma Revenue Per Available Room (RevPAR): There was a 6.6% rise in Pro Forma RevPAR to $120.12. The Pro Forma Average Daily Rate (ADR) saw a 3.1% increase to $166.27, and Pro Forma occupancy went up by 3.4% to 72.2%.
• Same Store RevPAR: This metric also rose by 6.6% to $119.33, with Same Store ADR growing by 3.2% to $165.09, and occupancy by 3.3% to 72.3%.
• Pro Forma Hotel Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA): Increased by 6.0% to $260.5 million, though the margin slightly decreased to 35.5% from 36.1%.
• Same Store Hotel EBITDA: Saw a 5.8% increase to $246.7 million, with a minor margin decrease to 35.7% from 36.2%.
• Adjusted Earnings Before Interest, Taxes, Depreciation, Amortization, and Rent (EBITDAre): Improved by 5.1% to $190.0 million.
• Adjusted Funds From Operations (FFO): Slightly decreased to $112.8 million, or $0.92 per diluted share, from $114.0 million, or $0.94 per diluted share the previous year.

For the fourth quarter of 2023:

• Net Loss: The net loss was $16.6 million, or $0.16 per diluted share, compared to a net loss of $12.0 million, or $0.11 per diluted share, in the same quarter of 2022.
• Pro Forma and Same Store Performance Metrics: Both showed increases in RevPAR, ADR, and occupancy, indicating positive trends in hotel operations.
• Pro Forma and Same Store Hotel EBITDA: Experienced slight decreases and margin contractions, adjusted for significant real estate tax credits received in 2022.
• Adjusted EBITDAre and Adjusted FFO: Showed slight improvements and decreases, respectively, in the fourth quarter.

The Company also reported on its transaction activities, including sales and acquisitions, and provided an update on its balance sheet and capital market transactions, which included refinancing and securing new financing to strengthen its financial position.

For the year 2024, the Company has provided forecasts indicating expected growth in Pro Forma RevPAR and adjustments in its EBITDAre and FFO, reflecting its ongoing operational and financial management strategies.

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