PR Newswire | Nov 3, 2021 04:36PM EDT

11/03 15:35 CDT

Summit Hotel Properties Reports Third Quarter 2021 ResultsPortfolio RevPAR Acceleration Continues;New Highs Attained Since Onset of Pandemic As Adjusted EBITDAre Increases to $34.0 MillionStrategic 27-Hotel Portfolio Acquisition Announced Subsequent to Quarter End AUSTIN, Texas, Nov. 3, 2021

AUSTIN, Texas, Nov. 3, 2021 /PRNewswire/ -- Summit Hotel Properties, Inc. (NYSE: INN) (the "Company"), today announced results for the three and nine months ended September 30, 2021.

"We were pleased with the continued improvement in operating fundamentals during the third quarter which drove portfolio wide occupancy to nearly 70% and RevPAR to nearly $100, more than a 25% increase over the second quarter. While demand predictably slowed as the summer travel season concluded, we began to see a reacceleration of demand in the latter part of the quarter driven increasingly by improving average daily rates which grew 19% from the second quarter to the third quarter. These improving trends have continued through October, which posted our strongest month since the onset of the pandemic with $106 RevPAR," said Jonathan P. Stanner, the Company's President and Chief Executive Officer. "Overall, we remain excited about the future of our business highlighted by our existing portfolio of high-quality hotels, efficient and resilient operating model, strong liquidity profile, and announced plans for external growth early in this cycle positioning us very well to benefit from the continued recovery of lodging demand."

Third Quarter 2021Summary

* Net Loss: Net loss attributable to common stockholders was $11.0 million, or $0.10 per diluted share, compared with a net loss of $38.3 million, or $0.37 per diluted share, in the same period of 2020. * Pro Forma RevPAR: Pro forma revenue per available room ("RevPAR") increased 109.0% percent to $97.89 from the same period in 2020. Pro forma average daily rate ("ADR") increased 37.1 percent to $142.54 compared to the same period in 2020, and pro forma occupancy increased 52.5 percent to 68.7 percent. * Same-Store RevPAR: Same-store RevPAR increased 107.7% percent to $97.29 from the same period in 2020. Same-store ADR increased 36.6 percent to $142.03 compared to the same period in 2020, and same-store occupancy increased 52.1 percent to 68.5 percent. * Pro Forma Hotel EBITDA: Pro forma hotel EBITDA increased to $38.8 million from $5.7 million in the same period in 2020. Pro forma hotel EBITDA margin expanded to 35.0 percent from 10.8 percent in the same period of 2020. * Adjusted EBITDAre: Adjusted EBITDAre increased to $34.0 million from $2.5 million in the same period of 2020. * Adjusted FFO: Adjusted FFO was $20.5 million, or $0.19 per diluted share, compared to ($10.8) million, or ($0.10) per diluted share, in the same period of 2020.

The Company's results for the three and nine months ended September 30, 2021, and 2020 are as follows (in thousands, except per share amounts):

For the Three Months Ended For the Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

(unaudited)

Net loss attributable to common stockholders $ (10,964) $ (38,256) $ (68,439) $ (111,413)

Net loss per diluted share $ (0.10) $ (0.37) $ (0.66) $ (1.07)

Total revenues $ 110,686 $ 52,412 $ 255,064 $ 186,233

EBITDAre ^(1) $ 37,523 $ 2,258 $ 60,013 $ 12,329

Adjusted EBITDAre ^(1) $ 34,024 $ 2,539 $ 61,982 $ 16,498

FFO ^(1) $ 16,841 $ (12,642) $ 9,160 $ (33,647)

Adjusted FFO ^(1) $ 20,484 $ (10,806) $ 21,981 $ (23,459)

FFO per diluted share and unit ^(1) $ 0.16 $ (0.12) $ 0.09 $ (0.32)

Adjusted FFO per diluted share and unit ^(1) $ 0.19 $ (0.10) $ 0.21 $ (0.22)

Pro Forma ^(2)

RevPAR $ 97.89 $ 46.83 $ 76.51 $ 55.31

RevPAR Growth 109.0% 38.3%

Hotel EBITDA $ 38,764 $ 5,663 $ 72,515 $ 25,379

Hotel EBITDA margin 35.0% 10.8% 28.2% 13.6%

Hotel EBITDA margin growth 2,418 bps 1,454 bps

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,(1) 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.

Unless stated otherwise in this release, all pro forma information includes operating and financial results for 73 hotels owned as of September 30,^ 2021, as if each hotel had been owned by the Company since January 1, 2020(2) and remained open for the entirety of the measurement period. As a result, all pro forma information includes operating and financial results for hotels acquired since January 1, 2020, which may include periods prior to the Company's ownership. Pro forma and non-GAAP financial measures are unaudited.

Monthly Operating Data (1)

Pro Forma 73 Hotels - 2021 Q1 Q2 Jul Aug Sep Q3 YTD

Occupancy 50.6% 64.9% 72.2% 66.4% 67.4% 68.7% 61.5%

ADR $ 104.99 $ 120.14 $ 141.66 $ 141.30 $ 144.77 $ 142.54 $ 124.46

RevPAR $ 53.13 $ 78.03 $ 102.21 $ 93.88 $ 97.56 $ 97.89 $ 76.51

2020 Variance

Occupancy change vs 2020 -17.5% 167.6% 73.8% 43.0% 42.7% 52.5% 41.1%

ADR change vs 2020 -32.9% 25.7% 38.3% 33.4% 39.9% 37.1% -2.0%

RevPAR change vs 2020 -44.7% 236.4% 140.4% 90.8% 99.7% 109.0% 38.3%

2019 Variance

Occupancy change vs 2019 -34.1% -21.0% -11.0% -19.0% -14.8% -14.9% -23.1%

ADR change vs 2019 -37.2% -27.7% -11.0% -8.7% -11.5% -10.4% -24.2%

RevPAR change vs 2019 -58.6% -42.9% -20.8% -26.0% -24.6% -23.8% -41.7%

Pro Forma 73 Hotels - 2020 Q1 Q2 Jul Aug Sep Q3 YTD

Occupancy 61.4% 24.3% 41.5% 46.5% 47.2% 45.0% 43.6%

ADR $ 156.44 $ 95.57 $ 102.40 $ 105.91 $ 103.46 $ 103.98 $ 126.97

RevPAR $ 95.99 $ 23.20 $ 42.52 $ 49.20 $ 48.84 $ 46.83 $ 55.31

Pro Forma 73 Hotels - 2019 Q1 Q2 Jul Aug Sep Q3 YTD

Occupancy 76.8% 82.3% 81.0% 82.0% 79.1% 80.7% 79.9%

ADR $ 167.27 $ 166.14 $ 159.25 $ 154.70 $ 163.55 $ 159.07 $ 164.09

RevPAR $ 128.48 $ 136.65 $ 129.06 $ 126.88 $ 129.33 $ 128.41 $ 131.18

Unaudited pro forma information includes operating results for 73 hotels owned as of September 30, 2021, as if all such hotels had been owned by the Company since January 1, 2019. For any hotels acquired by the Company after January 1, 2019 (the "Acquired Hotels"), the Company has included in the pro forma information the financial results of each of the Acquired Hotels for the period from January 1, 2019, to the date the Acquired Hotels(1) were purchased by the Company (the "Pre-acquisition Period"). The financial results for the Pre-acquisition Period were provided by the third-party owner of such Acquired Hotel prior to purchase by the Company and have not been audited or reviewed by our auditors or adjusted by us. The pro forma information is included to enable comparison of results for the current reporting period to results for the comparable period of the prior year and are not indicative of future results.

Year-to-Date 2021Summary

* Net Loss: Net loss attributable to common stockholders was $68.4 million, or $0.66 per diluted share, compared with a net loss of $111.4 million, or $1.07 per diluted share, in the same period of 2020. * Pro forma RevPAR: Pro forma RevPAR increased 38.3% percent to $76.51 from the same period in 2020. Pro forma ADR decreased 2.0 percent to $124.46 compared to the same period in 2020, and pro forma occupancy increased 41.1 percent to 61.5 percent. * Same-Store RevPAR: Same-store RevPAR increased 37.4% percent to $76.02 from the same period in 2020. Same-store ADR decreased 2.3 percent to $124.02 compared to the same period in 2020, and same-store occupancy increased 40.7 percent to 61.3 percent. * Pro Forma Hotel EBITDA: Pro forma hotel EBITDA increased to $72.5 million from $25.4 million in the same period in 2020. Pro forma hotel EBITDA margin expanded to 28.2 percent from 13.6 percent in the same period of 2020. * Adjusted EBITDAre: Adjusted EBITDAre increased to $62.0 million from $16.5 million in the same period of 2020. * Adjusted FFO: Adjusted FFO was $22.0 million, or $0.21 per diluted share, compared to ($23.5) million, or ($0.22) per diluted share, in the same period of 2020.

Transaction to Acquire 27-Hotel Portfolio Announced

In a separate press release, the Company today announced that it has entered into a definitive contribution agreement with NewcrestImage to acquire a 27-hotel portfolio totaling 3,709 guestrooms, two parking structures and various economic incentives through its existing joint venture with GIC for total consideration of $822 million. The total consideration for the transaction is comprised of $776.5 million, or $209,000 per key, for the 27-hotel portfolio, $24.8 million for the two parking structures and $20.7 million for the incentives. The hotel portfolio is comprised of 27 high-quality, well-located assets that are highly complementary to our existing portfolio and significantly expands our presence in high-growth Sun Belt markets.

The transaction is expected to be funded with a combination of cash, debt, common equity and preferred equity. The Company expects to fund its 51% equity contribution through the issuance of 15.865 million common operating partnership units valued at $160 million based on the 10-day VWAP of $10.0853 per unit as of November 2, 2021, and $50 million of preferred operating partnership units with an annual coupon of 5.25%. The joint venture has secured a $410 million financing commitment from Bank of America and Wells Fargo Bank and GIC's estimated equity contribution of $208 million will be funded in cash. The transaction has been structured to preserve nearly all of our $450 million of existing liquidity and is expected to be immediately accretive to earnings, leverage neutral to our balance sheet and preserve ample investment capacity to continue to grow our portfolio.

For additional information and transaction highlights regarding the announcement, please see the press release and investor presentation dated November 3, 2021, on the Company's website @ www.shpreit.com.

Acquisition of Residence Inn Steamboat Springs Completed

On July 9, 2021, the Company completed the acquisition of the 110-guestroom Residence Inn by Marriott Steamboat Springs for $33.0 million through its joint venture with GIC. The Company funded its 51% interest in the joint venture acquisition using approximately $17 million of cash on-hand. Since closing on the acquisition, the hotel has performed exceptionally well, generating occupancy and RevPAR of nearly 87% and $160, respectively, and hotel EBITDA margin of 49% for the third quarter. This resulted in an annualized net operating income yield of 9.0% in less than three months of ownership despite the hotel having been open for less than one year.

Capital Markets & Balance Sheet

On August 12, 2021, the Company completed an offering of 4,000,000 shares of 5.875% Series F Cumulative Redeemable Preferred Stock for gross proceeds of $100 million. Net proceeds from the transaction were used to redeem all 3,000,000 shares of its 6.45% Series D Cumulative Redeemable Preferred Stock on September 4, 2021, while the remainder was used to partially repay the Company's existing term loan maturing in 2022 by $22 million.

On September 30, 2021, inclusive of its pro rata share of the Joint Venture credit facility, the Company had the following:

* Pro rata outstanding debt of $998.7 million with a weighted average interest rate of 3.39 percent. * After giving effect to interest rate derivative agreements, $792.5 million, or 79 percent, of our pro rata outstanding debt had fixed interest rates, and $206.2 million, or 21 percent, had variable interest rates. * Pro rata unrestricted cash and cash equivalents of $53.1 million. * Revolving credit facility availability of $340.0 million, plus an additional $50.0 million available to borrow subject to certain requirements. The Company had no borrowings outstanding on its revolving credit facility. * Total liquidity of $443.1 million, including unrestricted cash and cash equivalents and revolving credit facility availability.

On October 20, 2021, inclusive of its pro rata share of the Joint Venture credit facility, the Company had the following:

* Pro rata outstanding debt of $998.4 million with a weighted average interest rate of 3.39 percent. * After giving effect to interest rate derivative agreements, $792.2 million, or 79 percent, of our pro rata outstanding debt had fixed interest rates, and $206.2 million, or 21 percent, had variable interest rates. * Pro rata unrestricted cash and cash equivalents of $56.9 million. * Revolving credit facility availability of $340.0 million, plus an additional $50.0 million available to borrow subject to certain requirements. The Company had no borrowings outstanding on its revolving credit facility. * Total liquidity of $446.9 million, including unrestricted cash and cash equivalents and revolving credit facility availability.

Capital Improvements

The Company invested $4.2 million and $10.7 million in capital improvements during the three and nine months ended September 30, 2021, respectively, and plans to invest a total of $15.0 million to $20.0 million for the full year of 2021.

Dividends

On October 29, 2021, the Company declared a quarterly cash preferred dividend of $0.390625 per share on its 6.25% Series E Cumulative Redeemable Preferred Stock and $0.440625 per share on its 5.875% Series F Cumulative Redeemable Preferred Stock. The preferred dividends are payable on November 30, 2021, to holders of record as of November 16, 2021.

Third Quarter 2021 Earnings Conference Call

The Company will conduct its quarterly conference call on Thursday, November 4, 2021, at 9:00 AM ET. To participate in the conference call, dial 877-930-8101 approximately ten minutes before the call begins (8:50 AM ET). The conference identification code for the call is 6195606. Additionally, a live webcast of the quarterly conference call will be available through the Company's website, www.shpreit.com. A replay of the quarterly conference call webcast will be available until 12:00 PM ET Thursday, November 11, 2021, by dialing 855-859-2056, conference identification code 6195606. A replay will also be available in the Investor Relations section of the Company's website until January 31, 2022.

About Summit Hotel Properties

Summit Hotel Properties, Inc. is a publicly traded real estate investment trust focused on owning premium-branded hotels with efficient operating models primarily in the Upscale segment of the lodging industry. As of November 3, 2021, the Company's portfolio consisted of 73 hotels, 61 of which are wholly owned, with a total of 11,398 guestrooms located in 23 states.

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

Contact:Adam WudelSVP - Finance & Capital MarketsSummit Hotel Properties, Inc.(512) 538-2325

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, 2020, filed with the SEC, and its quarterly and other periodic filings with the SEC. The Company undertakes no duty to update the statements in this release to conform the statements to actual results or changes in the Company's expectations.



Summit Hotel Properties, Inc.

Condensed Consolidated Balance Sheets

(Dollars in thousands)



September 30, December 31, 2020 2021

(unaudited)

ASSETS

Investment in hotel properties, net $ 2,078,014 $ 2,105,946

Undeveloped land 1,500 1,500

Assets held for sale, net 425 425

Cash and cash equivalents 59,650 20,719

Restricted cash 25,521 18,177

Investment in real estate loans, net 26,369 23,689

Right-of-use assets, net 27,290 28,420

Trade receivables, net 14,209 11,775

Prepaid expenses and other 7,308 9,763

Deferred charges, net 4,249 4,429

Other assets 3,785 8,176

Total assets $ 2,248,320 $ 2,233,019

LIABILITIES AND EQUITY

Liabilities:

Debt, net of debt issuance costs $ 1,056,667 $ 1,094,745

Lease liabilities, net 17,527 18,438

Accounts payable 4,330 2,674

Accrued expenses and other 70,289 65,099

Total liabilities 1,148,813 1,180,956

Total stockholders' equity 954,305 988,742

Non-controlling interests in operating partnership 828 1,111

Non-controlling interests in joint venture 144,374 62,210

Total equity 1,099,507 1,052,063

Total liabilities and equity $ 2,248,320 $ 2,233,019



Summit Hotel Properties, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

(Amounts in thousands, except per share amounts)



For the Three Months Ended For the Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

Revenues:

Room $ 102,521 $ 48,636 $ 235,761 $ 171,067

Food and beverage 2,097 628 4,656 5,760

Other 6,068 3,148 14,647 9,406

Total revenues 110,686 52,412 255,064 186,233

Expenses:

Room 22,186 11,352 52,320 42,340

Food and beverage 1,476 520 3,000 4,890

Other hotel operating expenses 34,713 22,535 88,672 74,406

Property taxes, insurance and other 10,679 11,007 32,573 34,171

Management fees 2,888 1,335 6,757 5,051

Depreciation and amortization 25,893 27,503 79,776 82,147

Corporate general and administrative 6,099 4,652 18,283 14,635

Transaction costs - - 3,849 -

(Reversal of) provision for credit losses (2,632) - (2,632) 2,530

Loss on impairment and write-off of assets 4,361 - 4,361 782

Total expenses 105,663 78,904 286,959 260,952

Gain on disposal of assets, net - 211 81 176

Operating income (loss) 5,023 (26,281) (31,814) (74,543)

Other income (expense):

Interest expense (10,817) (10,904) (32,567) (32,665)

Other income, net 2,250 1,278 7,777 4,260

Total other income (expense) (8,567) (9,626) (24,790) (28,405)

Loss from continuing operations before income (3,544) (35,907) (56,604) (102,948)taxes

Income tax (expense) benefit (695) 132 (1,075) (1,589)

Net loss (4,239) (35,775) (57,679) (104,537)

Less - Loss (income) attributable to non-controlling interests:

Operating Partnership 10 70 98 203

Joint venture (275) 1,159 3,020 4,049

Net loss attributable to Summit Hotel Properties, Inc. (4,504) (34,546) (54,561) (100,285)

Preferred dividends (3,750) (3,710) (11,168) (11,128)

Premium on redemption of preferred stock (2,710) - (2,710) -

Net loss attributable to common stockholders $ (10,964) $ (38,256) $ (68,439) $ (111,413)

Loss per share:

Basic and diluted $ (0.10) $ (0.37) $ (0.66) $ (1.07)

Weighted average common shares outstanding:

Basic and diluted 104,548 104,200 104,441 104,117



Summit Hotel Properties, Inc.

Reconciliation of Net Loss to Non-GAAP Measures - Funds From Operations

(Unaudited)

(Amounts in thousands, except per share and unit amounts)

For the Three Months Ended For the Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

Net loss $ (4,239) $ (35,775) $ (57,679) $ (104,537)

Preferred dividends (3,750) (3,710) (11,168) (11,128)

Premium on redemption of preferred stock (2,710) - (2,710) -

(Income) loss related to non-controlling interests (275) 1,159 3,020 4,049in joint venture

Net loss applicable to common shares and $ (10,974) $ (38,326) $ (68,537) $ (111,616)common units

Real estate-related depreciation ^(1) 25,773 27,388 79,421 81,802

Loss on impairment and write-off of assets 4,361 - 4,361 782

Gain on disposal of assets, net - (211) (81) (176)

Adjustments from non-controlling interest in (2,319) (1,493) (6,004) (4,439)joint venture

FFO applicable to common shares and $ 16,841 $ (12,642) $ 9,160 $ (33,647)common units

(Reversal of) provision for credit losses (2,632) - (2,632) 2,530

Amortization of lease-related intangible assets, net 22 22 65 65

Amortization of deferred financing costs 1,115 643 3,239 1,655

Amortization of franchise fees ^(1) 120 115 355 345

Equity-based compensation 1,892 1,517 5,861 4,958

Transaction costs - - 3,849 -

Debt transaction costs 17 65 160 336

Premium on redemption of preferred stock 2,710 - 2,710 -

Non-cash interest income ^(2) (262) (757) (779) (2,297)

Non-cash lease expense, net 131 101 388 275

Casualty losses, net 627 117 781 407

Increase in deferred tax asset valuation allowance - - - 2,058

Adjustments from non-controlling interest in joint venture (97) (78) (1,176) (235)

Severance payments - 91 - 91

AFFO applicable to common shares and $ 20,484 $ (10,806) $ 21,981 $ (23,459)common units

FFO per common share / common unit $ 0.16 $ (0.12) $ 0.09 $ (0.32)

AFFO per common share / common unit $ 0.19 $ (0.10) $ 0.21 $ (0.22)

Weighted average diluted common shares / 105,265 104,375 105,282 104,302common units for FFO / AFFO ^(3)

The total of these line items represents depreciation and amortization as^ reported on the Company's Condensed Consolidated Statements of Operations for(1) the periods presented.

Non-cash interest income relates to the amortization of the discount on certain^ notes receivable. The discount on these notes receivable was recorded at(2) inception of the related loans based on the estimated value of the embedded purchase options in the notes receivable.

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(3) 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

(Unaudited)

(Amounts in thousands)



For the Three Months Ended For the Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

Reconciliation of weighted average diluted common shares for FFO / AFFO:

Weighted average dilutive common shares outstanding 104,548 104,200 104,441 104,117

Dilutive effect of restricted stock awards 425 48 410 33

Dilutive effect of shares issuable upon 23,978 - 23,012 -conversion of convertible debt

Adjusted weighted dilutive common 128,951 104,248 127,863 104,150shares outstanding

Non-GAAP adjustment for dilutive effects of 133 175 151 185common units

Non-GAAP adjustment for dilutive effects of 159 (48) 280 (33)restricted stock awards

Non-GAAP adjustment for dilutive effects of (23,978) - (23,012) -shares issuable upon conversion of convertible debt

Non-GAAP weighted dilutive common 105,265 104,375 105,282 104,302shares / common units outstanding



Summit Hotel Properties, Inc.

Reconciliation of Net Loss to Non-GAAP Measures - EBITDAre

(Unaudited)

(Dollars in thousands)



For the Three Months Ended For the Nine Months Ended

September 30, September 30,

2021 2020 2021 2020

Net loss $ (4,239) $ (35,775) $ (57,679) $ (104,537)

Depreciation and amortization 25,893 27,503 79,776 82,147

Interest expense 10,817 10,904 32,567 32,665

Interest income (4) (31) (6) (141)

Income tax expense (benefit) 695 (132) 1,075 1,589

EBITDA $ 33,162 $ 2,469 $ 55,733 $ 11,723

Loss on impairment and write-off of assets 4,361 - 4,361 782

Gain on disposal of assets, net - (211) (81) (176)

EBITDAre $ 37,523 $ 2,258 $ 60,013 $ 12,329

(Reversal of) provision for credit losses (2,632) - (2,632) 2,530

Amortization of lease-related intangible assets, net 22 22 65 65

Equity-based compensation 1,892 1,517 5,861 4,958

Transaction costs - - 3,849 -

Debt transaction costs 17 65 160 336

Non-cash interest income ^(1) (262) (757) (779) (2,297)

Non-cash lease expense, net 131 101 388 275

Casualty losses, net 627 117 781 407

(Income) loss from non-controlling interest in joint venture (275) 1,159 3,020 4,049

Adjustments from non-controlling interest in joint venture (3,019) (2,034) (8,744) (6,245)

Severance payments - 91 - 91

Adjusted EBITDAre $ 34,024 $ 2,539 $ 61,982 $ 16,498

Non-cash interest income relates to the amortization of the discount on(1) certain notes receivable. The discount on these notes receivable was recorded at inception of the related loans based on the estimated value of the embedded purchase options in the notes receivable.



Summit Hotel Properties, Inc.

Pro Forma Hotel Operating Data

(Unaudited)

(Dollars in thousands)



For the Three Months Ended For the Nine Months Ended

September 30, September 30,

Pro Forma Operating Data ^(1) (2) 2021 2020 2021 2020

Pro forma room revenue $ 102,645 $ 48,636 $ 238,074 $ 171,067

Pro forma other hotel operations revenue 8,170 3,777 19,403 15,166

Pro forma total revenues 110,815 52,413 257,477 186,233

Pro forma total hotel operating expenses 72,051 46,750 184,962 160,854

Pro forma hotel EBITDA $ 38,764 $ 5,663 $ 72,515 $ 25,379

Pro forma hotel EBITDA Margin 35.0% 10.8% 28.2% 13.6%

Reconciliations of Non-GAAP financial measures to comparable GAAP financialmeasures

Revenue:

Total revenues $ 110,686 $ 52,412 $ 255,064 $ 186,233

Total revenues - acquisitions ^(1) 129 - 2,413 -

Total revenues - dispositions ^(2) - 1 - -

Pro forma total revenues 110,815 52,413 257,477 186,233

Hotel Operating Expenses:

Total hotel operating expenses 71,942 46,749 183,322 160,858

Hotel operating expenses - acquisitions ^(1) 109 - 1,641 -

Hotel operating expenses - dispositions ^(2) - 1 (1) (4)

Pro forma hotel operating expenses 72,051 46,750 184,962 160,854

Hotel EBITDA:

Operating income (loss) 5,023 (26,281) (31,814) (74,543)

Gain on disposal of assets, net - (211) (81) (176)

Loss on impairment and write-off of assets 4,361 - 4,361 782

(Reversal of) provision for credit losses (2,632) - (2,632) 2,530

Transaction costs - - 3,849 -

Corporate general and administrative 6,099 4,652 18,283 14,635

Depreciation and amortization 25,893 27,503 79,776 82,147

Hotel EBITDA 38,744 5,663 71,742 25,375

Hotel EBITDA - acquisitions ^(1) (743) - (743) -

Hotel EBITDA - dispositions ^(2) - - 1 4

Same store hotel EBITDA $ 38,001 $ 5,663 $ 71,000 $ 25,379

Hotel EBITDA - acquisitions ^(3) 763 - 1,515 -

Pro forma hotel EBITDA $ 38,764 $ 5,663 $ 72,515 $ 25,379

For any hotels acquired by the Company after January 1, 2020 (the "Acquired Hotels"), the Company has excluded the financial(1) results of each of the Acquired Hotels for the period the Acquired Hotels were purchased by the Company to September 30, 2021 (the "Acquisition Period") in determining same-store hotel EBITDA.

For hotels sold by the Company between January 1, 2020, and September 30, 2021 (the "Disposed Hotels"), the Company has excluded the financial results of each(2) 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.

Unaudited pro forma information includes operating results for 73 hotels owned as of September 30, 2021, as if all such hotels had been owned by the Company since January 1, 2020. For hotels acquired by the Company after January 1, 2020 (the "Acquired Hotels"), the Company has included in the pro forma information the financial results of each of the Acquired Hotels for the period(3) from January 1, 2020, to September 30, 2021. 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

(Unaudited)

(Dollars in thousands, except operating statistics)



2020 2021 Trailing Twelve

Months EndedPro Forma Operating Data ^(1) (2) Q4 Q1 Q2 Q3 Sept 30, 2021

Pro forma room revenue $ 44,705 $ 54,498 $ 80,931 $ 102,645 $ 282,779

Pro forma other hotel operations revenue 3,811 4,672 6,561 8,170 23,214

Pro forma total revenues 48,516 59,170 87,492 110,815 305,993

Pro forma total hotel operating expenses 45,981 50,981 61,930 72,051 230,943

Pro forma hotel EBITDA $ 2,535 $ 8,189 $ 25,562 $ 38,764 $ 75,050

Pro forma hotel EBITDA Margin 5.2% 13.8% 29.2% 35.0% 24.5%

Pro Forma Statistics ^(1) (2)

Rooms sold 444,682 519,096 673,663 720,127 2,357,568

Rooms available 1,041,686 1,025,820 1,037,218 1,048,616 4,153,340

Occupancy 42.7% 50.6% 64.9% 68.7% 56.8%

ADR $ 100.53 $ 104.99 $ 120.14 $ 142.54 $ 119.95

RevPAR $ 42.92 $ 53.13 $ 78.03 $ 97.89 $ 68.08

Actual Statistics

Rooms sold 443,166 511,365 666,345 719,341 2,340,217

Rooms available 1,038,496 1,015,920 1,027,208 1,047,736 4,129,360

Occupancy 42.7% 50.3% 64.9% 68.7% 56.7%

ADR $ 100.27 $ 104.12 $ 120.05 $ 142.52 $ 119.73

RevPAR $ 42.79 $ 52.41 $ 77.88 $ 97.85 $ 67.86

Reconciliations of Non-GAAP financial measures to comparable GAAP financialmeasures

Revenue:

Total revenues $ 48,230 $ 57,854 $ 86,524 $ 110,686 $ 303,294

Total revenues from acquisitions ^(1) 286 1,316 968 129 2,699

Total revenues from dispositions ^(2) - - - - -

Pro forma total revenues 48,516 59,170 87,492 110,815 305,993

Hotel Operating Expenses:

Total hotel operating expenses 45,815 50,139 61,241 71,942 229,137

Total hotel operating expenses from acquisitions ^(1) 164 843 689 109 1,805

Total hotel operating expenses from dispositions ^(2) 2 (1) - - 1

Pro forma total hotel operating expenses 45,981 50,981 61,930 72,051 230,943

Hotel EBITDA:

Operating (loss) income (34,867) (25,210) (11,627) 5,023 (66,681)

Loss (gain) on disposal of assets, net 192 (50) (31) - 111

Loss on impairment and write-off of assets 977 - - 4,361 5,338

(Reversal of) provision for credit losses 2,291 - - (2,632) (341)

Transaction costs - - 3,849 - 3,849

Corporate general and administrative 6,350 5,678 6,506 6,099 24,633

Depreciation and amortization 27,472 27,297 26,586 25,893 107,248

Hotel EBITDA 2,415 7,715 25,283 38,744 74,157

Hotel EBITDA from acquisitions ^(1) - - - (743) (743)

Hotel EBITDA from dispositions ^(2) (2) 1 - - (1)

Same store hotel EBITDA $ 2,413 $ 7,716 $ 25,283 $ 38,001 $ 73,413

Hotel EBITDA from acquisitions ^(3) 122 473 279 763 1,637

Pro forma hotel EBITDA $ 2,535 $ 8,189 $ 25,562 $ 38,764 $ 75,050

For any hotels acquired by the Company after October 1, 2020 (the "Acquired Hotels"), the Company has excluded the financial results of each of the(1) Acquired Hotels for the period the Acquired Hotels were purchased by the Company to September 30, 2021 (the "Acquisition Period") in determining same-store hotel EBITDA.

For hotels sold by the Company between October 1, 2020, and September 30, 2021 (the "Disposed Hotels"), the Company has excluded the financial results of each(2) of the Disposed Hotels for the period beginning on October 1, 2020 and ending on the date the Disposed Hotels were sold by the Company (the "Disposition Period") in determining same-store hotel EBITDA.

Unaudited pro forma information includes operating results for 73 hotels owned as of September 30, 2021, as if all such hotels had been owned by the Company since October 1, 2020. For hotels acquired by the Company after October 1, 2020 (the "Acquired Hotels"), the Company has included in the pro forma information the financial results of each of the Acquired Hotels for the period(3) from October 1, 2020, to September 30, 2021. 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.

Non-GAAP Financial MeasuresWe disclose certain "non-GAAP financial measures," which are measures of our historical financial performance. Non-GAAP financial measures are financial measures not prescribed by Generally Accepted Accounting Principles ("GAAP"). These measures are as follows: (i) Funds From Operations ("FFO") and Adjusted Funds from Operations ("AFFO"), (ii) Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA"), Earnings before Interest, Taxes, Depreciation and Amortization for Real Estate ("EBITDAre"), Adjusted EBITDAre, and hotel EBITDA (as described below). We caution investors that amounts presented in accordance with our definitions of non-GAAP financial measures may not be comparable to similar measures disclosed by other companies, since not all companies calculate these non-GAAP financial measures in the same manner. Our non-GAAP financial measures should be considered along with, but not as alternatives to, net income (loss) as a measure of our operating performance. Our non-GAAP financial measures may include funds that may not be available for our discretionary use due to functional requirements to conserve funds for capital expenditures, property acquisitions, debt service obligations and other commitments and uncertainties. Although we believe that our non-GAAP financial measures can enhance the understanding of our financial condition and results of operations, these non-GAAP financial measures are not necessarily better indicators of any trend as compared to a comparable measure prescribed by GAAP such as net income (loss).

Funds From Operations ("FFO") and Adjusted FFO ("AFFO")

As defined by Nareit, FFO represents net income or loss (computed in accordance with GAAP), excluding preferred dividends, gains (or losses) from sales of real property, impairment losses on real estate assets, items classified by GAAP as extraordinary, the cumulative effect of changes in accounting principles, plus depreciation and amortization related to real estate assets, and adjustments for unconsolidated partnerships, and joint ventures. AFFO represents FFO excluding amortization of deferred financing costs, franchise fees, equity-based compensation expense, debt transaction costs, premiums on redemption of preferred shares, losses from net casualties, non-cash lease expense, non-cash interest income and non-cash income tax related adjustments to our deferred tax assets. Unless otherwise indicated, we present FFO and AFFO applicable to our common shares and common units. We present FFO and AFFO because we consider FFO and AFFO an important supplemental measure of our operational performance and believe it is frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO and AFFO when reporting their results. FFO and AFFO are intended to exclude GAAP historical cost depreciation and amortization, which assumes that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. Because FFO and AFFO exclude depreciation and amortization related to real estate assets, gains and losses from real property dispositions and impairment losses on real estate assets, FFO and AFFO provide performance measures that, when compared year over year, reflect the effect to operations from trends in occupancy, guestroom rates, operating costs, development activities and interest costs, providing perspective not immediately apparent from net income. Our computation of FFO differs slightly from the computation of Nareit-defined FFO related to the reporting of corporate depreciation and amortization expense. Our computation of FFO may also differ from the methodology for calculating FFO used by other equity REITs and, accordingly, may not be comparable to such other REITs. FFO and AFFO should not be considered as an alternative to net income (loss) (computed in accordance with GAAP) as an indicator of our liquidity, nor is it indicative of funds available to fund our cash needs, including our ability to pay dividends or make distributions. Where indicated in this release, FFO is based on our computation of FFO and not the computation of Nareit-defined FFO unless otherwise noted.

EBITDA, EBITDAre, Adjusted EBITDAre, and Hotel EBITDA

EBITDA

EBITDA represents net income or loss, excluding: (i) interest, (ii) income tax expense and (iii) depreciation and amortization. We believe EBITDA is useful to an investor in evaluating our operating performance because it provides investors with an indication of our ability to incur and service debt, to satisfy general operating expenses, to make capital expenditures and to fund other cash needs or reinvest cash into our business. We also believe it helps investors meaningfully evaluate and compare the results of our operations from period to period by removing the effect of our asset base (primarily depreciation and amortization) from our operating results. Our management team also uses EBITDA as one measure in determining the value of acquisitions and dispositions.

EBITDAre and Adjusted EBITDAre

EBITDAre is based on EBITDA and is expected to provide additional relevant information about REITs as real estate companies in support of growing interest among generalist investors. EBITDAre is intended to be a supplemental non-GAAP performance measure that is independent of a company's capital structure and will provide a uniform basis to measure the enterprise value of a company compared to other REITs.

EBITDAre, as defined by Nareit, is calculated as EBITDA, excluding: (i) loss and gains on disposition of property and (ii) asset impairments, if any. We believe EBITDAre is useful to an investor in evaluating our operating performance because it provides investors with an indication of our ability to incur and service debt, to satisfy general operating expenses, to make capital expenditures and to fund other cash needs or reinvest cash into our business. We also believe it helps investors meaningfully evaluate and compare the results of our operations from period to period by removing the effect of our asset base (primarily depreciation and amortization) from our operating results.

We make additional adjustments to EBITDAre when evaluating our performance because we believe that the exclusion of certain additional non-recurring or certain non-cash items described below provides useful supplemental information to investors regarding our ongoing operating performance. We believe that the presentation of Adjusted EBITDAre, when combined with the primary GAAP presentation of net income, is useful to an investor in evaluating our operating performance because it provides investors with an indication of our ability to incur and service debt, to satisfy general operating expenses, to make capital expenditures and to fund other cash needs or reinvest cash into our business. We also believe it helps investors meaningfully evaluate and compare the results of our operations from period to period by removing the effect of our asset base (primarily depreciation and amortization) from our operating results.

Hotel EBITDA

With respect to hotel EBITDA, we believe that excluding the effect of corporate-level expenses and non-cash items provides a more complete understanding of the operating results over which individual hotels and operators have direct control. We believe the property-level results provide investors with supplemental information on the ongoing operational performance of our hotels and effectiveness of the third-party management companies operating our business on a property-level basis.

We caution investors that amounts presented in accordance with our definitions of EBITDA, EBITDAre, adjusted EBITDAre, and hotel EBITDA may not be comparable to similar measures disclosed by other companies, since not all companies calculate these non-GAAP measures in the same manner. EBITDA, EBITDAre, adjusted EBITDAre, and hotel EBITDA should not be considered as an alternative measure of our net income (loss) or operating performance. EBITDA, EBITDAre, adjusted EBITDAre, and hotel EBITDA may include funds that may not be available for our discretionary use due to functional requirements to conserve funds for capital expenditures and property acquisitions and other commitments and uncertainties. Although we believe that EBITDA, EBITDAre, adjusted EBITDAre, and hotel EBITDA can enhance your understanding of our financial condition and results of operations, these non-GAAP financial measures are not necessarily a better indicator of any trend as compared to a comparable GAAP measure such as net income (loss). Above, we include a quantitative reconciliation of EBITDA, EBITDAre, adjusted EBITDAre and hotel EBITDA to the most directly comparable GAAP financial performance measure, which is net income (loss) and operating income (loss).

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SOURCE Summit Hotel Properties, Inc.