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Summit Hotel Properties Reports Third Quarter Results



  Summit Hotel Properties Reports Third Quarter Results

  11.6 Percent Pro Forma RevPAR Growth; 25.8 Percent Adjusted EBITDA Growth;
                     Increasing Guidance; Strong Dividend

Business Wire

SIOUX FALLS, S.D. -- November 07, 2012

Summit Hotel Properties, Inc. (NYSE: INN) (the “Company”) today announced
results for the third quarter ended September 30, 2012. The Company’s results
include the following:

Third Quarter Highlights

  * Pro forma RevPAR: Pro forma RevPAR for the quarter ended September 30,
    2012, increased 11.6 percent to $72.24 as a result of a 5.6 percent
    increase in average daily rate (“ADR”) to $97.72 and a 5.7 percent
    increase in occupancy to 73.9 percent.
  * Pro forma Hotel EBITDA: Pro forma Hotel EBITDA was $17.4 million for the
    third quarter, an increase of 20.9 percent over third quarter 2011.
  * Pro forma Hotel EBITDA Margin: Pro forma Hotel EBITDA Margin for the third
    quarter was 33.9 percent, an improvement of 261 basis points over the
    comparable period of 2011. Hotel EBITDA Margin is defined as Hotel EBITDA
    as a percentage of total revenue.
  * Adjusted EBITDA: Adjusted EBITDA was $15.2 million, an increase of 25.8
    percent as compared to third quarter 2011.
  * Adjusted FFO: Adjusted FFO for the third quarter 2012 was $9.7 million or
    $0.26 per diluted share/unit. Included in AFFO is $0.3 million of income
    tax expense. The Company anticipates a tax benefit in the fourth quarter
    and for the full year. Therefore, after adjusting for the tax expense, the
    Company views its third quarter AFFO results as $0.27 per diluted
    share/unit.
  * Acquisition: The Company acquired a 96 room Residence Inn by Marriott,
    located in Dallas (Arlington), TX for a purchase price of $15.5 million on
    July 2, 2012.
  * Dividends: The Company declared third quarter 2012 dividends of $0.1125
    per common share on October 31, 2012, representing an annualized yield of
    approximately 5.4 percent based on the closing price of the Company’s
    common stock on the NYSE on November 6, 2012, and $0.5781 per share on the
    Company’s 9.25% Series A Cumulative Redeemable Preferred Stock.

 
Third Quarter and Year-to-Date Results
 
                     Third Quarter                 Year-to-Date
                     2012           2011           2012            2011
                     ($ in thousands, except per share/unit data)
                                                                    
Total revenue        $   51,234     $   40,437     $   138,425     $   109,663
EBITDA (1)           $   14,491     $   11,887     $   35,386      $   30,368
Adjusted EBITDA      $   15,246     $   12,120     $   40,691      $   32,125
(1)
FFO (1)              $   9,001      $   8,433      $   22,469      $   14,931
Adjusted FFO (1)     $   9,743      $   8,666      $   25,999      $   22,591
FFO per diluted      $   0.24       $   0.23       $   0.60        $   0.47
share/unit (1)
Adjusted FFO per
diluted              $   0.26       $   0.23       $   0.70        $   0.49
share/unit (1)
                                                                    
Pro Forma (2)
RevPAR               $   72.24      $   64.75      $   68.28       $   62.14
RevPAR growth            11.6%                         9.9%
Hotel EBITDA         $   17,369     $   14,366     $   47,556      $   40,446
Hotel EBITDA             33.9%          31.3%          32.9%           31.0%
margin
Hotel EBITDA         261 bps                       199 bps
margin growth
                                                                    

      See tables later in this press release for a reconciliation to net
      income (loss) of earnings before interest, taxes, depreciation and
      amortization (“EBITDA”), adjusted EBITDA, funds from operations (“FFO”),
      FFO per diluted share/unit, adjusted FFO and adjusted FFO per diluted
(1)   share/unit. EBITDA, adjusted EBITDA, FFO, FFO per diluted share/unit,
      adjusted FFO and adjusted FFO per diluted share/unit, as well as hotel
      EBITDA, are non-GAAP financial measures. See further discussions of
      these non-GAAP measures and reconciliations to net income (loss) later
      in this press release.
      For purposes of this press release, pro forma information includes
      operating results for the Company’s 73 hotels owned as of September 30,
(2)   2012, as if such hotels had been owned by the Company since January 1,
      2011. As a result, these pro forma operating measures include operating
      results for certain hotels for periods prior to the Company’s ownership.
       

Recent Developments

Capital Markets

On October 3, 2012, the Company closed on its initial follow on public
offering of 12,000,000 shares of its common stock, par value $0.01 per share,
an increase of 20.0 percent over the previously announced offering size of
10,000,000 shares, at a price of $8.15 per share. The underwriters of the
Company’s offering fully exercised their option to purchase an additional
1,800,000 shares. The total number of shares sold, including the option
shares, was 13,800,000. Total net proceeds of approximately $107.0 million
were realized after deducting the underwriting discount and other estimated
offering expenses.

On November 6, 2012, the Company increased the commitment on its revolving
credit facility to $150 million. The increased revolving credit facility
increases the capital the Company has available for future acquisitions and
capital investments. The actual amount of borrowing capacity available under
the facility depends on the value of the properties comprising the borrowing
base that secure the credit facility.

Acquisitions

The Company continues to actively acquire hotels, having closed the
acquisition of nine hotels, totaling 1,141 rooms, with an average purchase
price per key of $82,901 since September 30, 2012.

The hotels purchased include:

                                                                       
Hotel                                Location                         Rooms
Hyatt Place-Arlington                Dallas (Arlington), TX           127
Hyatt Place-Park Meadows             Denver (Lone Tree), CO           127
Hyatt Place-Denver Tech Center       Denver (Englewood), CO           126
Hyatt House-Denver Tech Center       Denver (Englewood), CO           135
Hyatt Place-Owings Mills             Baltimore (Owings Mills), MD     123
Hyatt Place-Lombard                  Chicago (Lombard), IL            151
Hyatt Place-Phoenix                  Phoenix, AZ                      127
Hyatt Place-Scottsdale               Scottsdale, AZ                   127
Hilton Garden Inn - Fort Worth       Fort Worth, TX                   98
                                     Total                            1,141
                                                                       

During 2012, the Company has acquired 16 hotels totaling 2,477 rooms, an
increase of 22.3 percent over the number of rooms at December 31, 2011. As of
November 6, 2012, the Company owns 82 hotels totaling 8,674 rooms.

Other

On October 30, 2012, we entered into an agreement with an affiliate of Hyatt
Hotels Corporation to fund $20 million in the form of a first lien mortgage
loan on a hotel property in downtown Minneapolis, MN. The $20 million
represents a portion of the total acquisition and renovation costs expected to
be incurred to convert the property to a Hyatt Place hotel. Subject to certain
conditions, including the successful conversion of the property estimated to
be completed in the summer of 2013, we plan to purchase the property and enter
into a management agreement with a Hyatt affiliate.

“We had exceptional performance in the third quarter, exceeding expectations,”
said Dan Hansen, president and CEO. “Our RevPAR and EBITDA growth were
industry leading. We believe our performance combined with our recent
acquisition of nine hotels, our successful follow on common stock offering,
and our robust pipeline for future acquisitions position us to provide solid
shareholder returns.”

Capital Investments
The Company deployed $5.3 million in capital for renovations during the third
quarter. The major improvements and capital invested during the third quarter
included: Baton Rouge, LA Springhill Suites by Marriott - $0.7 million;
Nashville, TN Springhill Suites by Marriott - $0.7 million; Jackson
(Ridgeland), MS Homewood Suites - $0.6 million; Baton Rouge, LA Fairfield Inn
by Marriott - $0.5 million; Fort Smith, AR Hampton Inn - $0.5 million; El
Paso, TX Courtyard by Marriott - $0.4 million; El Paso, TX Hampton Inn &
Suites - $0.4 million. Varying in scope, the major improvements listed above
include renovation to guestrooms, common areas, and exteriors of the hotels.
The Company anticipates deploying up to $11.0 million on renovations and other
non-recurring capital expenditures in the fourth quarter.

Dispositions
The Company continued its strategy of recycling capital by selling hotels or
land that it no longer considers relevant to its strategy of owning hotels
with best brands in best markets. In August 2012, the Company sold the 52 room
AmericInn Hotel & Suites in Missoula, MT for approximately $1.9 million.

Year-to-Date Highlights
For the nine-months ended September 30, 2012, pro forma RevPAR increased 9.9
percent to $68.28 as a result of pro forma ADR growth of 3.5 percent to $96.22
and a 6.2 percent increase in pro forma occupancy to 71.0 percent. RevPAR
improvement was the result of the positive effect of recent renovations, the
recent rebranding of 10 hotels, and general economic improvement in many of
the Company’s markets. Pro forma Hotel EBITDA year to date was $47.6 million,
a 17.6 percent increase over the comparable period in 2011. Pro forma Hotel
EBITDA margin was 32.9 percent for the period, a 199  basis points margin
expansion over the same period in 2011. The Company’s pro forma Hotel EBITDA
margin expansion was 243 basis points after adjusting for the $0.6 million
one-time hotel management fee concessions agreed to by Interstate Hotels and
Resorts during second quarter 2011.

Adjusted EBITDA was $40.7 million for the first nine-months of 2012, a 26.7
percent increase over the same period in 2011.

Balance Sheet
As of September 30, 2012, the Company had total outstanding debt of $312.3
million, including $69.9 million outstanding on its senior secured credit
facility, and the Company had $10.3 million of cash and cash equivalents. As
of November 6, 2012, the Company had $69.4 million outstanding on its senior
secured credit facility with additional borrowing capacity of $43.0 million on
its credit facility and 15 unencumbered hotels available to further expand
capacity on its credit facility. The Company’s weighted average interest rate
on its secured debt was 5.02% as of November 6, 2012.

2012 Outlook
The Company is providing fourth quarter guidance and increasing its 2012 full
year outlook to reflect performance in the third quarter and to include its
recent acquisitions including the 96 room Residence Inn by Marriott, Dallas
(Arlington), TX, 127 room Hyatt Place, Dallas (Arlington), TX, 127 room Hyatt
Place-Park Meadows, Denver (Lone Tree), CO, 126 room Hyatt Place-Denver Tech
Center, Denver (Englewood), CO, 135 room Hyatt House-Denver Tech Center,
Denver (Englewood), CO, 123 room Hyatt Place-Owings Mills, Baltimore (Owings
Mills), MD, 151 room Hyatt Place-Lombard, Chicago (Lombard), IL, 127 room
Hyatt Place-Phoenix, Phoenix, AZ, 127 room Hyatt Place-Scottsdale, Scottsdale,
AZ and 98 room Hilton Garden Inn, Fort Worth, TX and the issuance of
13,800,000 additional common shares described above. The Company’s outlook is
based on 82 current hotels owned and assumes no additional hotels acquired or
sold for the remainder of 2012 and no additional issuances of equity
securities.

                                        
                                         Fourth Quarter 2012
                                         Low-end       High-end
                                                        
RevPAR                                   $   63.50     $   64.75
RevPAR growth                                7.0%          9.0%
RevPAR (same-store 61 hotels)            $   55.50     $   56.50
RevPAR growth (same-store 61 hotels)         8.0%          10.0%
Adjusted FFO                             $   5,700     $   6,600
Adjusted FFO per diluted share/unit      $   0.11      $   0.13
Renovation capital deployed              $   8,000     $   11,000
                                                            

                                                    
                       Updated                       Previous
                       2012 Full Year Outlook        2012 Full Year Outlook
                       Low-end        High-end       Low-end        High-end
RevPAR                 $   65.50          66.75      $   71.53      $   72.87
RevPAR Growth              7.0%           9.0%           6.50%          8.50%
RevPAR (same-store     $   62.00      $   63.25      $   61.54      $   62.70
61 hotels)
RevPAR Growth
(Same-store 61             8.0%           10.0%          6.50%          8.50%
hotels)
Adjusted FFO           $   31,900     $   32,500     $   28,600     $   29,800
Adjusted FFO per       $   0.78       $   0.80       $   0.77       $   0.80
diluted share/unit
Renovation Capital     $   25,000     $   28,000     $   20,000     $   25,000
Deployed
                                                                     

(1)   Assumptions include US 2012 GDP growth of 1.75% to 2.0%.
      Fourth quarter and full year same-store RevPAR guidance anticipates 150
(2)   basis points of RevPAR disruption and $0.2 million of EBITDA disruption
      in the fourth quarter of 2012 due to renovation work.
      Fourth quarter 2012 AFFO guidance includes an anticipated $0.8 million
(3)   to $1.0 million income tax benefit; resulting in a similar anticipated
      income tax benefit for the full year.
(4)   Assumed weighted average diluted common shares/units of 51,086,000 for
      fourth quarter and 40,912,000 for the full year 2012.
       

Earnings Call
The Company will conduct its quarterly conference call on Thursday, November
8, 2012 at 9:00am EST. To participate in the conference call please dial
800-591-6923. The participant passcode for the call is 95273080. 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 Thursday, November 15, 2012 by dialing 888-286-8010; participant
passcode 75865330. A replay of the conference call will also be available on
the Company’s website until February 15, 2013.

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 November 6, 2012, the Company’s portfolio consisted of 82 hotels with a
total of 8,674 rooms located in 21 states. Additional information about Summit
may be found at the Company’s website, www.shpreit.com.

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 or services; forecasts of the Company’s future
economic performance and potential increases in average daily rate, occupancy,
RevPAR, room supply and demand, funds from operations and adjusted funds from
operations; US GDP growth 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”),
including, without limitation, the Company’s Annual Report on Form 10-K for
the year ended December 31, 2011. 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, 2011 and its quarterly and
other periodic filings with the SEC.

The following condensed consolidated balance sheets and statements of
operations are those of Summit Hotel OP, LP (the Operating Partnership),
Summit Hotel Properties, Inc’s. (the REIT’s) consolidated operating
partnership. Such financial results for the periods presented are identical to
those of the REIT; however, we believe the reconciliation of FFO, AFFO, EBITDA
and Adjusted EBITDA to net income (loss) presented in the Operating
Partnership’s statement of operations is more beneficial, as it eliminates the
presentation of noncontrolling interests represented by the equity interests
held by limited partners of the Operating Partnership, other than the REIT. In
addition, FFO and AFFO results on a total per common unit basis provides for a
more consistent period over period presentation now and in future periods.

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
Condensed Consolidated Balance Sheets
September 30, 2012 (Unaudited) and December 31, 2011
                                                              
                                           2012                2011
ASSETS
                                                                
Cash and cash equivalents                  $   10,287,841      $   10,537,132
Restricted cash                                4,275,143           1,464,032
Trade receivables                              6,666,212           3,424,630
Prepaid expenses and other                     4,390,302           4,268,393
Land held for development                      19,006,473          20,294,973
Property and equipment, net                    572,525,464         498,876,238
Deferred charges and other assets, net         8,986,646           8,923,906
Deferred tax benefit                           2,708,849           2,195,820
Other assets                                   4,257,462           4,019,870
TOTAL ASSETS                               $   633,104,392     $   554,004,994
                                                                
                                                                
LIABILITIES AND EQUITY
                                                                
LIABILITIES
Accounts payable                           $   1,254,050       $   1,670,994
Derivative liabilities                         522,564             -
Accrued expenses                               17,723,139          15,781,577
Mortgages and notes payable                    312,250,257         217,103,728
TOTAL LIABILITIES                              331,750,010         234,556,299
                                                                
COMMITMENTS AND CONTINGENCIES
                                                                
EQUITY                                         301,354,382         319,448,695
                                                                
TOTAL LIABILITIES AND EQUITY               $   633,104,392     $   554,004,994
                                                                    

                    
SUMMIT HOTEL PROPERTIES
Condensed Consolidated Statements of Operations
(Unaudited)
 
                                                                               Company and
                     Company                                                   Predecessor
                     Three months       Three months       Nine months         Nine months
                     ended 09/30/12     ended 09/30/11     ended 09/30/12      ended 09/30/11
                                                                                
REVENUE
Room revenue         $ 50,062,745       $ 39,589,802       $ 135,132,550       $ 107,360,347
Other hotel
operations             1,171,162          846,774            3,292,311           2,302,943    
revenue
Total Revenue          51,233,907         40,436,576         138,424,861         109,663,290  
                                                                                
EXPENSES
Hotel operating
expenses
Rooms                  13,990,364         11,789,795         39,036,709          32,498,487
Other direct           5,957,531          5,371,116          15,983,050          14,839,145
Other indirect         13,690,221         10,354,525         37,492,154          28,486,700
Other                  226,496            243,434            669,500             590,557      
Total hotel
operating              33,864,612         27,758,870         93,181,413          76,414,889
expenses
Depreciation and       8,503,841          8,108,644          24,836,200          21,226,273
amortization
Corporate
general and
administrative:
Salaries and
other                  1,645,359          791,044            3,563,325           2,168,560
compensation
Other                  823,480            625,609            2,757,611           2,166,420
Loan transaction       227,577            -                  650,687             -
costs
Hotel property
acquisition            245,782            181,892            1,573,015           181,892      
costs
Total Expenses         45,310,651         37,466,059         126,562,251         102,158,034  
                                                                                
INCOME (LOSS)          5,923,256          2,970,517          11,862,610          7,505,256    
FROM OPERATIONS
                                                                                
OTHER INCOME
(EXPENSE)
Interest income        17,863             553                19,554              21,919
Other income           22,697             -                  497,273             -
Interest expense       (4,048,676 )       (3,337,485 )       (11,747,874 )       (14,231,174 )
Gain (loss) on
disposal of            (12,206    )       -                  (198,795    )       (36,031     )
assets
Gain (loss) on         (775       )       -                  (1,787      )       -            
derivatives
Total Other            (4,021,097 )       (3,336,932 )       (11,431,629 )       (14,245,286 )
Income (Expense)
                                                                                
INCOME (LOSS)
FROM CONTINUING
OPERATIONS
BEFORE INCOME          1,902,159          (366,415   )       430,981             (6,740,030  )
TAXES
                                                                                
INCOME TAX
(EXPENSE)              (313,199   )       1,688              98,657              (821,206    )
BENEFIT
                                                                                
INCOME (LOSS)
FROM CONTINUING        1,588,960          (364,727   )       529,638             (7,561,236  )
OPERATIONS
                                                                                
INCOME (LOSS)
FROM                   51,866             406,149            (2,050,413  )       385,842      
DISCONTINUED
OPERATIONS
                                                                                
NET INCOME             1,640,826          41,422             (1,520,775  )       (7,175,394  )
(LOSS)
                                                                                
PREFERRED              (1,156,250 )       -                  (3,468,750  )       -            
DIVIDENDS
                                                                                
NET INCOME
(LOSS)
ATTRIBUTABLE TO
COMMON UNIT          $ 484,576          $ 41,422           $ (4,989,525  )     $ (7,175,394  )
HOLDERS
                                                                                
                                                                                
Basic and
diluted net          $ 0.01             $ 0.00             $ (0.13       )     $ (0.03       )
income (loss)
per unit:
                                                                                
Weighted-average
common units
outstanding:
                                                                                
Basic                  37,393,288         37,378,000         37,384,795          37,378,000   
                                                                                
Diluted                37,586,027         37,378,000         37,384,795          37,378,000   
                                                                                              

 
SUMMIT HOTEL PROPERTIES
FFO
(Unaudited)
                                                                       
                                                                        Company and
                 Company                                                Predecessor
                 Three months       Three months     Nine months        Nine months
                 ended 09/30/12     ended            ended 09/30/12     ended 09/30/11
                                    09/30/11
                                                                         
NET INCOME       $ 1,640,826        $ 41,422         $ (1,520,775 )     $ (7,175,394 )
(LOSS)
Preferred          (1,156,250 )       -                (3,468,750 )       -
dividends
Depreciation
and                8,503,841          8,391,915        25,161,462         22,069,954
amortization
Loss on
impairment         -                  -                2,098,000          -
of assets
(Gain) loss
on disposal        12,206             -                198,795            36,031      
of assets
Funds From       $ 9,000,623        $ 8,433,337      $ 22,468,732       $ 14,930,591
Operations
Per Common       $ 0.24             $ 0.23           $ 0.60             $ 0.40
share/unit
                                                                         
                                                                         
Equity based       268,684            51,201           783,253            353,685
compensation
Hotel
property           245,782            181,892          1,573,015          181,892
acquisition
costs
Loan
transaction        227,577            -                650,687            -
costs
Unrealized
(gain) loss        775                -                1,787              -
on
derivatives
Operating
expenses as        -                  -                -                  710,000
result of
IPO (1)
Corporate
G&A related        -                  -                -                  476,000
to IPO (1)
Interest
expense on
prepayment         -                  -                521,773            5,600,000
penalties
(1)
Income tax
expense as         -                  -                -                  339,000     
result of
IPO (1)
Adjusted
Funds From       $ 9,743,441        $ 8,666,430      $ 25,999,247       $ 22,591,168
Operations
Per Common       $ 0.26             $ 0.23           $ 0.69             $ 0.60
share/unit
                                                                         
Weighted
average
diluted            37,586,027         37,378,000       37,491,872         37,378,000
Common
shares/units
                                                                                      

Note:      
             
            Includes non-recurring expenses related to the transfer and
      (1)   assumption of indebtedness and other contractual obligations of
            our predecessor in connection with the IPO and our formation
            transactions in 2011.
             

 
SUMMIT HOTEL PROPERTIES
EBITDA
(Unaudited)
 
                                                                          Company and
                 Company                                                  Predecessor
                 Three months       Three months       Nine months        Nine months
                 ended 09/30/12     ended 09/30/11     ended 09/30/12     ended 09/30/11
                                                                           
NET INCOME       $ 1,640,826        $ 41,422           $ (1,520,775 )     $ (7,175,394 )
(LOSS)
Depreciation
and                8,503,841          8,391,915          25,161,462         22,069,954
amortization
Interest           4,048,676          3,456,335          11,878,610         14,641,320
expense
Interest           (17,863    )       (553       )       (19,554    )       (21,919    )
income
Income tax
expense            315,765            (1,813     )       (113,888   )       853,700     
(benefit)
EBITDA           $ 14,491,245       $ 11,887,306       $ 35,385,855       $ 30,367,661
                                                                           
                                                                           
Equity based       268,684            51,201             783,253            353,685
compensation
Hotel
property           245,782            181,892            1,573,015          181,892
acquisition
costs
Loan
transaction        227,577            -                  650,687            -
costs
Unrealized
(gain) loss        775                -                  1,787              -
on
derivatives
(Gain) loss
on disposal        12,206             -                  198,795            36,031
of assets
Loss on
impairment         -                  -                  2,098,000          -
of assets
Operating
expenses as        -                  -                  -                  710,000
result of
IPO (1)
Corporate
G&A related        -                  -                  -                  476,000     
to IPO (1)
ADJUSTED         $ 15,246,269       $ 12,120,399       $ 40,691,392       $ 32,125,269
EBITDA
                                                                                        

Note:      
             
            Includes non-recurring expenses related to the transfer and
      (1)   assumption of indebtedness and other contractual obligations of
            our predecessor in connection with the IPO and our formation
            transactions in 2011.
             

                                                                                  
SUMMIT HOTEL PROPERTIES
Pro Forma Hotel Operational Data (1)
Schedule of Property Level Results
(Unaudited)
                                                                                    
                                                                   Company and
               Company                                             Predecessor
               Three months     Three months     Nine months       Nine months
               ended            ended            ended             ended
               09/30/12         09/30/11         09/30/12          09/30/11
                                                                                    
REVENUE
Room           $ 50,062,745     $ 44,910,387     $ 141,002,892     $ 127,685,513
revenue
Other
hotel            1,171,162        1,005,352        3,340,866         2,972,533
operations
revenue
Total            51,233,907       45,915,739       144,343,758       130,658,046
Revenue
                                                                                    
EXPENSES
Hotel
operating
expenses
Rooms            13,990,364       13,034,164       40,547,552        38,314,821
Other            5,957,531        5,550,351        16,601,644        17,455,210    (2)
direct
Other            13,690,221       12,754,534       38,943,218        33,650,438    (2)
indirect
Other            226,496          211,016          695,412           791,119
Total
hotel            33,864,613       31,550,065       96,787,826        90,211,588
operating
expenses
                                                                                    
Hotel          $ 17,369,294     $ 14,365,674     $ 47,555,931      $ 40,446,458
EBITDA
                                                                                    

Note:      
             
            For purposes of this press release, pro forma information includes
            operating results for the Company’s 73 hotels owned as of
      (1)   September 30, 2012, as if such hotels had been owned by the
            Company since January 1, 2011. As a result, these pro forma
            operating measures include operating results for certain hotels
            prior to the Company’s ownership.
      (2)   Includes expenses related to our predecessor in connection with
            the IPO in 2011.
             

 
SUMMIT HOTEL PROPERTIES
Pro Forma and Same-Store Statistical Data for the Hotels
(Unaudited)
 
                                                                  Company and
                    Company                                       Predecessor
                    Pro Forma      Pro Forma      Pro Forma       Pro Forma
                    Three          Three          Nine months     Nine months
                    months         months
                    ended          ended          ended           ended
                    09/30/12       09/30/11       09/30/12        09/30/11
Total Portfolio
(73 hotels)
Rooms Occupied      512,366        485,300        1,465,373       1,373,358
Rooms Available     693,036        693,558        2,065,163       2,054,738
Occupancy           73.9%          70.0%          71.0%           66.8%
ADR                 $97.71         $92.54         $96.22          $92.97
RevPAR              $72.24         $64.75         $68.28          $62.14
                                                                   
Occupancy           5.7%                          6.2%
Growth
ADR Growth          5.6%                          3.5%
RevPAR Growth       11.6%                         9.9%
                                                                   

Note:
 
For purposes of this press release, pro forma information includes operating
results for the Company’s 73 hotels owned as of September 30, 2012, as if such
hotels had been owned by the Company since January 1, 2011. As a result, these
pro forma operating measures include operating results for certain hotels
prior to the Company’s ownership.
 

                                                                 
                                                                  Company and
                      Company                                     Predecessor
                      Three         Three         Nine months     Nine months
                      months        months
                      ended         ended         ended           ended
                      09/30/12      09/30/11      09/30/12        09/30/11
Same Store (61
hotels)
Rooms Occupied        421,334       397,745       1,197,313       1,124,706
Rooms Available       570,124       570,646       1,698,099       1,693,570
Occupancy             73.9%         69.7%         70.5%           66.4%
ADR                   $95.87        $90.00        $93.86          $90.25
RevPAR                $70.85        $62.73        $66.18          $59.94
                                                                   
Occupancy Growth      6.0%                        6.2%
ADR Growth            6.5%                        4.0%
RevPAR Growth         12.9%                       10.4%
                                                                   

Note:
 
This schedule includes operating data for same store properties owned at all
times by the Company during the three-month and nine-month periods ended
September 30, 2012 and 2011.
 

 
SUMMIT HOTEL PROPERTIES
Pro Forma Statistical Data for the Hotels
(Unaudited)
 
Pro Forma Operating Data                                                          
             
              2011                               2012
              Q4               FYE               Q1               Q2               Q3
                                                                                    
Room          $ 37,680,985     $ 165,366,498     $ 42,575,353     $ 48,361,475     $ 50,062,745
revenue
Other           859,306          3,831,839         1,047,523        1,125,499        1,171,162
revenue
Total         $ 38,540,292     $ 169,198,337     $ 43,622,876     $ 49,486,975     $ 51,233,907
Revenue
                                                                                    
Hotel         $ 9,020,495      $ 49,466,952      $ 13,423,447     $ 16,763,190     $ 17,369,294
EBITDA
                                                                                    
Rooms           415,243          1,788,601         448,820          504,187          512,366
occupied
Rooms           684,603          2,748,173         686,594          685,533          693,036
available
                                                                                    
Occupancy       60.7%            65.1%             65.4%            73.5%            73.9%
ADR           $ 90.74          $ 92.46           $ 94.86          $ 95.92          $ 97.71
RevPAR        $ 55.04          $ 60.17           $ 62.01          $ 70.55          $ 72.24
                                                                                      

Note:
 
The above pro forma information includes operating results for the Company’s
73 hotels owned as of September 30, 2012, as if such hotels had been owned by
the Company since January 1, 2011. As a result, these pro forma operating
measures include operating results for certain hotels prior to the Company’s
ownership
 

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 nonrecurring 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.

Contact:

Summit Hotel Properties, Inc.
Dan Boyum, 605-782-2015
VP of Investor Relations
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