Summit Hotel Properties Reports 2012 Results

  Summit Hotel Properties Reports 2012 Results

  9.7 Percent Pro Forma RevPAR Growth; 40.0 Percent Adjusted EBITDA Growth;

    Performance Driven by Organic Growth and Acquisitions; Strong Dividend

Business Wire

AUSTIN, Texas -- February 26, 2013

Summit Hotel Properties, Inc. (NYSE: INN) (the “Company”) today announced
results for the fourth quarter and full year 2012. The Company’s results
included the following:

                            Fourth Quarter             Full Year
                             2012         2011          2012       2011
                             ($ in thousands, except per unit and RevPAR data)
Total Revenue                $  51,423     $  33,568     $ 189,542   $ 142,663
EBITDA ^1                    $  11,298     $  7,008      $ 47,041    $ 35,273
Adjusted EBITDA ^1           $  11,064     $  7,080      $ 52,113    $ 37,229
FFO ^1                       $  5,002      $  4,118      $ 27,470    $ 19,048
Adjusted FFO ^1              $  7,571      $  4,190      $ 33,570    $ 26,907
FFO per diluted unit ^1      $  0.10       $  0.11       $ 0.67      $ 0.51
Adjusted FFO per diluted     $  0.15       $  0.11       $ 0.82      $ 0.72
unit ^1
                                                                     
Pro Forma ^2
RevPAR                       $  64.58      $  57.45      $ 69.22     $ 63.09
RevPAR growth                   12.4%                      9.7%
Hotel EBITDA                 $  15,359     $  11,799     $ 73,851    $ 61,984
Hotel EBITDA margin             27.6%         23.7%        31.1%       28.6%
Hotel EBITDA margin growth   388 bps                     249 bps
                                                                     

^1 See tables later in this press release for a reconciliation of net income
(loss) to earnings before interest, taxes, depreciation and amortization
(“EBITDA”), adjusted EBITDA, funds from operations (“FFO”), FFO per diluted
unit, adjusted FFO and adjusted FFO per diluted unit. EBITDA, adjusted EBITDA,
FFO, FFO per diluted unit, adjusted FFO and adjusted FFO per diluted unit, as
well as hotel EBITDA, are non-GAAP financial measures. See further discussions
of these non-GAAP measures later in this press release.

^2 Pro forma information includes operating results for the Company’s 83
hotels owned as of December 31, 2012, which excludes the AmericInn Hotel &
Suites in Golden, CO that was held for sale at year end, 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.

2012 Highlights

  *Pro Forma RevPAR: 2012  pro forma room revenue per available room
    (“RevPAR”) grew to $69.22, an increase of 9.7 percent over 2011. Pro forma
    average daily rate (“ADR”) grew to $97.90, a 3.9 percent increase over
    2011, and pro forma occupancy improved 380 basis points to 70.7 percent.
  *Pro Forma Hotel EBITDA: 2012 pro forma hotel EBITDA was $73.9 million, an
    increase of 19.2 percent over 2011.
  *Pro Forma Hotel EBITDA Margin: 2012  pro forma hotel EBITDA margin was
    31.1 percent, an improvement of 249 basis points over 2011. Pro forma
    hotel EBITDA margin is defined as pro forma hotel EBITDA as a percentage
    of pro forma total revenue.
  *Adjusted EBITDA: 2012  adjusted EBITDA was $52.1 million, an increase of
    40.0 percent over 2011. Adjusted EBITDA reflects $0.2 million of charges
    associated with the consolidation of the Company’s corporate offices to
    Austin, TX.
  *Adjusted FFO: 2012  adjusted FFO was $33.6 million or $0.82 per diluted
    unit.
  *Acquisitions: The Company acquired 19 hotels, 2,348 guestrooms, in 2012
    for a total purchase price of $265.4 million.
  *Dividends: During 2012, the Company declared dividends of $0.45 per common
    share, representing an annualized yield of approximately 4.9 percent based
    on the closing price of the Company’s common stock on the NYSE on February
    25, 2013 and $2.3125 per share on the Company’s 9.25% Series A Cumulative
    Redeemable Preferred Shares.

Fourth Quarter Highlights

  *Pro Forma RevPAR: Pro forma RevPAR in the fourth quarter of 2012 grew to
    $64.58, an increase of 12.4 percent over the same period in 2011. Pro
    forma ADR grew to $96.47, an increase of 4.5 percent from the fourth
    quarter of 2011. Pro forma occupancy grew by 470 basis points to 66.9
    percent.
  *Pro Forma Hotel EBITDA: The hotels generated $15.4 million of pro forma
    hotel EBITDA for the fourth quarter 2012, an increase of 30.2 percent over
    the same period of 2011.
  *Pro Forma Hotel EBITDA Margin: Pro forma hotel EBITDA margin grew 388
    basis points compared with the same period in 2011. The Company’s pro
    forma hotel EBITDA margin expansion was 275 basis points after adjusting
    for the $0.6 million one-time hotel management incentive fee paid to
    Interstate Hotels and Resorts during fourth quarter 2011.
  *Adjusted EBITDA: The Company’s adjusted EBITDA increased to $11.1 million
    from $7.1 million in the same period in 2011, an increase of $4.0 million
    or 56.3 percent. Adjusted EBITDA for the quarter reflects $0.2 million of
    charges associated with the consolidation of the Company’s corporate
    offices to Austin, TX.
  *Adjusted FFO: The Company’s Adjusted FFO for the quarter was $7.6 million
    or $0.15 per diluted unit.
  *Acquisitions: During the fourth quarter, the Company acquired 12 hotels,
    962 guestrooms, for a total purchase price of $166.4 million.
  *Dividends: On January 31, 2013, the Company declared an $0.1125 per share
    quarterly dividend on its common shares, a $0.5781 per share quarterly
    dividend on its 9.25% Series A Cumulative Redeemable Preferred Shares, and
    a $0.432 per share quarterly dividend on its 7.875% Series B Cumulative
    Redeemable Preferred Shares.

                                            
                        2012       2011       growth
Number of Hotels           84         70       20.0 %
Number of Guestrooms        9,019       7,095     27.1 %
Total Revenue (000’s)     $ 189,542   $ 142,663   32.9 %
Adjusted EBITDA (000’s)  $ 52,113   $ 37,229   40.0 %


“We had a terrific year,” said Dan Hansen, President and CEO. “We acquired 19
hotels, sold 5 hotels, raised both common and preferred equity, and renovated
13 hotels. Through this tremendous amount of activity, our asset management
team performed brilliantly by minimizing disruption and maximizing both rate
and occupancy. They further showed their strength by continuing to implement
revenue and cost management strategies that benefitted the entire portfolio.
We continue to remain focused on realizing our embedded growth and balancing
that with new acquisitions in markets that are accretive to our portfolio. We
anticipate opportunities to be just as plentiful in 2013.”

Subsequent Events

  *On January 14, 2013, the Company completed a public offering of 15,000,000
    shares of its common stock at a public offering price of $9.00 per share.
    The underwriters fully exercised their option to purchase an additional
    2,250,000 shares. The total number of shares sold, including the option
    shares, was 17,250,000. Net proceeds of $148.1 million were realized after
    deducting the underwriting discount and other estimated offering expenses.
  *On January 14, 2013, the Company repaid its loans with First National Bank
    of Omaha in the amount of $22.8 million.
  *On January 15, 2013, the Company sold the AmericInn Hotel & Suites (62
    guestrooms) in Golden, CO for $2.6 million.
  *On January 22, 2013, the Company acquired three upscale Hyatt Place hotels
    (426 guestrooms) for $36.1 million. The hotels are located in Orlando, FL
    (2 hotels) and Chicago, IL.
  *On January 25, 2013, the Company closed on a $29.4 million CMBS loan with
    KeyBank secured by four of its recent Hyatt Place acquisitions, Chicago
    (Lombard), IL, Denver (Lone Tree), CO, Denver (Englewood), CO and Dallas
    (Arlington), TX. This loan has a maturity date of February 1, 2023, and
    bears interest at a fixed rate of 4.46%.
  *On February 11, 2013, the Company, through a joint venture with an
    affiliate of IHG, acquired a Holiday Inn Express & Suites (252 guestrooms)
    in San Francisco, CA for a purchase price of $60.5 million, including the
    $23.5 million in debt assumed. The Company contributed $34.6 million,
    including $2.8 million in renovation reserves, to the joint venture for an
    80 percent controlling interest.
  *On February 15, 2013, the Company sold the Hampton Inn (149 guestrooms) in
    Denver (Greenwood Village), CO for $5.5 million.

Acquisitions

During 2012, the Company acquired 19 hotels in the upscale and upper midscale
segments, totaling 2,348 guestrooms for a total purchase price of $265.4
million. These acquisitions, net of hotel dispositions in 2012, increased the
Company’s guestroom count 27.1 percent over the number of guestrooms owned on
December 31, 2011.

“The 19 hotels we acquired are all top brands, in top markets and continue to
build our strong portfolio of assets across the country. We continue to
cultivate and improve our portfolio with accretive acquisitions,” said Mr.
Hansen. “We have also effectively recycled capital through the strategic
disposition of select hotels. Successful execution of this strategy is one of
the key components of how we create value for our investors.”

The following table provides information on the Company’s 2012 hotel
acquisitions:

                                                             Purchase
Date       Hotel                Location                 Rooms   Price (000's)
01/12/12   Courtyard            Atlanta, GA              150     $     28.9
02/28/12   Hilton Garden Inn    Birmingham               95            8.6
                                (Lakeshore), AL
02/28/12   Hilton Garden Inn    Birmingham (Liberty      130           11.5
                                Park), AL
05/29/12   Hilton Garden Inn    Nashville (Smyrna), TN   112           11.5
05/29/12   Courtyard            Dallas (Arlington), TX   103           15.0
06/21/12   Hampton Inn &        Nashville (Smyrna), TN   83            8.0
           Suites
07/02/12   Residence Inn        Dallas (Arlington), TX   96            15.5
10/05/12   Hyatt Portfolio (8                                          87.4
           hotels)
           Hyatt Place          Baltimore (Owings        123
                                Mills), MD
           Hyatt Place          Chicago (Lombard), IL    151
           Hyatt Place          Dallas (Arlington), TX   127
           Hyatt Place          Denver (Englewood), CO   126
           Hyatt Place          Phoenix, AZ              127
           Hyatt Place          Scottsdale, AZ           127
           Hyatt Place          Denver (Lone Tree), AZ   127
           Hyatt House          Denver (Englewood), CO   135
10/23/12   Hilton Garden Inn    Fort Worth, TX           98            7.2
12/21/12   Residence Inn        Salt Lake City, UT       178           20.0
12/27/12   Hyatt Place          Long Island (Garden      122           31.0
                                City), NY
12/27/12  Hampton Inn &       Tampa (Ybor City), FL   138         20.8
           Suites
         Total                                      2,348  $     265.4
                                                                       

On October 30, 2012, the Company entered into an agreement with an affiliate
of Hyatt Hotels Corporation to fund $20.3 million in the form of a first lien
mortgage loan on a hotel property in downtown Minneapolis, MN. The $20.3
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 fourth quarter of 2013, the Company
plans to purchase the property and enter into a management agreement with a
Hyatt affiliate. The Company has funded $10.3 million to date and anticipates
funding the additional capital over the next two quarters.

Dispositions

The Company continued its strategy of recycling capital by selling hotels or
land that it no longer considers strategic.

  *On May 16, 2012, the Company sold the following three hotels all located
    in Twin Falls, ID for $16.5 million.

       *111 guestroom AmericInn Hotel and Suites
       *91 guestroom Holiday Inn Express & Suites
       *75 guestroom Hampton Inn

  *On May 30, 2012, the Company sold a parcel of land in Twin Falls, ID for
    $0.3 million.
  *On June 28, 2012, the Company sold two parcels of land in Boise, ID for
    $1.4 million.
  *On August 15, 2012, the Company sold the 52 guestroom AmericInn Hotel &
    Suites in Missoula, MT for $1.9 million.
  *On December 11, 2012, the Company sold the 92 guestroom Courtyard in
    Missoula, MT for $7.7 million.

On February 26, 2013, the Company owns 86 hotels totaling 9,486 guestrooms.
Since its initial public offering in February of 2011, the Company has
acquired 28 hotel properties, totaling 3,593 guestrooms for a total purchase
price of $412.1 million.

Capital Markets

During 2012, in order to maintain its strong balance sheet and continue its
strategic growth plan, the Company completed several capital market
transactions. The Company raised $178.9 million in net proceeds from common
and preferred stock offerings.

  *On October 3, 2012, the Company completed a public offering of 12,000,000
    shares of its common stock at a public offering price of $8.15 per share.
    The underwriters 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 $106.4 million were realized
    after deducting the underwriting discount and other estimated offering
    expenses.
  *On December 11, 2012, the Company completed a public offering of 3,000,000
    shares of its 7.875% Series B Cumulative Redeemable Preferred Stock,
    resulting in net proceeds, after deducting the underwriting discount and
    estimated offering costs, of $72.5 million.

The Company amended its $125.0 million senior secured revolving credit
facility on May 16, 2012. The amendment included the following:

  *Reduction in LIBOR spread of 75 basis points and elimination of the LIBOR
    floor of 50 basis points.
  *The option for increased leverage on borrowing base assets from 55% to 60%
    of appraised value.
  *Extended maturity date from April 29, 2014 to May 16, 2015.
  *The maximum leverage ratio covenant and fixed charge coverage ratio
    covenant were adjusted to provide flexibility on acquisitions in the near
    term.
  *The unused fee was reduced by 12.5 basis points.

In addition to the amendments listed above, on November 6, 2012, the Company
increased the commitment on its senior secured revolving credit facility to
$150.0 million; increasing 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.

In 2012, the Company entered into the following term debt arrangements:

  *On January 12, 2012, the Company entered into a loan with Empire Financial
    in connection with the Atlanta, GA Courtyard acquisition. The principal
    loan amount was $19.0 million and the maturity date is February 1, 2017.
    The loan bears interest at a fixed rate of 6.00% per year.
  *On February 13, 2012, the Company consolidated and refinanced four loans
    with ING Life Insurance and Annuity Company into a single term loan of
    $67.5 million and the maturity date is March 1, 2032. The loan bears
    interest at a fixed rate of 6.10%. This loan is callable by the lender
    beginning March 1, 2019.
  *On February 14, 2012, the Company refinanced a loan with Metabank of $7.0
    million with a maturity date of February 1, 2017. The loan bears interest
    at a fixed rate of 4.95% per year.
  *On March 2, 2012, the Company obtained two term loans from General
    Electric Capital Corporation in connection with the two Birmingham, AL
    acquisitions. The loan amounts were $5.6 million and $6.5 million, with
    both loans having a maturity date of April 1, 2017, and bear a fixed
    interest rate of 5.46% per year.
  *On April 4, 2012, the Company refinanced two loans with GE Capital
    Financial, Inc. formerly financed with National Western Life Insurance;
    mortgage loans associated with the Scottsdale, AZ Courtyard and the
    Scottsdale, AZ Springhill Suites with loan amounts of $9.8 and $5.3
    million, respectively. Both new loans bear interest at a fixed rate of
    6.03% and have a maturity date of May 1, 2017. The transaction resulted in
    an interest rate reduction of 197 basis points as compared to the previous
    loan’s interest rate and $1.5 million of net proceeds from the refinancing
    after repaying the two previous loans including a prepayment penalty of
    $0.5 million.
  *On June 24, 2012, the Company refinanced a loan with Chambers Bank of $1.5
    million, which bears interest at a fixed rate of 6.50%, and a maturity
    date of June 24, 2014.
  *On June 29, 2012, the Company refinanced a loan with Bank of the Ozarks of
    $8.9 million which resulted in $2.5 million of net proceeds after
    exercising the earn-out provision on the loan. In addition, the revised
    maturity date on the loan is July 10, 2017. Lastly, the interest rate was
    fixed at 5.75% for years 1-3 and will reset annually at LIBOR plus 375
    basis points with a floor of 5.50% in years 4-5.

Capital Investment

The Company invested $28.0 million in 2012 on renovations, $11.0 million of
which was deployed during the fourth quarter. The renovation scope varied
among the 13 properties completed in 2012. Projects ranged from lobby and
public space improvements to complete guestroom renovation including all
furniture, soft goods, and new guest bathrooms.

One of the Company’s largest transformations during 2012 was the full
renovation and conversion of the Fairfield Inn & Suites in Ft. Worth, TX. This
renovation included moving walls in order to expand the lobby and breakfast
areas. All guestrooms were fully renovated, adding the full Marriott package
including new furniture. The renovation totaled $2.9 million and was completed
in June of 2012.

The Fairfield Inn in Seattle (Bellevue), WA was also fully renovated and
converted in 2012 to a Fairfield Inn & Suites property. This conversion
included complete guestroom and guest bathroom renovations. The exercise room
was increased in size and all new equipment was installed. The market was
relocated in order to increase the lobby and breakfast areas, which is now
serviced by the kitchen that was re-built during the project. The entire
exterior was painted and new signage installed. The renovation totaled $2.6
million and was completed in February of 2012.

“We have seen positive results from the renovation and re-branding capital we
have deployed over the past several quarters,” said Mr. Hansen. “We believe
our recent substantial RevPAR growth is, in part, driven by the completion of
this renovation work.”

Balance Sheet

  *At December 31, 2012, the Company had total outstanding debt of $312.6
    million, including $58.0 million outstanding on its senior secured
    revolving credit facility, and the Company had $14.0 million of cash and
    cash equivalents.
  *At February 25, 2013, following the completion of a public offering on
    January 14, 2013 and the re-payment of debt with net proceeds, the Company
    has a total outstanding debt of $283.0 million. Maximum borrowing capacity
    is $112.1 million under the senior secured revolving credit facility. The
    Company has no outstanding borrowings under its facility, $3.7 million in
    standby letters of credit, and $108.4 million available to borrow. In
    addition, the Company also has 19 unencumbered hotels available to further
    expand its borrowing base.
  *The Company’s weighted average interest rate on its debt outstanding at
    February 25, 2013 is 5.60%.

Estimated Sources and Uses

On page 18 of this release, the Company provides a schedule of estimated
sources and uses. The schedule reflects components of the Company’s balance
sheet as of December 31, 2012, as well as subsequently completed or announced
hotel acquisitions and dispositions and completed or anticipated financing
transactions to be completed in the next two quarters of 2013. However, no
assurance can be given that anticipated transactions will be completed within
the expected time frame, or at all. The timing of these transactions may
change. In addition, the Company may choose not to complete anticipated
transactions for various reasons, including reasons beyond the control of the
Company.

First Quarter 2013 Outlook

The Company is providing guidance for the first quarter based on 91 current
hotels^1 and the issuance of 17,250,000 additional shares of common stock on
January 14, 2013. Except as described in footnote 1 below, it assumes no
additional hotels are acquired or sold in the first quarter and no additional
issuances of equity securities.

                                  Low-end   High-end
Pro forma RevPAR (91) ^1           $ 74.00    $ 76.00
Pro forma RevPAR Growth (91)         5.0%       7.0%
RevPAR (same-store 63) ^2          $ 64.00    $ 66.00
RevPAR Growth (same-store 63)        5.0%       7.0%
Adjusted FFO                       $ 10,600   $ 11,900
Adjusted FFO per diluted unit ^3   $ 0.16     $ 0.18
Renovation capital deployed        $ 9,000    $ 11,000
Interest expense                   $ 4,000    $ 4,500
Income tax expense                 $ -        $ 400
                                              

^1 In addition to the Company’s portfolio of 83 hotels (8,957 guestrooms) at
December 31, 2012 (excluding the AmericInn Hotel & Suites in Golden, CO that
was held for sale at year end), includes: the 151 - guestroom Hyatt Place
(Universal), Orlando, FL; the 149 - guestroom Hyatt Place (Convention Center),
Orlando, FL; the 126 - guestroom Hyatt Place, Chicago (Hoffman Estates) IL;
and the 252 - guestroom Holiday Inn Express & Suites, San Francisco, CA.
Assumes the acquisition of the 153 - guestroom Courtyard, New Orleans
(Metairie), LA; the 120 - guestroom Residence Inn, New Orleans (Metairie), LA;
the 208 - guestroom Springhill Suites (Convention Center), New Orleans, LA;
the 202 - guestroom Courtyard (Convention Center), New Orleans, LA; and the
140 - guestroom Courtyard (French Quarter), New Orleans, LA currently under
contract. Also reflects the sale of the 62 – guestroom AmericInn Hotel &
Suites, Lakewood, CO and the 149 - guestroom Hampton Inn, Denver (Greenwood),
CO.

^2 First quarter same-store RevPAR guidance anticipates 75 to 125 basis points
of RevPAR disruption and $0.2 to $0.3 million of EBITDA disruption in the
first quarter of 2013 due to renovation work.

^3 Assumed weighted average diluted common units of 66,160,000 for first
quarter 2013.

Full Year 2013 Outlook

The Company is providing guidance for full year 2013 based on 93 current
hotels^1 and the issuance of 17,250,000 additional shares of common stock on
January 14, 2013. Except as described in footnote 1 below, it assumes no
additional hotels are acquired or sold in 2013 and no additional issuances of
equity securities. US GDP growth was assumed to be in the range of 2.0 to 2.9
percent as forecasted by Smith Travel Research and PwC’s Hospitality
Directions economic outlooks.

                                  Low-end   High-end
Pro forma RevPAR (93) ^1           $ 78.00    $ 80.00
Pro Forma RevPAR Growth (93)         5.0%       7.0%
RevPAR (same-store 63)             $ 69.00    $ 71.00
RevPAR Growth (same-store 63)        5.0%       7.0%
Adjusted FFO ^2                    $ 57,500   $ 61,000
Adjusted FFO per diluted unit ^3   $ 0.84     $ 0.90
Renovation capital deployed        $ 38,000   $ 48,000
Interest expense                   $ 19,500   $ 20,500
Income tax expense                 $ 800      $ 1,200
                                              

^1 In addition to the Company’s portfolio of 83 hotels (8,957 guestrooms) at
December 31, 2012 (excluding the AmericInn Hotel & Suites in Golden, CO that
was held for sale at year end), includes: the 151 - guestroom Hyatt Place
(Universal), Orlando; FL, the 149 - guestroom Hyatt Place (Convention Center),
Orlando, FL; the 126 - guestroom Hyatt Place, Chicago (Hoffman Estates), IL;
and the 252 - guestroom Holiday Inn Express & Suites, San Francisco, CA.
Assumes the acquisition of: the 153 - guestroom Courtyard, New Orleans
(Metairie), LA; the 120 - guestroom Residence Inn, New Orleans (Metairie), LA;
the 208 - guestroom Springhill Suites (Convention Center), New Orleans, LA;
the 202 - guestroom Courtyard (Convention Center), New Orleans, LA; the 140 -
guestroom Courtyard (French Quarter), New Orleans, LA; the 93 - guestroom
Holiday Inn Express & Suites, Minneapolis (Minnetonka), MN; and the 97 -
guestroom Hilton Garden Inn, Minneapolis (Eden Prairie), MN currently under
contract. Also reflects the sale of the 62 – guestroom AmericInn Hotel &
Suites, Lakewood, CO and the 149 - guestroom Hampton Inn, Denver (Greenwood),
CO.

^2 Adjusted FFO guidance on 93 hotels is based in part on 2013 Hotel EBITDA
margin change in the range of 100 to 175 basis points on the 83 hotels owned
on December 31, 2012 (excluding the AmericInn Hotel & Suites in Golden, Co
that was held for sale at year end). It also assumes additional charges in the
range of $0.4 million to $0.6 million that are associated with the
consolidation of the Company’s corporate office from Sioux Falls, SD to
Austin, TX prior to the end of 2013.

^3 Assumed weighted average diluted common units of 68,133,000 for full year
2013.

Earnings Call

The Company will conduct its quarterly conference call on Wednesday, February
27, 2013 at 9:00am EST. To participate in the conference call please dial
866-510-0676. The participant passcode for the call is 44189639. 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 Wednesday March 6, 2013 by dialing 888-286-8010; participant
passcode 18479433. A replay of the conference call will also be available on
the Company’s website until June 7, 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 February 25, 2013, the Company’s portfolio consisted of 86 hotels with a
total of 9,486 rooms located in 22 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, dispositions, financings or services;
forecasts of the Company’s future financial performance and potential
increases in average daily rate, occupancy, RevPAR, room supply and demand,
funds from operations and adjusted funds from operations; US GDP growth;
estimated sources and uses of available capital; and descriptions of
assumptions underlying or relating to any of the foregoing expectations
regarding the timing of their occurrence. These forward-looking statements are
subject to various risks and uncertainties, not all of which are known to the
Company and many of which are beyond the Company’s control, which could cause
actual results to differ materially from such statements. These risks and
uncertainties include, but are not limited to, the state of the U.S. economy,
supply and demand in the hotel industry and other factors as are described in
greater detail in the Company’s filings with the Securities and Exchange
Commission (“SEC”), including, without limitation, the Company’s Annual Report
on Form 10-K for the year ended December 31, 2012. 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, 2012 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) 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
December 31, 2012 and December 31, 2011
Amounts in thousands

                                                  2012       2011
ASSETS
                                                               
Investment in hotel properties, net                $ 734,362   $ 498,876
Investment in hotel properties under development     10,303      -
Land held for development                            15,802      20,295
Assets held for sale                                 4,836       -
Cash and cash equivalents                            13,980      10,537
Restricted cash                                      3,624       1,464
Trade receivables                                    5,478       3,425
Prepaid expenses and other                           5,311       4,721
Deferred charges, net                                8,895       8,924
Deferred tax asset                                   3,997       2,196
Other assets                                        4,201      3,567
TOTAL ASSETS                                       $ 810,789   $ 554,005
                                                               
                                                               
LIABILITIES AND EQUITY
                                                               
LIABILITIES
Debt                                               $ 312,613   $ 217,104
Accounts payable                                     5,013       1,671
Accrued expenses                                     18,985      15,781
Derivative financial instruments                    641        -
TOTAL LIABILITIES                                   337,252    234,556
                                                               
COMMITMENTS AND CONTINGENCIES
                                                              
EQUITY                                              473,537    319,449
                                                               
TOTAL LIABILITIES AND EQUITY                       $ 810,789   $ 554,005
                                                                 

SUMMIT HOTEL PROPERTIES
Condensed Consolidated Statements of Operations
Amounts in thousands
                                                                
                                                                   Company and
                           Company                                 Predecessor
                           Fourth Quarter           Year
                           2012        2011         2012          2011
                                                                   
REVENUE
Room revenue               $ 49,067     $ 32,199     $ 181,598     $ 137,022
Other hotel operations      2,356      1,369      7,944       5,641   
revenue
Total Revenue               51,423     33,568     189,542     142,663 
                                                                   
EXPENSES
Hotel operating expenses
Rooms                        15,829       10,588       54,083        42,343
Other direct                 7,146        5,355        25,125        21,858
Other indirect               14,263       10,434       51,062        38,236
Other                       242        182        911         773     
Total hotel operating        37,480       26,559       131,181       103,210
expenses
Depreciation and             9,543        7,328        34,263        28,359
amortization
Corporate general and
administrative:
Salaries and other           2,476        913          6,039         3,082
compensation
Other                        776          1,313        3,534         3,479
Hotel property               1,477        72           3,050         254
acquisition costs
Loss on impairment of       660        -          660         -       
assets
Total Expenses              52,412     36,185     178,727     138,384 
                                                                   
INCOME (LOSS) FROM          (989   )    (2,617 )    10,815      4,279   
OPERATIONS
                                                                   
OTHER INCOME (EXPENSE)
Interest income              15           1            35            23
Other income                 234          -            731           -
Interest expense             (3,885 )     (3,023 )     (15,585 )     (17,021 )
Debt transaction costs       (10    )     -            (661    )     -
Gain (loss) on disposal      1            -            (198    )     (36     )
of assets
Gain (loss) on
derivative financial        -          -          (2      )    -       
instruments
Total Other Income          (3,645 )    (3,022 )    (15,680 )    (17,034 )
(Expense)
                                                                   
INCOME (LOSS) FROM
CONTINUING OPERATIONS
BEFORE INCOME TAXES          (4,634 )     (5,639 )     (4,865  )     (12,755 )
                                                                   
INCOME TAX (EXPENSE)        1,139      2,683      1,238       1,865   
BENEFIT
                                                                   
INCOME (LOSS) FROM           (3,495 )     (2,956 )     (3,627  )     (10,890 )
CONTINUING OPERATIONS
                                                                   
INCOME (LOSS) FROM          2,746      (252   )    1,357       506     
DISCONTINUING OPERATIONS
                                                                   
NET INCOME (LOSS)            (749   )     (3,208 )     (2,270  )     (10,384 )
                                                                   
PREFERRED DIVIDENDS         (1,156 )    (411   )    (4,625  )    (411    )
                                                                   
NET INCOME (LOSS)
ATTRIBUTABLE TO
COMMON UNIT HOLDERS        $ (1,905 )   $ (3,619 )   $ (6,895  )   $ (10,795 )
                                                                   
WEIGHTED AVERAGE COMMON
UNITS OUTSTANDING
Basic                       50,894     37,378     40,780      37,378  
                                                                   
Diluted                     51,086     37,378     40,912      37,378  
                                                                             

SUMMIT HOTEL PROPERTIES
FFO
Amounts in thousands, except per common unit
(Unaudited)
                                                                
                                                                   Company and
                            Company                                Predecessor
                            Fourth Quarter           Year
                            2012        2011         2012         2011
NET INCOME (LOSS)           $ (749   )   $ (3,208 )   $ (2,270 )   $ (10,384 )
Preferred dividends           (1,156 )     (411   )     (4,625 )     (411    )
Depreciation and              9,710        7,737        34,871       29,807
amortization
Loss on impairment of         207          -            2,305        -
assets
(Gain) loss on disposal      (3,010 )    -          (2,811 )    36      
of assets
Funds From Operations       $ 5,002      $ 4,118      $ 27,470     $ 19,048
Per common unit             $ 0.10       $ 0.11       $ 0.67       $ 0.51
                                                                   
                                                                   
Equity based compensation     422          -            1,205        480
Hotel property                1,477        72           3,050        254
acquisition costs
Loss on impairment of         660          -            660          -
assets
Debt transaction costs        10           -            661          -
(Gain) loss on                -            -            2            -
derivatives
Non-recurring operating
expenses related to IPO       -            -            -            710
^1
Corporate G&A related to      -            -            -            476
IPO ^1
Interest expense related
to prepayment penalties       -            -            522          5,600
^1
Non-recurring income tax     -          -          -          339     
expense related to IPO ^1
Adjusted Funds From         $ 7,571      $ 4,190      $ 33,570     $ 26,907
Operations
Per common unit             $ 0.15       $ 0.11       $ 0.82       $ 0.72
                                                                   
Weighted average diluted      51,086       37,378       40,912       37,378
common units
                                                                   

^1 Includes expenses related to the transfer and assumption of indebtedness
and other contractual obligations of the predecessor in connection with the
IPO and the Company’s formation transactions in 2011.

SUMMIT HOTEL PROPERTIES
EBITDA
Amounts in thousands
(Unaudited)
                                                                
                                                                   Company and
                            Company                                Predecessor
                            Fourth Quarter           Year
                            2012        2011         2012         2011
NET INCOME (LOSS)           $ (749   )   $ (3,208 )   $ (2,270 )   $ (10,384 )
Depreciation and              9,710        7,737        34,871       29,807
amortization
Interest income               (15    )     (1     )     (35    )     (23     )
Interest expense              3,527        (1,481 )     15,764       17,859
Income tax expense           (1,175 )    3,961      (1,289 )    (1,986  )
(benefit)
EBITDA                      $ 11,298     $ 7,008      $ 47,041     $ 35,273
                                                                   
                                                                   
Equity based compensation     422          -            1,205        480
Hotel property                1,477        72           3,050        254
acquisition costs
Loss on impairment of         867          -            2,965        -
assets
Debt transaction costs        10           -            661          -
(Gain) loss on disposal       (3,010 )     -            (2,811 )     36
of assets
(Gain) loss on                -            -            2            -
derivatives
Non-recurring operating
expenses related to IPO       -            -            -            710
^1
Corporate G&A related to     -          -          -          476     
IPO ^1
ADJUSTED EBITDA             $ 11,064     $ 7,080      $ 52,113     $ 37,229
                                                                             

^1 Includes expenses related to the transfer and assumption of indebtedness
and other contractual obligations of the predecessor in connection with the
IPO and the Company’s formation transactions in 2011.

SUMMIT HOTEL PROPERTIES
Pro Forma Hotel Operational Data^1
Schedule of Property Level Results
Amounts in thousands
(Unaudited)
                                                                        
                                                              Company and
                            Company                           Predecessor
                            Fourth Quarter       Year
                            2012      2011       2012        2011
REVENUE
Room Revenue                $ 53,194   $ 47,366   $ 226,958   $  206,198
Other hotel operations       2,535     2,462     10,213      10,155
revenue
Total Revenue                55,729    49,829    237,171     216,353
                                                                            
EXPENSES
Hotel operating expenses
Rooms                         17,050     16,061     67,333       63,332
Other direct                  7,697      7,251      31,281       32,693     ^2
Other indirect                15,363     14,472     63,572       57,189     ^2
Other                        261       246       1,134       1,156
Total Operating expenses     40,370    38,030    163,320     154,370
                                                                            
Hotel EBITDA                $ 15,359   $ 11,799   $ 73,851    $  61,984
                                                                            

^1For purposes of this press release, pro forma information includes
operating results for the Company’s 83 hotels owned as of December 31, 2012,
which excludes the AmericInn Hotel & Suites in Golden, CO that was held for
sale at year end, 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 the Company’s predecessor in connection with
the IPO in 2011.

SUMMIT HOTEL PROPERTIES
Pro Forma^1 and Same-Store^2 Statistical Data for the Hotels
(Unaudited)
                                                                
                                                                   Company and
                            Company                                Predecessor
                            Pro forma Fourth Quarter  Pro Forma Year
                            2012          2011        2012        2011
Total Portfolio (83
hotels)
Rooms Occupied              551,387        513,134     2,318,227   2,187,374
Rooms Available             823,657        824,535     3,278,655   3,268,298
Occupancy                   66.9%          62.2%       70.7%       66.9%
ADR                         $96.47         $92.31      $97.90      $94.27
RevPAR                      $64.58         $57.45      $69.22      $63.09
                                                                   
Occupancy Growth            471 bps                    378 bps
ADR Growth                  4.5%                       3.9%
RevPAR Growth               12.4%                      9.7%
                                                       
                            Fourth Quarter             Year
                            2012           2011        2012        2011
Same Store (59 hotels)
Rooms Occupied              359,440        327,314     1,528,650   1,425,102
Rooms Available             555,925        556,355     2,211,828   2,207,883
Occupancy                   64.7%          58.8%       69.1%       64.6%
ADR                         $92.18         $87.87      $93.51      $89.66
RevPAR                      $59.60         $51.70      $64.63      $57.87
                                                                   
Occupancy Growth            582 bps                    457 bps
ADR Growth                  4.9%                       4.3%
RevPAR Growth               15.3%                      11.7%
                                                                   

^1 For purposes of this press release, pro forma information includes
operating results for the Company’s 83 hotels owned as of December 31, 2012,
which excludes the AmericInn Hotel & Suites in Golden, CO that was held for
sale at year end, 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 For purposes of this press release, same store information includes
operating results for same store properties owned at all times by the Company
during the three-month and twelve-month periods ended December 31, 2012 and
2011.

SUMMIT HOTEL PROPERTIES
Pro Forma Statistical Data for the Hotels^1
Amounts in thousands, except ADR and RevPAR
(Unaudited)
                
                  2012
                  Q1         Q2         Q3         Q4         Year
                                                                  
Room Revenue      $ 53,581    $ 59,299    $ 60,884    $ 53,194    $ 226,958
Other Revenue      2,570      2,603      2,505      2,535      10,213
Total Revenue     $ 56,151    $ 61,902    $ 63,389    $ 55,729    $ 237,171
                                                              
Hotel EBITDA      $ 17,262    $ 20,545    $ 20,684    $ 15,359    $ 73,851
                                                                  
Rooms occupied      546,030     606,118     614,692     551,387     2,318,227
Rooms available     815,654     815,208     824,136     823,657     3,278,655
                                                                  
Occupancy           66.9%       74.4%       74.6%       66.9%       70.7%
ADR               $98.13      $97.83      $99.05      $96.47      $97.90
RevPAR            $65.69      $72.74      $73.88      $64.58      $69.22
                                                                  

^1 The above pro forma information includes operating results for the
Company’s 83 hotels owned as of December 31, 2012, which excludes the
AmericInn Hotel & Suites in Golden, CO that was held for sale at year end, as
if such hotels had been owned by the Company since January 1, 2012. As a
result, these pro forma operating measures include operating results for
certain hotels prior to the Company’s ownership.

SUMMIT HOTEL PROPERTIES
Estimated Sources and Uses of Cash
December 31, 2012 and Subsequent Events
Amounts in thousands
                                                                
                                                   Sources      Uses
As of December 31, 2012
Cash and Cash Equivalents                            $ 14,000      $ -
Secured Credit Facility Borrowing Capacity             112,100       -
Outstanding Borrowings on Revolving Credit             (58,000 )     -
Facility
                                                                   
Completed Transactions (Subsequent to December 31,
2012)
Net Proceeds of Public Offering on January 14,         148,000       -
2013
Hotel Acquisitions
Hyatt Place Portfolio (3 hotels) – Hotel Purchase      -             36,100
Price (1)
San Francisco, CA Holiday Inn Express & Suites –       -             60,500
Hotel Purchase Price (2)
San Francisco, CA Holiday Inn Express & Suites -       7,500         -
IHG Equity Contribution (2)
Debt Financing
First National Bank of Omaha - Loan Pay-off (3)        -             22,800
KeyBank – CMBS loan (4)                                29,400        -
San Francisco, CA Holiday Inn Express & Suites –       23,500        -
Assumed Mortgage Debt (2)
Dispositions
Golden, CO AmericInn Hotel & Suites (5)                2,600         -
Denver, CO Hampton Inn (6)                             5,500         -
                                                                   
Anticipated Transactions
Hotel Acquisitions
Minneapolis (Eden Prairie), MN Hilton Garden Inn       -             10,200
(7)
Minneapolis (Minnetonka), MN Holiday Inn Express &     -             6,900
Suites (7)
New Orleans, LA Portfolio (5 hotels) (8)               -             135,000
Minneapolis, MN Hyatt Place - Downtown                 -             21,000
(Construction Loan/Purchase) (9)
Debt Financing
KeyBank – CMBS loans (4)                               44,600        -
Minneapolis (Eden Prairie), MN Hilton Garden Inn –     6,500         -
Assumed Mortgage Debt (7)
Minneapolis (Minnetonka), MN Holiday Inn Express &     3,800         -
Suites – Assumed Mortgage Debt (7)
New Orleans, LA Portfolio Anticipated Mortgage         67,500        -
Debt (8)
Dispositions
Jacksonville, FL land sale (10)                        1,900         -
Anticipated Capital Expenditures
Scheduled Q1 2013 Maintenance Cap Ex (11)              -             9,000
                                                                   
Estimated Net Cash Available After Completed and
Anticipated Transactions Described Above
Cash and Cash Equivalents                              -             10,000
Secured Credit Facility Borrowing Capacity             -             112,100
Outstanding Borrowings on Revolving Credit           -          (14,700 )
Facility (12)
Total                                               $ 408,900   $ 408,900 
                                                                             

Note: The Company’s announced or anticipated acquisition and financing
activities outlined are subject to satisfactory completion of the Company’s
and lender’s due diligence and satisfaction of customary closing conditions,
and the Company can give no assurance that the anticipated activities will be
consummated.

                           SUMMIT HOTEL PROPERTIES
                      Estimated Sources and Uses of Cash

1.On January 22, 2013 the Company acquired the Hyatt Place portfolio, for
    $36.1 million including: the 151 - guestroom Hyatt Place-Universal,
    Orlando, FL; the 149 - guestroom Hyatt Place-Convention Center, Orlando,
    FL; the 125 - guestroom Hyatt Place-Hoffman Estates, Chicago, IL.
2.On February 11, 2013, the Company, through a joint venture, acquired the
    252 - guestroom Holiday Inn Express & Suites in San Francisco, CA for
    $60.5 million, including assumed debt of $23.5 million. Intercontinental
    Hotel Group contributed $7.5 million to the joint venture for a 20 percent
    interest.
3.On January 14, 2013 the Company repaid a $22.8 million loan with First
    National Bank of Omaha.
4.On January 25, 2013, the Company closed a CMBS loan with KeyBank. The
    $29.4 million loan is secured by a first mortgage on four hotels.
    Additional loans anticipated to close in first quarter 2013 in the amount
    of $44.6 million to be secured by a first mortgage on six hotels.
5.On January 15, 2013, the Company sold the 62 – guestroom AmericInn Hotel &
    Suites in Golden, CO for $2.6 million. The amount shown in the table is
    the contractual sales price (prior to adjustments and expenses).
6.On February 15, 2013, the Company sold the 149 - guestroom Hampton Inn,
    Denver, CO for $5.5 million. The amount shown in the table is the
    contractual sales price (prior to adjustments and expenses).
7.The Company anticipates acquiring the 97 - guestroom Hilton Garden Inn,
    Minneapolis (Eden Prairie), MN and the 93 - guestroom Holiday Inn Express
    & Suites, Minneapolis (Minnetonka), MN in the second quarter of 2013 for
    $17.1 million. The Company anticipates assuming mortgage loans totaling
    $10.3 million with the acquisition of the hotels.
8.The Company anticipates acquiring the New Orleans, LA Portfolio for $135
    million that includes: the 153 - guestroom Courtyard by Marriott,
    Metairie, LA; the 120 - guestroom Residence Inn by Marriott, Metairie, LA;
    the 208 - guestroom Springhill Suites by Marriott, New Orleans, LA; the
    202 - guestroom Courtyard by Marriott, New Orleans, LA; the 140 -
    guestroom Courtyard by Marriott, New Orleans, LA. Hotels are unencumbered
    and the Company anticipates acquiring mortgage financing for $67.5 million
    on a portion of the hotels in the second quarter of 2013. The Company does
    not have a commitment for this anticipated mortgage debt and no assurance
    can be provided that such financing will be obtained on favorable terms,
    or at all.
9.The Company currently has a $10.3 million loan on the 213 - guestroom
    Hyatt Place, Minneapolis, MN construction project. Upon completion, the
    Company has the right to purchase the hotel for $31.0 million, including
    the $10.3 million currently outstanding.
10.The Company anticipates selling a 3.25 acre parcel of vacant land in
    Jacksonville, FL for $1.9 million in the first quarter 2013. The amount
    shown in the table is the contractual sales price (prior to adjustments
    and expenses).
11.Capital expenditures are provided at the mid-point of the Company's first
    quarter 2013 guidance.
12.As a result of the activities described above, the Company expects a net
    reduction of approximately $43.3 million of borrowings on their revolving
    credit facility that were outstanding at December 31, 2012.

Non-GAAP Financial Measures

FFO and Adjusted FFO (“AFFO”)

As defined by the National Association of Real Estate Investment Trusts, or
NAREIT, funds from operations, or FFO, represents net income or loss (computed
in accordance with GAAP), excluding gains (or losses) from sales of property,
plus depreciation and amortization. We present FFO because we consider it an
important supplemental measure of our operational performance and believe it
is frequently used by securities analysts, investors and other interested
parties in the evaluation of REITs, many of which present FFO when reporting
their results. FFO is intended to exclude GAAP historical cost depreciation
and amortization, which assumes that the value of real estate assets
diminishes ratably over time. Historically, however, real estate values have
risen or fallen with market conditions. Because FFO excludes depreciation and
amortization unique to real estate, gains and losses from property
dispositions and impairment losses, it provides a performance measure that,
when compared year over year, reflects the effect to operations from trends in
occupancy, room rates, operating costs, development activities and interest
costs, providing perspective not immediately apparent from net income. Our
computation of FFO may differ from the methodology for calculating FFO
utilized by other equity REITs and, accordingly, may not be comparable to such
other REITs because the amount of depreciation and amortization we add back to
net income or loss includes amortization of deferred financing costs and
amortization of franchise royalty fees. FFO should not be considered as an
alternative to net income (loss) (computed in accordance with GAAP) as an
indicator of our liquidity, nor is it indicative of funds available to fund
our cash needs, including our ability to pay dividends or make distributions.

We further adjust FFO for certain additional items that are not included in
the definition of FFO, such as hotel transaction and pursuit costs, equity
based compensation, loan transaction costs, prepayment penalties and certain
other expenses, which we refer to as AFFO. We believe that AFFO provides
investors with another financial measure that may facilitate comparisons of
operating performance between periods and between REITs.

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

EBITDA and Adjusted EBITDA, and Hotel EBITDA

EBITDA represents net income or loss, excluding: (i) interest, (ii) income tax
expense and (iii) depreciation and amortization. We believe EBITDA is useful
to an investor in evaluating our operating performance because it provides
investors with an indication of our ability to incur and service debt, to
satisfy general operating expenses, to make capital expenditures and to fund
other cash needs or reinvest cash into our business. We also believe it helps
investors meaningfully evaluate and compare the results of our operations from
period to period by removing the effect of our asset base (primarily
depreciation and amortization) from our operating results. Our management also
uses EBITDA as one measure in determining the value of acquisitions and
dispositions. We further adjust EBITDA by adding back hotel transaction and
pursuit costs, equity based compensation, impairment losses, and certain other
nonrecurring expenses. We believe that adjusted EBITDA provides investors with
another financial measure that may facilitate comparisons of operating
performance between periods and between REITs.

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

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

Contact:

Summit Hotel Properties, Inc.
Dan Boyum, VP of Investor Relations, 512-538-2304
www.shpreit.com
 
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