Core Insights - Summit Hotel Properties, Inc. has declared a cash dividend of $0.08 per share for the second quarter ended June 30, 2025, representing an annualized dividend yield of 6.1% based on the closing price on July 31, 2025 [1] - The Company has also declared cash dividends for its preferred stock, including $0.390625 per share for the 6.25% Series E Cumulative Redeemable Preferred Stock and $0.3671875 per share for the 5.875% Series F Cumulative Redeemable Preferred Stock, both for the period ending August 31, 2025 [2] - Additionally, a cash distribution of $0.328125 per unit has been authorized for the operating partnership's unregistered 5.25% Series Z Cumulative Perpetual Preferred Units for the distribution period ending August 31, 2025 [3] Company Overview - Summit Hotel Properties, Inc. is a publicly-traded real estate investment trust focused on owning premium-branded lodging properties primarily in the Upscale segment of the lodging industry [4] - As of July 31, 2025, the Company's portfolio consists of 97 assets, including 53 wholly owned properties, with a total of 14,577 guestrooms located across 25 states [4]

Core Insights - The article focuses on Summit Hotel Properties, Inc. (NYSE: INN), a prominent player in the REIT sector, emphasizing the need to assess its credit quality [1]. Company Analysis - Summit Hotel Properties, Inc. is highlighted as a leading company within the REIT industry, indicating its significance in the market [1]. - The article suggests a thorough examination of the credit quality of Summit Hotel Properties, which is crucial for understanding its financial health and investment potential [1].

Core Viewpoint - Summit Hotel Properties (NYSE:INN) is facing a challenging environment with high costs and competition, but the preferred series F offers an attractive investment opportunity with an 8.4% current yield and 42% upside to par [1][30]. Cashflow Amount and Stability - INN's latest earnings report shows an AFFO of $0.22 for Q1 2025, which annualizes to $0.88, but seasonal trends indicate stronger performance in Q2 and Q3 [2][5]. - Adjusting for seasonality, the annualized AFFO appears to exceed $0.90 per share, providing ample coverage for preferred dividends [5]. Preferred Series F Investment Opportunities - Three potential ways for preferred series F investors to benefit include: 1. Continuing to collect dividends 2. A buyout of INN at any price over $3.50 3. A decline in interest rates leading to a price increase toward $25 [6][30]. Financial Performance Metrics - For Q1 2025, INN reported a net loss attributable to common stockholders of $4.684 million, with total revenues of $184.478 million [8]. - The company’s FFO for the same period was $23.196 million, with adjusted FFO at $27.359 million [9]. AFFO Calculation Concerns - There are anomalies in INN's AFFO calculation, as it includes deferred financing costs and other adjustments that may not reflect true earnings [10][12]. - A more conservative AFFO estimate of $0.42 per share still indicates that preferred dividends are well covered [13]. Preferred Safety and Liquidation Preference - INN has over $600 million in common equity, providing a significant buffer for preferred shareholders [14][21]. - The company has a debt-to-gross properties ratio of about 39%, which is typical for real estate, and has been reducing leverage [15][18]. Return Potential of Preferreds - The preferred series F has a current yield of 8.37% and a potential upside to par of 42.53%, making it an attractive option compared to other fixed-income securities [22][23]. - The change of control provisions favor series F, providing better upside and reduced risk compared to series E [24][29]. Market Conditions and Buyout Potential - The hotel industry is currently distressed, with many hotels trading below replacement cost, making INN a potential buyout target [31][34]. - A buyout price above $4.30 would trigger favorable outcomes for series F holders, ensuring they receive the full $25 liquidation preference [34][35]. Interest Rate Impact - A decline in interest rates could lead to significant capital gains for INN-F, as its market price would rise to maintain a yield premium over treasuries [36].

Core Viewpoint - Summit Hotel Properties, Inc. will report its financial results for Q2 2025 on August 5, 2025, and will hold a conference call on August 6, 2025, at 9:00 AM ET [1]. Company Overview - Summit Hotel Properties, Inc. is a publicly traded real estate investment trust (REIT) that focuses on owning premium-branded lodging facilities with efficient operating models, primarily in the upscale segment of the lodging industry [2]. - As of June 24, 2025, the company's portfolio includes 97 assets, with 53 wholly owned properties, totaling 14,556 guestrooms across 25 states [2]. Conference Call Information - To access the conference call, pre-registration is required, and registrants will receive confirmation with dial-in details [4]. - A live webcast of the conference call will be available, with a replay accessible on the company's website until November 3, 2025 [4].

Portfolio Overview - Summit Hotel Properties owns 97 lodging assets [9], with 5,534 guestrooms [9] - 86% of the portfolio is located in the top 50 markets [9] - 95% of the portfolio is affiliated with Marriott, Hyatt, and Hilton brands [9] Financial Performance and Outlook - Pro forma RevPAR for 2024 was $124, representing an 18.7% increase [14] - The company expects full-year 2025 pro forma RevPAR growth between 1.00% and 3.00% [16] - Adjusted EBITDA for 2025 is projected to be between $184 million and $198 million [16] - Adjusted FFO for 2025 is expected to be between $111.9 million and $125.6 million [16] Capital Allocation and Transactions - Sold ten hotels over the last 18 months for approximately $150 million at a <5% cap rate [14] - Acquired a two-hotel portfolio for $96 million with an 8.8% NOI capitalization rate [14] - Declared a quarterly common dividend representing a 5.1% annualized dividend yield of $0.08 per share [14] Balance Sheet and Liquidity - The company has approximately $350 million in liquidity [14] - Nearly 80% of the pro rata debt is fixed [14] - Pro rata net debt outstanding is $1.0 billion [101]

Group 1 - The focus is on building a financial portfolio aimed at achieving financial independence through investments in dividend stocks, which provide a steady income stream [1] - There is a keen interest in financial markets and a continuous effort to learn about various sectors [1] Group 2 - No stock, option, or similar derivative positions are held in any of the companies mentioned, but there may be plans to initiate a long position in the near future [2] - The article expresses personal opinions and is not influenced by compensation from any company mentioned [2] Group 3 - Past performance is not indicative of future results, and no specific investment recommendations are provided [3] - The views expressed may not represent the overall opinions of the platform, and the analysts may not be licensed or certified [3]

Financial Data and Key Metrics Changes - RevPAR in the same store portfolio increased by 1.5% year over year, driven by a mix of rate and occupancy growth [4] - EBITDA margin contracted by less than 50 basis points compared to the first quarter of the previous year, with pro forma operating expenses increasing by only 1.5% year over year [4][20] - Adjusted EBITDA for the first quarter was $45 million, a modest decline compared to the prior year, primarily due to net effective asset sales completed in 2024 [22] - Adjusted FFO was $27.4 million or $0.22 per share, benefiting from lower interest expenses due to deleveraging efforts [23] Business Line Data and Key Metrics Changes - Urban portfolio RevPAR increased nearly 3%, outperforming the total industry by approximately 80 basis points [17] - Suburban and small town metro portfolios generated average RevPAR growth of 1.2%, driven by hotels in specific regions [19] - The resort location type accounts for only 11% of total guest rooms, with significant capital investment expected to enhance performance [19] Market Data and Key Metrics Changes - January RevPAR declined by 1.5% due to weather-related disruptions, but February saw a robust increase of 8.1% year over year [5] - March RevPAR declined by 1.6% in the same store portfolio, with a 10% decline in the qualified segment, primarily due to weakness in government-related travel [5][10] - April RevPAR is expected to decline by 45% compared to last year, influenced by difficult calendar comparisons [8][12] Company Strategy and Development Direction - The company is focused on managing expenses effectively in a lower revenue growth environment, with EBITDA margins contracting only 15 basis points on 1.6% RevPAR growth over the past five quarters [11] - A $50 million share repurchase program has been approved to return capital to shareholders and drive value creation [15][26] - The company continues to prioritize a balance between returning capital to shareholders, investing in the portfolio, reducing corporate leverage, and maintaining liquidity for future growth [26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term prospects for the portfolio despite near-term macroeconomic uncertainties [11][15] - The company expects a modest pullback in demand, particularly in government and international travel, but anticipates some recovery as the year progresses [10][32] - The outlook for the second quarter indicates a RevPAR decline of 24% compared to the previous year, with expectations for flat RevPAR growth for the full year [12][14] Other Important Information - The company has closed on a $275 million delayed draw term loan to refinance maturing convertible notes, preserving cash flow [24][25] - Total liquidity stands at over $300 million, with an average interest rate of approximately 4.6% [25] Q&A Session Summary Question: How have trends evolved within government and international travel? - Management noted that the most acute impact was felt in March, but there is optimism for recovery as the year progresses [31][32] Question: How have trends for business transient customers evolved? - Business transient travel has held up reasonably well, with no significant downward trend observed [34] Question: Is leisure travel being impacted the most? - Leisure travel is expected to be resilient, with potential shifts towards more domestic travel [40][41] Question: What proactive measures are being taken regarding margins? - Management has focused on managing contract labor and employee turnover, without implementing deeper cuts seen in previous downturns [55][56] Question: Thoughts on the buyback announcement and capital allocation? - The buyback program is seen as a compelling opportunity due to significant dislocation in stock prices, with funding expected from reduced CapEx and potential asset sales [59][61] Question: Latest thoughts on joint venture partner's capital deployment? - The joint venture partner is well-capitalized and prepared to take advantage of dislocation opportunities, though transaction activity is expected to slow [64]

Financial Data and Key Metrics Changes - RevPAR in the same store portfolio increased by 1.5% year over year, driven by a mix of rate and occupancy growth [4] - EBITDA margin contracted by less than 50 basis points compared to the first quarter of the previous year, with pro forma operating expenses increasing by 1.5% year over year [4][19] - Adjusted EBITDA for the first quarter was $45 million, a modest decline compared to the prior year, primarily due to net effective asset sales completed in 2024 [20] - Adjusted FFO was $27.4 million or $0.22 per share, benefiting from lower interest expenses due to deleveraging efforts [21] Business Line Data and Key Metrics Changes - Urban portfolio RevPAR increased nearly 3%, outperforming the total industry by approximately 80 basis points [16] - Suburban and small town metro portfolios generated average RevPAR growth of 1.2%, driven by hotels in specific regions [18] - Resort location type accounts for only 11% of total guest rooms, with significant renovations expected to boost performance [18] Market Data and Key Metrics Changes - Demand softening was noted in early March, particularly in government and international travel segments, with March RevPAR declining by 1.6% in the same store portfolio [5][10] - The company expects April RevPAR to decline by approximately 45% year over year, influenced by difficult calendar comparisons [7][12] - The first quarter saw a 2% decline in average daily rate (ADR) despite absolute ADRs increasing year over year across most demand segments [6] Company Strategy and Development Direction - The company announced a $50 million share repurchase program to return capital to shareholders and drive value creation [14][24] - Continued investment in renovations is expected to enhance the quality of the portfolio and drive future profitability [21][25] - The company is focused on managing expenses effectively in a lower revenue growth environment, with a strong emphasis on cost controls [11][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term prospects for the portfolio despite near-term macroeconomic uncertainties [10][14] - The company anticipates a modest recovery in government and international travel segments as the year progresses [30] - Management noted that leisure demand is expected to remain resilient during economic uncertainty, with expectations for group demand to remain strong [11][39] Other Important Information - The company has a total liquidity of over $300 million and no significant debt maturities until 2027 [23] - The average interest rate on the company's debt is approximately 4.6%, with 71% of pro rata share of debt fixed [23] - The company reduced its full-year capital expenditure guidance to $60 million to $70 million, allowing for flexibility in response to market conditions [25] Q&A Session Summary Question: Trends in government and international travel segments - Management noted that both segments experienced the most acute impact in March but have stabilized at lower levels, with optimism for recovery as the year progresses [30][31] Question: Business transient customer trends - The midweek negotiated business segment has held up reasonably well, with no significant downward trend observed [32] Question: Impact on shorter booked weekend leisure trips - Management indicated that leisure demand is expected to be resilient, with potential shifts towards more domestic travel [39] Question: Expense management and potential brand negotiations - Management stated that proactive expense management has been effective, and they have not yet needed to implement deeper cuts seen in prior downturns [55] Question: Share repurchase program and capital allocation - The company plans to fund the buyback through a combination of reduced CapEx and opportunistic asset sales, while maintaining a healthy balance sheet [61] Question: Joint venture partner's capital deployment view - Management indicated that their joint venture partner is well-capitalized and prepared to take advantage of market dislocations, though transaction activity is expected to slow [64]

Core Viewpoint - Summit Hotel Properties reported quarterly funds from operations (FFO) of $0.22 per share, exceeding the Zacks Consensus Estimate of $0.21 per share, but down from $0.24 per share a year ago [1][2] Financial Performance - The FFO surprise for the quarter was 4.76%, following a previous quarter where the company also exceeded expectations with an FFO of $0.20 compared to an estimate of $0.19, resulting in a surprise of 5.26% [2] - Revenues for the quarter were $184.48 million, missing the Zacks Consensus Estimate by 0.80%, and down from $188.14 million year-over-year [3] Market Performance - Summit Hotel Properties shares have declined approximately 40.7% since the beginning of the year, contrasting with the S&P 500's decline of 5.5% [4] - The company has surpassed consensus FFO estimates four times over the last four quarters [2][3] Future Outlook - The current consensus FFO estimate for the upcoming quarter is $0.28 on revenues of $199.62 million, and for the current fiscal year, it is $0.89 on revenues of $754.25 million [8] - The estimate revisions trend for Summit Hotel Properties is currently favorable, leading to a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [7] Industry Context - The REIT and Equity Trust - Other industry is currently ranked in the bottom 36% of over 250 Zacks industries, suggesting that the overall industry outlook may impact stock performance [9]

Earnings Release Supplement First Quarter 2025 (UNAUDITED) April 30, 2025 1 Table of Contents | Section I | Forward-Looking Statements and Non-GAAP Financial Measure Disclosures | | --- | --- | | Section II | Corporate Financial Schedules | | Section III | Operating & Property-Level Schedules | | Section IV | Capitalization and Debt Schedules | | Section V | Asset Listing | 2 Forward-Looking Statements We make forward-looking statements in this presentation that are subject to risks and uncertainties. These ...