Financial Data and Key Metrics Changes - The pro forma portfolio of 74 hotels generated RevPAR of $81 for the full year, representing a 55% increase over 2020 and a 63% recapture rate relative to 2019 [5] - Fourth quarter pro forma RevPAR was $94, driven by a 51% increase in occupancy and a 44% increase in average rate [7] - Adjusted FFO for the fourth quarter was $14.8 million, resulting in a full year adjusted FFO of $36.8 million [23] - Operating costs per occupied room declined more than 5% compared to 2019, leading to a gross operating profit margin of 44% and hotel EBITDA margin of 33% in the fourth quarter [23][24] Business Line Data and Key Metrics Changes - Urban hotels generated outsized year-over-year growth in the third and fourth quarters of 160% and 200%, respectively, translating to nominal RevPAR of $94 and $88 [19] - Non-urban portfolio RevPAR was approximately $98 in the fourth quarter, driven by strength in non-resort properties, which generated a RevPAR of $118 [20] - Average daily rate (ADR) increased 2% relative to the third quarter across the entire portfolio, with a 100% ADR recapture rate to Q4 2019 [21] Market Data and Key Metrics Changes - January RevPAR was approximately $75, which was 31% below January 2019 levels, but February RevPAR pace was up over 30% from January [11] - The Dallas market recovery is over 80% of 2019 levels, while other gateway urban markets lag behind [36] - January RevPAR at the Embassy Suites in Tucson exceeded last year by nearly 80% and surpassed January 2019 levels [15] Company Strategy and Development Direction - The company was active in transactions, completing over $1 billion of transaction activity in 2021, increasing the number of hotels in the portfolio by 40% [17] - The joint venture with GIC now totals 40 hotels, representing over $1.3 billion of invested capital, which will increase ancillary fee streams for asset and capital project management services [17] - The company plans to continue a more typical renovation program in line with pre-pandemic levels throughout 2022 [26] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the favorable demand backdrop for the portfolio, anticipating a meaningful return of corporate travel alongside robust leisure demand [12] - The company noted that while staffing shortages and rising labor costs affect the industry, they have managed to operate efficiently with a lean staffing model [24] - Management highlighted that guest satisfaction scores have improved as amenities and services have been restored [68] Other Important Information - The company maintains a liquidity position of nearly $450 million, enhanced through various capital markets transactions [27] - The average interest rate on the balance sheet is 3.3%, with approximately 70% of current outstanding debt fixed [28] - The company expects to exit existing waivers on certain financial covenants in the second quarter of 2022, providing more capital allocation flexibility [28] Q&A Session Summary Question: How does the pace of acceleration in booking trends compare across segments? - Management noted strength in leisure-dominated markets, with midweek performance improving recently [34] Question: What is Summit's leverage to urban recovery post-Newcrest acquisition? - The urban mix has shifted towards Sun Belt markets, with recovery rates varying significantly by market [35] Question: How is the labor market affecting staffing levels? - Staffing levels are currently at about 55% of pre-pandemic levels, with challenges in finding labor persisting [39] Question: What is the outlook for capital allocation and acquisitions? - The company has nearly $450 million in liquidity and plans to be a net acquirer early in the cycle, while remaining opportunistic [43] Question: What benefits are expected from the Aimbridge takeover of Newcrest hotels? - Management anticipates operational synergies and improved performance from the integration of the Newcrest portfolio [47] Question: How does the company view leverage and balance sheet health? - The company assesses balance sheet health holistically, feeling confident about its current position and future deleveraging [51] Question: What is the expected run rate for capital expenditures in the coming years? - The company expects capital expenditures to be elevated in 2022, with a run rate similar to pre-pandemic levels in subsequent years [61] Question: Are there any non-core hotels that could be sold? - Management indicated that while there is always a bottom 10% of the portfolio, they do not feel pressured to sell assets [66]

[Cautionary Statement About Forward-Looking Statements](index=4&type=section&id=CAUTIONARY%20STATEMENT%20ABOUT%20FORWARD-LOOKING%20STATEMENTS) This section outlines forward-looking statements and inherent risks that could cause actual results to differ materially - The report contains forward-looking statements covered by safe harbor provisions of the Private Securities Litigation Reform Act of 1995[15](index=15&type=chunk) - Future plans, strategies, and expectations are based on certain assumptions and involve known and unknown risks, uncertainties, and other factors beyond the company's control[15](index=15&type=chunk) - Factors that may cause actual results to differ materially include the effects of the COVID-19 pandemic, financing risks, global economic conditions, travel spending levels, supply and demand factors, competition, increased operating costs, acquisition/disposition risks, tax issues, environmental uncertainties, and cybersecurity risks[16](index=16&type=chunk)[18](index=18&type=chunk) [PART I](index=6&type=section&id=PART%20I) [Item 1. Business](index=6&type=section&id=Item%201.%20Business) Summit Hotel Properties, Inc. is a self-managed REIT focused on owning premium-branded, select-service hotels, detailing its portfolio, strategic growth, financing, and regulatory environment - Summit Hotel Properties, Inc. is a self-managed hotel investment company, organized in June 2010 and completed its initial public offering in February 2011, focusing on owning primarily premium-branded, select-service hotels[21](index=21&type=chunk) - As of December 31, 2021, the portfolio consisted of **74 hotels with 11,518 guestrooms** in 23 states; 61 hotels are 100% owned, and 13 are owned through a 51% controlling interest in a joint venture[21](index=21&type=chunk) - Post-NCI Transaction (January 2022), the portfolio expanded to **100 hotels with 15,051 guestrooms** in 24 states, with 39 hotels held through the joint venture[25](index=25&type=chunk) - **90% of guestrooms** were located in the top 50 metropolitan statistical areas (MSAs) as of December 31, 2021, and all hotels operate under premium franchise brands (Marriott, Hilton, Hyatt, IHG)[23](index=23&type=chunk) - The company's business strategy includes selectively allocating capital, evolving its portfolio through asset sales and acquisitions, and intensive asset management, focusing on premium-branded hotels in the Upscale segment[30](index=30&type=chunk)[32](index=32&type=chunk) - The financing strategy relies on cash from operations, working capital, borrowings under senior credit facilities, term debt, equity issuances, strategic hotel sales, and joint venture contributions, aiming for conservative debt levels[39](index=39&type=chunk)[41](index=41&type=chunk) - The company faces significant competition for hotel investments and guests, which can affect occupancy, ADR, and RevPAR[43](index=43&type=chunk)[44](index=44&type=chunk) - Properties are subject to various regulations, including ADA and environmental laws, requiring ongoing compliance and potential expenditures[46](index=46&type=chunk)[47](index=47&type=chunk)[48](index=48&type=chunk) - The company is committed to its Environmental, Social and Governance (ESG) program, focusing on sustainability, community engagement, and diversity[52](index=52&type=chunk) - As a REIT, the company cannot directly operate hotels; all hotels are leased to taxable REIT subsidiaries (TRSs) and managed by third-party companies[28](index=28&type=chunk)[55](index=55&type=chunk) - As of February 11, 2022, the company had **63 corporate employees** and is committed to cultivating an inclusive work environment with competitive compensation and benefits[57](index=57&type=chunk)[60](index=60&type=chunk) [Item 1A. Risk Factors](index=13&type=section&id=Item%201A.%20Risk%20Factors) This section outlines material risks that could adversely affect the company's business, financial condition, results of operations, and stock price - The company's business strategy and growth prospects are dependent on achieving revenue and net income growth from anticipated increases in hotel demand and general economic conditions, which are uncertain[72](index=72&type=chunk) - The COVID-19 pandemic has materially adversely affected and may continue to affect financial position and results, with recovery dependent on leisure travel and a slower recovery of business/group travel[73](index=73&type=chunk)[120](index=120&type=chunk)[121](index=121&type=chunk) - Fixed operating expenses may not decrease with revenue declines, and certain costs (wages, benefits, insurance) may exceed inflation, potentially reducing profitability[74](index=74&type=chunk)[75](index=75&type=chunk) - Risks related to acquisitions include competition, inability to obtain financing, and failure to successfully integrate acquired hotels or achieve expected operating performance[76](index=76&type=chunk)[79](index=79&type=chunk) - The company has significant debt, and its organizational documents do not limit additional indebtedness, which could reduce cash flow for operations and dividends, and increase vulnerability to adverse economic conditions[98](index=98&type=chunk)[99](index=99&type=chunk) - Restrictive covenants in debt, hotel management, and franchise agreements could limit operational flexibility, and an increase in interest rates would raise costs on variable-rate debt[89](index=89&type=chunk)[102](index=102&type=chunk)[106](index=106&type=chunk) - Reliance on external capital sources (debt, equity, joint venture contributions) to fund future needs, with access dependent on market conditions and financial performance[94](index=94&type=chunk)[95](index=95&type=chunk)[96](index=96&type=chunk) - System security risks, data breaches, and cyber-attacks could disrupt operations, increase expenses, and damage reputation, despite existing cyber insurance and indemnities[112](index=112&type=chunk)[115](index=115&type=chunk) - Joint venture investments carry risks such as lack of sole decision-making authority, disputes with partners, and financial condition of partners[117](index=117&type=chunk)[118](index=118&type=chunk) - Failure to maintain REIT qualification would result in corporate taxation, substantially reducing funds for distributions and impairing business expansion[166](index=166&type=chunk)[168](index=168&type=chunk) - The 100% prohibited transactions tax may limit the ability to dispose of properties, and successful IRS challenges could result in material tax liability[186](index=186&type=chunk) - The company could incur uninsured and underinsured losses from catastrophic events, terrorism, data breaches, or business disruptions, which may not be fully covered by insurance[188](index=188&type=chunk) [Item 1B. Unresolved Staff Comments](index=37&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reported no unresolved staff comments from the SEC - There are no unresolved staff comments[192](index=192&type=chunk) [Item 2. Properties](index=38&type=section&id=Item%202.%20Properties) This section details the company's hotel portfolio, categorized by STR Chain Scale and brand, and updates on the significant NCI Transaction - As of December 31, 2021, the portfolio consisted of **74 hotel properties with a total of 11,518 guestrooms**[193](index=193&type=chunk) Hotel Portfolio by STR Chain Scale (December 31, 2021) | STR Chain Scale | Number of Hotels | Number of Guestrooms | | :-------------- | :--------------- | :------------------- | | Upper-upscale | 3 | 400 | | Upscale | 61 | 9,647 | | Upper-midscale | 10 | 1,471 | | **Total** | **74** | **11,518** | - In January 2022, the NCI Transaction significantly expanded the portfolio with the acquisition of **26 hotel properties (3,533 guestrooms)** and two parking structures for **$766.0 million**[196](index=196&type=chunk) - The company owns two parcels of undeveloped land, one designated as held for sale, suitable for hotel or restaurant development[197](index=197&type=chunk) - As of December 31, 2021, four hotel properties are subject to ground lease agreements, requiring rental payments and other charges[198](index=198&type=chunk)[199](index=199&type=chunk)[202](index=202&type=chunk) - All hotel properties operate under franchise agreements (10-20 year terms) with Marriott, Hilton, Hyatt, or IHG, which provide access to reservation systems, marketing, and loyalty programs[200](index=200&type=chunk)[201](index=201&type=chunk) - All hotel properties are operated by professional third-party management companies; as of December 31, 2021, Aimbridge Hospitality managed 35 of 74 hotels, increasing to 61 of 100 hotels post-NCI Transaction (February 11, 2022)[203](index=203&type=chunk) [Item 3. Legal Proceedings](index=42&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in routine litigation but currently has no pending legal actions expected to materially affect its financial position or results of operations - The company is involved from time to time in litigation arising in the ordinary course of business[205](index=205&type=chunk) - There are currently no pending legal actions that the company believes would have a material adverse effect on its financial position or results of operations[205](index=205&type=chunk) [Item 4. Mine Safety Disclosures](index=42&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - This item is not applicable[206](index=206&type=chunk) [PART II](index=43&type=section&id=PART%20II) [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=43&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) This section provides information on the trading market for the company's common stock, stockholder details, and distribution policies, highlighting the suspension of common stock dividends - The company's common stock began trading on the NYSE on February 9, 2011, under the symbol "INN"[209](index=209&type=chunk) - The last reported sale price for common stock on the NYSE as of February 11, 2022, was **$9.85 per share**[209](index=209&type=chunk) - As of February 11, 2022, there were **106,340,958 shares of common stock outstanding**, held by **280 record holders**[9](index=9&type=chunk)[210](index=210&type=chunk) - As a REIT, the company must distribute annually at least **90% of its REIT taxable income** to stockholders[211](index=211&type=chunk) - The company suspended the declaration and payment of dividends on common stock and operating partnership units beginning in Q1 2020 due to the negative financial effects of the Pandemic[214](index=214&type=chunk) - Restrictions from credit facility modifications prevent declaring and paying common stock dividends (other than those required for REIT status) through March 31, 2022[214](index=214&type=chunk) [Item 6. [Reserved]](index=43&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information - This item is reserved[215](index=215&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=44&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, focusing on the impact of the COVID-19 pandemic, strategic responses, and performance metrics - U.S. lodging industry demand is generally correlated to macroeconomic trends (GDP, corporate profits, employment) and affected by travel-related health and safety restrictions[216](index=216&type=chunk) - The COVID-19 Pandemic caused a significant downturn in the global and U.S. economies, and the travel and lodging industries, leading to a substantial decline in revenues, profitability, and cash flows from operations[217](index=217&type=chunk) - During 2021, the company experienced significant business improvement, primarily driven by leisure travel and modest recovery in other demand segments, but is still recovering to pre-Pandemic performance levels[218](index=218&type=chunk) - Management took actions to mitigate Pandemic effects, including adjusting operational costs, enhancing liquidity through convertible notes, preferred share offerings, and joint venture contributions, and implementing health and safety protocols[220](index=220&type=chunk)[221](index=221&type=chunk)[222](index=222&type=chunk)[223](index=223&type=chunk)[225](index=225&type=chunk) - Key operating performance indicators include Occupancy, Average Daily Rate (ADR), and Revenue Per Available Room (RevPAR), which are used to evaluate individual and overall hotel performance[226](index=226&type=chunk)[227](227&type=chunk) - The company continuously evaluates acquisitions and dispositions to refine its portfolio, including the NCI Transaction in January 2022, which added 26 hotels[228](index=228&type=chunk)[231](index=231&type=chunk) - Revenues are primarily from room sales, with operating expenses including fixed costs (e.g., property taxes, insurance) and variable costs (e.g., labor, supplies); cost reduction initiatives partially offset expense increases[233](index=233&type=chunk)[234](index=234&type=chunk)[235](index=235&type=chunk) Key Operating Metrics (Total Portfolio) 2021 vs. 2020 (in thousands, except percentages) | Metric | 2021 | 2020 | Dollar Change | Percentage Change | | :-------------------- | :------- | :------- | :------------ | :---------------- | | Room Revenue | $334,338 | $215,506 | $118,832 | 55.1% | | Food and Beverage Revenue | $7,299 | $6,444 | $855 | 13.3% | | Other Revenue | $20,289 | $12,513 | $7,776 | 62.1% | | **Total Revenues** | **$361,926** | **$234,463** | **$127,463** | **54.4%** | | Room Expense | $74,781 | $53,784 | $20,997 | 39.0% | | Food and Beverage Expense | $4,856 | $5,416 | $(560) | (10.3)% | | Other Hotel Operating Expenses | $123,626 | $96,506 | $27,120 | 28.1% | | **Total Expenses** | **$203,263** | **$155,706** | **$47,557** | **30.5%** | | Occupancy | 62.3% | 43.3% | n/a | 43.6% | | ADR | $129.70 | $120.36 | $9.34 | 7.8% | | RevPAR | $80.74 | $52.16 | $28.58 | 54.8% | Other Consolidated Income and Expenses 2021 vs. 2020 (in thousands) | Item | 2021 | 2020 | Dollar Change | Percentage Change | | :-------------------------------- | :------- | :------- | :------------ | :---------------- | | Property taxes, insurance and other | $41,350 | $44,691 | $(3,341) | (7.5)% | | Management fees | $9,858 | $6,276 | $3,582 | 57.1% | | Depreciation and amortization | $105,955 | $109,619 | $(3,664) | (3.3)% | | Corporate general and administrative | $29,428 | $20,985 | $8,443 | 40.2% | | Transaction costs | $3,849 | $0 | $3,849 | (1) | | (Reversal of) provision for credit losses | $(2,632) | $4,821 | $(7,453) | (1) | | Loss on impairment and write-off of assets | $4,361 | $1,759 | $2,602 | 147.9% | | Gain (loss) on disposal of assets, net | $240 | $(16) | $256 | (1) | | Interest expense | $43,368 | $43,300 | $68 | 0.2% | | Other income, net | $9,523 | $4,841 | $4,682 | 96.7% | | Income tax expense | $1,473 | $1,376 | $97 | 7.0% | FFO and AFFO (in thousands, except per share/unit amounts) | Metric | 2021 | 2020 | 2019 | | :------------------------------------ | :------- | :------- | :------- | | Net (loss) income applicable to common shares and common units | $(83,829) | $(158,448) | $67,929 | | **FFO applicable to common shares and common units** | **$17,300** | **$(53,463)** | **$122,491** | | **AFFO applicable to common shares and common units** | **$36,782** | **$(38,569)** | **$130,356** | | FFO per common share/common unit | $0.16 | $(0.51) | $1.17 | | AFFO per common share/common unit | $0.35 | $(0.37) | $1.25 | EBITDA, EBITDAre and Adjusted EBITDAre (in thousands) | Metric | 2021 | 2020 | 2019 | | :-------------------- | :------- | :------- | :------- | | Net (loss) income | $(68,584) | $(149,245) | $82,348 | | **EBITDA** | **$82,204** | **$4,905** | **$224,045** | | **EBITDAre** | **$86,325** | **$6,680** | **$181,148** | | **Adjusted EBITDAre** | **$90,495** | **$14,414** | **$185,263** | - Adjusted Funds From Operations (AFFO) increased by **$75.4 million** in 2021 over the prior year, and Adjusted EBITDAre increased by **$76.1 million**, both primarily due to improved business performance driven by leisure travel and modest recovery in other demand segments[255](index=255&type=chunk)[264](index=264&type=chunk) - Short-term liquidity requirements include operating expenses, capital expenditures, interest payments, and debt principal; long-term requirements include acquisitions, renovations, and dividend distributions[268](index=268&type=chunk)[269](index=269&type=chunk) - As of February 11, 2022, total outstanding indebtedness was **$1.1 billion**, including **$287.5 million** in Convertible Notes and **$143.5 million** under the Joint Venture Credit Facility[280](index=280&type=chunk)[281](index=281&type=chunk) - The company funded **$20.4 million** in capital expenditures in 2021 and anticipates spending **$60.0 million to $80.0 million** in 2022, funded by cash on hand, working capital, or borrowings[290](index=290&type=chunk) Cash Flow Summary (in thousands) | Activity | 2021 | 2020 | Change | | :------------------------------------ | :------- | :------- | :------- | | Net cash provided by (used in) operating activities | $66,051 | $(42,052) | $108,103 | | Net cash used in investing activities | $(74,244) | $(30,710) | $(43,534) | | Net cash provided by financing activities | $66,241 | $41,825 | $24,416 | | **Net change in cash, cash equivalents and restricted cash** | **$58,048** | **$(30,937)** | **$88,985** | - Operating cash flow increased significantly in 2021 due to reduced net loss and increased operating activity; investing cash use increased due to hotel acquisitions and escrow deposits, partially offset by mezzanine loan repayments[292](index=292&type=chunk) - Financing cash flow increased due to joint venture contributions and preferred stock issuance, partially offset by preferred stock redemption and debt repayments[292](index=292&type=chunk) - Critical accounting estimates, particularly asset impairment, involve substantial management judgment due to Pandemic-related volatility in revenue forecasts[294](index=294&type=chunk) - The company manages cybersecurity risks with franchisors and property managers, maintaining cyber insurance and indemnifications, and has not experienced material cyber incidents[295](index=295&type=chunk) - Recent developments include management and board transitions, the NCI Transaction, and the declaration of cash dividends for preferred stock and Series Z Preferred Units[296](index=296&type=chunk)[297](index=297&type=chunk)[298](index=298&type=chunk)[299](index=299&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures about Market Risk](index=58&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section discusses the company's exposure to market risks, primarily interest rate risk, and its strategies for managing this risk through derivative financial instruments - The primary market risk exposure is interest rate risk, specifically to 30-day LIBOR[301](index=301&type=chunk) - The company uses derivative financial instruments, such as interest rate swaps, to manage interest rate volatility and add stability to interest expense[109](index=109&type=chunk)[301](index=301&type=chunk) - LIBOR will cease to be available after 2021, and the transition to SOFR or another benchmark interest rate may result in a different calculation of variable interest rates, potentially increasing costs[107](index=107&type=chunk)[302](index=302&type=chunk) - Credit facilities (2018 Senior Credit Facility, 2018 Term Loan, 2017 Term Loan, Joint Venture Credit Facility) have been amended to accommodate the transition from LIBOR to SOFR[302](index=302&type=chunk) - As of December 31, 2021, the company was party to four interest rate swaps with an aggregate notional amount of **$400.0 million**[303](index=303&type=chunk) - After giving effect to interest rate derivatives, **77.9% of the company's debt had fixed interest rates** and **22.1% had variable interest rates** at December 31, 2021 (compared to 49.5% fixed and 50.5% variable at December 31, 2020)[303](index=303&type=chunk) - A **1.0% increase or decrease in interest rates** would decrease or increase, respectively, cash flows by approximately **$2.4 million per year**[303](index=303&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=58&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This item incorporates by reference the company's audited financial statements and supplementary data, including consolidated balance sheets, statements of operations, and cash flows - The financial statements and supplementary data required by this item are included on pages F-1 through F-46 of this Annual Report on Form 10-K[305](index=305&type=chunk) [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=59&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reported no changes in or disagreements with its accountants on accounting and financial disclosure matters - There were no changes in and disagreements with accountants on accounting and financial disclosure[306](index=306&type=chunk) [Item 9A. Controls and Procedures](index=59&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management evaluated the effectiveness of disclosure controls and internal control over financial reporting as of December 31, 2021, concluding they were effective - Management, with CEO and CFO participation, concluded that disclosure controls and procedures were effective as of December 31, 2021[307](index=307&type=chunk) - Management concluded that the company had effective internal control over financial reporting as of December 31, 2021, based on criteria established in the Internal Control—Integrated Framework (2013) by COSO[310](index=310&type=chunk) - Ernst & Young LLP, the independent registered public accounting firm, issued an unqualified auditor's attestation report on management's assessment of the effectiveness of internal control over financial reporting[311](index=311&type=chunk) - There were no material changes in internal control over financial reporting during the three months ended December 31, 2021[312](index=312&type=chunk) [Item 9B. Other Information](index=60&type=section&id=Item%209B.%20Other%20Information) The company filed articles supplementary on February 22, 2022, to reclassify 5,000,000 authorized but unissued shares of Series D Preferred Stock as preferred stock without designation - On February 22, 2022, the company filed articles supplementary to reclassify **5,000,000 authorized but unissued shares of Series D Preferred Stock** as shares of preferred stock without designation[313](index=313&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=60&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - This item is not applicable[314](index=314&type=chunk) [PART III](index=61&type=section&id=PART%20III) [Item 10. Directors, Executive Officers and Corporate Governance](index=61&type=section&id=Item%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) This item incorporates information from the 2022 Proxy Statement and notes recent transitions in the executive management team and board of directors - Information required by this item is incorporated by reference to the company's Definitive Proxy Statement on Schedule 14A for the 2022 Annual Meeting of Stockholders[317](index=317&type=chunk) - Daniel P. Hansen, Executive Chairman, retired effective January 1, 2022, and will continue to serve as a non-employee director[318](index=318&type=chunk) - Jeffrey W. Jones was appointed non-executive Chairman of the Board, effective January 1, 2022[319](index=319&type=chunk) [Item 11. Executive Compensation](index=61&type=section&id=Item%2011.%20Executive%20Compensation) This item incorporates information regarding executive compensation by reference to the company's 2022 Proxy Statement - Information required by this item is incorporated by reference to the company's 2022 Proxy Statement[320](index=320&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=61&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) This section provides details on securities authorized for issuance under equity compensation plans and common shares retained for employee taxes upon vesting of equity awards Securities Authorized for Issuance Under Equity Compensation Plans (December 31, 2021) | Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options | Weighted Average Exercise Price of Outstanding Options | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans | | :------------ | :--------------------------------------------------- | :------------------------------------- | :----------------------------------------------------------------- | | Approved by Stockholders | — | $0.00 | 3,662,423 | Common Shares Retained for Employee Taxes Upon Vesting of Equity Awards (Year Ended December 31, 2021) | Period | Total Shares Purchased | Average Price Paid Per Share | | :----- | :--------------------- | :--------------------------- | | March 1, 2021 - March 31, 2021 | 155,605 | $10.29 | | December 1, 2021 - December 31, 2021 | 111,863 | $9.76 | | **Total** | **267,468** | | - Other information required by this item is incorporated by reference to the company's 2022 Proxy Statement[322](index=322&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=61&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) This item incorporates information regarding certain relationships, related transactions, and director independence by reference to the company's 2022 Proxy Statement - Information required by this item is incorporated by reference to the company's 2022 Proxy Statement[323](index=323&type=chunk) [Item 14. Principal Accountant Fees and Services](index=61&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) This item incorporates information regarding principal accountant fees and services by reference to the company's 2022 Proxy Statement - Information required by this item regarding the principal accountant, Ernst & Young LLP, is incorporated by reference to the company's 2022 Proxy Statement[324](index=324&type=chunk) [PART IV](index=62&type=section&id=PART%20IV) [Item 15. Exhibits and Financial Statement Schedules](index=62&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This item lists the financial statements, financial statement schedules, and exhibits filed as part of the Annual Report on Form 10-K - Financial Statements are included on pages F-1 through F-42[326](index=326&type=chunk) - Financial Statement Schedule III — Real Estate and Accumulated Depreciation is included on pages F-43 through F-46[327](index=327&type=chunk) - A comprehensive list of exhibits, including organizational documents, debt agreements, equity incentive plans, and employment agreements, is filed as part of this report[329](index=329&type=chunk)[330](index=330&type=chunk)[331](index=331&type=chunk)[332](index=332&type=chunk)[333](index=333&type=chunk)[334](index=334&type=chunk) [SIGNATURES](index=68&type=section&id=SIGNATURES) This section confirms the report's signing date and lists the key individuals who signed it - The report was signed on February 23, 2022[339](index=339&type=chunk) - Signatories include Jonathan P. Stanner (President, CEO, and Director), William H. Conkling (Executive Vice President and Chief Financial Officer), Paul Ruiz (Senior Vice President and Chief Accounting Officer), Jeffrey W. Jones (Chairman of the Board), and other Directors[339](index=339&type=chunk)[340](index=340&type=chunk) [INDEX TO FINANCIAL STATEMENTS AND SCHEDULES](index=69&type=section&id=INDEX%20TO%20FINANCIAL%20STATEMENTS%20AND%20SCHEDULES) [Reports of Independent Registered Public Accounting Firm](index=70&type=section&id=Reports%20of%20Independent%20Registered%20Public%20Accounting%20Firm) Ernst & Young LLP provided an unqualified opinion on the company's consolidated financial statements and the effectiveness of its internal control over financial reporting - Ernst & Young LLP issued an unqualified opinion on the consolidated financial statements of Summit Hotel Properties, Inc. as of December 31, 2021 and 2020, and for the three years ended December 31, 2021[345](index=345&type=chunk) - An unqualified opinion was also issued on the effectiveness of the company's internal control over financial reporting as of December 31, 2021[346](index=346&type=chunk)[355](index=355&type=chunk) - The critical audit matter identified was the impairment assessment for investment in hotel properties, due to the subjective auditor judgment required in evaluating management's identification and assessment of impairment indicators[351](index=351&type=chunk) [Consolidated Balance Sheets](index=73&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets present the company's financial position as of December 31, 2021, and 2020, showing assets, liabilities, and equity Consolidated Balance Sheet Highlights (in thousands) | Item | December 31, 2021 | December 31, 2020 | | :-------------------------------- | :------------------ | :------------------ | | Total assets | $2,264,902 | $2,233,019 | | Investment in hotel properties, net | $2,091,973 | $2,105,946 | | Cash and cash equivalents | $64,485 | $20,719 | | Restricted cash | $32,459 | $18,177 | | Investment in real estate loans, net | $0 | $23,689 | | Total liabilities | $1,157,710 | $1,180,956 | | Debt, net of debt issuance costs | $1,069,797 | $1,094,745 | | Total equity | $1,107,192 | $1,052,063 | [Consolidated Statements of Operations](index=74&type=section&id=Consolidated%20Statements%20of%20Operations) The consolidated statements of operations show the company's financial performance for the years ended December 31, 2021, 2020, and 2019, reporting a net loss in 2021 and 2020 with a significant reduction in loss in 2021 Consolidated Statements of Operations Highlights (in thousands, except per share amounts) | Item | 2021 | 2020 | 2019 | | :------------------------------------ | :------- | :------- | :------- | | Total revenues | $361,926 | $234,463 | $549,348 | | Total expenses | $395,432 | $343,857 | $475,360 | | Operating (loss) income | $(33,266) | $(109,410) | $119,406 | | Net (loss) income | $(68,584) | $(149,245) | $82,348 | | Net (loss) income attributable to common stockholders | $(83,714) | $(158,177) | $67,772 | | Basic and diluted (loss) earnings per share | $(0.80) | $(1.52) | $0.65 | | Dividends per common share | $0 | $0.18 | $0.72 | [Consolidated Statements of Comprehensive Income (Loss)](index=75&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) The consolidated statements of comprehensive income (loss) present the net income (loss) and other comprehensive income (loss) for the years ended December 31, 2021, 2020, and 2019, showing a significant reduction in comprehensive loss in 2021 Consolidated Statements of Comprehensive Income (Loss) Highlights (in thousands) | Item | 2021 | 2020 | 2019 | | :------------------------------------ | :------- | :------- | :------- | | Net (loss) income | $(68,584) | $(149,245) | $82,348 | | Changes in fair value of derivative financial instruments | $15,127 | $(14,673) | $(14,596) | | Comprehensive (loss) income | $(53,457) | $(163,918) | $67,752 | | Comprehensive (loss) income attributable to common stockholders | $(68,608) | $(172,825) | $53,210 | [Consolidated Statements of Changes in Equity](index=76&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Equity) The consolidated statements of changes in equity detail movements in stockholders' equity and non-controlling interests for the years ended December 31, 2021, 2020, and 2019, reflecting preferred stock issuances and redemptions, joint venture contributions, and net losses Total Equity (in thousands) | Year | Amount | | :--- | :------- | | 2021 | $1,107,192 | | 2020 | $1,052,063 | | 2019 | $1,243,390 | - Net proceeds from the sale of preferred stock in 2021 amounted to **$96,617 thousand**[371](index=371&type=chunk) - Redemption of preferred stock in 2021 totaled **$(75,000) thousand**[371](index=371&type=chunk) - Contribution by non-controlling interest in joint venture in 2021 was **$115,546 thousand**[371](index=371&type=chunk) - Net loss attributable to common stockholders in 2021 was **$(83,714) thousand**[366](index=366&type=chunk) [Consolidated Statements of Cash Flows](index=79&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) The consolidated statements of cash flows provide a summary of cash flows from operating, investing, and financing activities for the years ended December 31, 2021, 2020, and 2019, showing a significant increase in cash from operating activities in 2021 Consolidated Statements of Cash Flows Summary (in thousands) | Activity | 2021 | 2020 | 2019 | | :------------------------------------ | :------- | :------- | :------- | | Net cash provided by (used in) operating activities | $66,051 | $(42,052) | $148,478 | | Net cash used in investing activities | $(74,244) | $(30,710) | $(182,164) | | Net cash provided by financing activities | $66,241 | $41,825 | $30,963 | | **Net change in cash, cash equivalents and restricted cash** | **$58,048** | **$(30,937)** | **$(2,723)** | | Cash, cash equivalents and restricted cash (End of period) | $96,944 | $38,896 | $69,833 | - Net cash provided by operating activities increased by **$108,103 thousand** in 2021 compared to 2020, primarily due to a decrease in net loss and an increase in accruals at hotel properties[291](index=291&type=chunk)[292](index=292&type=chunk) - Net cash used in investing activities increased by **$43,534 thousand** in 2021, mainly due to hotel acquisitions (**$59.0 million**) and increased escrow deposits, partially offset by mezzanine loan repayments[291](index=291&type=chunk)[292](index=292&type=chunk) - Net cash provided by financing activities increased by **$24,416 thousand** in 2021, driven by joint venture partner contributions (**$115.5 million**) and preferred stock issuance (**$96.6 million**), partially offset by preferred stock redemption and debt repayments[291](index=291&type=chunk)[292](index=292&type=chunk) [Notes to Consolidated Financial Statements](index=80&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) These notes provide detailed disclosures on the company's accounting policies, financial instruments, and specific balance sheet and income statement items, offering further context to the consolidated financial statements [NOTE 1 –– DESCRIPTION OF BUSINESS](index=80&type=section&id=NOTE%201%20%E2%80%93%E2%80%93%20DESCRIPTION%20OF%20BUSINESS) This note describes Summit Hotel Properties, Inc. as a self-managed hotel investment company, its portfolio, strategic transactions, and the impact of the COVID-19 Pandemic - Summit Hotel Properties, Inc. is a self-managed hotel investment company, organized in June 2010, focusing on premium-branded hotels in the Upscale segment[376](index=376&type=chunk)[377](index=377&type=chunk) - As of December 31, 2021, the portfolio comprised **74 hotels (11,518 guestrooms)** in 23 states, with **90% in top 50 MSAs** and all operating under major franchise brands (Marriott, Hilton, Hyatt, IHG)[377](index=377&type=chunk)[378](index=378&type=chunk) - In January 2022, the company significantly expanded its portfolio through the NCI Transaction, acquiring **26 hotel properties and two parking structures for $766.0 million**, with one additional hotel expected in Q1 2022[379](index=379&type=chunk) - Post-NCI Transaction (February 11, 2022), the portfolio consists of **100 hotels (15,051 guestrooms)** in 24 states, with **86% in top 50 MSAs**[380](index=380&type=chunk) - The company has elected to be taxed as a REIT, leasing all hotels to taxable REIT subsidiaries (TRS Lessees) for third-party management[381](index=381&type=chunk) - The COVID-19 Pandemic has had a significant negative effect on the company's revenues, profitability, and cash flows, though 2021 saw improvement driven by leisure travel[382](index=382&type=chunk)[383](index=383&type=chunk) - Management believes it has sufficient cash and liquidity to meet obligations for at least the next twelve months and pursue growth opportunities, despite ongoing Pandemic uncertainties[385](index=385&type=chunk) [NOTE 2 –– BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES](index=81&type=section&id=NOTE%202%20%E2%80%93%E2%80%93%20BASIS%20OF%20PRESENTATION%20AND%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the company's accounting principles, consolidation policies, asset valuation, depreciation methods, impairment assessments, and revenue recognition - The consolidated financial statements are prepared in conformity with U.S. GAAP, requiring estimates and assumptions[386](index=386&type=chunk) - The company consolidates entities where it has a controlling financial interest, including its joint venture with GIC, and has one reportable segment for real estate investment[387](index=387&type=chunk)[388](index=388&type=chunk)[389](index=389&type=chunk) - Hotel properties are recorded at cost less accumulated depreciation, with purchase prices allocated to land, building, furniture, fixtures, equipment, and identifiable intangibles based on fair value[390](index=390&type=chunk)[392](index=392&type=chunk) - Depreciation is calculated using the straight-line method over estimated useful lives (6-40 years for buildings, 2-15 years for FF&E)[393](index=393&type=chunk) - Assets are evaluated for impairment quarterly; if the carrying amount is not recoverable, the asset is written down to its estimated fair value[396](index=396&type=chunk) - Assets classified as 'Held for Sale' are no longer depreciated and are carried at the lower of carrying amount or fair value less selling costs[399](index=399&type=chunk) - The company has elected to be taxed as a REIT, generally exempting it from federal income tax on distributed income, while its TRSs are subject to corporate income tax[423](index=423&type=chunk)[425](index=425&type=chunk) - A valuation allowance was recorded against substantially all deferred tax assets at December 31, 2021, due to certain TRSs incurring cumulative operating losses and uncertain realizability[428](index=428&type=chunk) - Revenue from hotel operations is recognized when guestrooms are occupied, services rendered, or fees earned, disaggregated into room, food and beverage, and other revenues[415](index=415&type=chunk) - The company adopted ASU No. 2020-06 (Convertible Instruments) effective January 1, 2021, recording convertible notes entirely as a liability and using the if-converted method for diluted EPS calculations[437](index=437&type=chunk) [NOTE 3 –– INVESTMENT IN HOTEL PROPERTIES, NET](index=87&type=section&id=NOTE%203%20%E2%80%93%E2%80%93%20INVESTMENT%20IN%20HOTEL%20PROPERTIES,%20NET) This note details the composition of investment in hotel properties, including land, buildings, and equipment, and outlines acquisition and impairment activities Investment in Hotel Properties, net (in thousands) | Component | 2021 | 2020 | | :-------------------------- | :------- | :------- | | Land | $323,276 | $319,603 | | Hotel buildings and improvements | $2,127,782 | $2,066,986 | | Furniture, fixtures and equipment | $167,245 | $173,351 | | Construction in progress | $18,321 | $8,903 | | Intangible assets | $10,834 | $11,231 | | Real estate development loan | $27,595 | $16,508 | | Less - accumulated depreciation | $(583,080) | $(490,636) | | **Total** | **$2,091,973** | **$2,105,946** | - Depreciation expense was **$105.5 million** in 2021, **$109.2 million** in 2020, and **$99.0 million** in 2019[439](index=439&type=chunk) - In 2021, the company acquired two hotel properties (Residence Inn Steamboat Springs, CO and Embassy Suites Tucson, AZ) through its Joint Venture for an aggregate purchase price of **$58.5 million**[441](index=441&type=chunk) - On May 1, 2021, the company contributed six hotels to its consolidated joint venture, with GIC contributing **$84.3 million** in cash for its 49% interest[444](index=444&type=chunk) - In January 2022, the NCI Transaction was completed, acquiring **26 hotel properties and two parking structures for $766.0 million**, with one additional hotel expected in Q1 2022 for **$56.0 million**[446](index=446&type=chunk)[447](index=447&type=chunk) - Loss on impairment and write-off of assets totaled **$4.4 million** in 2021 and **$1.8 million** in 2020, related to purchase options on real estate development loans[448](index=448&type=chunk) [NOTE 4 — INVESTMENT IN REAL ESTATE LOANS](index=89&type=section&id=NOTE%204%20%E2%80%94%20INVESTMENT%20IN%20REAL%20ESTATE%20LOANS) This note details the company's real estate loan portfolio, including mezzanine and seller-financing loans, and related credit loss allowances Investment in Real Estate Loans, net (in thousands) | Component | 2021 | 2020 | | :-------------------- | :------- | :------- | | Real estate loans | $2,350 | $28,671 | | Allowance for credit losses | $(2,350) | $(4,982) | | **Total** | **$0** | **$23,689** | - Two mezzanine loans on real estate development projects were fully repaid in Q4 2021, leading to a reversal of **$2.6 million** in allowance for credit losses and a **$4.4 million** loss on impairment for related purchase options[451](index=451&type=chunk)[452](index=452&type=chunk) - A remaining mezzanine loan for a mixed-use development project had **$27.7 million** funded as of December 31, 2021, with a **9.0% stated interest rate** and a May 15, 2022 maturity date[453](index=453&type=chunk) - Seller-financing loans had **$2.4 million** outstanding as of December 31, 2021; terms were amended in June 2021, extending maturity to December 31, 2022, with a **9.00% interest rate** (5.00% cash, 4.00% paid-in-kind)[454](index=454&type=chunk)[455](index=455&type=chunk) [NOTE 5 — SUPPLEMENTAL BALANCE SHEET INFORMATION](index=90&type=section&id=NOTE%205%20%E2%80%94%20SUPPLEMENTAL%20BALANCE%20SHEET%20INFORMATION) This note provides additional details on balance sheet items such as assets held for sale, restricted cash, prepaid expenses, and accrued expenses - Assets held for sale consist of a land parcel in Flagstaff, AZ, being marketed for sale[456](index=456&type=chunk) Restricted Cash (in thousands) | Component | 2021 | 2020 | | :---------------- | :------- | :------- | | FF&E reserves | $23,587 | $16,094 | | Property taxes | $2,132 | $1,469 | | Other | $6,740 | $614 | | **Total** | **$32,459** | **$18,177** | - Marriott allowed the use of **$1.6 million** from FF&E Reserve Accounts for working capital and released **$8.9 million** for general corporate purposes in 2020, and suspended monthly FF&E reserve funding through December 31, 2021[458](index=458&type=chunk)[459](index=459&type=chunk) Prepaid Expenses and Other (in thousands) | Component | 2021 | 2020 | | :-------------------------- | :------- | :------- | | Deferred acquisition costs | $6,763 | $0 | | Prepaid insurance | $6,713 | $4,123 | | Escrow deposits | $6,000 | $0 | | Other | $3,329 | $3,018 | | Prepaid taxes | $1,691 | $2,622 | | **Total** | **$24,496** | **$9,763** | - Deferred charges (initial franchise fees, net) were **$4,347 thousand** in 2021, with amortization expense of **$0.5 million** in 2021 and 2020[462](index=462&type=chunk) Accrued Expenses and Other (in thousands) | Component | 2021 | 2020 | | :-------------------------------- | :------- | :------- | | Accrued property, sales and income taxes | $17,448 | $17,713 | | Derivative financial instruments | $15,723 | $30,850 | | Accrued salaries and benefits | $13,679 | $6,632 | | Other accrued expenses at hotels | $11,880 | $5,922 | | Other | $4,794 | $2,793 | | Accrued interest | $2,695 | $1,189 | | **Total** | **$66,219** | **$65,099** | [NOTE 6 –– DEBT](index=92&type=section&id=NOTE%206%20%E2%80%93%E2%80%93%20DEBT) This note provides a comprehensive overview of the company's debt structure, including senior credit facilities, term loans, convertible notes, and mortgage indebtedness, along with compliance with covenants and LIBOR transition updates - Total indebtedness was **$1,081,315 thousand** at December 31, 2021, with a weighted average interest rate of **3.35%** (after derivatives)[465](index=465&type=chunk)[502](index=502&type=chunk) - The **$600 Million Senior Credit Facility** includes a **$400 Million Revolver** (matures March 31, 2023) and a **$200 Million Term Loan** (matures April 1, 2024); amendments provided covenant waivers through March 31, 2022, and modified financial covenants through December 31, 2023[466](index=466&type=chunk)[467](index=467&type=chunk)[472](index=472&type=chunk) - The Joint Venture Credit Facility (total **$200.0 million**) includes a **$125 Million Revolver** and a **$75 Million Term Loan**, both maturing October 8, 2023; amendments provided covenant waivers and adjustments[485](index=485&type=chunk)[487](index=487&type=chunk)[488](index=488&type=chunk)[492](index=492&type=chunk) - The company has a **$225.0 million 2018 Term Loan** (matures February 14, 2025) and a **$225.0 million 2017 Term Loan** with a principal balance of **$62.0 million** (matures November 2022)[473](index=473&type=chunk)[479](index=479&type=chunk) - Convertible Notes totaling **$287.5 million** were issued in January 2021, bearing **1.50% fixed interest**, maturing February 15, 2026; capped call transactions were entered into to reduce potential dilution[496](index=496&type=chunk)[497](index=497&type=chunk)[499](index=499&type=chunk) - Secured mortgage indebtedness totaled **$163.3 million** at December 31, 2021, across 16 properties[502](index=502&type=chunk) - All credit facilities have been amended to accommodate the transition from LIBOR to SOFR[467](index=467&type=chunk)[476](index=476&type=chunk)[482](index=482&type=chunk)[489](index=489&type=chunk) - The company and its Joint Venture were in compliance with all loan covenants at December 31, 2021[284](index=284&type=chunk)[471](index=471&type=chunk)[477](index=477&type=chunk)[483](index=483&type=chunk) Contractual Principal Payments for Debt (in thousands) | Year | Amount | | :--- | :------- | | 2022 | $66,308 | | 2023 | $232,183 | | 2024 | $216,365 | | 2025 | $226,594 | | 2026 | $289,169 | | Thereafter | $50,696 | | **Total** | **$1,081,315** | [NOTE 7 –– LEASES](index=98&type=section&id=NOTE%207%20%E2%80%93%E2%80%93%20LEASES) This note describes the company's operating lease arrangements for land, corporate office, and equipment, as well as its role as a lessor for retail and restaurant spaces - The company has operating leases for land under certain hotel properties, conference centers, parking spaces, automobiles, its corporate office, and other equipment, with terms ranging from 1 to 77 years[512](index=512&type=chunk) - The company also leases retail or restaurant space to third-party tenants, recording gross tenant income of **$2.2 million** in 2021[513](index=513&type=chunk) - Rent deferrals were granted to third-party tenants due to the Pandemic, accounted for as short-term lease receivables[514](index=514&type=chunk) - The company adopted ASC No. 842, Leases, on January 1, 2019, recognizing right-of-use assets and related liabilities, with a weighted average incremental borrowing rate of **4.9%** as of December 31, 2021[515](index=515&type=chunk) Operating Lease Costs and Cash Outflows (in thousands) | Year | Total Operating Lease Cost | Operating Cash Outflows from Operating Leases | | :--- | :------------------------- | :-------------------------------------------- | | 2021 | $3,300 | $3,100 | | 2020 | $3,100 | $2,800 | | 2019 | $3,300 | $3,000 | - The weighted average operating lease term was **28.25 years** as of December 31, 2021[516](index=516&type=chunk) Operating Lease Maturities (in thousands) | Year | Amount | | :--- | :------- | | 2022 | $1,845 | | 2023 | $974 | | 2024 | $913 | | 2025 | $914 | | 2026 | $925 | | Thereafter | $27,069 | | **Total Lease Payments** | **$32,640** | [NOTE 8 — DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING](index=99&type=section&id=NOTE%208%20%E2%80%94%20DERIVATIVE%20FINANCIAL%20INSTRUMENTS%20AND%20HEDGING) This note details the company's use of interest rate derivatives, primarily interest rate swaps, to manage exposure to variable-rate debt and stabilize interest expense - The company uses interest rate derivatives, primarily interest rate swaps, to manage exposure to variable-rate debt and stabilize interest expense[517](index=517&type=chunk)[518](index=518&type=chunk) - Interest rate swaps are designated as cash flow hedges and are recorded at fair value in the Consolidated Balance Sheets[518](index=518&type=chunk)[520](index=520&type=chunk) Derivative Financial Instruments (in thousands) | Contract Date | Expiration Date | Notional Amount (Dec 31, 2021) | Fair Value (Dec 31, 2021) | Fair Value (Dec 31, 2020) | | :------------ | :-------------- | :----------------------------- | :------------------------ | :------------------------ | | October 2, 2017 | January 31, 2023 | $100,000 | $(1,617) | $(3,831) | | October 2, 2017 | January 31, 2023 | $100,000 | $(1,629) | $(3,853) | | June 11, 2018 | September 30, 2024 | $75,000 | $(3,831) | $(7,371) | | June 11, 2018 | December 31, 2025 | $125,000 | $(8,646) | $(15,795) | | **Total** | | **$400,000** | **$(15,723)** | **$(30,850)** | - Changes in the fair value of hedging instruments are deferred in Other comprehensive income and reclassified to Interest expense when the hedged item affects earnings; an estimated **$8.0 million** will be reclassified in 2022[521](index=521&type=chunk) [NOTE 9 — EQUITY](index=100&type=section&id=NOTE%209%20%E2%80%94%20EQUITY) This note outlines the company's authorized and outstanding common and preferred stock, recent preferred stock transactions, and details regarding its joint venture and non-controlling interests - The company is authorized to issue up to **500,000,000 shares of common stock** ($0.01 par value), with **106,337,724 shares outstanding** at December 31, 2021[523](index=523&type=chunk)[526](index=526&type=chunk) - The company is authorized to issue up to **100,000,000 shares of preferred stock** ($0.01 par value), including 6,400,000 Series E and 4,000,000 Series F shares[527](index=527&type=chunk) - In August 2021, **4,000,000 Series F preferred shares** were offered for net proceeds of **$96.6 million**[528](index=528&type=chunk) - In September 2021, all **3,000,000 outstanding 6.45% Series D Cumulative Redeemable Preferred Stock** were redeemed for **$75.0 million**, plus accrued dividends, resulting in a **$2.7 million premium on redemption**[529](index=529&type=chunk) - On January 13, 2022, in connection with the NCI Transaction, **1,958,429 Series Z Preferred Units** were issued, entitled to **5.25% annual distributions**[532](index=532&type=chunk) - Unaffiliated third parties hold Common Units in the Operating Partnership, representing less than a **1% limited partnership interest** at December 31, 2021, which are redeemable for cash or common stock[534](index=534&type=chunk) - The company's joint venture with GIC (formed July 2019) involves the company as general partner and asset manager, investing **51% of equity capitalization**, with GIC investing **49%**[536](index=536&type=chunk) [NOTE 10 — FAIR VALUE MEASUREMENT](index=103&type=section&id=NOTE%2010%20%E2%80%94%20FAIR%20VALUE%20MEASUREMENT) This note provides information on financial instruments measured at fair value, including purchase options related to real estate loans and interest rate swaps, categorized by valuation input levels Financial Instruments Measured at Fair Value (in thousands) | Instrument | Level | December 31, 2021 Total | December 31, 2020 Total | | :-------------------------------- | :---- | :------------------------ | :------------------------ | | Purchase options related to real estate loans | Level 3 | $2,800 | $7,161 | | Interest rate swaps | Level 2 | $15,723 | $30,850 | - Purchase options related to real estate loans are measured at cost less impairment, with fair value estimated using a Black-Scholes model (Level 3 inputs)[431](index=431&type=chunk)[541](index=541&type=chunk)[542](index=542&type=chunk) - A Loss on impairment and write-off of assets of **$4.4 million** was recorded in 2021 due to the company electing not to exercise purchase options on repaid real estate loans[543](index=543&type=chunk) - Interest rate swaps are valued using a market approach (Level 2 valuation technique)[520](index=520&type=chunk) - There were no transfers between Level 1 and Level 2 of the fair value hierarchy during 2021 or 2020[544](index=544&type=chunk) [NOTE 11 — COMMITMENTS AND CONTINGENCIES](index=104&type=section&id=NOTE%2011%20%E2%80%94%20COMMITMENTS%20AND%20CONTINGENCIES) This note outlines the company's commitments under franchise and management agreements, including associated fees, and addresses ongoing litigation - All hotel properties operate under franchise agreements (10-20 year terms) with fees ranging from **2% to 6% of gross revenue**, plus marketing fees and capital expenditure reserve funds[545](index=545&type=chunk) - Franchise fees expensed were **$25.0 million** in 2021, **$20.7 million** in 2020, and **$47.8 million** in 2019[545](index=545&type=chunk) - Hotel properties operate under management agreements (month-to-month to 25-year terms) with third-party companies, involving base management fees and potential incentive fees[546](index=546&type=chunk) - Management fees expensed were **$9.9 million** in 2021, **$6.3 million** in 2020, and **$16.6 million** in 2019[546](index=546&type=chunk) - The company is involved in ordinary course litigation but is not aware of any actions that would have a material effect on its financial condition or results of operations[547](index=547&type=chunk) [NOTE 12 — EQUITY-BASED COMPENSATION](index=104&type=section&id=NOTE%2012%20%E2%80%94%20EQUITY-BASED%20COMPENSATION) This note details the company's equity-based compensation plans, including stock options, restricted stock awards, and director stock awards, along with associated expenses and vesting information - The company's Equity Plan provides for various equity-based awards, including stock options, restricted stock, and director stock awards[548](index=548&type=chunk) - All **235,000 stock options** outstanding at December 31, 2020, expired unexercised on February 13, 2021[550](index=550&type=chunk) - Non-vested time-based restricted stock awards totaled **605,470 shares** at December 31, 2021, with a weighted average grant date fair value of **$9.98 per share**[552](index=552&type=chunk) - The total fair value of time-based restricted stock awards that vested was **$5.3 million** in 2021, including **$1.5 million** from accelerated vesting due to the Executive Chairman's retirement[555](index=555&type=chunk) - Non-vested performance-based restricted stock awards totaled **1,002,866 shares** at December 31, 2021, valued using a Monte Carlo simulation model based on percentile ranking within the SNL U.S. REIT Hotel Index[556](index=556&type=chunk)[557](index=557&type=chunk)[560](index=560&type=chunk) - Director stock awards of **60,546 shares** in 2021 and **93,810 shares** in 2020 were granted to non-employee directors and vested upon grant[561](index=561&type=chunk) Equity-Based Compensation Expense (in thousands) | Component | 2021 | 2020 | 2019 | | :-------------------------- | :------- | :------- | :------- | | Time-based restricted stock | $4,784 | $2,470 | $2,327 | | Performance-based restricted stock | $5,314 | $3,559 | $3,396 | | Director stock | $583 | $447 | $496 | | **Total** | **$10,681** | **$6,476** | **$6,219** | - Unrecognized equity-based compensation expense for all non-vested awards was **$8.0 million** at December 31, 2021[563](index=563&type=chunk) - The retirement of the Executive Chairman resulted in **$2.9 million** of additional stock-based compensation expense recorded in 2021[563](index=563&type=chunk) [NOTE 13 — BENEFIT PLANS](index=107&type=section&id=NOTE%2013%20%E2%80%94%20BENEFIT%20PLANS) This note describes the company's qualified contributory retirement plan (401(k) Plan) and the associated employer contributions - The company initiated a qualified contributory retirement plan (401(k) Plan) on August 1, 2011, covering all eligible full-time employees[564](index=564&type=chunk) - The plan is a Safe Harbor Plan requiring a mandatory employer contribution, which was **$0.3 million** in each of 2021, 2020, and 2019[564](index=564&type=chunk) [NOTE 14 — INCOME TAXES](index=107&type=section&id=NOTE%2014%20%E2%80%94%20INCOME%20TAXES) This note details the company's income tax expense, deferred tax assets and liabilities, net operating losses, and the impact of recent tax legislation, considering its REIT status - As a REIT, the company is generally not subject to corporate income taxes on taxable income distributed to shareholders, but its TRSs are subject to federal, state, and local taxes[565](index=565&type=chunk)[566](index=566&type=chunk) Components of Income Tax Expense (Benefit) (in thousands) | Component | 2021 | 2020 | 2019 | | :---------------- | :------- | :------- | :------- | | Current Federal | $1,036 | $(904) | $869 | | Current State and local | $456 | $224 | $643 | | Deferred Federal | $(19) | $1,548 | $(32) | | Deferred State and local | $0 | $508 | $20 | | **Income tax expense** | **$1,473** | **$1,376** | **$1,500** | - A valuation allowance of **$13.0 million** was recorded against deferred tax assets at December 31, 2021, due to certain TRSs incurring a three-year cumulative loss and uncertain realizability[568](index=568&type=chunk) - At December 31, 2021, TRSs had federal net operating losses of **$40.5 million** (no expiration) and state net operating losses of **$41.9 million** (expire beginning 2025)[569](index=569&type=chunk) - The American Rescue Plan Act of 2021 extended the employee retention tax credit (resulting in **$1.1 million credit** in 2021) and expanded executive compensation deduction limits[572](index=572&type=chunk)[573](index=573&type=chunk) - For 2021, Preferred D, Preferred E, and Preferred F dividends were **100% return of capital**[574](index=574&type=chunk) [NOTE 15 — EARNINGS PER SHARE](index=110&type=section&id=NOTE%2015%20%E2%80%94%20EARNINGS%20PER%20SHARE) This note explains the company's method for computing earnings per share, including the two-class method and the treatment of participating and antidilutive securities - The company applies the two-class method for computing earnings per share, which requires separate calculations for non-vested time-based restricted stock awards with non-forfeitable dividends and common stock[577](index=577&type=chunk) - Net losses are not allocated to participating securities unless there is a contractual obligation to share in losses[577](index=577&type=chunk) - Unvested performance-based restricted stock awards (**1,002,866 shares** in 2021) and outstanding convertible notes were excluded from diluted EPS calculations as they were antidilutive or had not met vesting conditions[578](index=578&type=chunk) Basic and Diluted (Loss) Earnings Per Share | Year | EPS | | :--- | :-- | | 2021 | $(0.80) | | 2020 | $(1.52) | | 2019 | $0.65 | - Weighted average common shares outstanding (basic and diluted) were **104,471 thousand** in 2021[579](index=579&type=chunk) [NOTE 16 — SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)](index=111&type=section&id=NOTE%2016%20%E2%80%94%20SELECTED%20QUARTERLY%20FINANCIAL%20DATA%20(UNAUDITED)) This note presents selected unaudited quarterly financial data for 2021 and 2020, including total revenues, net loss, and loss per share Selected Quarterly Financial Data (in thousands, except per share amounts) | Quarter | 2021 Total Revenues | 2021 Net Loss | 2021 Loss per Share | 2020 Total Revenues | 2020 Net Loss | 2020 Loss per Share | | :------ | :------------------ | :------------ | :------------------ | :------------------ | :------------ | :------------------ | | First | $57,854 | $(32,871) | $(0.34) | $108,385 | $(16,214) | $(0.18) | | Second | $86,524 | $(20,569) | $(0.21) | $25,436 | $(52,548) | $(0.52) | | Third | $110,686 | $(4,239) | $(0.10) | $52,412 | $(35,775) | $(0.37) | | Fourth | $106,862 | $(10,905) | $(0.15) | $48,230 | $(44,708) | $(0.45) | [NOTE 17 — SUBSEQUENT EVENTS](index=111&type=section&id=NOTE%2017%20%E2%80%94%20SUBSEQUENT%20EVENTS) This note discloses significant events occurring after the balance sheet date, including the NCI Transaction, new credit facilities, and dividend declarations - In January 2022, the NCI Transaction was completed, acquiring **26 hotels for $766.0 million** through the Joint Venture, with one additional hotel expected in Q1 2022 for **$56.0 million**[581](index=581&type=chunk) - In connection with the NCI Transaction, the Joint Venture entered into a **$410.0 million senior secured term loan facility** (NCI Credit Facility) on January 13, 2022, maturing January 13, 2026, with a floating interest rate (SOFR + 2.86%)[582](index=582&type=chunk) - As part of the NCI Transaction, **15,314,494 Common Units** and **1,958,429 Series Z Preferred Units** were issued on January 13, 2022[583](index=583&type=chunk) - On January 28, 2022, the Board of Directors declared cash dividends for Series E and F Preferred Stock, and Series Z Cumulative Perpetual Preferred Units, payable February 28, 2022[584](index=584&type=chunk)[585](index=585&type=chunk) [Schedule III - Real Estate and Accumulated Depreciation](index=113&type=section&id=Schedule%20III%20-%20Real%20Estate%20and%20Accumulated%20Depreciation) This schedule provides a detailed breakdown of the company's real estate assets and accumulated depreciation as of December 31, 2021, including the cost capitalized, subsequent improvements, and reconciliation of changes in asset basis and accumulated depreciation - The total cost of real estate (land, buildings, and improvements) was **$2,638,549 thousand** at December 31, 2021[592](index=592&type=chunk) - Total accumulated depreciation was **$583,080 thousand** at December 31, 2021[592](index=592&type=chunk) Reconciliation of Land, Buildings and Improvements (in thousands) | Item | 2021 | 2020 | 2019 | | :-------------------------------- | :------- | :------- | :------- | | Balance at beginning of period | $2,570,768 | $2,553,428 | $2,406,269 | | Additions | $80,496 | $19,918 | $336,480 | | Disposition | $(12,715) | $(2,578) | $(186,800) | | Impairment loss | $0 | $0 | $(2,521) | | **Balance at end of period** | **$2,638,549** | **$2,570,768** | **$2,553,428** | Reconciliation of Accumulated Depreciation (in thousands) | Item | 2021 | 2020 | 2019 | | :-------------------------------- | :------- | :------- | :------- | | Balance at beginning of period | $490,326 | $383,763 | $351,821 | | Depreciation | $105,462 | $109,159 | $99,013 | | Depreciation on assets sold or disposed | $(12,708) | $(2,596) | $(67,071) | | **Balance at end of period** | **$583,080** | **$490,326** | **$383,763** | - Depreciation is computed based on useful lives of **6-40 years** for buildings and improvements, and **2-15 years** for furniture and equipment[598](index=598&type=chunk) - The aggregate cost of real estate for Federal income tax purposes was approximately **$2,448 million**[597](ind

Financial Data and Key Metrics Changes - The company reported a pro forma RevPAR of $98 for Q3 2021, more than double the RevPAR from Q3 2020 and 24% lower than Q3 2019, showing significant improvement from earlier in the year [11] - Corporate cash flow reached $18.5 million in Q3, more than triple the cash flow from Q2 2021, with pro forma hotel EBITDA at $38.8 million, exceeding the previous two quarters combined by approximately $5 million [25][28] - Operating costs per occupied room declined nearly 10% compared to 2019, leading to a gross operating profit margin of 47% and hotel EBITDA margin of 35% in Q3 [26] Business Line Data and Key Metrics Changes - The resort and non-urban hotels experienced a RevPAR growth of 12% relative to Q2 2021, with a nominal RevPAR exceeding $100 [18] - Urban hotels saw a RevPAR increase of 43% from Q2 2021 to approximately $94, driven by a 24% increase in ADR [19] - Full week group RevPAR for the total portfolio increased by 76% relative to Q2 2021, while weekday group RevPAR increased by 100% during the same period [22] Market Data and Key Metrics Changes - Demand growth was primarily driven by increases in group business and negotiated business segments, with negotiated room revenue increasing approximately 28% in Q3 over Q2 [10][22] - Weekend occupancy averaged 80% during Q3, with mid-week occupancy climbing to 64%, indicating a narrowing gap between weekday and weekend occupancy [13] - The company noted a reacceleration in demand in the latter half of September, with occupancy averaging nearly 70% during the last two weeks of the quarter [10] Company Strategy and Development Direction - The company announced a transformational acquisition of 27 hotels for a total consideration of $822 million, aimed at enhancing its portfolio in high-growth markets [7][30] - The acquisition is expected to be immediately accretive to earnings and leverage-neutral, with a stabilized NOI yield of 8% to 8.5% [31][33] - The company plans to continue renovations and capital expenditures between $15 million and $20 million for the year, reflecting confidence in long-term demand trends [16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of corporate transient demand trends, with indications of a more robust return of corporate travel [10] - The company highlighted the favorable dynamics in Texas and Sunbelt markets, which are expected to benefit from migration patterns and corporate relocation activity [31][52] - Management acknowledged ongoing labor challenges but indicated a commitment to maintaining a lean staffing model while gradually increasing FTEs as demand recovers [26][62] Other Important Information - The company completed the acquisition of a newly built 110 guestroom residence for $33 million, which has performed exceptionally well since acquisition [14][15] - The company accessed capital markets in August, issuing $100 million of preferred equity to refinance existing debt and strengthen liquidity [28] Q&A Session Summary Question: Details on accretion numbers from NewcrestImage transactions - Management expects the transaction to be immediately accretive to earnings, with a stabilized NOI yield between 8% and 8.5% [40] Question: NewcrestImage's holding period intentions - Shares will be subject to a 6-month lockup period, and the partnership is expected to be long-term [42] Question: Ramp-up of EBITDA from the new portfolio - The new portfolio is expected to have a different growth profile, with higher growth potential due to the inclusion of newer assets [48] Question: Comfort with Texas exposure - Management is confident in the growth dynamics in Texas, citing strong migration and job growth [50] Question: Future acquisition plans post-transaction - While the transaction will keep management busy, the company remains open to opportunistic acquisitions [56] Question: Labor dynamics in new markets - Management noted better labor dynamics in the new markets, which were a consideration in the acquisition [75] Question: Supply growth outlook - The new development pipeline has slowed significantly, leading to expectations of below-average supply growth for several years [78]

[PART I — FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) Presents unaudited condensed consolidated financial statements and management's discussion for Q3 and YTD 2021 [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited condensed consolidated financial statements for Summit Hotel Properties, Inc. as of September 30, 2021 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Presents the company's financial position, including assets, liabilities, and equity, as of September 30, 2021 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2021 (Unaudited) | Dec 31, 2020 | | :--- | :--- | :--- | | **Total Assets** | **$2,248,320** | **$2,233,019** | | Investment in hotel properties, net | $2,078,014 | $2,105,946 | | Cash and cash equivalents | $59,650 | $20,719 | | **Total Liabilities** | **$1,148,813** | **$1,180,956** | | Debt, net of debt issuance costs | $1,056,667 | $1,094,745 | | **Total Equity** | **$1,099,507** | **$1,052,063** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Presents revenues, operating income, and net loss for the three and nine months ended September 30, 2021 Statement of Operations Highlights (in thousands, except per share amounts) | Metric | Q3 2021 | Q3 2020 | YTD 2021 | YTD 2020 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | **$110,686** | **$52,412** | **$255,064** | **$186,233** | | Operating Income (Loss) | $5,023 | $(26,281) | $(31,814) | $(74,543) | | Net Loss | $(4,239) | $(35,775) | $(57,679) | $(104,537) | | Net Loss Attributable to Common Stockholders | $(10,964) | $(38,256) | $(68,439) | $(111,413) | | Loss Per Share (Basic and Diluted) | $(0.10) | $(0.37) | $(0.66) | $(1.07) | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Presents cash flows from operating, investing, and financing activities for the nine months ended September 30, 2021 Cash Flow Summary for the Nine Months Ended Sep 30 (in thousands) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net Cash Provided By (Used In) Operating Activities | $50,289 | $(21,391) | | Net Cash Used In Investing Activities | $(51,880) | $(27,355) | | Net Cash Provided By Financing Activities | $47,866 | $35,520 | | **Net Change in Cash, Cash Equivalents and Restricted Cash** | **$46,275** | **$(13,226)** | [Notes to the Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) Offers detailed explanations and additional information for the condensed consolidated financial statements - The company's portfolio consisted of **73 hotels with 11,398 guestrooms** across 23 states as of September 30, 2021, focusing on premium-branded hotels in the Upscale segment[24](index=24&type=chunk) - The COVID-19 pandemic significantly impacted operations since March 2020, but sequential improvement was observed in the first three quarters of 2021, driven primarily by leisure travel[25](index=25&type=chunk)[26](index=26&type=chunk) - In January 2021, the company issued **$287.5 million** of 1.50% convertible senior notes due 2026, using the net proceeds of approximately **$280.0 million** to repay debt and fund capped call transactions[118](index=118&type=chunk) - In August 2021, the company issued **4,000,000 shares** of 5.875% Series F Cumulative Redeemable Preferred Stock for net proceeds of **$96.6 million**, and in September 2021, redeemed all **3,000,000 outstanding shares** of its 6.45% Series D Preferred Stock for **$75.0 million**[141](index=141&type=chunk)[142](index=142&type=chunk) - Subsequent to the quarter end, on November 2, 2021, the company agreed to acquire a **27-hotel portfolio** for a total consideration of **$822 million** through its joint venture with GIC[182](index=182&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Analyzes hotel demand recovery, operational results, non-GAAP measures, and liquidity for the first nine months of 2021 [Overview and COVID-19 Impact](index=35&type=section&id=Overview%20and%20COVID-19%20Impact) Reviews portfolio, business recovery from leisure travel, and operational adjustments due to COVID-19 - As of September 30, 2021, the company's portfolio consisted of **73 premium-branded, select-service hotels with 11,398 guestrooms** in 23 states[190](index=190&type=chunk) - The business experienced a significant downturn due to the COVID-19 pandemic but saw a significant recovery in the first nine months of 2021, driven by leisure travelers, while corporate and group demand recovery has been slower[196](index=196&type=chunk)[198](index=198&type=chunk) - In response to the pandemic, the company adjusted labor cost structures, reduced staffing levels, and implemented enhanced cleaning protocols to ensure guest and employee safety[199](index=199&type=chunk)[202](index=202&type=chunk) [Results of Operations](index=39&type=section&id=Results%20of%20Operations) Analyzes operating performance, including revenues, occupancy, ADR, and RevPAR, for Q3 and YTD 2021 Q3 2021 vs. Q3 2020 Operating Metrics (Total Portfolio) | Metric | Q3 2021 | Q3 2020 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $110,686K | $52,412K | 111.2% | | Occupancy | 68.7% | 45.0% | 52.4% | | ADR | $142.52 | $103.98 | 37.1% | | RevPAR | $97.85 | $46.83 | 108.9% | YTD 2021 vs. YTD 2020 Operating Metrics (Total Portfolio) | Metric | YTD 2021 | YTD 2020 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $255,064K | $186,233K | 37.0% | | Occupancy | 61.4% | 43.6% | 40.9% | | ADR | $124.28 | $126.97 | (2.1)% | | RevPAR | $76.28 | $55.31 | 37.9% | - The significant increase in revenues and RevPAR in Q3 and YTD 2021 was attributed to the business recovery driven by leisure travel as COVID-19 restrictions eased[211](index=211&type=chunk)[217](index=217&type=chunk) [Non-GAAP Financial Measures](index=43&type=section&id=Non-GAAP%20Financial%20Measures) Reconciles and discusses key non-GAAP financial measures such as FFO, AFFO, EBITDAre, and Adjusted EBITDAre FFO and AFFO Reconciliation (in thousands) | Metric | Q3 2021 | Q3 2020 | YTD 2021 | YTD 2020 | | :--- | :--- | :--- | :--- | :--- | | Net loss applicable to common shares | $(10,974) | $(38,326) | $(68,537) | $(111,616) | | FFO applicable to common shares | $16,841 | $(12,642) | $9,160 | $(33,647) | | AFFO applicable to common shares | $20,484 | $(10,806) | $21,981 | $(23,459) | EBITDAre and Adjusted EBITDAre Reconciliation (in thousands) | Metric | Q3 2021 | Q3 2020 | YTD 2021 | YTD 2020 | | :--- | :--- | :--- | :--- | :--- | | Net loss | $(4,239) | $(35,775) | $(57,679) | $(104,537) | | EBITDAre | $37,523 | $2,258 | $60,013 | $12,329 | | Adjusted EBITDAre | $34,024 | $2,539 | $61,982 | $16,498 | [Liquidity and Capital Resources](index=47&type=section&id=Liquidity%20and%20Capital%20Resources) Details financial position, capital structure, and recent financing activities to enhance liquidity - The company enhanced liquidity through several transactions in 2021, including a **$287.5 million** convertible notes offering, a **$96.6 million** Series F preferred stock offering, and an **$84.3 million** cash contribution from its JV partner[241](index=241&type=chunk)[243](index=243&type=chunk)[244](index=244&type=chunk) - Proceeds from financing activities were used to repay senior debt, redeem **$75.0 million** of Series D preferred stock, and fund acquisitions[241](index=241&type=chunk)[245](index=245&type=chunk)[246](index=246&type=chunk) Contractual Obligations Summary (in thousands) | Obligation | Total | Less than 1 Year | 1-3 Years | 4-5 Years | More than 5 Years | | :--- | :--- | :--- | :--- | :--- | :--- | | Debt obligations | $1,069,064 | $4,030 | $496,454 | $429,703 | $138,877 | | Projected interest | $103,659 | $36,647 | $53,900 | $12,100 | $1,012 | | Lease obligations | $33,143 | $1,983 | $2,026 | $1,834 | $27,300 | | **Total** | **$1,213,417** | **$50,211** | **$552,380** | **$443,637** | **$167,189** | [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=51&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Addresses interest rate risk exposure on variable-rate debt and its management through derivatives - The company's primary market risk exposure is to interest rates, specifically 30-day LIBOR, on its variable-rate debt[267](index=267&type=chunk) - The company is monitoring the transition from LIBOR to a new benchmark rate like SOFR, as its loan agreements contain provisions to establish an alternative rate[268](index=268&type=chunk) Debt Structure by Interest Rate Type | Debt Type | Sep 30, 2021 | % of Total | Dec 31, 2020 | % of Total | | :--- | :--- | :--- | :--- | :--- | | Fixed-rate debt | $830.5M | 78% | $545.8M | 50% | | Variable-rate debt | $238.5M | 22% | $555.7M | 50% | [Item 4. Controls and Procedures](index=52&type=section&id=Item%204.%20Controls%20and%20Procedures) Confirms effective disclosure controls and procedures with no material changes in internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of September 30, 2021[271](index=271&type=chunk) - No changes in internal control over financial reporting occurred during the third quarter of 2021 that have materially affected, or are reasonably likely to materially affect, internal controls[272](index=272&type=chunk) [PART II — OTHER INFORMATION](index=53&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) Provides disclosures on legal proceedings, risk factors, equity sales, defaults, and other information [Item 1. Legal Proceedings](index=53&type=section&id=Item%201.%20Legal%20Proceedings) Reports on ordinary course litigation with no expected material adverse effects on financial position - There are currently no pending legal actions that the company believes would have a material adverse effect on its financial position or results of operations[275](index=275&type=chunk) [Item 1A. Risk Factors](index=53&type=section&id=Item%201A.%20Risk%20Factors) Reports no material changes to risk factors previously disclosed in the Annual Report on Form 10-K - No material changes to risk factors have occurred since the filing of the Annual Report on Form 10-K for the year ended December 31, 2020[276](index=276&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=53&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Confirms no unregistered sales of equity securities occurred during the reporting period - None[277](index=277&type=chunk) [Item 3. Defaults Upon Senior Securities](index=53&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) Confirms no defaults upon senior securities occurred during the reporting period - None[278](index=278&type=chunk) [Item 4. Mine Safety Disclosures](index=53&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) States that this item is not applicable to the company's operations - Not applicable[279](index=279&type=chunk) [Item 5. Other Information](index=53&type=section&id=Item%205.%20Other%20Information) Indicates that there is no other information requiring disclosure in this section - None[280](index=280&type=chunk) [Item 6. Exhibits](index=54&type=section&id=Item%206.%20Exhibits) Lists the exhibits accompanying the quarterly report, including required certifications and XBRL documents - Exhibits filed with the report include CEO and CFO certifications pursuant to Sarbanes-Oxley Act Sections 302 and 906, along with XBRL data files[282](index=282&type=chunk)

I N V E S T O R P R E S E N T A T I O N S E P T E M B E R 2 0 2 1 | N Y S E : I N N Forward-Looking Statements We make forward-looking statements in this presentation that are subject to risks and uncertainties. These forward-looking statements include information about possible or assumed future results of our business, financial condition, liquidity, results of operations, plans, and objectives. When we use the words "believe," "expect," "anticipate," "estimate," "plan," "continue," "intend," "should," "m ...

Summit Hotel Properties Inc. (NYSE:INN) Q2 2021 Earnings Conference Call August 4, 2021 9:00 AM ET Company Participants Adam Wudel - Senior Vice President of Finance, Capital Markets and Treasurer Jon Stanner - Chief Executive Officer Trey Conkling - Executive Vice President and Chief Financial Officer Conference Call Participants Neil Malkin - Capital One Austin Wurschmidt - KeyBanc Dany Asad - Bank of America Michael Bellisario - Baird Bill Crow - Raymond James Operator Thank you for standing by, and welc ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________________________________________________________________________ FORM 10-Q ____________________________________________________________________________________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ...

Financial Data and Key Metrics Changes - The company reported pro forma RevPAR at $53, a decline of 45% compared to last year and 59% compared to Q1 2019, but a 23% improvement over Q4 2020 [7] - March RevPAR finished above $65, representing a 27% month-over-month increase from February, with preliminary April results suggesting a RevPAR of nearly $70 [5][6] - Corporate level cash burn in March was less than $1 million, with expectations to be near or cash flow positive in April [6] Business Line Data and Key Metrics Changes - Nine resort hotels led the recovery with first quarter occupancy exceeding 76% and RevPAR exceeding $100, driven by strong leisure demand [9] - Urban hotels reported post-pandemic highs in occupancy and RevPAR, exceeding 50% occupancy in April [10] - The average occupancy for weekdays during March was over 50%, marking a significant recovery [8] Market Data and Key Metrics Changes - The company gained market share with a RevPAR index of 133%, a nine percentage point increase relative to competitive sets [7] - ADR in March was 9% higher than February and 14% higher than January, indicating a positive trend in pricing [11] - Year-to-date through April, urban hotels experienced ADR growth of approximately 27% from December of the previous year [12] Company Strategy and Development Direction - The company plans to accelerate renovations starting in Q4 2021, taking advantage of improving demand trends [17][18] - The joint venture with GIC now holds 11 assets with total investments of nearly $450 million, focusing on unique and opportunistic investments [20] - The company aims to maintain a lean staffing model while addressing challenges in rehiring hourly staff due to enhanced unemployment benefits [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery trajectory, particularly in leisure demand, with expectations for a robust summer travel season [26] - The return of corporate travel is anticipated as case counts decline and vaccine distribution broadens, contributing to future demand [26] - Management acknowledged ongoing challenges in the operating environment but noted that hotels are consistently profitable [13][15] Other Important Information - The company completed a convertible notes offering generating gross proceeds of $287.5 million at a 1.5% coupon [21] - The joint venture revolving credit facility was amended to provide waivers of certain covenants through the end of the year [23] - New management team additions were announced, including a new CFO and a new board member [24][25] Q&A Session Summary Question: Can you provide insights on ADR trends and corporate travel? - Management noted that March ADR was 14% higher than January, with expectations for continued growth, particularly with the return of corporate travel [30][31] Question: How is the company managing labor challenges? - Management acknowledged labor challenges due to unemployment benefits but emphasized efforts to retain key staff and gradually reintroduce normal staffing levels [50][51] Question: What is the strategy behind the GIC joint venture and asset contributions? - Management explained that the asset contributions were based on finding markets where GIC could be more constructive on pricing, with no specific number of assets predetermined [35][60] Question: How does the company view future acquisitions and capital deployment? - Management indicated a busy acquisition pipeline and the potential for redeploying capital into unique opportunities, emphasizing flexibility in capital allocation [64][62] Question: What are the plans for capital expenditures and renovations? - Management plans to accelerate renovations in response to improving demand, focusing on room and public space upgrades [88][89]

I N V E S T O R P R E S E N T A T I O N A P R I L 2 0 2 1 | N Y S E : I N N Forward-Looking Statements We make forward-looking statements in this presentation that are subject to risks and uncertainties. These forward-looking statements include information about possible or assumed future results of our business, financial condition, liquidity, results of operations, plans, and objectives. When we use the words "believe," "expect," "anticipate," "estimate," "plan," "continue," "intend," "should," "may," or ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ____________________________________________________________________________________ FORM 10-Q ____________________________________________________________________________________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ...