Summit Hotel Properties(INN) - 2025 Q1 - Quarterly Report

PART I — FINANCIAL INFORMATION Item 1. Financial Statements Presents the unaudited condensed consolidated financial statements for the quarter ended March 31, 2025 Condensed Consolidated Balance Sheet Highlights (As of March 31, 2025) | Metric | March 31, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $2,897,459 thousand | $2,896,230 thousand | | Total Liabilities | $1,529,622 thousand | $1,511,184 thousand | | Total Stockholders' Equity | $920,439 thousand | $909,545 thousand | Condensed Consolidated Statements of Operations Highlights (Three Months Ended March 31) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Total Revenues | $184,478 thousand | $188,142 thousand | | Operating Income | $19,827 thousand | $23,489 thousand | | Net Income | $623 thousand | $2,833 thousand | | Net Loss Attributable to Common Stockholders | $(4,684) thousand | $(2,116) thousand | | Loss Per Share (Basic and Diluted) | $(0.04) | $(0.02) | Condensed Consolidated Statements of Cash Flows Highlights (Three Months Ended March 31) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $25,850 thousand | $28,150 thousand | | Net Cash Used in Investing Activities | $(16,872) thousand | $(9,986) thousand | | Net Cash (Used in) Provided by Financing Activities | $(1,004) thousand | $6,419 thousand | Note 1 - Description of Business Details the company's structure as a self-managed lodging REIT with a portfolio of 97 premium franchise hotels - As of March 31, 2025, the company's portfolio consisted of 97 lodging properties with 14,555 guestrooms in 25 states[22] - The company owns a 51% controlling interest in a 41-property joint venture with GIC and 90% equity interests in two other joint ventures[22] - The company has elected to be taxed as a REIT and leases all its properties to taxable REIT subsidiaries (TRSs)[24] Note 3 - Investments in Lodging Property, Net Outlines the company's net investments in lodging properties, totaling $2.73 billion as of March 31, 2025 Investments in Lodging Property, net (in thousands) | Category | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Lodging buildings and improvements | $2,875,145 | $2,867,256 | | Land | $415,574 | $415,574 | | Furniture, fixtures and equipment | $299,578 | $296,476 | | Less accumulated depreciation | $(941,731) | $(904,678) | | Total Investments in lodging property, net | $2,727,510 | $2,746,765 | - In February 2025, the company sold a parcel of undeveloped land in San Antonio, TX for $1.3 million[51] - In February 2024, the GIC Joint Venture sold the 127-guestroom Hyatt Place in Dallas (Plano), TX for $10.3 million[52] Note 5 - Debt Summarizes the company's total debt of $1.43 billion and recent refinancing activities Debt Summary (in thousands) | Debt Type | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Revolving debt | $155,000 | $135,000 | | Term loans | $921,037 | $921,037 | | Convertible notes | $287,500 | $287,500 | | Mortgage loans | $63,822 | $64,470 | | Total Debt | $1,427,359 | $1,408,007 | - In March 2025, the company entered into a $275 million delayed draw term loan to refinance its convertible notes maturing in February 2026[86] - After considering interest rate derivative agreements, 65% of the company's debt was fixed-rate as of March 31, 2025[63] Note 8 - Equity Details the company's equity structure, share count changes, and capital management programs Changes in Common Stock (Q1 2025) | Description | Shares | | :--- | :--- | | Beginning shares outstanding | 108,435,663 | | Common Unit redemptions | 2,923,797 | | Grants under Equity Plan | 1,253,885 | | Forfeitures & shares acquired | (401,577) | | Ending shares outstanding | 112,221,768 | - On April 29, 2025, the Board of Directors authorized a new share repurchase program for up to $50.0 million of the company's common stock[119] - The company has a $200.0 million ATM program, but no shares have been sold under it to date[114] Note 16 - Subsequent Events Describes key capital allocation decisions made after the first quarter, including dividends and a share buyback - On April 24, 2025, the Board declared a quarterly cash dividend of $0.08 per common share/unit, along with dividends for its preferred stock[156] - On April 29, 2025, a new share repurchase program was authorized for up to $50.0 million of common stock, with no expiration date[157] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Analyzes Q1 2025 financial results, portfolio performance, liquidity, and capital resources Key Operating Metrics (Q1 2025 vs Q1 2024) | Metric | Total Portfolio Change | Same-Store Portfolio Change | | :--- | :--- | :--- | | Total Revenues | -1.9% | +0.5% | | Occupancy | +0.7% | +0.8% | | ADR | +0.2% | +0.7% | | RevPAR | +0.9% | +1.5% | Non-GAAP Financial Performance (Q1 2025 vs Q1 2024) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | AFFO per share/unit | $0.22 | $0.24 | | Adjusted EBITDAre | $45.0 million | $48.8 million | - The company secured a $275 million delayed draw term loan to refinance convertible notes maturing in February 2026, enhancing its liquidity position[200] - Anticipated capital expenditures for 2025 are projected to be between $60.0 million and $70.0 million on a pro rata basis[209] Results of Operations Compares Q1 2025 performance to Q1 2024, noting a total revenue decrease but same-store RevPAR growth - Total portfolio room revenue decreased by $3.7 million, reflecting a $4.3 million decline from property sales, offset by a $0.6 million increase in same-store revenues[177] - Same-store RevPAR increased by 1.5% YoY, driven by a 0.8% increase in occupancy and a 0.7% increase in ADR[178] - Interest expense decreased by $1.6 million (7.5%) due to lower average interest rates and a lower average outstanding debt balance[181][183] Non-GAAP Financial Measures Provides reconciliations for key non-GAAP metrics, showing a year-over-year decline in FFO, AFFO, and Adjusted EBITDAre FFO and AFFO Reconciliation (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net loss applicable to common shares/units | $(5,287) | $(2,432) | | Real estate-related depreciation | $36,663 | $35,603 | | FFO applicable to common shares/units | $23,196 | $25,488 | | Adjustments for AFFO | $4,163 | $4,508 | | AFFO applicable to common shares/units | $27,359 | $29,996 | Adjusted EBITDAre Reconciliation (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income | $623 | $2,833 | | EBITDAre | $58,449 | $61,199 | | Adjustments | $(13,442) | $(12,398) | | Adjusted EBITDAre | $45,007 | $48,801 | Liquidity and Capital Resources Details the company's $1.43 billion debt profile, proactive maturity management, and 2025 capital expenditure plans - Total debt outstanding as of March 31, 2025 was $1.427 billion, spread across Operating Partnership debt ($717.5 million) and Joint Venture debt ($709.9 million)[207] - The company has scheduled debt principal payments of $0.9 million in the next twelve months, plus a $45.6 million loan maturing in June 2025 and $287.5 million in convertible notes maturing in February 2026[200] - Net cash from operating activities decreased to $25.9 million in Q1 2025 from $28.2 million in Q1 2024[210][214] Item 3. Quantitative and Qualitative Disclosures about Market Risk Focuses on interest rate risk from variable-rate debt and mitigation strategies using derivative agreements - The company's main market risk is interest rate risk from variable-rate debt indexed to SOFR[215] - As of March 31, 2025, the company had six interest rate swap agreements with a total notional amount of $625.0 million to manage this risk[216] - After accounting for swaps, 65% of consolidated debt is fixed-rate, and a 1.0% change in interest rates would affect annual cash flows by about $5.0 million[217][218] Item 4. Controls and Procedures Confirms the effectiveness of disclosure controls and procedures as of March 31, 2025 - Management concluded that disclosure controls and procedures were effective as of the end of the quarter[220] - No material changes in internal control over financial reporting were identified during the quarter[221] PART II — OTHER INFORMATION Item 1. Legal Proceedings States that no pending litigation is expected to have a material adverse effect on the company - 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[223] Item 1A. Risk Factors Updates risk factors, adding a new disclosure regarding the discretionary nature of its share repurchase program - A new risk factor was added related to the April 2025 authorization of a $50.0 million share repurchase program[224] - The company states there is no assurance it will repurchase shares, as the program is discretionary and depends on multiple factors[224] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Reports no unregistered sales of equity securities during the quarter - None[225] Item 3. Defaults Upon Senior Securities Reports no defaults upon senior securities during the quarter - None[226] Item 4. Mine Safety Disclosures States this item is not applicable to the company - Not applicable[227] Item 5. Other Information Discloses no adoption, modification, or termination of director or officer trading plans during the quarter - No adoptions, modifications, or terminations of director or officer trading plans under Rule 10b5-1 occurred during the quarter[228] Item 6. Exhibits Lists exhibits filed with the Form 10-Q, including a new term loan agreement and required CEO/CFO certifications - A key exhibit filed is the Delayed Draw Term Loan Agreement dated March 27, 2025[229] - Certifications from the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act are also included as exhibits[229]