Summit Hotel Properties(US:INN)2025-11-04 21:35Company Overview - As of September 30, 2025, the company owned 97 lodging properties with a total of 14,577 guestrooms located in 25 states[179]. - The lodging property portfolio includes 49 properties under the Marriott brand, totaling 7,543 guestrooms, and 25 properties under the Hilton brand, totaling 3,887 guestrooms[187]. - The company operates under premium franchise brands including Marriott, Hilton, Hyatt, and IHG, with all properties managed by third-party companies[181]. - The company holds a 51% controlling interest in 41 lodging properties through a joint venture formed in July 2019[179]. - As of September 30, 2025, the company owned 100% of the outstanding equity interests in 53 of the 97 lodging properties[179]. Financial Performance - Total revenues for the three months ended September 30, 2025, were $177.1 million, a slight increase of 0.2% compared to $171.4 million in the same period of 2024[192]. - Room revenues decreased by $1.1 million, primarily due to a $5.6 million decrease in same-store revenues, offset by a $4.5 million increase from the acquisition of two properties[193]. - Total operating expenses increased by $4.8 million to $105.8 million, representing a 4.8% increase compared to $102.6 million in 2024[192]. - For the three months ended September 30, 2025, the net loss applicable to common shares was $12.8 million, compared to a net loss of $4.9 million for the same period in 2024[211]. - Funds From Operations (FFO) applicable to common shares and Common Units for the three months ended September 30, 2025, was $16.3 million, down from $23.1 million in 2024, representing a decrease of 29.9%[211]. - Adjusted Funds From Operations (AFFO) applicable to common shares and Common Units decreased by $6.4 million for the three months ended September 30, 2025, compared to the same period in 2024[214]. - The company recorded a loss on disposal of assets of $136, compared to a gain of $28.4 million in the prior year[204]. Revenue and Expenses - Key drivers of lodging revenue include changes in GDP, corporate profits, and consumer sentiment, with elevated inflation impacting operational costs[185]. - The company experienced a modest same-store revenue decline due to reduced government-related and inbound international travel, influenced by macroeconomic uncertainties[186]. - Occupancy rate remained stable at 73.7%, while Average Daily Rate (ADR) decreased by 2.9% to $158.25, leading to a 2.9% decrease in Revenue per Available Room (RevPAR) to $116.57[192]. - Room expenses increased by $1.7 million, driven by an $0.8 million increase in same-store room expenses due to higher labor and benefits costs[195]. - Property taxes, insurance, and other expenses increased by $0.9 million, primarily due to higher property tax expenses and a decrease in franchise tax refunds[197]. - Management fees rose by $0.4 million, reflecting amendments to property management agreements that resulted in lower fees in the prior year[197]. Capital Expenditures and Investments - Capital expenditures for the nine months ended September 30, 2025, were $56.4 million on a consolidated basis, with a pro rata portion of $48.7 million related to joint ventures[238]. - The company anticipates capital expenditures of approximately $60 million to $65 million on a pro rata basis during 2025[238]. - Cash used in investing activities for the nine months ended September 30, 2025, was $61.8 million, primarily due to $63.0 million of renovation and development expenditures[242]. Debt and Liquidity - As of September 30, 2025, the company had scheduled debt principal payments totaling $0.5 million in the next 12 months, alongside $287.5 million in convertible notes maturing in February 2026[224]. - The company closed a $275 million delayed draw term loan in March 2025 to refinance a significant portion of its convertible notes upon maturity[224]. - At September 30, 2025, total outstanding indebtedness was $1,433.5 million, which includes $20 million under a $400 million revolver and $200 million on a $200 million term loan[230]. - The company expects to maintain compliance with financial covenants and believes it will have adequate liquidity to meet scheduled maturities and principal repayments[225]. Share Repurchase and Tax Status - The company has authorized a share repurchase program of up to $50 million, with approximately $34.6 million remaining available for repurchase as of September 30, 2025[183][184]. - The company intends to distribute sufficient taxable income to maintain its REIT status, which requires distributing at least 90% of its REIT taxable income annually[228]. - Approximately $34.6 million is authorized for the repurchase of common stock under the 2025 Share Repurchase Program[229]. Interest Rates and Financial Instruments - At September 30, 2025, 69% of consolidated debt had fixed interest rates, while 31% had variable interest rates[246]. - An increase or decrease in interest rates of 1.0% would affect cash flows by approximately $4.5 million per year[247]. - The company entered into a $58 million interest rate swap in June 2025 to fix one-month term SOFR until May 2028[249]. - In August 2025, the GIC Joint Venture entered into two $150 million forward-starting interest rate swaps to fix one-month term SOFR until January 2028[250].