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Summit Hotel Properties Reports Strong 2012 Revenue Growth

2013-02-27

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Summit Hotels 2012 pro forma hotel EBITDA was $73.9 million, an increase of 19.2 percent over 2011.

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

	Fourth Quarter				Full Year
	2012		2011		2012		2011
	($ in thousands, except per unit and RevPAR data)
Total Revenue	$	51,423	$	33,568	$	189,542	$	142,663
EBITDA ¹	$	11,298	$	7,008	$	47,041	$	35,273
Adjusted EBITDA ¹	$	11,064	$	7,080	$	52,113	$	37,229
FFO ¹	$	5,002	$	4,118	$	27,470	$	19,048
Adjusted FFO ¹	$	7,571	$	4,190	$	33,570	$	26,907
FFO per diluted unit ¹	$	0.10	$	0.11	$	0.67	$	0.51
Adjusted FFO per diluted unit ¹	$	0.15	$	0.11	$	0.82	$	0.72

Pro Forma ²
RevPAR	$	64.58	$	57.45	$	69.22	$	63.09
RevPAR growth		12.4%				9.7%
Hotel EBITDA	$	15,359	$	11,799	$	73,851	$	61,984
Hotel EBITDA margin		27.6%		23.7%		31.1%		28.6%
Hotel EBITDA margin growth	388 bps				249 bps

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

² Pro forma information includes operating results for the Company’s 83 hotels owned as of December 31, 2012, which excludes the AmericInn Hotel & Suites in Golden, CO that was held for sale at year end, as if such hotels had been owned by the Company since January 1, 2011. As a result, these pro forma operating measures include operating results for certain hotels for periods prior to the Company’s ownership.

2012 Highlights

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

Fourth Quarter Highlights

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


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

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

Subsequent Events

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

Acquisitions

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

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

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

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

On October 30, 2012, the Company entered into an agreement with an affiliate of Hyatt Hotels Corporation to fund $20.3 million in the form of a first lien mortgage loan on a hotel property in downtown Minneapolis, MN. The $20.3 million represents a portion of the total acquisition and renovation costs expected to be incurred to convert the property to a Hyatt Place hotel. Subject to certain conditions, including the successful conversion of the property estimated to be completed in the fourth quarter of 2013, the Company plans to purchase the property and enter into a management agreement with a Hyatt affiliate. The Company has funded $10.3 million to date and anticipates funding the additional capital over the next two quarters.

Dispositions

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

On May 16, 2012, the Company sold the following three hotels all located in Twin Falls, ID for $16.5 million.
- 111 guestroom AmericInn Hotel and Suites
- 91 guestroom Holiday Inn Express & Suites
- 75 guestroom Hampton Inn
On May 30, 2012, the Company sold a parcel of land in Twin Falls, ID for $0.3 million.
On June 28, 2012, the Company sold two parcels of land in Boise, ID for $1.4 million.
On August 15, 2012, the Company sold the 52 guestroom AmericInn Hotel & Suites in Missoula, MT for $1.9 million.
On December 11, 2012, the Company sold the 92 guestroom Courtyard in Missoula, MT for $7.7 million.

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

Capital Markets

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

On October 3, 2012, the Company completed a public offering of 12,000,000 shares of its common stock at a public offering price of $8.15 per share. The underwriters fully exercised their option to purchase an additional 1,800,000 shares. The total number of shares sold, including the option shares, was 13,800,000. Total net proceeds of $106.4 million were realized after deducting the underwriting discount and other estimated offering expenses.
On December 11, 2012, the Company completed a public offering of 3,000,000 shares of its 7.875% Series B Cumulative Redeemable Preferred Stock, resulting in net proceeds, after deducting the underwriting discount and estimated offering costs, of $72.5 million.

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

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

In addition to the amendments listed above, on November 6, 2012, the Company increased the commitment on its senior secured revolving credit facility to $150.0 million; increasing the capital the Company has available for future acquisitions and capital investments. The actual amount of borrowing capacity available under the facility depends on the value of the properties comprising the borrowing base.

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

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

Capital Investment

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

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

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

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

Balance Sheet

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

Estimated Sources and Uses

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

First Quarter 2013 Outlook

The Company is providing guidance for the first quarter based on 91 current hotels¹ and the issuance of 17,250,000 additional shares of common stock on January 14, 2013. Except as described in footnote 1 below, it assumes no additional hotels are acquired or sold in the first quarter and no additional issuances of equity securities.

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

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

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

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

Full Year 2013 Outlook

The Company is providing guidance for full year 2013 based on 93 current hotels¹ and the issuance of 17,250,000 additional shares of common stock on January 14, 2013. Except as described in footnote 1 below, it assumes no additional hotels are acquired or sold in 2013 and no additional issuances of equity securities. US GDP growth was assumed to be in the range of 2.0 to 2.9 percent as forecasted by Smith Travel Research and PwC’s Hospitality Directions economic outlooks.

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

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

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

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

About Summit Hotel Properties

Summit Hotel Properties, Inc. is a publicly traded real estate investment trust focused primarily on acquiring and owning premium-branded select-service hotels in the upscale and upper midscale segments of the lodging industry. As of February 25, 2013, the Company’s portfolio consisted of 86 hotels with a total of 9,486 rooms located in 22 states.

SUMMIT HOTEL PROPERTIES
Condensed Consolidated Balance Sheets
December 31, 2012 and December 31, 2011
Amounts in thousands

	2012		2011
ASSETS

Investment in hotel properties, net	$	734,362	$	498,876
Investment in hotel properties under development		10,303		-
Land held for development		15,802		20,295
Assets held for sale		4,836		-
Cash and cash equivalents		13,980		10,537
Restricted cash		3,624		1,464
Trade receivables		5,478		3,425
Prepaid expenses and other		5,311		4,721
Deferred charges, net		8,895		8,924
Deferred tax asset		3,997		2,196
Other assets		4,201		3,567
TOTAL ASSETS	$	810,789	$	554,005


LIABILITIES AND EQUITY

LIABILITIES
Debt	$	312,613	$	217,104
Accounts payable		5,013		1,671
Accrued expenses		18,985		15,781
Derivative financial instruments		641		-
TOTAL LIABILITIES		337,252		234,556

COMMITMENTS AND CONTINGENCIES

EQUITY		473,537		319,449

TOTAL LIABILITIES AND EQUITY	$	810,789	$	554,005

SUMMIT HOTEL PROPERTIES
Condensed Consolidated Statements of Operations
Amounts in thousands

										Company and
	Company									Predecessor
	Fourth Quarter						Year
	2012			2011			2012			2011

REVENUE
Room revenue	$	49,067		$	32,199		$	181,598		$	137,022
Other hotel operations revenue		2,356			1,369			7,944			5,641
Total Revenue		51,423			33,568			189,542			142,663

EXPENSES
Hotel operating expenses
Rooms		15,829			10,588			54,083			42,343
Other direct		7,146			5,355			25,125			21,858
Other indirect		14,263			10,434			51,062			38,236
Other		242			182			911			773
Total hotel operating expenses		37,480			26,559			131,181			103,210
Depreciation and amortization		9,543			7,328			34,263			28,359
Corporate general and administrative:
Salaries and other compensation		2,476			913			6,039			3,082
Other		776			1,313			3,534			3,479
Hotel property acquisition costs		1,477			72			3,050			254
Loss on impairment of assets		660			-			660			-
Total Expenses		52,412			36,185			178,727			138,384

INCOME (LOSS) FROM OPERATIONS		(989	)		(2,617	)		10,815			4,279

OTHER INCOME (EXPENSE)
Interest income		15			1			35			23
Other income		234			-			731			-
Interest expense		(3,885	)		(3,023	)		(15,585	)		(17,021	)
Debt transaction costs		(10	)		-			(661	)		-
Gain (loss) on disposal of assets		1			-			(198	)		(36	)
Gain (loss) on derivative financial instruments		-			-			(2	)		-
Total Other Income (Expense)		(3,645	)		(3,022	)		(15,680	)		(17,034	)

INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES		(4,634	)		(5,639	)		(4,865	)		(12,755	)

INCOME TAX (EXPENSE) BENEFIT		1,139			2,683			1,238			1,865

INCOME (LOSS) FROM CONTINUING OPERATIONS		(3,495	)		(2,956	)		(3,627	)		(10,890	)

INCOME (LOSS) FROM DISCONTINUING OPERATIONS		2,746			(252	)		1,357			506

NET INCOME (LOSS)		(749	)		(3,208	)		(2,270	)		(10,384	)

PREFERRED DIVIDENDS		(1,156	)		(411	)		(4,625	)		(411	)

NET INCOME (LOSS) ATTRIBUTABLE TO
COMMON UNIT HOLDERS	$	(1,905	)	$	(3,619	)	$	(6,895	)	$	(10,795	)

WEIGHTED AVERAGE COMMON UNITS OUTSTANDING
Basic		50,894			37,378			40,780			37,378

Diluted		51,086			37,378			40,912			37,378

SUMMIT HOTEL PROPERTIES
FFO
Amounts in thousands, except per common unit
(Unaudited)

										Company and
	Company									Predecessor
	Fourth Quarter						Year
	2012			2011			2012			2011
NET INCOME (LOSS)	$	(749	)	$	(3,208	)	$	(2,270	)	$	(10,384	)
Preferred dividends		(1,156	)		(411	)		(4,625	)		(411	)
Depreciation and amortization		9,710			7,737			34,871			29,807
Loss on impairment of assets		207			-			2,305			-
(Gain) loss on disposal of assets		(3,010	)		-			(2,811	)		36
Funds From Operations	$	5,002		$	4,118		$	27,470		$	19,048
Per common unit	$	0.10		$	0.11		$	0.67		$	0.51


Equity based compensation		422			-			1,205			480
Hotel property acquisition costs		1,477			72			3,050			254
Loss on impairment of assets		660			-			660			-
Debt transaction costs		10			-			661			-
(Gain) loss on derivatives		-			-			2			-
Non-recurring operating expenses related to IPO ¹		-			-			-			710
Corporate G&A related to IPO ¹		-			-			-			476
Interest expense related to prepayment penalties ¹		-			-			522			5,600
Non-recurring income tax expense related to IPO ¹		-			-			-			339
Adjusted Funds From Operations	$	7,571		$	4,190		$	33,570		$	26,907
Per common unit	$	0.15		$	0.11		$	0.82		$	0.72

Weighted average diluted common units		51,086			37,378			40,912			37,378

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

SUMMIT HOTEL PROPERTIES
EBITDA
Amounts in thousands
(Unaudited)

										Company and
	Company									Predecessor
	Fourth Quarter						Year
	2012			2011			2012			2011
NET INCOME (LOSS)	$	(749	)	$	(3,208	)	$	(2,270	)	$	(10,384	)
Depreciation and amortization		9,710			7,737			34,871			29,807
Interest income		(15	)		(1	)		(35	)		(23	)
Interest expense		3,527			(1,481	)		15,764			17,859
Income tax expense (benefit)		(1,175	)		3,961			(1,289	)		(1,986	)
EBITDA	$	11,298		$	7,008		$	47,041		$	35,273


Equity based compensation		422			-			1,205			480
Hotel prop