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☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Maryland
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27-2962512
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(State or other jurisdiction
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(I.R.S. Employer Identification No.)
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of incorporation or organization)
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, $0.01 par value
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INN
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New York Stock Exchange
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Series D Cumulative Redeemable Preferred Stock, $0.01 par value
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INN-PD
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New York Stock Exchange
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Series E Cumulative Redeemable Preferred Stock, $0.01 par value
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INN-PE
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New York Stock Exchange
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Page
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March 31, 2020
|
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December 31, 2019
|
||||
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(Unaudited)
|
|
|
||||
ASSETS
|
|
|
|
|
|
|
||
Investment in hotel properties, net
|
|
$
|
2,169,314
|
|
|
$
|
2,184,232
|
|
Undeveloped land
|
|
1,500
|
|
|
1,500
|
|
||
Assets held for sale, net
|
|
425
|
|
|
425
|
|
||
Cash and cash equivalents
|
|
131,267
|
|
|
42,238
|
|
||
Restricted cash
|
|
28,597
|
|
|
27,595
|
|
||
Investment in real estate loans, net
|
|
28,958
|
|
|
30,936
|
|
||
Right-of-use assets, net
|
|
29,577
|
|
|
29,884
|
|
||
Trade receivables, net
|
|
11,356
|
|
|
13,281
|
|
||
Prepaid expenses and other
|
|
8,297
|
|
|
8,844
|
|
||
Deferred charges, net
|
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4,594
|
|
|
4,709
|
|
||
Other assets
|
|
9,235
|
|
|
12,039
|
|
||
Total assets
|
|
$
|
2,423,120
|
|
|
$
|
2,355,683
|
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LIABILITIES AND EQUITY
|
|
|
|
|
|
|
||
Liabilities:
|
|
|
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|
|
|
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Debt, net of debt issuance costs
|
|
$
|
1,135,019
|
|
|
$
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1,016,163
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|
Lease liabilities
|
|
19,384
|
|
|
19,604
|
|
||
Accounts payable
|
|
5,725
|
|
|
4,767
|
|
||
Accrued expenses and other
|
|
76,097
|
|
|
71,759
|
|
||
Total liabilities
|
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1,236,225
|
|
|
1,112,293
|
|
||
Commitments and contingencies (Note 10)
|
|
|
|
|
|
|
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Equity:
|
|
|
|
|
|
|
||
Preferred stock, $0.01 par value per share, 100,000,000 shares authorized:
|
|
|
|
|
|
|
||
6.45% Series D - 3,000,000 shares issued and outstanding at March 31, 2020 and December 31, 2019 (aggregate liquidation preference of $75,417 at March 31, 2020 and December 31, 2019, respectively)
|
|
30
|
|
|
30
|
|
||
6.25% Series E - 6,400,000 shares issued and outstanding at March 31, 2020 and December 31, 2019 (aggregate liquidation preference of $160,861 at March 31, 2020 and December 31, 2019, respectively)
|
|
64
|
|
|
64
|
|
||
Common stock, $0.01 par value per share, 500,000,000 shares authorized, 105,574,400 and 105,169,515 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively
|
|
1,056
|
|
|
1,052
|
|
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Additional paid-in capital
|
|
1,191,964
|
|
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1,190,949
|
|
||
Accumulated other comprehensive loss
|
|
(35,044
|
)
|
|
(16,034
|
)
|
||
Distributions in excess of retained earnings
|
|
(39,868
|
)
|
|
(2,283
|
)
|
||
Total stockholders’ equity
|
|
1,118,202
|
|
|
1,173,778
|
|
||
Non-controlling interests in operating partnership
|
|
1,658
|
|
|
1,809
|
|
||
Non-controlling interests in joint venture (Note 8)
|
|
67,035
|
|
|
67,803
|
|
||
Total equity
|
|
1,186,895
|
|
|
1,243,390
|
|
||
Total liabilities and equity
|
|
$
|
2,423,120
|
|
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$
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2,355,683
|
|
|
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For the
Three Months Ended March 31, |
||||||
|
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2020
|
|
2019
|
||||
Revenues:
|
|
|
|
|
|
|
||
Room
|
|
$
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98,603
|
|
|
$
|
128,100
|
|
Food and beverage
|
|
4,884
|
|
|
6,020
|
|
||
Other
|
|
4,898
|
|
|
4,832
|
|
||
Total revenues
|
|
108,385
|
|
|
138,952
|
|
||
Expenses:
|
|
|
|
|
|
|
||
Room
|
|
24,573
|
|
|
27,840
|
|
||
Food and beverage
|
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4,037
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|
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4,538
|
|
||
Other hotel operating expenses
|
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35,283
|
|
|
39,859
|
|
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Property taxes, insurance and other
|
|
11,698
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|
|
11,408
|
|
||
Management fees
|
|
3,072
|
|
|
5,146
|
|
||
Depreciation and amortization
|
|
27,079
|
|
|
25,536
|
|
||
Corporate general and administrative
|
|
4,668
|
|
|
5,990
|
|
||
Provision for credit losses
|
|
2,530
|
|
|
—
|
|
||
Loss on impairment of assets
|
|
782
|
|
|
—
|
|
||
Total expenses
|
|
113,722
|
|
|
120,317
|
|
||
(Loss) gain on disposal of assets, net
|
|
(3
|
)
|
|
4,166
|
|
||
Operating (loss) income
|
|
(5,340
|
)
|
|
22,801
|
|
||
Other income (expense):
|
|
|
|
|
|
|
||
Interest expense
|
|
(11,012
|
)
|
|
(10,852
|
)
|
||
Other income, net
|
|
2,106
|
|
|
1,301
|
|
||
Total other income (expense)
|
|
(8,906
|
)
|
|
(9,551
|
)
|
||
(Loss) income from continuing operations before income taxes
|
|
(14,246
|
)
|
|
13,250
|
|
||
Income tax expense (Note 12)
|
|
(1,968
|
)
|
|
(350
|
)
|
||
Net (loss) income
|
|
(16,214
|
)
|
|
12,900
|
|
||
Less - Loss (income) attributable to non-controlling interests:
|
|
|
|
|
||||
Operating Partnership
|
|
37
|
|
|
(23
|
)
|
||
Joint venture
|
|
855
|
|
|
—
|
|
||
Net (loss) income attributable to Summit Hotel Properties, Inc.
|
|
(15,322
|
)
|
|
12,877
|
|
||
Preferred dividends
|
|
(3,709
|
)
|
|
(3,709
|
)
|
||
Net (loss) income attributable to common stockholders
|
|
$
|
(19,031
|
)
|
|
$
|
9,168
|
|
(Loss) earnings per share:
|
|
|
|
|
||||
Basic and diluted
|
|
$
|
(0.18
|
)
|
|
$
|
0.09
|
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
||
Basic
|
|
103,995
|
|
|
103,749
|
|
||
Diluted
|
|
103,995
|
|
|
103,837
|
|
|
|
For the
Three Months Ended March 31, |
||||||
|
|
2020
|
|
2019
|
||||
Net (loss) income
|
|
$
|
(16,214
|
)
|
|
$
|
12,900
|
|
Other comprehensive (loss) income, net of tax:
|
|
|
|
|
|
|
||
Changes in fair value of derivative financial instruments
|
|
(19,044
|
)
|
|
(5,558
|
)
|
||
Comprehensive (loss) income
|
|
(35,258
|
)
|
|
7,342
|
|
||
Less - Comprehensive loss (income) attributable to non-controlling interests:
|
|
|
|
|
|
|
||
Operating Partnership
|
|
74
|
|
|
(9
|
)
|
||
Joint venture
|
|
855
|
|
|
—
|
|
||
Comprehensive (loss) income attributable to Summit Hotel Properties, Inc.
|
|
(34,329
|
)
|
|
7,333
|
|
||
Preferred dividends
|
|
(3,709
|
)
|
|
(3,709
|
)
|
||
Comprehensive (loss) income attributable to common stockholders
|
|
$
|
(38,038
|
)
|
|
$
|
3,624
|
|
|
|
Shares
of Preferred
Stock
|
|
Preferred
Stock
|
|
Shares
of
Common
Stock
|
|
Common
Stock
|
|
Additional
Paid-In Capital
|
|
Accumulated Other
Comprehensive
Income (Loss)
|
|
Retained Earnings
and
Distributions
|
|
Total
Stockholders’
Equity
|
|
Non-controlling Interests
|
|
Total
Equity
|
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
Operating
Partnership
|
|
Joint
Venture
|
|
|||||||||||||||||||||||||||||
Balance at December 31, 2019
|
|
9,400,000
|
|
|
$
|
94
|
|
|
105,169,515
|
|
|
$
|
1,052
|
|
|
$
|
1,190,949
|
|
|
$
|
(16,034
|
)
|
|
$
|
(2,283
|
)
|
|
$
|
1,173,778
|
|
|
$
|
1,809
|
|
|
$
|
67,803
|
|
|
$
|
1,243,390
|
|
Contribution by non-controlling interests in joint venture
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
577
|
|
|
577
|
|
|||||||||
Common stock redemption of common units
|
|
—
|
|
|
—
|
|
|
4,956
|
|
|
—
|
|
|
46
|
|
|
(3
|
)
|
|
—
|
|
|
43
|
|
|
(43
|
)
|
|
—
|
|
|
—
|
|
|||||||||
Dividends
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(22,263
|
)
|
|
(22,263
|
)
|
|
(37
|
)
|
|
(490
|
)
|
|
(22,790
|
)
|
|||||||||
Equity-based compensation
|
|
—
|
|
|
—
|
|
|
465,274
|
|
|
5
|
|
|
1,467
|
|
|
—
|
|
|
—
|
|
|
1,472
|
|
|
3
|
|
|
—
|
|
|
1,475
|
|
|||||||||
Shares acquired for employee withholding requirements
|
|
—
|
|
|
—
|
|
|
(65,345
|
)
|
|
(1
|
)
|
|
(468
|
)
|
|
—
|
|
|
—
|
|
|
(469
|
)
|
|
—
|
|
|
—
|
|
|
(469
|
)
|
|||||||||
Other
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(30
|
)
|
|
—
|
|
|
—
|
|
|
(30
|
)
|
|
—
|
|
|
—
|
|
|
(30
|
)
|
|||||||||
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(19,007
|
)
|
|
—
|
|
|
(19,007
|
)
|
|
(37
|
)
|
|
—
|
|
|
(19,044
|
)
|
|||||||||
Net loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15,322
|
)
|
|
(15,322
|
)
|
|
(37
|
)
|
|
(855
|
)
|
|
(16,214
|
)
|
|||||||||
Balance at March 31, 2020
|
|
9,400,000
|
|
|
$
|
94
|
|
|
105,574,400
|
|
|
$
|
1,056
|
|
|
$
|
1,191,964
|
|
|
$
|
(35,044
|
)
|
|
$
|
(39,868
|
)
|
|
$
|
1,118,202
|
|
|
$
|
1,658
|
|
|
$
|
67,035
|
|
|
$
|
1,186,895
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Balance at December 31, 2018
|
|
9,400,000
|
|
|
$
|
94
|
|
|
104,783,179
|
|
|
$
|
1,048
|
|
|
$
|
1,185,310
|
|
|
$
|
(1,441
|
)
|
|
$
|
4,838
|
|
|
$
|
1,189,849
|
|
|
$
|
2,295
|
|
|
$
|
—
|
|
|
$
|
1,192,144
|
|
Dividends
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(21,956
|
)
|
|
(21,956
|
)
|
|
(47
|
)
|
|
—
|
|
|
(22,003
|
)
|
|||||||||
Equity-based compensation
|
|
—
|
|
|
—
|
|
|
370,826
|
|
|
4
|
|
|
1,345
|
|
|
—
|
|
|
—
|
|
|
1,349
|
|
|
3
|
|
|
—
|
|
|
1,352
|
|
|||||||||
Shares acquired for employee withholding requirements
|
|
—
|
|
|
—
|
|
|
(73,892
|
)
|
|
(1
|
)
|
|
(833
|
)
|
|
—
|
|
|
—
|
|
|
(834
|
)
|
|
—
|
|
|
—
|
|
|
(834
|
)
|
|||||||||
Other
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(32
|
)
|
|
—
|
|
|
—
|
|
|
(32
|
)
|
|
—
|
|
|
—
|
|
|
(32
|
)
|
|||||||||
Other comprehensive loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,544
|
)
|
|
—
|
|
|
(5,544
|
)
|
|
(14
|
)
|
|
—
|
|
|
(5,558
|
)
|
|||||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,877
|
|
|
12,877
|
|
|
23
|
|
|
—
|
|
|
12,900
|
|
|||||||||
Balance at March 31, 2019
|
|
9,400,000
|
|
|
$
|
94
|
|
|
105,080,113
|
|
|
$
|
1,051
|
|
|
$
|
1,185,790
|
|
|
$
|
(6,985
|
)
|
|
$
|
(4,241
|
)
|
|
$
|
1,175,709
|
|
|
$
|
2,260
|
|
|
$
|
—
|
|
|
$
|
1,177,969
|
|
|
|
For the
Three Months Ended March 31, |
||||||
|
|
2020
|
|
2019
|
||||
OPERATING ACTIVITIES
|
|
|
|
|
|
|||
Net (loss) income
|
|
$
|
(16,214
|
)
|
|
$
|
12,900
|
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
27,079
|
|
|
25,536
|
|
||
Amortization of deferred financing costs
|
|
457
|
|
|
381
|
|
||
Loss on impairment of assets
|
|
782
|
|
|
—
|
|
||
Provision for credit losses
|
|
2,530
|
|
|
—
|
|
||
Equity-based compensation
|
|
1,475
|
|
|
1,352
|
|
||
Deferred tax asset, net
|
|
2,058
|
|
|
—
|
|
||
Loss (gain) on disposal of assets, net
|
|
3
|
|
|
(4,166
|
)
|
||
Non-cash interest income
|
|
(791
|
)
|
|
(507
|
)
|
||
Debt transaction costs
|
|
1
|
|
|
713
|
|
||
Other
|
|
108
|
|
|
149
|
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
||
Trade receivables, net
|
|
1,925
|
|
|
(9,645
|
)
|
||
Prepaid expenses and other
|
|
411
|
|
|
746
|
|
||
Accounts payable
|
|
1,334
|
|
|
(510
|
)
|
||
Accrued expenses and other
|
|
(13,852
|
)
|
|
3,291
|
|
||
NET CASH PROVIDED BY OPERATING ACTIVITIES
|
|
7,306
|
|
|
30,240
|
|
||
INVESTING ACTIVITIES
|
|
|
|
|
|
|
||
Acquisition of hotel properties and land
|
|
—
|
|
|
(4,178
|
)
|
||
Improvements to hotel properties
|
|
(11,050
|
)
|
|
(17,248
|
)
|
||
Proceeds from asset dispositions, net
|
|
—
|
|
|
11,310
|
|
||
Funding of real estate loans
|
|
(1,670
|
)
|
|
(500
|
)
|
||
Proceeds from principal payments on real estate loans
|
|
—
|
|
|
300
|
|
||
NET CASH USED IN INVESTING ACTIVITIES
|
|
(12,720
|
)
|
|
(10,316
|
)
|
||
FINANCING ACTIVITIES
|
|
|
|
|
|
|
||
Proceeds from issuance of debt
|
|
165,000
|
|
|
45,000
|
|
||
Principal payments on debt
|
|
(45,931
|
)
|
|
(42,326
|
)
|
||
Dividends paid
|
|
(23,031
|
)
|
|
(22,668
|
)
|
||
Proceeds from contribution by non-controlling interests in joint venture
|
|
577
|
|
|
—
|
|
||
Financing fees on debt and other issuance costs
|
|
(701
|
)
|
|
(713
|
)
|
||
Repurchase of common shares for withholding requirements
|
|
(469
|
)
|
|
(834
|
)
|
||
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
|
|
95,445
|
|
|
(21,541
|
)
|
||
Net change in cash, cash equivalents and restricted cash
|
|
90,031
|
|
|
(1,617
|
)
|
||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
|
|
|
|
|
|
||
Beginning of period
|
|
69,833
|
|
|
72,556
|
|
||
End of period
|
|
$
|
159,864
|
|
|
$
|
70,939
|
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
|
|
|
|
|
|
|
||
Cash payments for interest
|
|
$
|
9,977
|
|
|
$
|
11,879
|
|
Accrued improvements to hotel properties
|
|
$
|
3,924
|
|
|
$
|
5,306
|
|
Cash payments for income taxes, net of refunds
|
|
$
|
27
|
|
|
$
|
(1,049
|
)
|
•
|
Borrowed an additional net amount of $100.0 million on our $400 million unsecured revolving credit facility during the three months ended March 31, 2020 and an additional $25.0 million on April 1, 2020;
|
•
|
Amended certain loan agreements to provide for a financial covenant waiver through March 31, 2021, to modify certain financial covenant measures for the final three quarters of 2021 and to access additional borrowing capacity of $150.0 million under our $400 Million Revolver;
|
•
|
Suspended the declaration and payment of dividends on our common stock and operating partnership units;
|
•
|
Postponed all non-essential capital improvement projects planned for 2020 beyond those already substantially complete;
|
•
|
Adopted comprehensive cost reduction initiatives, including the reduction of labor and temporary elimination of certain services and amenities at all hotels;
|
•
|
Negotiated the temporary suspension of FF&E funding requirements for certain of our hotels and facilitated the interim or permanent use of cash deposited in the FF&E Reserve Accounts of certain of our hotels for general working capital purposes;
|
•
|
Implemented a voluntary 25% temporary reduction of base salaries and fees, respectively, for executive officers and independent members of the Board of Directors;
|
•
|
Furloughed approximately 25% of the corporate-level staff and implemented temporary salary reductions for the majority of employees not subject to furlough; and
|
•
|
Implemented a temporary hiring freeze for any new corporate-level positions.
|
Level 1:
|
|
Observable inputs such as quoted prices in active markets.
|
Level 2:
|
|
Directly or indirectly observable inputs, other than quoted prices in active markets.
|
Level 3:
|
|
Unobservable inputs in which there is little or no market information, which require a reporting entity to develop its own assumptions.
|
Market approach:
|
|
Prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.
|
Cost approach:
|
|
Amount required to replace the service capacity of an asset (replacement cost).
|
Income approach:
|
|
Techniques used to convert future amounts to a single amount based on market expectations (including present-value, option-pricing, and excess-earnings models).
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Hotel buildings and improvements
|
|
$
|
2,050,923
|
|
|
$
|
2,049,384
|
|
Land
|
|
319,603
|
|
|
319,603
|
|
||
Furniture, fixtures and equipment
|
|
180,868
|
|
|
173,128
|
|
||
Construction in progress
|
|
10,229
|
|
|
9,388
|
|
||
Intangible assets
|
|
11,231
|
|
|
11,231
|
|
||
Real estate development loan
|
|
7,433
|
|
|
5,485
|
|
||
|
|
2,580,287
|
|
|
2,568,219
|
|
||
Less - accumulated depreciation and amortization
|
|
(410,973
|
)
|
|
(383,987
|
)
|
||
|
|
$
|
2,169,314
|
|
|
$
|
2,184,232
|
|
|
|
For the
Three Months Ended March 31, |
||||||
|
|
2020
|
|
2019
|
||||
Revenues
|
|
$
|
108,385
|
|
|
$
|
141,756
|
|
Income from hotel operations
|
|
$
|
29,725
|
|
|
$
|
53,808
|
|
Net (loss) income (1)
|
|
$
|
(16,213
|
)
|
|
$
|
15,603
|
|
Net (loss) income attributable to common stockholders, net of amount allocated to participating securities (1)
|
|
$
|
(19,111
|
)
|
|
$
|
8,814
|
|
Basic and diluted net (loss) income per share attributable to common stockholders (1)
|
|
$
|
(0.18
|
)
|
|
$
|
0.08
|
|
(1)
|
Pro forma amounts include depreciation expense, property tax expense, interest expense, income tax expense, loss on impairment of assets and other corporate expenses totaling $56.6 million and $47.9 million for the three months ended March 31, 2020 and 2019, respectively.
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Real estate loans
|
|
$
|
32,870
|
|
|
$
|
32,831
|
|
Unamortized discount
|
|
(1,382
|
)
|
|
(1,895
|
)
|
||
Allowance for credit losses
|
|
(2,530
|
)
|
|
—
|
|
||
|
|
$
|
28,958
|
|
|
$
|
30,936
|
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||
Revolving debt
|
|
$
|
260,000
|
|
|
$
|
140,000
|
|
Term loans
|
|
725,000
|
|
|
725,000
|
|
||
Mortgage loans
|
|
156,796
|
|
|
157,726
|
|
||
|
|
1,141,796
|
|
|
1,022,726
|
|
||
Unamortized debt issuance costs
|
|
(6,777
|
)
|
|
(6,563
|
)
|
||
Debt, net of debt issuance costs
|
|
$
|
1,135,019
|
|
|
$
|
1,016,163
|
|
|
|
March 31, 2020
|
|
Percentage
|
|
December 31, 2019
|
|
Percentage
|
||||
Fixed-rate debt
|
|
$
|
548,372
|
|
|
48%
|
|
$
|
549,236
|
|
|
54%
|
Variable-rate debt
|
|
593,424
|
|
|
52%
|
|
473,490
|
|
|
46%
|
||
|
|
$
|
1,141,796
|
|
|
|
|
$
|
1,022,726
|
|
|
|
|
|
March 31, 2020
|
|
December 31, 2019
|
|
|
||||||||||||
|
|
Carrying
Value
|
|
Fair Value
|
|
Carrying
Value
|
|
Fair Value
|
|
Valuation Technique
|
||||||||
Fixed-rate debt
|
|
$
|
148,372
|
|
|
$
|
148,502
|
|
|
$
|
149,236
|
|
|
$
|
151,268
|
|
|
Level 2 - Market approach
|
•
|
Waivers of all financial and certain other covenants in the 2018 Unsecured Credit Facility for the period April 1, 2020 through March 31, 2021; and
|
•
|
Adjustments to certain financial covenants for the period April 1, 2021 through December 31, 2021 including:
|
◦
|
Increases in the Maximum Leverage Ratio, adjusting down each quarter of 2021;
|
◦
|
Reduction of the Minimum Consolidated Fixed Charge Coverage Ratio;
|
◦
|
Increase of the Maximum Unsecured Leverage Ratio; and
|
◦
|
Reduction of the Minimum Unsecured Interest Coverage Ratio;
|
•
|
Increases to the Maximum Leverage Ratio for the calendar year 2022, adjusting down throughout 2022.
|
2020
|
$
|
1,630
|
|
2021
|
2,065
|
|
|
2022
|
1,840
|
|
|
2023
|
969
|
|
|
2024
|
908
|
|
|
Thereafter
|
28,906
|
|
|
Total lease payments (1)
|
36,318
|
|
|
Less interest
|
(16,934
|
)
|
|
Total
|
$
|
19,384
|
|
(1)
|
Certain payments above include future increases to the minimum fixed rent based on the Consumer Price Index in effect at the initial measurement of the lease balances.
|
|
|
|
|
|
|
|
Notional Amount
|
|
Fair Value
|
|||||||||||||
Contract date
|
|
Effective Date
|
|
Expiration Date
|
Average Annual Effective Fixed Rate
|
|
March 31, 2020
|
|
December 31, 2019
|
|
March 31, 2020
|
|
December 31, 2019
|
|||||||||
October 2, 2017
|
|
January 29, 2018
|
|
January 31, 2023
|
1.98
|
%
|
|
$
|
100,000
|
|
|
$
|
100,000
|
|
|
$
|
(4,756
|
)
|
|
$
|
(1,316
|
)
|
October 2, 2017
|
|
January 29, 2018
|
|
January 31, 2023
|
1.98
|
%
|
|
100,000
|
|
|
100,000
|
|
|
(4,786
|
)
|
|
(1,350
|
)
|
||||
June 11, 2018
|
|
September 28, 2018
|
|
September 30, 2024
|
2.87
|
%
|
|
75,000
|
|
|
75,000
|
|
|
(8,316
|
)
|
|
(4,389
|
)
|
||||
June 11, 2018
|
|
December 31, 2018
|
|
December 31, 2025
|
2.93
|
%
|
|
125,000
|
|
|
125,000
|
|
|
(17,363
|
)
|
|
(9,122
|
)
|
||||
|
|
|
|
|
|
|
$
|
400,000
|
|
|
$
|
400,000
|
|
|
$
|
(35,221
|
)
|
|
$
|
(16,177
|
)
|
|
|
For the
Three Months Ended March 31, |
||||||
|
|
2020
|
|
2019
|
||||
Loss recognized in Other comprehensive income on derivative financial instruments
|
|
$
|
(19,823
|
)
|
|
$
|
(5,497
|
)
|
(Loss) gain reclassified from Other comprehensive income to Interest expense
|
|
$
|
(779
|
)
|
|
$
|
61
|
|
Total Interest expense in which the effects of cash flow hedges are recorded
|
|
$
|
(11,012
|
)
|
|
$
|
(10,852
|
)
|
|
For the
Three Months Ended March 31, |
||||
|
2020
|
|
2019
|
||
Beginning common shares outstanding
|
105,169,515
|
|
|
104,783,179
|
|
Grants under the Equity Plan
|
676,171
|
|
|
537,304
|
|
Common Unit redemptions
|
4,956
|
|
|
—
|
|
Performance share and other forfeitures
|
(210,897
|
)
|
|
(166,478
|
)
|
Shares retained for employee tax withholding requirements
|
(65,345
|
)
|
|
(73,892
|
)
|
Ending common shares outstanding
|
105,574,400
|
|
|
105,080,113
|
|
|
|
Fair Value Measurements at March 31, 2020 using
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
Purchase Options related to real estate loans
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,138
|
|
|
$
|
8,138
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate swaps
|
|
—
|
|
|
35,221
|
|
|
—
|
|
|
35,221
|
|
|
|
Fair Value Measurements at December 31, 2019 using
|
||||||||||||||
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Purchase Options related to real estate loans
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8,920
|
|
|
$
|
8,920
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate swaps
|
|
—
|
|
|
16,177
|
|
|
—
|
|
|
16,177
|
|
|
|
Real Estate Loan 1
|
|
Real Estate Loan 2
|
|
Real Estate Loan 3
|
|
Real Estate Loan 4
|
|
||||||||
Exercise price
|
|
$
|
15,143
|
|
|
$
|
17,377
|
|
|
$
|
5,503
|
|
|
$
|
37,800
|
|
|
Term
|
|
2.59
|
|
(1) (2)
|
2.68
|
|
(1) (2)
|
2.67
|
|
(1) (2)
|
1.42
|
|
(3)
|
||||
Expected volatility
|
|
65.0
|
%
|
|
55.0
|
%
|
|
55.0
|
%
|
|
55.0
|
%
|
|
||||
Risk-free rate
|
|
0.3
|
%
|
|
0.3
|
%
|
|
0.3
|
%
|
|
0.2
|
%
|
|
||||
Expected annualized equity dividend yield
|
|
6.5
|
%
|
|
7.5
|
%
|
|
17.1
|
%
|
|
—
|
%
|
|
(1)
|
The purchase option is currently exercisable.
|
(2)
|
The option term is the period from April 1, 2020 through the fully extended maturity dates of the respective mezzanine loans.
|
(3)
|
The option term is the period from April 1, 2020 through the date in which the development project is completed and the option becomes exercisable.
|
|
|
Real Estate Loan 1
|
|
Real Estate Loan 2
|
|
Real Estate Loan 3
|
|
Real Estate Loan 4
|
||||||||
Purchase Option value at December 31, 2019
|
|
$
|
2,382
|
|
|
$
|
2,761
|
|
|
$
|
977
|
|
|
$
|
2,800
|
|
Loss on impairment of assets
|
|
(782
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Purchase Option value at March 31, 2020
|
|
$
|
1,600
|
|
|
$
|
2,761
|
|
|
$
|
977
|
|
|
$
|
2,800
|
|
|
|
Number
of Shares
|
|
Weighted Average
Grant Date
Fair Value
|
|
Aggregate
Current Value
|
|||||
|
|
|
|
(per share)
|
|
(in thousands)
|
|||||
Non-vested at December 31, 2019
|
|
448,467
|
|
|
$
|
12.51
|
|
|
$
|
5,534
|
|
Granted
|
|
299,562
|
|
|
8.47
|
|
|
|
|
||
Vested
|
|
(172,170
|
)
|
|
13.31
|
|
|
|
|
||
Forfeited
|
|
(536
|
)
|
|
8.47
|
|
|
|
|
||
Non-vested at March 31, 2020
|
|
575,323
|
|
|
$
|
10.17
|
|
|
$
|
2,336
|
|
|
|
Number
of Shares
|
|
Weighted Average
Grant Date
Fair Value (1)
|
|
Aggregate
Current Value
|
|||||
|
|
|
|
(per share)
|
|
(in thousands)
|
|||||
Non-vested at December 31, 2019
|
|
755,991
|
|
|
$
|
14.31
|
|
|
$
|
9,329
|
|
Granted
|
|
376,609
|
|
|
9.38
|
|
|
|
|
||
Forfeited
|
|
(210,361
|
)
|
|
17.13
|
|
|
|
|
||
Non-vested at March 31, 2020
|
|
922,239
|
|
|
$
|
11.65
|
|
|
$
|
3,744
|
|
|
|
For the
Three Months Ended March 31, |
||||||
|
|
2020
|
|
2019
|
||||
Time-based restricted stock
|
|
$
|
602
|
|
|
$
|
542
|
|
Performance-based restricted stock
|
|
873
|
|
|
810
|
|
||
|
|
$
|
1,475
|
|
|
$
|
1,352
|
|
|
|
Total
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
||||||||||||
Time-based restricted stock
|
|
$
|
5,023
|
|
|
$
|
1,871
|
|
|
$
|
1,859
|
|
|
$
|
1,041
|
|
|
$
|
235
|
|
|
$
|
17
|
|
Performance-based restricted stock
|
|
6,928
|
|
|
2,686
|
|
|
2,654
|
|
|
1,392
|
|
|
196
|
|
|
—
|
|
||||||
|
|
$
|
11,951
|
|
|
$
|
4,557
|
|
|
$
|
4,513
|
|
|
$
|
2,433
|
|
|
$
|
431
|
|
|
$
|
17
|
|
•
|
Eliminating the 80% of taxable income limitations by allowing corporate entities to fully utilize net operating loss (NOL) carryforwards to offset taxable income in 2018, 2019, or 2020, and reinstating it for tax years after 2020;
|
•
|
Allowing NOLs generated in 2018, 2019, or 2020, to be carried back five years;
|
•
|
Increasing the net interest expense deduction limit to 50% of adjusted taxable income from 30% for the 2019 and 2020 tax years;
|
•
|
Allowing taxpayers with alternative minimum tax credits to claim a refund for the entire amount of the credit instead of recovering the credit through refunds over a period of years, as required by the 2017 Tax Cut and Jobs Act;
|
•
|
Allowing entities to deduct more of their charitable cash contributions made during calendar year 2020 by increasing the taxable income limitation to 25% from 10%; and
|
•
|
Providing for an employee retention tax credit to offset the employer's share of payroll taxes for the period between March 13, 2020 and December 31, 2020. The credit is calculated based on 50% of qualifying wages, capped at the first $10,000 of compensation.
|
|
|
For the
Three Months Ended March 31, |
||||||
|
|
2020
|
|
2019
|
||||
Numerator:
|
|
|
|
|
|
|
||
Net (loss) income
|
|
$
|
(16,214
|
)
|
|
$
|
12,900
|
|
Less: Preferred dividends
|
|
(3,709
|
)
|
|
(3,709
|
)
|
||
Allocation to participating securities
|
|
(81
|
)
|
|
(67
|
)
|
||
Attributable to non-controlling interest in Operating Partnership
|
|
37
|
|
|
(23
|
)
|
||
Attributable to non-controlling interests in joint venture
|
|
855
|
|
|
—
|
|
||
Net (loss) income attributable to common stockholders, net of amount allocated to participating securities
|
|
$
|
(19,112
|
)
|
|
$
|
9,101
|
|
Denominator:
|
|
|
|
|
|
|
||
Weighted average common shares outstanding - basic
|
|
103,995
|
|
|
103,749
|
|
||
Dilutive effect of equity-based compensation awards
|
|
—
|
|
|
88
|
|
||
Weighted average common shares outstanding - diluted
|
|
103,995
|
|
|
103,837
|
|
||
(Loss) earnings per share:
|
|
|
|
|
||||
Basic and diluted
|
|
$
|
(0.18
|
)
|
|
$
|
0.09
|
|
•
|
the effects of the novel coronavirus (COVID-19) pandemic and other infectious disease outbreaks;
|
•
|
potential changes in operations as a result of laws or regulations imposed in the aftermath of, or changes in consumer behavior in response to, the COVID-19 pandemic;
|
•
|
financing risks, including the risk of leverage and the corresponding risk of default on our existing indebtedness and potential inability to refinance or extend the maturities of our existing indebtedness;
|
•
|
default by borrowers to which we lend or provide seller financing;
|
•
|
global, national, regional and local economic and geopolitical conditions;
|
•
|
levels of spending for business and leisure travel, as well as consumer confidence;
|
•
|
supply and demand factors in our markets or sub-markets;
|
•
|
the effect of alternative accommodations on our business;
|
•
|
adverse changes in occupancy, average daily rate (“ADR”) and revenue per available room (“RevPAR”) and other hotel operating metrics;
|
•
|
hostilities, including future terrorist attacks, or fear of hostilities that affect travel;
|
•
|
financial condition of, and our relationships with, third-party property managers and franchisors;
|
•
|
the degree and nature of our competition;
|
•
|
increased interest rates;
|
•
|
increased operating costs, including but not limited to labor costs;
|
•
|
increased renovation costs, which may cause actual renovation costs to exceed our current estimates;
|
•
|
changes in zoning laws;
|
•
|
increases in real property taxes that are significantly higher than our expectations;
|
•
|
risks associated with hotel acquisitions, including the ability to ramp up and stabilize newly acquired hotels with limited or no operating history or that require substantial amounts of capital improvements for us to earn stabilized economic returns consistent with our expectations at the time of acquisition;
|
•
|
risks associated with dispositions of hotel properties, including our ability to successfully complete the sale of hotel properties under contract to be sold, including the risk that the purchaser may not have access to the capital needed to complete the purchase;
|
•
|
the nature of our structure and transactions such that our federal and state taxes are complex and there is risk of successful challenges to our tax positions by the Internal Revenue Service ("IRS") or other federal and state taxing authorities;
|
•
|
the recognition of taxable gains from the sale of hotel properties as a result of the inability to complete certain like-kind exchanges in accordance with Section 1031 of the Internal Revenue Code of 1986, as amended (the “IRC”);
|
•
|
availability of and our ability to retain qualified personnel;
|
•
|
our failure to maintain our qualification as a real estate investment trust ("REIT") under the IRC;
|
•
|
changes in our business or investment strategy;
|
•
|
availability, terms and deployment of capital;
|
•
|
general volatility of the capital markets and the market price of our common stock;
|
•
|
environmental uncertainties and risks related to natural disasters;
|
•
|
our ability to recover fully under third party indemnities or our existing insurance policies for insurable losses and our ability to maintain adequate or full replacement cost “all-risk” property insurance policies on our properties on commercially reasonable terms;
|
•
|
the effect of a data breach or significant disruption of hotel operator information technology networks as a result of cyber-attacks that are greater than insurance coverages or indemnities from service providers;
|
•
|
the effect on our interest rates if LIBOR is replaced with a new benchmark or performs differently than in the past;
|
•
|
our ability to effectively manage our joint venture with our joint venture partner;
|
•
|
current and future changes to the IRC; and
|
•
|
the other factors discussed under the heading "Risk Factors" included in our Annual Report on Form 10-K for the year ended December 31, 2019.
|
Management Company
|
|
Number of
Properties
|
|
Number of
Guestrooms
|
||
Affiliates of Aimbridge Hospitality, including Interstate Management Company, LLC (1)
|
|
30
|
|
|
4,533
|
|
OTO Development, LLC
|
|
12
|
|
|
1,696
|
|
Stonebridge Realty Advisors, Inc. and affiliates
|
|
9
|
|
|
1,312
|
|
Affiliates of Marriott, including Courtyard Management Corporation, SpringHill SMC Corporation and Residence Inn by Marriott, Inc.
|
|
7
|
|
|
1,176
|
|
Select Hotels Group, LLC, an affiliate of Hyatt
|
|
5
|
|
|
807
|
|
White Lodging Services Corporation
|
|
4
|
|
|
791
|
|
American Liberty Hospitality, Inc.
|
|
2
|
|
|
372
|
|
Fillmore Hospitality
|
|
1
|
|
|
261
|
|
Intercontinental Hotel Group Resources, Inc., an affiliate of IHG
|
|
1
|
|
|
252
|
|
Crestline Hotels & Resorts, LLC
|
|
1
|
|
|
88
|
|
Total
|
|
72
|
|
|
11,288
|
|
(1)
|
On October 25, 2019, Aimbridge Hospitality announced that it had completed a merger with Interstate Hotels & Resorts.
|
•
|
We have borrowed an additional net amount of $100.0 million on our $400 million unsecured revolving credit facility (the $400 Million Revolver”) during the three months ended March 31, 2020 and an additional $25.0 million on April 1, 2020 as a precautionary measure to provide sufficient liquidity to meet our funding needs for the foreseeable future. At April 30, 2020, we had $144.3 million of consolidated unrestricted cash on hand and an additional $150.0 million of undrawn availability on our $400 Million Revolver, as amended by the First Amendment. We have no debt maturing before November 2022.
|
•
|
We have amended certain loan agreements to provide for financial covenant waivers through March 31, 2021 and to modify certain financial covenant measures for the final three quarters of 2021.
|
•
|
In May 2020, we suspended the declaration and payment of dividends on our common stock and operating partnership units. This will conserve an additional $19.0 million of cash quarterly, or $75.0 million on an annualized basis.
|
•
|
We postponed all non-essential capital improvement projects planned for 2020 beyond those that are already substantially complete, which is expected to reduce previously planned total capital expenditures by at least $35.0 million, or over 50% based on the midpoint of our previously provided guidance range of total capital expenditures for 2020.
|
•
|
We have adopted comprehensive cost reduction initiatives, including the reduction of labor and temporary elimination of certain services and amenities, at all hotels. As described above, we have temporarily suspended operations at certain hotels in response to specific government mandates or as the result of adverse market conditions.
|
•
|
We have implemented a voluntary 25% temporary reduction of base salaries and fees, respectively, for executive officers and independent members of the Board of Directors.
|
•
|
We have furloughed approximately 25% of the corporate-level staff and temporary salary reductions have been implemented for the majority of employees not subject to furlough.
|
•
|
We have implemented a temporary hiring freeze for any new corporate-level positions.
|
•
|
Waivers of all financial and certain other covenants in the 2018 Unsecured Credit Facility for the period April 1, 2020 through March 31, 2021; and
|
•
|
Adjustments to certain financial covenants for the period April 1, 2021 through December 31, 2021 including:
|
◦
|
Increases in the Maximum Leverage Ratio, adjusting down each quarter of 2021;
|
◦
|
Reduction of the Minimum Consolidated Fixed Charge Coverage Ratio;
|
◦
|
Increase of the Maximum Unsecured Leverage Ratio; and
|
◦
|
Reduction of the Minimum Unsecured Interest Coverage Ratio;
|
•
|
Increases to the Maximum Leverage Ratio for the calendar year 2022, adjusting down throughout 2022.
|
•
|
Eliminating the 80% of taxable income limitations by allowing corporate entities to fully utilize net operating loss (NOL) carryforwards to offset taxable income in 2018, 2019, or 2020, and reinstating it for tax years after 2020;
|
•
|
Allowing NOLs generated in 2018, 2019, or 2020, to be carried back five years;
|
•
|
Increasing the net interest expense deduction limit to 50% of adjusted taxable income from 30% for the 2019 and 2020 tax years;
|
•
|
Allowing taxpayers with alternative minimum tax credits to claim a refund for the entire amount of the credit instead of recovering the credit through refunds over a period of years, as required by the 2017 Tax Cut and Jobs Act;
|
•
|
Allowing entities to deduct more of their charitable cash contributions made during calendar year 2020 by increasing the taxable income limitation to 25% from 10%; and
|
•
|
Providing for an employee retention tax credit to offset the employer's share of payroll taxes for the period between March 13, 2020 and December 31, 2020. The credit is calculated based on 50% of qualifying wages, capped at the first $10,000 of compensation.
|
Franchise/Brand
|
|
Number of Hotel
Properties |
|
Number of
Guestrooms |
||
Marriott
|
|
|
|
|
|
|
Courtyard by Marriott
|
|
15
|
|
|
2,761
|
|
Residence Inn by Marriott
|
|
11
|
|
|
1,636
|
|
SpringHill Suites by Marriott
|
|
5
|
|
|
761
|
|
AC Hotel by Marriott
|
|
1
|
|
|
255
|
|
Marriott
|
|
1
|
|
|
165
|
|
Fairfield Inn & Suites by Marriott
|
|
1
|
|
|
140
|
|
Four Points by Sheraton
|
|
1
|
|
|
101
|
|
Total Marriott
|
|
35
|
|
|
5,819
|
|
Hilton
|
|
|
|
|
|
|
Hampton Inn & Suites
|
|
7
|
|
|
986
|
|
Hilton Garden Inn
|
|
7
|
|
|
1,067
|
|
Homewood Suites
|
|
2
|
|
|
251
|
|
DoubleTree by Hilton
|
|
1
|
|
|
210
|
|
Total Hilton
|
|
17
|
|
|
2,514
|
|
Hyatt
|
|
|
|
|
|
|
Hyatt Place
|
|
13
|
|
|
1,908
|
|
Hyatt House
|
|
3
|
|
|
466
|
|
Total Hyatt
|
|
16
|
|
|
2,374
|
|
IHG
|
|
|
|
|
|
|
Holiday Inn Express & Suites
|
|
2
|
|
|
345
|
|
Staybridge Suites
|
|
1
|
|
|
121
|
|
Hotel Indigo
|
|
1
|
|
|
115
|
|
Total IHG
|
|
4
|
|
|
581
|
|
Total
|
|
72
|
|
|
11,288
|
|
|
|
For the Three Months Ended March 31,
|
|
Quarter-over-Quarter
|
|
Quarter-over-Quarter
|
|
||||||||||||||||||||||||
|
|
2020
|
|
2019
|
|
Dollar Change
|
|
Percentage/Basis Point Change
|
|
||||||||||||||||||||||
|
|
Total
Portfolio
(72 hotels)
|
|
Same-Store
Portfolio
(67 hotels)
|
|
Total
Portfolio
(75 hotels)
|
|
Same-Store
Portfolio
(67 hotels)
|
|
Total
Portfolio
(72/75 hotels)
|
|
Same-Store
Portfolio
(67 hotels)
|
|
Total
Portfolio
(72/75 hotels)
|
|
Same-Store
Portfolio
(67 hotels)
|
|
||||||||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Room
|
|
$
|
98,603
|
|
|
$
|
90,735
|
|
|
$
|
128,100
|
|
|
$
|
118,975
|
|
|
$
|
(29,497
|
)
|
|
$
|
(28,240
|
)
|
|
(23.0
|
)%
|
|
(23.7
|
)%
|
|
Food and beverage
|
|
4,884
|
|
|
4,582
|
|
|
6,020
|
|
|
5,783
|
|
|
(1,136
|
)
|
|
(1,201
|
)
|
|
(18.9
|
)%
|
|
(20.8
|
)%
|
|
||||||
Other
|
|
4,898
|
|
|
4,531
|
|
|
4,832
|
|
|
4,655
|
|
|
66
|
|
|
(124
|
)
|
|
1.4
|
%
|
|
(2.7
|
)%
|
|
||||||
Total
|
|
$
|
108,385
|
|
|
$
|
99,848
|
|
|
$
|
138,952
|
|
|
$
|
129,413
|
|
|
$
|
(30,567
|
)
|
|
$
|
(29,565
|
)
|
|
(22.0
|
)%
|
|
(22.8
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Room
|
|
$
|
24,573
|
|
|
$
|
22,835
|
|
|
$
|
27,840
|
|
|
$
|
25,333
|
|
|
$
|
(3,267
|
)
|
|
$
|
(2,498
|
)
|
|
(11.7
|
)%
|
|
(9.9
|
)%
|
|
Food and beverage
|
|
4,037
|
|
|
3,712
|
|
|
4,538
|
|
|
4,295
|
|
|
(501
|
)
|
|
(583
|
)
|
|
(11.0
|
)%
|
|
(13.6
|
)%
|
|
||||||
Other hotel operating expenses
|
|
35,283
|
|
|
32,679
|
|
|
39,859
|
|
|
36,531
|
|
|
(4,576
|
)
|
|
(3,852
|
)
|
|
(11.5
|
)%
|
|
(10.5
|
)%
|
|
||||||
Total
|
|
$
|
63,893
|
|
|
$
|
59,226
|
|
|
$
|
72,237
|
|
|
$
|
66,159
|
|
|
$
|
(8,344
|
)
|
|
$
|
(6,933
|
)
|
|
(11.6
|
)%
|
|
(10.5
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Operational Statistics:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Occupancy
|
|
61.4
|
%
|
|
61.3
|
%
|
|
76.4
|
%
|
|
76.5
|
%
|
|
n/a
|
|
|
n/a
|
|
|
(1,502
|
)
|
bps
|
(1,520
|
)
|
bps
|
||||||
ADR
|
|
$
|
156.44
|
|
|
$
|
155.05
|
|
|
$
|
160.80
|
|
|
$
|
164.74
|
|
|
$
|
(4.36
|
)
|
|
$
|
(9.69
|
)
|
|
(2.7
|
)%
|
|
(5.9
|
)%
|
|
RevPAR
|
|
$
|
95.99
|
|
|
$
|
95.05
|
|
|
$
|
122.81
|
|
|
$
|
126.03
|
|
|
$
|
(26.82
|
)
|
|
$
|
(30.98
|
)
|
|
(21.8
|
)%
|
|
(24.6
|
)%
|
|
•
|
Revenues. The decline in total revenues was primarily related to the same-store portfolio as incremental revenues from acquired properties were offset by declines related to disposed properties. The decline in same-store revenues was primarily due to a significant decline in occupancy in the last few weeks of the quarter ended March 31, 2020 as a result of the COVID-19 pandemic. See "Industry Trends and Outlook - Effects of COVID-19 Pandemic on Our Business" for further information.
|
•
|
RevPAR. The declines in RevPAR were primarily due to a significant decline in occupancy in the last few weeks of the quarter ended March 31, 2020 as a result of the COVID-19 pandemic. See "Industry Trends and Outlook - Effects of COVID-19 Pandemic on Our Business" for further information.
|
•
|
Expenses. We have taken comprehensive cost reduction initiatives, including the reduction of labor and temporary elimination of certain services and amenities, at all hotels which led to the decline in operating expenses.
|
|
|
For the Three Months Ended
March 31, |
|
|
|
|
|||||||||
|
|
2020
|
|
2019
|
|
Dollar Change
|
|
Percentage Change
|
|||||||
Property taxes, insurance and other
|
|
$
|
11,698
|
|
|
$
|
11,408
|
|
|
$
|
290
|
|
|
2.5
|
%
|
Management fees
|
|
3,072
|
|
|
5,146
|
|
|
(2,074
|
)
|
|
(40.3
|
)%
|
|||
Depreciation and amortization
|
|
27,079
|
|
|
25,536
|
|
|
1,543
|
|
|
6.0
|
%
|
|||
Corporate general and administrative
|
|
4,668
|
|
|
5,990
|
|
|
(1,322
|
)
|
|
(22.1
|
)%
|
|||
Provision for credit losses
|
|
2,530
|
|
|
—
|
|
|
2,530
|
|
|
100.0
|
%
|
|||
Loss on impairment of assets
|
|
782
|
|
|
—
|
|
|
782
|
|
|
100.0
|
%
|
|||
(Loss) gain on disposal of assets, net
|
|
(3
|
)
|
|
4,166
|
|
|
(4,169
|
)
|
|
(100.1
|
)%
|
|||
Interest expense
|
|
11,012
|
|
|
10,852
|
|
|
160
|
|
|
1.5
|
%
|
|||
Other income, net
|
|
2,106
|
|
|
1,301
|
|
|
805
|
|
|
61.9
|
%
|
|||
Income tax expense
|
|
1,968
|
|
|
350
|
|
|
1,618
|
|
|
462.3
|
%
|
•
|
Property Taxes, Insurance and Other. This increase is primarily due to increased insurance premiums related to our casualty and general liability policies.
|
•
|
Management Fees. This decrease is primarily due to reduced consolidated revenues, upon which management fees are based, as a result of the COVID-19 pandemic.
|
•
|
Depreciation and Amortization. This increase is due to incremental depreciation associated with the hotels acquired in 2019 of $3.1 million and an increase in depreciation expense of $0.3 million for the same-store portfolio, partially offset by a decrease in depreciation expense of $1.9 million related to the hotel properties sold after December 31, 2018.
|
•
|
Corporate General and Administrative. This decline is primarily due to decreases in incentive compensation costs as a result of our comprehensive cost reduction initiatives in response to the COVID-19 pandemic.
|
•
|
Provision for Credit Losses. We evaluated our notes receivable for potential credit losses by estimating the fair value of the collateral supporting each note receivable at March 31, 2020 based on assumptions related to the expected future performance of the collateral assets and the resulting anticipated net selling value of the assets at capitalization rates that are common for the asset class. During the three months ended March 31, 2020, we recorded a Provision for credit losses of $2.5 million due to the effects of the COVID-19 pandemic.
|
•
|
Loss on Impairment of Assets. Due to the adverse effects of the COVID-19 pandemic, we evaluated our purchase options for impairment at March 31, 2020. On the basis of our impairment evaluation, we recorded a Loss on impairment of assets of $0.8 million related to one of our purchase options. See "Note 9 - Fair Value Measurement" to the Condensed Consolidated Financial Statements for further information.
|
•
|
(Loss) gain on Disposal of Assets. This decrease is primarily due to the sale of two hotels in the three months ended March 31, 2019 for a net gain of $4.2 million.
|
•
|
Interest Expense. Interest expense increased slightly as a result of increased borrowings, offset by declines in base interest rates.
|
•
|
Other Income. This increase is primarily due to a decline in debt transaction costs of $0.7 million and an increase in interest income of $0.4 million as a result of an increase in the balance of real estate loans, partially offset by net casualty recoveries of $0.4 million during the three months ended March 31, 2019.
|
•
|
Income Tax Expense. The $2.0 million income tax expense includes a $2.1 million discrete non-cash deferred income tax related to the establishment of valuation allowances against our TRS Lessees’ deferred tax assets.
|
|
|
For the
Three Months Ended March 31, |
||||||
|
|
2020
|
|
2019
|
||||
Net (loss) income
|
|
$
|
(16,214
|
)
|
|
$
|
12,900
|
|
Preferred dividends
|
|
(3,709
|
)
|
|
(3,709
|
)
|
||
Loss related to non-controlling interests in joint venture
|
|
855
|
|
|
—
|
|
||
Net (loss) income applicable to common shares and common units
|
|
(19,068
|
)
|
|
9,191
|
|
||
Real estate-related depreciation
|
|
26,964
|
|
|
25,425
|
|
||
Loss on impairment of assets
|
|
782
|
|
|
—
|
|
||
Loss (gain) on disposal of assets, net
|
|
3
|
|
|
(4,166
|
)
|
||
Provision for credit losses
|
|
2,530
|
|
|
—
|
|
||
Adjustments related to non-controlling interests in consolidated joint venture
|
|
(1,413
|
)
|
|
—
|
|
||
FFO applicable to common shares and common units
|
|
9,798
|
|
|
30,450
|
|
||
Amortization of lease-related intangible assets, net
|
|
22
|
|
|
35
|
|
||
Amortization of deferred financing costs
|
|
457
|
|
|
381
|
|
||
Amortization of franchise fees
|
|
115
|
|
|
111
|
|
||
Equity-based compensation
|
|
1,475
|
|
|
1,352
|
|
||
Debt transaction costs
|
|
1
|
|
|
713
|
|
||
Non-cash interest income
|
|
(791
|
)
|
|
(507
|
)
|
||
Non-cash lease expense, net
|
|
109
|
|
|
156
|
|
||
Casualty losses (recoveries), net
|
|
89
|
|
|
(427
|
)
|
||
Increase in deferred tax asset valuation allowance
|
|
2,058
|
|
|
—
|
|
||
Adjustments related to non-controlling interests in consolidated joint venture
|
|
(64
|
)
|
|
—
|
|
||
AFFO applicable to common shares and common units
|
|
$
|
13,269
|
|
|
$
|
32,264
|
|
Weighted average diluted common shares/common units (1)
|
|
104,298
|
|
|
104,198
|
|
||
FFO per common share/common unit
|
|
$
|
0.09
|
|
|
$
|
0.29
|
|
AFFO per common share/common unit
|
|
$
|
0.13
|
|
|
$
|
0.31
|
|
(1)
|
Includes common units in the Operating Partnership held by limited partners (other than us and our subsidiaries) because the common units are redeemable for cash or, at our election, shares of our common stock.
|
|
|
For the
Three Months Ended March 31, |
||||||
|
|
2020
|
|
2019
|
||||
Net (loss) income
|
|
$
|
(16,214
|
)
|
|
$
|
12,900
|
|
Depreciation and amortization
|
|
27,079
|
|
|
25,536
|
|
||
Interest expense
|
|
11,012
|
|
|
10,852
|
|
||
Interest income
|
|
(56
|
)
|
|
(69
|
)
|
||
Income tax expense
|
|
1,968
|
|
|
350
|
|
||
EBITDA
|
|
23,789
|
|
|
49,569
|
|
||
Loss on impairment of assets
|
|
782
|
|
|
—
|
|
||
Provision for credit losses
|
|
2,530
|
|
|
—
|
|
||
Loss (gain) on disposal of assets, net
|
|
3
|
|
|
(4,166
|
)
|
||
EBITDAre
|
|
27,104
|
|
|
45,403
|
|
||
Amortization of lease-related intangible assets, net
|
|
22
|
|
|
35
|
|
||
Equity-based compensation
|
|
1,475
|
|
|
1,352
|
|
||
Debt transaction costs
|
|
1
|
|
|
713
|
|
||
Non-cash interest income
|
|
(791
|
)
|
|
(507
|
)
|
||
Non-cash lease expense, net
|
|
109
|
|
|
156
|
|
||
Casualty losses (recoveries), net
|
|
89
|
|
|
(427
|
)
|
||
Loss related to non-controlling interests in joint venture
|
|
855
|
|
|
—
|
|
||
Adjustments related to non-controlling interests in consolidated joint venture
|
|
(2,114
|
)
|
|
—
|
|
||
Adjusted EBITDAre
|
|
$
|
26,750
|
|
|
$
|
46,725
|
|
Lender
|
|
Interest Rate
|
|
Amortization
Period (Years)
|
|
Maturity Date
|
|
Number of
Encumbered Properties
|
|
Principal Amount
Outstanding
|
||||
$600 Million Senior Unsecured Credit and Term Loan Facility (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deutsche Bank AG New York Branch
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$400 Million Revolver
|
|
2.74% Variable
|
|
n/a
|
|
|
March 31, 2023
|
|
n/a
|
|
|
$
|
195,000
|
|
$200 Million Term Loan
|
|
2.69% Variable
|
|
n/a
|
|
|
April 1, 2024
|
|
n/a
|
|
|
200,000
|
|
|
Total Senior Unsecured Credit Facility
|
|
|
|
|
|
|
|
|
|
|
|
395,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Joint Venture Credit Facility (2)
|
|
|
|
|
|
|
|
|
|
|
||||
Bank of America, N.A.
|
|
|
|
|
|
|
|
|
|
|
||||
$125 Million Revolver
|
|
3.14% Variable
|
|
n/a
|
|
|
October 8, 2023
|
|
n/a
|
|
|
65,000
|
|
|
$75 Million Term Loan
|
|
3.09% Variable
|
|
n/a
|
|
|
October 8, 2023
|
|
n/a
|
|
|
75,000
|
|
|
Total Joint Venture Credit Facility
|
|
|
|
|
|
|
|
|
|
140,000
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
||||
Unsecured Term Loans (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
KeyBank National Association
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Term Loan
|
|
2.74% Variable
|
|
n/a
|
|
|
November 25, 2022
|
|
n/a
|
|
|
225,000
|
|
|
KeyBank National Association
|
|
|
|
|
|
|
|
|
|
|
||||
Term Loan
|
|
2.49% Variable
|
|
n/a
|
|
|
February 14, 2025
|
|
n/a
|
|
|
225,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Secured Mortgage Indebtedness
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MetaBank
|
|
4.44% Fixed
|
|
25
|
|
|
July 1, 2027
|
|
3
|
|
|
46,965
|
|
|
KeyBank National Association
|
|
4.46% Fixed
|
|
30
|
|
|
February 1, 2023
|
|
3
|
|
|
19,393
|
|
|
|
|
4.52% Fixed
|
|
30
|
|
|
April 1, 2023
|
|
3
|
|
|
19,874
|
|
|
|
|
4.30% Fixed
|
|
30
|
|
|
April 1, 2023
|
|
3
|
|
|
19,207
|
|
|
|
|
4.95% Fixed
|
|
30
|
|
|
August 1, 2023
|
|
2
|
|
|
34,509
|
|
|
Bank of the Cascades
|
|
2.99% Variable
|
|
25
|
|
|
December 19, 2024
|
|
1
|
|
(3)
|
8,424
|
|
|
|
|
4.30% Fixed
|
|
25
|
|
|
December 19, 2024
|
|
—
|
|
(3)
|
8,424
|
|
|
Total Mortgage Loans
|
|
|
|
|
|
|
|
|
|
|
|
156,796
|
|
|
Total Debt
|
|
|
|
|
|
|
|
|
15
|
|
|
$
|
1,141,796
|
|
(1)
|
The $600 Million Senior Secured Credit and Term Loan Facility and Unsecured Term Loans are supported by a borrowing base of 52 unencumbered hotel properties.
|
(2)
|
The Joint Venture Credit Facility is secured by pledges of the equity in the entities (and affiliated entities) that own the hotels.
|
(3)
|
The Bank of Cascades mortgage loan is comprised of two promissory notes that are secured by the same collateral and cross-defaulted.
|
|
|
For the
Three Months Ended March 31, |
|
|
||||||||
|
|
2020
|
|
2019
|
|
Change
|
||||||
|
|
(in thousands)
|
||||||||||
Net cash provided by operating activities
|
|
$
|
7,306
|
|
|
$
|
30,240
|
|
|
$
|
(22,934
|
)
|
Net cash used in investing activities
|
|
(12,720
|
)
|
|
(10,316
|
)
|
|
(2,404
|
)
|
|||
Net cash provided by (used in) financing activities
|
|
95,445
|
|
|
(21,541
|
)
|
|
116,986
|
|
|||
Net change in cash, cash equivalents and restricted cash
|
|
$
|
90,031
|
|
|
$
|
(1,617
|
)
|
|
$
|
91,648
|
|
•
|
Cash provided by operating activities. This decrease primarily resulted from a decrease in net income of $18.9 million after adjusting for non-cash items, such as depreciation and amortization and gains on the sale of assets, due to the effects of the COVID-19 pandemic, and net changes in working capital of $4.1 million primarily due to the timing of working capital changes. The overall decrease is primarily due to a significant decline in occupancy in the last few weeks of the quarter ended March 31, 2020 as a result of the COVID-19 pandemic.
|
•
|
Cash used in investing activities. This increase in cash used in investing activities is primarily due to a reduction in proceeds from asset dispositions of $11.3 million and an increase in net real estate loan funding of $1.5 million, partially offset by a decline in capital expenditures of $6.2 million and a reduction in investments in hotel properties under development of $4.2 million.
|
•
|
Cash provided by (used in) financing activities. This increase is primarily due to an increase in net borrowings of $116.4 million. As described above, during the three months ended March 31, 2020, we increased our borrowings on our $400 Million Revolver as a precautionary measure to provide sufficient liquidity to meet our funding needs for the foreseeable future.
|
|
|
Payments Due By Period
|
||||||||||||||||||
|
|
Total
|
|
Less than
One Year
|
|
One to Three
Years
|
|
Four to Five
Years
|
|
More than
Five Years
|
||||||||||
Debt obligations (1)
|
|
$
|
1,141,796
|
|
|
$
|
3,797
|
|
|
$
|
482,249
|
|
|
$
|
414,837
|
|
|
$
|
240,913
|
|
Currently projected interest (2)
|
|
149,918
|
|
|
39,752
|
|
|
77,629
|
|
|
28,824
|
|
|
3,713
|
|
|||||
Lease obligations (3)
|
|
36,318
|
|
|
2,159
|
|
|
3,623
|
|
|
1,855
|
|
|
28,681
|
|
|||||
Purchase obligations (4)
|
|
5,072
|
|
|
5,072
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
|
$
|
1,333,104
|
|
|
$
|
50,780
|
|
|
$
|
563,501
|
|
|
$
|
445,516
|
|
|
$
|
273,307
|
|
(1)
|
Amounts shown include amortization of principal and debt maturities.
|
(2)
|
Interest payments on our variable rate debt have been estimated using the interest rates in effect at March 31, 2020, after giving effect to our interest rate swaps.
|
(3)
|
Amounts consist primarily of non-cancelable ground lease and corporate office lease obligations.
|
(4)
|
This amount represents purchase orders and executed contracts for development or renovation projects at our hotel properties.
|
Contract date
|
|
Effective Date
|
|
Expiration Date
|
|
Notional Amount
|
||
October 2, 2017
|
|
January 29, 2018
|
|
January 31, 2023
|
|
$
|
100,000
|
|
October 2, 2017
|
|
January 29, 2018
|
|
January 31, 2023
|
|
100,000
|
|
|
June 11, 2018
|
|
September 28, 2018
|
|
September 30, 2024
|
|
75,000
|
|
|
June 11, 2018
|
|
December 31, 2018
|
|
December 31, 2025
|
|
125,000
|
|
|
|
|
|
|
|
|
$
|
400,000
|
|
Period
|
|
Total Shares Purchased
|
|
Average Price Paid Per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
|
|||||
January 1, 2020 - January 31, 2020
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
February 1, 2020 - February 29, 2020
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
—
|
|
March 1, 2020 - March 31, 2020
|
|
65,345
|
|
|
$
|
7.17
|
|
|
—
|
|
|
—
|
|
Total
|
|
65,345
|
|
|
$
|
7.17
|
|
|
—
|
|
|
—
|
|
Exhibit
|
|
|
Number
|
|
Description of Exhibit
|
|
||
|
||
|
||
|
||
101.INS
|
|
The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
|
101.SCH
|
|
Inline XBRL Taxonomy Extension Schema Document (1)
|
101.CAL
|
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document (1)
|
101.DEF
|
|
Inline XBRL Taxonomy Extension Definition Linkbase Document (1)
|
101.LAB
|
|
Inline XBRL Taxonomy Extension Labels Linkbase Document (1)
|
101.PRE
|
|
Inline XBRL Taxonomy Presentation Linkbase Document (1)
|
|
SUMMIT HOTEL PROPERTIES, INC. (registrant)
|
|
|
|
|
Date: May 11, 2020
|
By:
|
/s/ Jonathan P. Stanner
|
|
|
Jonathan P. Stanner
Executive Vice President, Chief Financial Officer and Treasurer
(principal financial officer)
|
|
|
|
|
|
|
Date: May 11, 2020
|
|
/s/ Daniel P. Hansen
|
|
|
Daniel P. Hansen
|
|
|
Chairman of the Board of Directors,
|
|
|
President and Chief Executive Officer
|
|
|
(principal executive officer)
|
|
|
|
|
|
|
|
|
Date: May 11, 2020
|
|
/s/ Jonathan P. Stanner
|
|
|
Jonathan P. Stanner
|
||
|
Executive Vice President, Chief Financial Officer and Treasurer
|
||
|
(principal financial officer)
|
||
|
|
|
|
|
|
|
|
|
|
|
|
Date: May 11, 2020
|
|
/s/ Daniel P. Hansen
|
|
|
|
Daniel P. Hansen
Chairman of the Board of Directors,
President and Chief Executive Officer
(principal executive officer)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Date: May 11, 2020
|
|
/s/ Jonathan P. Stanner
|
|
|
Jonathan P. Stanner
Executive Vice President, Chief Financial Officer and Treasurer
(principal financial officer)
|
||
|
|
|
|