Summit Hotel Properties, Inc. · NYSE:INN
Summit Hotel Properties — Investor Presentation (May 2017)
46 slides from Summit Hotel Properties's investor presentation, May 23, 2017
Slide 1: Forward-Looking Statements
Forward-Looking Statements We make forward-looking statements in this presentation that are subject to risks and uncertainties. These forward-looking statements include information about possible or assumed future results of our business, financial condition, liquidity, results of operations, plans,
Slide 2: Agenda – Tuesday, May 23, 2017
Agenda – Tuesday, May 23, 2017 Breakfast & Company Presentation Courtyard Convention Center Floor 2-A, Meeting Space BC 8:00 AM – 10:00 AM Property Tours 10:30 AM – 2:30 PM Hilton New Orleans/St. Charles Avenue 333 St. Charles Avenue 10:30 AM – 11:00 AM JW Marriott New Orleans 614 Canal Street 11:00
Slide 3: Table of Contents
Table of Contents I. Company Overview II. Industry Overview III. Portfolio Overview IV. Asset Management Expertise V. Capital Allocation Strategy VI. Industry-Leading Results VII. New Orleans Market Update 4
Slide 4: Company Overview
Company Overview Summit Hotel Properties, Inc. is a publicly-traded real estate investment trust focused on owning premium-branded hotels with efficient operating models primarily in the Upscale segment of the lodging industry. Total Shareholder Return Since IPO 120% 114% 88% 90% 60% 41% 30% 0% -30%
Slide 5: Experienced Leadership Driving Success
Experienced Leadership Driving Success managed all aspects of operations, facilities management, human resources, information technology and ACC’s specialized operating platform which facilitated American Campus Communities becoming the first analysis. Before serving as Chief Executive Officer, Mr.
Slide 6: Differentiated Investment Strategy
Differentiated Investment Strategy TARGETED CAPITAL RECYCLING AND REINVESTMENT BRAND PARTNERS 7 INDUSTRY LEADING FOCUSED AND EFFICIENT OPERATING MODEL BROAD GEOGRAPHIC EBITDA DIVERSIFICATION UNCONFLICTED AND BEST-IN-CLASS OPERATORS
Slide 7: Table of Contents
Table of Contents I. Company Overview II. Industry Overview III. Portfolio Overview IV. Asset Management Expertise V. Capital Allocation Strategy VI. Industry-Leading Results VII. New Orleans Market Update 8
Slide 8: Industry Cycle Analysis
Industry Cycle Analysis Through an entire lodging cycle, the Upscale segment outperforms the Upper-Upscale segment and nearly doubles the RevPAR growth of the Luxury segment. Peak-to-Trough Average CAGR (1) Trough-to-Peak Average CAGR (3) 10.0% 0.0% 8.6% 8.0% -3.0% 7.0% 6.7% 6.0% -6.0% 3.2% 3.1% 4.2
Slide 9: Top Market RevPAR Growth
Top 5 Market RevPAR Growth While the Upscale segment is expected to experience the most supply growth though 2021, it is also generating the most demand. Summit’s Top 5 markets are expected to experience slightly higher supply than demand growth but are still expected to outpace both the Upscale and
Slide 10: Managing Through Supply Growth – Austin, TX
Managing Through Supply Growth – Austin, TX The Austin market has experienced one of the highest levels of guestroom supply growth over the last three years. • • Guestroom supply has increased 6.0% since September 2014. Since acquiring the Hampton Inn & Suites Austin Downtown in September 2014, the
Slide 11: Evolving Guest Preference
Evolving Guest Preference Summit believes guest preferences continue to shift favorably toward newer, cleaner, and more functional Upscale products that can offer guests an authentically local and convenient experience. Unnamed Full-Service Hyatt Product Hyatt Place Chicago Downtown-The Loop From da
Slide 12: Table of Contents
Table of Contents I. Company Overview II. Industry Overview III. Portfolio Overview IV. Asset Management Expertise V. Capital Allocation Strategy VI. Industry-Leading Results VII. New Orleans Market Update 13
Slide 13: Diversified Portfolio
Diversified Portfolio No single market contributes more than 10% to our portfolio hotel EBITDA, and no single hotel contributes more than 5% to our portfolio hotel EBITDA. WA ME Other 9% VT NH CTRI MN 22% MT ND 42% NY WI OR MI PA ID SD 27% NJ NE DE MD WY OH IA VA WV CO NV IL UT KS NC SC MO TN 88% of
Slide 14: We Believe in the Value of Brands…Sort of
We Believe in the Value of Brands…Sort of We believe that brand recognition and an adherence to lodging standards drives guest loyalty, which in turn helps to increase occupancy, improve room rates, and create greater shareholder value. Global Brands Premium Standards With more than two million room
Slide 15: Table of Contents
Table of Contents I. Company Overview II. Industry Overview III. Portfolio Overview IV. Asset Management Expertise V. Capital Allocation Strategy VI. Industry-Leading Results VII. New Orleans Market Update 16
Slide 16: Creating Value Through “Summitization”
Creating Value Through “Summitization” Our revenue and asset management teams have over six decades of combined experience at Summit and have an average of over 25 years in the lodging industry. • Unlike many competitors, we utilize Corporate Revenue Managers. Our Revenue Managers regularly visit ev
Slide 17: Revenue Management
Revenue Management Summit has a staff of professionals with multi-property revenue management experience who lend expertise to our property managers to help reach each hotel’s maximum potential. Hotel Experience: • • Veteran team of “real hoteliers” with an average of 18 years of expertise Multi-bra
Slide 18: Upscale Outperformance
Upscale Outperformance We believe the outperformance of the Upscale segment is a direct result of an enhanced guest experience through continuous product evolution. Despite new supply, we expect a continuing shift in guest preference to Upscale hotels. STR Upscale RevPAR (1) STR Upper-Upscale RevPAR
Slide 19: Track Record of Outperformance
Track Record of Outperformance Our pro forma portfolio RevPAR growth has outperformed the STR Upscale RevPAR growth benchmark every year for the past five years by an average margin of 186 basis points. RevPAR Performance: Summit Pro Forma Portfolio vs. STR Upscale (1) 12.0% 10.9% 9.7% 10.0% 8.4% 8.
Slide 20: Top Tier Hotel EBITDA Margin
Top Tier Hotel EBITDA Margin Our strategy of investing in high-quality hotels with efficient operating models and lower cost structures continues to drive top tier hotel EBITDA margins relative to the overall industry. FYE 2016 Hotel EBITDA Margin (1) 50.0% 40.0% 35.9% 35.7% 32.2% 32.1% 31.1% 30.0%
Slide 21: Brand Conversion
Brand Conversion We identified a unique opportunity to convert to a stronger and more valuable brand in the San Francisco marketplace, thereby allowing us to create additional value for our shareholders. DoubleTree by Hilton San Francisco Airport North 71% RevPAR growth $200 40% $160 36% $139.85 $12
Slide 22: Strategic Renovation
Strategic Renovation We reconfigured public spaces and guestrooms at two hotels to meet the higher expectations of today’s guests. Since the 2013 renovation, RevPAR has increased 38% as compared to the Orlando MSA RevPAR increase of only 22%. Upside from Renovation – Hyatt Place Orlando, FL (Univers
Slide 23: Capturing Value
Capturing Value We converted six two-bedroom suites into six one-bedroom suites and six standalone queen guestrooms. A seventh suite was added by converting an existing fitness center while repurposing a vacant outbuilding into a new fitness center. Guestroom Conversion – Hyatt House Miami, Florida
Slide 24: Table of Contents
Table of Contents I. Company Overview II. Industry Overview III. Portfolio Overview IV. Asset Management Expertise V. Capital Allocation Strategy VI. Industry-Leading Results VII. New Orleans Market Update 25
Slide 25: Capital Allocation Strategy
Capital Allocation Strategy Acquisitions • “Markets That Matter” with favorable supply/demand dynamics and multiple demand generators Rooms focused business model Target strong RevPAR hotels relative to our existing portfolio Seek value-add opportunities (i.e. property renovations, brand conversions
Slide 26: Timeline Since IPO
Timeline Since IPO • Since our IPO, we have sold 51 of our original 65 hotels and have averaged approximately 1.5 hotel transactions per month. Our transaction activity over the past six years increased our market capitalization $1.5 billion. • 27 2016 Acquisitions: $244.2 million Dispositions: 147.
Slide 27: Courtyard by Marriott Fort Lauderdale
Courtyard by Marriott Fort Lauderdale Note: The Company entered into an agreement on April 11, 2017, to acquire the Courtyard Fort Lauderdale Beach for a purchase price of $85.0 million and is expected to complete the acquisition in the second quarter 2017. The acquisition is subject to the satisfac
Slide 28: Courtyard by Marriott Fort Lauderdale
Courtyard by Marriott Fort Lauderdale (1) The metrics above represent management’s estimate of first year performance for the pending acquisition based on our due dili gence and underwriting activities, which included review and analysis of unaudited historical financial information provided by the
Slide 29: Portfolio Transformation
Portfolio Transformation Our portfolio transformation was completed through the disposition of non-core assets while raising minimal equity through capital markets, maximizing current shareholder return. • • Generated an 11.1% unlevered IRR on disposition assets over an 11-year hold period Creative
Slide 30: Continuous Portfolio Transformation
Continuous Portfolio Transformation We continue to upgrade the quality of our portfolio through the acquisition of hotels located in strong markets while also completing the disposition of less-strategic hotels. Average Guestrooms per Hotel RevPAR 145 $125 139 130 $116 $110 +42% +62% 115 $95 100 $80
Slide 31: Hyatt House Orlando Universal Expansion
Hyatt House Orlando Universal Expansion Architectural Rendering (1) The metrics represent management’s estimate of the hotel performance for the year ended December 31, 2020. Note: photographs are based on the development package and therefore may not be an exact reproduction of the final product. 3
Slide 32: Conservative Capital Structure
Conservative Capital Structure Percent of Total Debt Maturing Through 2018 (5) 100% 80% 60% 40% 23% 19% 18% 18% 20% 6% 6% 6% 2% 2% 2% 0% Summit’s Debt Maturity Schedule (1) $200 $175 $150 Secured Non-Recourse Loans Unsecured Term Loan (5YR) Unsecured Term Loan (7YR) Unsecured Revolving Credit Facili
Slide 33: Well-Covered Dividend
Well-Covered Dividend Our portfolio of high-quality hotels continues to generate strong free cash flow, which has afforded us the opportunity to increase our common dividend by 45% over the past three years while still maintaining a conservative payout ratio. (1) Current Dividend Yield (2) 10.0% 7.8
Slide 34: Table of Contents
Table of Contents I. Company Overview II. Industry Overview III. Portfolio Overview IV. Asset Management Expertise V. Capital Allocation Strategy VI. Industry-Leading Results VII. New Orleans Market Update 35
Slide 35: Exceptional Execution of Strategy
Exceptional Execution of Strategy Our relentless attention to detail and aggressive approach towards proactive management enable us to deliver significant value to our shareholders. STR RevPAR Index Hotel EBITDA per Key 120 $18,000 +514 bps +17.3% CAGR $16,800 115 $15,500 113.7 $14,600 110 $13,000 1
Slide 36: Superior Total Shareholder Return – YTD
Superior Total Shareholder Return YTD Total Shareholder Return (1) 10.0% 7.6% 5.1% 2.8% 0.7% 0.4% 0.0% -3.3% -3.7% -4.5% -10.0% -9.5% -10.2% -11.2% -17.0% -20.0% -19.4% -26.0% -30.0% INN PEB SHO PK RHP HST DRH APLE CLDT LHO XHR CHSP FCH HT RLJ AHT AHP TSR SNL U.S. REIT Hotel (1) Based on SNL’s Total
Slide 37: Superior Total Shareholder Return – 1-Year
Superior Total Shareholder Return 1-Year Total Shareholder Return (1) 50.0% 47.1% 40.0% 34.5% 32.6% 32.4% 31.5% 31.4% 30.0% 26.4% 25.4% 23.9% 22.8% 20.0% 11.5% 10.7% 10.0% 7.0% 5.5% 2.9% 0.0% -10.0% INN SHO PEB RHP DRH LHO HST TSR AHT XHR HT FCH APLE CHSP RLJ CLDT AHP SNL U.S. REIT Hotel (1) Based o
Slide 38: Superior Total Shareholder Return – 3-Year
Superior Total Shareholder Return 3-Year Total Shareholder Return (1) 120.0% 102.5% 100.0% 80.0% 62.4% 60.0% 40.0% 31.9% 20.0% 9.2% 4.1% 3.9% 1.9% 0.1% 0.0% -20.0% -14.9% -19.8% -21.0% -29.4% -40.0% INN RHP SHO DRH LHO CLDT TSR PEB CHSP HST HT RLJ AHT FCH AHP SNL U.S. REIT Hotel (1) Based on SNL’s T
Slide 39: Superior Total Shareholder Return – 5-Year
Superior Total Shareholder Return 5-Year Total Shareholder Return (1) 210.0% 181.4% 180.0% 150.0% 120.0% 98.7% 92.1% 91.7% 85.4% 90.0% 72.2% 70.6% 69.3% 60.0% 53.3% 44.8% 38.1% 37.7% 30.0% 21.1% 0.0% INN SHO FCH CLDT AHT PEB CHSP SNL U.S. REIT Hotel HST RLJ LHO DRH HT TSR (1) Based on SNL’s Total Sh
Slide 40: Superior Total Shareholder Return – Since IPO
Superior Total Shareholder Return Total Shareholder Return Since Summit IPO (1) 150.0% 128.0% 120.0% 90.0% 78.7% 70.6% 69.1% 60.0% 54.9% 41.7% 37.3% 29.2% 30.0% 12.9% 10.9% 0.0% -30.0% INN SHO PEB CHSP CLDT TSR AHT LHO DRH HST FCH HT SNL U.S. REIT Hotel (1) Based on SNL’s Total Shareholder Return fr
Slide 41: Table of Contents
Table of Contents I. Company Overview II. Industry Overview III. Portfolio Overview IV. Asset Management Expertise V. Capital Allocation Strategy VI. Industry-Leading Results VII. New Orleans Market Update 42
Slide 42: New Orleans Market Update
New Orleans Market Update We own 5 hotels totaling 823 guestrooms in the New Orleans market, which represents approximately 8.2% of our portfolio. (1) own Annual Growth 2014 – 2016 INN New Orleans Portfolio: New Orleans Market: Total U.S.: 3.8 % 2.3 % 3.2 % (1) Based on pro forma hotel EBITDA for th
Slide 43: Courtyard Downtown-French Quarter
Courtyard Downtown-French Quarter Current / Pre-Renovation Post-Renovation Rendering Standard King Guestroom Guest Bathroom Note: post-renovation photographs are based on the generic brand-mandated renovation package and therefore may not be an exact reproduction of the final product. 44
Slide 44: SpringHill Suites Downtown-Convention
SpringHill Suites Downtown-Convention Current / Pre-Renovation Post-Renovation Rendering Standard King Suite Fitness Center Note: post-renovation photographs are based on the generic brand-mandated renovation package and therefore may not be an exact reproduction of the final product. 45
Slide 45: Current / Pre-Renovation Post-Renovation Rendering
Current / Pre-Renovation Post-Renovation Renderin: Standard King Suite Fitness Center "te pasta phatsgaps ar Bondar ges bandmaraohdnraanpaclag ans on my olb 7 eeopoasnet ie alot 6
Slide 46: Summit Hotel Properties
SUMMIT HOTEL PROPERTIES NYSE: INN
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