Summit Hotel Properties, Inc. · NYSE:INN
Summit Hotel Properties — Corporate Update (November 2021)
32 slides from Summit Hotel Properties's corporate update, Nov 3, 2021
Slide 1: Acquisition and Operating Update November 2021
ACQUISITION AND OPERATING UPDATE NOVEMBER 2021 Residence Inn – Portland Downtown Marriott Residence Inn – Boston Watertown Marriott Courtyard – Pittsburgh Downtown Marriott Residence Inn ꟷ Steamboat Springs Marriott AC Hotel ꟷ Frisco Marriott Embassy Suites – Amarillo Hilton Canopy by Hilton ꟷ Frisc
Slide 2: 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 3: SpringHill Suites / TownePlace Suites NOLA Marriott AC Hotel Houston Marriott Canopy by Hilton
SpringHill Suites / TownePlace Suites NOLA Marriott AC Hotel Houston Marriott Canopy by Hilton Frisco Hilton Holiday Inn Express Grapevine IHG AC Hotel Dallas Downtown Marriott Hyatt Place OKC Bricktown Hyatt Embassy Suites Amarillo Hilton Residence Inn Dallas Marriott AC Hotel OKC Bricktown Marriot
Slide 4: Transaction Overview
Transaction Overview AC Hotel Oklahoma City Bricktown (1) Summit and GIC have a 51% and 49% economic interest in the joint venture, respectively. 1 ꟷ Summit / GIC joint venture (1) to acquire a portfolio of assets from NewcrestImage (“NCI” or the “Portfolio”) for total consideration of $822 million
Slide 5: Newer Vintage Hotels with Significant Growth Potential and Minimal Near Term CapEx Needs
Newer Vintage Hotels with Significant Growth Potential and Minimal Near Term CapEx Needs ꟷ Average effective age of portfolio is ~3.8 years ꟷ 66% of guestrooms and 73% of hotel value developed since 2015 ꟷ Limited expected capital investment of ~$20 million over next 3 years reflects quality of asse
Slide 6: NCI Portfolio at a Glance
3 NCI Portfolio at a Glance (1) Part of Marriott / Hilton “tri-plex” that includes a standalone parking garage in Downtown Dallas. (2) Part of Marriott / Hilton “tri-plex” that includes a standalone parking garage in Frisco Station. 27 Hotels 3,700+ Guestrooms ~3.8 Average Effective Age (Years) 80%
Slide 7: Combination Creates Diversified, Unparalleled Portfolio of Premium-Branded Hotels
# of Hotels 73 27 100 # of Guestrooms 11,398 3,709 15,107 Average Effective Age (Years) 4.8 3.8 4.5 % of Room Revenue (2019A) 92% 87% 91% Brand Diversification (by Rooms) Pro Forma 52% 22% 21% 5% 51% 25% 19% 5% 47% 33% 14% 6% 4 Combination Creates Diversified, Unparalleled Portfolio of Premium- Bran
Slide 8: Strategic Rationale for Acquisition
STRATEGIC RATIONALE FOR ACQUISITION Canopy by Hilton Dallas Frisco Station
Slide 9: Acquired Portfolio Meaningfully Increases Summit's Presence in High-Growth Sun Belt Markets
5 Acquired Portfolio Meaningfully Increases Summit’s Presence in High-Growth Sun Belt Markets U.S. Markets INN Portfolio Pro Forma Top 25 67% 64% Top 50 91% 87% Sun Belt 47% 60% 1442169_1.wor 1442169_1.wor 1442169_1.wor 1442169_1.wor 1442169_1.wor 1442169_1.wor 1442169_1.wor 1442169_1.wor 1442169_1.
Slide 10: Increased Exposure to High-Growth Markets
Increased Exposure to High-Growth Markets 85% 73% 64% 0% 15% 30% 45% 60% 75% 90% 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 NCI Key Markets Sun Belt Markets Total U.S. Cumulative forecasted RevPAR growth from 2021 (post-COVID) NCI Primary Markets (3)(4) (1) The Sun Belt is defined as the cont
Slide 11: Favorable Market Exposure Enhances Summit's Future Growth Profile
5YR CAGR 7 Favorable Market Exposure Enhances Summit’s Future Growth Profile 13% 9% 0% 15% 30% 45% 60% 75% 90% 2021 2022 2023 2024 2025 2026 Forecasted Cumulative RevPAR Growth (1)(2) Pro Forma Portfolio CBRE Total U.S. Summit Markets Rooms % Portfolio 5YR CAGR (1) vs. Total U.S. Market Indicator Da
Slide 12: High-Quality, New Vintage Hotels Drive Market Share and Limit Capital Expenditures
13% 21% 66% Pre-2010 2010-2014 2015+ <100 100-109 110-119 >120 26% 19% 30% 24% 8 Number of Rooms Developed by Year The youth and excellent physical condition of the acquired portfolio results in minimal needed capex with only $20mm anticipated over the next 3 years, or less than $2k / key per year H
Slide 13: Significant Forward Ramp in Acquired Portfolio
Significant Forward Ramp in Acquired Portfolio 30% 40% 50% 60% 70% 80% 90% Hilton Garden Inn Grapevine (2021) Canopy New Orleans (2021) Canopy Hotel Frisco Station (2020) AC Frisco Station (2019) Residence Inn Frisco Station (2019) AC Houston Downtown (2019) SpringHill Suites Dallas Downtown (1997)
Slide 14: Operational Enhancement Opportunities
$11.9k $19.1k $7.0k $8.2k 32.7% 33.3% 37.2% 38.9% 10 Operational Enhancement Opportunities Multiple revenue management opportunities via Summit’s proprietary, in-house team that leverages new technologies and multiple data sources to optimize RevPAR and operating margins Optimization of revenue and
Slide 15: Attractive Basis Drives Shareholder Value
11 Attractive Basis Drives Shareholder Value Underwritten stabilized cap rate of 8.0% to 8.5% after underwritten capital expenditures represents discount to Summit’s pre-pandemic stabilized trading levels ― Approximately 10.5x to 11.0x stabilized Hotel EBITDA multiple (1) Represents an estimated 15%
Slide 16: Strengthens Balance Sheet and Preserves Liquidity
Summit Transaction Consolidated GIC Summit Current Adjustments Pro Forma Adjustments Pro Forma Share Price $10.22 $10.0853 $10.22 $10.22 Share Count (mms) 106.446 -- 106.446 -- 106.446 OP Unit Count (mms) 0.130 15.865 15.994 -- 15.994 Total Common Shares / Units 106.576 15.865 122.440 -- 122.440 Equ
Slide 17: Strengthens Balance Sheet and Preserves Liquidity (Cont'd)
13 Strengthens Balance Sheet and Preserves Liquidity (Cont’d) Pro Forma Capital Structure Pro Forma Debt Maturity Schedule ($ in millions) Pro Forma Key Highlights Liquidity (Undrawn Revolver Capacity + Cash): $439mm Average Length to Maturity: 3.4 years Pro Forma Weighted Avg. Cost of Debt: 3.5% Ne
Slide 18: Additional Future Growth Opportunities via NCI Existing Development Pipeline
14 Additional Future Growth Opportunities via NCI Existing Development Pipeline NCI’s development pipeline offers Summit the opportunity to accretively finance future growth opportunities Summit retains the option to acquire the asset or recoup its mezzanine investment at the end of development peri
Slide 19: Summit Operations Update
SUMMIT OPERATIONS UPDATE Boulder Marriott
Slide 20: Increased RevPAR Driving Corporate-Level Profitability
Positive Free Cash Flow Monthly Room RevPAR Progression ⁽¹⁾ 15 Increased RevPAR Driving Corporate-Level Profitability Strong leisure demand and improved mid-week performance resulting in RevPAR levels that have consistently generated positive corporate-level cash flow since spring of 2021 (1) Based
Slide 21: Strong Growth in Rate Driving Recovery
16 Strong Growth in Rate Driving Recovery October finished with an 87% recapture to 2019A ADR levels ADR Recapture vs. 2019 Residence Inn Boston Watertown ADR % Recapture $61 lower ADR 62% recapture vs. 2019 $22 lower ADR 87% recapture vs. 2019 50% 60% 70% 80% 90% 100% $80 $100 $120 $140 $160 $180 J
Slide 22: Demand Recovery Driving Increased RevPAR Premium
17 Demand Recovery Driving Increased RevPAR Premium Courtyard Pittsburgh Downtown Increasing RevPAR Premium (1) RevPAR As demand continues to broadly recover, Summit’s RevPAR premium to its competitive set has increased to near pre-pandemic levels, resulting in $79 million of additional annualized r
Slide 23: Proactive Asset Management Drives Greater Efficiencies in Operations
18 Proactive Asset Management Drives Greater Efficiencies in Operations Thoughtful expense controls and a modified operating model have resulted in a 12% decrease in costs per occupied room compared to 2019 ꟷ Regular property visits and collaboration with third-party management company partners as w
Slide 24: Summit Delivers Best-in-Class Operating Margins
19 Summit Delivers Best-in-Class Operating Margins 48% 46% 37% 35% 30% 35% 40% 45% 50% INN Select-Service Total U.S. Full-Service Summit (1)(2) (2) (2) +243 bps +1,192 bps +1,361 bps FYE GOP Margin (1) (1) Based on the 2019 pro forma actuals. (2) Based on the 2020 STR Host Almanac with financials as
Slide 25: Summit Generating Strong Free Cash Flow at Corporate Level
20 Source: Company filings. Hotel Indigo Asheville Downtown Summit has significantly increased cash flow over 2021 ($11mm) $5mm $19mm $13mm Q1 2021 Q2 2021 Q3 2021 Q3 2021 YTD Summit Generating Strong Free Cash Flow at Corporate Level
Slide 26: Appendix
APPENDIX Residence Inn Steamboat Springs
Slide 27: Positive Hotel-Level Cash Flow
Positive Hotel-Level Cash Flow $8 $19 $34 $41 $49 $52 $56 $43 $41 $44 $56 $74 $71 $78 $88 $85 $77 $87 $96 21 NCI Monthly RevPAR Progression ꟷ 2021 RevPAR has improved each quarter relative to 2019 for the 20 comparable hotel portfolio (of 27 total): Q1 RevPAR = $63 (-39% vs. 2019) Q2 RevPAR = $85 (-
Slide 28: Overview of Dallas Submarkets
Overview of Dallas Submarkets 22 Dallas Forth Worth Highlights Population ꟷ Over the last decade, Dallas experienced population growth of 21% ꟷ Today, Dallas is the fourth largest MSA in the U.S. based on population Employment ꟷ Over the last decade, the Dallas labor force grew 21% ꟷ In 2019, the un
Slide 29: Submarket Overview: Dallas CBD
23 Submarket Overview: Dallas CBD AC Hotel / Residence Inn Dallas Downtown ꟷ Downtown Dallas is the largest employment center in North Texas with ~35 million SF of office space, over 135,000 employees, more than 6,500 businesses, over 250 corporate or regional headquarters, including four Fortune 50
Slide 30: Submarket Overview: Grapevine
24 Submarket Overview: Grapevine ꟷ Grapevine is a rapidly growing city of North Dallas and is known for Lake Grapevine, the Grapevine Mills Mall (which is home to numerous attractions such as LEGOLAND®), its historic downtown, wineries and tasting rooms (the city name was inspired by the region’s na
Slide 31: Submarket Overview: West Plano / Frisco
25 Submarket Overview: West Plano / Frisco ꟷ West Plano / Frisco are rapidly growing suburbs of Dallas experiencing billions of dollars of new development and rapid population and employment growth ꟷ The Frisco Station development is a $1.8 billion, 242-acre mixed-use project adjacent to the Dallas
Slide 32: Submarket Overview: Oklahoma City CBD / Bricktown
26 Submarket Overview: Oklahoma City CBD / Bricktown AC Hotel Oklahoma City Bricktown ꟷ This thriving urban district is OKC's premier entertainment district and today is home to more than 45 restaurants, bars and retail shops, along with family-friendly attractions, a plethora of public art, museums
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