Summit Hotel Properties, Inc. · NYSE:INN
Summit Hotel Properties — Investor Presentation (February 2022)
38 slides from Summit Hotel Properties's investor presentation, Feb 23, 2022
Slide 1: Investor Presentation February 2022
INVESTOR PRESENTATION FEBRUARY 2022 Residence Inn – Portland Downtown Marriott Residence Inn – Boston Watertown Marriott Courtyard – Pittsburgh Downtown Marriott Residence Inn ꟷ Steamboat Springs Marriott Hyatt House ꟷ Orlando Universal Hyatt AC Hotel – Oklahoma City Bricktown Marriott Canopy by Hil
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: Summit Overview
Summit Overview Average Effective Age (1,2) 4.9 years 95% Franchisor Contribution (1,2) Guestrooms (1) 15,227 Top 50 Markets (1,2) 86% Hotels and Resorts(1) 101 Recent Acquisitions ~$900M GOP Margin (1,3) 44% Markets (1) 42 Portfolio RevPAR Index (1,3) 124 Summit Hotel Properties (NYSE: INN) is a le
Slide 4: Summit Investment Thesis
SUMMIT OPERATIONS UPDATE Boulder Marriott AC Hotel Downtown Dallas SUMMIT INVESTMENT THESIS
Slide 5: Investment thesis highlights
Efficient Operating Model and Best-in-Class Platform Drives Profitability Premier Portfolio with Broad Geographic Diversification and Concentration in High Growth Sun Belt Markets Targeted Capital Allocation Strategy with Proven Track Record of External Growth and Capital Recycling Strong Balance Sh
Slide 6: Efficient Operating Model and Best-in-Class Platform Drives Profitability
Efficient Operating Model and Best-in-Class Platform Drives Profitability Flexible and favorable management terms High degree of engagement with key management company personnel Use of independent platforms eliminates conflicts of interest Independent Management Companies In-House Asset Management I
Slide 7: Upscale vs Upper-Upscale RevPAR
Efficient Operating Model and Best-in-Class Platform Drives Profitability $70 $70 $83 $103 $65 $75 $85 $95 $105 2000 2010 2012 2019 +48% STR Upscale RevPAR (1) STR Upper-Upscale RevPAR (1) $113 $96 $109 $140 $90 $105 $120 $135 $150 2000 2010 2012 2019 +25% An enhanced guest experience has facilitate
Slide 8: Cumulative RevPAR Growth vs STR Upscale
Efficient Operating Model and Best-in-Class Platform Drives Profitability Summit has a track record of outperformance with cumulative RevPAR growth exceeding the STR Upscale chain scale benchmark by a 120bps CAGR in the eight years leading into the pandemic 10% 15% 26% 34% 37% 39% 40% 41% 7% 12% 20%
Slide 9: Best-in-Class Operating Margins
Efficient Operating Model and Best-in-Class Platform Drives Profitability 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 Summit Delivers Best-in-Class Operating Margins (1) Based on the 2019 pro forma actuals. (2)
Slide 10: Adjusted EBITDA Indexed to Pre-Pandemic Levels
Efficient Operating Model and Best-in-Class Platform Drives Profitability 10 100% 8% 49% 0% 25% 50% 75% 100% 2019 2020 2021 Summit 100% -18% 26% -25% 0% 25% 50% 75% 100% 2019 2020 2021 Annualized Lodging REIT Peers (1) (1) Lodging REIT Peers include: APLE, AHT, BHR, CLDT, CPLG, DRH, HT, HST, PK, PEB
Slide 11: Potential for Margin Expansion
Efficient Operating Model and Best-in-Class Platform Drives Profitability Courtyard Charlotte City Center 11 Through both asset management initiatives and a restructuring of the operating model due to the pandemic, we believe there is potential for margin expansion as revenues return to stabilized l
Slide 12: Premier Portfolio with Broad Geographic Diversification
Premier Portfolio with Broad Geographic Diversification and Concentration in High Growth Sun Belt Markets U.S. Markets % of Portfolio (1) Number of Rooms Top 25 64% 9,604 Top 50 86% 12,952 Sun Belt 60% 8,980 Total 100% 15,227 Dallas-Fort Worth New Orleans Atlanta San Francisco Portland Minneapolis H
Slide 13: Forecasted Cumulative RevPAR Growth by Market
5YR CAGR 13% 9% 0% 15% 30% 45% 60% 75% 90% 2021 2022 2023 2024 2025 2026 Forecasted Cumulative RevPAR Growth (1)(2) Summit CBRE Total U.S. CBRE Upscale Summit Markets Rooms % Portfolio 5YR CAGR (1) vs. Total U.S. Market Indicator Dallas-Fort Worth 2,225 15% 11% 240 bps + New Orleans 1,178 8% 18% 920
Slide 14: Franchisor and Hotel Type Mix
25% 19% 5% 50% Franchisor(1) Legend 22% 8% 65% 5% Hotel Type (1) Legend Premium Select Service Extended Stay Lifestyle Compact Full Service Summit believes in the value of loyalty and partners with leading global brands that provide access to millions of enrolled loyalty members. We believe guests s
Slide 15: Summit RevPAR and EBITDA per Key 2015-2019
$104 $128 $106 $112 $50 $65 $80 $95 $110 $125 INN 2015 INN 2019 Peers 2015 Peers 2019 Summit RevPAR 2015-2019 $14,643 $19,080 $16,345 $16,248 $5,000 $7,500 $10,000 $12,500 $15,000 $17,500 $20,000 INN 2015 INN 2019 Peers 2015 Peers 2019 Summit EBITDA / Key 2015-2019 4YR CAGR 5.2% 4YR CAGR 6.8% In 201
Slide 16: Acquisitions, Dispositions and Joint Venture
Acquisitions • Locations in “Markets that Matter” with favorable supply/demand dynamics and multiple demand generators • Efficient operating models • Value-add opportunities (i.e., property renovations, brand conversions, management changes) Dispositions • Identify markets with unfavorable supply/de
Slide 17: Key Highlights: Recent Acquisitions
Key Highlights Residence Inn Steamboat Embassy Suites Tucson NCI Summit @ March 2022 (2) Summit @ 6/30/2021 # of Hotels 72 1 1 27 101 # of Guestrooms 11,288 110 120 3,709 15,227 Date of Acquisition - Jul - 21 Dec - 21 Jan - 22 - Purchase Price - $33M $26M $822M - Price Per Key - $300K $213K $209K(1)
Slide 18: Acquisition of NewcrestImage Portfolio
Acquisition of NewcrestImage Portfolio (1) Summit and GIC have a 51% and 49% economic interest in the joint venture, respectively. AC Hotel Houston Marriott AC Hotel Dallas Downtown Marriott Embassy Suites Amarillo Hilton SpringHill Suites / TownePlace Suites New Orleans Marriott AC Hotel Frisco Sta
Slide 19: Acquisition of Embassy Suites Tucson Catalina Foothills
Acquisition of Embassy Suites Tucson Catalina Foothills Transaction Overview • Recently renovated, market-leading, high-quality 120-guestroom hotel. • Purchase price of $25.5 million ($212,500/key) represents a discount to estimated replacement cost. • Excellent location and dominant brand affiliati
Slide 20: Strong Balance Sheet and Liquidity Support Future Growth
44% 12% 44% Equity Preferred Equity Net Debt Strong Balance Sheet and Liquidity Support Future Growth Pro Forma Capital Structure Pro Forma Debt Maturity Schedule ($ in millions) Pro Forma Key Highlights Note: As of February 2022. Assumes fully-extended debt maturity dates. 20 $89 $16 $45 $10 $288 $
Slide 21: Corporate Responsibility Program
We established our Corporate Responsibility program in 2018 for the purpose of creating long-term value for our stakeholders by investing responsibility in our business, environment, people and communities. Our program goals align with the United Nations Sustainable Development Goals (UN SDGs) and w
Slide 22: Leading Environmental, Social, and Governance Program
Leading Environmental, Social, and Governance Program 20.5% intensity reduction in energy consumption from 2018 baseline 26.4% intensity reduction in greenhouse gas emissions from 2018 baseline Environmental (2) Social Governance 27.2% intensity reduction in water consumption from 2018 baseline Cont
Slide 23: Experienced Leadership Driving Success
Experienced Leadership Driving Success JONATHAN STANNER PRESIDENT AND CHIEF EXECUTIVE OFFICER Mr. Stanner joined Summit Hotel Properties in April 2017 and most recently served as the company’s Executive Vice President and Chief Financial Officer. Prior to joining Summit, Mr. Stanner was Chief Execut
Slide 24: Summit Operations Update
SUMMIT OPERATIONS UPDATE Marriott Boulder
Slide 25: Monthly RevPAR Progression
$41 $52 $67 $70 $77 $89 $102 $94 $98 $106 $92 $84 $75 Monthly Room RevPAR Progression (1) Increasing RevPAR Driving Corporate Free Cash Flow (1) Based on pro forma RevPAR for the 74 hotels owned as of December 31, 2021. (2) Based on pro forma RevPAR for the 100 hotels owned as of January 31, 2022 Co
Slide 26: Summit's RevPAR Premium Drives Outperformance vs. Peers
Summit’s RevPAR Premium Drives Outperformance vs. Peers 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 $71 million of additional annualiz
Slide 27: Appendix
APPENDIX Homewood Suites Aliso Viejo
Slide 28: Asset Management Case Studies
ASSET MANAGEMENT CASE STUDIES Courtyard Nashville Vanderbilt
Slide 29: Hyatt House Across From Universal Orlando Resort
Hyatt House Across From Universal Orlando Resort In-House Development Expertise • Leveraged in-house development expertise to develop a new and complementary hotel on previously acquired land parcel adjacent to existing Hyatt Place. • The two hotels benefit from a collaborative sales effort that gen
Slide 30: Brand Conversion
Brand Conversion Unique opportunity to acquire a recently repositioned asset with a distinctive brand in a high-growth market AC Hotel by Marriott Atlanta Downtown Post-Conversion (1) Today (2) Implied Value $57.5 million $80.5 million Value Per Key $225,500 $315,800 EBITDA Yield on Cost 7.4 % 11.0
Slide 31: Strategic Renovation
Strategic Renovation Converted seven underutilized meeting rooms into seven standard guestrooms and one two-bedroom suite into two standard guestrooms. Marriott Boulder Guestroom Conversion Pre-Renovation Post-Renovation Return on Investment Hotel EBITDA per Key (1) $27,700 Renovation Cost per Key $
Slide 32: Managing Through Supply Growth
Managing Through Supply Growth Hampton Inn & Suites – Austin, TX • Acquired the hotel in September 2014. • Austin CBD supply has increased 6.1% annually since the hotel was acquired Performance Highlights • The hotel currently generates an EBITDA yield on cost of 10.0% • Implemented revenue and asse
Slide 33: Additional Financial Disclosure
ADDITIONAL FINANCIAL DISCLOSURE Hampton Inn Baltimore Inner Harbor
Slide 34: Summary Financial Results
Summary Financial Results (1) (See tables later in this press release for a discussion and reconciliation of net loss to non-GAAP financial measures, including earnings before interest, taxes, depreciation, and amortization (“EBITDA”), EBITDAre, adjusted EBITDAre, funds from operations (“FFO”), FFO
Slide 35: Summary Pro Forma Operating Results
Summary Pro Forma Operating Results (1) Unaudited pro forma information includes operating results for 74 hotels owned as of December 31, 2021, as if all such hotels had been owned by the Company since January 1, 2020. For any hotels acquired by the Company after January 1, 2020 (the “Acquired Hotel
Slide 36: Pro Forma Hotels 2021 and 2020
Pro Forma 74 Hotels - 2021 (1) Q1 Q2 Q3 Oct Nov Dec Q4 FYE Occupancy 50.8% 65.0% 68.7% 70.1% 64.5% 60.3% 65.0% 62.4% ADR 105.39 $ 120.45 $ 142.49 $ 151.56 $ 142.49 $ 139.93 $ 144.99 $ 129.98 $ RevPAR 53.48 $ 78.35 $ 97.85 $ 106.28 $ 91.95 $ 84.35 $ 94.22 $ 81.13 $ 2020 Variance Occupancy change vs 2
Slide 37: EBITDA and Adjusted EBITDAre Reconciliation
For the Three Months Ended December 31, For the Year Ended December 31, 2021 2020 2021 2020 Net loss (10,905) $ (44,708) $ (68,584) $ (149,245) $ Depreciation and amortization 26,179 27,472 105,955 109,619 Interest expense 10,801 10,635 43,368 43,300 Interest income (2) (4) (8) (145) Income tax expe
Slide 38: FFO and AFFO Reconciliation
For the Three Months Ended December 31, For the Year Ended December 31, 2021 2020 2021 2020 Net loss (10,905) $ (44,708) $ (68,584) $ (149,245) $ Preferred dividends (4,263) (3,710) (15,431) (14,838) Premium on redemption of preferred stock - - (2,710) - (Income) loss related to non-controlling inte
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