Form 8-K/A Summit Hotel Properties, For: Sep 09
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM�8-K/A
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CURRENT REPORT
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Pursuant to Section�13 or 15(d)�of the
Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported): September�9, 2014
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SUMMIT HOTEL PROPERTIES,�INC.
(Exact Name of Registrant as Specified in its Charter)
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Maryland |
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001-35074 |
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27-2962512 |
(State or Other Jurisdiction |
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(Commission File Number) |
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(I.R.S. Employer Identification No.) |
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12600 Hill Country Boulevard, Suite�R-100
Austin, Texas 78738
(Address of Principal Executive Offices) (Zip Code)
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(512) 538-2300
(Registrants� telephone number, including area code)
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Not applicable
(Former name or former address, if changed since last report.)
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Check the appropriate box below if the Form�8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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o�Written communications pursuant to Rule�425 under the Securities Act (17 CFR 230.425)
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o�Soliciting material pursuant to Rule�14a-12 under the Exchange Act (17 CFR 240.14a-12)
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o�Pre-commencement communications pursuant to Rule�14d-2(b)�under the Exchange Act (17 CFR 240.14d-2(b))
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o�Pre-commencement communications pursuant to Rule�13e-4(c)�under the Exchange Act (17 CFR 240.13e-4(c))
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This Form�8-K/A amends and supplements the registrant�s Form�8-K, as filed September�15, 2014, to include the�historical financial statements and pro forma financial information required by Item 9.01(a)�and (b).
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Item 9.01.����������������������Financial Statements and Exhibits.
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(a)�Financial statements of businesses acquired.��The following audited financial statements for the Hampton Inn�& Suites Austin � Downtown/ Convention Center are attached hereto as Exhibit�99.1 and incorporated by reference herein.
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Hampton Inn�& Suites Austin � Downtown/ Convention Center:
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Report of Independent Auditors;
Balance Sheets as of December�31, 2013 and June�30, 2014 (unaudited)
Statements of Comprehensive Income for the year ended December�31, 2013 and the six months ended June�30, 2014 and 2013 (unaudited);
Statements of Owners� Equity in the Hotel for the year ended December�31, 2013 and the six months ended June�30, 2014 (unaudited);
Statements of Cash Flows for the year ended December�31, 2013 and the six months ended June�30, 2014 and 2013 (unaudited);
Notes to Financial Statements.
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(b)�Pro forma financial information.��The following unaudited pro forma financial information for the Company is attached hereto as Exhibit�99.2 and incorporated by reference herein.
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Unaudited Pro Forma Consolidated Statement of Operations for the year ended December�31, 2013 and the six months ended June�30, 2014;
Notes to Unaudited Pro Forma Financial Information.
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(d)�Exhibits
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23.1 |
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Consent of Ernst�& Young, LLP |
99.1 |
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Financial Statements for the Hampton Inn�& Suites Austin � Downtown/ Convention Center |
99.2 |
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Unaudited Pro Forma Financial Information for Summit Hotel Properties,�Inc. |
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SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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SUMMIT HOTEL PROPERTIES,�INC. | |
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By: |
/s/ Christopher R. Eng |
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Name: Christopher R. Eng | |
Dated: November�25, 2014 |
Title: Senior Vice President, General Counsel, Chief Risk Officer and Secretary |
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Exhibit 23.1
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Independent Auditors� Consent
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The Board of Directors
Summit Hotel Properties,�Inc.:
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We consent to the incorporation by reference�in the Registration Statements on Form�S-3 (File Nos. 333-179503, 333-179828, 333-187227, and 333-187624) and Form�S-8 (File No.�333-172145) of Summit Hotel Properties,�Inc. of our report dated November�19, 2014, with respect to the balance sheet of the Hampton Inn�& Suites Austin�Downtown/ Convention Center as of December�31, 2013, and the related statements of comprehensive income, owners� equity in the Hotel, and cash flows for the year ended December�31, 2013.
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/s/ Ernst�& Young, LLP
Austin, Texas
November�24, 2014
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Exhibit 99.1
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FINANCIAL STATEMENTS
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Hampton Inn�& Suites Austin � Downtown/ Convention Center, Austin, Texas
Year Ended December�31, 2013 and for the Periods Ended
June�30, 2014 and 2013 (Unaudited)
With Report of Independent Auditors
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Hampton Inn�& Suites Austin � Downtown/ Convention Center
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Year Ended December�31, 2013 and for the Periods Ended
June�30, 2014 and 2013 (Unaudited)
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Contents
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Report of Independent Auditors
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The Board of Directors
Summit Hotel Properties,�Inc.
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We have audited the accompanying financial statements of the Hampton Inn�& Suites Austin�Downtown/ Convention Center (the hotel) (not a legal entity), which comprise the balance sheet as of December�31, 2013, and the related statements of comprehensive income, owners� equity in hotel, and cash flows for the year then ended, and the related notes to the financial statements.
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Management�s Responsibility for the Financial Statements
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Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
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Auditor�s Responsibility
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Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United�States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
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An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor�s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity�s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity�s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.
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We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
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Opinion
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In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Hampton Inn�& Suites Austin � Downtown/ Convention Center as of December�31, 2013, and the results of its operations and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States.
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/s/Ernst�& Young, LLP
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Austin, TX
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November�19, 2014
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Hampton Inn & Suites Austin � Downtown/ Convention Center
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� |
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June�30, |
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December�31, |
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2014 |
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2013 |
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(Unaudited) |
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Assets |
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� |
� |
� |
� | ||
Investments in hotel properties, at cost: |
� |
� |
� |
� |
� | ||
Fixed assets, including CIP |
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$ |
21,460,596 |
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$ |
21,389,983 |
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Accumulated depreciation |
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(9,659,402 |
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(9,304,899 |
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Net investment in hotel properties |
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11,801,194 |
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12,085,084 |
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� |
� |
� |
� |
� | ||
Cash on hand |
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1,800,771 |
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2,092,421 |
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Cash in reserve/restricted |
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500,097 |
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500,000 |
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Accounts receivable |
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425,200 |
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285,950 |
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Accounts receivable�� credit card receivables |
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136,754 |
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44,348 |
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Prepaid expenses |
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199,917 |
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181,790 |
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FF&E�� escrow |
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499,493 |
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247,101 |
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Property tax�� escrow |
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315,741 |
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573,225 |
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Total assets |
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$ |
15,679,167 |
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$ |
16,009,919 |
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� |
� |
� |
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Liabilities and owners� equity |
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� |
� |
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Accounts payable |
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$ |
196,445 |
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$ |
262,860 |
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Other payables |
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333,003 |
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424,333 |
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Property taxes payable |
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287,262 |
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442,653 |
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Accrued payroll and payroll taxes |
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14,690 |
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79,325 |
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Due to affiliate |
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30,758 |
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121,240 |
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Mortgages payable |
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11,223,087 |
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11,425,118 |
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Total liabilities |
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12,085,245 |
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12,755,529 |
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Total owners� equity |
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3,593,922 |
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3,254,390 |
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Total liabilities and owners� equity |
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$ |
15,679,167 |
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$ |
16,009,919 |
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See accompanying notes.
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Hampton Inn & Suites Austin � Downtown/ Convention Center
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Statements of Comprehensive Income
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June�30, |
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December�31, |
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2014 |
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2013 |
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2013 |
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(Unaudited) |
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(Unaudited) |
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Revenue: |
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Rooms |
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$ |
6,022,540 |
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$ |
5,696,619 |
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$ |
10,825,747 |
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Valet, suite shop, and other |
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496,083 |
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463,638 |
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1,021,509 |
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Total revenue |
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6,518,623 |
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6,160,257 |
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11,847,256 |
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Department expense: |
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Rooms |
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940,024 |
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797,079 |
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1,664,563 |
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Valet, suite shop, and other |
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158,144 |
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156,082 |
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312,641 |
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Total department expense |
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1,098,168 |
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953,161 |
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1,977,204 |
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Total gross profit |
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5,420,455 |
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5,207,096 |
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9,870,052 |
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Operating expenses: |
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Administrative and general |
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382,214 |
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274,589 |
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700,334 |
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Advertising and promotion |
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402,611 |
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357,281 |
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695,095 |
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Franchise fees |
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481,803 |
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455,729 |
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868,620 |
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Management fee |
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260,744 |
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246,410 |
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475,170 |
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Property maintenance |
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188,764 |
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183,890 |
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412,342 |
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Taxes, insurance and leases |
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624,369 |
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581,097 |
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1,061,646 |
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Utilities |
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136,402 |
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217,775 |
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379,506 |
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Depreciation and amortization |
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354,503 |
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265,489 |
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781,863 |
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Interest |
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315,311 |
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326,070 |
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652,173 |
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Rent |
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177,834 |
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172,479 |
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370,017 |
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Other expense |
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6,368 |
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5,170 |
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5,170 |
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Total operating expenses |
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3,330,923 |
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3,085,979 |
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6,401,936 |
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Comprehensive income |
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$ |
2,089,532 |
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$ |
2,121,117 |
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$ |
3,468,116 |
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See accompanying notes.
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Hampton Inn & Suites Austin � Downtown/ Convention Center
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Statements of Owners� Equity in the Hotel
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Balance at January�1, 2013 |
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$ |
2,361,274 |
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Comprehensive income |
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3,468,116 |
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Distributions to owners |
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(2,575,000 |
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Balance at December�31, 2013 |
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3,254,390 |
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Comprehensive income (unaudited) |
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2,089,532 |
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Distributions to owners (unaudited) |
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(1,750,000 |
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Balance at June�30, 2014 (unaudited) |
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$ |
3,593,922 |
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See accompanying notes.
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Hampton Inn & Suites Austin � Downtown/ Convention Center
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June�30, |
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December�31, |
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� |
2014 |
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2013 |
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2013 |
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(Unaudited) |
� |
� |
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Operating activities |
� |
� |
� |
� |
� |
� |
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Comprehensive income |
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$ |
2,089,532 |
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$ |
2,121,117 |
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$ |
3,468,116 |
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Adjustments to reconcile comprehensive income to net cash provided by operating activities: |
� |
� |
� |
� |
� |
� |
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Depreciation and amortization |
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354,503 |
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265,489 |
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781,863 |
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Accounts receivable, net |
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(139,250 |
) |
14,685 |
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(43,980 |
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Accounts receivable credit card receivables |
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(92,406 |
) |
(138,101 |
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(3,640 |
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Due to/from affiliate |
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(90,482 |
) |
2,112 |
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127,984 |
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Prepaid expenses |
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(18,127 |
) |
67,642 |
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47,829 |
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Property tax escrow |
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257,484 |
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296,822 |
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(4,597 |
) | |||
Accounts payable�� trade |
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(66,415 |
) |
110,413 |
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253,758 |
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Accounts payable�� other |
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(91,330 |
) |
(181,977 |
) |
(42,116 |
) | |||
Accrued payroll and payroll tax |
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(64,635 |
) |
(52,368 |
) |
15,213 |
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Property taxes payable |
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(155,391 |
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(239,744 |
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(24,890 |
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Net cash provided by operating activities |
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1,983,483 |
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2,266,090 |
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4,575,540 |
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� |
� |
� |
� |
� |
� |
� |
� | |||
Investing activities |
� |
� |
� |
� |
� |
� |
� | |||
Purchase of fixed assets |
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(70,613 |
) |
(636,842 |
) |
(712,620 |
) | |||
(Increase) decrease in FF&E Escrow |
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(252,392 |
) |
(199,208 |
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294,082 |
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(Increase) decrease in capital reserve |
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(97 |
) |
� |
� |
(133,784 |
) | |||
Net cash used in investing activities |
� |
(323,102 |
) |
(836,050 |
) |
(552,322 |
) | |||
� |
� |
� |
� |
� |
� |
� |
� | |||
Financing activities |
� |
� |
� |
� |
� |
� |
� | |||
Payments on mortgage |
� |
(202,031 |
) |
(191,269 |
) |
(382,505 |
) | |||
Partnership distributions |
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(1,750,000 |
) |
(1,125,000 |
) |
(2,575,000 |
) | |||
Net cash used in financing activities |
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(1,952,031 |
) |
(1,316,269 |
) |
(2,957,505 |
) | |||
� |
� |
� |
� |
� |
� |
� |
� | |||
Net change in cash and cash equivalents |
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(291,650 |
) |
113,771 |
� |
1,065,713 |
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Cash on hand, beginning of year |
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2,092,421 |
� |
1,026,708 |
� |
1,026,708 |
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Cash on hand, end of year |
� |
$ |
1,800,771 |
� |
$ |
1,140,479 |
� |
$ |
2,092,421 |
� |
� |
� |
� |
� |
� |
� |
� |
� | |||
Supplemental disclosures of cash flow information |
� |
� |
� |
� |
� |
� |
� | |||
Cash paid for interest |
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$ |
315,311 |
� |
$ |
326,070 |
� |
$ |
652,173 |
� |
Cash paid for income tax |
� |
$ |
47,208 |
� |
$ |
40,367 |
� |
$ |
80,735 |
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See accompanying notes.
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Hampton Inn�& Suites Austin � Downtown/ Convention Center
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June�30, 2014
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1. Description of Business and Basis of Presentation
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The financial statements presented herein for the Hampton Inn�& Suites Austin � Downtown/ Convention Center (not a legal entity) are for one hotel (the�Hotel) owned by San Jacinto Hotel Partners, L.P. (the Owners). The Hotel is a 209�� guestroom Hampton Inn�& Suites hotel located in downtown�Austin, Texas.
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These financial statements present the balance sheets, statements of comprehensive income, statements of owners� equity in the Hotel, and statements of cash flows of the Hotel, not a legal entity.
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2. Summary of Significant Accounting Policies
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Use of Estimates
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The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America (U.S.�GAAP) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Actual results could differ from those estimates and assumptions. Such estimates and assumptions could change in the future as more information becomes known, which could affect the amounts reported and disclosed herein. Intercompany accounts and transactions have been eliminated in consolidation.
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Cash
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Cash includes cash held in depository bank accounts.
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Restricted Cash
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Restricted cash consists of funds placed in escrow with mortgage lenders to pay property taxes (Property tax�� escrow), capital expenditures (FF&E�� escrow), as well as a capital reserve account.
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Concentration of Credit Risk
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The Owners maintain their cash and cash equivalents in bank deposit accounts, which, at times, may exceed federally insured limits. The Hotel has not experienced any losses in such accounts.
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Hampton Inn�& Suites Austin � Downtown/ Convention Center
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Notes to Financial Statements (continued)
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2. Summary of Significant Accounting Policies (continued)
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Investment in the Hotel Property
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Investments in the Hotel property and related assets are recorded at cost, less accumulated depreciation. The Hotel capitalizes the costs of significant additions and improvements that materially extend the property�s life. These costs may include hotel refurbishment, renovation, and remodeling expenditures. All costs of repairs and maintenance are expensed as incurred.
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Depreciation is recorded on a straight-line basis over the estimated useful lives of the assets. The estimated useful lives are as follows:
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Classification |
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Estimated |
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Building |
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39 years |
Building improvements |
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5�39 years |
Furnishings and equipment |
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5�7 years |
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When depreciable property and equipment are retired or disposed of, the related costs and accumulated depreciation are removed from the balance sheets and any gain or loss is reflected in current operations.
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Impairment of Investment in the Hotel Property
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If events or circumstances indicate that the carrying value of the Hotel property to be held and used may be impaired, a recoverability analysis is performed based on estimated undiscounted future cash flows to be generated from the property. If the analysis indicates that the carrying value is not recoverable from future cash flows, the excess of the net book value over the estimated fair value is charged to earnings. There was no impairment of the investment in the hotel property at December�31, 2013 or June�30, 2014, respectively.
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Income Taxes
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No provision or liability for income taxes or income tax positions has been made in the accompanying financial statements since the financial statements do not contemplate the type of legal or tax entity that holds the Hotel.
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Hampton Inn�& Suites Austin � Downtown/ Convention Center
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Notes to Financial Statements (continued)
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2. Summary of Significant Accounting Policies (continued)
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Advertising Costs
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Advertising costs are expensed as incurred and are included in sales and promotion expenses in the accompanying statements of comprehensive income.
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Revenue Recognition
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Revenues are recognized when guestrooms are occupied and the services are provided. Revenues consist of mainly guestroom sales. Additionally, the Hotel collects sales, use, occupancy, and similar taxes, which are presented on a net basis in the accompanying statements of comprehensive income.
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Accounts Receivable
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Accounts receivable, which primarily represent amounts due from hotel guests, are recorded at management�s estimate of the amounts that will be ultimately collected.
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Due to/from Related Parties
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Due to/from related parties represents the amounts payable/receivable to an affiliate of the Hotel for services rendered related to advertising, promotion, sales, reservations, management fees, centralized services, loyalty program, insurance, various benefit plans, purchasing and other charges.
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Deferred Loan Cost, Net
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Certain loan costs are deferred and amortized to expense using the straight-line method, which approximates the amount to be amortized using the effective interest method. At the time of any repurchases or retirements of debt, a proportionate amount of net deferred loan costs is written off. The Hotel recognized amortization of deferred loan costs totaling $98,129 for the year ended December�31, 2013, and $49,065 for the period ended June�30, 2013. As the net balance of deferred loan costs was $0 at December�31, 2013, no expense was recorded for the period ended June�30, 2014.
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Hampton Inn�& Suites Austin � Downtown/ Convention Center
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Notes to Financial Statements (continued)
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2. Summary of Significant Accounting Policies (continued)
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Fair Value of Financial Instruments
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Financial assets and liabilities with carrying amounts approximating fair value include cash, accounts receivable, prepaid expenses and deposits, accounts payable and accrued expenses. The carrying amounts of these financial assets and liabilities approximate fair value because of their short maturities. The carrying amounts of the Hotel�s debt and other long-term liabilities approximate their fair values. The fair value of debt was based upon management�s best estimate of interest rates that would be available for similar debt obligations as of December�31, 2013.
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The accounting guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The accounting standard establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include Level�1, defined as observable inputs, such as quoted prices in active markets; Level�2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level�3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
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3. Franchise Agreements
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Upon opening of the Hotel, the Owners entered into a franchise agreement with Hilton Hotels Corporation. The agreement is for a 22-year period from the opening date of the Hotel. Franchise fees are computed at 8.0% of the gross room revenues for the Hotel, as defined in the agreement. Franchise fees for the year ended December�31, 2013, was $868,620, and were $481,803(unaudited) and $455,729(unaudited) for the periods ended June�30, 2014 and 2013, respectively.
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�
Hampton Inn�& Suites Austin � Downtown/ Convention Center
�
Notes to Financial Statements (continued)
�
4. Mortgages Payable
�
The Owners had the following mortgage payable at June�30 and December�31, respectively:
�
� |
� |
June�30, |
� |
December�31, |
� | ||
� |
� |
2014 |
� |
2013 |
� | ||
� |
� |
(Unaudited) |
� |
� |
� | ||
Promissory note effective October�11, 2005, in the original amount of $14,000,000 with fixed monthly payments of $86,223, at an interest rate of 5.53% per annum, until November�1, 2015, at which time the principal balance is due. The loan is secured by property, furniture, fixtures and equipment. In addition, the loan is guaranteed by related parties of the Owners. |
� |
$ |
11,223,087 |
� |
$ |
11,425,118 |
� |
Total |
� |
$ |
11,223,087 |
� |
$ |
11,425,118 |
� |
�
Total amount of the outstanding balance was paid in full in September�2014.
�
5. Leases
�
The Hotel leases the land under a noncancelable ground lease with a term of 50 years from the effective date of May�23, 2000. Rent expense for the year ended December�31, 2013, was $370,017, and for the periods ended June�30, 2014 and 2013 rent expense was $177,834(unaudited) and $172,479(unaudited), respectively. The terms of the rent payments include base monthly rent, as well as a percentage rent which is paid annually. Base rent terms are outlined in the agreement which increases every five years. The percentage rent is 3% of the amount of gross revenue above the agreed upon breakeven point (as defined in the agreement).
�
6. Related-Party Transactions
�
The Owners have a management agreement with Valencia Hotel Inc., an entity related through common ownership. The agreement has a ten-year term with three consecutive two-year renewal terms starting on the commencement date of December�17, 2002. The agreement provides for base management fees. Base management fees are calculated at 4% of gross monthly revenues, as defined in the agreement. Base management fees for the year ended December�31, 2013, were $475,170. Base management fees for the periods ended June�30, 2014 and 2013, were $260,744(unaudited) and $246,410(unaudited), respectively.
�
�
Hampton Inn�& Suites Austin � Downtown/ Convention Center
�
Notes to Financial Statements (continued)
�
7. Commitments and Contingencies
�
The nature of the Hotel�s operations exposes it to the risk of claims and litigation in the normal course of its business. Although the outcome of such matters cannot be determined, management believes the ultimate resolution of these matters will not have a material effect on the financial position, results of operations or cash flows of the Hotel.
�
8. Subsequent Events
�
Management has evaluated subsequent events through November�19, 2014, the date the accompanying financial statements were available to be issued. On July�25, 2014, the Owners entered into a definitive purchase and sale agreement to sell the Hotel to Summit Hotel Properties,�Inc. through its operating partnership, Summit Hotel OP, LP, for an aggregate sales price of $53�million, subject to closing prorations and adjustments. The sale of the property was completed on September�9, 2014.
�
Exhibit�99.2
�
UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL INFORMATION OF
SUMMIT HOTEL PROPERTIES,�INC.
�
Summit Hotel Properties,�Inc. (the �Company�) is a self-managed hotel investment company that was organized on June�30, 2010 as a Maryland corporation. The Company holds both general and limited partnership interests in Summit Hotel OP, LP (the �Operating Partnership�), a Delaware limited partnership also organized on June�30, 2010.
�
Unless stated otherwise or the context otherwise requires, references in this report to �we�, �our�, �us�, �our company� or �the company� mean Summit Hotel Properties,�Inc. and its consolidated subsidiaries.
�
On September�9, 2014, we purchased the Hampton Inn�& Suites Austin � Downtown/ Convention Center (the �Austin Hampton Inn�) in Austin, Texas.� The hotel has 209 guestrooms and we completed the acquisition for a purchase price of $53.0 million.� We funded the acquisition with borrowings under our senior unsecured revolving credit facility.
�
The unaudited pro forma consolidated statements of operations for the Company for the six months ended June�30, 2014 and the year ended December�31, 2013 are presented as if the acquisition of the Austin Hampton Inn had been completed on January�1, 2013.
�
The unaudited pro forma consolidated financial information is not necessarily indicative of what our consolidated results of operations would have been assuming the acquisition of the Austin Hampton Inn had been completed on January�1, 2013, nor is it indicative of the consolidated results of operations for future periods. In management�s opinion, all adjustments necessary to reflect the effects of the acquisition of the Austin Hampton Inn have been made. The unaudited pro forma consolidated financial information should be read in conjunction with the historical consolidated financial statements included in the Company�s Annual Report on Form�10-K for the year ended December�31, 2013 and Quarterly Report on Form�10-Q for the quarter ended September�30, 2014.
�
�
Summit Hotel Properties,�Inc.
Unaudited Pro Forma Consolidated Statement of Operations
For the Six Months Ended June�30, 2014
(in thousands, except per share amounts)
�
� |
� |
Historical�Summit |
� |
Historical�Austin |
(1) |
Pro�Forma |
� |
Pro�Forma |
� | ||||
� |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||||
Revenues: |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||||
Room |
� |
$ |
184,232 |
� |
$ |
6,023 |
� |
$ |
� |
� |
$ |
190,255 |
� |
Other hotel operations revenue |
� |
10,837 |
� |
496 |
� |
� |
� |
11,333 |
� | ||||
Total revenues |
� |
195,069 |
� |
6,519 |
� |
� |
� |
201,588 |
� | ||||
� |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||||
Expenses: |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||||
Hotel operating expenses: |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||||
Room |
� |
49,677 |
� |
940 |
� |
� |
� |
50,617 |
� | ||||
Other direct |
� |
25,234 |
� |
886 |
� |
� |
� |
26,120 |
� | ||||
Other indirect |
� |
51,617 |
� |
1,933 |
� |
179 |
(2)�(3)�(4) |
53,729 |
� | ||||
Total hotel operating expenses |
� |
126,528 |
� |
3,759 |
� |
179 |
� |
130,466 |
� | ||||
Depreciation and amortization |
� |
32,075 |
� |
355 |
� |
438 |
(5) |
32,868 |
� | ||||
Corporate general and administrative |
� |
9,622 |
� |
� |
� |
� |
� |
9,622 |
� | ||||
Hotel property acquisition costs |
� |
709 |
� |
� |
� |
� |
� |
709 |
� | ||||
Loss on impairment of assets |
� |
660 |
� |
� |
� |
� |
� |
660 |
� | ||||
Total expenses |
� |
169,594 |
� |
4,114 |
� |
617 |
� |
174,325 |
� | ||||
Operating income (loss) |
� |
25,475 |
� |
2,405 |
� |
(617 |
) |
27,263 |
� | ||||
� |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||||
Other income (expense): |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||||
Interest expense |
� |
(13,206 |
) |
(315 |
) |
(224 |
)(6) |
(13,745 |
) | ||||
Other income |
� |
286 |
� |
� |
� |
� |
� |
286 |
� | ||||
Total other expense, net |
� |
(12,920 |
) |
(315 |
) |
(224 |
) |
(13,459 |
) | ||||
� |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||||
Income (loss) from continuing operations before income taxes |
� |
12,555 |
� |
2,090 |
� |
(841 |
) |
13,804 |
� | ||||
Income tax expense |
� |
(407 |
) |
� |
� |
� |
� |
(407 |
) | ||||
Income (loss) from continuing operations |
� |
12,148 |
� |
2,090 |
� |
(841 |
) |
13,397 |
� | ||||
� |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||||
Income attributable to non-controlling interests: |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||||
Operating partnership |
� |
47 |
� |
� |
� |
15 |
(7) |
62 |
� | ||||
Joint venture |
� |
1 |
� |
� |
� |
� |
� |
1 |
� | ||||
Net income (loss) from continuing operations attributable to Summit Hotel Properties,�Inc. |
� |
12,100 |
� |
2,090 |
� |
(856 |
) |
13,334 |
� | ||||
Preferred dividends |
� |
(8,294 |
) |
� |
� |
� |
� |
(8,294 |
) | ||||
Net income (loss) from continuing operations attributable to common stockholders |
� |
$ |
3,806 |
� |
$ |
2,090 |
� |
$ |
(856 |
) |
$ |
5,040 |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||||
Earnings per share: |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||||
Basic and diluted net income per share from continuing operations |
� |
$ |
0.04 |
� |
� |
� |
� |
� |
$ |
0.06 |
� | ||
� |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||||
Weighted average common shares outstanding: |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||||
Basic |
� |
85,136 |
� |
� |
� |
� |
� |
85,136 |
� | ||||
Diluted |
� |
85,596 |
� |
� |
� |
� |
� |
85,596 |
� |
�
�
Summit Hotel Properties, Inc.
Unaudited Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 2013
(in thousands, except per share amounts)
�
� |
� |
Historical�Summit |
� |
Historical�Austin |
(1) |
Pro�Forma |
� |
Pro�Forma |
� | ||||
� |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||||
Revenues: |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||||
Room |
� |
$ |
283,279 |
� |
$ |
10,826 |
� |
$ |
� |
� |
$ |
294,105 |
� |
Other hotel operations revenue |
� |
15,679 |
� |
1,022 |
� |
� |
� |
16,701 |
� | ||||
Total revenues |
� |
298,958 |
� |
11,848 |
� |
� |
� |
310,806 |
� | ||||
� |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||||
Expenses: |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||||
Hotel operating expenses: |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||||
Room |
� |
80,391 |
� |
1,665 |
� |
� |
� |
82,056 |
� | ||||
Other direct |
� |
39,815 |
� |
1,800 |
� |
� |
� |
41,615 |
� | ||||
Other indirect |
� |
78,136 |
� |
3,481 |
� |
354 |
(2)�(3)�(4) |
81,971 |
� | ||||
Total hotel operating expenses |
� |
198,342 |
� |
6,946 |
� |
354 |
� |
205,642 |
� | ||||
Depreciation and amortization |
� |
51,184 |
� |
782 |
� |
804 |
(5) |
52,770 |
� | ||||
Corporate general and administrative |
� |
12,929 |
� |
� |
� |
� |
� |
12,929 |
� | ||||
Hotel property acquisition costs |
� |
1,886 |
� |
� |
� |
� |
� |
1,886 |
� | ||||
Loss on impairment of assets |
� |
1,369 |
� |
� |
� |
� |
� |
1,369 |
� | ||||
Total expenses |
� |
265,710 |
� |
7,728 |
� |
1,158 |
� |
274,596 |
� | ||||
Operating income (loss) |
� |
33,248 |
� |
4,120 |
� |
(1,158 |
) |
36,210 |
� | ||||
� |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||||
Other income (expense): |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||||
Interest expense |
� |
(20,137 |
) |
(652 |
) |
(446 |
)(6) |
(21,235 |
) | ||||
Other expense |
� |
(1,592 |
) |
� |
� |
� |
� |
(1,592 |
) | ||||
Total other expense, net |
� |
(21,729 |
) |
(652 |
) |
(446 |
) |
(22,827 |
) | ||||
Income (loss) from continuing operations before income taxes |
� |
11,519 |
� |
3,468 |
� |
(1,604 |
) |
13,383 |
� | ||||
Income tax expense |
� |
(4,894 |
) |
� |
� |
� |
� |
(4,894 |
) | ||||
� |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||||
Income (loss) from continuing operations |
� |
6,625 |
� |
3,468 |
� |
(1,604 |
) |
8,489 |
� | ||||
� |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||||
Income (loss) attributable to non-controlling interests: |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||||
Operating partnership |
� |
(272 |
) |
� |
� |
64 |
(7) |
(208 |
) | ||||
Joint venture |
� |
316 |
� |
� |
� |
� |
� |
316 |
� | ||||
Net income (loss) from continuing operations attributable to Summit Hotel Properties,�Inc. |
� |
6,581 |
� |
3,468 |
� |
(1,668 |
) |
8,381 |
� | ||||
Preferred dividends |
� |
(14,590 |
) |
� |
� |
� |
� |
(14,590 |
) | ||||
� |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||||
Net income (loss) from continuing operations attributable to common stockholders |
� |
$ |
(8,009 |
) |
$ |
3,468 |
� |
$ |
(1,668 |
) |
$ |
(6,209 |
) |
� |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||||
Earnings per share: |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||||
Basic and diluted net loss per share from continuing operations |
� |
$ |
(0.11 |
) |
� |
� |
� |
� |
$ |
(0.09 |
) | ||
� |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||||
Weighted average common shares outstanding: |
� |
� |
� |
� |
� |
� |
� |
� |
� | ||||
Basic |
� |
70,327 |
� |
� |
� |
� |
� |
70,327 |
� | ||||
Diluted |
� |
70,737 |
� |
� |
� |
� |
� |
70,737 |
� |
�
�
Summit Hotel Properties,�Inc.
Notes to Unaudited Pro Forma Financial Information
(dollars in thousands)
�
(1) |
The unaudited pro forma financial information for the six months ended June�30, 2014 and the year ended December�31, 2013, presents the acquisition of the 209 guestroom Austin Hampton Inn as if it occurred on January�1, 2013 for a purchase price of $53.0 million, funded with borrowings under our senior unsecured revolving credit facility. |
� |
� |
� |
The following is a summary of assets and liabilities acquired, including the Company�s allocation of the aggregate purchase price for the Austin Hampton Inn, and the net cash disbursed to complete the acquisition. |
�
Assets and Liabilities Acquired
�
Hotel buildings and improvements |
� |
$ |
52,460 |
� |
Furniture, fixtures and equipment |
� |
1,300 |
� | |
Total purchase price |
� |
53,760 |
� | |
Other assets |
� |
17 |
� | |
Total assets acquired |
� |
53,777 |
� | |
Other liabilities |
� |
(1,727 |
) | |
Net assets acquired |
� |
$ |
52,050 |
� |
�
Net Cash Disbursed
�
Purchase price |
� |
$ |
53,000 |
� |
Acquisition costs |
� |
13 |
� | |
Net working capital |
� |
(950 |
) | |
� |
� |
$ |
52,063 |
� |
� |
� |
� |
� | |
Cash |
� |
$ |
13 |
� |
Draw on revolving credit facility |
� |
52,050 |
� | |
� |
� |
$ |
52,063 |
� |
�
(2) |
The pro forma adjustment represents the difference between the franchise fees previously paid by the property prior to the acquisition by us and the franchise fees that we are contractually obligated to pay. |
� |
� |
(3) |
The pro forma adjustment represents the difference between the property taxes incurred by the property prior to the acquisition by us and the property taxes that we expect to incur as a result of the increase in the basis of the net assets acquired. |
� |
� |
(4) |
The pro forma adjustment represents the difference between the management fees previously paid by the property prior to the acquisition by us and the fees that we are contractually obligated to pay. |
� |
� |
(5) |
The pro forma adjustment represents the difference between the depreciation recorded by the property prior to the acquisition by us and the amount of depreciation that we expect to record based on our basis in the net assets acquired.� We will record depreciation expense using the straight-line method over a 39 year period for buildings and improvements and an unfavorable lease liability and over a five-year period for furniture, fixtures and equipment. |
� |
� |
(6) |
The pro forma adjustment represents the difference between the interest expense paid by the property prior to the acquisition by us based on the former debt structure of the hotel and the interest expense that we expect to incur as a result of the borrowings under our senior unsecured revolving credit facility that were drawn to complete the acquisition. |
� |
� |
(7) |
The pro forma adjustment represents the allocation of the pro forma net income of the property to the non-controlling interest of the Company. |
�
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