a50578156.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K/A
Amendment No. 1

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 27, 2013 (January 7, 2013)

SUMMIT HOTEL PROPERTIES, INC.
(Exact Name of Registrant as Specified in its Charter)

Maryland
(State or Other Jurisdiction
of Incorporation or Organization)
001-35074
(Commission File Number)
27-2962512
(I.R.S. Employer Identification No.)
 
12600 Hill Country Boulevard, Suite R-100
Austin, Texas 78738
(Address of Principal Executive Offices) (Zip Code)

(605) 361-9566
(Registrants’ telephone number, including area code)

Not applicable
(Former name or former address, if changed since last report.)
 
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:
 
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 240.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 
 
 
EXPLANATORY NOTE

As previously reported, on October 5, 2012, Summit Hotel Properties, Inc. (the “Company”), through its operating partnership, Summit Hotel OP, LP (the “Operating Partnership”), purchased from affiliates of Hyatt Hotels Corporation (“Hyatt”) a portfolio of eight hotels containing an aggregate of 1,043 guestrooms (the “Initial Hyatt Hotels”) for $87.4 million, and on January 22, 2013, the Company, through the Operating Partnership, purchased from affiliates of Hyatt three additional hotels containing an aggregate of 426 guestrooms (the “Additional Hyatt Hotels,” and, together with the Initial Hyatt Hotels, the “Hyatt 11 Portfolio”) for $36.1 million.

The Company reported the acquisitions of the Initial Hyatt Hotels and the Additional Hyatt Hotels in Current Reports on Form 8-K filed on October 9, 2012 and January 28, 2013, respectively.

The Company is filing this Amendment No. 1 to its Current Report on Form 8-K filed on January 7, 2013 to provide certain additional unaudited pro forma financial information for the year ended December 31, 2012 for the Company and the Operating Partnership regarding the Hyatt 11 Portfolio.


Item 9.01.  Financial Statements and Exhibits.

(b)           Pro Forma Financial Information.

Provided below are the unaudited pro forma consolidated financial statements of the Company and of the Operating Partnership for the year ended December 31, 2012, and the notes thereto, which are presented as if the acquisition of the Hyatt 11 Portfolio had been consummated as of January 1, 2012.

 
1
 
 
SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned hereunto duly authorized.
 
 
SUMMIT HOTEL PROPERTIES, INC.
(Registrant)
   
 
  By: /s/ Christopher R. Eng
    Christopher R. Eng
Date: February 27, 2013   Vice President, General Counsel and Secretary
 
 
2
 
 
UNAUDITED PRO FORMA FINANCIAL INFORMATION OF
SUMMIT HOTEL PROPERTIES, INC. AND SUMMIT HOTEL OP, LP
 
Summit Hotel Properties, Inc. (the “Company”) is a self-advised 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. 
 
On January 14, 2013, the Company closed on its second follow-on common stock offering and issued 17,250,000 shares of common stock for net proceeds of $148.1 million. The Company contributed the net proceeds to the Operating Partnership in exchange for common units. The Operating Partnership used the proceeds to fund the acquisition of the three Hyatt hotels discussed below that were under contract to purchase and pay down the principal balance of its senior secured revolving credit facility.

On January 22, 2013, the Company purchased from affiliates of Hyatt Hotels Corporation (“Hyatt”), a portfolio of three hotels (the “Hyatt 3 Portfolio”) containing an aggregate of 426 guestrooms for $36.1 million. The Company had previously acquired from Hyatt eight hotels on October 5, 2012. Collectively the eleven hotels acquired from Hyatt are referred to as the Hyatt 11 Portfolio.

The unaudited pro forma consolidated balance sheets as of December 31, 2012 are presented as if the second follow-on common stock offering and the acquisition of the Hyatt 3 Portfolio had occurred on December 31, 2012. The unaudited pro forma consolidated statements of operations for the year ended December 31, 2012 are presented as if the second follow-on common stock offering and the acquisition of the Hyatt 11 Portfolio had been completed at the beginning of 2012.

The unaudited pro forma financial information is not necessarily indicative of what the Company’s results of operations would have been assuming the second follow-on common stock offering and the acquisition of the Hyatt 11 Portfolio had been completed at the beginning of 2012, nor is it indicative of the results of operations for future periods. The unaudited pro forma financial information reflects the preliminary application of purchase accounting to the acquisition of the Hyatt 3 Portfolio. The preliminary purchase accounting may be adjusted if any of the assumptions underlying the purchase accounting change. In management’s opinion, all adjustments necessary to reflect the effects of the second follow-on common stock offering and the acquisition of the Hyatt 3 Portfolio have been made. This unaudited pro forma financial information should be read in conjunction with the historical financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.
 
 
3
 
 
Summit Hotel Properties, Inc.
Unaudited Pro Forma Consolidated Balance Sheet
December 31, 2012
(in thousands)
 
                         
   
Historic Summit
Hotel Properties,
Inc.
    
Issuance of
17,250,000
Shares of
Common Stock
(1)
    
Acquisition of
Hyatt 3 Portfolio 
(2)
    
Pro Forma
Summit Hotel Properties, Inc.
  
ASSETS
                        
                         
  Investment in hotel properties, net
   $ 734,362     $ -     $ 36,125     $ 770,487  
  Investment in hotel properties under development
     10,303       -       -       10,303  
  Land held for development
     15,802       -       -       15,802  
  Assets held for sale
     4,836       -       -       4,836  
  Cash and cash equivalents
     13,980       90,100       (36,235 )     67,845  
  Restricted cash
     3,624       -       -       3,624  
  Trade receivables
     5,478       -       551       6,029  
  Prepaid expenses and other
     5,311       -       103       5,414  
  Deferred charges, net
     8,895       -       -       8,895  
  Deferred tax asset
     3,997       -       -       3,997  
  Other assets
     4,201       -       -       4,201  
          TOTAL ASSETS
   $ 810,789     $ 90,100     $ 544     $ 901,433  
                                 
                                 
LIABILITIES AND EQUITY
                                
                                 
LIABILITIES
                                
  Debt
   $ 312,613     $ (58,000 )   $ -     $ 254,613  
  Accounts payable
     5,013       -       42       5,055  
  Accrued expenses
     18,985       -       891       19,876  
  Derivative financial instruments
     641       -       -       641  
          TOTAL LIABILITIES
     337,252       (58,000 )     933       280,185  
                                 
COMMITMENTS AND CONTINGENCIES
                                
                                 
EQUITY
                                
  Preferred stock, $.01 par value per share, 100,000,000 shares authorized:
                        
      9.25% Series A - 2,000,000 shares issued and outstanding at December 31,
                  
          2012 and 2011 (liquidation preference of $50,393 at December 31,
                        
          2012 and 2011)
     20       -       -       20  
      7.875% Series B - 3,000,000 shares issued and outstanding at December 31,
                  
          2012 (liquidation preference of  $75,324 at December 31, 2012)
     30       -       -       30  
  Common stock, $.01 par value per share, 450,000,000 shares authorized,
                          
      46,159,652 and 27,278,000 shares issued and outstanding at December 31,
                  
      2012 and 2011, respectively
     462       173       -       635  
  Additional paid-in capital
     468,820       147,927       -       616,747  
  Accumulated other comprehensive income (loss)
     (528 )     -       -       (528 )
  Accumulated deficit and distributions
     (31,985 )     -       (389 )     (32,374 )
  Total stockholders' equity
     436,819       148,100       (389 )     584,530  
  Noncontrolling interests
     36,718       -       -       36,718  
          TOTAL EQUITY
     473,537       148,100       (389 )     621,248  
                                 
          TOTAL LIABILITIES AND EQUITY
   $ 810,789     $ 90,100     $ 544     $ 901,433  
 
See Notes to Unaudited Pro Forma Financial Information
 
 
4
 
 
Summit Hotel Properties, Inc.
Unaudited Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 2012
(in thousands, except per share)
 
   
Historical
Summit Hotel Properties, Inc.
    
Historic Hyatt 11
 Portfolio
     Pro Forma Adjustments    
 
    
Pro Forma
Summit Hotel
 Properties, Inc.
  
                               
REVENUES
                              
  Room revenue
   $ 181,598     $ 33,300     $ -           $ 214,898  
  Other hotel operations revenue
     7,944       112       -             8,056  
Total Revenues
     189,542       33,412       -             222,954  
                                       
EXPENSES
                                      
Hotel operating expenses
                                      
  Rooms
     54,083       10,191       -             64,274  
  Other direct
     25,125       3,883       -             29,008  
  Other indirect
     51,062       10,157       (700 )   (3)       60,519  
  Other
     911       55       -             966  
Total hotel operating expenses
     131,181       24,286       (700 )           154,767  
  Depreciation and amortization
     34,263       8,696       (2,624 )   (4)       40,335  
  Corporate general and administrative:
                                      
     Salaries and other compensation
     6,039       -       -             6,039  
     Other
     3,534       -       -             3,534  
  Debt transaction costs
     661       -       -             661  
  Hotel property acquisition costs
     3,050       -       (304 )   (5)       2,746  
  Loss on impairment of assets
     660       -       -             660  
Total Expenses
     179,388       32,982       (3,628 )           208,742  
                                       
INCOME (LOSS) FROM OPERATIONS
     10,154       430       3,628             14,212  
                                       
OTHER INCOME (EXPENSE)
                                      
  Interest income
     35       -       -             35  
  Other income
     731       -       -             731  
  Interest expense
     (15,585 )     -       2,062     (6)       (13,523 )
  Gain (loss) on disposal of assets
     (198 )     (128 )     -             (326 )
  Gain (loss) on derivative financial instruments
     (2 )     -       -             (2 )
Total Other Income (Expense)
     (15,019 )     (128 )     2,062             (13,085 )
                                       
INCOME (LOSS) FROM CONTINUING OPERATIONS
                                
     BEFORE INCOME TAXES
     (4,865 )     302       5,690             1,127  
                                       
INCOME TAX (EXPENSE) BENEFIT
     1,238       -       -             1,238  
                                       
INCOME (LOSS) FOR CONTINUING OPERATIONS
     (3,627 )     302       5,690             2,365  
                                       
NET INCOME (LOSS) FROM CONTINUING OPERATIONS
                        
     ATTRIBUTABLE TO NONCONTROLLING INTERESTS
     (1,429 )     -       1,034     (7)       (395 )
                                       
NET INCOME (LOSS) FROM CONTINUING OPERATIONS
                        
     ATTRIBUTABLE TO SUMMIT HOTEL PROPERITES INC.
     (2,198 )     302       4,656             2,760  
                                       
PREFERRED DIVIDENDS
     (4,625 )     -       -             (4,625 )
                                       
NET INCOME (LOSS) FROM CONTINUING OPERATIONS
                        
   ATTRIBUTABLE TO COMMON STOCKHOLDERS
   $ (6,823 )   $ 302     $ 4,656           $ (1,865 )
                                       
WEIGHTED AVERGE COMMON SHARES OUTSTANDING
                        
  Basic
     33,717               17,250     (8)       50,967  
                                       
  Diluted
     33,849               17,250     (8)       51,099  
                                       
EARNINGS PER SHARE
                                      
Basic and diluted net income (loss) per share from continuing
                                
  operations
   $ (0.20 )                         $ (0.04 )
 
See Notes to Unaudited Pro Forma Financial Information
 
 
5
 
 
Summit Hotel OP, LP
Unaudited Pro Forma Consolidated Balance Sheet
December 31, 2012
(in thousands)
 
   
Historic 
Summit Hotel
OP, LP
    
Issuance of
17,250,000
Common Units
(1)
    
Acquisition of
Hyatt 3 Portfolio 
(2)
    
Pro Forma
Summit Hotel
OP, LP
  
ASSETS
                        
                         
  Investment in hotel properties, net
   $ 734,362     $ -     $ 36,125     $ 770,487  
  Investment in hotel properties under development
     10,303       -       -       10,303  
  Land held for development
     15,802       -       -       15,802  
  Assets held for sale
     4,836       -       -       4,836  
  Cash and cash equivalents
     13,980       90,100       (36,235 )     67,845  
  Restricted cash
     3,624       -       -       3,624  
  Trade receivables
     5,478       -       551       6,029  
  Prepaid expenses and other
     5,311       -       103       5,414  
  Deferred charges, net
     8,895       -       -       8,895  
  Deferred tax asset
     3,997       -       -       3,997  
  Other assets
     4,201       -       -       4,201  
          TOTAL ASSETS
   $ 810,789     $ 90,100     $ 544     $ 901,433  
                                 
                                 
LIABILITIES AND EQUITY
                                
                                 
LIABILITIES
                                
  Debt
   $ 312,613     $ (58,000 )   $ -     $ 254,613  
  Accounts payable
     5,013       -       42       5,055  
  Accrued expenses
     18,985       -       891       19,876  
  Derivative financial instruments
     641       -       -       641  
          TOTAL LIABILITIES
     337,252       (58,000 )     933       280,185  
                                 
COMMITMENTS AND CONTINGENCIES
                                
                                 
EQUITY
                                
  Summit Hotel Properties, Inc., 46,159,652 and 27,278,000 common units
                                
     outstanding at December 31, 2012 and 2011, respectively, and 5,000,000
                                
     and 2,000,000 preferred units outstanding at December 31, 2012 and
                                
     2011, respectively (preferred units liquidation preference of $125,717 and
                                
     $50,393 at December 31, 2012 and 2011, respectively)
     436,819       148,100       (322 )     584,597  
  Unaffiliated limited partners, 5,226,375 and 10,100,000 common units
                                
     outstanding at December 31, 2012 and 2011, respectively
     36,718       -       (67 )     36,651  
          TOTAL EQUITY
     473,537       148,100       (389 )     621,248  
                                 
          TOTAL LIABILITIES AND EQUITY
   $ 810,789     $ 90,100     $ 544     $ 901,433  
 
See Notes to Unaudited Pro Forma Financial Information
 
 
6
 
 
Summit Hotel OP, LP
Unaudited Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 2012
(in thousands, except per unit)
 
    Historical Summit Hotel OP, LP     Historic Hyatt 11 Portfolio     Pro Forma Adjustments    
 
    
Pro Forma
Summit Hotel
OP, LP
  
                               
REVENUE
                              
  Room revenue
   $ 181,598     $ 33,300     $ -           $ 214,898  
  Other hotel operations revenue
     7,944       112       -             8,056  
Total Revenue
     189,542       33,412       -             222,954  
                                       
EXPENSES
                                      
Hotel operating expenses
                                      
  Rooms
     54,083       10,191       -             64,274  
  Other direct
     25,125       3,883       -             29,008  
  Other indirect
     51,062       10,157       (700 )   (3)       60,519  
  Other
     911       55       -             966  
Total hotel operating expenses
     131,181       24,286       (700 )           154,767  
  Depreciation and amortization
     34,263       8,696       (2,624 )   (4)       40,335  
  Corporate general and administrative:
                                      
     Salaries and other compensation
     6,039       -       -             6,039  
     Other
     3,534       -       -             3,534  
  Debt transaction costs
     661       -       -             661  
  Hotel property acquisition costs
     3,050       -       (304 )   (5)       2,746  
  Loss on impairment of assets
     660       -       -             660  
Total Expenses
     179,388       32,982       (3,628 )           208,742  
                                       
INCOME (LOSS) FROM OPERATIONS
     10,154       430       3,628             14,212  
                                       
OTHER INCOME (EXPENSE)
                                      
  Interest income
     35       -       -             35  
  Other income
     731       -       -             731  
  Interest expense
     (15,585 )     -       2,062     (6)       (13,523 )
  Gain (loss) on disposal of assets
     (198 )     (128 )     -             (326 )
  Gain (loss) on derivative financial instruments
     (2 )     -       -             (2 )
Total Other Income (Expense)
     (15,019 )     (128 )     2,062             (13,085 )
                                       
INCOME (LOSS) FROM CONTINUING OPERATIONS
                                
   BEFORE INCOME TAXES
     (4,865 )     302       5,690             1,127  
                                       
INCOME TAX (EXPENSE) BENEFIT
     1,238       -       -             1,238  
                                       
INCOME (LOSS) FROM CONTINUING OPERATIONS
     (3,627 )     302       5,690             2,365  
                                       
PREFERRED DIVIDENDS
     (4,625 )     -       -             (4,625 )
                                       
NET INCOME (LOSS) FROM CONTINUING OPERATIONS
                                
  ATTRIBUTABLE TO COMMON UNIT HOLDERS
   $ (8,252 )   $ 302     $ 5,690           $ (2,260 )
                                       
WEIGHTED AVERGE COMMON UNITS OUTSTANDING
                                
  Basic
     40,780               17,250     (8)       58,030  
                                       
  Diluted
     40,912               17,250     (8)       58,162  
                                       
EARNINGS PER UNIT
                                      
Basic and diluted net income (loss) per unit from continuing
                                
  operations
   $ (0.20 )                         $ (0.04 )
 
See Notes to Unaudited Pro Forma Financial Information
 
 
7
 
 
Summit Hotel Properties, Inc. and Summit Hotel OP, LP
Notes to Unaudited Pro Forma Financial Information
(dollars in thousands)
 
 
(1)  
Reflects the issuance of 17,250,000 shares of common stock by the Company and 17,250,000 common units by the Operating Partnership as if they occurred on December 31, 2012. Net proceeds, after deducting the underwriting discount and estimated offering costs were $148.1 million, $58.0 million of which was used to pay off borrowings under the senior secured revolving credit facility.

(2)  
Reflects the acquisition of the Hyatt 3 Portfolio for a purchase price of $36.1 million as if it occurred on December 31, 2012. The acquisition was funded with the proceeds from the Company’s second follow-on common stock offering. The following is a summary of the Hyatt 3 Portfolio.

 
Brand
  
Location
  
Number of
Guestrooms
           
 
Hyatt Place
  
Chicago (Hoffman Estates), IL
  
              126
 
Hyatt Place
  
Orlando (Convention), FL
  
              149
 
Hyatt Place
  
Orlando (Universal), FL
  
              151
         
              426
 
The following is a summary of assets and liabilities acquired, including an estimate of the Company’s initial allocation of the aggregate purchase price for the Hyatt 3 Portfolio, and the net cash disbursed in connection with the acquisition. The purchase price allocation is based on preliminary information and is, therefore, subject to change.
 
 
Assets and Liabilities Acquired
    
Net Cash Disbursed
  
 
Land
   $ 5,058    
Purchase price
   $ 36,125  
 
Hotel buildings and improvements
     28,901    
Acquisition costs
     85  
 
Furniture, fixtures and equipment
     2,166    
Net working capital
     38  
 
Total purchase price
     36,125         $ 36,248  
 
Cash acquired
     317    
Use of proceeds from common
        
 
Other assets
     654    
   stock offering
   $ 36,248  
 
Total assets acquired
     37,096    
Borrowings under senior secured
        
 
Other liabilities
     933    
    revolving credit facility
     -  
 
Net assets acquired
   $ 36,163         $ 36,248  
 
(3)
Reflects adjustment to management and franchise fees for the difference between historical fees of the Hyatt 11 Portfolio and the fees the Company has contracted to pay.

(4)
Reflects adjustment to depreciation resulting from the change in basis of assets acquired in the Hyatt 11 Portfolio. The new basis is depreciated using a straight-line method over 25 to 40 years for hotel buildings and improvements and 2 to 15 years for furniture, fixtures and equipment.

(5)
Reflects the removal of acquisition costs of $304 thousand related to the Hyatt 11 Portfolio.

(6)
Reflects the decrease in interest expense resulting from the change in borrowings under the Company’s senior secured revolving credit facility related to the second follow-on common stock offering and the Hyatt 3 Portfolio acquisition.

(7)
Reflects the allocation of earnings from the Hyatt 11 Portfolio and pro forma adjustments to noncontrolling interest.

(8)
Reflects the issuance of 17,250,000 shares of common stock by the Company and 17,250,000 common units by the Operating Partnership as if they had occurred on January 1, 2012.
 
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