SEC Company Response from Summit Hotel Properties, Inc. (INN, INN-PE, INN-PF) (CIK 0001497645) (INN) — Oct 3, 2017
Summit Hotel Properties, Inc. (INN, INN-PE, INN-PF) (CIK 0001497645)
Date: Oct. 3, 2017 · CIK: 0001497645 · Accession: 0001497645-17-000011
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 001-35074
Referenced dates: September 21, 2017
Letter
VIA EDGAR United States Securities and Exchange Commission Division of Corporate Finance Attention: Ms. Kristi Marrone Summit Hotel Properties, Inc. Form 8-K Filed August 2, 2017 File No. 001-35074
Dear Ms. Marrone:
This letter is being submitted in response to the comment letter dated September 21, 2017 of the staff of the Division of Corporate Finance (the “Staff”) of the United States Securities and Exchange Commission (the “SEC”) regarding the Current Report on Form 8-K filed by Summit Hotel Properties, Inc. (the “Company”) on August 2, 2017.
For the Staff’s convenience, the Staff’s comment appears below in italics with the Company’s response to the comment set out immediately below it.
Form 8-K filed August 2, 2017
Exhibit 99.1
Pro Forma Operational and Statistical Data, page 14
1.
We note that your presentation of Hotel EBITDA on a pro forma basis. In future filings, please revise your presentation of Hotel EBITDA as follows:
a.
Reconcile to the most directly comparable GAAP financial measure in accordance with Regulation G and Item 10(e)(1)(i) of Regulation S-K.
b.
Present Actual Hotel EBITDA, followed by a single adjustment for pre- acquisition results to arrive at Pro Forma Hotel EBITDA. Present other pro forma line items (e.g. pro forma revenues and hotel operating expenses) in a similar manner if you wish to continue to present those measures.
c.
Describe the source of pre-acquisition results and any adjustments made to those results. Additionally, consider disclosing whether the pre-acquisition results were audited or reviewed by your auditors.
d.
To the extent that you continue to present Pro Forma Total Revenue or other measures that include pre-acquisition results, tell us how you considered providing the relevant non-GAAP measures.
Ms. Kristi Marrone
United States Securities and Exchange Commission
Division of Corporate Finance
October 3, 2017
RESPONSE:
(1)In future filings, we will revise our presentation of Hotel EBITDA and Pro Forma Hotel EBITDA as described in the following paragraphs (a) through (d). To illustrate how the proposed reconciliations and additional disclosures will appear in our future filings, we have prepared a schedule of Pro Forma Hotel Operating Data populated with data for the three- and six-month periods ended June 30, 2016 and 2017. This illustrative schedule is Attachment A to this response letter (“Attachment A”).
(a)As illustrated in Attachment A, we will reconcile Pro Forma Hotel EBITDA to Operating Income, which is the most directly comparable GAAP financial measure, in accordance with Regulation G and Item 10(e)(1)(i) of Regulation S-K.
(b)As illustrated in Attachment A, we will present Actual Hotel EBITDA, followed by adjustments for pre-acquisition and pre-disposition results, to arrive at Pro Forma Hotel EBITDA. Additionally, as illustrated in Attachment A, we will reconcile Pro Forma Total Revenues and Pro Forma Total Hotel Operating Expenses to Total Revenues and Total Hotel Operating Expenses, respectively, which are the most directly comparable GAAP financial measures.
(c)As illustrated in Attachment A, we will include footnotes to the schedule of Pro Forma Hotel Operating Data that will (i) describe the source of pre-acquisition results, (ii) indicate whether adjustments have been made to such results, and (iii) state whether such results have been audited or reviewed by our auditors.
(d)Pro Forma Total Revenues and other measures that include pre-acquisition results are included in our presentation of non-GAAP measures to enable comparison of financial results for the current period to financial results of the corresponding period of the prior year. This comparison necessitates the inclusion or exclusion of pre-acquisition or pre-disposition financial results, respectively, and is consistent with presentations of other similar companies in our industry.
Ms. Kristi Marrone
United States Securities and Exchange Commission
Division of Corporate Finance
October 3, 2017
If you have any questions or comments regarding our response above, please do not hesitate to call the undersigned at 512-538-2303.
Very truly yours,
/s/ Greg A. Dowell
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CORRESP 1 filename1.htm Document 12600 Hill Country Boulevard Suite R - 100 A us t i n, Texas 78738 512-538-2300 October 3, 2017 VIA EDGAR United States Securities and Exchange Commission Division of Corporate Finance 100 F. Street, N.E. Washington, D.C. 20549 Attention: Ms. Kristi Marrone RE: Summit Hotel Properties, Inc. Form 8-K Filed August 2, 2017 File No. 001-35074 Dear Ms. Marrone: This letter is being submitted in response to the comment letter dated September 21, 2017 of the staff of the Division of Corporate Finance (the “Staff”) of the United States Securities and Exchange Commission (the “SEC”) regarding the Current Report on Form 8-K filed by Summit Hotel Properties, Inc. (the “Company”) on August 2, 2017. For the Staff’s convenience, the Staff’s comment appears below in italics with the Company’s response to the comment set out immediately below it. Form 8-K filed August 2, 2017 Exhibit 99.1 Pro Forma Operational and Statistical Data, page 14 1. We note that your presentation of Hotel EBITDA on a pro forma basis. In future filings, please revise your presentation of Hotel EBITDA as follows: a. Reconcile to the most directly comparable GAAP financial measure in accordance with Regulation G and Item 10(e)(1)(i) of Regulation S-K. b. Present Actual Hotel EBITDA, followed by a single adjustment for pre- acquisition results to arrive at Pro Forma Hotel EBITDA. Present other pro forma line items (e.g. pro forma revenues and hotel operating expenses) in a similar manner if you wish to continue to present those measures. c. Describe the source of pre-acquisition results and any adjustments made to those results. Additionally, consider disclosing whether the pre-acquisition results were audited or reviewed by your auditors. d. To the extent that you continue to present Pro Forma Total Revenue or other measures that include pre-acquisition results, tell us how you considered providing the relevant non-GAAP measures. Ms. Kristi Marrone United States Securities and Exchange Commission Division of Corporate Finance October 3, 2017 RESPONSE: (1)In future filings, we will revise our presentation of Hotel EBITDA and Pro Forma Hotel EBITDA as described in the following paragraphs (a) through (d). To illustrate how the proposed reconciliations and additional disclosures will appear in our future filings, we have prepared a schedule of Pro Forma Hotel Operating Data populated with data for the three- and six-month periods ended June 30, 2016 and 2017. This illustrative schedule is Attachment A to this response letter (“Attachment A”). (a)As illustrated in Attachment A, we will reconcile Pro Forma Hotel EBITDA to Operating Income, which is the most directly comparable GAAP financial measure, in accordance with Regulation G and Item 10(e)(1)(i) of Regulation S-K. (b)As illustrated in Attachment A, we will present Actual Hotel EBITDA, followed by adjustments for pre-acquisition and pre-disposition results, to arrive at Pro Forma Hotel EBITDA. Additionally, as illustrated in Attachment A, we will reconcile Pro Forma Total Revenues and Pro Forma Total Hotel Operating Expenses to Total Revenues and Total Hotel Operating Expenses, respectively, which are the most directly comparable GAAP financial measures. (c)As illustrated in Attachment A, we will include footnotes to the schedule of Pro Forma Hotel Operating Data that will (i) describe the source of pre-acquisition results, (ii) indicate whether adjustments have been made to such results, and (iii) state whether such results have been audited or reviewed by our auditors. (d)Pro Forma Total Revenues and other measures that include pre-acquisition results are included in our presentation of non-GAAP measures to enable comparison of financial results for the current period to financial results of the corresponding period of the prior year. This comparison necessitates the inclusion or exclusion of pre-acquisition or pre-disposition financial results, respectively, and is consistent with presentations of other similar companies in our industry. Ms. Kristi Marrone United States Securities and Exchange Commission Division of Corporate Finance October 3, 2017 If you have any questions or comments regarding our response above, please do not hesitate to call the undersigned at 512-538-2303. Very truly yours, /s/ Greg A. Dowell Greg A. Dowell Executive Vice President and Chief Financial Officer Cc: Daniel P. Hansen, Chief Executive Officer Christopher R. Eng, General Counsel and Chief Risk Officer David C. Wright, Hunton & Williams, LLP Mark W. Wickersham, Hunton & Williams, LLP ATTACHMENT A SUMMIT HOTEL PROPERTIES, INC. Pro Forma Hotel Operating Data Schedule of Property Level Results (Unaudited) For the Three Months Ended June 30, For the Six Months Ended June 30, Pro Forma Operating Data (1) (2) 2017 2016 2017 2016 Pro forma room revenue $ 131,101 $ 134,266 $ 252,940 $ 254,101 Pro forma other hotel operations revenue 9,729 10,306 18,810 19,971 Pro forma total revenues 140,830 144,572 271,750 274,072 Pro forma total hotel operating expenses 86,191 85,380 168,362 165,021 Pro forma hotel EBITDA $ 54,639 $ 59,192 $ 103,388 $ 109,051 Pro forma hotel EBITDA Margin 38.8 % 40.9 % 38.0 % 39.8 % Reconciliations of Non-GAAP financial measures to comparable GAAP financial measures Revenue: Total revenues $ 129,056 $ 127,195 $ 247,045 $ 245,277 Total revenues from acquisitions (1) 13,656 27,369 32,992 51,294 Total revenues from dispositions (2) (1,882 ) (9,992 ) (8,287 ) (22,499 ) Pro forma total revenues $ 140,830 $ 144,572 $ 271,750 $ 274,072 Hotel Operating Expenses: Total hotel operating expenses $ 79,499 $ 76,757 $ 154,703 $ 150,895 Total hotel operating expenses from acquisitions (1) 8,183 15,662 19,779 30,037 Total hotel operating expenses from dispositions (2) (1,491 ) (7,039 ) (6,120 ) (15,911 ) Pro forma total hotel operating expenses (1) (2) $ 86,191 $ 85,380 $ 168,362 $ 165,021 Hotel EBITDA: Operating income $ 24,515 $ 25,634 $ 43,082 $ 46,302 Hotel property acquisition costs — 1,728 354 2,282 Corporate general and administrative expenses 5,310 5,391 10,448 9,970 Depreciation and amortization 19,732 17,685 38,458 35,828 Hotel EBITDA 49,557 50,438 92,342 94,382 Hotel EBITDA from acquisitions (1) 5,473 11,707 13,213 21,257 Hotel EBITDA from dispositions (2) (391 ) (2,953 ) (2,167 ) (6,588 ) Pro forma hotel EBITDA $ 54,639 $ 59,192 $ 103,388 $ 109,051 (1) Pro forma information includes operating results for 81 hotels owned as of June 30, 2017 as if all such hotels had been owned by the Company since January 1, 2016. For hotels acquired by the Company after January 1, 2016 (the “Acquired Hotels”), the Company has included in the pro forma information the financial results of each of the Acquired Hotels for the period from January 1, 2016 to the date the Acquired Hotels were purchased by the Company (the “Pre- acquisition Period”). The financial results for the Pre-acquisition Period were provided by the third-party owner of such Acquired Hotel prior to purchase by the Company and have not been audited or reviewed by our auditors or adjusted by us. The pro forma information is included to enable comparison of results for the current reporting period to results for the comparable period of the prior year and are not indicative of future results. (2) For hotels sold by the Company between January 1, 2016 and June 30, 2017 (the “Disposed Hotels”), the pro forma information excludes the financial results of each of the Disposed Hotels for the period of ownership by the Company from January 1, 2016 through the date that the Disposed Hotels were sold by the Company. ATTACHMENT A (continued) SUMMIT HOTEL PROPERTIES, INC. Pro Forma Hotel Operating Data Schedule of Property Level Results (Unaudited) 2016 2017 Trailing Twelve Months Ended June 30, 2017 Pro Forma Operating Data (1) (2) Q3 Q4 Q1 Q2 Pro forma room revenue $ 126,811 $ 114,088 $ 121,839 $ 131,101 $ 493,839 Pro forma other hotel operations revenue 9,946 8,630 9,082 9,729 37,387 Pro forma total revenues 136,757 122,718 130,921 140,830 531,226 Pro forma total hotel operating expenses 83,771 77,787 82,172 86,191 329,921 Pro forma hotel EBITDA $ 52,986 $ 44,931 $ 48,749 $ 54,639 $ 201,305 Pro forma hotel EBITDA Margin 38.7 % 36.6 % 37.2 % 38.8 % 37.9 % Pro Forma Statistics (1) (2) Rooms occupied 850,499 788,526 803,388 869,275 3,311,688 Rooms available 1,067,292 1,067,292 1,044,720 1,056,325 4,235,629 Occupancy 79.7 % 73.9 % 76.9 % 82.3 % 78.2 % ADR $ 149.10 $ 144.69 $ 151.66 $ 150.82 $ 149.12 RevPAR $ 118.82 $ 106.89 $ 116.62 $ 124.11 $ 116.59 Actual Statistics Rooms occupied 775,529 737,390 761,358 813,577 3,087,854 Rooms available 983,579 1,002,482 990,913 986,998 3,963,972 Occupancy 78.8 % 73.6 % 76.8 % 82.4 % 77.9 % ADR $ 142.84 $ 139.16 $ 144.94 $ 148.13 $ 143.87 RevPAR $ 112.63 $ 102.36 $ 111.36 $ 122.10 $ 112.07 Reconciliations of non-GAAP financial measures to comparable GAAP financial measures Revenue: Total revenues $ 118,336 $ 110,322 $ 117,989 $ 129,056 $ 475,703 Total revenues from acquisitions (1) 25,130 18,479 19,336 13,656 76,601 Total revenues from dispositions (2) (6,709 ) (6,083 ) (6,404 ) (1,882 ) (21,078 ) Pro forma total revenues $ 136,757 $ 122,718 $ 130,921 $ 140,830 $ 531,226 Hotel Operating Expenses: Total hotel operating expenses $ 73,530 $ 71,256 $ 75,204 $ 79,499 $ 299,489 Total hotel operating expenses from acquisitions (1) 15,030 10,994 11,596 8,183 45,803 Total hotel operating expenses from dispositions (2) (4,789 ) (4,463 ) (4,628 ) (1,491 ) (15,371 ) Pro forma total hotel operating expenses $ 83,771 $ 77,787 $ 82,172 $ 86,191 $ 329,921 Hotel EBITDA: Operating income $ 21,427 $ 14,758 $ 18,567 $ 24,515 $ 79,267 Loss on impairment of assets 577 — — — 577 Hotel property acquisition costs 527 683 354 — 1,564 Corporate general and administrative expenses 4,388 4,934 5,138 5,310 19,770 Depreciation and amortization 17,887 18,691 18,726 19,732 75,036 Hotel EBITDA 44,806 39,066 42,785 49,557 176,214 Hotel EBITDA from acquisitions (1) 10,100 7,485 7,740 5,473 30,798 Hotel EBITDA from dispositions (2) (1,920 ) (1,620 ) (1,776 ) (391 ) (5,707 ) Pro forma hotel EBITDA $ 52,986 $ 44,931 $ 48,749 $ 54,639 $ 201,305 (1) Pro forma information includes operating results for 81 hotels owned as of June 30, 2017 as if all such hotels had been owned by the Company since July 1, 2016. For hotels acquired by the Company after July 1, 2016 (the “Acquired Hotels”), the Company has included in the pro forma information the financial results of each of the Acquired Hotels for the period from July 1, 2016 to the date the Acquired Hotels were purchased by the Company (the “Pre-acquisition Period”). The financial results for the Pre-acquisition Period were provided by the third-party owner of such Acquired Hotel prior to purchase by the Company and have not been audited or reviewed by our auditors or adjusted by us. The pro forma information is included to enable comparison of results for the current reporting period to results for the comparable period of the prior year and are not indicative of future results. (2) For hotels sold by the Company between July 1, 2016 and June 30, 2017 (the “Disposed Hotels”), the pro forma information excludes the financial results of each of the Disposed Hotels for the period of ownership by the Company from July 1, 2016 through the date that the Disposed Hotels were sold by the Company.