AUSTIN-Summit Hotel Properties Inc. released its Q3 2013 earnings, most of which were positive. One small dilution in earnings, however, came in the form of reduced adjusted FFO guidance, from $0.24-$0.26 per share to $0.23-$0.25 per share.
According to a release, the dilution came on the heels of a public offering of 17.2 million shares of common stock, which raised net proceeds of $152.2 million, and which will be used to target more acquisitions.
"This follow-on offering positions us well for sustained growth, providing us with capital to acquire strategic hotels over the next several quarters," says Dan Hansen, Summit's president and CEO. "The short-term dilutive effect will resolve itself quickly as we execute on hotel acquisitions. Since the offering was completed, we have acquired two hotels and have three under purchase agreement, as well as a very active pipeline of both single assets and small portfolios." He went on to say the earnings results were "within our expected range," with certain items impacting earnings "both on the positive and negative side."
Pro forma RevPAR growth increased 3.3% year over year to $83.56, while pro forma ADR was $111.90, an increase of 5.1% versus Q3 2012.
"Our RevPAR growth was within our range when excluding the five recently acquired New Orleans properties. Adjusted FFO per diluted unit was aided by a tax benefit of approximately $0.02 per diluted unit," Hansen says, adding that other factors had an impact on operating results at some of the REIT's smaller hotels. These factors included sequestration, the government shutdown and poor performance. "We have addressed the operating shortcomings at those hotels with our third-party management companies and expect to see improvements," Hansen says. "We remain positive about the company's 2014 outlook."
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