Summit Hotel Properties, Inc 8-K, filed Mar 26, 2020
Summit Hotel Properties, Inc. (INN)
About this 8-K
Summit Hotel Properties, Inc filed this 8-K on March 26, 2020, reporting on events of March 25, 2020.
Items reported
- Item 2.03: New debt or off-balance-sheet obligation
- Item 7.01: Regulation FD disclosure
- Item 8.01: Other events
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
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Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
As previously disclosed, Summit Hotel Properties, Inc. (the “Company”), as parent guarantor, Summit Hotel OP, LP (the “Operating Partnership”), as borrower, and each party executing the credit facility documentation as a subsidiary guarantor, entered into a $600 million senior unsecured credit facility (the “Credit Facility”) with Deutsche Bank AG New York Branch, as administrative agent, Deutsche Bank Securities Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Regions Capital Markets and U.S. Bank National Association, as joint lead arrangers and joint bookrunners, and a syndicate of lenders including Deutsche Bank AG New York Branch, Bank of America, N.A., Regions Bank, U.S. Bank National Association, KeyBank National Association, PNC Bank National Association, Royal Bank of Canada, Raymond James Bank, N.A., Branch Banking and Trust Company, Capital One, National Association and BMO Harris Bank N.A. The material terms of the Credit Facility are described under Item 1.01 of the Company’s Current Report on Form 8-K filed with the United States Securities and Exchange Commission on December 10, 2018, which description is hereby incorporated by reference herein. The Credit Facility is comprised of a $400 million revolving credit facility (the “$400 Million Revolver”) and a $200 million term loan.
On March 19, 2020, the Company borrowed $125.0 million under the $400 Million Revolver as a precautionary measure in order to increase its cash position and preserve financial flexibility in light of current uncertainty resulting from, and the adverse effects on operations of, the novel coronavirus and related respiratory disease (COVID-19) pandemic.
As of March 23, 2020, the principal amount outstanding under the $400 Million Revolver was approximately $220.0 million. The current interest rate for borrowings under the $400 Million Revolver is LIBOR plus 175 basis points based on the Company’s current leverage ratio, or approximately 2.68% as of March 23, 2020.
Item 7.01. Regulation FD Disclosure.
On March 25, 2020, the Company announced actions it has taken and will take to mitigate the operating and financial effects on the Company due to the COVID-19 pandemic.
A copy of the press release is furnished as Exhibit 99.1 to this report and is hereby incorporated by reference herein.
Item 8.01. Other Events.
On March 25, 2020, the Company announced that due to the effects of the COVID-19 pandemic it will temporarily suspend operations at certain hotels in response to specific government mandates or as the result of the current adverse market conditions.
This Current Report on Form 8-K contains statements that are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended, pursuant to the safe harbor provisions of the Private Securities Reform Act of 1995. These forward-looking statements relate to the suspension of operations at hotel properties. Forward-looking statements are based on certain assumptions and can include future expectations, future plans and strategies, financial and operating projections or other forward-looking information.
These forward-looking statements are subject to various risks and uncertainties, not all of which are known to the Company and many of which are beyond the Company’s control, which could cause actual results to differ materially from such statements. These risks and uncertainties include, but are not limited to, the state of the U.S. economy, supply and demand in the hotel industry, the effects of the COVID-19 pandemic and other factors as are described in greater detail in the Company’s filings with the SEC, including, without limitation, the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Unless legally required, the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
| Item 9.01. | Financial Statements and Exhibits. |
| (d) | Exhibits |
| 99.1 | Press release issued on March 25, 2020. |
| 104 | Cover Page Interactive Data File – the cover page XBRL tags are embedded within the Inline XBRL document |
SIGNATURE
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.
| SUMMIT HOTEL PROPERTIES, INC. | ||
| By: | /s/ Christopher R. Eng | |
| Christopher R. Eng Executive Vice President, General Counsel, | ||
| Dated: March 25, 2020 | Chief Risk Officer and Secretary | |
Exhibit 99.1
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13215
Bee Cave Parkway. Suite B-300, Austin, Texas 78738 Telephone: 512-538-2300 Fax: 512-538-2333 www.shpreit.com |
PRESS RELEASE
Summit Hotel Properties Provides Update on Action Plan to Mitigate Effects of COVID-19
Austin, Texas, March 25, 2020 - - - Summit Hotel Properties, Inc. (NYSE: INN) (the “Company”) today announced that it has taken significant steps to enhance its overall liquidity position in light of the operating and financial effects on the Company due to the COVID-19 (Coronavirus) pandemic.
The following is a summary of certain measures the Company has taken to date in order to enhance its overall liquidity position:
| · | Comprehensive cost reduction initiatives, including the reduction of labor and elimination of certain services and amenities, have been implemented at all hotels. The Company will temporarily suspend operations at certain hotels in response to specific government mandates or as the result of the current adverse market conditions. |
| · | The Company has postponed all non-essential capital improvement projects planned for 2020 beyond those already completed or substantially complete, which is expected to reduce total capital expenditures by approximately $35 million, or over 50% based on the midpoint of the Company’s previously provided guidance range of total capital expenditures for 2020. |
| · | The Company intends to suspend the declaration and payment of dividends on its common stock and operating partnership units beginning with the first quarter of 2020. This will conserve $19 million of cash quarterly, or $75 million on an annualized basis. The Company will continue to monitor the operating environment to determine the appropriate time and level of any common stock dividend payments. |
| · | The Company has drawn an additional $125 million on its $400 million unsecured revolving credit facility as a precautionary measure to ensure the Company has sufficient liquidity to meets its funding needs for the foreseeable future. The Company currently has $135 million of consolidated unrestricted corporate cash on hand and an additional $170 million of undrawn availability on its unsecured revolving credit facility. The Company has no debt maturing before November 2022. |
“As our industry continues to navigate through the adverse effects of the COVID-19 pandemic, we remain committed, first and foremost, to the safety and well-being of our employees, guests and associates. I’m incredibly proud and thankful for the efforts of our employees and the commitment from our key partners to serving the best interests of all of our stakeholders,” said Dan Hansen, Chairman, President and Chief Executive Officer of Summit Hotel Properties. “Over the past few weeks, we have worked diligently with our third-party management companies and brand partners to make many difficult, but necessary, decisions at the hotel level in an attempt to preserve shareholder value and are committed to expeditiously returning to a more normal operating environment as conditions improve. Additionally, we will continue to evaluate further measures to enhance our overall liquidity position as we monitor the potential longevity of the evolving situation. While these are unprecedented and difficult times in our business and for our company, I am confident our experienced team will successfully navigate this challenging environment and Summit will continue as an industry leader.”
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About Summit Hotel Properties
Summit Hotel Properties, Inc. is a publicly traded real estate investment trust focused on owning premium-branded hotels with efficient operating models primarily in the Upscale segment of the lodging industry. As of March 25, 2020, the Company’s portfolio consisted of 72 hotels, 67 of which were wholly owned, with a total of 11,288 guestrooms located in 23 states.
For additional information, please visit the Company’s website, www.shpreit.com and follow the Company on Twitter at @SummitHotel_INN.
Contact:
Adam Wudel
SVP – Finance & Capital Markets
Summit Hotel Properties, Inc.
(512) 538-2325
Forward Looking Statements
This press release contains statements that are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended, pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “may,” “will,” “should,” “potential,” “intend,” “expect,” “seek,” “anticipate,” “estimate,” “approximately,” “believe,” “could,” “project,” “predict,” “forecast,” “continue,” “plan,” “likely,” “would” or other similar words or expressions. These forward-looking statements relate to the payment of dividends, savings from reductions of capital improvement projects, suspension of operations at hotels, and the future prospects of the Company. Forward-looking statements are based on certain assumptions and can include future expectations, future plans and strategies, financial and operating projections or other forward-looking information. These forward-looking statements are subject to various risks and uncertainties, not all of which are known to the Company and many of which are beyond the Company’s control, which could cause actual results to differ materially from such statements. These risks and uncertainties include, but are not limited to, the state of the U.S. economy, supply and demand in the hotel industry and other factors as are described in greater detail in the Company’s filings with the Securities and Exchange Commission, including, without limitation, the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Unless legally required, the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
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