INN - Earnings call transcript Q3 2018 | Summit Hotel Properties, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to the Summit Hotel Properties Q3 2018 earnings call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to introduce your host for today's call Mr. President and Vice Markets. Senior Wudel, of Financial Capital Adam

You begin. may now

Adam Wudel

Dan XXXX I and President today Officer, Please Vice note Sherry Jon you, of Financial am and and and are Chief President other forward-looking unknown, good Executive that Chairman, and risks uncertainties, filings. known and our considered defined Thank federal to Stanner. Properties' morning. statements comments today joined and Officer, Executive securities subject by described Form in our as Hotel as SEC by are Chief many laws. XX-K Hansen, Summit These statements both

Forward-looking statements we of undertake today later. effective and today, to duty only update them that as we make no XXXX, October XX, are

reconciliations on You on President measures copies can SEC Properties' Web-site Summit Officer, our filings Dan find Hansen. our non-GAAP contain this to referenced of call, which www.shpreit.com. Chief Executive Chairman, and Hotel Please at and welcome financial release, earnings

Dan Hansen

you quarter a results, with of occupancy today coming when thank comparison in year us line the all our joining conference and third the our to Hurricane related reported year-over-year results natural last we by which despite quarter, disruption earnings boosted Adam, was Yesterday, by into compounded some Florence. XXXX disaster Thanks, bottom-line for third difficult expectations our quarter caused for call.

$X.XX daily which as to third in a to the and the by $X.XX decline compared and rate, above which Irma by markets Harvey consisted of in came affected the by South in basis share, third as share. our million X.X% quarter, range X.X% RevPAR driven a midpoint pro in XXXX, per of well forma wildfires For quarter average we our unchanged hotels increase California. $X.XX reported the $XX.X of occupancy Hurricanes largely adjusted On of or was of guidance a FFO per offset

quarter, better experienced our hotels brands disruption which markets September were of such Michael opportunities Several and Ashville the well-located from continued well there that in the and a us last Hurricanes during for year's models of with our growth addition two with as XX.X% In third in growth. the and the great affected markets the of of again two well of has few gives been Charlotte year. efficient at hotels Florence operating have to hotels. XX% by impressive performing optimism this year-to-date markets markets one natural margin that performed encouraging was XXX disasters, Bottom-line Minneapolis hotels quarter. to hotel quite with our bringing RevPAR leading growth the an during RevPAR performance points our X.X% downtown downtown and the with combined quarter, at expansion way EBITDA during as basis increase

the up year. difficult Although, against of in first Super the quarter next Bowl we will comparison

in market by the We fundamentals strengthening are encouraged Minneapolis.

to in outperforming sets The decline Hampton in competitive both as RevPAR XX.X% in of to solid RevPAR share. X% margin in XX.X% Inn quarter increase the of and X.X% the translated EBITDA in Our in Inn of XX.X% & quarter Francisco market the three posted basis XXXX. and a of growth increase & the rate top-line hotels growth Suites margin daily Suites hotel X.X% significantly the of points. resulted San by to of rate renovated nearly Holiday strong quarter, Austin and across led increased San In X.X% Francisco X.X% points of gain EBITDA compared Austin, the XXX quarter this a during X.X% Express our growth period the generated same performance growth market hotel hotels basis of growth. our outpaced expansion hotel's which XXX our expansion X.X% translated A hotel RevPAR with overall average EBITDA three which recently

acquired an was growth mid-XXXX of nearly which of XX% Our quarter in hotel to XXX driven XX.X% boosted ADR an in RevPAR margin RevPAR downtown impressive expansion and EBITDA had Pittsburgh, growth basis the posting courtyard points.

is In to addition, XXX% Hyatt our still hotel up fastest reach report our ramping hotel history. recently share at of which Studios House market being success its RevPAR has first that achieving it select Universal Hyatt's in happy and fair index and now I'm developed new already opened been month, in Orlando resounding service share the month to its makes

quarter require near-term EBITDA of the street margins limited our of the The the income. RevPAR highest Watertown the expenditures to Room rapidly Residence very submarket and The will make of announced from on hotel the in cap We hotel the have is absolute redevelopment. the over capital X.X% Cambridge expanding hotel acquisition capital XXX of [ph] Boston continue allocation $XX any strategy recycling progress in will and million in Watertown. personally XX-month mixed to and portfolio. on as the an archery and our represents purchase use rate estimated price during Guest we operating The net across adjacent transformational

items. RevPAR portfolio previously pro $XXX.X X.X% XXXX resulted During the as The than capital than X.X% including average average weighted margin proceeds XXX XXth. the forma the pro Fort Room period. of of in for $XX the the rate the hotel for on including cap EBITDA XX.X% of The XX.X% sale same capital sold in approximately brings expenditures. points Place was Florida. blended XX-month XX-month lower disposition completed September of quarter, forma at gross Combined average lower portfolio hotels the we our in was eight or expenditures million of Hyatt combined NOI, a rate sale XXXX price to in trailing Guest basis XXX mandated cap of the This estimated Myers, brand at announced $XX.X our tip million

and demonstrating of on to whole period further into believe net resulted have and capital execution recent during potential hotels allowed to growth our of The hotels returns. Our million redeploy has the we hotels on recycling XX.X% of year better returns overall the eight attractive ability in blended strategy our unlevered in renovating a that buying, and was strategy dispositions. greater selling risk adjusted gain a to $XX.X our IRR execute sold at capital us

Our stay. XX high acquisition hotels validate and absolute margin average currently a have in XXX EBITDA ability the to guest points markets where we and higher. and our today's premium XX% the hotels sold hotel basis in have as success on to of locations hotels wants to compared execute XXXX classified continues Their to acquisitions identify quality RevPAR

in are During $XX.X our ongoing at from the we timed to on renovations. room items and to guest projects space to invested hotels demand term planned upside turn complete benefit such name CFO, to Stanner. improvements markets and with With call million from over to portfolio Atlanta few. near into San enhancements as the public Jon our lobby The I'll bar ranging our a that, quarter, strategically Francisco, position renovation Huston

Jon Stanner

good and everyone. Dan morning Thanks

X.X% pro hotel expenses same hotel decrease million XX.X%. $XX.X a costs. basis Hotel labor points X% to contracted of compared our forma basis in quarter was period room increased per XXXX just and under higher by operating quarter primarily to a driven the on EBITDA the For the EBITDA margins XX during occupied

increased quarter, X.X% third to million. the EBITDARE our $XX.X During adjusted

than at to well-positioned with of an be four more balance approximately maturity years. liquidity continues of Our average current million length of sheet $XXX

loans debt in of intend of X.X%. to $XXX without XXth, mature mortgage XXXX, outstanding we with At As an rate penalty million outstanding we $XXX interest had million. of the four repay that the and balance total average end September of XXXX of weighted

sheet. flexible loans, Following the balance to continued our of hotel a our highly be these repayment assemble of will EBITDA approximately efforts XX% validating unencumbered,

a of share As of price guidance $X.XX hotels we the our eight combined X.X% transactions, and October capital per the share. XX, annualized common and of the year Dan We ratio forma yesterday. mentioned, closing the basis. XX in times have an dividend sale year-to-date XX% for our with a October as to stock or a $X.XX The for proven quarter we of per net XX-month fourth these dividend quarter results great make approximately $XXX.X payout the press midpoint yield of is price outlook. full trailing attractive After AFFO of updated of approximately XXXX of sale progress continued annualized declared a on our On million. X.X for recycling on completion program the the third debt-to-EBITDA our of pro XXXX dividend on based an at release in quarterly

for FFO tied XXXX adjusted to share. into was guidance full per year $X.XX $X.XX Our

also X.XX% We updated and and guidance store X.XX% RevPAR growth our same pro X.XX% to forma to respectively. negative to X.XX% negative

range is improvement Our to full million. the $XX $XX for expected capital million in to of estimate be year

forma AFFO negative and For share portfolio. X% to guidance for provided both fourth of same RevPAR the negative X% to quarter store guidance we $X.XX pro of growth per the and $X.XX XXXX,

No growth beyond previously the With fourth to demand difficult a year additional call reminder, Dan. equity XXXX we storm RevPAR or of fourth I'll year back over faced full those raises or As X.X%. to that, when the acquisitions, drove transactions debt turn related guidance. year-over-year comparisons quarter in dispositions, or assumed particularly quarter the last mentioned to

Dan Hansen

with quarter and In continue diversified as progress third pleased we're portfolio producing our summary, Thanks, results. the very Jon. recycling capital our solid well our in properties acquisition

with questions. optimistic extremely about Summit. of future to to continue that, open We the And the be your call we'll

Operator

Wurschmidt Markets. Instructions] question Austin [Operator first Capital Our you. KeyBanc from Thank comes with

Austin Wurschmidt

Hi. Good guys. morning,

from some up difficult the the the I XQ hurricane but and only impacted been from faced know it's the comps into from that clearly a hurricane? point see markets markets month comps, the how far, you this what can so have Just first into how question, fourth suggests quarter guide challenges the the

Dan Hansen

is Dan. start. this I'll Austin,

has everything been I think of in with line expectations. kind

the always the in There and work we've it's been to all challenges pushing so there when done, mound traveler as but quarter good about in and as renovation, I compare been past travel bit speak. to decline as a rates feel challenges some you yourself we over a have that good fundamentals talked X.X% feel QX growth think a strong and last to solid. RevPAR of that's difficult been we really that underlying market-by-market guide, with business about almost been it's about some the leisure has year, have general some has supply, of

all effect is the growth of that and early almost So, year there less implies kind the taking portfolio. perhaps is actually in in than

have has difficult feel portfolio. with great still renovations purchased and the about fourth A over challenging and we quarter, the we years. comp despite some the we work done good So, lot few last acquisitions, of been the

imply. certainly the more guide So, we're so would than optimistic probably

Austin Wurschmidt

as third there of So, to anticipated? fourth saying that quarter are what expected markets in they've guidance the that decrease underperforming largely RevPAR is was performed attributable quarter or other performance the kind you originally any

Jon Stanner

Yeah. Hey it's Jon. Austin,

otherwise of the low towards is in our implied quarter a the when think one guidance third range coming quarter. of a in for fourth would softer guided end I than that in quarter the we a the fourth weaker quarter of what third combination guidance

As performed think have hurricane the with markets Dan I our mentioned, affected expectation. largely in line

been there other the portfolio. softness Now, has some throughout

weaker. in Barbara by very us, Santa of has a the quarter third in are it's year, combination is been quarter. third any caused say that's disruption Some one weak of other more a wouldn't the related I and Lake Salt obviously the of for storm Nashville. some in a in but of but was that been that little little market pockets We've of difficult a been comps market, fourth weaker there just couple quarter a this weakness,

Austin Wurschmidt

Watertown, announced Okay. Thanks for Boston you near-term outlook just And quarter, softness some about prospects the had what a last or created acquisition growth is you detail. Last that then your hotel, talked that Suburban supply one in for are, in curious in just market? high-quality market, well-located but for the certainly added me.

Dan Hansen

Yeah.

adjacent Boston effect us not growth had to the that's from as more suburban tremendous market, street Waltham coming a that a really transformational an of to right asset. kind relatively particularly submarket, new redevelopment look relates going in the and a that's mixed-use we hurt on to that's Cambridge, really and us think that think more that really of at at out across submarket Boston it development is I Watertown, Arsenal it Norwood. Yards as of this just a has be When in look we as supply

tremendous a have location in the think going effective to citywide less supply. the from is the that submarket purchase. right Really that is, New relatively is of we We Hampton science believe the street great there So, Boston a from companies I that's we we've in growth first all year, only growth that but new being across I coming supply that life little that think from built got convention that's the a there. calendar perspective weaker is moved have see universities from a suburban of the next refusal affect right in that market, there

and the the feel good in there. about we location we're So, market

Austin Wurschmidt

refusal? that of the timing first on And right what's

Dan Hansen

in built. It's process being of

haven't true, I but been time, actual So, true disclosed obviously the construction.

Austin Wurschmidt

the time. Thanks taking Great. for

Dan Hansen

Thanks.

Operator

Thank you.

Bank. Chris question from next Our comes Woronka with Deutsche

Chris Woronka

Hey, you are think want those are do as you to worse look good year mentioned morning, I do the ago the certain almost just pressures think they about time ask year are you November, or time you've a in to we're you from unfolded they has at the than guys. how same. abating, markets, now supply

Just trying for supply as next sense the year? get your broader to into a is markets what your heading to outlook

Dan Hansen

Dan. Chris, one this I'll and is Jon a share this probably bit.

benefits renovation. witnessed several supply we've of effective in last over the stabilization short-term, some from is some real I new what the but think that larger kind a years probably and

have portfolio, and supply come have as about into proliferation in the If things you disrupt And goals best always we the matter will especially our while locations. the of transformed new to market short-term, brands. locations one with think it's of the can

renovations locations good good time So, I - to and absorbed as can lead supply still the performance. create great gets over think

example. a on the to some came challenging lot helped kind some had XXXX and the really market prior new We year the I as drive had supply of is a supply Minneapolis with online. that a coming think in dynamics events special performance of great

some difficult had supply you So, and comps.

solid far, a been so this for it's And us. year really market

strength even and the Now the our we've this certainly performance Bowl, which our was Super year, have in we seen do but tailwind consistency a going Super Bowl there. into without

So, in competitive noted like was as think quarter others' the the probably markets stick markets I significantly out at Austin some market more particular set. Austin. that up look supply, are was a we and than and that there versus Nashville as this market

can great still in markets value. great general the property managers So, with drive

headwind abate continue much is perhaps be online. than seen renovations less to up, to of locations in And think we have couple supply I we on that part sum going of continue it and of So, and think will to absorbed I a being and that see last the coming forward years. predicated

new shorter as have we be portfolio So, that think have, about we will we coming competes markets talk probably forward we term as through the and well could properties talked but we do move that we've high-quality challenge, online. some - with very

Chris Woronka

you of expense still is question kind then, which of there you And a still cycle for front, worst similar point helpful. you meaningful moving potentially That's a type or target guess Okay. next of year? I headwind the kind of where of on the and kind do do is still a think pretty increases we're think that's

Dan Hansen

think of we we I some have. cycle to start challenges the should

higher RevPAR be that in expense and lower we're managers companies general probably management is honest prolonged an think experienced environment I of many before to haven't environment our where under management scrutiny.

model. So, start. because we is efficiency cut our the operating of a I think of when lot to not There

challenge companies. mitigate increases ways creative on So, managers asset management is being not but to with something our - and our being just efficient we continually

added are a expect There moderate that think And create, we I'd efficiencies anticipated to them headwind we than of it some So, greater to a year. certainly has this the I but hope lot been overtime. things create efficiencies. has to as labor. little you'd do of probably the expect, that to always That's focused is some biggest of be there on expense can But growth. that been with driver

Jon Stanner

mind big margins we've XX%, which in only would been thing being were the that keep and increases property first acquisitive as I half very taxes. a of in a have a add way XX% about first bit headwind in year half we headwind just is in quite the from that particularly XXXX. the material in the in Clearly property a Chris, talked goes away in of the year, at look result we XXXX up that's of kind of taxes,

Chris Woronka

Okay, Thanks very good. guys.

Dan Hansen

Chris. Thanks,

Operator

Thank you.

comes question Michael next Baird. Our with from Bellisario

Michael Bellisario

everyone. morning Good

Dan Hansen

Good morning.

Michael Bellisario

you to impacted South any Texas, and that be back segments Just September guys release Florida, press weakness than quarter comments on the trend that in particularly on have hurricane go Florida expected out and you snuck weaker and on maybe expected point the from September? than wanted maybe to to can just up markets, Houston you your earlier did were weaker the strip pin or

Dan Hansen

it's Mike, Hey, Jon. Yeah.

so as think third little storms, those mind, kind markets We talked this thankfully one XX of I storms basis impacts were quarter. had the about wasn't the I some look for the that a think very of analysis it to headwind from of need results from pick in basis about were quarter. in type I in and keep sounds had don't on there. future of specifically the any us bit from that question was we but benefits not up disruptive know through to than segment softer as storm. lower two any were if disruption last segmentation particularly total another some quarters. driving particular storm get if as a the between XX-basis we points what about so - confidence for of the was storms related and the sort we segment a year's XX particularly we a in quarter. The trend is wasn't it the last points others. which difficult headwind us weaker year, on That that it didn't read it damaging particular any through was from points the a year

Michael Bellisario

in seen it. related, and it, and some October that weather correct? September Got of its trend take is hurricane you've things those more And into I carryover

Dan Hansen

quarter of go you in back the when and again difficult guidance fourth Again, some does and put think of quarter one out just we that's quarter I it of look we fourth and more the think the fourth fourth the imply third of in reflective very guided market saw September. affected guide, softer of quarter softness and two that kind the a the if hurricane quarter yesterday, at I implied combination, comp. kind Yeah, we a guide

Michael Bellisario

helpful. the on talk kind of but today developments thinking share you kind uses have all repurchases side forward. about That's to from maybe the about way options going just the and sources stock about lately capital and your potentially it. And you allocation Got underperforming list your capital then think of how other of all

Dan Hansen

Mike, it's Yeah, Dan.

view and We've our the capital. of in that dollar consistently thoughtful We've allocating really We've do and I capital. precious, issued capital. believe stewards we're been in raised every a think that in by we've lot stock. recycled very many been is we we've dividend. of how capital of We believe

an to that So, a table. there used alternative we is as buyback. at such not That the the is haven't extent, certainly stock

has everything very whether read, renovation some investment an mean that. evaluate like in internal everything little we'd there is. we - where things drive tension discussion and incremental is what I think I best capital revenue that bar an - of it's acquisition, use or about of bit a a could a the

the with that we're certain we'll to people think as investors options and is continue that every at as should REIT, be by our expectation that we board. a and evaluate a team the I looking seriously all take and very So, that is quarter each something and that

Michael Bellisario

given rise hearing then all? rates? potential same your interest growth same cap the last Are sale lower still appetite rates? in just some of anything one in or out front. at on me about you any Got on just it. that Do is properties change you quality, think And for topic, value lower to a perspective prospects you at portfolio disposition sell And there from the continue could for the that is buyers

Jon Stanner

given any it's don't Mike, with public market seen private correction the asset Look market prices. happened Hey think pricing what's that Jon. in of material share I Yeah. we've

I year, talking that and consistent we've to been we've an being So, about net think conducive it I this buying. in that's seller think more still fairly been environment selling

today. think environment I same that persists

to think in sell the assets portfolio. to look I continue we'll opportunistically

Michael Bellisario

you. Thank me. for all That's

Jon Stanner

Thanks Mike.

Operator

you. Thank

Sean comes Our from of Bank question [ph] next Kelley with America.

Unidentified Analyst

maybe think But tailwind we're I sort are go seeing supply. It that. headwind morning. demand you Good out on of the the you to what to there. to I around guys some Jon, guys. wanted like from of already thoughts of seems you shift side guys Hi, to back that think mentioned starting

kind it types give already you supply markets Just that has a your Is us basis are of look average that least at more a you thinking XXXX? the could your in you clarity? on or more XXXX pipeline peak think at bit know are for construction in or you weighted Because blended timing? just growth Do portfolio about certainly Summit peaked. little for when how we property overall

Jon Stanner

we've their market been supply Yeah, early of clearly like It's year, kind on there Minneapolis that late When There firm at it it's has a Nashville little year. growth. feels bit analysis. There year a year is peak about feels still next last the we for look pockets, a supply where is coming. that - you this see and of when supply. this market-by-market a came like supply the is a and still that market lot lot of talked

year, that's think stands from By one to of market late us it's early headwinds out to that a needs kind that we supply perspective a watched enlarge, this supply say think year. peak will next as to a again safe that see I from be perspective. I

Dan Hansen

add consistency probably been top likely to markets XX thing I'd see XXXX if some is only The at and Dan. It's there you the over look XXXX. and has

to and the are usual growth. the expected of suspects and a supply Nashville like to Some supposed are highest and Houston all Denver have Boston

and Denver we're at watching unique So, I closely. drivers. be own demand that suspects likely those supply. like the a usual said those effect and But market think pockets of new in supply submarkets very the that their different of lot what are Having think the I downtown some any areas has may new coming are markets affect that of of not other have would ones that, culprits

Unidentified Analyst

XXXX? let's now ballpark sort just the of called year? end They're growth estimate Great. you're of the of And do weighted of guys forward looking portfolio. or Or what of it supply you for sort across sort the have at average

Jon Stanner

XX Yeah, see is I line with top in think what ours fairly from markets. you

kind 'XX So, that. X%. an for our 'XX industry right the growth one top line growth as supply growth market Again, us. outlier around of Ex-Nashville and average. pay if a to top paid X.X%. XX We we're that's the kind has XX the market Nashville in is closer we've closer for probably industry both with And probably to

Unidentified Analyst

think introductions guys targeted about some the last I things of need these an mentioned for type you was mid-scale you there call seen Nashville upper And just being, of just very of then recently. it as of Is the families How talk was we've Right. the of is these it bigger of that there. sort strategic to maybe brand the sort out more? outlier of Could impacting And proliferation think do you everybody. or some of brand or thing level a some cannibalization about it out kind there? fair even is a launch sort way. that we think that how kind But Let's high brands across see or those downshift brands launches? urban we about

Jon Stanner

the Sure. stop. We don't expect to launches

be think kind cater diverse purchased. for niche that to interesting. have and if hotels or unique specific are we unique looking I specific that narrative They of unique XX maybe of and the have dozen risk lot that generator. that true, our products say demand you I guests is those experience a that And looking looking for a individual to types But a around opportunity. there location. mitigate that And focus at are great last to look locations is a very of would

on that individual lot are the new in that think on out great drive I on to brands preference. is just not so brands Hyatt And think successful cloud way brands do it there believe We and for Hilton, more the to distributed. are locations water the think We a about and both speak while So, well but Marriott, these the hotels the locations a and is that of come guest behavior. IH&G family. distribution we be the loyalty that can think brand great and that

to big and great from out that But of helpful, kind maybe is the renovations we're that upscale there. every great in hotel. a and So, unique risk our bring that fantasy the property to locations mitigate Sean? average believers our our level partners distinct of the day way suburban the Does

Unidentified Analyst

it Thanks Yeah, Perfect. is. guys.

Dan Hansen

Thank you.

Operator

question next And Bill Thank James. Raymond comes from you. Crow with our

Bill Crow

guys. morning, Good

with speeding, Let dynamics? in big changing the that way change Is cost, to offering of encouraging, that that rooms the question. cost? the rethinking way picture Is anything brands the using about thing. clean challenge shift are by macro labor me be start Maybe there labor labor sort that the the thinking encouraged technology are can that margin the produce we

Dan Hansen

talking I about it And all as it. know were as owners they're talking about well.

to less the much the be of physical technology. the I And opportunities is key in entry extent efficient think greatest the the of with there need for component of challenges contact. our labor are to result and the

lobby challenge. engagement can it's engage. don't that's value a a people think in where in good But people we a important. and in and I are fewer people. industry, hospitality and provide or to I there a continually the they check in to with believe where find choose that Whether future guest we are see service

about going maybe there and that thoughtful there efficient, expectation be is with as still how to your deliver I on be will future but think discussion great a bit and workers little really brands engage be guest of fulfill lot certainly, needs the a to owners the be they'll their with a utilized to But how to different. where a question, well.

Bill Crow

first we are Bowl Super Okay, should your portfolio? and a how thanks. Minneapolis And think the what should the Bowl impact more full Kind Super quarter? Atlanta. to in about than the

Dan Hansen

probably Minneapolis I heavily heavier think from we're in from have weighted Atlanta. base to the an room EBITDA a we're more waiting base the

the would be So, more think be expectation tailwind. a it I should of

Bill Crow

me. finally then Okay. for And

As better X think your definitively know don't markets. next year? be to are to next be or year? about are top going ones X you ones I Which Which are worse going definitive

Dan Hansen

It's still October.

yet. provide not sure So, answer there I'm is definitive to a

very diversified. well are We

the So, that magnitude waiting X% X% that of I'm has difference be waiting, a not the quantified sure difference that as between significant. market could and

the as that a some think I Francisco, San well markets renovations thoughtful expect such been have we'd where to a about understood. bolder where we've San upside. Francisco is significant

those which there's convention think convention the some is we where we which convention have We kind up there, next have the creates had expectations for this I there's full Louisville, high like center, that that I there some pace but expect scheme fairly markets the or calendar the compression. be we've hotels, so at disruption and also strength year. and a everybody has do I mean think upside and great some calendar for markets there'd two some I are that who all strong on Atlanta at running think of and from

think speak. is I be so the of portfolio we'd earnings are the but concentrations expect strengthen driver. to Part some of we our markets kind saw of because one not there'd to I'm So, big not that sure markets there the can that thesis diversification of that our in have

Bill Crow

That's from Okay. you. Thank me. it

Dan Hansen

Bill. Thanks,

Operator

Wes you. our Golladay Capital RBC final from Thank And Market. with question comes

Wes Golladay

Hey, good morning guys.

so the for little looks it line the you loan over look mortgages, Just is issuance? you term to like $XX at guys Is want plan if balance issue might your rate million to $XXX a million. and prepay have a new a go cog a what

Dan Hansen

capacity have online. do to it We

option doing for for that is assumption existing have it always expectation I is safe capacity evaluate. will the think capital other do an certainly markets now the line. on But think transaction can that that we the now, to some be I it the

Wes Golladay

the first the thinking mezzanine maybe option And this loan strategically guess if year that with you I you out have of to have Okay. try end then or you interest the is last mezzanine the that going it there yields the exercise take what the plan a current than expires all are note on hotel more you would way and it exploration? to

Dan Hansen

is the year it's next exploration Yeah, not actually this year.

Wes Golladay

Okay.

Dan Hansen

to use it so like available we'd greatest, and as capital do than be you've would look of we use know market look at at else. the underwriting don't But current I returns would capacity be different the and capital almost a of to want would thoughtful becomes described, current it issue, are, another it anything Yeah, dynamics think our part I of and as part as the be a of are look we where that we option potential. growth it at about

expect be thoughtful you we any look in make options the we road down to think So, very should investments to as I a our capital exercise. us about at

Wes Golladay

you're issues Okay. from to at And lot a of year looking you next or next look any do have residual quarter any addressed assets from XXXX, that do but renovate, be renovations then in one that the taking let's this the the more you appear material, it issues call to year, going year? have abating comp we've first talking into storm

Dan Hansen

of in out minimize the pipeline renovations Dan. your try the we still We typically I for years have which will so to disruption maximize answer some This safe unique at easier so done, I'll the next I the million year. think run the the and bet. is time we've is renovations about have quarter in be that $XX think the quarter a in that first for, We as year first. to disruption properties. the planned some of have quarter, us. most kind question? much talk the a of think in of throughout probably as We second disruption look We of our comparison this I and as did always that acquisitions effects have a we've a rate investment year kind fourth did

Wes Golladay

I'm more was what to again headwind I high and next the but occupancy that that's tailwind didn't year, like have it wanted versus this you the year. about are renovations make we sure hotels Yeah, and have talking the

Dan Hansen

with say think the expectation with to started I again fair getting that that we're just budget knowing kind of what it's Yeah, season.

first as of I hotels think in XXXX versus in more renovated were it the half year from significant our XXXX was that the expectation occupancy renovation of be headwind that end disruption the tailwind in mentioned that two a this the you would be larger would year. our particularly higher

Wes Golladay

And Florida from the material of year Houston comp is residual comp next the issue? then and distribution or from the XXXX issue that XQ

Dan Hansen

travel, create of a probably getting Caribbean South in quarter as residual is that some Florida this - probably displacement I the us. and was a this of more it's that for year just probably probably challenge is. that some pick-up the There residual. the pick-up a had in leisure not in some Again, comp. planning from Lauderdale again travel that meaningful say in for would first in there Fort was We'll Florida, we're sure I'm particularly how XXXX. for we season

Wes Golladay

a Thanks Okay. guys. lot,

Dan Hansen

Thanks, Wes.

Operator

would for for the to now back closing participating question-and-answer today's today's call call. I and Ladies over portion remarks. any in turn like to management thank of you gentlemen,

Dan Hansen

we'll work appreciate to certainly as shareholders, for through the value you allocation operational creating capital enhancement. continue thoughtful always, together, We taking time and hard very and all

Our to in grow, we for high-quality portfolio Summit. hotels continue see of things the and great future continues to

have day forward you talking again a So, and to to look soon. terrific we all hope you

Operator

in and conference. gentlemen, Ladies program. today's you the for thank does participating conclude This

all wonderful disconnect a may have You day. and

Summit Hotel Properties (INN) 31 Oct 182018 Q3 Earnings call transcript