Summit Hotel Properties reported its second-quarter 2025 financial results, with operating income of $22.7 million and Adjusted FFO of $32.7 million, or $0.27 per share. Same-store RevPAR declined 3.6%, primarily due to a 3.3% decrease in average daily rate, influenced by difficult comparisons to Q2 2024 and a decline in government-related and international travel demand. Analysts surveyed by Zacks Investment Research confirmed that the company's Q2 FFO topped estimates.
Despite top-line pressures, the company demonstrated operational efficiency, with overall demand remaining stable and occupancy declining less than 0.5% year-over-year to 78%. Operating expenses increased only 1.5% year-over-year, limiting year-to-date EBITDA margin contraction to 160 basis points. The company achieved a RevPAR index of 115%, a nearly 150 basis point increase, demonstrating its ability to grow market share.
In a move to return capital to shareholders, Summit Hotel Properties opportunistically repurchased 3.6 million shares for $15.4 million during Q2 2025, at an average price of $4.30 per share. These repurchases, executed at an implied dividend yield of 7.4%, reduced shares outstanding by approximately 3%.
The company also completed two significant debt refinancings, including a new $58 million mortgage for the AC Element hotel in Miami in May 2025 and a $400 million term loan for the GIC Joint Venture in July 2025. These refinancings extended maturities to May 2030 and July 2030, respectively, and reduced interest rate spreads by 40-50 basis points, saving an estimated $2 million annually in interest. As a result, the company now has virtually no debt maturities until 2028 and an average length to maturity of approximately four years, with 75% of its pro rata share of debt fixed after considering interest rate swaps at an average SOFR rate of approximately 3.1%.
Furthermore, the Onera Joint Venture, a glamping property in Fredericksburg, TX, completed a 23-unit expansion in Q2 2025. Phase 1 of the property has already generated a remarkable $360 RevPAR and nearly 50% hotel EBITDA margins. This low-labor-efficient operating model offers unlevered yields in the low to mid-teens for the expansion, showcasing the company's ability to identify and scale highly profitable, operationally distinct assets.
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