Summit Hotel Properties, Inc. 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.”