##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Quarterly Period Ended March 31, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the Transition Period from  to
 Commission File Number: 000-51955
 SUMMIT HOTEL PROPERTIES, LLC
  South Dakota
 20-0617340
 2701 South Minnesota Avenue, Suite 6
Sioux Falls, SD 57105
 (605) 361-9566
 þ o
 o o
  Large accelerated filer o
Accelerated filer o
Non-accelerated filer þ(Do not check if a smaller reporting company)
Smaller reporting company o o þ




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##### 



TABLE OF CONTENTS
 PagePART IItem 1.
    
    Financial Statements
    
    12Condensed Consolidated Balance Sheets as of March 31, 2009 (Unaudited) and December 31, 2008
    
    3Condensed Consolidated Statements of Operations for the three months ended March 31,
2009 and 2008 (Unaudited)
    
    4Condensed
Consolidated Statement of Changes in Members Equity for the
three months ended March 31, 2009 (Unaudited)
    
    5Condensed Consolidated Statements of Cash Flows for the three months ended March 31,
2009 and 2008 (Unaudited)
    
    6Notes to Condensed Consolidated Financial Statements (Unaudited)
    
    8Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    12Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    26Item 4.
    
    Controls and Procedures
    
    27PART IIItem 1.
    
    Legal Proceedings
    
    27Item 1A.
    
    Risk Factors
    
    28Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    28Item 3.
    
    Defaults Upon Senior Securities
    
    28Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    28Item 5.
    
    Other Information
    
    28Item 6.
    
    Exhibits
    
    29Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2Exhibit 99.1EX-31.1EX-31.2EX-32.1EX-32.2EX-99.1
  2




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Item 1. Financial Statements
 SUMMIT HOTEL PROPERTIES, LLC
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)MARCH 31, 2009 AND DECEMBER 31, 2008
 2009
    
    
    2008ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    8,608,583
    
    
    $
    18,153,435Restricted cash
    
    
    1,639,990
    
    
    
    1,679,027Trade receivables
    
    
    3,514,776
    
    
    
    2,622,164Prepaid expenses and other
    
    
    2,860,105
    
    
    
    2,170,955Total current assets
    
    
    16,623,454
    
    
    
    24,625,581PROPERTY AND EQUIPMENT, NET
    
    
    483,747,084
    
    
    
    461,894,270OTHER ASSETSDeferred charges and other assets, net
    
    
    5,772,834
    
    
    
    5,664,796Restricted cash
    
    
    2,996,668
    
    
    
    2,570,374Total other assets
    
    
    8,769,502
    
    
    
    8,235,170TOTAL ASSETS
    
    $
    509,140,040
    
    
    $
    494,755,021LIABILITIES AND MEMBERS EQUITYCURRENT LIABILITIESCurrent portion of long-term debt
    
    $
    88,868,100
    
    
    $
    19,508,600Lines of credit
    
    
    10,100,000
    
    
    
    12,288,500Notes payable
    
    
    
    
    
    
    7,469,865Accounts payable
    
    
    9,824,790
    
    
    
    3,770,908Related party accounts payable
    
    
    2,159,225
    
    
    
    3,173,179Accrued expenses
    
    
    9,558,386
    
    
    
    9,956,372Total current liabilities
    
    
    120,510,501
    
    
    
    56,167,424LONG-TERM DEBT, NET OF CURRENT PORTION
    
    
    298,063,676
    
    
    
    350,826,837COMMITMENTS AND CONTINGENCIESMEMBERS EQUITYClass A, 1,166.62 units issued and outstanding
    
    
    73,464,768
    
    
    
    76,512,442Class A-1, 275.43 and 196.50 units issued and outstanding, respectively
    
    
    22,580,481
    
    
    
    15,855,756Class B, 81.36 units issued and outstanding
    
    
    2,893,247
    
    
    
    3,007,247Class C, 173.60 units issued and outstanding
    
    
    (6,625,182
    )
    
    
    (5,990,222
    )Total Summit Hotel Properties, LLC members equity
    
    
    92,313,314
    
    
    
    89,385,223Noncontrolling interest
    
    
    (1,747,451
    )
    
    
    (1,624,463
    )Total equity
    
    
    90,565,863
    
    
    
    87,760,760TOTAL LIABILITIES AND MEMBERS EQUITY
    
    $
    509,140,040
    
    
    $
    494,755,021
  3




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SUMMIT HOTEL PROPERTIES, LLC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008
 2009
    
    
    2008REVENUESRoom revenues
    
    $
    29,187,950
    
    
    $
    32,256,024Other hotel operations revenues
    
    
    624,436
    
    
    
    565,00829,812,386
    
    
    
    32,821,032COSTS AND EXPENSESDirect hotel operations
    
    
    9,948,899
    
    
    
    9,983,670Other hotel operating expenses
    
    
    4,183,894
    
    
    
    3,674,154General, selling and administrative
    
    
    5,652,550
    
    
    
    5,854,710Repairs and maintenance
    
    
    1,829,261
    
    
    
    2,720,946Depreciation and amortization
    
    
    5,666,740
    
    
    
    5,620,52227,281,344
    
    
    
    27,854,002INCOME FROM OPERATIONS
    
    
    2,531,042
    
    
    
    4,967,030OTHER INCOME (EXPENSE)Interest income
    
    
    10,490
    
    
    
    48,700Interest (expense)
    
    
    (4,135,421
    )
    
    
    (4,548,015
    )Gain (loss) on disposal of assets
    
    
    (71
    )
    
    
    (3,964
    )(4,125,002
    )
    
    
    (4,503,279
    )INCOME (LOSS) FROM CONTINUING OPERATIONS
    
    
    (1,593,960
    )
    
    
    463,751INCOME (LOSS) FROM DISCONTINUED OPERATIONS
    
    
    
    
    
    
    285,155NET INCOME (LOSS) BEFORE INCOME TAXES
    
    
    (1,593,960
    )
    
    
    748,906STATE INCOME TAX (EXPENSE)
    
    
    
    
    
    
    NET INCOME (LOSS)
    
    
    (1,593,960
    )
    
    
    748,906NET INCOME (LOSS) ATTRIBUTABLE TO
NONCONTROLLING INTEREST
    
    
    (122,988
    )
    
    
    244,433NET INCOME (LOSS) ATTRIBUTABLE TO SUMMIT
HOTEL PROPERTIES, LLC
    
    $
    (1,470,972
    )
    
    $
    504,473BASIC AND DILUTED EARNINGS PER
$100,000 CAPITAL UNIT
    
    $
    (893.97
    )
    
    $
    324.46WEIGHTED AVERAGE NUMBER OF UNITS
OUTSTANDING FOR CALCULATION OF
BASIC AND DILUTED EARNINGS PER
CAPITAL UNIT (based on $100,000 investment)
    
    
    1,645.43
    
    
    
    1,554.83
  4




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SUMMIT HOTEL PROPERTIES, LLC
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN MEMBERS EQUITY (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2009
 Equity# of
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Atributable toCapital
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    NoncontrollingUnits
    
    
    Class A
    
    
    Class A-1
    
    
    Class B
    
    
    Class C
    
    
    Interest
    
    
    TotalBALANCES, JANUARY 1, 2009
    
    
    1,618.08
    
    
    $
    76,512,442
    
    
    $
    15,855,756
    
    
    $
    3,007,247
    
    
    $
    (5,990,222
    )
    
    $
    (1,624,463
    )
    
    $
    87,760,760Class A-1 units issued
in private placement
    
    
    78.93
    
    
    
    
    
    
    
    7,242,534
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,242,534Net Income (Loss)
    
    
    
    
    
    
    (645,330
    )
    
    
    (76,682
    )
    
    
    (114,000
    )
    
    
    (634,960
    )
    
    
    (122,988
    )
    
    
    (1,593,960
    )Distributions to members
    
    
    
    
    
    
    (2,402,344
    )
    
    
    (441,127
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,843,471
    )BALANCES, MARCH 31, 2009
    
    
    1,697.01
    
    
    $
    73,464,768
    
    
    $
    22,580,481
    
    
    $
    2,893,247
    
    
    $
    (6,625,182
    )
    
    $
    (1,747,451
    )
    
    $
    90,565,863
  5




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SUMMIT HOTEL PROPERTIES, LLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008
 2009
    
    
    2008OPERATING ACTIVITIESNet income (loss)
    
    $
    (1,470,972
    )
    
    $
    504,473Adjustments to reconcile net income to
net cash from operating activities:Depreciation and amortization
    
    
    5,666,740
    
    
    
    5,874,772Noncontrolling interest in operations of consolidated LLC
    
    
    (122,988
    )
    
    
    244,433(Gain) loss on disposal of assets
    
    
    71
    
    
    
    3,964Changes in current assets and liabilities:Trade receivables
    
    
    (892,612
    )
    
    
    (1,602,615
    )Prepaid expenses and other
    
    
    (689,150
    )
    
    
    501,901Accounts payable and related party accounts payable
    
    
    (286,014
    )
    
    
    (3,906,543
    )Accrued expenses
    
    
    (398,067
    )
    
    
    612,883NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES
    
    
    1,807,008
    
    
    
    2,233,268INVESTING ACTIVITIESLand and hotel acquisitions and construction in progress
    
    
    (8,570,552
    )
    
    
    Purchases of other property & equipment
    
    
    (2,292,063
    )
    
    
    (3,625,707
    )Restricted cash released (funded)
    
    
    (387,257
    )
    
    
    194,966NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES
    
    
    (11,249,872
    )
    
    
    (3,430,741
    )FINANCING ACTIVITIESProceeds from issuance of long-term debt
    
    
    
    
    
    
    900,000Principal payments on long-term debt
    
    
    (1,584,377
    )
    
    
    (1,296,636
    )Financing fees on long-term debt
    
    
    (430,545
    )
    
    
    (132,390
    )Proceeds from issuance of notes payable and line of credit
    
    
    239,350
    
    
    
    4,140,390Principal payments on notes payable and line of credit
    
    
    (276,329
    )
    
    
    Proceeds from equity contributions
    
    
    4,793,384
    
    
    
    Distributions to members
    
    
    (2,843,471
    )
    
    
    (2,665,195
    )NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES
    
    
    (101,988
    )
    
    
    946,169NET CHANGE IN CASH AND CASH EQUIVALENTS
    
    
    (9,544,852
    )
    
    
    (251,304
    )CASH AND CASH EQUIVALENTSBEGINNING OF PERIOD
    
    
    18,153,435
    
    
    
    7,776,395END OF PERIOD
    
    $
    8,608,583
    
    
    $
    7,525,091
  6




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SUMMIT HOTEL PROPERTIES, LLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008
 2009
    
    
    2008SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:Cash payments for interest, net of the amounts
capitalized below
    
    $
    4,110,400
    
    
    $
    4,738,348Interest capitalized
    
    $
    928,180
    
    
    $
    957,317Cash payments for state income taxes
    
    $
    112,445
    
    
    $
    129,322SUPPLEMENTAL DISCLOSURE OF
NON-CASH FINANCIAL INFORMATION:Acquisitions of hotel properties and land through issuance
of debt
    
    $
    
    
    
    $
    1,212,116Construction in progress financed through related party
accounts payable
    
    $
    1,642,270
    
    
    $
    1,998,802Construction in progress financed through accounts payable
    
    $
    3,683,672
    
    
    $
    Construction in progress financed through issuance
of debt
    
    $
    11,008,480
    
    
    $
    5,255,003Issuance of long-term debt to refinance existing
long-term debt
    
    $
    8,440,000
    
    
    $
    Conversion of debt to equity
    
    $
    2,449,150
    
    
    $
    
  7




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SUMMIT HOTEL PROPERTIES, LLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2009
 NOTE 1  SIGNIFICANT ACCOUNTING POLICIES AND BUSINESS
 Basis of Presentation
   Use of Estimates
  Recent Accounting Pronouncements
 Determining Fair Value When the Volume
and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying
Transactions that are not Orderly
 Interim Disclosures about
Fair Value of Financial Instruments
 Adopted Accounting Standards
 Noncontrolling Interests in Consolidated Financial
Statements-an Amendment to ARB No. 51, or SFAS No. 160
  8




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SUMMIT HOTEL PROPERTIES, LLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2009
  Business
Combinations
  Disclosures about
Derivative Instruments and Hedging Activities
 Assets Held for Sale
   Discontinued Operations
   9




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SUMMIT HOTEL PROPERTIES, LLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 2009 AND 2008
  2009
    
    
    2008REVENUES
    
    $
    
    
    
    $
    2,064,287COSTS AND EXPENSESDirect hotel operations
    
    
    
    
    
    
    657,383Other hotel operating expenses
    
    
    
    
    
    
    236,090General, selling and administrative
    
    
    
    
    
    
    354,763Repairs and maintenance
    
    
    
    
    
    
    59,585Depreciation and amortization
    
    
    
    
    
    
    254,250
    
    
    
    1,562,071INCOME FROM OPERATIONS
    
    
    
    
    
    
    502,216OTHER INCOME (EXPENSE)Interest income
    
    
    
    
    
    
    3,271Interest (expense)
    
    
    
    
    
    
    (220,332
    )
    
    
    
    (217,061
    )(LOSS) INCOME FROM
DISCONTINUED OPERATIONS
    
    $
    
    
    
    $
    285,155
 Acquisitions
 Business Combinations
  10




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SUMMIT HOTEL PROPERTIES, LLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2009
 Accrued Expenses
  2009
    
    
    2008Accrued taxes
    
    $
    5,341,897
    
    
    $
    5,910,209Accrued salaries and benefits
    
    
    1,725,984
    
    
    
    1,838,615Accrued interest
    
    
    1,134,598
    
    
    
    1,109,577Other accrued expenses
    
    
    1,355,907
    
    
    
    1,097,971$
    9,558,386
    
    
    $
    9,956,372
 Note Obligations
   Commitments/Agreements
   Subsequent Events
  11




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PART I
FINANCIAL INFORMATION
 
 
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward-Looking Statements
  Overview
   12




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Critical Accounting Policies
 Property and Equipment
  Capitalized Development and Interest Costs
  Impairment of Long-Lived Assets
    13




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Consolidation Policy
    Revenue Recognition
  Results of Operations
    14




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Three Months Ended March 31, 2009 Compared with Three Months Ended March 31, 2008
 Revenues
   Three Months Ended
    
    Three Months EndedMarch 31,
    
    March 31,2009
    
    2008
    
    Increase/(Decrease)All Company HotelsRevPAR
    
    $
    55.18
    
    
    $
    64.30
    
    
    
    ($9.12
    )Average Daily Rate
    
    $
    91.44
    
    
    $
    102.69
    
    
    
    ($11.25
    )Occupancy Rate
    
    
    60.35
    %
    
    
    62.62
    %
    
    
    (2.27
    %)
   15




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Hotel Operating Expenses
    Depreciation
  16




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Management Expense
  Repairs and Maintenance
  Net Income (Loss)
  Seasonality and Diversification
  17




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Liquidity and Capital Resources
 Cash From Operating Activities
      18




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Cash From Investing Activities
  Cash From Financing Activities
   1 2 3 4
  19




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20




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Uses of Cash
   21




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Additional Information Concerning Sources and Uses of Cash
     22




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23




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Acquisition
    
    OpeningLocation
    
    # Rooms
    
    Franchise
    
    Status
    
    Date
    
    Date (1)Houston, TX (2)
    
    
    118
    
    
    Springhill Suites
    
    Future Construction
    
    2/15/07
    
    TBDJacksonville, FL(2)
    
    
    136
    
    
    Aloft
    
    Under Construction
    
    11/29/06
    
    08/09Jacksonville, FL(2)
    
    
    119
    
    
    Holiday Inn
    
    Future Construction
    
    11/29/06
    
    TBDFlagstaff, AZ (2)
    
    
    164
    
    
    Courtyard by Marriott
    
    Under Construction
    
    4/5/06
    
    09/09Portland, OR (2)(3)
    
    
    124
    
    
    Residence Inn
    
    Under Construction
    
    6/13/07
    
    09/09Portland, OR (2)(3)
    
    
    136
    
    
    Hyatt Place
    
    Under Construction
    
    6/13/07
    
    11/09El Paso, TX (2)
    
    
    101
    
    
    Hampton Inn & Suites
    
    Future Construction
    
    7/16/07
    
    TBDEl Paso, TX (2)
    
    
    121
    
    
    Courtyard by Marriott
    
    Future Construction
    
    7/16/07
    
    TBDFt. Myers, FL (2)
    
    
    149
    
    
    Hyatt Place
    
    Under Construction
    
    8/30/07
    
    10/09Boise, ID(2)
    
    
    120
    
    
    Holiday Inn Express &Suites
    
    Future Construction
    
    10/1/04
    
    TBDTwin Falls, ID
    
    
    91
    
    
    Holiday Inn Express & Suites
    
    Construction Completed
    
    2/1/08
    
    03/09Twin Falls, ID(2)
    
    
    116
    
    
    Courtyard by Marriott
    
    Future Construction
    
    12/9/08
    
    TBDSan Antonio, TX(2)
    
    TBD
    
    Hilton Garden Inn
    
    Future Construction
    
    1/22/07
    
    TBDSan Antonio, TX
    
    TBD
    
    TBD
    
    Future Construction
    
    1/22/07
    
    TBDSpokane, WA(2)
    
    
    105
    
    
    Courtyard by Marriott
    
    Future Construction
    
    7/31/08
    
    TBDSpokane, WA(2)
    
    
    108
    
    
    Springhill Suites
    
    Future Construction
    
    7/31/08
    
    TBDMissoula, MT(2)
    
    
    100
    
    
    Fairfield Inn & Suites
    
    Future Construction
    
    7/17/08
    
    TBD
 
 (1)
    
    The opening date is estimated and is subject to change.(2)
    
    Number of rooms and franchise indicate our plans as of May 1, 2009, which are subject
to change.(3)
    
    Real estate is subject to a ground lease.   24




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Recent Developments
  Acquisitions and Dispositions
  Commitments and Contingencies
  25




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Off-Balance Sheet Arrangements
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
     26




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Item 4. Controls and Procedures
   
 PART II
OTHER INFORMATION
 
 Item 1. Legal Proceedings
    27




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Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
  28




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Item 6. Exhibits
  ExhibitNumber
    
    Description of Exhibit31.1
    
    Certification pursuant to Rule 13a-14 under the Securities Exchange Act of 1934 
Chief Executive Officer.31.2
    
    Certification pursuant to Rule 13a-14 under the Securities Exchange Act of 1934  Chief
Financial Officer.32.1
    
    Certification pursuant to Section 1350 of Chapter 63 of Title 18 of the United States
Code  Chief Executive Officer.32.2
    
    Certification pursuant to Section 1350 of Chapter 63 of Title 18 of the United States
Code  Chief Financial Officer.99.1
    
    Reconciliation of Non-GAAP Financial Measure
 29




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SIGNATURES
  SUMMIT HOTEL PROPERTIES, LLCDate: May 15, 2009
    By:
    /s/ Kerry W. BoekelheideKerry W. BoekelheideChief Executive Officer and ManagerDate: May 15, 2009
    By:
    /s/ Daniel P. HansenDaniel P. HansenChief Financial Officer and Manager 30




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EXHIBIT INDEX
 31.1
    
    Certification pursuant to Rule 13a-14 under the Securities Exchange Act of 1934 
Chief Executive Officer.31.2
    
    Certification pursuant to Rule 13a-14 under the Securities Exchange Act of 1934  Chief
Financial Officer.32.1
    
    Certification pursuant to Section 1350 of Chapter 63 of Title 18 of the United States
Code  Chief Executive Officer.32.2
    
    Certification pursuant to Section 1350 of Chapter 63 of Title 18 of the United States
Code  Chief Financial Officer.99.1
    
    Reconciliation of Non-GAAP Financial Measure
 31