UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________

FORM 10-Q

_________________

[x]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~March 3031, ~~2012~~2013

[ ]	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: 001-35074 (Summit Hotel Properties, Inc.)

Commission File Number: 001-54273 (Summit Hotel OP, LP)

SUMMIT HOTEL PROPERTIES, INC.

SUMMIT HOTEL OP, LP

(Exact name of registrant as specified in its charter)

_________________

Maryland (Summit Hotel Properties, Inc.)		27-2962512 (Summit Hotel Properties, Inc.)
Delaware (Summit Hotel OP, LP)		27-0617340 (Summit Hotel OP, LP)
(State or other jurisdiction		(I.R.S. Employer Identification No.)
of incorporation or organization)

~~2701~~12600 ~~South~~Hill ~~Minnesota~~Country ~~Avenue~~Boulevard, Suite 2R-100

~~Sioux Falls~~Austin, ~~SD 57105~~TX 78738

(Address of principal executive offices, including zip code)

(~~605~~512) ~~361~~538-~~9566~~2315

(Registrant’s telephone number, including area code)

_________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Summit Hotel Properties, Inc.

[x] Yes

[ ] No

Summit Hotel OP, LP

[x] Yes

[ ] No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405) of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Summit Hotel Properties, Inc.

[x] Yes

[ ] No

Summit Hotel OP, LP

[x] Yes

[ ] No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company in Rule 12b-2 of the Exchange Act.

Summit Hotel Properties, Inc. Large accelerated filer [ ] Accelerated filer [X] Non-accelerated filer [ ] Smaller reporting company [ ] Summit Hotel OP, LP Large accelerated filer [ ] Accelerated filer [X] Non-accelerated filer [x ] Smaller reporting company [ ]

Summit Hotel OP, LP Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [x] Smaller reporting company [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Summit Hotel Properties, Inc.

[ ] Yes

[x] No

Summit Hotel OP, LP

[ ] Yes

[x] No

As of ~~November~~May 1, ~~2012~~2013, the number of outstanding shares of common stock of Summit Hotel Properties, Inc. was 4665,~~159~~931,~~652~~900 and the number of outstanding units of partnership interest in Summit Hotel OP, LP designated as “Common Units” was 52,~~226~~997,~~375~~831, excluding 65,931,900 Common Units held by Summit Hotel Properties, Inc. and its wholly owned subsidiary which is the general partner of Summit Hotel OP, LP.

EXPLANATORY NOTE

This report combines the Quarterly Reports on Form 10-Q for the ~~three~~period ~~months~~ ended ~~September~~March 3031, ~~2012~~2013 of Summit Hotel Properties, Inc., a Maryland corporation, and Summit Hotel OP, LP, a Delaware limited partnership.

Unless stated otherwise or the context otherwise requires, references in this report to:

●	“Summit REIT” mean Summit Hotel Properties, Inc., a Maryland corporation;

●	“Summit OP” or “our operating partnership” mean Summit Hotel OP, LP, a Delaware limited partnership, our operating partnership, and its consolidated subsidiaries; and

● “we,” “our,” “us,” “our company” or “the company” mean Summit REIT, Summit OP and their consolidated subsidiaries taken together as one ~~enterprise~~company. ~~When this report discusses or refers to activities occurring prior to February 14, 2011, the date on which our operations commenced, these references refer to our predecessor.~~

Summit REIT is the sole member of Summit Hotel GP, LLC, a Delaware limited liability company, which is the sole general partner (the “General Partner”) of Summit OP. As of ~~September~~March 3031, ~~2012~~2013, Summit REIT owned approximately ~~83.8~~95% of the issued and outstanding common units of partnership interest of Summit OP (“Common Units”), including the sole general partnership interest held by the General Partner. As of ~~September~~March 3031, ~~2012~~2013, Summit REIT owned ~~100%~~all of the issued and outstanding 9.25% Series A Cumulative Redeemable Preferred Units of Summit OP (“Series A Preferred Units”), all of the issued and outstanding 7. 875% Series B Cumulative Redeemable Preferred Units of Summit OP (“Series B Preferred Units”), and all of the issued and outstanding 7.125% Series C Cumulative Redeemable Preferred Units of Summit OP (“Series C Preferred Units,” the Series C Preferred Units, Series B Preferred Units and Series A Preferred Units collectively referred to as “Preferred Units”). As the sole member of the General Partner, Summit REIT has exclusive control of Summit OP’s day-to-day management. The remaining Common Units of Summit OP are owned by third parties.

We believe combining the Quarterly Reports on Form 10-Q of Summit REIT and Summit OP into this single report provides the following benefits:

●	it enhances investors’ understanding of Summit REIT and Summit OP by enabling investors to view the business as a whole in the same manner as management views and operates the business;

●	it eliminates duplicative disclosure and provides a more streamlined and readable presentation since a substantial portion of the disclosure applies to both Summit REIT and Summit OP; and

●	it creates time and cost efficiencies for both companies through the preparation of one combined report instead of two separate reports.

We believe it is important to understand the few differences between Summit REIT and Summit OP in the context of how Summit REIT and Summit OP operate as a consolidated company. Summit REIT has elected to be taxed as a real estate investment trust (“REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”), commencing with its short taxable year ended December 31, 2011.

As of ~~September~~March 3031, ~~2012~~2013, Summit REIT’s only material assets were its ownership of Common Units and ~~Series A~~ Preferred Units of Summit OP and its ownership of the membership interests in the General Partner. As a result, Summit REIT does not conduct business itself, other than controlling, through the General Partner, Summit OP, raising capital through issuances of equity securities from time to time and guaranteeing certain debt of Summit OP and its subsidiaries. Summit OP and its subsidiaries hold all the assets of the consolidated company. Except for net proceeds from securities issuances by Summit REIT, which are contributed to Summit OP in exchange for partnership units of Summit OP, Summit OP and its subsidiaries generate capital from the operation of our business and through borrowings and the issuance of partnership units of Summit OP.

Stockholders’ equity, partners’ capital and noncontrolling interests are the main areas of difference between the consolidated financial statements of Summit REIT and those of Summit OP. As of ~~September~~March 3031, ~~2012~~2013, Summit OP’s capital interests include Common Units, representing general and limited partnership interests, and ~~Series A~~ Preferred Units. The Common Units owned by limited partners other than Summit REIT and its subsidiaries are accounted for in partners’ capital in Summit OP’s consolidated financial statements and (within stockholders’ equity) as noncontrolling interests in Summit REIT’s consolidated financial statements.

In order to highlight the differences between Summit REIT and Summit OP, there are sections in this report that separately discuss Summit REIT and Summit OP, including separate financial statements and certain notes thereto and separate Exhibit 31 and Exhibit 32 certifications. In the sections that combine disclosure for Summit REIT and Summit OP (i.e., where the disclosure refers to the consolidated company), this report refers to actions or holdings as our actions or holdings and, unless otherwise indicated, means the actions or holdings of Summit REIT and Summit OP and their respective subsidiaries, as one consolidated company.

As the sole member of the General Partner, Summit REIT consolidates Summit OP for financial reporting purposes, and Summit REIT does not have assets other than its investment in the General Partner and Summit OP. Therefore, while stockholders’ equity and partners’ capital differ as discussed above, the assets and liabilities of Summit REIT and Summit OP are the same on their respective financial statements.

Finally, we refer to a number of other entities and events in this report as follows. Unless the context otherwise requires or indicates, references ~~in this report~~ to:

● “the LLC” refer to Summit Hotel Properties, LLC and references to “our predecessor” include the LLC and its consolidated subsidiaries;

●	“our TRSs” refer to Summit Hotel TRS, Inc., a Delaware corporation, and Summit Hotel TRS II, Inc., a Delaware corporation, and any other taxable REIT subsidiaries (“TRSs”) that we may form in the future;

● “our TRS lessees” refer to the ~~wholly owned~~ subsidiaries of our TRSs that lease our hotels from Summit OP or subsidiaries of Summit OP;. ~~and~~All but one of our TRS lessees are wholly owned by our TRSs.

● “The Summit Group” refer to The Summit Group, Inc., our predecessor’s hotel management company, Company Manager and former Class C Member, which is wholly owned by our Executive Chairman, Kerry W. Boekelheide.ii

TABLE OF CONTENTS

			Page
PART I — FINANCIAL INFORMATION
Item 1.		Financial Statements.	1
	Summit Hotel Properties, Inc. and Summit Hotel Properties, LLC (Predecessor)
	Summit Hotel Properties, Inc.
		Condensed Consolidated Balance Sheets — September 30, 2012 (unaudited) and December 31, 2011	1
		Consolidated Balance Sheets — March 31, 2013 (unaudited) and December 31, 2012	1
		Condensed Consolidated Statements of Operations (unaudited) - Three and Nine Months Ended September 30, 2012 and 2011	2
		Consolidated Statements of Operations (unaudited) — Quarters Ended March 31, 2013 and 2012	2
		Condensed Consolidated Statements of Other Comprehensive Income (unaudited) — Three and Nine Months Ended September 30, 2012 and 2011	3
		Consolidated Statements of Comprehensive Income (Loss) (unaudited) - Quarters Ended March 31, 2013 and 2012	3
		Condensed Consolidated Statements of Changes in Equity (unaudited) —Nine Months Ended September 30, 2012	4
		Consolidated Statements of Changes in Equity (unaudited) — Quarters Ended March 31, 2013 and 2012	4
		Condensed Consolidated Statements of Cash Flows (unaudited) — Nine Months Ended September 30, 2012 and 2011	5
		Consolidated Statements of Cash Flows (unaudited) — Quarters Ended March 31, 2013 and 2012	5
	Summit Hotel OP, LP and Summit Hotel Properties, LLC (Predecessor)
	Summit Hotel OP, LP
		Condensed Consolidated Balance Sheets — September 30, 2012 (unaudited) and December 31, 2011	7
		Consolidated Balance Sheets — March 31, 2013 (unaudited) and December 31, 2012	6
		Condensed Consolidated Statements of Operations (unaudited) - Three and Nine Months Ended September 30, 2012 and 2011	8
		Consolidated Statements of Operations (unaudited) — Quarters Ended March 31, 2013 and 2012	7
		Condensed Consolidated Statements of Other Comprehensive Income (unaudited) — Three and Nine Months Ended September 30, 2012 and 2011	9
		Consolidated Statements of Comprehensive Income (Loss) (unaudited) - Quarters Ended March 31, 2013 and 2012	8
		Condensed Consolidated Statements of Changes in Equity (unaudited) —Nine Months Ended September 30, 2012	10
		Consolidated Statements of Changes in Equity (unaudited) — Quarters Ended March 31, 2013 and 2012	9
		Condensed Consolidated Statements of Cash Flows (unaudited) — Nine Months Ended September 30, 2012 and 2011	11
		Consolidated Statements of Cash Flows (unaudited) — Quarters Ended March 31, 2013 and 2012	10
		Notes to Condensed Consolidated Financial Statements	13
		Notes to Consolidated Financial Statements (unaudited)	11
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations.	3123
Item 3.		Quantitative and Qualitative Disclosures About Market Risk.	4735
Item 4.		Controls and Procedures.	4836
PART II — OTHER INFORMATION
Item 1.		Legal Proceedings.	5036
Item 1A.		Risk Factors.	5037
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds.	5037
Item 3.		Defaults Upon Senior Securities.	5037
Item 4.		Mine Safety Disclosures	5037
Item 5.		Other Information.	5037
Item 6.		Exhibits.	5138

iii

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

SUMMIT HOTEL PROPERTIES, INC.

~~CONDENSED~~ CONSOLIDATED BALANCE SHEETS (in thousands, except share amounts)

~~SEPTEMBER~~MARCH 3031, ~~2012~~2013 (UNAUDITED) AND DECEMBER 31, ~~2011~~2012

	2012			2011
	March 31,			December 31,
	2013			2012
ASSETS
Cash and cash equivalents	$	10,287,841		$	10,537,132
Investment in hotel properties, net	$	934,842		$	734,362
Restricted cash		4,275,143			1,464,032
Investment in hotel properties under development		10,380			10,303
Trade receivables		6,666,212			3,424,630
Land held for development		13,844			15,802
Prepaid expenses and other		4,390,302			4,268,393
Assets held for sale		26,920			4,836
Land held for development		19,006,473			20,294,973
Cash and cash equivalents		20,790			13,980
Property and equipment, net		572,525,464			498,876,238
Restricted cash		22,261			3,624
Deferred charges and other assets, net		8,986,646			8,923,906
Trade receivables		12,677			5,478
Deferred tax benefit		2,708,849			2,195,820
Prepaid expenses and other		2,889			5,311
Other assets		4,257,462			4,019,870
Deferred charges, net		9,324			8,895
TOTAL ASSETS	$	633,104,392		$	554,004,994
Deferred tax asset		3,894			3,997
Other assets		4,169			4,201
TOTAL ASSETS	$	1,061,990		$	810,789
LIABILITIES AND EQUITY
LIABILITIES
Accounts payable	$	1,254,050		$	1,670,994
Debt	$	325,673		$	312,613
Derivative liabilities		522,564			-
Debt related to assets held for sale		6,715			-
Accrued expenses		17,723,139			15,781,577
Accounts payable		3,875			5,013
Mortgages and notes payable		312,250,257			217,103,728
Accrued expenses		21,886			18,985
TOTAL LIABILITIES		331,750,010			234,556,299
Derivative financial instruments		534			641
TOTAL LIABILITIES		358,683			337,252
COMMITMENTS AND CONTINGENCIES
EQUITY
Preferred stock, $.01 par value per share (liquidation preference of $50,385,417),
Preferred stock, $.01 par value per share, 100,000,000 shares authorized:
100,000,000 shares authorized, 2,000,000 issued and outstanding		20,000			20,000
9.25% Series A - 2,000,000 shares issued and outstanding at March 31, 2013
and December 31, 2012 (liquidation preference of $50,393 at March 31,
2013 and December 31, 2012)		20			20
7.875% Series B - 3,000,000 shares issued and outstanding at March 31, 2013
and December 31, 2012 (liquidation preference of $75,502 and $75,324 at
March 31, 2013 and December 31, 2012, respectively)		30			30
7.125% Series C - 3,400,000 shares issued and outstanding at March 31, 2013
(liquidation preference of $85,183 at March 31, 2013)		34			-
Common stock, $.01 par value per share, 450,000,000 shares authorized,
31,501,219 and 27,278,000 issued and outstanding, respectively		315,012			272,780
65,678,025 and 46,159,652 shares issued and outstanding at March 31, 2013
Additional paid-in capital		285,168,804			288,902,331
and December 31, 2012, respectively		657			462
Accumulated other comprehensive income (loss)		(430,921	)		-
Additional paid-in capital		705,683			468,820
Accumulated deficit and distributions		(24,813,858	)		(11,020,151	)
Accumulated other comprehensive income (loss)		(426	)		(528	)
Total stockholders' equity		260,259,037			278,174,960
Accumulated deficit and distributions		(39,916	)		(31,985	)
Noncontrolling interest		41,095,345			41,273,735
Total stockholders' equity		666,082			436,819
TOTAL EQUITY		301,354,382			319,448,695
Noncontrolling interests in Operating Partnership		29,762			36,718
TOTAL LIABILITIES AND EQUITY	$	633,104,392		$	554,004,994
Noncontrolling interests in joint venture		7,463			-
TOTAL EQUITY		703,307			473,537
TOTAL LIABILITIES AND EQUITY	$	1,061,990		$	810,789

(See Notes to ~~Condensed~~the Consolidated Financial Statements)

SUMMIT HOTEL PROPERTIES, INC. ~~AND SUMMIT HOTEL~~

~~PROPERTIES,~~CONSOLIDATED ~~LLC~~STATEMENTS OF OPERATIONS (~~PREDECESSOR~~in thousands, except per share amounts)

~~CONDENSED~~FOR ~~CONSOLIDATED~~THE ~~STATEMENTS~~QUARTERS OFENDED ~~OPERATIONS~~MARCH 31, 2013 AND 2012 (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011

	First Quarter
	2013			2012

REVENUES
Room revenue	$	60,089		$	35,727
Other hotel operations revenue		3,122			1,593
Total Revenues		63,211			37,320

EXPENSES
Hotel operating expenses:
Rooms		17,621			10,475
Other direct		8,244			4,954
Other indirect		16,242			10,146
Other		213			201
Total hotel operating expenses		42,320			25,776
Depreciation and amortization		11,156			7,555
Corporate general and administrative:
Salaries and other compensation		2,421			938
Other		656			883
Hotel property acquisition costs		654			580
Total Expenses		57,207			35,732

INCOME (LOSS) FROM OPERATIONS		6,004			1,588

OTHER INCOME (EXPENSE)
Interest income		18			1
Other income		160			-
Interest expense		(4,072	)		(3,195	)
Gain (loss) on disposal of assets		6			-
Total Other Income (Expense)		(3,888	)		(3,194	)

INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		2,116			(1,606	)

INCOME TAX (EXPENSE) BENEFIT		(410	)		147

INCOME (LOSS) FOR CONTINUING OPERATIONS		1,706			(1,459	)

INCOME (LOSS) FROM DISCONTINUED OPERATIONS		177			(1,346	)

NET INCOME (LOSS)		1,883			(2,805	)

NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTERESTS
Operating Partnership		(28	)		(1,070	)
Joint venture		(37	)		-

NET INCOME (LOSS) ATTRIBUTABLE TO SUMMIT HOTEL PROPERTIES, INC.		1,948			(1,735	)

PREFERRED DIVIDENDS		(2,452	)		(1,156	)

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	(504	)	$	(2,891	)

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic		62,684			27,278

Diluted		62,950			27,278

EARNINGS PER SHARE
Basic and diluted net income (loss) per share from continuing operations	$	(0.01	)	$	(0.07	)
Basic and diluted net income (loss) per share from discontinued operations		0.00			(0.04	)

Basic and diluted net income (loss) per share	$	(0.01	)	$	(0.11	)

	Summit Hotel Properties, Inc.												Summit Hotel Properties, LLC (Predecessor)
	Three months ended 09/30/12			Three months ended 09/30/11			Nine months ended 09/30/12			Period 2/14/11 through 9/30/11			Period 1/1/11 through 2/13/11
REVENUE
Room revenue	$	50,062,745		$	39,589,802		$	135,132,550		$	93,598,363		$	13,761,984
Other hotel operations revenue		1,171,162			846,774			3,292,311			1,972,692			330,251
Total Revenue		51,233,907			40,436,576			138,424,861			95,571,055			14,092,235
EXPENSES
Hotel operating expenses
Rooms		13,990,364			11,789,795			39,036,709			27,715,406			4,783,081
Other direct		5,957,531			5,371,116			15,983,050			12,305,241			2,533,904
Other indirect		13,690,221			10,354,525			37,492,154			23,964,794			4,521,906
Other		226,496			243,434			669,500			517,519			73,038
Total hotel operating expenses		33,864,612			27,758,870			93,181,413			64,502,960			11,911,929
Depreciation and amortization		8,503,841			8,108,644			24,836,200			17,937,342			3,288,931
Corporate general and administrative:
Salaries and other compensation		1,645,359			791,044			3,563,325			2,168,560			-
Other		823,480			625,609			2,757,611			2,166,420			-
Loan transaction costs		227,577			-			650,687			-			-
Hotel property acquisition costs		245,782			181,892			1,573,015			181,892			-
Total Expenses		45,310,651			37,466,059			126,562,251			86,957,174			15,200,860
INCOME (LOSS) FROM OPERATIONS		5,923,256			2,970,517			11,862,610			8,613,881			(1,108,625	)
OTHER INCOME (EXPENSE)
Interest income		17,863			553			19,554			14,780			7,139
Other income		22,697			-			497,273			-			-
Interest expense		(4,048,676	)		(3,337,485	)		(11,747,874	)		(9,753,543	)		(4,477,631	)
Gain (loss) on disposal of assets		(12,206	)		-			(198,795	)		(36,031	)		-
Gain (loss) on derivatives		(775	)		-			(1,787	)		-			-
Total Other Income (Expense)		(4,021,097	)		(3,336,932	)		(11,431,629	)		(9,774,794	)		(4,470,492	)
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES		1,902,159			(366,415	)		430,981			(1,160,913	)		(5,579,117	)
INCOME TAX (EXPENSE) BENEFIT		(313,199	)		1,688			98,657			(495,967	)		(325,239	)
INCOME (LOSS) FROM CONTINUING OPERATIONS		1,588,960			(364,727	)		529,638			(1,656,880	)		(5,904,356	)
INCOME (LOSS) FROM DISCONTINUED OPERATIONS		51,866			406,149			(2,050,413	)		688,042			(302,200	)
NET INCOME (LOSS)		1,640,826			41,422			(1,520,775	)		(968,838	)		(6,206,556	)
NET INCOME (LOSS) ATTRIBUTABLE TO
NONCONTROLLING INTEREST		78,448			11,184			(1,266,822	)		(261,586	)		-
NET INCOME (LOSS) ATTRIBUTABLE TO SUMMIT
HOTEL PROPERTIES, INC./PREDECESSOR		1,562,378			30,238			(253,953	)		(707,252	)		(6,206,556	)
PREFERRED DIVIDENDS		(1,156,250	)		-			(3,468,750	)		-			-
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON	$	406,128		$	30,238		$	(3,722,703	)	$	(707,252	)	$	(6,206,556	)
STOCKHOLDERS/MEMBERS
Basic and diluted net income (loss) per share
from continuing operations:	$	0.01		$	(0.01	)	$	(0.08	)	$	(0.05	)
Basic and diluted net income (loss) per share
from discontinued operations:		0.00			0.01			(0.05	)		0.02
Basic and diluted net income (loss) per share:	$	0.01		$	0.00		$	(0.13	)	$	(0.03	)
Weighted-average common shares outstanding:
Basic		31,308,480			27,278,000			29,713,213			27,278,000
Diluted		31,501,219			27,278,000			29,713,213			27,278,000

See Notes to the Consolidated Financial Statements

(See Notes to Condensed Consolidated Financial Statements)

SUMMIT HOTEL PROPERTIES, INC. ~~AND SUMMIT HOTEL~~

~~PROPERTIES,~~CONSOLIDATED ~~LLC~~STATEMENTS OF COMPREHENSIVE INCOME (~~PREDECESSOR~~LOSS) (in thousands)

~~CONDENSED~~FOR ~~CONSOLIDATED~~THE ~~STATEMENTS~~QUARTERS OFENDED ~~COMPREHENSIVE~~MARCH ~~INCOME~~31, ~~(LOSS)~~2013 AND 2012 (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011

	First Quarter
	2013			2012


NET INCOME (LOSS)	$	1,883		$	(2,805	)

Other comprehensive income (loss), net of tax:
Changes in unrealized loss on derivatives		107			-
Total other comprehensive income (loss)		107			-

COMPREHENSIVE INCOME (LOSS)		1,990			(2,805	)

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO
NONCONTROLLING INTERESTS
Operating Partnership		(23	)		(1,070	)
Joint venture		(37	)		-

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO
SUMMIT HOTEL PROPERTIES, INC.		2,050			(1,735	)

PREFERRED DIVIDENDS		(2,452	)		(1,156	)

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO
COMMON STOCKHOLDERS	$	(402	)	$	(2,891	)

	Summit Hotel Properties, Inc.											Summit Hotel Properties, LLC (Predecessor)
	Three months ended 09/30/12			Three months ended 09/30/11		Nine months ended 09/30/12			Period 2/14/11 through 9/30/11			Period 1/1/11 through 2/13/11
NET INCOME (LOSS)	$	1,640,826		$	41,422	$	(1,520,775	)	$	(968,838	)	$	(6,206,556	)
Other comprehensive income (loss), net of tax:
Change in unrealized loss on derivatives		(240,948	)		-		(520,777	)		-			-
Total other comprehensive income (loss)		(240,948	)		-		(520,777	)		-			-
COMPREHENSIVE INCOME (LOSS)		1,399,878			41,422		(2,041,552	)		(968,838	)		(6,206,556	)
COMPREHENSIVE INCOME (LOSS)
ATTRIBUTABLE TO NONCONTROLLING INTEREST		39,441			-		(1,356,678	)		-			-
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE
TO SUMMIT HOTEL PROPERTIES, INC./PREDECESSOR		1,360,437			41,422		(684,874	)		(968,838	)		(6,206,556	)
PREFERRED DIVIDENDS		(1,156,250	)		-		(3,468,750	)		-			-
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE
TO COMMON STOCKHOLDERS/MEMBERS	$	204,187		$	41,422	$	(4,153,624	)	$	(968,838	)	$	(6,206,556	)

See Notes to the Consolidated Financial Statements

(See Notes to Condensed Consolidated Financial Statements)

SUMMIT HOTEL PROPERTIES, INC.

~~CONDENSED~~ CONSOLIDATED ~~STATEMENT~~STATEMENTS OF CHANGES IN EQUITY (~~UNAUDITED~~in thousands, except share amounts)

FOR THE ~~NINE~~QUARTERS ~~MONTHS~~ ENDED ~~SEPTEMBER~~MARCH 3031, 2013 AND 2012 (UNAUDITED)

	# of Shares				# of Shares							Accumulated Other			Accumulated			Total
												Accumulated
	of Preferred		Preferred		of Common		Common		Additional			Comprehensive			Deficit and			Stockholders'			Noncontrolling			Total
	Shares of				Shares of							Other			Accumulated			Total			Noncontrolling Interests
	Stock		Stock		Stock		Stock		Paid-In Capital			Income (Loss)			Distributions			Equity			Interest			Equity
	Preferred		Preferred		Common		Common		Additional			Comprehensive			Deficit and			Stockholders'			Operating						Total
BALANCES, JANUARY 1, 2012		2,000,000	$	20,000		27,278,000	$	272,780	$	288,902,331		$	-		$	(11,020,151	)	$	278,174,960		$	41,273,735		$	319,448,695
	Stock		Stock		Stock		Stock		Paid-In Capital			Income (Loss)			Distributions			Equity			Partnership			Joint Venture			Equity
Summit Hotel Properties, Inc.
BALANCES, DECEMBER 31, 2012		5,000,000	$	50		46,159,652	$	462	$	468,820		$	(528	)	$	(31,985	)	$	436,819		$	36,718		$	-		$	473,537
Registration and offering costs		-		-		-		-		(707,101	)		-			-			(707,101	)		-			(707,101	)
Net proceeds from sale of
Common stock redemption of common units		-		-		4,015,192		40,152		(3,670,596	)		-			-			(3,630,444	)		3,630,444			-
common stock		-		-		17,250,000		172		147,981			-			-			148,153			-			-			148,153
Dividends paid		-		-		-		-		-			-			(13,539,754	)		(13,539,754	)		(2,589,159	)		(16,128,913	)
Net proceeds from sale of
Stock awards		-		-		208,027		2,080		(2,080	)		-			-			-			-			-
preferred stock		3,400,000		34		-		-		81,917			-			-			81,951			-			-			81,951
Equity-based compensation		-		-		-		-		646,250			-			-			646,250			137,003			783,253
Common stock redemption of
Other comprehensive income (loss)		-		-		-		-		-			(430,921	)		-			(430,921	)		(89,856	)		(520,777	)
common units		-		-		1,974,669		20		6,547			-			-			6,567			(6,567	)		-			-
Net income (loss)		-		-		-		-		-			-			(253,953	)		(253,953	)		(1,266,822	)		(1,520,775	)
Contribution by noncontrolling
BALANCES, SEPTEMBER 30, 2012		2,000,000	$	20,000		31,501,219	$	315,012	$	285,168,804		$	(430,921	)	$	(24,813,858	)	$	260,259,037		$	41,095,345		$	301,354,382
interests in joint venture		-		-		-		-		-			-			-			-			-			7,500			7,500
Dividends paid		-		-		-		-		-			-			(9,879	)		(9,879	)		(366	)		-			(10,245	)
Equity-based compensation		-		-		293,704		3		418			-			-			421			-			-			421
Other comprehensive
income (loss)		-		-		-		-		-			102			-			102			5			-			107
Net income (loss)		-		-		-		-		-			-			1,948			1,948			(28	)		(37	)		1,883
BALANCES, MARCH 31, 2013		8,400,000	$	84		65,678,025	$	657	$	705,683		$	(426	)	$	(39,916	)	$	666,082		$	29,762		$	7,463		$	703,307
BALANCES, DECEMBER 31, 2011		2,000,000	$	20		27,278,000	$	273	$	288,902		$	-		$	(11,020	)	$	278,175		$	41,274		$	-		$	319,449
Regristration and offering costs		-		-		-		-		(323	)		-			-			(323	)		-			-			(323	)
Dividends paid		-		-		-		-		-			-			(4,225	)		(4,225	)		(1,136	)		-			(5,361	)
Equity-based compensation		-		-		-		-		126			-			-			126			-			-			126
Net income (loss)		-		-		-		-		-			-			(1,735	)		(1,735	)		(1,070	)		-			(2,805	)
BALANCES, MARCH 31, 2012		2,000,000	$	20		27,278,000	$	273	$	288,705		$	-		$	(16,980	)	$	272,018		$	39,068		$	-		$	311,086

(See Notes to ~~Condensed~~the Consolidated Financial Statements)

SUMMIT HOTEL PROPERTIES, INC. ~~AND SUMMIT HOTEL~~

~~PROPERTIES,~~CONSOLIDATED ~~LLC~~STATEMENTS OF CASH FLOWS (~~PREDECESSOR~~in thousands)

~~CONDENSED~~FOR ~~CONSOLIDATED~~THE ~~STATEMENTS~~QUARTERS OFENDED ~~CASH~~MARCH ~~FLOWS~~31, 2013 AND 2012 (UNAUDITED)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011

	First Quarter
	2013			2012

OPERATING ACTIVITIES
Net income (loss)	$	1,883		$	(2,805	)
Adjustments to reconcile net income (loss) to
net cash from operating activities:
Depreciation and amortization		11,490			8,480
Amortization of prepaid lease		12			12
Loss on impairment of assets		1,500			932
Equity-based compensation		421			126
Deferred tax asset		104			(463	)
(Gain) loss on disposal of assets		(1,640	)		-
Changes in operating assets and liabilities:
Restricted cash released (funded)		871			258
Trade receivables		(7,199	)		(2,544	)
Prepaid expenses and other		2,423			549
Accounts payable and accrued expenses		1,220			(1,639	)

NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES		11,085			2,906

INVESTING ACTIVITIES
Acquisitions of hotel properties		(213,135	)		(29,738	)
Investment in hotel properties under development		(77	)		-
Improvements and additions to hotel properties		(8,520	)		(6,833	)
Purchases of office furniture and equipment		(224	)		-
Proceeds from asset dispositions, net of closing costs		9,198			2
Restricted cash released (funded)		(14,030	)		(337	)

NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES		(226,788	)		(36,906	)

FINANCING ACTIVITIES
Proceeds from issuance of debt		74,000			111,550
Principal payments on debt		(77,649	)		(70,550	)
Financing fees on debt		(1,196	)		(983	)
Proceeds from equity offerings, net of offering costs		237,603			(323	)
Dividends paid and distributions to members		(10,245	)		(5,361	)

NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES		222,513			34,333

NET CHANGE IN CASH AND CASH EQUIVALENTS		6,810			333

CASH AND CASH EQUIVALENTS
BEGINNING OF PERIOD		13,980			10,537

END OF PERIOD	$	20,790		$	10,870

SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
Cash payments for interest	$	3,925		$	3,388

Capitalized interest	$	77		$	-

Cash payments for income taxes, net of refunds	$	81		$	120

	2012			2011
OPERATING ACTIVITIES
Net income (loss)	$	(1,520,775	)	$	(7,175,394	)
Adjustments to reconcile net income (loss) to
net cash from operating activities:
Depreciation and amortization		25,161,462			22,069,954
Amortization of prepaid lease		35,550			35,550
Loss on impairment of assets		2,098,000			-
Equity-based compensation		783,253			353,685
Deferred tax benefit		(513,029	)		-
(Gain) loss on derivatives		1,787			-
(Gain) loss on disposal of assets		198,795			36,031
Changes in operating assets and liabilities:
Trade receivables		(2,903,582	)		(2,448,764	)
Prepaid expenses and other		(121,909	)		4,125,239
Accounts payable and related party accounts payable		(416,944	)		(736,091	)
Income tax receivable		453,369			-
Accrued expenses		1,630,562			3,918,188
Restricted cash released (funded)		(265,432	)		(256,354	)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		24,621,107			19,922,044
INVESTING ACTIVITIES
Land and hotel acquisitions		(65,949,000	)		(50,017,000	)
Purchases of other property and equipment		(17,984,149	)		(21,234,766	)
Proceeds from asset dispositions, net of closing costs		18,421,047			359,936
Restricted cash released (funded)		(2,545,679	)		660,135
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		(68,057,781	)		(70,231,695	)
FINANCING ACTIVITIES
Proceeds from issuance of debt		142,585,266			65,382,528
Principal payments on debt		(80,541,737	)		(228,228,653	)
Financing fees on debt		(2,020,132	)		(3,953,546	)
Proceeds from equity offerings, net of offering costs		(707,101	)		240,840,458
Distributions to members and dividends paid		(16,128,913	)		(14,590,474	)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		43,187,383			59,450,313
NET CHANGE IN CASH AND CASH EQUIVALENTS		(249,291	)		9,140,662
CASH AND CASH EQUIVALENTS
BEGINNING OF PERIOD		10,537,132			7,977,418
END OF PERIOD	$	10,287,841		$	17,118,080

See Notes to the Consolidated Financial Statements

(See Notes to Condensed Consolidated Financial Statements)

SUMMIT HOTEL ~~PROPERTIES~~OP, ~~INC. AND SUMMIT HOTEL~~LP

~~PROPERTIES,~~CONSOLIDATED ~~LLC~~BALANCE SHEETS (~~PREDECESSOR~~in thousands, except unit amounts)

~~CONDENSED~~MARCH ~~CONSOLIDATED~~31, ~~STATEMENTS~~2013 ~~OF CASH FLOWS~~ (UNAUDITED) AND DECEMBER 31, 2012

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011

	March 31,		December 31,
	2013		2012
ASSETS

Investment in hotel properties, net	$	934,842	$	734,362
Investment in hotel properties under development		10,380		10,303
Land held for development		13,844		15,802
Assets held for sale		26,920		4,836
Cash and cash equivalents		20,790		13,980
Restricted cash		22,261		3,624
Trade receivables		12,677		5,478
Prepaid expenses and other		2,889		5,311
Deferred charges, net		9,324		8,895
Deferred tax asset		3,894		3,997
Other assets		4,169		4,201
TOTAL ASSETS	$	1,061,990	$	810,789


LIABILITIES AND EQUITY

LIABILITIES
Debt	$	325,673	$	312,613
Debt related to assets held for sale		6,715		-
Accounts payable		3,875		5,013
Accrued expenses		21,886		18,985
Derivative financial instruments		534		641
TOTAL LIABILITIES		358,683		337,252

COMMITMENTS AND CONTINGENCIES

EQUITY
Summit Hotel Properties, Inc., 65,678,025 and 46,159,652 common units outstanding
at March 31, 2013 and December 31, 2012, respectively, and 8,400,000 and
5,000,000 preferred units outstanding at March 31, 2013 and December 31, 2012,
respectively (preferred units liquidation preference of $211,078 and $125,717 at
March 31, 2013 and December 31, 2012, respectively)		666,082		436,819
Unaffiliated limited partners, 3,251,706 and 5,226,375 common units outstanding at
March 31, 2013 and December 31, 2012, respectively		29,762		36,718
Total partners' equity		695,844		473,537
Noncontrolling interests in joint venture		7,463		-
TOTAL EQUITY		703,307		473,537

TOTAL LIABILITIES AND EQUITY	$	1,061,990	$	810,789

		2012		2011
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Cash payments for interest	$	11,636,683	$	15,632,256
Cash payments for state income taxes, net of refunds	$	392,945	$	616,276

See Notes to the Consolidated Financial Statements

(See Notes to Condensed Consolidated Financial Statements)

SUMMIT HOTEL OP, LP

~~CONDENSED~~ CONSOLIDATED ~~BALANCE~~STATEMENTS ~~SHEETS~~OF OPERATIONS (in thousands, except per unit amounts)

~~SEPTEMBER~~FOR ~~30,~~THE ~~2012~~QUARTERS ~~(UNAUDITED)~~ENDED ~~AND~~MARCH ~~DECEMBER~~ 31, ~~2011~~2013 AND 2012 (UNAUDITED)

	2012			2011
	First Quarter
ASSETS
	2013			2012
Cash and cash equivalents	$	10,287,841		$	10,537,132
REVENUE
Restricted cash		4,275,143			1,464,032
Room revenue	$	60,089		$	35,727
Trade receivables		6,666,212			3,424,630
Other hotel operations revenue		3,122			1,593
Prepaid expenses and other		4,390,302			4,268,393
Total Revenue		63,211			37,320
Land held for development		19,006,473			20,294,973
EXPENSES
Property and equipment, net		572,525,464			498,876,238
Hotel operating expenses:
Deferred charges and other assets, net		8,986,646			8,923,906
Rooms		17,621			10,475
Deferred tax benefit		2,708,849			2,195,820
Other direct		8,244			4,954
Other assets		4,257,462			4,019,870
Other indirect		16,242			10,146
TOTAL ASSETS	$	633,104,392		$	554,004,994
Other		213			201
LIABILITIES AND EQUITY
Total hotel operating expenses		42,320			25,776
LIABILITIES
Depreciation and amortization		11,156			7,555
Accounts payable	$	1,254,050		$	1,670,994
Corporate general and administrative:
Derivative liabilities		522,564			-
Salaries and other compensation		2,421			938
Accrued expenses		17,723,139			15,781,577
Other		656			883
Mortgages and notes payable		312,250,257			217,103,728
Hotel property acquisition costs		654			580
TOTAL LIABILITIES		331,750,010			234,556,299
Total Expenses		57,207			35,732
COMMITMENTS AND CONTINGENCIES
INCOME (LOSS) FROM OPERATIONS		6,004			1,588
EQUITY
OTHER INCOME (EXPENSE)
Partners' equity:
Interest income		18			1
Summit Hotel Properties, Inc., 31,501,219 and 27,278,000 common units
Other income		160			-
outstanding, respectively, and 2,000,000 preferred units outstanding,
Interest expense		(4,072	)		(3,195	)
(liquidation preference of $50,385,417)		260,259,037			278,174,960
Gain (loss) on disposal of assets		6			-
Unaffiliated limited partners, 6,084,808 and 10,100,000 common units
Total Other Income (Expense)		(3,888	)		(3,194	)
outstanding, respectively		41,095,345			41,273,735
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES		2,116			(1,606	)
TOTAL EQUITY		301,354,382			319,448,695
INCOME TAX (EXPENSE) BENEFIT		(410	)		147
TOTAL LIABILITIES AND EQUITY	$	633,104,392		$	554,004,994
INCOME (LOSS) FROM CONTINUING OPERATIONS		1,706			(1,459	)
INCOME (LOSS) FROM DISCONTINUED OPERATIONS		177			(1,346	)
NET INCOME (LOSS)		1,883			(2,805	)
NET INCOME (LOSS) ATTRIBUTABLE TO NONCONTROLLING INTERESTS
IN JOINT VENTURE		(37	)		-
NET INCOME (LOSS) ATTRIBUTABLE TO SUMMIT HOTEL OP, LP		1,920			(2,805	)
PREFERRED DIVIDENDS		(2,452	)		(1,156	)
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON UNIT HOLDERS	$	(532	)	$	(3,961	)
WEIGHTED AVERAGE COMMON UNITS OUTSTANDING
Basic		65,979			37,378
Diluted		66,245			37,378
EARNINGS PER UNIT
Basic and diluted net income (loss) per unit from continuing operations	$	(0.01	)	$	(0.07	)
Basic and diluted net income (loss) per unit from discontinued operations		0.00			(0.04	)
Basic and diluted net income (loss) per unit	$	(0.01	)	$	(0.11	)

(See Notes to ~~Condensed~~the Consolidated Financial Statements)

SUMMIT HOTEL OP, LP ~~AND SUMMIT HOTEL~~

~~PROPERTIES,~~CONSOLIDATED ~~LLC~~STATEMENTS OF COMPREHENSIVE INCOME (~~PREDECESSOR~~LOSS) (in thousands)

~~CONDENSED~~FOR ~~CONSOLIDATED~~THE ~~STATEMENTS~~QUARTERS OFENDED ~~OPERATIONS~~MARCH 31, 2013 AND 2012 (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011

	First Quarter
	2013			2012


NET INCOME (LOSS)	$	1,883		$	(2,805	)

Other comprehensive income (loss), net of tax:
Changes in unrealized loss on derivatives		107			-
Total other comprehensive income (loss)		107			-

COMPREHENSIVE INCOME (LOSS)		1,990			(2,805	)

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO
NONCONTROLLING INTERESTS IN JOINT VENTURE		(37	)		-

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO
SUMMIT HOTEL OP, LP		2,027			(2,805	)

PREFERRED DIVIDENDS		(2,452	)		(1,156	)

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO
COMMON UNIT HOLDERS	$	(425	)	$	(3,961	)

	Summit Hotel OP, LP												Summit Hotel Properties, LLC (Predecessor)
	Three months ended 09/30/12			Three months ended 09/30/11			Nine months ended 09/30/12			Period 2/14/11 through 9/30/11			Period 1/1/11 through 2/13/11
REVENUE
Room revenue	$	50,062,745		$	39,589,802			$ 135,132,550		$	93,598,363		$	13,761,984
Other hotel operations revenue		1,171,162			846,774			3,292,311			1,972,692			330,251
Total Revenue		51,233,907			40,436,576			138,424,861			95,571,055			14,092,235
EXPENSES
Hotel operating expenses
Rooms		13,990,364			11,789,795			39,036,709			27,715,406			4,783,081
Other direct		5,957,531			5,371,116			15,983,050			12,305,241			2,533,904
Other indirect		13,690,221			10,354,525			37,492,154			23,964,794			4,521,906
Other		226,496			243,434			669,500			517,519			73,038
Total hotel operating expenses		33,864,612			27,758,870			93,181,413			64,502,960			11,911,929
Depreciation and amortization		8,503,841			8,108,644			24,836,200			17,937,342			3,288,931
Corporate general and administrative:
Salaries and other compensation		1,645,359			791,044			3,563,325			2,168,560			-
Other		823,480			625,609			2,757,611			2,166,420			-
Loan transaction costs		227,577			-			650,687			-			-
Hotel property acquisition costs		245,782			181,892			1,573,015			181,892			-
Total Expenses		45,310,651			37,466,059			126,562,251			86,957,174			15,200,860
INCOME (LOSS) FROM OPERATIONS		5,923,256			2,970,517			11,862,610			8,613,881			(1,108,625	)
OTHER INCOME (EXPENSE)
Interest income		17,863			553			19,554			14,780			7,139
Other income		22,697			-			497,273			-			-
Interest expense		(4,048,676	)		(3,337,485	)		(11,747,874	)		(9,753,543	)		(4,477,631	)
Gain (loss) on disposal of assets		(12,206	)		-			(198,795	)		(36,031	)		-
Gain (loss) on derivatives		(775	)		-			(1,787	)		-			-
Total Other Income (Expense)		(4,021,097	)		(3,336,932	)		(11,431,629	)		(9,774,794	)		(4,470,492	)
INCOME (LOSS) FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES		1,902,159			(366,415	)		430,981			(1,160,913	)		(5,579,117	)
INCOME TAX (EXPENSE) BENEFIT		(313,199	)		1,688			98,657			(495,967	)		(325,239	)
INCOME (LOSS) FROM CONTINUING OPERATIONS		1,588,960			(364,727	)		529,638			(1,656,880	)		(5,904,356	)
INCOME (LOSS) FROM DISCONTINUED OPERATIONS		51,866			406,149			(2,050,413	)		688,042			(302,200	)
NET INCOME (LOSS)		1,640,826			41,422			(1,520,775	)		(968,838	)		(6,206,556	)
PREFERRED DIVIDENDS		(1,156,250	)		-			(3,468,750	)		-			-
NET INCOME (LOSS) ATTRIBUTABLE TO
COMMON UNIT HOLDERS	$	484,576		$	41,422		$	(4,989,525	)	$	(968,838	)	$	(6,206,556	)
Basic and diluted net income (loss) per unit
from continuing operations:	$	0.01		$	(0.01	)	$	(0.08	)	$	(0.05	)
Basic and diluted net income (loss) per unit
from discontinued operations:		0.00			0.01			(0.05	)		0.02
Basic and diluted net income (loss) per unit:	$	0.01		$	0.00		$	(0.13	)	$	(0.03	)
Weighted-average common units outstanding:
Basic		37,393,288			37,378,000			37,384,795			37,378,000
Diluted		37,586,027			37,378,000			37,384,795			37,378,000

See Notes to the Consolidated Financial Statements

(See Notes to Condensed Consolidated Financial Statements)

SUMMIT HOTEL OP, LP ~~AND SUMMIT HOTEL~~

~~PROPERTIES,~~CONSOLIDATED ~~LLC~~STATEMENTS OF CHANGES IN EQUITY (~~PREDECESSOR~~in thousands)

~~CONDENSED~~FOR ~~CONSOLIDATED~~THE ~~STATEMENTS~~QUARTERS OFENDED ~~COMPREHENSIVE~~MARCH ~~INCOME~~31, ~~(LOSS)~~2013 AND 2012 (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011

	Preferred			Common
							Total			Noncontrolling
	Summit Hotel			Summit Hotel			Unaffiliated Limited			Interests in			Total
	Properties, Inc.			Properties, Inc.			Partners' Equity			Joint Venture			Equity

BALANCES, DECEMBER 31, 2012	$	120,328		$	316,491		$	36,718		$	-		$	473,537

Contributions		81,951			148,153			-			7,500			237,604
Common stock redemption of common units		-			6,567			(6,567	)		-			-
Distributions		(2,452	)		(7,427	)		(366	)		-			(10,245	)
Equity-based compensation		-			421			-			-			421
Other comprehensive income (loss)		-			102			5			-			107
Net income (loss)		2,452			(504	)		(28	)		(37	)		1,883

BALANCES, MARCH 31, 2013	$	202,279		$	463,803		$	29,762		$	7,463		$	703,307


BALANCES, DECEMBER 31, 2011	$	47,875		$	230,300		$	41,274		$	-		$	319,449

Registration and offering costs		-			(323	)		-			-			(323	)
Distributions		(1,156	)		(3,069	)		(1,136	)		-			(5,361	)
Equity-based compensation		-			126			-			-			126
Net income (loss)		1,156			(2,891	)		(1,070	)		-			(2,805	)

BALANCES, MARCH 31, 2012	$	47,875		$	224,143		$	39,068		$	-		$	311,086

	Summit Hotel OP, LP											Summit Hotel Properties, LLC (Predecessor)
	Three months ended 09/30/12			Three months ended 09/30/11		Nine months ended 09/30/12			Period 2/14/11 through 9/30/11			Period 1/1/11 through 2/13/11
NET INCOME (LOSS)	$	1,640,826		$	41,422	$	(1,520,775	)	$	(968,838	)	$	(6,206,556	)
Other comprehensive income (loss), net of tax:
Change in unrealized loss on derivatives		(240,928	)		-		(520,777	)		-			-
Total other comprehensive income (loss)		(240,928	)		-		(520,777	)		-			-
COMPREHENSIVE INCOME (LOSS)		1,399,898			41,422		(2,041,552	)		(968,838	)		(6,206,556	)
PREFERRED DIVIDENDS		(1,156,250	)		-		(3,468,750	)		-			-
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE
TO COMMON UNIT HOLDERS	$	243,648		$	41,422	$	(5,510,302	)	$	(968,838	)	$	(6,206,556	)

See Notes to the Consolidated Financial Statements

(See Notes to Condensed Consolidated Financial Statements)

SUMMIT HOTEL OP, LP

~~CONDENSED~~ CONSOLIDATED ~~STATEMENT~~STATEMENTS OF ~~CHANGES~~CASH INFLOWS ~~EQUITY~~ (~~UNAUDITED~~in thousands)

FOR THE ~~NINE~~QUARTERS ~~MONTHS~~ ENDED ~~SEPTEMBER~~MARCH 3031, 2013 AND 2012 (UNAUDITED)

	Preferred			Common
	First Quarter
							Total
	2013			2012
	Summit Hotel			Summit Hotel			Unaffiliated Limited			Total
OPERATING ACTIVITIES
	Properties, Inc.			Properties, Inc.			Partners' Equity			Equity
Net income (loss)	$	1,883		$	(2,805	)
BALANCES, JANUARY 1, 2012	$	47,875,094		$	230,299,866		$	41,273,735		$	319,448,695
Adjustments to reconcile net income (loss) to
Summit Hotel OP, LP
net cash from operating activities:
Registration and offering costs		-			(707,101	)		-			(707,101	)
Depreciation and amortization		11,490			8,480
Common stock redemption of common units		-			(3,630,444	)		3,630,444			-
Amortization of prepaid lease		12			12
Distributions		(3,468,750	)		(10,071,004	)		(2,589,159	)		(16,128,913	)
Loss on impairment of assets		1,500			932
Equity-based compensation		-421			~~646,250~~126			~~137,003~~			~~783,253~~
Other comprehensive income (loss)					(430,921	)		(89,856	)		(520,777	)
Deferred tax asset		104			(463	)
Net income (loss)		3,468,750			(3,722,703	)		(1,266,822	)		(1,520,775	)
(Gain) loss on disposal of assets		(1,640	)		-
BALANCES, SEPTEMBER 30, 2012	$	47,875,094		$	212,383,943		$	41,095,345		$	301,354,382
Changes in operating assets and liabilities:
Restricted cash released (funded)		871			258
Trade receivables		(7,199	)		(2,544	)
Prepaid expenses and other		2,423			549
Accounts payable and accrued expenses		1,220			(1,639	)
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES		11,085			2,906
INVESTING ACTIVITIES
Acquisitions of hotel properties		(213,135	)		(29,738	)
Investment in hotel properties under development		(77	)		-
Improvements and additions to hotel properties		(8,520	)		(6,833	)
Purchases of office furniture and equipment		(224	)		-
Proceeds from asset dispositions, net of closing costs		9,198			2
Restricted cash released (funded)		(14,030	)		(337	)
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES		(226,788	)		(36,906	)
FINANCING ACTIVITIES
Proceeds from issuance of debt		74,000			111,550
Principal payments on debt		(77,649	)		(70,550	)
Financing fees on debt		(1,196	)		(983	)
Contributions		237,603			(323	)
Distributions		(10,245	)		(5,361	)
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES		222,513			34,333
NET CHANGE IN CASH AND CASH EQUIVALENTS		6,810			333
CASH AND CASH EQUIVALENTS
BEGINNING OF PERIOD		13,980			10,537
END OF PERIOD	$	20,790		$	10,870
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Cash payments for interest	$	3,925		$	3,388
Capitalized interest	$	77		$	-
Cash payments for income taxes, net of refunds	$	81		$	120

(See Notes to ~~Condensed~~the Consolidated Financial Statements)

SUMMIT HOTEL OP PROPERTIES, LP INC. AND SUMMIT HOTEL OP, LP

~~PROPERTIES,~~NOTES ~~LLC~~TO THE CONSOLIDATED FINANCIAL STATEMENTS (~~PREDECESSOR~~UNAUDITED)

~~CONDENSED~~NOTE ~~CONSOLIDATED~~1 ~~STATEMENTS~~- DESCRIPTION OF ~~CASH FLOWS (UNAUDITED)~~BUSINESS

~~FOR~~Summit ~~THE NINE~~Hotel ~~MONTHS~~Properties, ~~ENDED~~Inc. ~~SEPTEMBER~~(the “Company”) is a self-advised hotel investment company that was organized on June 30, ~~2012~~2010 ~~AND~~as ~~2011~~ a Maryland corporation. The Company holds both general and limited partnership interests in Summit Hotel OP, LP (the “Operating Partnership”), a Delaware limited partnership also organized on June 30, 2010. Unless the context otherwise requires, “we” and “our” refer to the Company and the Operating Partnership collectively.

	2012			2011
OPERATING ACTIVITIES
Net income (loss)	$	(1,520,775	)	$	(7,175,394	)
Adjustments to reconcile net income (loss) to
net cash from operating activities:
Depreciation and amortization		25,161,462			22,069,954
Amortization of prepaid lease		35,550			35,550
Loss on impairment of assets		2,098,000			-
Equity-based compensation		783,253			353,685
Deferred tax benefit		(513,029	)		-
(Gain) loss on derivatives		1,787			-
(Gain) loss on disposal of assets		198,795			36,031
Changes in operating assets and liabilities:
Trade receivables		(2,903,582	)		(2,448,764	)
Prepaid expenses and other		(121,909	)		4,125,239
Accounts payable and related party accounts payable		(416,944	)		(736,091	)
Income tax receivable		453,369			-
Accrued expenses		1,630,562			3,918,188
Restricted cash released (funded)		(265,432	)		(256,354	)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		24,621,107			19,922,044
INVESTING ACTIVITIES
Land and hotel acquisitions		(65,949,000	)		(50,017,000	)
Purchases of other property and equipment		(17,984,149	)		(21,234,766	)
Proceeds from asset dispositions, net of closing costs		18,421,047			359,936
Restricted cash released (funded)		(2,545,679	)		660,135
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES		(68,057,781	)		(70,231,695	)
FINANCING ACTIVITIES
Proceeds from issuance of debt		142,585,266			65,382,528
Principal payments on debt		(80,541,737	)		(228,228,653	)
Financing fees on debt		(2,020,132	)		(3,953,546	)
Contributions, net of offering costs		(707,101	)		240,840,458
Distributions		(16,128,913	)		(14,590,474	)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		43,187,383			59,450,313
NET CHANGE IN CASH AND CASH EQUIVALENTS		(249,291	)		9,140,662
CASH AND CASH EQUIVALENTS
BEGINNING OF PERIOD		10,537,132			7,977,418
END OF PERIOD	$	10,287,841		$	17,118,080

At March 31, 2013, our portfolio consists of 91 upscale, upper midscale and midscale hotel properties containing 10,309 guestrooms located in 22 states. Of our 91 hotel properties, six are classified as held for sale. Our hotel properties are leased to subsidiaries (“TRS Lessees”) of our taxable REIT subsidiaries (“TRSs”). We indirectly own 100% of the outstanding equity interests in all but one of our TRS Lessees. We indirectly own an 80% controlling interest in the TRS Lessee associated with the recently acquired Holiday Inn Express & Suites in San Francisco, CA.

~~(See~~NOTE ~~Notes~~2 to- BASIS ~~Condensed~~OF ~~Consolidated~~PRESENTATION ~~Financial~~AND ~~Statements)~~SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements of the Company include the accounts of the Company, the Operating Partnership, and their subsidiaries, including joint ventures. The accompanying consolidated financial statements of the Operating Partnership include the accounts of the Operating Partnership and its subsidiaries, including joint ventures. All significant intercompany balances and transactions have been eliminated in the consolidated financial statements.

We prepare these consolidated financial statements in conformity with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Results for first quarter 2013 may not be indicative of the results that may be expected for the full year 2013. For further information, please read the financial statements included in our Form 10-K for the year ended December 31, 2012.

We made certain reclassifications to the first quarter 2012 financial information to conform to our 2013 presentation, which included the reclassification of $0.6 million of food and beverage costs previously included as a reduction of other hotel operations revenue to other direct expenses. This reclassification had no effect on previously reported results of operations or equity.

Noncontrolling Interests

Noncontrolling interests represent the portion of equity in a subsidiary held by owners other than the consolidating parent. Noncontrolling interests are reported in the consolidated balance sheets within equity, separately from stockholders’ equity. Revenue, expenses and net income (loss) attributable to both the Company and the noncontrolling interests are reported in the consolidated statements of operations.

Our consolidated financial statements include noncontrolling interests related to Common Units of the Operating Partnership held by unaffiliated third parties and third-party ownership of joint ventures.

SUMMIT HOTEL OP PROPERTIES, LP INC. AND SUMMIT HOTEL OP, LP

~~PROPERTIES,~~NOTES ~~LLC~~TO THE CONSOLIDATED FINANCIAL STATEMENTS (~~PREDECESSOR~~UNAUDITED)

~~CONDENSED~~New ~~CONSOLIDATED~~Accounting ~~STATEMENTS OF CASH FLOWS (UNAUDITED)~~Standards

~~FOR~~In ~~THE NINE~~first ~~MONTHS~~quarter ~~ENDED~~2013, ~~SEPTEMBER~~we 30adopted Accounting Standards Update (“ASU”) 2013–02, ~~2012~~Comprehensive ~~AND~~Income ~~2011~~ (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income. ASU 2013–02 required an entity to separately provide information about the effects on net income of certain significant amounts reclassified out of each component of accumulated other comprehensive income.

		2012		2011
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Cash payments for interest	$	11,636,683	$	15,632,256
Cash payments for state income taxes, net of refunds	$	392,945	$	616,276

Adoption of this new standard did not have a material effect on the consolidated financial statements of the Company or our Operating Partnership.

~~(See~~NOTE ~~Notes~~3 to- HOTEL ~~Condensed~~PROPERTY ~~Consolidated Financial Statements)~~ACQUISITIONS

Hotel property acquisitions in first quarter 2013 and 2012 include (in thousands):

Date Acquired	Franchise/Brand	Location	Purchase Price		Debt Assumed

First Quarter 2013
January 22	Hyatt Place	Chicago (Hoffman Estates), IL	$	8,706	$	-
January 22	Hyatt Place	Orlando (Convention), FL		13,547		-
January 22	Hyatt Place	Orlando (Universal), FL		13,872		-
February 11	Holiday Inn Express & Suites (1)	San Francisco, CA		60,500		23,423
March 11	SpringHill Suites by Marriott	New Orleans, LA		33,500		-
March 11	Courtyard by Marriott	New Orleans (Convention), LA		31,500		-
March 11	Courtyard by Marriott	New Orleans (French Quarter), LA		26,000		-
March 11	Courtyard by Marriott	New Orleans (Metairie), LA		24,000		-
March 11	Residence Inn by Marriott	New Orleans (Metairie), LA		20,000		-

Total First Quarter 2013		9 hotel properties	$	231,625	$	23,423

First Quarter 2012
January 12	Courtyard by Marriott (2)	Atlanta, GA	$	28,900	$	19,011
February 28	Hilton Garden Inn	Birmingham (Liberty Park), AL		11,500		-
February 28	Hilton Garden Inn	Birmingham (Lakeshore), AL		8,625		-

Total First Quarter 2012		3 hotel properties	$	49,025	$	19,011

(1) This hotel property was acquired by a joint venture in which we own an 80% controlling interest.
(2) We acquired a 90% controlling interest in this hotel property and we are obligated to acquire the remaining ownership in
2016 for $0.4 million. The $0.4 million has been accrued as a liability and is included in the purchase price above.

The allocation of the aggregate purchase prices to the fair value of assets and liabilities acquired for the above acquisitions follows (in thousands):

	First Quarter
	2013		2012

Land	$	32,618	$	4,850
Hotel buildings and improvements		193,657		40,950
Furniture, fixtures and equipment		5,350		2,825
Other assets		5,478		187
Total assets acquired		237,103		48,812
Debt assumed		23,423		19,011
Other liabilities		545		63
		-
Net assets acquired	$	213,135	$	29,738

The allocations for certain of the first quarter 2013 acquisitions are based on preliminary information and are, therefore, subject to change.

SUMMIT HOTEL PROPERTIES, INC., AND SUMMIT HOTEL OP, LP~~, AND~~

~~SUMMIT~~NOTES ~~HOTEL~~TO ~~PROPERTIES,~~THE ~~LLC~~CONSOLIDATED FINANCIAL STATEMENTS (~~PREDECESSOR~~UNAUDITED)

~~NOTES~~Total TOrevenues ~~THE~~and ~~CONDENSED~~net ~~CONSOLIDATED~~income ~~FINANCIAL~~(loss) ~~STATEMENTS~~for hotel properties acquired in first quarter 2013 and 2012, which are included in our consolidated statements of operations follow (~~UNAUDITED~~in thousands):

SEPTEMBER 30, 2012

	First Quarter
	2013 Acquisitions		2012 Acquisitions
	2013		2013			2012

Revenues	$	6,779	$	2,904		$	1,798

Net income (loss)	$	1,136	$	(186	)	$	131

~~NOTE~~The results of operations of acquired hotel properties are included in the consolidated statements of operations beginning on their respective acquisition dates. The following unaudited condensed pro forma financial information presents the results of operations as if all acquisitions in 2012 and first quarter 2013 had taken place on January 1, ~~- SIGNIFICANT~~2012. ~~ACCOUNTING~~The ~~POLICIES~~unaudited ~~AND~~condensed ~~BUSINESS~~pro forma information excludes discontinued operations, is for comparative purposes only, and is not necessarily indicative of what actual results of operations would have been had the hotel property acquisitions taken place on January 1, 2012. This information does not purport to represent results of operations for future periods.

~~Basis~~The ofunaudited ~~Presentation~~condensed pro forma financial information for 2013 and 2012 follows (in thousands, except per share):

Summit Hotel Properties, Inc. (the “Company”) is a self-advised hotel investment company that was organized on June 30, 2010 as a Maryland corporation. The Company holds both general and limited partnership interests in Summit Hotel OP, LP (the “Operating Partnership”), a Delaware limited partnership also organized on June 30, 2010. On February 14, 2011, the Company closed on its initial public offering (“IPO”) of 26,000,000 shares of common stock and a concurrent private placement of 1,274,000 shares of common stock. Effective February 14, 2011, the Operating Partnership and Summit Hotel Properties, LLC (the “Predecessor”) completed the merger of the Predecessor with and into the Operating Partnership (the “Merger”). At the effective time of the Merger, the outstanding Class A, Class A-1, Class B and Class C membership interests in the Predecessor were issued and converted into, and cancelled in exchange for, a total of 9,993,992 common units of partnership interest in the Operating Partnership (“Common Units”), and the members of the Predecessor were admitted as limited partners of the Operating Partnership. Also effective February 14, 2011, The Summit Group, Inc., the parent company of the Predecessor (“The Summit Group”), contributed its 36% Class B membership interest in Summit Group of Scottsdale, Arizona LLC (“Summit of Scottsdale”) to the Operating Partnership in exchange for 74,829 Common Units and an unaffiliated third-party investor contributed its 15% Class C membership interest in Summit of Scottsdale to the Operating Partnership in exchange for 31,179 Common Units. Effective February 14, 2011, the Company contributed the net proceeds of the IPO and the concurrent private placement to the Operating Partnership in exchange for an aggregate of 27,274,000 Common Units, including Common Units representing the sole general partnership interest in the Operating Partnership, which are held by a wholly owned subsidiary of the Company as the sole general partner of the Operating Partnership. Unless the context otherwise requires, “we” and “our” refer to the Company and the Operating Partnership collectively.

	First Quarter
	2013		2012

Revenues	$	72,410	$	67,721

Net income (loss)	$	5,639	$	2,479

Net income (loss) per share attributable to common
stockholders - basic and diluted	$	0.05	$	0.06

NOTE 4 - INVESTMENT IN HOTEL PROPERTIES

~~While~~Investment ~~the Operating Partnership was the survivor of and the legal acquirer of the Predecessor~~ in ~~the~~hotel ~~merger,~~properties ~~for~~includes ~~accounting and financial reporting purposes, the Predecessor is considered the accounting acquirer~~ (in the Merger. As a result, the historical consolidated financial statements of the Predecessor are presented as the historical consolidated financial statements of the Company and the Operating Partnership after completion of the Merger and the contributions of the Class B and C membership interests in Summit of Scottsdale to the Operating Partnership (collectively, the “Reorganization Transaction”thousands).:

As a result of the Reorganization Transaction, the Operating Partnership and its subsidiaries acquired sole ownership of the 65 hotels in its initial portfolio. In addition, the Operating Partnership and its subsidiaries assumed the liabilities, including indebtedness, of the Predecessor and its subsidiaries.

	March 31,		December 31,
	2013		2012

Land	$	134,506	$	105,571
Hotel buildings and improvements		815,055		649,699
Furniture, fixtures and equipment		126,757		124,385
		1,076,318		879,655
Less accumulated depreciation		141,476		145,293

	$	934,842	$	734,362

As of September 30, 2012, our real estate investment portfolio consists of 73 upscale, upper midscale and midscale hotels with a total of 7,533 guestrooms located in small, mid-sized and suburban markets in 20 states (see Note 3 for new acquisitions). The hotels are leased to subsidiaries (“TRS Lessees”) of the Company’s taxable REIT subsidiaries (“TRSs”). The Company indirectly owns 100% of the outstanding equity interests in the TRS Lessees.

The accompanying unaudited interim financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for reporting on interim periods. Accordingly, certain information and footnotes required by Generally Accepted Accounting Principles (“GAAP”) for complete financial statements have been condensed or omitted. Interim results may not be indicative of fiscal year performance because of seasonal and other factors. These interim statements should be read in conjunction with the financial statements and notes thereto included in our combined Annual Report on Form 10-K for the year ended December 31, 2011. In management’s opinion, all adjustments made were normal and recurring in nature, and were necessary for a fair statement of the results of the interim period.

SUMMIT HOTEL PROPERTIES, INC., AND SUMMIT HOTEL OP, LP~~, AND~~

~~SUMMIT~~NOTES ~~HOTEL~~TO ~~PROPERTIES,~~THE ~~LLC~~CONSOLIDATED FINANCIAL STATEMENTS (~~PREDECESSOR~~UNAUDITED)

~~NOTES~~NOTE TO5 ~~THE~~- ASSETS ~~CONDENSED~~HELD ~~CONSOLIDATED~~FOR ~~FINANCIAL STATEMENTS (UNAUDITED)~~SALE

~~SEPTEMBER~~Assets ~~30,~~held ~~2012~~for sale and related debt include (in thousands):

Use of Estimates

	March 31,		December 31,
	2013		2012

Land	$	7,939	$	3,092
Building		17,389		1,474
Furniture, fixtures and equipment		1,592		270

	$	26,920	$	4,836

Debt	$	6,715	$	-

~~The~~At ~~preparation~~March of31, ~~the~~2013, ~~financial~~assets ~~statements~~held infor ~~conformity~~sale ~~with~~include ~~U.S.~~the ~~GAAP~~Holiday ~~requires~~Inn, ~~management~~Holiday toInn ~~make~~Express, ~~estimates~~Hampton ~~and~~Inn, ~~assumptions~~Fairfield ~~that~~Inn ~~affect~~& ~~the~~Suites, ~~reported~~and ~~amounts~~a ofland ~~assets~~parcel ~~and~~in ~~liabilities~~Boise, atID; the ~~date~~Courtyard ofby Marriott in Memphis, TN; the ~~financial~~SpringHill ~~statements~~Suites in Lithia, GA; and ~~reported~~land ~~amounts~~parcels ofin ~~revenues~~Missoula, MT and ~~expenses~~Houston, ~~during~~TX. ~~the~~The ~~reporting~~Holiday ~~period~~Inn and Holiday Inn Express in Boise, ID were sold on May 1, 2013. ~~Actual~~ ~~results~~All ~~could~~other ~~differ~~properties ~~from~~classified ~~those~~as ~~estimates~~held for sale are under contract to sell.

~~Consolidation~~At December 31, 2012, assets held for sale included the Missoula land parcel; the AmericInn & Suites in Golden, CO, which was sold on January 15, 2013; and a land parcel in Jacksonville, FL, which was sold on February 27, 2013.

~~The~~NOTE ~~accompanying~~6 condensed consolidated financial statements of the Company include the accounts of the Company, the Operating Partnership, and their subsidiaries. The accompanying condensed consolidated financial statements of the Operating Partnership include the accounts of the Operating Partnership and its subsidiaries. All significant intercompany balances and transactions have been eliminated in the condensed consolidated financial statements.- DEBT

~~Reclassifications~~Our debt is comprised of a senior secured revolving credit facility and term loans secured by various hotel properties. The weighted average interest rate, after giving effect to our interest rate derivatives, for all borrowings was 5.35% at March 31, 2013 and 5.15% at December 31, 2012, respectively. Our total fixed-rate and variable-rate debt, after giving effect to our interest rate derivatives, follows (in thousands):

Certain prior year amounts have been reclassified to conform to the current year presentation with no impact to net income, shareholders’ equity or cash flows.

	March 31,		December 31,
	2013		2012

Fixed-rate debt	$	325,297	$	229,587
Variable-rate debt		7,091		83,026

		332,388		312,613
Less debt related to assets
held for sale - fixed rate		6,715		-

	$	325,673	$	312,613

Recent Accounting Pronouncements

In May 2011, FASB issued an update (ASU No. 2011-04) to ASC 820, Fair Value Measurements and Disclosures, to develop common requirements for measuring fair value and for disclosing information about fair value measurements in accordance with GAAP and IFRS. This update was effective for interim and fiscal years beginning after December 15, 2011. Adoption of this ASU did not have a material impact on the consolidated financial statements.

In June 2011, FASB issued ASU 2011-05, Presentation of Comprehensive Income. ASU 2011-05 requires an entity to present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. ASU 2011-05 eliminates the option to present the components of other comprehensive income as part of the statement of changes in equity. ASU 2011-05 was effective for interim and fiscal years beginning after December 15, 2011. In December 2011, the FASB decided to defer the effective date of those changes in ASU 2011-05 that relate only to the presentation of reclassification adjustments in the statement of income by issuing ASU 2011-12, Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive income in Accounting Standards Update 2011-05. The adoption of this ASU did not have an impact on the consolidated financial statements.

SUMMIT HOTEL PROPERTIES, INC., AND SUMMIT HOTEL OP, LP~~, AND~~

~~SUMMIT~~NOTES ~~HOTEL~~TO ~~PROPERTIES,~~THE ~~LLC~~CONSOLIDATED FINANCIAL STATEMENTS (~~PREDECESSOR~~UNAUDITED)

~~NOTES~~Information TOabout ~~THE~~the ~~CONDENSED~~fair ~~CONSOLIDATED~~value ~~FINANCIAL~~of ~~STATEMENTS~~our fixed-rate debt that is not recorded at fair value follows (~~UNAUDITED~~in thousands):

SEPTEMBER 30, 2012

	March 31, 2013				December 31, 2012
	Carrying Value		Fair Value		Carrying Value		Fair Value		Valuation Technique

Fixed-rate debt not recorded at fair value	$	284,704	$	281,101	$	188,565	$	193,448	Level 2 - Market approach

~~Revenue~~At ~~Recognition~~March 31, 2013 and December 31, 2012, we had variable rate debt of $40.6 million and $41.0 million, respectively, which had effectively been converted to fixed interest rates through derivative financial instruments which are carried at fair value. Differences between carrying value and fair value of our fixed-rate debt are primarily due to changes in interest rates. Inherently, fixed-rate debt is subject to fluctuations in fair value.

~~Revenue~~$150 isMillion ~~recognized~~Senior ~~when~~Secured ~~rooms~~Revolving ~~are~~Credit ~~occupied and services have been rendered.~~Facility

~~Derivatives~~In January 2013, we removed the AmericInn and ~~Hedges~~Fairfield Inn in Golden, CO from the borrowing base of our senior secured revolving credit facility. At March 31, 2013, the maximum amount of borrowing permitted under the terms of this facility was $113.1 million, of which we had $5.0 million borrowed, $3.7 million in standby letters of credit and $104.4 million available to borrow.

WeTerm use interest rate derivatives to hedge our risks on variable-rate debt. We apply hedge accounting to our interest rate swap derivatives. Interest rate derivatives could include swaps, caps, and floors. We assess the effectiveness of each hedging relationship by comparing changes in fair value or cash flows of the derivative hedging instrument with the changes in fair value or cash flows of the designated hedged item or transaction.Loans

~~All~~On ~~derivatives~~January ~~are~~14, ~~recorded~~2013, atwe ~~fair~~paid ~~value~~off ~~and~~two ~~reported~~variable asrate aterm ~~derivative~~loans ~~asset~~with orFirst ~~liability~~National inBank ~~the~~of ~~condensed~~Omaha ~~consolidated~~that ~~balance~~were ~~sheets~~secured by three hotel properties. ~~For~~ ~~interest~~These ~~rate~~loans ~~derivatives~~totaled ~~designated~~$22.8 asmillion ~~cash~~and ~~flow~~had ~~hedges:~~maturity dates of July 2013 and February 2014. There were no associated prepayment penalties.

a)On ~~the~~January ~~effective~~25, ~~portion~~2013, ofwe ~~changes~~closed inon ~~fair~~a ~~value~~$29.4 ismillion ~~initially~~term ~~reported~~loan aswith KeyBank National Association (KeyBank) with a ~~component~~fixed rate of ~~accumulated~~4.46%. ~~other~~This ~~comprehensive~~term ~~income~~loan ~~(loss)~~matures inon ~~the~~February ~~equity~~1, ~~section~~2023, ofamortizes ~~the~~over ~~condensed~~30 ~~consolidated~~years, ~~balance~~and ~~sheets~~is ~~and~~secured ~~reclassified~~by tofour ~~interest~~of ~~expense~~the Hyatt Place hotels we acquired in ~~the~~October ~~condensed~~2012. ~~consolidated~~These ~~statements~~hotels ofare ~~operations~~located in ~~the~~Chicago ~~period~~(Lombard), ~~during~~IL; ~~which~~Denver ~~the~~(Lone ~~hedged~~Tree), ~~transaction~~CO; ~~affects~~Denver ~~earnings~~(Englewood), CO; and Dallas (Arlington), TX.

bOn February 11, 2013, as a part of our acquisition (through a joint venture) of the ~~ineffective~~Holiday ~~portion~~Inn of& ~~changes~~Suites in ~~fair~~San ~~value~~Francisco, isCA, ~~recognized~~we ~~directly~~assumed ina ~~earnings~~$23.4 ~~“gain~~million ~~(loss)~~term onloan ~~derivatives”~~with inGreenwich ~~the~~Capital ~~condensed~~Financial ~~consolidated~~Products, ~~statements~~Inc. This loan has a fixed interest rate of ~~operations~~6.2%, matures on January 6, 2016 and amortizes over 30 years.

~~Fair~~On ~~Value~~March 7 and 8, 2013, we closed on two additional term loans with KeyBank, which mature on April 1, 2023 and amortize over 30 years. A $22.7 million term loan with a fixed rate of 4.52% is secured by three of the Hyatt hotels we acquired in October 2012. These hotels include a Hyatt House in Denver (Englewood), CO and Hyatt Place hotels in Baltimore (Owings Mills), MD and Scottsdale, AZ. A $22.0 million term loan with a fixed rate of 4.3% is secured by the three Hyatt Place hotels we acquired in January 2013. These hotels are located in Chicago (Hoffman Estates), IL; Orlando (Convention), FL; and Orlando (Universal), FL.

~~FASB~~NOTE ~~ASC~~7 ~~820~~- COMMITMENTS ~~defines~~AND fair value, establishes a framework for measuring fair value and enhances disclosures about fair value measurements. Fair value is defined under GAAP as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.CONTINGENCIES

~~Our~~Pending ~~estimates~~Hotel ofProperty the fair value of financial instruments as of September 30, 2012 were determined using available market information and appropriate valuation methods. Considerable judgment is necessary to interpret market data and develop estimated fair value. The use of different market assumptions or estimation methods may have a material effect on the estimated fair value amounts.Acquisitions

~~The~~At ~~carrying~~March ~~amounts~~31, of2013, ~~cash~~we ~~and~~had ~~cash~~purchase ~~equivalents,~~agreements ~~restricted~~for ~~cash,~~a ~~receivables,~~Holiday ~~accounts~~Inn ~~payable~~Express & Suites in Minneapolis (Minnetonka), MN and ~~accrued~~a ~~expenses~~Hilton ~~approximate~~Garden ~~fair~~Inn ~~value~~in ~~due~~Minneapolis to(Eden Prairie), MN that have not been closed as of the ~~short-term~~issuance ~~nature~~of these financial statements. The aggregated purchase price of these ~~instruments~~hotel properties is $17.1 million, which includes the assumption of debt of $10.2 million. These acquisitions are contingent upon customary closing conditions; therefore, there is no assurance that they will be completed.

As of September 30, 2012, the aggregate fair value of our consolidated mortgages and notes payable, (Level 2) is approximately $313.0 million, compared to the aggregate carrying value of approximately $312.3 million on our condensed consolidated balance sheet.

FASB ASC 820 also requires that non-financial assets and non-financial liabilities be disclosed at fair value in the financial statements if these items are measured at fair value on a non-recurring basis, such as in determining impairment loss or the value of assets held for sale as described below.

SUMMIT HOTEL PROPERTIES, INC., AND SUMMIT HOTEL OP, LP~~, AND~~

~~SUMMIT~~NOTES ~~HOTEL~~TO ~~PROPERTIES,~~THE ~~LLC~~CONSOLIDATED FINANCIAL STATEMENTS (~~PREDECESSOR~~UNAUDITED)

~~NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~Litigation

~~SEPTEMBER~~We 30are involved from time to time in litigation arising in the ordinary course of business; however, ~~2012~~we are not currently aware of any actions against us that we believe would have a significant impact on our financial condition or results of operations.

~~Depreciation~~NOTE ~~and~~8 ~~Amortization~~- EQUITY

~~Hotels~~Common are carried at cost and depreciated using the straight-line method over an estimated useful life of 27 to 40 years for buildings and two to 15 years for furniture, fixtures and equipment. We are required to make subjective assessments as to the useful lives and classification of our properties for purposes of determining the amount of depreciation expense to reflect each year with respect to the assets. Depreciation and amortization expense consists of depreciation of real property, amortization of deferred financing costs and amortization of franchise fees. Depreciation expense was $7,780,890 and $7,097,918 for the three months ended September 30, 2012 and 2011, respectively. Depreciation expense was $22,794,069 and $19,582,596 for the nine months ended September 30, 2012 and 2011, respectively. Amortization of deferred financing costs was $572,852 and $1,153,043 for the three months ended September 30, 2012 and 2011, respectively. Amortization of deferred financing costs was $1,795,545 and $1,770,368 for the nine months ended September 30, 2012 and 2011, respectively. Amortization of franchise fees was $150,099 and $140,954 for the three months ended September 30, 2012 and 2011, respectively. Amortization of franchise fees was $571,848 and $716,990 for the nine months ended September 30, 2012 and 2011, respectively.Stock

~~Long-Lived~~On ~~Assets~~January ~~and~~3, ~~Impairment~~2013, we issued 1,974,669 shares of common stock to limited partners of the Operating Partnership upon redemption of their Common Units.

WeOn ~~apply~~January ~~the~~14, ~~provisions~~2013, ofwe ~~FASB~~completed ~~ASC~~underwritten ~~360,~~public ~~Property~~offering ~~Plant~~of ~~and Equipment~~17,250,000 ~~which~~shares ~~addresses~~of ~~financial~~common ~~accounting~~stock. ~~and~~Net ~~reporting~~proceeds ~~for~~were $148.2 million, after the ~~impairment~~underwriting ordiscount ~~disposal~~and offering-related expenses of ~~long-lived~~$7.1 ~~assets~~million.

WeOn ~~monitor~~March ~~events~~1, ~~and changes in circumstances for indicators that the carrying value of a hotel and related assets may be impaired. Factors that could trigger an impairment analysis include~~2013, ~~among~~we ~~others:~~issued ~~(1) significant underperformance relative to historical or projected operating results~~292,090 ~~(2) significant~~shares ~~changes in the manner~~ of ~~use~~common ofstock ato ~~hotel~~our orexecutive ~~the~~officers ~~strategy~~pursuant ofto our ~~overall~~2011 ~~business,~~Equity ~~(3) a~~Incentive ~~significant~~Plan. ~~increase~~On inMarch ~~competition~~22, ~~(4) a significant adverse change in legal factors or regulations or (5) significant negative industry or economic trends. When such factors are identified~~2013, we ~~prepare~~issued ~~an estimate of the undiscounted future cash flows~~1,614 ~~without~~shares ~~interest charges,~~ of ~~the~~common ~~specific~~stock ~~hotel and determine if the investment~~ in ~~such~~lieu ~~hotel~~of ~~is recoverable based on the undiscounted future~~ cash ~~flows.~~for Ifdirector ~~impairment is indicated, an adjustment is made to the carrying value of the hotel to record the hotel at fair value~~fees.

~~During~~Preferred the second quarter of 2012, the Company disposed of three hotels located in Twin Falls, ID for a sales price of $16.5 million. During the third quarter of 2012, the Company disposed of a hotel in Missoula, MT for a sales price of $1.9 million. As a result of entering into these sales agreements, we recorded an impairment loss within income (loss) from discontinued operations of approximately $932,000 and $1,166,000 during the first and second quarters of 2012, respectively, for those assets as the anticipated net proceeds were less than the carrying value.Stock

~~Assets~~On ~~Held~~March 20, 2013, we completed a public offering of 3,400,000 shares of 7.125% Series C Cumulative Redeemable Preferred Stock for ~~Sale~~net proceeds of $82.0 million, after the underwriting discount and offering-related expenses of $3.0 million.

Our Series C preferred stock has a $25 per share liquidation preference and pays dividends at an annual rate of $1.78125 per share. Dividend payments are made quarterly in arrears on or about the last day of February, May, August and November of each year.

Noncontrolling Interests in Operating Partnership

Pursuant to the limited partnership agreement, beginning February 14, 2012, the unaffiliated third parties who hold Common Units in our Operating Partnership have the right to cause us to redeem their Common Units in exchange for cash, based upon the fair value of an equivalent number of our shares of common stock at the time of redemption, or at our option, shares of our common stock on a one-for-one basis. The number of shares of our common stock issuable upon redemption of Common Units may be adjusted upon the occurrence of certain events such as share dividends, share subdivisions or combinations.

On January 3, 2013, we redeemed 1,974,669 Common Units for 1,974,669 shares of our common stock.

At March 31, 2013 and December 31, 2012, unaffiliated third parties owned 3,251,706 and 5,226,375 Common Units of the Operating Partnership, representing 4.7% and 10.1% limited partnership interest in the Operating Partnership, respectively.

We classify outstanding Common Units held by unaffiliated third parties as noncontrolling interests in the Operating Partnership, a component of equity in the Company’s consolidated balance sheets. The portion of net income (loss) allocated to these Common Units is reported on the Company’s consolidated statement of operations as net income (loss) attributable to noncontrolling interests of the Operating Partnership.

SUMMIT HOTEL PROPERTIES, INC., AND SUMMIT HOTEL OP, LP~~, AND~~

~~SUMMIT~~NOTES ~~HOTEL~~TO ~~PROPERTIES,~~THE ~~LLC~~CONSOLIDATED FINANCIAL STATEMENTS (~~PREDECESSOR~~UNAUDITED)

~~NOTES~~Noncontrolling TOInterests ~~THE~~in ~~CONDENSED~~Joint ~~CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~Venture

~~SEPTEMBER~~On 30February 11, ~~2012~~2013, we formed a joint venture with an affiliate of IHG to purchase a Holiday Inn Express & Suites in San Francisco, CA. We own an 80% controlling interest in the joint venture and our partner owns a 20% interest. We classify our partner’s 20% interest as noncontrolling interest in joint venture on our consolidated balance sheets. The portion of net income (loss) allocated to our partner is reported on our consolidated statements of operations as net income (loss) attributable to noncontrolling interests of joint venture.

~~Acquisitions~~NOTE 9 - EQUITY-BASED COMPENSATION

WeOur ~~allocate~~equity-based ~~the~~awards ~~purchase~~were ~~price~~issued ofunder ~~acquisitions~~our ~~based~~2011 onEquity ~~the~~Incentive ~~fair~~Plan ~~value~~which ofprovides for the ~~acquired~~granting ~~assets~~of ~~and~~stock ~~assumed~~options, ~~liabilities.~~stock Weappreciation ~~determine~~rights, ~~the~~restricted ~~acquisition-date~~stock, ~~fair~~restricted ~~values~~stock ofunits, ~~all~~dividend ~~assets~~equivalent rights, and ~~assumed~~other ~~liabilities~~equity-based ~~using~~award ~~appraisals~~ or ~~methods~~incentive ~~similar~~awards up to ~~those~~an ~~used~~aggregate byof ~~independent appraisers~~2,318,290 ~~for~~shares ~~example,~~of ~~using~~common astock. Stock ~~discounted~~options ~~cash~~granted ~~flow~~may ~~analysis~~be ~~that~~either ~~utilizes~~incentive ~~appropriate~~stock ~~discount~~options ~~and/~~or ~~capitalization~~nonqualified ~~rates~~stock ~~and~~options. Vesting ~~available~~terms ~~market~~may ~~information~~vary ~~(level~~with ~~3).~~each ~~Estimates~~grant, ofand ~~future~~stock ~~cash~~option ~~flows~~terms are ~~based~~generally onfive ato ~~number~~ten ofyears. ~~factors~~We ~~including~~have ~~historical~~outstanding ~~operating~~equity-based ~~results,~~awards in ~~known~~the ~~and~~form ~~anticipated~~of ~~trends,~~stock ~~and~~options ~~market~~ and ~~economic~~restricted ~~conditions~~stock ~~(see~~awards. ~~Note~~All 3of ~~for~~our ~~new~~existing ~~acquisitions). Acquisition~~equity-based ~~costs~~awards are ~~expensed~~classified as ~~incurred~~equity awards.

~~Equity-Based~~Stock ~~Compensation~~Options

~~Effective~~Stock asoption ofactivity ~~the closing of the IPO, we adopted the 2011 Equity Incentive Plan, which provides~~ for ~~the~~first ~~grants~~quarter of2013 stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent rights and other stock-based awards, or any combination of the foregoing. In accordance with FASB ASC 718, Compensation-Stock Compensation, equity-based compensation is recognized as an expense in the financial statements over the vesting period and measured at the fair value of the award on the date of grant. The amount of the expense may be subject to adjustment in future periods depending on the specific characteristics of the equity-based award and the application of accounting guidance.follows:

Income Taxes

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Terms		Aggregate Intrinsic Value (Current Value Less Exercise Price)
			(Per share)		(In years)		(in thousands)
Outstanding, December 31, 2012		893,000	$	9.75		-	$	-
Granted		-
Exercised		-
Forfeited		-

Outstanding, March 31, 2013		893,000	$	9.75		8	$	643

Exercisable, March 31, 2013		357,200	$	9.75		8	$	257

WeTime-Based ~~elected~~Restricted toStock be taxed as a REIT under the Code commencing with our short taxable year ended December 31, 2011. To qualify as a REIT, we must meet certain organizational and operational requirements, including a requirement to distribute annually to our stockholders at least 90% of our REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gains, which does not necessarily equal net income as calculated in accordance with GAAP. As a REIT, we generally will not be subject to federal income tax (other than taxes paid by our TRSs) to the extent we currently distribute 100% of our REIT taxable income to our stockholders. If we fail to qualify as a REIT in any taxable year, we will be subject to federal income tax on our taxable income at regular corporate income tax rates and generally will not be permitted to qualify for treatment as a REIT for the four taxable years following the year during which qualification is lost unless we satisfy certain relief provisions.Awards

~~Commencing~~On onMarch ~~February 14~~1, ~~2011~~2013, we ~~began~~awarded totime-based ~~account~~restricted ~~for~~stock ~~federal~~awards ~~and~~for ~~state~~106,518 ~~income~~shares ~~taxes~~of ~~with~~common ~~respect~~stock to our ~~TRSs~~executive ~~using the asset and liability method~~officers. ~~Deferred~~These ~~tax~~awards ~~assets~~vest ~~and~~over ~~liabilities~~a ~~are~~three ~~recognized~~year ~~for~~period ~~the~~based ~~future~~on ~~tax~~continued ~~consequences~~service ~~attributable~~(25% toon ~~differences~~February ~~between~~28, ~~the~~2014 ~~consolidated financial statements’ carrying amounts of existing assets~~ and ~~liabilities~~2015 and ~~respective~~50% ~~tax~~on ~~bases~~February ~~and~~28, ~~operating~~2016), ~~losses~~or ~~and~~upon ~~tax-credit~~a ~~carry~~change ~~forwards~~in control. ~~Deferred~~The ~~tax~~holders ~~assets~~of ~~and~~these ~~liabilities~~awards ~~are~~have ~~measured~~the ~~using~~right ~~enacted tax rates expected~~ to ~~apply~~vote ~~to taxable income in~~ the ~~years~~related inshares ~~which~~of ~~those~~common ~~temporary~~stock ~~differences~~and ~~are~~receive ~~expected~~all todividends bedeclared ~~recovered or settled. The effect on deferred tax assets~~ and ~~liabilities~~paid ofwhether aor ~~change~~not ~~in tax rates is recognized in income in the period that includes the enactment date~~vested.

Time-based restricted stock activity for first quarter 2013 follows:

	Number of Shares		Weighted Average Grant Date Fair Value		Aggregate Current Value
			(Per share)		(In thousands)
Non-vested, December 31, 2012		82,603	$	7.78	$	-
Granted		106,518	$	9.78
Vested		27,535	$	7.78
Forfeited		-

Non-vested, March 31, 2013		161,586	$	9.10	$	1,692

SUMMIT HOTEL PROPERTIES, INC., AND SUMMIT HOTEL OP, LP~~, AND~~

~~SUMMIT~~NOTES ~~HOTEL~~TO ~~PROPERTIES,~~THE ~~LLC~~CONSOLIDATED FINANCIAL STATEMENTS (~~PREDECESSOR~~UNAUDITED)

~~NOTES~~Performance-Based TORestricted ~~THE~~Stock ~~CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~Awards

~~SEPTEMBER~~On 30March 1, ~~2012~~2013, we awarded performance-based restricted stock awards for 185,572 shares of common stock to our executive officers. These awards vest ratably over the next three years (2013, 2014 and 2015) subject to the attainment of certain performance goals and continued service, or upon a change in control. The holders of these awards have the right to vote the related shares of common stock and any dividends declared will be accumulated and will be subject to the same vesting conditions as the awards.

~~NOTE 2~~ Performance- ~~EQUITY~~based restricted stock activity for first quarter 2013 follows:

Common Shares

	Number of Shares		Weighted Average Grant Date Fair Value		Aggregate Current Value
			(Per share)		(In thousands)
Non-vested, December 31, 2012		82,602	$	7.78	$	-
Granted		185,572	$	9.78
Vested		-
Forfeited		-

Non-vested, March 31, 2013		268,174	$	9.16	$	2,808

OnDirector ~~February~~Stock 14, 2011, the Company completed an underwritten public offering and concurrent private placement of 27,274,000 common shares, par value of $.01 per share. Upon completion of the offering, the Company issued 4,000 common shares to our independent directors pursuant to the 2011 Equity Incentive Plan. Effective February 14, 2011, the Company granted options to purchase 940,000 common shares (see Note 7).Awards

OnOur ~~April~~directors 2,have ~~2012,~~ the ~~Company~~option ~~issued~~to anreceive ~~aggregate of 3,270,062~~ shares of our common stock toin ~~limited~~lieu ~~partners~~ of ~~our~~cash ~~operating~~for ~~partnership in connection with the redemption of~~ their ~~common~~director ~~units (see Note 6)~~fees. ~~During~~ ~~the~~In ~~second~~first quarter ~~of 2012~~2013, ~~the~~we ~~Company also~~ issued ~~208~~1,~~027~~614 ~~common~~ shares toof ~~our independent directors and executive officers pursuant to the 2011 Equity Incentive Plan (see Note 7). As a result, the Company’s outstanding~~ common ~~shares~~stock ~~increased~~for todirector ~~30,756,089 as of June 30, 2012~~fees.

OnEquity-Based ~~July~~Compensation 2, 2012, the Company issued an aggregate of 745,130 shares of common stock to limited partners of our operating partnership in connection with the redemption of their common units (see Note 6). As a result, the Company’s outstanding common shares increased to 31,501,219 as of September 30, 2012.Expense

~~The~~Equity-based ~~Company~~compensation ~~paid~~expense ~~dividends~~for offirst ~~$.1125~~quarter ~~per~~2013 ~~share~~and ~~on May 31, 2011; August 31, 2011; February 28,~~ 2012; ~~May~~follows ~~31,~~(in ~~2012 and August 31, 2012.~~thousands):

Preferred Shares

	First Quarter
	2013		2012

Included in corporate general and administrative salaries
and other compensation in the statements of operations:
Stock options	$	156	$	126
Time-based restricted stock		109		-
Performance-based restricted stock		140		-

		405		126
Included in corporate general and administrative other in
the statements of operations:
Director stock		16		-

	$	421	$	126

OnThe ~~October~~amount ~~28, 2011, the Company completed an underwritten public offering~~ of ~~2,000,000~~expense ~~shares~~may ofbe ~~9.25%~~subject ~~Series~~to Aadjustment ~~Cumulative Redeemable Preferred Stock, par value of $.01 per share. Dividends are payable quarterly~~ in ~~arrears~~future onperiods ordepending ~~about~~upon the ~~last~~attainment ~~day~~ of ~~February,~~specific ~~May~~goals, ~~August~~which ~~and~~affect ~~November~~the ofvesting ~~each year. The Company paid dividends~~ of ~~$.578125~~the ~~per~~performance-based ~~share~~restricted ~~on February 28~~stock, ~~2012;~~or ~~May~~a ~~31,~~change ~~2012;~~in ~~and~~the ~~August~~forfeiture ~~31, 2012~~assumptions.

~~NOTE 3~~Unrecognized equity- ~~ACQUISITIONS~~based compensation expense for all non-vested awards was $5.5 million at March 31, 2013. We expect to recognize this cost over a remaining weighted-average period of two years.

We acquired five hotels during 2011. We purchased the Homewood Suites in Ridgeland, MS on April 15, 2011 for approximately $7.3 million, the Staybridge Suites in Glendale, CO on April 27, 2011 for approximately $10.0 million, the Holiday Inn in Duluth, GA on April 27, 2011 for approximately $7.0 million, and the Hilton Garden Inn in Duluth, GA for approximately $13.4 million on May 25, 2011. We purchased the Courtyard by Marriott in El Paso, TX on July 28, 2011 for approximately $12.4 million. The purchases were financed with borrowings under our revolving credit facility. We did not acquire any intangibles or assume any debt related to these five acquisitions.

We acquired three hotels during the first quarter of 2012. We purchased the Courtyard by Marriott in Atlanta, GA on January 12, 2012 for approximately $28.5 million, the Hilton Garden Inn in Birmingham, AL for approximately $11.5 million on February 28, 2012, and another Hilton Garden Inn in Birmingham, AL for approximately $8.6 million on February 28, 2012. We assumed debt of approximately $19.0 million on the Atlanta, GA acquisition.

SUMMIT HOTEL PROPERTIES, INC., AND SUMMIT HOTEL OP, LP~~, AND~~

~~SUMMIT~~NOTES ~~HOTEL~~TO ~~PROPERTIES,~~THE ~~LLC~~CONSOLIDATED FINANCIAL STATEMENTS (~~PREDECESSOR~~UNAUDITED)

~~NOTES~~NOTE TO10 ~~THE~~- LOSS ~~CONDENSED~~ON ~~CONSOLIDATED~~IMPAIRMENT ~~FINANCIAL~~OF ~~STATEMENTS (UNAUDITED)~~ASSETS

~~SEPTEMBER~~In 30first quarter 2013, ~~2012~~we recognized a loss on impairment of assets of $1.5 million related to the SpringHill Suites in Lithia Springs, GA and the Courtyard by Marriott in Memphis, TN. These hotel properties were classified as held for sale at March 31, 2013, and their operating results, including impairment charges, are included in discontinued operations.

WeIn ~~acquired~~first ~~three hotels during the second~~ quarter of 2012~~. We~~, ~~purchased~~we ~~the~~recognized ~~Hilton~~a ~~Garden~~loss ~~Inn in Smyrna, TN~~ on ~~May~~impairment ~~16,~~of ~~2012~~assets ~~for~~of ~~approximately~~ $110.59 million, ~~the~~related ~~Hampton~~to ~~Inn~~the &AmericInn ~~Suites~~ in ~~Smyrna~~Twin Falls, TNID. onThis ~~June~~hotel ~~21,~~property ~~2012~~was ~~for~~classified ~~approximately~~as ~~$8.0~~held ~~million,~~for ~~and~~sale ~~the~~at ~~Courtyard~~March by31, ~~Marriott~~2012 inand ~~Arlington,~~subsequently TXsold on May 16, 2012 ~~for approximately $15~~.0 ~~million. We~~Its ~~assumed~~operating ~~debt~~results, ofincluding ~~approximately~~impairment ~~$14.1~~charges, ~~million~~are onincluded ~~the two hotel acquisitions~~ in ~~Smyrna,~~discontinued TNoperations.

WeNOTE ~~acquired~~11 ~~one~~- DERIVITIVE ~~hotel~~FINANCIAL ~~during~~INSTRUMENTS ~~the~~AND ~~third quarter of 2012. We purchased the Residence Inn in Arlington, TX on July 2, 2012 for approximately $15.5 million.~~HEDGING

~~The~~Information ~~following~~about ~~table illustrates~~ our ~~initial~~derivative ~~allocation~~financial ofinstruments ~~the~~at ~~aggregated~~March ~~purchase~~31, ~~prices~~2013 ~~for the hotel acquisitions discussed above during 2011~~ and ~~2012.~~December ~~The allocations for certain of our acquisitions are based on preliminary information and are~~31, ~~therefore,~~2012 ~~subject~~follows to(dollars ~~change.~~in thousands):

	2012		2011
	March 31, 2013							December 31, 2012
	(in thousands)		(in thousands)
	Number of Instruments		Notional Amount		Fair Value			Number of Instruments		Notional Amount		Fair Value
Land	$	9,843	$	7,254
Interest rate swaps (liability)		4	$	40,712	$	(533	)		4	$	41,095	$	(641	)
Hotel buildings and improvements		84,757		41,368
Furniture, fixtures and equipment		4,425		1,428
Other assets		338		365
Total assets acquired		99,363		50,415
Other liabilities		311		398
Debt acquired		33,103		-
Total liabilities acquired		33,414		398
Net assets acquired	$	65,949	$	50,017

~~Total~~Our ~~revenues~~interest ~~and~~rate ~~net~~swaps ~~income~~are ~~(loss)~~designated ~~for~~as ~~the~~cash ~~three~~flow hedges and ~~nine~~are ~~months~~valued ~~ended~~using ~~September~~a 30market approach, ~~2012~~which ofis ~~hotels~~a ~~acquired~~Level ~~during~~2 ~~the~~valuation ~~nine~~technique, ~~months~~and ~~ended~~are ~~September~~all ~~30,~~in ~~2012~~a ~~and~~liability ~~the~~position. ~~year~~At ~~ended~~March ~~December~~ 31, ~~2011~~2013, ~~which~~we ~~are~~had ~~included~~not inposted ~~the~~any ~~accompanying~~collateral ~~unaudited~~related ~~condensed~~to ~~consolidated~~these ~~statements~~agreements and were not in breach of ~~operations~~any ~~for~~financial provisions of the ~~three~~agreements. ~~and~~If ~~nine~~we ~~months~~had ~~ended~~breached ~~September~~any 30agreement provisions, ~~2012~~we ~~and~~could ~~2011,~~have ~~were~~been asrequired ~~follows~~to ~~(in~~settle ~~thousands):~~our obligations under these agreements at their aggregate termination value of $0.5 million at March 31, 2013.

	For the three months ended				For the nine months ended
2012 acquisitions	September 30, 2012		September 30, 2011		September 30, 2012		September 30, 2011
Revenue	$	5,808	$	-	$	11,457	$	-
Net income	$	448	$	-	$	1,055	$	-
	For the three months ended				For the nine months ended
2011 acquisitions	September 30, 2012		September 30, 2011		September 30, 2012		September 30, 2011
Revenue	$	4,338	$	4,022	$	12,496	$	6,222
Net income	$	748	$	913	$	2,070	$	1,474

Details of the location in the financial statements of the loss recognized on derivative financial instruments designated as cash flow hedges follow (in thousands):

The following unaudited condensed pro forma financial information presents the results of operations as if the 2012 and 2011 acquisitions had taken place on January 1, 2011. The condensed pro forma financial information excludes discontinued operations and is not necessarily indicative of what actual results of operations of the Company would have been assuming the acquisitions had taken place on January 1, 2011, nor does it purport to represent the results of operations for future periods. The unaudited condensed pro forma financial information, excluding discontinued operations, is as follows (in thousands, except per share data):

	First Quarter
	2013

Gain (loss) recognized in accumulated other comprehensive income on derivative financial instruments (effective portion)	$	21

Gain (loss) reclassified from accumulated other comprehensive income to interest expense (effective portion)	$	(86	)

Gain (loss) recognized in gain (loss) on derivative financial instruments (ineffective portion and amounts excluded from effectiveness testing)	$	-

We had no derivative financial instruments in first quarter 2012. Amounts reported in accumulated other comprehensive income related to derivative financial instruments will be reclassified to interest expense as interest payments are made on the hedged variable-rate debt.

SUMMIT HOTEL PROPERTIES, INC., AND SUMMIT HOTEL OP, LP~~, AND~~

~~SUMMIT~~NOTES ~~HOTEL~~TO ~~PROPERTIES,~~THE ~~LLC~~CONSOLIDATED FINANCIAL STATEMENTS (~~PREDECESSOR~~UNAUDITED)

~~NOTES~~NOTE TO12 ~~THE~~- DISCONTINUED ~~CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~OPERATIONS

~~SEPTEMBER~~We ~~30,~~have adjusted our consolidated statement of operations for first quarter 2013 and 2012 to reflect the operations of hotel properties sold or classified as held for sale in discontinued operations. Discontinued operations include the following hotel properties that have been sold:

	For the three months ended				For the nine months ended
	September 30, 2012		September 30, 2011		September 30, 2012			September 30, 2011
Revenue	$	51,234	$	45,916	$	144,338		$	130,658
Net income (loss)	$	485	$	153	$	(4,193	)	$	(6,090	)
Net income (loss) per share
attributable to common
shareholders - basic and diluted	$	0.01	$	0.00	$	(0.11	)	$	(0.16	)

●	Hampton Inn, Holiday Inn Express, and AmericInn in Twin Falls, ID – sold May 2012;

~~NOTE 4~~● ~~- DEBT~~AmericInn ~~OBLIGATIONS~~in Missoula, MT – sold August 2012;

~~Mortgage~~● ~~loans~~Courtyard ~~and~~by ~~notes~~Marriott ~~payable~~in ~~at September 30~~Missoula, ~~2012~~MT ~~and~~– sold December ~~31, 2011, are comprised of the following (dollars in millions):~~2012;

	2012		2011
	(in millions)		(in millions)
Fixed-rate mortgage loans	$	204.9	$	122.6
Variable-rate mortgage loans		107.4		94.5
	$	312.3	$	217.1

●	AmericInn & Suites in Golden, CO – sold January 2013; and

On● ~~January~~Hampton ~~12,~~Inn ~~2012, the Company entered into a $19.0 million term loan with Empire Financial Services, Inc. to modify the $19.0 million loan assumed~~ in ~~the acquisition of the Courtyard by Marriott in Atlanta~~Denver, GACO ~~(see~~– ~~Note~~sold ~~3). The interest rate is 6.00% fixed. The loan matures~~ February ~~1, 2017 and is secured by a first mortgage lien on the hotel. The loan carries a prepayment penalty of one percent (1%) for prepayments occurring before January 13,~~ 2013.

OnIn ~~February 14~~addition, ~~2012,~~discontinued weoperations ~~refinanced~~also include the ~~MetaBank~~following ~~loan~~hotel ofproperties ~~$7.0~~that ~~million. It~~were ~~now~~classified ~~matures~~as ~~February~~held 1,for ~~2017,~~sale isat ~~amortized~~March ~~over approximately 17 years and bears an annual interest rate of 4.95%. There is a prepayment penalty of 3% if the loan is paid off in the first two years~~31, ~~2% in year 3 and 1% in years 4 and 5. The loan is collateralized by a first mortgage lien on two hotels containing 197 rooms.~~2013:

On● ~~March~~Holiday 2Inn, ~~2012,~~Holiday ~~we entered into a $5.6 million term loan with General Electric Capital Corporation to purchase the 95-unit Hilton Garden~~ Inn ~~in Birmingham~~Express, ~~Alabama. The~~Hampton ~~interest~~Inn ~~rate is fixed for three years at 5.46%. On the third anniversary of the note, the rate will convert to a variable rate of 90-day LIBOR plus 5.28%. The note matures on April 1, 2017,~~ and isFairfield ~~secured by a first priority lien on the 95-unit Hilton Garden~~ Inn in& ~~Birmingham,~~Suites Alabama. The loan may not be prepaid during the first 12 months, and may be prepaid with a 2% prepayment fee during the second loan year, and 1% prepayment during the third loan year. The note is cross-defaulted and cross-collateralized with the $6.5 million note on the 130-unit Hilton Garden Inn in ~~Birmingham~~Boise, ~~Alabama.~~ID;

●	Courtyard by Marriott in Memphis, TN; and

●	SpringHill Suites in Lithia Springs, GA.

Condensed results of operations for the hotel properties included in discontinued operations follow (in thousands):

	First Quarter
	2013			2012

REVENUE	$	2,804		$	4,378

Hotel operating expenses		2,303			3,673
Depreciation and amortization		334			925
Loss on impairment of assets		1,500			932

INCOME (LOSS) FROM HOTEL OPERATIONS		(1,333	)		(1,152	)
Interest expense		82			330
(Gain) loss on disposal of assets		(1,634	)		-

INCOME (LOSS) BEFORE TAXES		219			(1,482	)

INCOME TAX (EXPENSE) BENEFIT		(42	)		136

INCOME (LOSS) FROM DISCONTINUED OPERATIONS	$	177		$	(1,346	)

INCOME (LOSS) FROM DISCONTINUED OPERATIONS
ATTRIBUTABLE TO NONCONTROLLING INTEREST	$	9		$	(364	)

INCOME (LOSS) FROM DISCONTINUED OPERATIONS
ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	168		$	(982	)

NOTE 13 - EARNINGS (LOSS) PER SHARE/UNIT

We apply the two-class method of computing earnings per share, which requires the calculation of separate earnings per share amounts for our non-vested time-based restricted stock awards with nonforfeitable dividends and for our common stock. Our non-vested time-based restricted stock awards with nonforfeitable rights to dividends are considered securities which participate in undistributed earnings with common stock. Under the two-class computation method, net losses are not allocated to participating securities unless the holder of the security has a contractual obligation to share in the losses. Our non-vested time-based restricted stock awards with nonforfeitable dividends do not have such an obligation so they are not allocated losses.

SUMMIT HOTEL PROPERTIES, INC., AND SUMMIT HOTEL OP, LP~~, AND~~

~~SUMMIT~~NOTES ~~HOTEL~~TO ~~PROPERTIES,~~THE ~~LLC~~CONSOLIDATED FINANCIAL STATEMENTS (~~PREDECESSOR~~UNAUDITED)

~~NOTES~~At TOMarch ~~THE~~31, ~~CONDENSED~~2013 ~~CONSOLIDATED~~and ~~FINANCIAL~~2012, ~~STATEMENTS~~we ~~(UNAUDITED)~~had 893,000 stock options outstanding which were not included in the computation of diluted earnings per share, as the options’ exercise price was greater than the average market price of our common shares.

~~SEPTEMBER~~In ~~30,~~first quarter 2012, our basic and diluted earnings per share are based on basic weighted average common shares outstanding due to our loss from continuing operations.

OnSummit ~~February~~Hotel 13Properties, ~~2012, we closed on the consolidation and refinance of our four loans with ING Life Insurance and Annuity, which four loans collectively had an aggregate outstanding balance of approximately $69~~Inc.5 million as of December 31, 2011. The loans were consolidated into a single term loan with a principal balance of $67.5 million, maturity date of March 1, 2032, amortized over 20 years and bearing an annual interest rate of 6.10%, collateralized by first mortgage liens on 16 properties containing 1,639 guestrooms. The lender has the right to call the loan so as to be payable in full at March 1, 2019, March 1, 2024 or March 1, 2029. If the loan is repaid prior to maturity, other than if called by the lender, there is a prepayment penalty equal to the greater of (i) 1% of the principal being repaid and (ii) the yield maintenance premium. Pursuant to the consolidation, the mortgages on the Courtyard by Marriott, Missoula, MT and the Courtyard by Marriott, Memphis, TN were released and new mortgages were taken on the Country Inn & Suites and the Holiday Inn Express in Charleston, West Virginia.

OnA ~~April~~summary 4,of ~~2012, we refinanced~~ the ~~National~~components ~~Western~~used ~~Life~~to ~~Insurance~~calculate ~~and~~basic ~~Annuity loan on the SpringHill Suites by Marriott in Scottsdale, Arizona with a $5.25 million term loan with GE Capital Financing Inc. The interest rate is 6.03%. The loan matures May 1, 2017~~ and isdiluted ~~secured~~earnings byper ashare ~~first~~follows ~~mortgage lien on the SpringHill by Marriott hotel~~ (in ~~Scottsdale~~thousands, ~~Arizona.~~except ~~The~~per ~~loan carries a prepayment penalty of one percent (1%~~share) ~~plus defeasance. The loan is cross-defaulted and cross-collateralized with the $9.75 million loan on the Courtyard by Marriott in Scottsdale, Arizona.~~:

On April 4, 2012, we refinanced the National Western Life Insurance and Annuity loan on the Courtyard by Marriott in Scottsdale, Arizona with a $9.75 million term loan with GE Capital Financing Inc. The interest rate is 6.03%. The loan matures May 1, 2017 and is secured by a first mortgage lien on the Courtyard by Marriott hotel in Scottsdale, Arizona. The loan carries a prepayment penalty of one percent (1%) plus defeasance. The loan is cross-defaulted and cross-collateralized with the $5.25 million loan on the SpringHill Suites by Marriott in Scottsdale, Arizona.

	First Quarter
	2013			2012
Numerator:
Income (loss) from continuing operations	$	1,706		$	(1,459	)
Less: Preferred dividends		2,452			1,156
Allocation to participating securities		9			-
Attributable to noncontrolling interest		(74	)		(706	)
Income (loss) attributable to common stockholders
from continuing operations		(681	)		(1,909	)
Income (loss) attributable to common stockholders
from discontinued operations		168			(982	)

Net income (loss) attributable to common stockholders	$	(513	)	$	(2,891	)

Denominator:
Weighted average common shares outstanding - basic		62,684			27,278
Dilutive effect of equity-based compensation awards		266			-

Weighted average common shares outstanding - diluted		62,950			27,278

Earnings per common share - basic and diluted:
Net income (loss) from continuing operations	$	(0.01	)	$	(0.07	)
Net income (loss) from discontinued operations		0.00			(0.04	)

Net income (loss)	$	(0.01	)	$	(0.11	)

On May 16, 2012, the Company assumed an $8.7 million term loan with Banc of America Commercial Mortgage, Inc. The interest rate is 6.41% fixed. The loan matures September 1, 2017 and is secured by a first mortgage lien on the Hilton Garden Inn hotel in Smyrna, TN.

On June 21, 2012, the Company assumed a $5.4 million term loan with Merrill Lynch Mortgage Lending, Inc. The interest rate is 6.3840% fixed. The loan matures August 1, 2016 and is secured by a first mortgage lien on the Hampton Inn hotel in Smyrna, TN.

On June 24, 2012, the Chambers Bank loan of approximately $1.5 million was refinanced, extending the maturity date to June 24, 2014. Summit Hotel Properties, Inc. executed a guaranty limited to non-recourse carve-outs, replacing the guaranty in place from an affiliate of our Predecessor.

On June 29, 2012, the Bank of the Ozarks loan was refinanced, extending the maturity date to July 10, 2017. In addition, Bank of the Ozarks advanced an additional $2.6 million, representing the amount available pursuant to the earn-out provision of the loan, increasing the current outstanding balance to approximately $8.9 million. The interest rate was fixed at 5.75% for three years, with the rate at LIBOR plus 3.75% or a fixed rate of 5.5% thereafter.

SUMMIT HOTEL PROPERTIES, INC., AND SUMMIT HOTEL OP, LP~~, AND~~

~~SUMMIT~~NOTES ~~HOTEL~~TO ~~PROPERTIES,~~THE ~~LLC~~CONSOLIDATED FINANCIAL STATEMENTS (~~PREDECESSOR~~UNAUDITED)

~~NOTES~~Summit TOHotel ~~THE~~OP, ~~CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~LP

~~SEPTEMBER~~A 30summary of the components used to calculate basic and diluted earnings per unit follows (in thousands, ~~2012~~except per unit):

On May 17, 2012, we entered into a Third Amendment to Credit Agreement to our $125.0 million revolving credit facility with Deutsche Bank AG New York Branch, which resulted in the Company being able to borrower a higher percentage of the value of each property in the borrowing base, an extended termination date of the facility, a decrease in the interest rate, a reduction in the unused fee, and a reduction in the leverage requirement and the consolidated fixed charge coverage ratio requirements. The terms of the credit facility, as amended, are described in the summary below.

	First Quarter
	2013			2012
Numerator:
Income (loss) from continuing operations	$	1,706		$	(1,459	)
Less: Preferred dividends		2,452			1,156
Attributable to noncontrolling interest		(37	)		-
Income (loss) attributable to common unit holders
from continuing operations		(709	)		(2,615	)
Income (loss) attributable to common unit holders
from discontinued operations		177			(1,346	)

Net income (loss) attributable to common unit holders	$	(532	)	$	(3,961	)

Denominator:
Weighted average common units outstanding - basic		65,979			37,378
Dilutive effect of equity-based compensation awards		266			-

Weighted average common units outstanding - diluted		66,245			37,378

Earnings per common unit - basic and diluted:
Net income (loss) from continuing operations	$	(0.01	)	$	(0.07	)
Net income (loss) from discontinued operations		0.00			(0.04	)

Net income (loss)	$	(0.01	)	$	(0.11	)

~~The~~NOTE ~~credit~~14 ~~facility~~- SUBSEQUENT matures May 16, 2015, with an option to extend for one additional year if we meet certain requirements. Outstanding borrowings on the revolving credit facility are limited to the least of (1) $125.0 million, (2) 60% of the aggregate appraised value of the borrowing base assets and (3) a formula related to the aggregate adjusted net operating income of the borrowing base assets securing the facility. The availability of the credit facility is also subject to a borrowing base having no fewer than 15 properties. As of September 30, 2012, 26 hotel properties are included in the borrowing base and the maximum amount of borrowing permitted by the terms of the credit facility is approximately $112.0 million, of which we had approximately $69.9 million borrowed, approximately $1.3 million in standby letters of credit and approximately $40.8 million available to borrow. On August 7, 2012, we added three properties as collateral to the borrowing base on our secured revolving credit facility. The properties include the 90 unit Courtyard by Marriott located in El Paso, Texas, the 103 unit Courtyard by Marriott located in Arlington, Texas and the 96 unit Residence Inn located in Arlington Texas.EVENTS

~~NOTE 5~~Equity ~~- DISCONTINUED OPERATIONS~~Transactions

~~The~~On ~~Company~~April ~~has~~1, ~~adjusted~~2013, ~~its~~we ~~consolidated~~issued ~~statements of operations for the three and nine months ended September 30~~249,846 ~~2012~~shares ~~and~~of ~~2011~~common tostock ~~reflect~~for ~~discontinued~~Common ~~operations~~Units of ~~four~~our ~~consolidated~~Operating ~~hotel~~Partnership ~~properties~~which ~~sold~~were ~~during~~tendered ~~this period pursuant to the plan~~ for ~~hotel~~redemption ~~dispositions. These adjustments have no impact~~ on ~~the~~January ~~Company’s~~31, ~~net income (loss) or the net income (loss) per share~~2013.

22On May 1, 2013, our Board of Directors declared cash dividends of $0.1125 per share of common stock, $0.578125 per share of 9.25% Series A Cumulative Redeemable Preferred Stock, $0.4921875 per share of 7.875% Series B Cumulative Redeemable Preferred Stock, and $0.35625 per share of 7.125% Series C Cumulative Redeemable Preferred Stock. These dividends are payable May 31, 2013.

SUMMIT HOTEL PROPERTIES, INC., SUMMIT HOTEL OP, LP, AND

SUMMIT HOTEL PROPERTIES, LLC (PREDECESSOR)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2012

Condensed results of operations for these hotel properties included in discontinued operations are as follows:

	Summit Hotel Properties, Inc.												Summit Hotel Properties, LLC (Predecessor)
	Three months ended 09/30/12			Three months ended 09/30/11			Nine months ended 09/30/12			Period 2/14/11 to 9/30/11			Period 1/1/11 to 2/13/11
REVENUE	$	157,284		$	1,893,129		$	2,069,253		$	4,156,363		$	506,058
EXPENSES
Rooms		42,802			499,243			715,991			1,217,332			177,369
Other direct		17,625			173,309			252,089			391,601			123,856
Other indirect		42,425			412,432			612,819			915,732			164,368
Loss on impairment of assets		-			-			2,098,000			-			-
Depreciation and amortization		-			283,271			325,262			703,396			140,285
		102,852			1,368,255			4,004,161			3,228,061			605,878
INCOME (LOSS) FROM OPERATIONS		54,432			524,874			(1,934,908	)		928,302			(99,820	)
OTHER INCOME (EXPENSE)
Interest expense		-			(118,850	)		(130,736	)		(221,561	)		(188,585	)
INCOME (LOSS) BEFORE TAXES		54,432			406,024			(2,065,644	)		706,741			(288,405	)
INCOME TAX (EXPENSE) BENEFIT		(2,566	)		125			15,231			(18,699	)		(13,795	)
INCOME (LOSS) FROM
DISCONTINUED OPERATIONS	$	51,866		$	406,149		$	(2,050,413	)	$	688,042		$	(302,200	)
NET INCOME (LOSS) FROM DISCONTINUED
OPERATIONS ATTRIBUTABLE TO
NONCONTROLLING INTEREST	$	8,397		$	109,747		$	(420,745	)	$	185,917		$	(81,658	)
NET INCOME (LOSS) FROM DISCONTINUED
OPERATIONS ATTRIBUTABLE TO
COMMON STOCKHOLDERS/MEMBERS	$	43,469		$	296,402		$	(1,629,668	)	$	502,125		$	(220,542	)

NOTE 6 - NONCONTROLLING INTERESTS

As of September 30, 2012, limited partners of the Operating Partnership other than the Company owned 6,084,808 Common Units representing an approximate 16% limited partnership interest in the Operating Partnership. Pursuant to the limited partnership agreement, redemption rights of the limited partners other than the Company enable those limited partners, at their election, to cause the Operating Partnership to redeem their Common Units in exchange for cash based upon the fair value of an equivalent number of shares of the Company’s common stock at the time of redemption, or at the Company’s option, shares of the Company’s common stock, on a one-for-one basis. The number of shares of the Company’s common stock issuable upon redemption of Common Units may be adjusted upon the occurrence of certain events such as share dividends, share subdivisions or combinations.

The Company classifies these Common Units as noncontrolling interests as a component of permanent equity on the September 30, 2012 condensed consolidated balance sheet. The share of net income (loss) allocated to these Common Units is reported on the accompanying condensed consolidated statement of operations for three and nine months ended September 30, 2012 and the period of February 14, 2011 through September 30, 2011 as net income (loss) attributable to noncontrolling interests. During the second and third quarters of 2012, 3,270,062 and 745,130 Common Units were redeemed, respectively, and the Company elected to issue shares of Common Stock to the holders.

SUMMIT HOTEL PROPERTIES, INC., SUMMIT HOTEL OP, LP, AND

SUMMIT HOTEL PROPERTIES, LLC (PREDECESSOR)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2012

NOTE 7 - EQUITY-BASED COMPENSATION

The Company measures and recognizes compensation expense for all equity-based payments. The compensation expense is recognized based on the grant-date fair value of those awards. All of the Company’s existing stock awards have been determined to be equity-classified awards.

The Company’s 2011 Equity Incentive Plan provides for the granting of options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent rights, and other equity-based award or incentive award up to an aggregate of 2,318,290 shares of the Company’s common stock. Options granted may be either incentive stock options or nonqualified stock options. Vesting terms may vary with each grant, and option terms are generally five to ten years.

Concurrent with the completion of the IPO, the Company granted options to purchase 940,000 shares of the Company’s common stock. Options to purchase shares of common stock were granted with exercise prices equal to $9.75 per share, the fair value of the common stock on the date of grant. Options vest on a ratable basis over a five year period following the date of grant and option terms are generally five to ten years following the date of grant. The fair value of stock options granted was estimated using a Black-Scholes valuation model with the following assumptions:

	2011
Expected dividend yield at date of grant		5.09	%
Expected stock price volatility		56.6	%
Risk-free interest rate		2.57	%
Expected life of options (in years)		6.5
Weighted average estimated fair value of
options at grant date per share	$	3.48

The risk-free interest rate assumptions were based on the U.S. Treasury yield curve in effect at the time of the grant. The expected volatility was based on historical monthly price changes of a peer group of comparable entities based on the expected life of the options at the date of grant. The expected life of options is the average number of years the Company estimates that options will be outstanding.

For the three months ended September 30, 2012 and 2011, the Company recognized $125,874 and $51,201, respectively, of share-based compensation expense related to these stock options. For the nine months ended September 30, 2012 and 2011, the Company recognized $377,622 and $314,685, respectively, of share-based compensation expense related to these stock options. As of September 30, 2012, there was $2.5 million of total unrecognized compensation costs related to these stock options. These costs are expected to be primarily recognized over an average period of 4.9 years.

SUMMIT HOTEL PROPERTIES, INC., SUMMIT HOTEL OP, LP, AND

SUMMIT HOTEL PROPERTIES, LLC (PREDECESSOR)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2012

The following table summarizes stock option activity under the Company’s 2011 Equity Incentive Plan for the nine months ended September 30, 2012:

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Terms (years)		Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2011		940,000		$	9.75		9.1	$	-
Granted		-		$	-		-	$	-
Exercised		-		$	-		-	$	-
Cancelled		(47,000	)	$	9.75		-	$	-
Outstanding at September 30, 2012		893,000		$	9.75		8.5	$	-	(¹)
Exercisable at September 30, 2012		178,600		$	9.75		8.5	$	-
(1) Exercise price exceeds our market price at September 30, 2012.

Concurrent with the completion of the IPO, the Company granted 4,000 shares of stock to directors of the Company under the 2011 Equity Incentive Plan and recognized $39,000 of compensation expense. These shares vested concurrent with the grant. On June 7, 2012, the Company granted 15,288 shares of stock to directors of the Company under the 2011 Equity Incentive Plan and recognized $120,011 of compensation expense. These shares vested concurrent with the grant.

Under the 2011 Equity Incentive Plan, the Company awarded 192,739 restricted shares to the executive officers on April 25, 2012. The shares issued vest over a period of time as determined by the Board at the date of grant. The Company recognizes compensation expense for non-vested shares on a straight-line basis over the vesting period based upon the fair market value of the shares on the date of issuance, adjusted for forfeitures.

A summary of the non-vested shares as of September 30, 2012 is as follows:

	Number of Shares		Weighted Average Grant Date Fair Value
Non-vested at January 1, 2012		-	$
Granted		192,739		7.78
Vested		-
Forfeited		-
Non-vested at September 30, 2012		192,739	$	7.78

SUMMIT HOTEL PROPERTIES, INC., SUMMIT HOTEL OP, LP, AND

SUMMIT HOTEL PROPERTIES, LLC (PREDECESSOR)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2012

For the three and nine months ended September 30, 2012, the Company recognized $142,810 and $285,620, respectively, of share-based compensation expense related to these restricted share awards. As of September 30, 2012, there was $1.3 million of total unrecognized compensation costs related to non-vested share awards. These costs are expected to be primarily recognized over an average period of 2.5 years.

NOTE 8 - EARNINGS (LOSS) PER SHARE

Presented below is a summary of the components used to calculate basic and diluted earnings per share. The Company applies the two-class method of computing earnings per share, which requires the calculation of separate earnings per share amounts for non-vested share-based awards and for common stock. Non-vested share-based awards that contain nonforfeitable rights to dividends are considered securities which participate in undistributed earnings with common stock. Under the two-class computation method, net losses are not allocated to participating securities unless the holder of the security has a contractual obligation to share in the losses. The non-vested share-based payment awards are not allocated losses as the awards do not have a contractual obligation to share in the losses of the Company.

Summit Hotel Properties, Inc.
	For the three months ended						For the nine months ended
	September 30, 2012			September 30, 2011			September 30, 2012			September 30, 2011
Numerator:
Income from continuing operations	$	1,588,960		$	(364,727	)	$	529,638		$	(1,656,880	)
Less: preferred dividend requirements		(1,156,250	)		-			(3,468,750	)		-
noncontrolling interest adjustments		(70,051	)		98,563			846,077			447,503
allocation to participating securities		-			-			(24,780	)		-
Net income (loss) attributable to common
shareholders from continuing operations		362,659			(266,164	)		(2,117,815	)		(1,209,377	)
Net income (loss) attributable to common
shareholders from discontinued operations		43,469			296,402			(1,629,668	)		502,125
Net income (loss) attributable to common
shareholders - basic and diluted	$	406,128		$	30,238		$	(3,747,483	)	$	(707,252	)
Denominator:
Weighted average number of common
shares - basic		31,308,480			27,278,000			29,713,213			27,278,000
- diluted		31,501,219			27,278,000			29,713,213			27,278,000
Earnings per Common Share - Basic and
Diluted:
Net income (loss) attributable to common
shareholders from continuing operations	$	0.01		$	(0.01	)	$	(0.08	)	$	(0.05	)
Net income (loss) attributable to common
shareholders from discontinued operations		0.00			0.01		$	(0.05	)		0.02
Net income (loss) attributable to common
shareholders	$	0.01		$	0.00		$	(0.13	)	$	(0.03	)

As of September 30, 2012 and 2011, we had 893,000 and 940,000 stock options outstanding, respectively, which were not included in the computation of diluted earnings per share, as the options’ exercise price was greater than the average market price of the common shares.

SUMMIT HOTEL PROPERTIES, INC., SUMMIT HOTEL OP, LP, AND

SUMMIT HOTEL PROPERTIES, LLC (PREDECESSOR)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2012

Summit Hotel OP, LP
	For the three months ended						For the nine months ended
	September 30, 2012			September 30, 2011			September 30, 2012			September 30, 2011
Numerator:
Income from continuing operations	$	1,588,960		$	(364,727	)	$	529,638		$	(1,656,880	)
Less: preferred dividend requirements		(1,156,250	)		-			(3,468,750	)		-
Net income (loss) attributable to common
shareholders from continuing operations		432,710			(364,727	)		(2,939,112	)		(1,656,880	)
Net income (loss) attributable to common
shareholders from discontinued operations		51,866			406,149			(2,050,413	)		688,042
Net income (loss) attributable to common
shareholders - basic and diluted	$	484,576		$	41,422		$	(4,989,525	)	$	(968,838	)
Denominator:
Weighted average number of common
shares - basic		37,393,288			37,378,000			37,384,795			37,378,000
- diluted		37,586,027			37,378,000			37,384,795			37,378,000
Earnings per Common Share - Basic and
Diluted:
Net income (loss) attributable to common
shareholders from continuing operations	$	0.01		$	(0.01	)	$	(0.08	)	$	(0.05	)
Net income (loss) attributable to common
shareholders from discontinued operations		0.00			0.01		$	(0.05	)		0.02
Net income (loss) attributable to common
shareholders	$	0.01		$	0.00		$	(0.13	)	$	(0.03	)

NOTE 9 - DERIVATIVE INSTRUMENTS AND HEDGING

Risk Management Objective of Using Derivatives

The Company is exposed to certain risks arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its debt funding and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the payment of future known and uncertain cash amounts, the value of which are determined by interest rates. The Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of the Company’s known or expected cash payments principally related to the Company’s borrowings.

SUMMIT HOTEL PROPERTIES, INC., SUMMIT HOTEL OP, LP, AND

SUMMIT HOTEL PROPERTIES, LLC (PREDECESSOR)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2012

Cash Flow Hedges of Interest Rate Risk

The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During 2012, such derivatives were used to hedge the variable cash flows associated with variable-rate debt. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. During the three and nine months ended September 30, 2012, the Company recorded $775 and $1,787, respectively, of hedge ineffectiveness in earnings due to slight mismatches in timing of payments.

Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During the next twelve months, the Company estimates that an additional $228,000 will be reclassified from accumulated other comprehensive income as an increase to interest expense.

As of September 30, 2012, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk (in thousands):

Interest Rate Derivative		Number of Instruments				Notional Amount
Interest Rate Swaps			3			$	29,280

The maximum length of time over which the Company is hedging its exposure to the transactions related to the payment of variable interest on the existing derivative instruments is approximately seven years. The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the condensed consolidated balance sheet as of September 30, 2012 (amounts in thousands). The Company had no active derivatives as of December 31, 2011.

	September 30, 2012
Derivative designated as hedging instruments:
Interest Rate Swaps, liability	$	(523	)

SUMMIT HOTEL PROPERTIES, INC., SUMMIT HOTEL OP, LP, AND

SUMMIT HOTEL PROPERTIES, LLC (PREDECESSOR)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2012

The table below details the location in the financial statements of the loss recognized on interest rate derivatives designated as cash flow hedges for the three and nine months ended September 30, 2012 (amounts in thousands). The Company had no active derivatives for the three and nine months ended September 30, 2011.

	Three months ended 9/30/12			Nine months ended 9/30/12
Amount of gain (loss) recognized in accumulated
other comprehensive income on interest rate
derivatives (effective portion)	$	(291	)	$	(587	)
Amount of gain (loss) reclassified from accumulated
other comprehensive income into income as interest
expense (effective portion)	$	(50	)	$	(66	)
Amount of gain (loss) recognized in income on
derivative instruments (ineffective portion and amounts
excluded from effectiveness testing)	$	(1	)	$	(2	)

Credit-risk-related Contingent Features

The Company has agreements with its derivative counterparties that contain provisions whereby, if the Company either defaults or can be declared in default on any of its indebtedness, the Company can also be declared in default on its derivative obligations.

As of September 30, 2012, the fair value of derivatives in a net liability position including any adjustment for nonperformance risk related to these agreements was $522,564. As of September 30, 2012, the Company has not posted any collateral related to this agreement and was not in breach of any agreement provisions. If the Company had breached any of these provisions, it could have been required to settle its obligations under the agreements at its aggregate termination value of approximately $546,780 at September 30, 2012.

NOTE 10 - COMMITMENTS AND CONTINGENCIES

We are involved from time to time in litigation arising in the ordinary course of business; however, we are not currently aware of any actions against us that we believe would materially adversely affect our business, financial condition or results of operations.

We have entered into purchase agreements for the acquisition of several existing hotels and are currently engaged in performing due diligence investigations for some of the properties.

In December 2011 and January 2012, arbitration hearings were held to determine our claim against Choice Hotels International, Inc. (“Choice”) that Choice wrongfully terminated 11 of our franchise agreements, and Choice’s counterclaims of fraudulent inducement, negligent misrepresentation, breach of contract and trademark infringement. On April 4, 2012, the arbitration panel determined, among other things, that Choice improperly terminated the 11 franchise agreements, that Choice is not entitled to recover liquidated damages in connection with the 11 hotels and that the Company did not make any materially false or misleading statements to Choice or omit any material information. The panel awarded the Company damages in the amount of $298,090 as full settlement of all claims submitted in the arbitration.

SUMMIT HOTEL PROPERTIES, INC., SUMMIT HOTEL OP, LP, AND

SUMMIT HOTEL PROPERTIES, LLC (PREDECESSOR)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

SEPTEMBER 30, 2012

The Company received these funds on April 30, 2012. Neither the Company nor Choice was entitled to recover attorney’s fees in connection with the matter.

We have an outstanding agreement to purchase a 178 unit Residence Inn in Salt Lake City, Utah for a purchase price of $20.0 million.

NOTE 11 - SUBSEQUENT EVENTS

Capital Structure

On October 1, 2012, holders of 858,433 Common Units tendered their Common Units for redemption and redeemed on a one-for-one basis with shares of our common stock pursuant to our prospectus filed with the Securities Exchange Commission on March 1, 2012,

On October 3, 2012, Summit REIT completed a public offering of 13,800,000 shares of common stock, in which it raised net proceeds, after deducting the underwriting discount and estimated offering costs, of approximately $107.0 million.

On October 11, 2012, we entered into an agreement to hedge our interest rate on $12.1 million of the outstanding principal balance of the Compass Bank loan, with an effective fixed rate of 4.57%.

Acquisitions

On ~~October~~April 530, ~~2012~~2013, we purchased ~~from~~the ~~affiliates~~Hilton ofGarden ~~Hyatt,~~Inn ain ~~portfolio of eight hotels containing an aggregate of 1~~Greenville,~~043~~ ~~guestrooms~~SC for ~~a purchase price of approximately~~ $8715.43 million.

~~On October 23, 2012, we purchased from an unaffiliated third party a 98 unit Hilton Garden Inn in Fort Worth, Texas for a purchase price of $7.2 million.~~Dispositions

~~Other~~On May 1, 2013, we sold the Holiday Inn and Holiday Inn Express in Boise, ID for $12.6 million.

On October 30, 2012, we entered into an agreement to fund $20 million in the form of a first mortgage loan on a hotel property located in downtown Minneapolis, Minnesota. The $20 million represents a portion of the total acquisition and renovation costs expected to be incurred to convert the property to a Hyatt Place hotel. Subject to certain conditions including the successful conversion of the property, estimated to be completed in summer 2013, we plan to purchase the property.22

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

~~CAUTIONARY~~Management’s ~~STATEMENT~~Discussion ~~ABOUT~~and ~~FORWARD~~Analysis of Financial Condition and Results of Operations should be read in conjunction with the financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-~~LOOKING~~K ~~STATEMENTS~~for the year ended December 31, 2012.

~~This~~Cautionary ~~report,~~Statement ~~together~~About with other statements and information publicly disseminated by us, contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and include this statement for purposes of complying with these safe harbor provisions. Forward-~~looking~~Looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “plan,” “continue,” “project” or similar expressions. Forward-looking statements in this report include, among others, statements about our business strategy, including acquisition and development strategies, industry trends, estimated revenue and expenses, ability to realize deferred tax assets and expected liquidity needs and sources (including capital expenditures and the ability to obtain financing or raise capital). You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond our control and which could materially affect actual results, performances or achievements. Factors that may cause actual results to differ materially from current expectations include, but are not limited to:Statements

This report, together with other statements and information publicly disseminated by us, contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and include this statement for purposes of complying with these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, are generally identifiable by use of the words “may,” “could,” “expect,” “intend,” “plan,” “seek,” “anticipate,” “believe,” “estimate,” “predict,” “forecast,” “potential,” “continue,” “likely,” “will,” “would” or similar expressions. Forward-looking statements in this report include, among others, statements about our business strategy, including acquisition and development strategies, industry trends, estimated revenue and expenses, ability to realize deferred tax assets and expected liquidity needs and sources (including capital expenditures and the ability to obtain financing or raise capital). You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond our control and which could materially affect actual results, performances or achievements. Factors that may cause actual results to differ materially from current expectations include, but are not limited to:

●	financing risks, including the risk of leverage and the corresponding risk of default on our mortgage loans and other debt and potential inability to refinance or extend the maturity of existing indebtedness;

●	national, regional and local economic conditions;

●	levels of spending in the business, travel and leisure industries, as well as consumer confidence;

●	declines in occupancy, average daily rate and revenue per available room and other hotel operating metrics;

●	hostilities, including future terrorist attacks, or fear of hostilities that affect travel;

● financial condition of, and our relationships with, third-party property managers, ~~franchisors~~ and ~~hospitality joint venture partners~~franchisors;

●	the degree and nature of our competition;

●	increased interest rates and operating costs;

●	changes in zoning laws and increases in real property tax rates;

●	risks associated with potential acquisitions, including the ability to ramp up and stabilize newly acquired hotels with limited or no operating history, and dispositions of hotel properties;

●	availability of and our ability to retain qualified personnel;

● our failure to maintain our qualification as a REIT under the ~~Internal Revenue~~ Code ~~of 1986, as amended, or the Code~~;

●	changes in our business or investment strategy;

●	availability, terms and deployment of capital;

●	general volatility of the capital markets and the market price of our shares of common stock;

● environmental uncertainties and risks related to natural disasters; and

● ~~changes~~other infactors ~~real~~described ~~estate~~under ~~and~~the ~~zoning~~section ~~laws~~entitled ~~and~~“Risk ~~increases~~Factors” included in ~~real~~our ~~property~~Annual ~~tax~~Report ~~rates;~~on Form 10-K for the year ended December 31, 2012 and in other reports we file from time to time with the SEC.

● the factors described under the section entitled “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2011, and in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2012.23

Accordingly, there is no assurance that our expectations will be realized. Except as otherwise required by the federal securities laws, we disclaim any obligations or undertaking to publicly release any updates or revisions to any forward-looking statement contained herein (or elsewhere) to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

Overview

We focus primarily on acquiring and owning premium-branded select-service hotels in the upscale and upper midscale segments of the U.S. lodging industry, as these segments are currently defined by Smith Travel Research (“STR”). Since completion of our IPO on February 14, 2011, we have acquired 2133 hotels ~~with~~containing ~~a total of 2~~4,~~477~~416 guestrooms for purchase prices aggregating ~~approximately~~ $~~245~~547.21 million. ~~Currently~~At March 31, 2013, we ~~own~~owned 8291 hotels ~~with~~containing ~~a total of 8~~10,~~674~~309 guestrooms located in 2122 states. Except for ~~five~~six hotels, five of which are subject to ground leases and one of which is subject to a PILOT (payment in lieu of taxes) lease, we own our hotels in fee simple. Our hotels are located in markets in which we have extensive experience and that exhibit multiple demand generators, such as business and corporate headquarters, retail centers, airports and tourist attractions. As of September 30, 2012, we owned 73 hotels and 56.7% of our guestrooms were located in the top 50 metropolitan statistical areas, or MSAs, and 78.2% were located within the top 100 MSAs. The majority of our hotels operate under premium franchise brands owned by Marriott International, Inc. (“Marriott”) (Courtyard by Marriott®, Residence Inn by Marriott®, SpringHill Suites by Marriott®, Fairfield Inn by Marriott®, Fairfield Inn and Suites by Marriott®, and TownePlace Suites by Marriott®), Hilton Worldwide (“Hilton”) (DoubleTree by Hilton®, Hampton Inn®, Hampton Inn & Suites®, Homewood Suites® and Hilton Garden Inn®), Intercontinental Hotel Group (“IHG”) (Holiday Inn®, Holiday Inn Express®, Holiday Inn Express and Suites® and Staybridge Suites®) and an affiliate of Hyatt Hotels Corporation (“Hyatt”) (Hyatt Place®).

AThe ~~substantial~~ majority of our hotels ~~(65~~operate ofunder ~~our~~premium 73franchise ~~hotels~~brands asowned ~~of September 30, 2012) are managed~~ by ~~Interstate~~Marriott ~~Management Company~~International, ~~LLC~~Inc. (“~~Interstate~~Marriott”) ~~pursuant~~(Courtyard toby aMarriott®, ~~hotel~~Residence ~~management~~Inn ~~agreement~~by ~~between Interstate~~Marriott®, ~~its~~SpringHill ~~affiliates~~Suites ~~and~~by ~~certain~~Marriott®, ofFairfield ~~our~~Inn ~~TRS~~by ~~lessees. In addition~~Marriott®, ~~our~~Fairfield ~~TRS~~Inn ~~lessees~~& ~~have~~Suites ~~entered~~by ~~into~~Marriott®, ~~hotel~~and ~~management~~TownePlace ~~agreements~~Suites ~~with~~by ~~IHG Management (Maryland~~Marriott®), ~~LLC~~Hilton Worldwide (“~~IHG Management~~Hilton”), an(DoubleTree ~~affiliate~~by ~~of IHG~~Hilton®, ~~pursuant~~Hampton toInn®, ~~which~~Hampton ~~IHG~~Inn ~~Management~~& ~~manages one hotel~~Suites®, ~~with~~Homewood ~~Courtyard~~Suites® ~~Management~~and ~~Corporation~~Hilton ~~(“Courtyard~~Garden ~~Management”~~Inn®), anIntercontinental ~~affiliate~~Hotel ofGroup ~~Marriott, pursuant to which Courtyard Management manages one hotel, with HP Hotels Management Company, Inc.~~ (“~~HP Hotels~~IHG”), ~~pursuant~~(Holiday ~~to which HP Hotels manages two of our hotels~~Inn®, ~~with~~Holiday ~~Kana~~Inn ~~Hotels~~Express®, ~~Inc.~~Holiday ~~(“Kana~~Inn ~~Hotels”),~~Express ~~pursuant~~& toSuites® ~~which~~and ~~Kana~~Staybridge ~~Hotels~~Suites®) ~~manages~~and ~~two~~an affiliate of ~~our~~Hyatt ~~hotels,~~Hotels ~~and~~Corporation ~~with InterMountain Management, LLC~~ (“~~InterMountain~~Hyatt”), ~~pursuant~~(Hyatt toPlace® ~~which InterMountain manages two of our hotels. Our TRS lessees may also employ other hotel managers in the future. We have,~~ and ~~will~~Hyatt ~~have, no ownership or economic interest in any of the hotel management companies engaged by our TRS lessees~~House®).

At March 31, 2013, our hotels are operated pursuant to hotel management agreements with third party hotel management companies, including the following:

●	Interstate Management Company, LLC (“Interstate”) and its affiliate, Noble Management Group (“Noble”) – 62 hotel properties;

●	Select Hotel Group, LLC (“Hyatt Management”) – 11 hotel properties;

●	Affiliates of Marriott, including Courtyard Management Corporation (“Courtyard Management”), SpringHill SMC Corporation (“SpringHill Management”), and Residence Inn by Marriott (“Residence Inn Management”) – six hotel properties;

●	HP Hotels Management Company, Inc. (“HP Hotels”) – two hotel properties;

●	Kana Hotels, Inc. (“Kana Hotels”) – two hotel properties;

●	InterMountain Management, LLC (“InterMountain”) – two hotel properties;

●	OTO Development, LLC – two hotel properties;

●	Affiliates of IHG including IHG Management (Maryland) LLC (“IHG Management”) and Intercontinental Hotels Group Resources, Inc. (“Intercontinental Management”) – two hotel properties;

●	FCH Hospitality, Inc. – one hotel property; and

●	Lodging Dynamics – one hotel property

We believe the hotel management companies engaged by our TRS lessees qualify as “eligible independent contractors” for federal income tax purposes. Our TRS lessees may also employ other hotel managers in the future. We have, and will have, no ownership or economic interest in any of the hotel management companies engaged by our TRS lessees.

Our revenue is derived from hotel operations and consists of room revenue and other hotel operations revenue. As a result of our focus on select-service hotels in the upscale and upper midscale segments of the U.S. lodging industry, substantially all of our revenue is room revenue generated from sales of hotel rooms. We also generate, to a much lesser extent, other hotel operations revenue, which consists of ancillary revenue related to meeting rooms and other guest services provided at our hotels.

Industry Trends and Outlook

Room-night demand in the U.S. lodging industry is correlated to macroeconomic trends. Key drivers of demand include growth in gross domestic product, or GDP, corporate profits, capital investments and employment. WeFollowing ~~recognize~~periods ~~that~~of ~~there~~recession, ~~are~~recovery ~~lingering~~of ~~concerns~~room-night ~~regarding~~demand ~~global~~for ~~macroeconomic~~lodging ~~conditions.~~historically Wehas ~~continue~~lagged toimprovements ~~monitor~~in ~~macroeconomic~~the ~~trends,~~overall ~~and~~economy. ~~evaluate~~However, ~~their~~in ~~effect~~the oneconomic ~~demand~~recovery ~~for~~beginning ~~our~~in ~~guestrooms.~~early As2010, aroom-night ~~result~~demand ofhas ~~scarcity~~led ofimprovements ~~financing,~~in the ~~severe~~overall ~~United~~economy. ~~States~~Although ~~recession~~we ~~and~~expect ~~declining~~that ~~hotel~~our ~~industry~~hotels ~~fundamentals~~will ~~during~~realize ~~2008~~meaningful ~~and~~revenue ~~2009,~~per ~~the~~available ~~current~~room ~~pipeline~~(“RevPAR”) ~~for~~gains ~~new~~as ~~hotel~~the ~~development~~economy isand ~~limited.~~lodging ~~Thus,~~industry wecontinue doto ~~not~~improve, ~~anticipate~~the risk exists that weglobal ~~will~~and ~~experience~~domestic aeconomic ~~significant~~conditions ~~increase~~may incause the ~~supply~~economic ofrecovery ~~new~~to ~~hotel~~stall, ~~rooms~~which inlikely ~~our~~would ~~markets~~adversely inaffect ~~the~~our ~~near~~growth ~~term~~expectations.

32While we are guardedly optimistic about macro-economic conditions and their effect on room-night demand, we feel relatively confident that our near-term results will not be adversely affected by increased lodging supply in our markets. Growth in lodging supply typically lags growth in room-night demand. Key drivers of lodging supply include the availability and cost of capital, construction costs, franchise availability, local real estate market conditions, and availability and pricing of existing properties. As a result of scarcity of financing, the severe United States recession and declining operating fundamentals, during 2008 and 2009, many planned hotel developments were cancelled or postponed. Due to continued economic uncertainty, we believe the effect of the severe recession will be prolonged compared with prior recessions, which could limit lodging supply growth.

Our Hotel Property Portfolio

AsAt ofMarch ~~September 30~~31, ~~2012~~2013, our hotel property portfolio consisted of 7391 hotels ~~with~~containing ~~a total of 7~~10,~~533~~309 guestrooms. Of these hotels, according to STR’s current chain segment designations, 3654 hotels containing 46,~~049~~647 guestrooms are “upscale,” 3334 hotels containing 3,~~216~~456 guestrooms are “upper midscale” and ~~four~~3 hotels containing ~~268~~206 guestrooms are “midscale.” ~~The~~Information ~~following table sets forth certain information~~ for our ~~hotels~~hotel properties by franchisor as of ~~September~~March 3031, ~~2012~~2013 follows:

Franchisor/Brand	Number of Hotels		Number of Rooms
Marriott
Courtyard by Marriott(1)		9		1,058
Fairfield Inn by Marriott		9		784
Fairfield Inn & Suites by Marriott		2		150
Residence Inn by Marriott		5		507
SpringHill Suites by Marriott		8		782
TownePlace Suites by Marriott		1		90
Subtotal		34		3,371
Hilton
DoubleTree by Hilton		1		127
Hampton Inn		7		745
Hampton Inn & Suites		4		473
Hilton Garden Inn		5		579
Homewood Suites		1		91
Subtotal		18		2,015
IHG
Holiday Inn Express		2		157
Holiday Inn Express & Suites		4		365
Holiday Inn		2		262
Staybridge Suites		2		213
Subtotal		10		997
Hyatt
Hyatt Place		4		556
AmericInn
AmericInn®		3		211
Starwood
Aloft®		1		136
Carlson
Country Inn & Suites By Carlson®		2		190
Independent
Aspen Hotel & Suites		1		57
Total(2)		73		7,533

Franchise/Brand	Number of Hotel Properties		Number of Guestrooms
Marriott
Courtyard by Marriott (1)		11		1,461
SpringHill Suites by Marriott		9		990
Residence Inn by Marriott		7		805
Fairfield Inn & Suites by Marriott		6		616
Fairfield Inn by Marriott		5		317
TownePlace Suites by Marriott		1		90
Total Marriott		39		4,279
Hilton
Hilton Garden Inn		6		677
Hampton Inn		6		596
Hampton Inn & Suites		5		611
DoubleTree by Hilton		1		127
Homewood Suites		1		91
Total Hilton		19		2,102
Hyatt
Hyatt Place		15		2,012
Hyatt House		1		135
Total Hyatt		16		2,147
IHG
Holiday Inn Express		4		306
Holiday Inn Express & Suites (2)		3		468
Holiday Inn		2		262
Staybridge Suites		2		213
Total IHG		11		1,249
Carlson
Country Inn & Suites by Carlson		2		190
AmericInn
AmericInn		2		149
Starwood
Aloft		1		136
Independent
Aspen Hotel & Suites		1		57

Total (3)		91		10,309

(1)	We own a 90% controlling interest in the Courtyard by Marriott hotel located in Atlanta, Georgia with the obligation to acquire the remaining 10% interest in approximately four years.
(2)	On October 5, 2012, we acquired a portfolio of eight hotels containing 1,043 guestrooms. On October 23, 2012, we acquired a 98 room hotel. These nine hotels are not included in the above table, but are described in additional detail in “Recent Developments.”

(1)	We own a 90% controlling interest in the Courtyard by Marriott located in Atlanta, GA with the obligation to acquire the remaining 10% interest in 2016.

~~Results~~(2) ofWe ~~Operations~~own an 80% controlling interest in the Holiday Inn Express & Suites in San Francisco, CA with an option to acquire the remaining 20% interest beginning in approximately one year.

~~Prior~~(3) toIncludes ~~February~~six ~~14,~~hotel ~~2011,~~properties ~~the~~that ~~date~~are weclassified ~~completed~~as ~~our~~held ~~IPO,~~for ~~concurrent~~sale ~~private~~at ~~placement~~March ~~and formation transactions~~31, ~~neither~~2013 ~~Summit~~in ~~REIT nor Summit OP had any operations other than the issuance of 1,000 shares of common stock of Summit REIT to~~ our ~~Executive~~financial ~~Chairman in connection with Summit REIT’s formation and initial capitalization and activity in connection with the IPO and the formation transactions~~statements. ~~The~~ ~~discussion~~On ~~below~~April ~~compares the results of our operations for the three months ended September~~ 30, ~~2012 to the three months ended September 30~~2013, ~~2011,~~we ~~and~~acquired the ~~results~~120-guestroom ofHilton ~~our~~Garden ~~operations~~Inn ~~for~~in ~~the nine months ended September 30~~Greenville, ~~2012~~ ~~to the combined operating results of our Company for the period from February 14~~SC, ~~2011~~which ~~through~~is ~~September~~not ~~30,~~included ~~2011,~~in ~~and~~ the ~~operations~~above ~~of our predecessor for the period from January 1~~table, ~~2011~~but ~~through~~is ~~February~~described ~~13, 2011. The results of operations presented below should be reviewed~~ in ~~conjunction~~additional ~~with~~detail ~~the condensed consolidated financial statements included elsewhere~~ in ~~this~~“Recent ~~report~~Developments.”

~~Comparison of the Operating Results of Our Company for the Three Months Ended September 30, 2012 to the Operating Results of Our Company for the Three Months Ended September 30, 2011~~26

OnHotel ~~May~~Property ~~16,~~Portfolio 2012, we sold our three hotels located in Twin Falls, Idaho and on August 15, 2012, we sold our AmericInn hotel in Missoula, Montana. Accordingly, during the reporting periods we classified these hotels in discontinued operations and do not include their operating results in the discussion below.Activity

The following table presents our results of operations for the three months ended September 30, 2012 and 2011 and includes the amount of change and percentage change between these periods:

	Company			Company			Period-over-Period
	Three Months Ended September 30, 2012			Three Months Ended September 30, 2011			Change
							$			%
Total Revenue:	$	51,234		$	40,437		$	10,797		26.7	%
Hotel operating expenses:		33,865			27,759			6,106		22.0	%
Total expenses:		45,311			37,466			7,845		20.9	%
Income from operations:		5,923			2,970			2,953		99.4	%
Total other income (expense):		(4,021	)		(3,337	)		(684	)	(20.5	)%
Net income (loss):	$	1,641		$	41		$	1,600		3902.4	%

Income from Operations. Income from operations increased by approximately $2.9 million to approximately $5.9 million for the three months ended September 30, 2012 from approximately $3.0 million for the three months ended September 30, 2011. This increase was primarily the result of an increase in same-store revenues due to the improving economy and hotel industry fundamentals and renovations made at nine hotels, and accretive income from operations from the twelve hotels acquired in 2011 and 2012. In addition, the rebranding and upgrades that occurred in 2011 at the hotels involved in the arbitration matter with Choice Hotels International, Inc. (“Choice”) resulted in improved operating results at these hotels in 2012.

Total Revenue. The following tables set forth key operating metrics for our total portfolio (73 hotels as of September 30, 2012 and 66 hotels as of September 30, 2011) and for our same-store portfolio (61 hotels) for the three months ended September 30, 2012 and 2011 (dollars in thousands, except ADR and RevPAR) and the percentage change between those two periods:

	Three Months Ended September 30, 2012
	Total Revenue		Occupancy(1)			ADR(2)		RevPAR(3)
Total Portfolio (73 hotels)(4)	$	51,234		73.9	%	$	97.72	$	72.24
Same-Store Portfolio (61 hotels)	$	41,088		73.9	%	$	95.87	$	70.85

	Three Months Ended September 30, 2011
	Total Revenue		Occupancy(1)			ADR(2)		RevPAR(3)
Total Portfolio (66 hotels)	$	40,437		70.1	%	$	91.10	$	63.86
Same-Store Portfolio (61 hotels)	$	36,431		69.7	%	$	90.00	$	62.73

	Percentage Change from Three Months Ended September 30, 2011 to Three Months Ended September 30, 2012
	Total Revenue			Occupancy(1)			ADR(2)			RevPAR(3)
Total Portfolio (73 hotels and 66 hotels)(4)		26.7	%		5.4	%		7.3	%		13.1	%
Same-Store Portfolio (61 hotels)		12.8	%		6.0	%		6.5	%		12.9	%

(1)	Occupancy rate, or occupancy, represents the weighted-average percentage of available guestrooms that were sold during a specified period of time and is calculated by dividing the number of guestrooms sold by the total number of guestrooms available, expressed as a percentage.
(2)	Average daily rate, or ADR, represents the weighted-average rate paid for guestrooms sold, calculated by dividing room revenue (i.e., excluding food and beverage revenues or other hotel operations revenues such as telephone, parking and other guest services) by guestrooms sold.
(3)	Revenue per available room, or RevPAR, is the product of ADR and occupancy. RevPAR does not include food and beverage revenues or other hotel operations revenues such as telephone, parking and other guest services.
(4)	The information in the tables above for our total portfolio for the three months ended September 30, 2012 includes revenues from the seven hotels we acquired during the first nine months of 2012 from July 1, 2012 or the date of acquisition of each hotel through September 30, 2012 and operating information (occupancy, ADR and RevPAR) for each of the hotels for the period in which it was owned by us. Accordingly, the information does not reflect a full three months of operations for the hotels acquired in the third quarter of 2012. Furthermore, the tables do not include the operating results in any period of our three hotels located in Twin Falls, Idaho that were sold on May 16, 2012, and one hotel located in Missoula, Montana that was sold on August 15, 2012.

Total revenue, including room and other hotel operations revenue, increased $10.8 million, from $40.4 million in 2011 to $ 51.2 million in 2012. The increase in revenues is due to an increase in same-store revenues of $4.7 million due to the improving economy and hotel industry fundamentals and renovations made at nine hotels, and accretive revenues of $6.1 million from the twelve hotels acquired in 2011 and 2012. In addition, the rebranding and upgrades that occurred in 2011 at the hotels involved in the Choice arbitration resulted in improved operating revenues at these hotels in 2012.

Hotel Operating Expenses. Hotel operating expenses increased by $6.1 million from $27.8 million in 2011 to $33.9 million in 2012. The increase is due in part to the $4.1 million of hotel operating expenses at the twelve hotel properties acquired in 2011 and 2012. In addition, the increase in same-store hotel operating expenses is due to $2.0 million of variable costs related to the increase in revenue. Expenses at the same-store hotels declined as a percentage of revenue from 69.4% in the third quarter of 2011 to 66.2% in the third quarter of 2012 due to stability in expenses despite increasing revenues at the hotels.

Depreciation and Amortization. Depreciation and amortization expense increased by $0.4 million, from $8.1 million in 2011 to $8.5 million in 2012, primarily due to the additional depreciation associated with the seven hotels acquired during the first nine months of 2012.

Corporate General and Administrative. Corporate general and administrative expenses increased by $1.1 million from $1.4 million in 2011 to $2.5 million in 2012. The increase in expense was caused by an increase in equity-based compensation, bonus accruals and increases in professional fees and other business services.

Other Income/Expense. The approximately $0.7 million increase in other income (expense) was primarily the result of an increase in interest expense due to debt incurred to finance the acquisition of twelve hotels during 2011 and 2012.

Comparison of the Operating Results of Our Company for the Nine Months Ended September 30, 2012 to the Combined Operating Results of Our Company and Our Predecessor for the Nine Months Ended September 30, 2011

On May 16, 2012, we sold our three hotels located in Twin Falls, Idaho and on August 15, 2012, we sold our AmericInn hotel located in Missoula, Montana. Accordingly, during the reporting periods we classified these hotels in discontinued operations and do not include their operating results in the discussion below.

The following table presents our results of operations for the nine months ended September 30, 2012 and 2011 and includes the amount of change and percentage change between these periods:

	Company			Company			Our Predecessor			Combined			Period-over-Period
	Nine Months Ended September 30, 2012			Period February 14, 2011 through September 30, 2011			Period January 1, 2011 through February 13, 2011			Nine Months Ended September 30, 2011			Change
													$		%
Total Revenue:	$	138,425		$	95,571		$	14,092		$	109,663		$	28,762	26.2	%
Hotel operating expenses:		93,181			64,503			11,912			76,415			16,766	21.9	%
Total expenses:		126,562			86,957			15,201			102,158			24,404	23.9	%
Income from operations:		11,863			8,614			(1,109	)		7,505			4,358	58.1	%
Total other income (expense):		(11,432	)		(9,775	)		(4,470	)		(14,245	)		2,813	19.8	%
Net income (loss):	$	(1,521	)	$	(969	)	$	(6,207	)	$	(7,176	)	$	5,655	78.8	%

Income from Operations. Income from operations increased by approximately $4.4 million to approximately $11.9 million for the nine months ended September 30, 2012 from approximately $7.5 million for the nine months ended September 30, 2011. This increase was primarily the result of an increase in same-store revenues due to the improving economy and hotel industry fundamentals and renovations made at nine hotels, and accretive income from operations from the twelve hotels acquired in 2011 and 2012. In addition, the rebranding and upgrades that occurred in 2011 at the hotels involved in the Choice arbitration resulted in improved operating results at these hotels in 2012.

Total Revenue. The following tables set forth key operating metrics for our total portfolio (73 hotels as of September 30, 2012 and 66 hotels as of September 30, 2011) and for our same-store portfolio (61 hotels) for the nine months ended September 30, 2012 and 2011 (dollars in thousands, except ADR and RevPAR) and the percentage change between those two periods:

	Nine Months Ended September 30, 2012
	Total Revenue		Occupancy(1)			ADR(2)		RevPAR(3)
Total Portfolio (73 hotels)(4)	$	138,425		70.9	%	$	95.83	$	67.97
Same-Store Portfolio (61 hotels)	$	114,472		70.5	%	$	93.86	$	66.18

	Nine Months Ended September 30, 2011
	Total Revenue		Occupancy(1)			ADR(2)		RevPAR(3)
Total Portfolio (66 hotels)	$	109,663		66.8	%	$	90.80	$	60.62
Same-Store Portfolio (61 hotels)	$	103,441		66.4	%	$	90.25	$	59.94

	Percentage Change from Nine Months Ended September 30, 2011 to Nine Months Ended September 30, 2012
	Total Revenue			Occupancy(1)			ADR(2)			RevPAR(3)
Total Portfolio (73 hotels and 66 hotels)(4)		26.2	%		6.1	%		5.5	%		12.1	%
Same-Store Portfolio (61 hotels)		10.7	%		6.2	%		4.0	%		10.4	%

(1)	Occupancy rate, or occupancy, represents the weighted-average percentage of available guestrooms that were sold during a specified period of time and is calculated by dividing the number of guestrooms sold by the total number of guestrooms available, expressed as a percentage.
(2)	Average daily rate, or ADR, represents the weighted-average rate paid for guestrooms sold, calculated by dividing room revenue (i.e., excluding food and beverage revenues or other hotel operations revenues such as telephone, parking and other guest services) by guestrooms sold.
(3)	Revenue per available room, or RevPAR, is the product of ADR and occupancy. RevPAR does not include food and beverage revenues or other hotel operations revenues such as telephone, parking and other guest services.
(4)	The information in the tables above for our total portfolio for the nine months ended September 30, 2012 includes revenues from the seven hotels we acquired during the first nine months of 2012 from the date of acquisition of each hotel through September 30, 2012 and operating information (occupancy, ADR and RevPAR) for each of the hotels for the period in which it was owned by us. Accordingly, the information does not reflect a full nine months of operations for each of the hotels acquired in the first nine months of 2012. Furthermore, the tables do not include the operating results in any period of our three hotels located in Twin Falls, Idaho that were sold on May 16, 2012 and the one hotel located in Missoula, Montana that was sold on August 15, 2012.

Total revenue, including room and other hotel operations revenue, increased $28.8 million from $109.7 million in 2011 to $138.4 million in 2012. The increase in revenue is due to an increase in same-store revenues of $11.0 million due to the improving economy and hotel industry fundamentals and renovations made at nine hotels, and accretive revenues of $17.8 million from the twelve hotels acquired in 2011 and 2012. In addition, the rebranding and upgrades that occurred in 2011 at the hotels involved in the Choice arbitration resulted in improved operating revenues at these hotels in 2012.

Hotel Operating Expenses. Hotel operating expenses increased by $16.8 million from $76.4 million in 2011 to $93.2 million in 2012. The increase is primarily due to the $11.7 million of hotel operating expenses at the twelve hotel properties acquired in 2011 and 2012. In addition, the increase in same-store hotel operating expenses is due to $5.1 million of variable costs related to the increase in revenue. Expenses at the same-store hotels declined as a percentage of revenue from 70.0% in the first nine months of 2011 to 67.7% in the first nine months of 2012 due to stability in expenses despite increasing revenues at the hotels.

Depreciation and Amortization. Depreciation and amortization expense increased by $3.6 million, from $21.2 million in 2011 to $24.8 million in 2012, primarily due to the additional depreciation associated with twelve hotels acquired after September 30, 2011.

Corporate General and Administrative. Corporate general and administrative expenses increased by $2.0 million from $4.3 million in 2011 to $6.3 million in 2012. Expenses following the IPO relate to salaries, certain professional fees, equity-based compensation and bonus accruals, which expenses were not incurred by our predecessor prior to the IPO. In addition, we incurred $0.2 million of legal expenses during the first nine months of 2012 related to the arbitration with Choice.

Other Income/Expense. The approximate $2.8 million decrease in other income (expense) was the result of a $2.5 million decline in interest expense due to significantly lower indebtedness levels in 2012 than in 2011. Following our IPO, the company paid off approximately $227.2 million of indebtedness with proceeds of the IPO and concurrent private placement. In addition to the significantly higher interest costs on indebtedness incurred in the first quarter 2011, the company paid approximately $0.6 million in defeasance and exit fees related to that payoff in the first quarter of 2011. The Company acquired twelve hotels from the IPO to September 30, 2012. Since September 30, 2012, the Company has acquired nine hotels and anticipates continuing to acquire hotels. As a result, interest expense is expected to rise.

Cash Flows

Net cash provided by operating activities increased approximately $4.7 million for the nine months ended September 30, 2012 compared to the prior-year period largely due to improved earnings resulting from increasing revenues. The $2.2 million decrease in net cash used in investing activities for the nine months ended September 30, 2012 compared to the prior-year period was primarily the result of $18.0 million realized from hotel and land dispositions, offset by an increase in cash used to acquire an additional $15.9 million in land and hotel acquisitions in the nine months ended September 30, 2012 compared to the same period in 2011. The $16.3 million decrease in net cash provided by financing activities for the nine months ended September 30, 2012 compared to the prior-year period was due to net change in debt proceeds and payments in the first nine months of 2012. In the first quarter of 2011, the Company generated $240.8 million from the receipt of the net proceeds from our IPO and concurrent private placement, partially offset by repayment of loan obligations of approximately $227.2 million and distributions paid by our predecessor to its members prior to our IPO of $8.3 million.

Liquidity and Capital Resources

Our short-term liquidity requirements consist primarily of operating expenses and other expenditures directly associated with our hotel properties, including recurring maintenance and capital expenditures necessary to maintain our hotel properties in accordance with brand standards, capital expenditures to improve our hotel properties, acquisitions, interest expense and scheduled principal payments on outstanding indebtedness, and distributions to our stockholders.

Acquisitions

OnWe ~~January~~acquired ~~12,~~nine ~~2012,~~hotel weproperties ~~purchased 90% of the ownership interests~~ in ~~the~~first ~~150~~quarter ~~unit~~2013 ~~Courtyard~~and bythree ~~Marriott~~ hotel properties in ~~Atlanta,~~first ~~Georgia~~quarter ~~for a purchase price of approximately $28~~2012.5 ~~million,~~A orsummary ~~approximately $190,000 per key. Upon expiration~~ of ~~tax~~these ~~credits~~acquisitions ~~related~~follows to(dollars ~~the hotel~~ in approximately four years, we are obligated to take assignment of the remaining ownership of the hotel for approximately $400,000.We expect to perform a minor renovation of approximately $230,000, for a combined purchase price and renovation cost of approximately $191,500 per key. We funded the purchase price of this acquisition with a term loan with Empire Financial with a principal balance of $19.0 million, and funded the remainder of the purchase price with borrowings under our secured revolving credit facility. We engaged Courtyard Management to manage the hotel pursuant to a hotel management agreement.thousands):

Date

Acquired

Franchise/Brand

Location

Guest-

rooms

Purchase

Price

Management Company

First Qtr 2013

January 22

Hyatt Place

Chicago (Hoffman Estates), IL

126

8,706

Hyatt Management

January 22

Hyatt Place

Orlando (Convention), FL

149

13,547

Hyatt Management

January 22

Hyatt Place

Orlando (Universal), FL

151

13,872

Hyatt Management

February 11

Holiday Inn Express & Suites

San Francisco, CA

252

60,500

Intercontinental Management

March 11

SpringHill Suites by Marriott

New Orleans, LA

208

33,500

SpringHill Management

March 11

Courtyard by Marriott

New Orleans (Convention), LA

202

31,500

Courtyard Management

March 11

Courtyard by Marriott

New Orleans (French Quarter), LA

140

26,000

Courtyard Management

March 11

Courtyard by Marriott

New Orleans (Metairie), LA

153

24,000

Courtyard Management

March 11

Residence Inn by Marriott

New Orleans (Metairie), LA

120

20,000

Residence Inn Management

Total First Quarter 2013

9 hotel properties

1,501

231,625

First Qtr 2012

January 12

Courtyard by Marriott

Atlanta, GA

150

28,900

Courtyard Management

February 28

Hilton Garden Inn

Birmingham (Liberty Park), AL

130

11,500

HP Hotels

February 28

Hilton Garden Inn

Birmingham (Lakeshore), AL

8,625

HP Hotels

Total First Quarter 2012

3 hotel properties

375

49,025

OnFirst ~~February~~Quarter ~~28,~~2013 2012, we purchased from an unaffiliated third party a 95 unit Hilton Garden Inn hotel in Birmingham, Alabama for a purchase price of approximately $8.6 million, or approximately $90,789 per key. We expect to perform approximately $1.6 million of renovations to the hotel for a combined purchase and renovation cost of approximately $107,600 per key. We funded the purchase price of this acquisition with a term loan with a principal balance of $5.6 million, and funded the remainder of the purchase price with borrowings under our secured revolving credit facility. We engaged HP Hotels to manage the hotel pursuant to a hotel management agreement.Acquisitions

On ~~February~~January 2822, ~~2012~~2013, we purchased from anaffiliates ~~unaffiliated~~of ~~third~~Hyatt ~~party~~Hotels aCorporation ~~130 unit Hilton Garden Inn hotel in Birmingham~~(“Hyatt”), ~~Alabama for~~ a ~~purchase~~portfolio ~~price~~ of ~~approximately~~three ~~$11.5~~hotel ~~million, or approximately $88,461 per key~~properties. We expect to ~~perform~~spend ~~approximately~~ $~~400,000~~4.9 ofmillion for renovations toat ~~the~~these ~~hotel~~properties for a ~~combined~~total ~~purchase and renovation~~ cost of ~~approximately~~ $9296,~~000~~300 per key. We funded ~~the purchase price for~~ this acquisition with a ~~term~~portion ~~loan~~of ~~with~~the aproceeds ~~principal~~from ~~balance~~our ofcommon ~~$6.5~~stock ~~million~~offering ~~and~~completed ~~funded~~on ~~the~~January ~~remainder~~14, of2013 (the ~~purchase~~“January ~~price~~2013 Stock Offering”). The renovations will be funded with borrowings under our senior secured revolving credit facility. ~~We engaged HP Hotels to manage the hotel pursuant to a hotel management agreement.~~

On ~~May~~February 1611, ~~2012~~2013, wethrough ~~purchased~~a ~~from~~joint venture with an ~~unaffiliated~~affiliate ~~third~~of ~~party~~IHG, awe ~~103~~purchased ~~unit~~a ~~Courtyard~~Holiday byInn ~~Marriott~~Express ~~hotel~~& Suites in ~~Arlington~~San Francisco, ~~Texas~~CA for a$240,079 ~~purchase~~per ~~price~~key. ofWe ~~approximately~~expect to spend $153.0 million, orfor ~~approximately~~renovations at this property for a total cost of $~~145~~252,~~631~~000 per key. We ~~expect~~The tojoint ~~perform~~venture ~~very~~assumed ~~minor~~a ~~renovations~~$23. We4 ~~funded~~million ~~the~~term ~~purchase~~loan ~~price~~as ~~for~~a ~~this~~part of the acquisition. ~~with~~We acontributed ~~draw~~$34.6 onmillion, ~~our~~including ~~secured~~$2.8 ~~revolving~~million ~~credit~~in ~~facility~~renovation reserves, to the joint venture for an 80% controlling interest. We ~~engaged~~funded ~~InterMountain~~our contribution to ~~manage~~ the ~~hotel~~joint ~~pursuant~~venture towith a ~~hotel~~portion ~~management~~of ~~agreement~~the proceeds from our January 2013 Stock Offering.

On ~~May~~March 1611, ~~2012~~2013, we purchased ~~from an unaffiliated third party~~ a ~~112~~portfolio ~~unit~~of ~~Hilton~~five ~~Garden~~Marriott ~~Inn~~ hotel inproperties. ~~Nashville~~We ~~(Smyrna),~~expect ~~Tennessee~~to ~~for~~spend ~~a purchase price of approximately~~ $~~11.~~5.0 million, orfor ~~approximately~~renovations ~~$107,143~~at ~~per~~these ~~key. We~~properties ~~expect to perform approximately $500,000 of renovations,~~ for a ~~combined~~total ~~purchase and renovation~~ cost of ~~approximately~~ $~~111~~170,~~600~~100 per key. We funded ~~the purchase price for~~ this acquisition ~~through~~with ~~assumption~~proceeds offrom a term ~~loan~~borrowings ~~with~~secured ~~Banc~~by ofpreviously ~~America~~acquired ~~Commercial~~hotel ~~Mortgage,~~properties ~~Inc. with an outstanding balance of $8.7 million,~~ and ~~with~~borrowings aunder ~~draw on~~ our ~~credit~~senior ~~facility~~secured ofrevolving ~~approximately~~credit $3facility.~~3 million. We engaged Kana Hotels to manage the hotel pursuant to a hotel management agreement.~~

OnFirst ~~June~~Quarter ~~21,~~ 2012, we purchased from an unaffiliated third party an 83 unit Hampton Inn & Suites hotel in Nashville (Smyrna), Tennessee for a purchase price of approximately $8.0 million, or approximately $102,409 per key. We expect to perform approximately $450,000 of renovations, for a combined purchase and renovation cost of approximately $107,800 per key. We funded the purchase price for this acquisition through assumption of a term loan with Merrill Lynch Mortgage Lending, Inc. with an outstanding balance of $5.4 million, and with a draw on our credit facility of approximately $3.3 million. We engaged Kana Hotels to manage the hotel pursuant to a hotel management agreement.Acquisitions

On ~~July~~January 212, 2012, we purchased ~~from~~90% anof ~~unaffiliated~~the ~~third~~ownership ~~party~~interests 96in ~~unit~~a ~~Residence~~Courtyard ~~Inn~~by ~~hotel~~Marriott in ~~Arlington~~Atlanta, ~~Texas~~GA for a$190,000 ~~purchase~~per ~~price of approximately $15~~key.5 Including ~~million~~renovations, orour ~~approximately~~total ~~$161,458~~cost per key was $191,300. We ~~expect~~Upon toexpiration ~~perform~~of ~~very~~tax ~~minor~~credits ~~renovations. We~~related ~~funded~~to the hotel in 2016, we are obligated to purchase ~~price~~the remaining ownership for ~~this~~$0.4 ~~acquisition~~million, ~~with~~which has been accrued as a ~~draw~~liability onand ~~our~~is ~~credit~~included ~~facility~~in the purchase price of $28. 9 million. We ~~engaged~~funded ~~InterMountain~~this ~~Hotels~~acquisition tothrough ~~manage~~assumption ~~the~~of ~~hotel~~a ~~pursuant~~$19.0 tomillion aterm ~~hotel~~loan ~~management~~and ~~agreement~~borrowings under our senior secured revolving credit facility.

~~For a discussion of acquisitions that have occurred after September 30, 2012, please see “-- Recent Developments.”~~27

On February 28, 2012, we purchased a Hilton Garden Inn in Birmingham (Liberty Park), AL for $88,462 per key. Including renovations, our total cost per key was $90,200. We funded this acquisition with a $6.5 million term loan and borrowings under our senior secured revolving credit facility.

On February 28, 2012, we purchased a Hilton Garden Inn in Birmingham (Lakeshore), AL for $90,789 per key. Including renovations, our total cost per key was $107,600. We funded the purchase price with a $5.6 million term loan and borrowings under our senior secured revolving credit facility.

Dispositions

OnPursuant ~~May~~to ~~16,~~our ~~2012,~~strategy weto ~~sold~~continually ~~the~~evaluate ~~Hampton~~our ~~Inn~~hotel properties and land held for development, ~~Holiday~~we ~~Inn~~sold ~~Express~~two hotel properties and ~~AmericInn~~a ~~hotels~~parcel ~~located~~of inland ~~Twin~~held ~~Falls,~~for ~~Idaho. The~~development ~~aggregate~~in ~~sale~~the ~~price~~first ~~was~~quarter ~~$16.5~~of ~~million~~2013. We ~~paid~~When ~~off~~a ~~approximately~~property ~~$5.6~~is ~~million~~identified ofas ~~term~~being ~~debt~~held ~~related~~for tosale, ~~the~~we ~~hotels,~~reclassify ~~and~~the ~~paid~~property ~~down~~on our ~~secured~~consolidated ~~revolving~~balance ~~credit~~sheets, ~~facility~~evaluate byfor ~~$9.0~~potential ~~million~~impairment, ~~with~~and, in the ~~proceeds~~case of ~~the~~a ~~sale. In~~hotel ~~August 2012~~property, wereport ~~sold~~historical ~~the~~and ~~52-room~~future ~~AmericInn~~results ~~Hotel~~of &operations ~~Suites~~in discontinued operations. We recognize impairment charges on hotel properties in ~~Missoula,~~discontinued ~~Montana,~~operations ~~which~~and ~~was~~on land held for ~~sale~~development atin ~~June~~continuing ~~30,~~operations. ~~2012,~~We ~~for~~recognized ~~approximately~~impairment charges of $1.95 million. ~~Because~~in ~~the~~first ~~hotels~~quarter ~~were~~2013 ~~held~~and ~~for~~$0.9 ~~sale~~million ~~during~~in ~~the~~first ~~reporting~~quarter ~~period,~~2012 ~~the~~due ~~results~~to ofthe ~~operations~~change ofin ~~these~~estimated ~~hotels~~holding ~~are~~period ~~included~~of inthe ~~discontinued~~related ~~operations~~properties.

39On January 15, 2013, we sold the AmericInn Hotel & Suites in Golden, CO for $2.6 million. On February 15, 2013, we sold the Hampton Inn in Denver, CO for $5.5 million and recognized a gain on the sale of $1.6 million. On February 27, 2013, we sold a parcel of land in Jacksonville, FL for $1.9 million. The proceeds from these sales were used to reduce our borrowings under our senior secured revolving credit facility.

~~Short-Term~~No ~~Liquidity~~hotel ~~Requirements~~properties were sold in first quarter 2012.

WeFor ~~expect~~additional toinformation ~~satisfy~~concerning our ~~short-term~~dispositions ~~liquidity requirements, including capital expenditures, scheduled debt payments~~ and ~~funding~~impairment ~~the cash portion of the purchase price of hotel properties under contract~~charges, ifsee ~~acquired,~~Note ~~with~~10 ~~working capital, cash provided by operations, and short-term borrowings under our secured revolving credit facility. In addition, we may fund the purchase price~~ of hotel acquisitions and cost of required capital improvements by assuming existing mortgage debt, issuing securities (including partnership units issued by Summit OP), or incurring other mortgage debt. Further, we may seek to raise capital through public or private offerings of our ~~equity~~financial orstatements ~~debt~~appearing ~~securities.~~elsewhere However, certain factors may have a material adverse effect on our ability to access these capital sources, including our degree of leverage, the value of our unencumbered hotel properties, borrowing restrictions imposed by lenders and market conditions. We will continue to analyze which sources of capital are most advantageous to us at any particular point in ~~time,~~this ~~but~~Form financing may not be consistently available to us on terms that are attractive, or at all. We believe that our working capital, cash provided by operations, borrowings under our secured revolving credit facility, and other sources of funds available to us will be sufficient to meet our ongoing short10-~~term liquidity requirements for at least the next 12 months~~Q.

~~Since~~Results ~~January 1, 2012, we have refinanced $84.3 million~~ of ~~our~~Operations ~~existing debt that would otherwise have matured or been callable during 2012, leaving approximately $20.1 million~~ of ~~debt~~Summit ~~(approximately~~Hotel ~~6.4% of our outstanding debt) that matures prior to December 31~~Properties, ~~2013~~Inc. It ~~may be difficult to refinance such loans on terms acceptable to us, or at all,~~ and weSummit ~~may~~Hotel not have sufficient borrowing capacity on our revolving credit facility to repay the maturing debt using draws on that facility for amounts that we are unable to refinance. Although we believe that we will be able to refinance these loans or will have the capacity to repay themOP, if necessary, using draws under our revolving credit facility, there can be no assurance that our revolving credit facility will be available to repay such maturing debt, as draws under our credit facility are subject to certain financial covenants.LP

OnThe ~~October~~comparisons 3,that ~~2012,~~follow ~~Summit~~should ~~REIT~~be ~~completed~~reviewed ain ~~public~~conjunction ~~offering~~with ofthe ~~13,800,000~~unaudited ~~shares~~condensed ofconsolidated ~~common~~financial ~~stock,~~statements included elsewhere in ~~which~~this itForm ~~raised~~10-Q. ~~net~~As ~~proceeds~~noted above, ~~after~~in ~~deducting~~first quarter of 2013 we sold the ~~underwriting~~AmericInn ~~discount~~Hotel ~~and~~& ~~estimated~~Suites ~~offering~~in ~~costs~~Golden, ofCO ~~approximately~~and ~~$107.0~~the ~~million.~~Hampton ~~The~~Inn ~~proceeds~~in ~~from~~Denver, ~~this~~CO. ~~offering~~In ~~were~~addition, ~~used~~at toMarch ~~fund~~31, ~~the~~2013, ~~acquisition~~we ofclassified ~~eight~~as ~~Hyatt~~held ~~hotels~~for onsale ~~October~~the 5Holiday Inn, ~~2012~~Holiday Inn Express, ~~for~~Hampton aInn ~~purchase~~and ~~price~~Fairfield ofInn ~~$87.4~~& ~~million~~Suites in Boise, ~~and~~ID; the ~~acquisition~~Courtyard ofby aMarriott ~~Hilton~~in ~~Garden~~Memphis, ~~Inn~~TN; inand ~~Fort~~the ~~Worth,~~SpringHill ~~Texas~~Suites onin ~~October~~Lithia 23Springs, ~~2012~~GA, ~~for~~which awere ~~purchase~~all ~~price~~under ofcontract ~~$7.2~~to ~~million~~sell. ~~The~~ ~~remaining~~Accordingly, ~~$12.4~~we ~~million~~classified inall ~~proceeds~~of ~~are~~these ~~anticipated~~hotel toproperties beas ~~used~~discontinued tooperations ~~acquire~~and ~~additional~~their ~~hotels~~operating results are not included in the discussion below.

WeComparison ~~have entered into an agreement to purchase a 178 unit Residence Inn in Salt Lake City, Utah for a purchase price~~ of ~~$20.0~~First ~~million.~~Quarter We2013 ~~currently intend to fund the acquisition by assuming approximately $14.1 million of existing first mortgage debt and~~ with ~~proceeds~~First ~~from~~Quarter our common stock offering and, if needed, additional borrowings under our senior secured revolving credit facility. We anticipate spending $6.5 million on renovations, which would be funded with borrowings under our senior secured revolving credit facility. The acquisition is subject to lender and franchisor approval and satisfaction of customary closing conditions. We can give no assurance that the acquisition will be consummated. We expect to complete the proposed acquisition in the fourth quarter of 2012.

~~Long~~Key operating metrics for our total portfolio (85 hotels at March 31, 2013 and 60 hotels at March 31, 2012) and our same-~~Term~~store ~~Liquidity~~portfolio ~~Requirements~~(57 hotels) for first quarter 2013 compared with first quarter 2012 follows (dollars in thousands, except ADR and RevPAR):

Our long-term liquidity requirements consist primarily of the costs of acquiring additional hotel properties, renovations and other non-recurring capital expenditures that need to be made periodically with respect to our hotel properties, and scheduled debt payments, including maturing loans. We will seek to satisfy these long-term liquidity requirements through various sources of capital, including working capital, cash provided by operations, long-term hotel mortgage indebtedness and other borrowings, including borrowings under our secured credit facility. In addition, we may seek to raise capital through public or private offerings of our equity or debt securities. However, certain factors may have a material adverse effect on our ability to access these capital sources, including our degree of leverage, the value of our unencumbered hotel properties, borrowing restrictions imposed by lenders and market conditions. We will continue to analyze which sources of capital are most advantageous to us at any particular point in time, but financing may not be consistently available to us on terms that are attractive, or at all.

	First Quarter
	2013				2012				Percentage Change
	Total Portfolio		Same-Store Portfolio		Total Portfolio		Same-Store Portfolio		Total Portfolio			Same-Store Portfolio
	(85 hotels)		(57 hotels)		(60 hotels)		(57 hotels)		(85/60 hotels)			(57 hotels)

Total revenues	$	63,211	$	37,400	$	37,320	$	35,462		69.4	%		5.5	%
Hotel operating expenses	$	42,320	$	25,590	$	25,776	$

Filing Compare · Summit Hotel OP, LP