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Operator
The conference will begin shortly. To raise and lower your hand during Q&A, you can dial star 1 1.
spk07
Good day and thank you for standing by.
John
Welcome to the Summit Hotel Properties Q4 2022 and full year earnings call. At this time, all participants are in a listen only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised today's conference is being recorded. I would like to hand the conference over to your speaker today, Adam Waddell, Senior Vice President, Finance, Capital Markets and Treasurer. You may begin.
Operator
Thank you, Kevin, and good morning. I am joined today by Summit Hotel Properties President and Chief Executive Officer John Stanner and Executive Vice President and Chief Financial Officer Trey Conkling. Please note that many of our comments today are considered forward-looking statements as defined by federal securities laws. These statements are subject to risks and uncertainties, both known and unknown, as described in our SEC filings. Forward-looking statements that we make today are effective only as of today, February 28, 2023, and we undertake no duty to update them later. You can find copies of our SEC filings and earnings release, which contain reconciliations to non-GAAP financial measures referenced on this call, on our website at www.shpreeds.com. Please welcome Summit Hotel Properties President and Chief Executive Officer, John Stanner.
Kevin
Thanks Adam, and thank you all for joining us today for our fourth quarter and full year 2022 earnings conference call. 2022 was a year of meaningful growth for Summit as we augmented rapidly accelerating operating fundamentals with the acquisition of more than $900 million of high quality hotels, reinstated our quarterly dividend, and made our initial strategic investment in the high growth glamping segment. Today, Trey and I will discuss our results from last year. our outlook for this year, and how our recent transaction activity positioned Summit to continue to be a leader in the lodging recovery. Overall, we were extremely pleased with the improving operating trends throughout our portfolio, which exceeded our expectations for the year. Proforma RevPar increased 38% year-over-year, driven by a 10% increase in occupancy and a 26% increase in average rate. In our portfolio of 92 hotels with comparable 2019 data, RevPAR recaptured 90% of 2019 levels and 85% of 2019 EBITDA levels, led by average rates which exceeded 2019 by 2%. Importantly, these RevPAR recapture rates improved sequentially each quarter from 80% in the first quarter to a post-pandemic high of 97% in the fourth quarter. Leisure demand led the recovery, as weekend RevPAR for the full year surpassed 2019 levels by 3%. driven by average rates, which finished the year 12% higher than 2019. Midweek and corporate demand began to improve meaningfully in the second half of 2022, most notably post-Labor Day weekend. The acceleration of business transient midweek and urban demand helped drive October RevPAR to $130, our highest nominal RevPAR since the pandemic started. While the natural seasonality of our business resulted in lower nominal RevPARs in the last two months of the quarter, Our December REF PAR recapture for our 92 comparable hotels was 97%, another post-pandemic era high. Fourth quarter pro forma REF PAR increased 18% year over year, driven by a 3% increase in occupancy and a 14% increase in average rate. Despite the normal seasonal decline in demand experienced in the fourth quarter, average rates were essentially flat quarter over quarter and 6% above 2019 levels, demonstrating our ability to maintain strong pricing power even in softer demand periods. While leisure demand remained robust during the fourth quarter, as weekend ADR surpassed 2019 levels by 16%, weekday REF PAR improved sequentially throughout the year and finished the fourth quarter at an 88% recapture to 2019 levels, with ADR surpassing the comparable period of 2019 midweek. Our asset and revenue management teams continue to drive impressive operating results as REVPAR index for our pro forma portfolio finished both the fourth quarter and full year at 112%, primarily driven by strong occupancy premiums and further demonstrating our ability to capture market share while maintaining pricing power throughout the portfolio. Trey will provide more details on the cost side of our business shortly, but we have been successful growing margins despite well documented wage and cost pressures. as we add back critical staff, services, and amenities to address the rapid acceleration of demand across the portfolio. The improving operating trends we experienced throughout 2022 have continued into the first quarter of this year. Our preliminary January REF PAR increased approximately 28% from the prior year, despite being negatively affected by cold fronts across the country and severe rainstorms and flooding in California in the first half of the month. Similar to last year, President's Day weekend served as a catalyst for a meaningful acceleration of demand with REVPAR results exceeding 2019 and 2022 by 15% and 11%, respectively, for the holiday weekend. February and March are pacing up 26% and 21%, respectively, month over month, putting us on track to finish the first quarter with REVPAR growth between 17% and 19% year over year. We continue to be confident in the favorable demand backdrop for our portfolio, particularly with our concentration of newer hotels and key high-growth Sunbelt markets. As I mentioned, 2022 was another extremely successful year for Summit on the transaction front. In the first quarter, we acquired a high-quality portfolio of 27 hotels and various other assets from Newcrest Image for a total consideration of $822 million through our joint venture with GIC. Our basis in the hotel portfolio is just over $200,000 per key, which represents a meaningful discount to estimated replacement cost and compares quite favorably to recent trades of comparable quality hotels. The portfolio has performed ahead of our initial expectations, despite a labor-intensive transition period during which we implemented numerous operational initiatives, such as complexing multiple hotel operations and creating sales clusters to optimize revenue. When excluding the Canopy New Orleans, which opened subsequent to the initial closing of the transaction, the portfolio was more than 3% ahead of our underwritten Hotel EBITDA and resulted in a Hotel EBITDA yield of just under 7% in 2022. We've emphasized repeatedly that much of the hard work needed to position these assets for future success was completed in 2022, and we believe we are just now starting to see the real benefits from those efforts. For example, in the fourth quarter, REVPAR recapture in the NCI portfolio increased to 97%, an 8 percentage point increase over the third quarter, culminating with a 102% recapture rate in December. The 800 basis point improvement in recapture rate in the fourth quarter compares to approximately 150 basis point improvement in our same store portfolio. Our outlook for the portfolio remains extremely positive. and we expect it to generate outsized RevPar and EBITDA growth in 2023 compared to the same store portfolio as our operational initiatives drive better performance and the newer hotels continue to ramp. As you will recall, many of these hotels are newly constructed and have never participated in a traditional RFP season, creating ample opportunity to grow mid-week negotiated business in 2023. In June, we closed on our equity purchase option to acquire a 90% interest in the 264-guestroom AC Element dual-branded hotel in downtown Miami's Brickell neighborhood at a valuation of $89 million, or $337,000 per key. The hotel features the acclaimed Rosa Sky rooftop bar, which has been a resounding success, generating on average nearly $500,000 of revenue per month since its opening in March of last year. The hotels have ramped quickly since their December 2021 opening, generating a full-year 2022 Hotel EBITDA approximately 50% higher than our initial underwriting and generating a 7.5% Hotel EBITDA yield. The long-term outlook for this market remains incredibly positive, and our attractive basis in the asset demonstrates the value creation potential of our unique mezzanine lending program. In October, we announced the acquisition of a 90% ownership stake in our first high-end glamping asset, a distinctive 11-unit property in Fredericksburg, Texas. In 2022, the property's first full year of operations, Onera Fredericksburg generated REVPAR of approximately $440, hotel EBITDA margins of more than 60%, and a net operating income yield of approximately 17% on our initial cost basis. Alongside this transaction, we announced a strategic partnership with Onera, which includes a right of first refusal on their next 10 projects designed to be a growth pipeline for the company. Yesterday, we announced the initial development of our next two Onera branded projects, the expansion of our Onera Fredericksburg site and a newly funded mezzanine loan for a separate glamping project, both of which are expected to open in 2024. Combined with our initial acquisition of the Fredericksburg property, We expect to invest between $40 and $45 million in these first three projects, which are forecasted to generate mid-teens unlevered stabilized yields. In addition, we have several other exciting projects under review that feature similar return profiles to our existing projects and would allow us to continue to scale our investment in this rapidly growing segment of our industry. In our earnings release yesterday, we also announced several pending asset sales through three separate transactions, including the sale of four non-core hotels in suburban Chicago and suburban Minneapolis, the sale of two hotels located in Atlanta and Kansas City, and the sale of a vacant land parcel in San Antonio. The six hotels under contract for sale generated a combined REF PAR of $78 in 2022, a 30% discount to our overall portfolio, and EBITDA margins that were nearly 18 percentage points below our total portfolio. Proceeds from the sale of the six hotels total $78.6 million, which equates to a 4% net operating income yield on 2022 results. Importantly, all six of these hotels are due for significant renovations, and the sales would allow us to forego near-term capital expenditures of between $35 and $40 million. Including the foregone capital spend, the equivalent 2022 net operating income yield is approximately 2.7%. We expected two transactions for the sale of the six hotels to close in the second quarter and the land parcel sale to close in the fourth quarter. Our recent transaction activity highlights our ability to identify opportunistic and value accretive transactions. Since the onset of the pandemic, we've acquired 32 high quality hotels located in high growth markets, totaling nearly a billion dollars of assets with minimal capital needs. Again, excluding the Canopy New Orleans, which was delayed in opening, Our acquisition portfolio finished 10.5% ahead of our 2022 underwriting, generating an additional $6 million of EBITDA compared to our expectations. Roughly one-third of these assets opened in 2019 or after and are still in the early stages of ramping towards stabilization, implying considerable growth and upside remains. In total, our acquisition portfolio generated a full-year 2022 net operating income yield of more than 6%. This compares favorably to our recent and pending dispositions, including the 2022 sale of the Hilton Garden Inn San Francisco, which collectively totaled nearly $155 million of gross proceeds, equating to a 2022 net operating income yield of approximately 3%, or sub-2%, net of the estimated deferral of nearly $45 million of near-term capital expenditures. With that, I'll turn the call over to our CFO, Trey Conklin.
Adam
Thanks, John, and good morning, everyone. Throughout 2022, our portfolio demonstrated significant improvement across all location types. While urban hotels lagged in the first quarter of the year relative to 2019, these hotels demonstrated strong recovery beginning in the second quarter, as REVPAR recapture rates increased from 72% in Q1 to 92% in Q4. The recovery in our urban portfolio was driven by robust pricing power due to the acceleration of business travel, professional and college sporting events, and citywide group and leisure demand in markets such as Dallas, Boston, Miami, Nashville, and Chicago. This resulted in 2019 ADR recapture rates of 105% and 107% in the third and fourth quarters of 2022, respectively, versus the 93% recapture rate in the first quarter of the year. The fourth quarter was highlighted by October, a month which typically produces the portfolio's highest nominal REVPAR, as our urban hotels generated $135 REVPAR, representing a 5% premium to the pro forma portfolio and a 93% recovery to 2019 levels. Strength was particularly evident in Dallas, our largest market, where our comparable hotels posted a fourth quarter recapture rate of 102%. Nominal rev par for these hotels grew 20% in the fourth quarter in comparison to last year, driven by a $19 or 15% increase in average rate. Rev par for the non-urban portfolio was $109 in the fourth quarter, representing a recapture rate of 98% to 2019. This was driven by continued strength in our resort properties, which generated a fourth quarter rev par of $132, an increase of 11% compared to 2021, and 104% recapture rate to 2019. Additionally, the suburban portfolio experienced the largest year-over-year growth of any location type, as fourth quarter rev par increased 18% compared to 2021, driven by a 4% increase in occupancy and a 13% increase in average rate. Shifting to portfolio segmentation, while seasonality translates to slowing room-night demand in the fourth quarter, average rate for the fourth quarter exceeded 2019 levels in all segments apart from the negotiated segment. Notably, the group segment saw improvement relative to 2019 as occupancy mix increased by 30 basis points on a full week basis and average rate increased by $4 or 2.4%, primarily driven by weekend rates, which finished $12, or 8%, ahead of the comparable period in 2019. Our asset management team continues to deliver strong results despite a labor market dynamic that has resulted in material wage growth and challenges adding back necessary staff, services, and amenities over the past year. These cost increases appear to be moderating, as evidenced by operating costs per occupied room in the fourth quarter that increased only 1.4% from the third quarter despite a lower occupied room base. As a result, fourth quarter gross operating profit margin and hotel EBITDA margin for the pro forma portfolio were 44% and 36% respectively, which were in line with the prior quarter despite a decline in absolute rev par of approximately 4.2% from the third quarter due to natural seasonality. Fourth quarter hotel EBITDA margin in our pro forma portfolio was 120 basis points above 2019 levels, largely attributable to favorable property tax returns. We have demonstrated an ability to grow margins relative to 2019 in months with higher nominal REVPARs driven by strong rate growth. GOP margins in our comparable portfolio exceeded 2019 levels in September and October. and hotel EBITDA margins exceeded 2019 levels in three of the final four months of the year by nearly 100 basis points. We were encouraged to see periods of margin expansion in our portfolio relative to 2019, despite the significant expense growth experienced throughout the industry in 2022. Expense growth was particularly acute on the labor side, where the industry experienced well-documented increases in hourly wages and outsized reliance on more expensive and less productive contract labor. Looking ahead, we expect wage growth to moderate in 2023. Proforma Hotel EBITDA for the fourth quarter and full year 2022 was $62.1 million and $243.9 million, respectively, representing increases of 27% and 63% year-over-year. Fourth quarter and full year adjusted EBITDA was $46.1 million and $180.8 million respectively, which reflects increases of 62% and 100% from 2021. Adjusted FFO in the fourth quarter was $30.3 million, or 25 cents a share, an increase of $15.5 million from the fourth quarter of 2021. and full year adjusted FFO was $114 million, or 94 cents a share, an increase of $77.2 million from 2021. From a capital expenditure standpoint, in the fourth quarter and for the full year 2022, we invested approximately $27.7 million and $76.5 million, respectively, in our portfolio on a consolidated basis. and approximately $22.2 million and $63.6 million, respectively, on a pro-rata basis. CAPEX spend for the full year and fourth quarter was driven by the completion of significant renovations at our Hilton Garden Inn Houston Energy Corridor and the Hyatt Place Orlando Universal Studios, as well as ongoing transformative renovations at our Residence Inn downtown Portland and our Hilton Garden Inn San Jose Milpitas. We continue to ensure the quality and relative age of our portfolio positions the company to drive profitability and market share. Turning to the balance sheet, our current overall liquidity position remains robust at more than $500 million pro forma for the four-pack and two-pack asset sales that John discussed earlier. The $79 million of gross proceeds from those asset sales continues to further deleverage Summit's balance sheet. In addition, during the fourth quarter, we defeased our only remaining 2023 debt maturity, a $32 million CMBS loan set to mature in August of this year, which eliminated all remaining debt maturities until the fourth quarter of 2024 after consideration of extension options. The defeasance unlocked $7 million of restricted cash and is accretive to AFFO given net cash savings of approximately $300,000 over the next six months. In combination, these transactions demonstrated strong progress towards our long-term stated leverage target of 3.5 times to 4.5 times net debt to EBITDA. Finally, in the fourth quarter, we submitted notice to exercise the first of four six-month extension options available under our $400 million senior revolving credit facility. The extended maturity date will be September 30, 2023. And when considering all available extension options, the facility has more than two years of remaining term with a final maturity of March 2025. From an interest rate risk management perspective, our balance sheet is well positioned, including an average pro rata interest rate of 4.5% and approximately 65% of our pro rata share of debt fixed after consideration of interest rate swaps at year end 2022. In addition, to address the recent maturity of $200 million in notional swaps, we recently entered into two $100 million interest rate swap agreements that fix one month SOFR and carry fixed rates of 2.6% and 2.56% respectively. These new swaps will mature in January 2027 and January 2029. This extends the average duration of our swap portfolio from less than two years to over four years. The swaps became effective in January of 2023. When accounting for the company series E, F, and Z preferred equity within our capital structure, we are approximately 70% fixed. On January 26th, our board of directors declared a quarterly common dividend of 4 cents per share or an annualized 16 cents per share. The current dividend represents a prudent AFFO payout ratio. leaving ample room for meaningful increases over time. Included in our press release last evening, you will note we reinstated full-year guidance for 2023 operational metrics in addition to certain non-operational items. This outlook is based on management's current view and does not account for any unexpected changes to the current operating environment. For the full year, we anticipate REVPAR growth of 6% to 11%. The high end of the range assumes continued strength in leisure demand and accelerating growth in business transient and group demand. The low end of the range reflects an economic slowdown that would result in low single-digit REVPAR growth in the back half of the year. REVPAR growth of 6% to 11% translates to an adjusted EBITDA range of $190.4 million to $205.9 million and an adjusted FFO range of $0.92 to $1.05 per share. The midpoint of our REVPAR guidance range implies hotel EBITDA margins to be essentially flat year over year. We expect interest expense excluding the amortization of deferred financing costs to be approximately $85 million. Series E and Series F preferred dividends to be $15.9 million. Series Z preferred distributions to be $2.6 million. and pro-rata capital expenditures to range from $60 million to $80 million. It's also worth noting that given the increased size of the GIC joint venture, the fee income payable to Summit now covers nearly 15% of annual cash corporate G&A expense, excluding any promote distributions Summit may earn during the year. I also want to point out that we have furnished a new financial supplement as part of our fourth quarter earnings. We believe this supplement will more clearly outline the performance and relative contribution of our various portfolio ownership structures. We have also outlined additional detail on our balance sheet, which has continued to be a strength for the company and allowed us to acquire nearly a billion dollars in acquisitions since July 2021. And with that, we'll open the call to your questions.
John
Ladies and gentlemen, if you have a question or a comment at this time, please press star 1-1 on your telephone. If your question has been answered, you wish to move yourself from the queue, please press star 1-1 again. We'll pause for a moment while we compile our Q&A roster. Our first question comes from Austin Worshman with KeyBank Capital Markets. Your line is open.
Austin Worshman
Hey, good morning, guys. John or Trey, I guess I'm just curious on the six-pack hotel,
Kevin
for sale can you just speak to how you guys arrived at the number of assets that you you know selectively marketed presumably and the amount of proceeds you were looking to solve for yeah sure good morning Austin first of all you know the first thing I point out is there's two separate transaction involves here there's a sale of the four pack the two suburban Chicago and two Minneapolis assets and a separate sale for the asset in Atlanta in Kansas City You know, look, I think we've talked for a while now about, you know, exiting some of these suburban assets that are lower rev par hotels, lower margins, you know, and particularly in Minneapolis, which has been a market that has been much slower to recover. We just felt like it was a prudent and opportunistic time to exit those assets. I think the one common theme that you'll see across the six assets is just the need for significant capital to be spent across those of the next over the near term, over the next probably 12 to 18 months. And so between the six assets, we think we'll avoid spending somewhere between $30 and $35 million over that time period. The other thing I would just point out is I think where we've seen, while it's not the easiest transaction mark today, where we've seen the most liquid part of that transaction market has been for some of these smaller hotels and some of the more secondary and tertiary locations where It appeals to a smaller owner, a local owner operator that can finance it through a local lender that isn't reliant on big money center banks or the CMBS market to get a financing done. And so we feel like the execution here is the appropriate one. I'll caveat this as we did in our press release by saying that these deals have not closed yet. They are under contract. We're optimistic that they will close. And we're happy with the execution if and when they close.
Austin Worshman
Thanks for the detail there. And then how do we think about the other side of that coin and capital deployment this year? I know you guys are very focused on returns more so than maybe markets, but are there any specific assets or markets you currently have your eye on if pricing makes sense? Given some of the benefits you highlighted in your opening remarks about putting assets into the joint venture, I guess how do we think about sort of wholly owned purchases down the road versus continuing to use the joint venture vehicle with GIC?
Kevin
Yeah, well, look, we still really like the joint venture. I think Trey highlighted the fact that it's getting to a size where particularly the fee income has become a meaningful source of income for us. They've been wonderful partners that allow us to execute on transactions that we otherwise wouldn't be able to execute on. So we still like that as a vehicle. We don't have to put everything into the vehicle. I think it will be a case-by-case basis. You know, as we've said, you know, I think a lot historically, we don't necessarily have a map with a bunch of dots on it that says that we need to be in certain markets. You can see through our transaction activity, you know, post-pandemic, we have had a bias towards investing in some markets that we like. The demographic changes where we see more immigration of people, more corporate relocation, that's put us in places like the Sunbelt. It's put us in some of these mountain towns that have performed really, really quite well since the onset of the pandemic. But we're certainly opportunistic. And again, through some of these dispositions, we will create some capacity to continue to be opportunistic where we see just better risk-adjusted returns on a relative basis.
Austin Worshman
And then just the last one for me, maybe for Trey, you mentioned that the midpoint of guidance assumes roughly flat hotel EBITDA margin. Can you share what that range is at the high and low end?
Adam
Yeah, I think if you look at the high and the low end of the range, we would say that's kind of minus 50 basis points to plus 50 basis points from 6% to 11% with kind of flat at the midpoint. Perfect. Thanks, guys.
John
One moment for our next question.
spk07
Our next question comes from Bill Crow with Raymond James.
John
Your line is open. Thanks. Good morning, guys.
Bill
I was looking for a little bit more detail on the expense expectations for this year. I think you mentioned that wage rates would be growing at a slower pace, but you also have higher FTEs, I assume, at least anniversary and those that were added last year. So how are you thinking about overall expense growth, what's going on with property taxes, which you actually were able to appeal, but what do you expect there, property insurance, et cetera?
Kevin
Yeah, sure, Bill. Thanks, and good morning. You know, as we said in the prepared remarks, we do expect to see some moderating of expense growth. I think as we've gotten later into last year and the first part of this year, we've seen some of, particularly on the wage pressure side, a fair amount of that moderating. articulated a little bit on an expense on a preoccupied room basis that the operating level was up less than 2% in the fourth quarter, or actually aggregate dollars of expenses in the fourth quarter actually declined from where it was in the third quarter. So we have started to see some moderating there. I think you can tell by, as Trey just mentioned, our implied margin guidance, which is flat at a midpoint of 8.5% rev par growth. still does contemplate some level of expense pressure persisting into next year. And I think what we'll see that's a little unique from this year is if you look at our results in 2022, our EBITDA margins expanded more than our GOP margins. Our expectation is that that will flip into 2023 as operating expenses moderate. But we did, as you alluded to, we had some nice successful property tax appeals, which helped our EBITDA margins in 2022. And we'll feel some pressure on expenses on the insurance line in 2023 that will make our EBITDA margin expansion lower than our GOP expansion is in the year.
Bill
Okay. And then a follow-up question for Trey. What was the cost of the two swaps on the $100 million debt pieces?
Adam
The rates there were 2.6% and 2.5%. Yeah, but what was it?
Bill
What was the actual cost of getting that transaction done?
Operator
Bill, those are – this is Adam. Those are settled on a monthly basis going forward. There's no initial out-of-pocket.
Bill
Okay. All right. Very good. Appreciate it.
Operator
Thanks. That's it for me.
Bill
Thanks, Bill.
John
One moment for our next question. Again, ladies and gentlemen, if you have a question or a comment at this time, please press star 11 on your telephone.
spk07
Our next question comes from Michael Bellisari with Baird. Your line is open. Thanks.
Michael Bellisari
Good morning, guys. Just want to go back to the asset sales and dispositions. I guess if the six hotels do close on your expected timeline, how much EBITDA in 23 might be sold for the remainder of the year?
Kevin
Yeah, some of that's going to depend on the timing of the sale, Mike. We've kind of outlined that we expect them to close in the second quarter. We will update our guidance at the time that they close. Our expectation on where we sit in the year is somewhere probably between $3 and $5 million of reduction in EBITDA.
Michael Bellisari
Got it. And then maybe this is sort of just on the margin, not margins, but on the margin, just As these asset sales are completed, the pro forma remaining portfolio, will REVPAR be benefited, will it be diluted, the growth that is, and margins too? What's kind of the growth impact in 23 from these six asset sales?
Kevin
Yeah, it's relatively marginal, Mike. It is slightly accretive to both REVPAR growth and our margin expectations for 2023. Not enough that I would expect us to materially change our guidance range as a result of these. Again, these are relatively smaller. As we mentioned, the prepared remark, they run on average about 30% discounts to our nominal REVPAR levels. And again, we expect this to be accretive from a REVPAR growth perspective. You know, the one thing I'll just, you know, kind of point out and reemphasize again is Part of the rationale for these sales is that while the per-key prices aren't as high as maybe you'd expect, the cap rates here are quite low. Combined with the asset sale in San Francisco last year, we're selling $155 million of assets at a three cap. If you adjust for the deferred capital needs, it's sub-2%. One of the things that we like is it's going to allow us to continue to bolster the balance sheet without giving up a ton of in-place earnings.
Michael Bellisari
Understood. Just one more, just thinking about the bottom portion of the portfolio. I guess maybe how many more $60,000 a key or maybe $75,000 or $700,000 per key type of assets you guys have left in the portfolio?
Kevin
Yeah, look, there's some. I mean, I think there's always kind of a bottom 10% of your portfolio. We don't have a ton of what I would describe as real non-core assets. I do think we'll try to continue to look opportunistically to sell assets. I think the execution, again, on these six plus the sale on SFO last year represent a really, really compelling execution, particularly with where we think we and where and how we can redeploy those proceeds. And we've shown Again, I think a really nice delta between the yields on what we've sold versus the yields on what we've acquired. And so I think you can expect us to continue to look opportunistically for asset sales as we go through 2023. Got it.
Michael Bellisari
And then last one for me, for Trey, probably just year-end net leverage, where did it stand? And then what would that have been on a pro forma basis if those six asset sales plus the land sale were completed at 1231?
Adam
Yeah, I think if you look at our leverage, what I would say is that pro forma for the asset sales and the kind of $79 million that we anticipate bringing in from that standpoint and kind of what the midpoint of our guidance range is, we're probably right around five times. That's obviously about a half a turn higher than what our target is, but I think it's good progress that we've made over the last year as we've kind of recycled out of some of these non-core assets as well as the EBITDA growth that we've seen.
Michael Bellisari
Got it. Thanks, everyone. Thanks, Mike.
John
And I'm not showing any further questions at this time. I'd like to turn the call back over to John Spanner, President and CEO, for any closing remarks.
Kevin
Well, thank you all for joining us today. We're obviously very encouraged by our operating results for 2022. We're excited about the prospects for the acquisition activity that we completed in the year, and we're optimistic about the future of Summit. We look forward to seeing many of you as we progress through the year. Thank you all again for joining. Have a good day.
John
Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day. The conference will begin shortly. To raise and lower your hand during Q&A, you can dial star 11.
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