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 "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:

? 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;

? the degree and nature of our competition;

? increased interest rates and operating costs;

? 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;

? changes in real estate and zoning laws and increases in real property tax rates; and

? 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.

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 21 hotels with a total of 2,477 guestrooms for purchase prices aggregating approximately $245.2 million. Currently, we own 82 hotels with a total of 8,674 guestrooms located in 21 states. Except for five hotels, which are subject to ground leases, 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®).

A substantial majority of our hotels (65 of our 73 hotels as of September 30, 2012) are managed by Interstate Management Company, LLC ("Interstate") pursuant to a hotel management agreement between Interstate, its affiliates and certain of our TRS lessees. In addition, our TRS lessees have entered into hotel management agreements with IHG Management (Maryland) LLC ("IHG Management"), an affiliate of IHG, pursuant to which IHG Management manages one hotel, with Courtyard Management Corporation ("Courtyard Management"), an affiliate of Marriott, pursuant to which Courtyard Management manages one hotel, with HP Hotels Management Company, Inc. ("HP Hotels"), pursuant to which HP Hotels manages two of our hotels, with Kana Hotels, Inc. ("Kana Hotels"), pursuant to which Kana Hotels manages two of our hotels, and with InterMountain Management, LLC ("InterMountain"), pursuant to which InterMountain manages two of our hotels. 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. We recognize that there are lingering concerns regarding global macroeconomic conditions. We continue to monitor macroeconomic trends, and evaluate their effect on demand for our guestrooms. As a result of scarcity of financing, the severe United States recession and declining hotel industry fundamentals during 2008 and 2009, the current pipeline for new hotel development is limited. Thus, we do not anticipate that we will experience a significant increase in the supply of new hotel rooms in our markets in the near term.

Our Portfolio

As of September 30, 2012, our portfolio consisted of 73 hotels with a total of 7,533 guestrooms. Of these hotels, according to STR's current chain segment designations, 36 hotels containing 4,049 guestrooms are "upscale," 33 hotels containing 3,216 guestrooms are "upper midscale" and four hotels containing 268 guestrooms are "midscale." The following table sets forth certain information for our hotels by franchisor as of September 30, 2012:

                                                 Number of       Number of
           Franchisor/Brand                        Hotels          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

(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."

Results of Operations

Prior to February 14, 2011, the date we completed our IPO, concurrent private placement and formation transactions, neither Summit REIT nor Summit OP had any operations other than the issuance of 1,000 shares of common stock of Summit REIT to our Executive Chairman in connection with Summit REIT's formation and initial capitalization and activity in connection with the IPO and the formation transactions. The discussion below compares the results of our operations for the three months ended September 30, 2012 to the three months ended September 30, 2011, and the results of our operations for the nine months ended September 30, 2012 to the combined operating results of our Company for the period from February 14, 2011 through September 30, 2011, and the operations of our predecessor for the period from January 1, 2011 through February 13, 2011. The results of operations presented below should be reviewed in conjunction with the condensed consolidated financial statements included elsewhere in this report.

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

On May 16, 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.

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     Three Months
                                              Ended            Ended                  Change
                                            September        September
                                             30, 2012         30, 2011           $               %
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:

                                                                        Our
                             Company             Company            Predecessor        Combined            Period-over-Period

                                                                      Period
                           Nine Months                              January 1,        Nine Months                Change
                              Ended          Period February       2011 through          Ended
                            September        14, 2011 through      February 13,      September 30,
                            30, 2012        September 30, 2011         2011              2011               $                %
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 . . .