Apple Hospitality Reit, Inc. · NYSE:APLE
Apple Hospitality Reit — Investor Presentation (August 2022)
43 slides from Apple Hospitality Reit's investor presentation, Aug 9, 2022
Slide 1: Investor Presentation August 2022
AUGUST 2022 • NYSE: APLE INVESTOR PRESENTATION Exhibit 99.1
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS 2 Certain statements made in this presentation are forward-looking statements, including statements regarding the impact to Apple Hospitality REIT, Inc.’s (the “Company,” “Apple Hospitality,” “Apple” or “APLE”) business and financial condition from, and measures being take
Slide 3: Company Profile & Proven Investment Strategy
COMPANY PROFILE & PROVEN INVESTMENT STRATEGY Note: Hotel portfolio statistics as of August 4, 2022. Market categorization based on STR designation. Average Effective Age represents years since hotels were built or last renovated. Average actual age of hotels is 15 years. The Tripadvisor® rating is b
Slide 4: Values and Mission
VALUES Hospitality – We are thoughtful in our interactions with others and know that strong, caring relationships are the core of our industry. Resolve – We are passionate about the work we do and are steadfast in our commitment to our shareholders. Excellence – We are driven to succeed and improve
Slide 5: Proven Investment Strategy
5 PROVEN INVESTMENT STRATEGY
Slide 6: Key Takeaways
6 KEY TAKEAWAYS Performance driven by strong leisure and improving business demand, consisting of both transient and small group bookings Q2 2022 occupancy was 78%, the highest quarterly occupancy since the onset of the pandemic, with Q2 2022 ADR and RevPAR exceeding Q2 2019 levels and continued gro
Slide 7: Year-over-Year Performance: Second Quarter 2022 at a Glance
YEAR-OVER-YEAR PERFORMANCE 7 HYATT PLACE GREENVILLE DOWNTOWN ($ in thousands except statistical data and per share amounts) Second Quarter 2022 Performance at a Glance Note: See explanation and reconciliation of Adjusted Hotel EBITDA and Modified Funds from Operations (MFFO) to net income (loss) inc
Slide 8: Efficient Operations
Upscale/Rooms-Focused YTD 6/30/2022 Hotel EBITDA Margin and RevPAR Comparison Upper Upscale/Full-Service EFFICIENT OPERATIONS 8 HOMEWOOD SUITES PHOENIX NORTH – HAPPY VALLEY Source: Company filings. Assumptions may vary by company. See explanation and reconciliation of Adjusted Hotel EBITDA to net in
Slide 9: Operating Trends
OPERATING TRENDS 9 Upside to pre-pandemic levels with Q2 2022 RevPAR exceeding Q2 2019 before full return of occupancy RESIDENCE INN SAN DIEGO DOWNTOWN
Slide 10: Occupancy Trends
Occupancy 10 OCCUPANCY TRENDS Source: Weekly data provided by STR for hotels owned by the Company for the periods noted and may differ from actual results achieved. Week ended Positive trajectory in occupancy with continued upside opportunity
Slide 11: Weekday vs. Weekend Occupancy
Source: Data provided by STR for hotels owned by the Company for the periods noted and may differ from actual results achieved. Weekday occupancy includes Sunday through Thursday nights and weekend occupancy includes Friday and Saturday nights. 11 FAIRFIELD INN & SUITES, CHANDLER, AZ Leisure travel
Slide 12: % of Hotels by Occupancy Tier
% OF HOTELS BY OCCUPANCY TIER 12 Week ended Source: Weekly data provided by STR for hotels owned by the Company for the periods noted and may differ from actual results achieved. Consolidated hotels included in 0% - 15% occupancy tier. (1) COURTYARD SANTA CLARITA VALENCIA
Slide 13: Portfolio Positioned for Continued Outperformance
13 PORTFOLIO POSITIONED FOR CONTINUED OUTPERFORMANCE Well positioned to benefit from increasing business transient demand Select-service hotels franchised with industry-leading brands have proven appeal with broadest group of customers Broad geographic diversification provides exposure to wide varie
Slide 14: Why Branded Select-Service Hotels?
WHY BRANDED SELECT-SERVICE HOTELS? 14 Total revenue primarily derived from rooms sold Ability to cross-utilize associates to maximize efficiencies High margins and low breakeven occupancy Fewer outlets to manage Less public space to maintain Resilient group business Efficient Operating Model Broad C
Slide 15: Broad Consumer Appeal
Rooms-focused hotels with industry-leading brands have broad consumer appeal BROAD CONSUMER APPEAL 15 Independent HILTON GARDEN INN DOWNTOWN BIRMINGHAM HAMPTON INN & SUITES ATLANTA- DOWNTOWN SPRINGHILL SUITES LAFAYETTE SOUTH AT RIVER RANCH Note: Hotel portfolio statistics as of August 4, 2022. Based
Slide 16: Broad Geographic Diversification
16 BROAD GEOGRAPHIC DIVERSIFICATION Broad geographic diversification provides exposure to wide variety of demand generators Markets benefit from a mix of business and leisure demand Portfolio benefits from both large corporate negotiated and small and midmarket local negotiated business demand Low d
Slide 17: Additional Upside as Business Travel Strengthens
17 ADDITIONAL UPSIDE AS BUSINESS TRAVEL STRENGTHENS With approximately 56% of the Company’s hotels achieving Q2 2022 RevPAR that met or exceeded Q2 2019 RevPAR, there is significant room for additional upside as business travel strengthens, leisure travel remains strong, and the recovery expands int
Slide 18: Opportunity for Long-Term Cost Savings
OPPORTUNITY FOR LONG-TERM COST SAVINGS 18 HAMPTON INN & SUITES PHOENIX DOWNTOWN
Slide 19: Limited Near-Term Impact from New Supply
LIMITED NEAR-TERM IMPACT FROM NEW SUPPLY 19 New construction starts have meaningfully decreased since onset of pandemic with anticipated delays in completion due to supply-chain and labor challenges Nearly 50% of our hotels do not have any exposure to new projects currently under construction within
Slide 20: Industry-Leading Asset Management
INDUSTRY-LEADING ASSET MANAGEMENT 20 Analytical, data-driven asset management to maximize property-level performance Scale to negotiate attractive national contracts Strategic revenue management to optimize mix of business and maximize bottom-line performance Strong regional and national third-party
Slide 21: Balance Sheet Poised for Future Growth
21 BALANCE SHEET POISED FOR FUTURE GROWTH Positive corporate cash flow early in the recovery preserved strength of balance sheet and equity value Conservative capital structure with staggered maturities lowers capital costs Amended and restated existing $850 million credit facility, increasing borro
Slide 22: Strong Balance Sheet & Liquidity Position
Debt Composition(1) 22 STRONG BALANCE SHEET & LIQUIDITY POSITION Based on balances and hotels owned as of August 1, 2022, excluding unamortized fair value adjustment of assumed debt and unamortized debt issuance costs. Excludes yearly amortization. Interest rate includes effect of interest rate swap
Slide 23: Effective Portfolio Management & Strategic Growth
23 EFFECTIVE PORTFOLIO MANAGEMENT & STRATEGIC GROWTH HAMPTON INN & SUITES AND HOME2 SUITES HUNTSVILLE/RESEARCH PARK AREA Opportunistic Dispositions Strategic Growth Our objective is to maximize long-term shareholder value through opportunistic dispositions and accretive acquisitions that improve the
Slide 24: Recent Acquisition & Disposition Activity
24 RECENT ACQUISITION & DISPOSITION ACTIVITY Since the start of the pandemic, the Company has been a net acquirer, purchasing 12 hotels for approximately $473 million, while opportunistically disposing of 24 hotels for a total combined sales price of approximately $245 million. Nine of the hotels re
Slide 25: Net Acquirer Since Onset of Pandemic
25 NET ACQUIRER SINCE ONSET OF PANDEMIC These two hotels comprise a dual-branded property at one location. Contract entered into prior to 2020. There are a number of conditions to closing that have not yet been satisfied and there can be no assurance that a closing on this hotel will occur under the
Slide 26: Acquisitions Under Contract
26 Hotel under development with anticipated completion of construction in early 2024 260 rooms(2) Anticipated gross purchase price: $78.6 million or approximately $302,000 per key Forward commitment with trusted developer Primary demand generators: University of Wisconsin Government Insurance Biotec
Slide 27: Apple REIT Companies Transaction History
Apple REIT Companies Transaction History 1999 – August 4, 2022 446 TOTAL HOTELS ACQUIRED 227 TOTAL HOTELS SOLD 219 CURRENT PORTFOLIO 4 REITS SOLD IN 3 TRANSACTIONS 4 REITS MERGED TO FORM CURRENT APLE OVER 20-YEAR TRACK RECORD OF HOTEL TRANSACTIONS 27 Note: Hotel transactions by the various Apple REI
Slide 28: Well-Maintained Portfolio
WELL-MAINTAINED PORTFOLIO 28 HILTON GARDEN INN OMAHA DOWNTOWN/OLD MARKET AREA The Tripadvisor® rating is based on lifetime scores for the Apple Hospitality portfolio of hotels through June 30, 2022. Average Effective Age represents years since hotels were built or last renovated. Average actual age
Slide 29: U.S. Hotel Forecast
U.S. HOTEL FORECAST 29 U.S. Hotel Forecast HAMPTON INN SAN DIEGO-DOWNTOWN Source: STR 2022 CoStar Group June 2022
Slide 30: ESG Initiatives
ESG INITIATIVES HAMPTON INN & SUITES PORTLAND PEARL DISTRICT
Slide 31: Sustainability Initiatives
SUSTAINABILITY INITIATIVES Apple Hospitality is committed to enhancing and incorporating sustainability opportunities into our investment and asset management strategies, with a focus on minimizing our environmental impact through reductions in energy and water consumption and through improvements i
Slide 32: Social Responsibility
SOCIAL RESPONSIBILITY 32 Apple Hospitality REIT has always been firmly committed to strengthening communities through charitable giving, by volunteering our time and talents, and by participating in the many philanthropic programs important to our employees and leaders within our industry, including
Slide 33: Governance
GOVERNANCE 33 Alignment with the best interests of our shareholders is at the forefront of our values. HILTON GARDEN INN LAFAYETTE/CAJUNDOME
Slide 34: Appendix
APPENDIX HILTON GARDEN INN MEMPHIS DOWNTOWN
Slide 35: 2020 and 2021 Dispositions
35 2020 AND 2021 DISPOSITIONS 20-hotel portfolio sale
Slide 36: Comparable Hotels Quarterly Operating Metrics
36 COMPARABLE HOTELS QUARTERLY OPERATING METRICS Comparable Hotels Quarterly Operating Metrics and Statistical Data (Unaudited) (in thousands, except statistical data) Note: Comparable Hotels is defined as the 219 hotels owned by the Company as of June 30, 2022. For hotels acquired during the period
Slide 37: Same Store Hotels Quarterly Operating Metrics
37 SAME STORE HOTELS QUARTERLY OPERATING METRICS SAME STORE Hotels Quarterly Operating Metrics and Statistical Data (Unaudited) (in thousands, except statistical data) Note: Same Store Hotels is defined as the 204 hotels owned by the Company as of January 1, 2019 and during the entirety of the perio
Slide 38: Reconciliation of Net Income (Loss) to EBITDA and Adjusted Hotel EBITDA
38 RECONCILIATION OF NET INCOME (LOSS) TO EBITDA, EBITDAre, ADJUSTED EBITDAre AND ADJUSTED HOTEL EBITDA THE FOLLOWING TABLE RECONCILES THE COMPANY’S GAAP NET INCOME (LOSS) TO EBITDA, EBITDAre, ADJUSTED EBITDAre AND ADJUSTED HOTEL EBITDA ON A QUARTERLY BASIS FROM MARCH 31, 2019 THROUGH JUNE 30, 2022
Slide 39: Reconciliation of Net Income (Loss) to FFO and MFFO
39 RECONCILIATION OF NET INCOME (LOSS) TO FFO AND MFFO THE FOLLOWING TABLE RECONCILES THE COMPANY’S GAAP NET INCOME (LOSS) TO FFO and MFFO ON A QUARTERLY BASIS FROM MARCH 31, 2019 THROUGH JUNE 30, 2022 (Unaudited) (in thousands, except per share amounts) Note: The Consolidated Statements of Operatio
Slide 40: Definitions
DEFINITIONS 40 HYATT PLACE JACKSONVILLE AIRPORT Non-GAAP Financial Measures The Company considers the following non-GAAP financial measures useful to investors as key supplemental measures of its operating performance: Funds from Operations (“FFO”); Modified FFO (“MFFO”); Earnings Before Interest, I
Slide 41: Definitions Continued
DEFINITIONS CONTINUED 41 RESIDENCE INN LOS ANGELES BURBANK/DOWNTOWN FFO and MFFO The Company calculates and presents FFO in accordance with standards established by Nareit, which defines FFO as net income (loss) (computed in accordance with generally accepted accounting principles (“GAAP”)), excludi
Slide 42: Trademark Information
TRADEMARK INFORMATION 42 “AC Hotels by Marriott®,” “Aloft Hotels®,” “Courtyard by Marriott®,” “Fairfield by Marriott®,” “Fairfield Inn by Marriott®,” “Fairfield Inn & Suites by Marriott®,” “Marriott® Hotels,” “Residence Inn by Marriott®,” “SpringHill Suites by Marriott®,” and “TownePlace Suites by M
Slide 43: Contact Information
CONTACT INFORMATION 43 COURTYARD RICHMOND DOWNTOWN
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