Apple Hospitality Reit, Inc. · NYSE:APLE
Apple Hospitality Reit — Investor Presentation (June 2018)
43 slides from Apple Hospitality Reit's investor presentation, Jun 1, 2018
Slide 1: Apple Hospitality Investor Presentation
APPLE HOSPITALITY INVESTOR PRESENTATION
Slide 2: Forward-Looking Statements
& APPLE HOSPITALITY REIT FORWARD-LOOKING STATEMENTS Certain statements made in this presentation are forward-looking statements. These forward-looking statements include statements regarding our intent, belief or current expectations and are based on various assumptions. These statements involve sub
Slide 3: Company Profile
& APPLE HOSPITALITY REIT COMPANY PROFILE 242 EOE Es 34 STATES 88 MARKETS 30,795 GUEST ROOMS 99% SELLE COC?) —S E RavsCoE. 4 years ANERAGE TEFPFE CGH IVE AGE 25% WOT AP PER T 7 TOTAL CAPITALIZATION $4.0 Billion EQUITY MARKET CAP (Jfamptony Guuautes an tan & Suites and Home? Suites, Huntsville, AL Not
Slide 4: Equity Market Capitalization
e& APPLE HOSPITALITY REIT EQUITY MARKET CAPITALIZATION (§ in billions) IEEE Upscale /SelectService Focus $13.8 [GMNEEEE Upper Upscale/FullService Focus HEE Upscale & Upper Upscale Combined $2.4 $2.1 $2.1 $17 gia $0.9 $0.7 $0.6 HST PK APLE RU SHO LHO PEB XHR DRH CHSP INN — CLDT HT AHT Largest publicl
Slide 5: Proven Investment Strategy
& APPLE HOSPITALITY REIT PROVEN INVESTMENT STRATEGY Hilton Marriott. Align with the best brands in that category Concentrate on upscale, rooms- focused product a Enhance portfolio through accretive acquisitions, opportunistic dispositions and strategic reinvestment Hire brand leading operators and m
Slide 6: Why Select-Service Hotels?
& APPLE HOSPITALITY REIT WHY SELECT-SERVICE HOTELS? 99% of APLE’s Hotels are Select-Service Less: More: Rooms to fill Consumer demand Square footage to manage Easily renovated Staff lender/buyer appeal Maintenance Consistency in operations Complex Adaptable to change Resulting Operating Margins 37 A
Slide 7: Advantages of a Select-Service REIT
& APPLE HOSPITALITY REIT ADVANTAGES OF A SELECT-SERVICE REIT as Compared to a Full-Service REIT 80% High 74 tf 73.0% Low 72.0% 62.6% High 62.8% 60% Low 62.1% 3 z 2 2 40% 6 * 29.4% 20% 17.3%0) High 12.3% | 8.7% low 5.1% 5.9% Bich 6.6% 2.0% 2.1% ae A9% 0% ES Operating Expense G&A Expense Capex Availab
Slide 8: Efficient Hotel Operations
e& APPLE HOSPITALITY REIT EFFICIENT HOTEL OPERATIONS 2017 Hotel EBITDA Margin and RevPAR Comparison MEE Upscale /Select Service Focus MEN Upper Upscale/Full-Service Focus EEE Upscale & Upper Upscale Combined 40% 38% 37% 34% 34% — 33% = 33% «= 33% 32% 31% 31% 28% 28% CLDT APLE™ INN PEB HT AHT LHO RU
Slide 9: Concentrated Brand Ownership
e& APPLE HOSPITALITY REIT CONCENTRATED BRAND OWNERSHIP With focus on Upscale SelectService CF RENAISSANCE Residence Marriott = Upscale = Upper Midscale » Upper Upscale Apple Hospitality owns 3% of Hilton® and Marriot® Upscale and Upper Midscale rooms in Laci ce the United States One of the largest o
Slide 10: Why Marriott and Hilton?
& APPLE HOSPITALITY REIT WHY MARRIOTT® AND HILTON®? @} NA Global Distribution Institutional Brands . RevPAR Premiums nearly 12,000 Hiotdleworldwide foster strong resale market, select-service brands with locations in more than 100 financing flexibility, and outperform comparable hotels countries and
Slide 11: Benefits of Concentrated Brand Strategy
& APPLE HOSPITALITY REIT BENEFITS OF CONCENTRATED BRAND STRATEGY branded hotels with concentration on efficient, rooms-focused properties Exclusive ownership of Hilton® & Marriott® Scale ownership within specific brands Expertise yields comparable hotel operating data to benchmark and drive performa
Slide 12: Benefits of Scale Ownership
& APPLE HOSPITALITY REIT BENEFITS OF SCALE OWNERSHIP Largest Select-Service Focused Publicly Traded Lodging REIT Unparalleled Access to Performance Data Current ownership of 242 hotels and more than 400 historically provides unique ability to identify areas of opportunity and implement best practice
Slide 13: Broad Geographic Diversification
PLE HOSPITALITY REIT BROAD GEOGRAPHIC DIVERSIFICATION Adjusted Hotel EBITDA contribution by location type Urban 24% Airport 7% Interstate 2% y Resort 5% Small Metro 4% Disciplined strategy of investing in urban, high-end suburban and developing markets where diverse demand generators and proximity t
Slide 14: Management Companies
& APPLE HOSPITALITY REIT MANAGEMENT COMPANIES AS OF MARCH 31, 2018 Company Total # of Rank Name Properties!') ] LBA A2 2 White Lodging 28 3 Dimension 24 4 McKibbon 19 5 Western 17 6 Marriott 14 7 Raymond 14 8 Newport 9 9 North Central 9 10 Vista Host 9 1 Crestline 9 % of Apple Hospitality Portfolio!
Slide 15: Unique Management Contract Structure
& APPLE HOSPITALITY REIT UNIQUE MANAGEMENT CONTRACT STRUCTURE Better aligns owner and manager to maximize performance in all market environments Variable Management Fee 2.5% - 3.5% of Revenues Based on Property’s Balanced Scorecard Performance Balanced Scorecard Metrics Gross operating profit vs bud
Slide 16: Well-Maintained Portfolio
& APPLE HOSPITALITY REIT WELL-MAINTAINED PORTFOLIO Leads to Traveler Satisfaction Outperformance & 4.3 out of 5.00 weighted average TripAdvisor rating!") Quality Portfolio with Average Effective Age of 4 Years!) Upscale and Upper Midscale Reinvestment Statistics!*) Average Annual Spend as % of Reven
Slide 17: Flexible Balance Sheet
& APPLE HOSPITALITY REIT FLEXIBLE BALANCE SHEET ebt Composition!) ebt Maturity Schedule!) ($ in millions) Hotels: 1 | | Hotels: 16 Keys: 130 Keys: 2,552 Rate 4.1% Rate: 4.1% Term loan Term loan Rate: 3.2%) Rate: 3.4% | Y | $16 Vv UNENCUMBERED Hotels: 2 PORTFOLIO Keys: 180 Rate: 4.8% Revolver Rate: 3
Slide 18: Industry Fundamentals
e& APPLE HOSPITALITY REIT INDUSTRY FUNDAMENTALS US Hotel Forecast STR Q1 2018 Supply and Demand % Change vs. Prior Year % Change vs. Prior Year |] 2018 2019 STR CBRE PwC STR CBRE PwC Supply 2.0% 2.0% 2.0% 1.9% 1.9% 1.9% Demand 2.3% 2.1% 24% 2.0% 2.1% 1.9% 0.2 luxury Upper Upscale Upper Midscale Econ
Slide 19: Comparable Hotels Financial Highlights
& APPLE HOSPITALITY REIT COMPARABLE HOTELS FINANCIAL HIGHLIGHTS ($ in thousands except statistical data} % 2018 2017 CHANGE RevPAR $100.23 $99.31 0.9% Total Revenue $299,499 $293,301 2.1% Adjusted Hotel EBITDA $107,500 $106,634 0.8% Adjusted Hotel EBITDA Margin 35.9% 36.4% (50 bps) Note: Comparable
Slide 20: Corporate Governance
& APPLE HOSPITALITY REIT CORPORATE GOVERNANCE Aligns with Shareholders * Audit, Compensation and Corporate Governance Committees are independent ¢ Regular executive sessions of independent directors * De-staggered Board allows for annual elections of directors * Required resignation of an incumbent
Slide 21: Investment Summary
& APPLE HOSPITALITY REIT INVESTMENT SUMMARY Focused on Performance Management team with extensive transaction and operations experience Strong regional and national operators Analytical data-driven approach to drive property level results Scale to negotiate attractive national contracts Structured t
Slide 22: APLE Trading
& APPLE HOSPITALITY REIT APLE TRADING Total Return Performance May 18, 2015 to March 31, 2018 150.00 140.00 ‘ APLE + 16.8% 130.00 “ S&P 500 Index + 31.7% 120.00 SNL U.S. REIT Hotel Index + 2.9% $110.00 $100.00 APLE Capital Markets $90.00 Average Share $19.56 : Issue Price : $80.00 Average Share $17.
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Slide 24: Company Overview
& APPLE HOSPITALITY REIT COMPANY OVERVIEW ENTITY EXCHANGE: TICKER DIVIDEND YIELD at 3/31/2018 AVERAGE TRADING VOLUME TTM 3/31/18 EQUITY MARKET CAP at 3/31/2018 NET DEBT at 3/31/2018 TOTAL CAPITALIZATION at 3/31/2018 REAL ESTATE PORTFOLIO at 5/7/2018 GEOGRAPHIC DIVERSIFICATION at 5/7/2018 COMPARABLE
Slide 25: Management Team with Deep Industry Experience
& APPLE HOSPITALITY REIT MANAGEMENT TEAM WITH DEEP INDUSTRY EXPERIENCE OVER MULTIPLE HOTEL CYCLES * Average executive tenure with the Apple REIT Companies is more than 15 years ¢ Established and operated 8 public hospitality REITs * Raised and invested approximately $7 billion in hotel assets * Purc
Slide 26: History of Apple REIT Brand Ownership
& APPLE HOSPITALITY REIT HISTORY OF APPLE REIT BRAND OWNERSHIP ral Hotels Current Hotel ned!) Ownership?) Hilton Garden Inn® 59 A2 Courtyard by Marriot® 63 40 Hampton by Hilton® 55 39 Homewood Suites by Hilton® 62 34 Residence Inn by Marriott® 104 34 SpringHill Suites by Marriott® 26 Wy TownePlace S
Slide 27: Portfolio Activity Since 2015
& APPLE HOSPITALITY REIT PORTFOLIO ACTIVITY SINCE 2015, 6g in thousands) ACQUISITIONS NUMBER OF HOTELS NUMBER OF GUEST ROOMS GROSS PURCHASE PRICE 2015 7 1,051 $254,800 2016 57 7 337 1,320,000) 2017 6 784 161,800 1/1/18 - 5/7/18 3 473 107,300 TOTAL 73 9,645 $1,843,900 DISPOSITIONS NUMBER OF HOTELS NU
Slide 28: Consolidated Balance Sheets
® ABELE HOSPITALITY REL APPLE HOSPITALITY REIT, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share data) March 31, December 31, 2018 2017 (unaudited) Assets Investment in real estate, net of accumulated depreciation of $775,894 and $731,284, respectively $ 4,829,776 $ 4,793,159 Restricted
Slide 29: Consolidated Statements of Operations
® ABELE HOSPITALITY RELI APPLE HOSPITALITY REIT, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited) (in thousands, except per share data} Three Months Ended March 31, 2018 2017 Revenues: Room $ 274,836 $ 269,393 Other 23,553 23,532 Total revenue 298,389 292,925 Expenses:
Slide 30: Reconciliation of Net Income to EBITDA and Adjusted Hotel EBITDA
& APPLE HOSPITALITY REIT THE FOLLOWING TABLE RECONCILES THE COMPANY’S GAAP NET INCOME (LOSS} TO EBITDA, ADJUSTED EBITDA AND ADJUSTED HOTEL EBITDA ON A QUARTERLY BASIS FROM JUNE 30, 2016 THROUGH MARCH 31, 2018 (Unaudited) {in thousands} Three Months Ended 6/30/2016 9/30/2016 12/31/2016 3/31/2017 6/30
Slide 31: Reconciliation of Net Income to FFO and MFFO
& APPLE HOSPITALITY REIT THE FOLLOWING TABLE RECONCILES THE COMPANY'S GAAP NET INCOME TO FFO AND MFFO FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2017 (Unaudited) {in thousands} Three Months Ended March 31, 2018 2017 Net income $ 42,182 $ 34,365 Depreciation of real estate owned 44,610 43,537 Loss
Slide 32: Comparable Hotels Operating Metrics and Statistical Data
& APPLE HOSPITALITY REIT APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS OPERATING METRICS AND STATISTICAL DATA (Unaudited) (in thousands except statistical data) Three Months Ended March 31, 2018 2017 % Change Room revenue $ 275,904 $ 271,069 1.8% Other revenue 23,595 22,232 6.1% Total revenue 299,4
Slide 33: Comparable Hotels Quarterly Operating Metrics
& APPLE HOSPITALITY REIT Sa APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS QUARTERLY OPERATING METRICS AND STATISTICAL DATA (Unaudited) {in thousands except statistical data) Three Months Ended 6/30/2016 9/30/2016 12/31/2016 3/31/2017 6/30/2017 9/30/2017 12/31/2017 3/31/2018 Room revenue $ 308,198 $
Slide 34: Same Store Hotels Operating Metrics
& APPLE HOSPITALITY REIT APPLE HOSPITALITY REIT, INC. SAME STORE HOTELS OPERATING METRICS AND STATISTICAL DATA (Unaudited) (in thousands except statistical data) Three Months Ended March 31, 2018 2017 % Change Room revenue $ 266,824 $ 263,961 1.1% Other revenue 22,551 21,563 4.6% Total revenue 289,3
Slide 35: Same Store Hotels Quarterly Operating Metrics
& APPLE HOSPITALITY REIT Sa APPLE HOSPITALITY REIT, INC. SAME STORE HOTELS QUARTERLY OPERATING METRICS AND STATISTICAL DATA (Unaudited) {in thousands except statistical data) Three Months Ended 3/31/2017 6/30/2017 9/30/2017 12/31/2017 3/31/2018 Room revenue $ 263,961 = $ += 301,663 $298,865 $260,906
Slide 36: Comparable Hotels Operating Metrics Top 20 Markets
& APPLE HOSPITALITY REIT APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS OPERATING METRICS TOP 20 MARKETS THREE MONTHS ENDED MARCH 31 (Unaudited} % of Adjusted Hotel Occupancy ADR RevPAR EBITDA # of Hotels Q12018 Q12017_% Change Q1 2018 Q12017_% Change Q1 2018 Q12017_% Change Ql 2018 Top 20 Markets P
Slide 37: Comparable Hotels Operating Metrics by Region
& APPLE HOSPITALITY REIT APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS OPERATING METRICS BY REGION THREE MONTHS ENDED MARCH 31 (Unaudited} % of Adjusted Hotel Region Occupancy ADR RevPAR EBITDA # of Hotels Q12018 QI 2017 _% Change Q1L2018 Q12017_% Change Q12018 Q12017_% Change Q1 2018 STR Region Ea
Slide 38: Comparable Hotels Operating Metrics by Chain Scale
& APPLE HOSPITALITY REIT APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS OPERATING METRICS BY CHAIN SCALE THREE MONTHS ENDED MARCH 31 (Unaudited) % of Adjusted Hotel Chain Scale/Brand Occupancy ADR RevPAR EBITDA # of Hotels Q12018_ Q12017_% Change Q1 2018 Q12017_% Change Q1 2018 Q1 2017 _% Change Q1
Slide 39: Comparable Hotels Operating Metrics by Location
& APPLE HOSPITALITY REIT APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS OPERATING METRICS BY LOCATION THREE MONTHS ENDED MARCH 31 (Unaudited) % of Adjusted Location Occupancy ADR RevPAR Hotel EBITDA #ofHotels __Q12018 QI 2017 % Change | Q12018 QI2017__% Change _ QI 2018 Q12017__%Change _ QI 2018 STR
Slide 40: Definitions
& APPLE HOSPITALITY REIT DEFINITIONS 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, Income Taxes
Slide 41: Definitions (Continued)
& APPLE HOSPITALITY REIT DEFINITIONS (CONTINUED) FEO and MFFO The Company calculates and presents FFO in accordance with standards established by the National Association of Real Estate Investment Trusts (“Nareit”), which defines FFO as net income (loss) (computed in accordance with generally accept
Slide 42: Trademark Information
& APPLE HOSPITALITY REIT TRADEMARK INFORMATION “Courtyard by Marriot®,” “Fairfield Inn by Marriot®,” “Fairfield Inn & Suites by Marriott®,” “Marriot® Hotels,” “Renaissance® Hotels,” “Residence Inn by Marriot®,” “SpringHill Suites by Marriott®,” and “TownePlace Suites by Marriot®’ are each a register
Slide 43: Contact Information
& APPLE HOSPITALITY REIT CONTACT INFORMATION 814 East Main Street Richmond, VA 23219 (804) 344-8121 www.applehospitalityreit.com 43
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