Apple Hospitality Reit, Inc. · NYSE:APLE
Apple Hospitality Reit — Investor Presentation (August 2021)
47 slides from Apple Hospitality Reit's investor presentation, Aug 30, 2021
Slide 1: Investor Presentation August 2021
AUGUST 2021 • NYSE: APLE INVESTOR PRESENTATION Exhibit 99.1
Slide 2: Forward-looking statements
COVER PHOTOS: HILTON GARDEN INN & HOMEWOOD SUITES, OKLAHOMA CITY, OK; COURTYARD, SANTA ANA, CA; SPRINGHILL SUITES, BURBANK, CA; RESIDENCE INN, SEATTLE, WA 2 HOME2 SUITES, JACKSONVILLE, NC Certain statements made in this presentation are forward-looking statements, including statements regarding the
Slide 3: Company Profile & Proven Investment Strategy
COMPANY PROFILE & PROVEN INVESTMENT STRATEGY Note: Hotel portfolio statistics as of August 30, 2021. Market categorization based on STR designation. Average Effective Age represents years since hotels were built or last renovated. Average actual age of hotels is 14 years. The TripAdvisor® rating is
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: Key Takeaways Second Quarter 2021 Performance Update
KEY TAKEAWAYS 5 SECOND QUARTER 2021 PERFORMANCE UPDATE Strongest operational results since beginning of pandemic with sequential improvement each month during the quarter Performance driven by mix of leisure and business demand, consisting of both transient and small group bookings Efficient operati
Slide 6: Quarterly Performance
6 QUARTERLY PERFORMANCE COURTYARD, CHANDLER, AZ ($ in thousands except statistical data) Strongest Quarterly Performance Since Onset of Pandemic Note: See explanation and reconciliation of Adjusted Hotel EBITDA to net income (loss) included in subsequent pages.
Slide 7: Q2 2021 MFFO/AFFO Per Share Outperformance
Q2 2021 MFFO/AFFO Per Share Q2 2021 Trailing Twelve Months MFFO/AFFO Per Share (1) Upper Upscale/Full-Service MFFO OUTPERFORMANCE 7 MFFO outperformance preserves balance sheet and equity value HAMPTON INN & SUITES, PHOENIX, AZ Source: Company filings. Assumptions may vary by company. Q2 2021 Trailin
Slide 8: Portfolio Positioned for Outperformance
PORTFOLIO POSITIONED FOR OUTPERFORMANCE 8 Not Dependent on Large Group Business Portfolio Diversified Across Location Types with Limited Exposure to Urban City Centers Rooms-Focused Portfolio with Significant Extended Stay and Suite Product Note: Hotel portfolio statistics as of August 30, 2021. Loc
Slide 9: Operating Trends
Achieved corporate-level breakeven at approximately $50 RevPAR 9 OPERATING TRENDS Note: Corporate-level breakeven RevPAR is before capital expenditures and will fluctuate based on operational costs and the mix of occupancy and rate. HAMPTON INN & SUITES, PHOENIX, AZ
Slide 10: Occupancy
Occupancy 10 HOMEWOOD SUITES, DENTON, TX HILTON GARDEN INN, RONKONKOMA, NY 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 Recent occupancy trends highlight strength of demand OCCUPANCY APPROACHING 2019
Slide 11: Weekday vs. Weekend Occupancy
11 FAIRFIELD INN & SUITES, CHANDLER, AZ Source: Data provided by STR for hotels owned by the Company for the periods noted, including all rooms available for consolidated hotels, and may differ from actual results achieved. Weekday occupancy includes Sunday through Thursday nights and weekend occupa
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. More than half of hotels have occupancy above 70% HOMEWOOD SUITE
Slide 13: Achieved Cost Savings
ACHIEVED COST SAVINGS 13 HOMEWOOD SUITES, CAPE CANAVERAL, FL Reductions in Total Hotel Expense and Total Revenue(1) Swiftly adjusted operating model to reduce costs and maximize performance Reductions for each quarter as compared to the same quarter of 2019. Total hotel expense includes total hotel
Slide 14: Opportunity for Long-Term Cost Savings
OPPORTUNITY FOR LONG-TERM COST SAVINGS 14 HOMEWOOD SUITES, CAPE CANAVERAL, FL Represents targeted reduction in year-over-year total hotel expense for every 1% decline in year-over-year total revenue and assumes as revenue recovers, service and amenity offerings will evolve from the extreme reduction
Slide 15: Proven Investment Strategy
PROVEN INVESTMENT STRATEGY 15
Slide 16: Why Branded Select-Service Hotels?
WHY BRANDED SELECT-SERVICE HOTELS? 16 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 sanitize Low dependence on large group business Efficient Operating
Slide 17: Broad Consumer Appeal
Business Leisure Government Military Construction Disaster Recovery Health Care Education Athletics First Responders Insurance Social Rooms-focused hotels with industry-leading brands have broad consumer appeal BROAD CONSUMER APPEAL Note: Hotel portfolio statistics as of August 30, 2021. 17 Broad mi
Slide 18: Industry-Leading Asset Management
INDUSTRY-LEADING ASSET MANAGEMENT 18 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 19: Broad Geographic Diversification
BROAD GEOGRAPHIC DIVERSIFICATION 19 Broad geographic diversification provides exposure to wide variety of demand generators Nearly all markets benefit from drive-to demand Low dependence on inbound international travel with majority of hotels located outside of gateway markets Unparalleled exposure
Slide 20: Effective Portfolio Management & Strategic Growth
20 HOMEWOOD SUITES, CAPE CANAVERAL, FL Opportunistic Dispositions Strategic Growth Our objective is to maximize long-term shareholder value through opportunistic dispositions and accretive acquisitions that improve the overall age, diversification and growth trajectory of our portfolio EFFECTIVE POR
Slide 21: Opportunistic Dispositions
Note: As of August 30, 2021. Based on buyers’ anticipated near-term capital reinvestment estimates. Average Effective Age represents years since hotels were built or last renovated. Complete list of hotels sold included in appendix. 21 Value is created through the strategic and timely disposition of
Slide 22: Accretive Acquisitions: Cape Canaveral
22 Purchased in April 2020, following completion of construction(1) 116-room Hampton Inn & Suites® and 108-room Home2 Suites® Total price: $46.7 million or approximately $208,000 per key Forward commitment with trusted developer Primary demand generators: Aerospace and Defense Government University
Slide 23: Accretive Acquisitions: Tempe/Phoenix
23 Purchased in August 2020, following completion of construction(1) 105-room Hyatt House® and 154-room Hyatt Place® Total price: $64.6 million or approximately $249,000 per key Forward commitment with trusted developer Primary demand generators: Arizona State University Novus Innovation Corridor Te
Slide 24: Accretive Acquisitions: Madison Downtown
24 Purchased in February 2021, following completion of construction(1) 176 rooms Total price: $49.6 million or approximately $282,000 per key Forward commitment with trusted developer Primary demand generators: University of Wisconsin Government Insurance Biotech Manufacturing Telecommunications Tec
Slide 25: Accretive Acquisitions: Portland, ME
25 Purchased in August 2021; hotel opened in July 2018 178 rooms Total price: $66.8 million or approximately $375,000 per key Primary demand generators: Leisure Government Professional and Business Services Manufacturing Trade Health Care AC HOTEL PORTLAND DOWNTOWN/WATERFRONT, ME ACCRETIVE ACQUISITI
Slide 26: Acquisitions Under Contract: Greenville
26 Anticipate closing in September 2021; hotel opened in December 2018 130 rooms Total price: $30.0 million or approximately $231,000 per key Primary demand generators: Leisure Distribution and Logistics Manufacturing Technology New Ventures and Startups Health Care There are a number of conditions
Slide 27: Acquisitions Under Contract: Aloft Portland
27 Anticipate closing in September 2021 following completion of construction 157 rooms Total price: $51.2 million or approximately $326,000 per key Primary demand generators: Leisure Government Professional and Business Services Manufacturing Trade Health Care ALOFT PORTLAND, ME(1) Hotel is under co
Slide 28: Acquisitions Under Contract: Madison
28 Hotel to be constructed with anticipated completion of construction late 2023 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 Biotech Ma
Slide 29: Apple REIT Companies Transaction History
Apple REIT Companies Transaction History 1999 – August 30, 2021 440 TOTAL HOTELS ACQUIRED 227 TOTAL HOTELS SOLD 213 CURRENT PORTFOLIO 4 REITS SOLD IN 3 TRANSACTIONS 4 REITS MERGED TO FORM CURRENT APLE OVER 20-YEAR TRACK RECORD OF HOTEL TRANSACTIONS 29 Note: Hotel transactions by the various Apple RE
Slide 30: Well-Maintained Portfolio
WELL-MAINTAINED PORTFOLIO 30 HOMEWOOD SUITES, MT. LAUREL, NJ COURTYARD, CHARLOTTESVILLE, VA HILTON GARDEN INN, DOTHAN, AL The TripAdvisor® rating is based on lifetime scores for the Apple Hospitality portfolio of hotels through June 30, 2021. Average Effective Age represents years since hotels were
Slide 31: Strong Balance Sheet & Liquidity Position
Debt Composition(1) STRONG BALANCE SHEET & LIQUIDITY POSITION Based on balances and hotels owned as of June 30, 2021, excluding unamortized fair value adjustment of assumed debt and unamortized debt issuance costs. Excludes yearly amortization. Maturity date may be extended up to one year if certain
Slide 32: Exited Extended Covenant Waiver Period
32 Exited Extended Covenant Waiver Period Note: See further information on the Company’s indebtedness and amendments to its unsecured credit facilities in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, Quarterly Report on Form 10-Q for the quarter ended June 30, 2021,
Slide 33: Amendments to Unsecured Credit Facilities
AMENDMENTS TO UNSECURED CREDIT FACILITIES 33 Note: See further information on the Company’s indebtedness and amendments to its unsecured credit facilities in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, Quarterly Report on Form 10-Q for the quarter ended June 30, 20
Slide 34: ESG Initiatives
ESG INITIATIVES RESIDENCE INN, SAN JUAN CAPISTRANO, CA
Slide 35: 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 36: Social Responsibility
SOCIAL RESPONSIBILITY 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 ou
Slide 37: Governance
GOVERNANCE Alignment with the best interests of our shareholders is at the forefront of our values. 37 HILTON GARDEN INN, BIRMINGHAM, AL
Slide 38: Appendix
APPENDIX COURTYARD & RESIDENCE INN, RICHMOND, VA
Slide 39: Year-over-Year Performance: Q2 2021 at a Glance
39 YEAR-OVER-YEAR PERFORMANCE HAMPTON INN & SUITES, MEMPHIS, TN ($ in thousands except statistical data) Q2 2021 Performance at a Glance Note: n/m = not meaningful. See explanation and reconciliation of Adjusted Hotel EBITDA to net income (loss) included in subsequent pages.
Slide 40: Reconciliation of Net Income (Loss) to EBITDA and Adjusted Hotel EBITDA
40 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, 2021
Slide 41: Reconciliation of Net Income (Loss) to FFO and MFFO
41 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, 2020 THROUGH JUNE 30, 2021 (Unaudited) (in thousands, except per share amounts) Note: The Consolidated Statements of Operatio
Slide 42: Dispositions 2020 and 2021 YTD
42 DISPOSITIONS 2020 AND 2021 YTD 20-hotel portfolio sale Note: As of August 30, 2021.
Slide 43: Acquisitions 2020 and 2021 YTD and Hotels Under Contract
43 ACQUISITIONS 2020 AND 2021 YTD AND HOTELS UNDER CONTRACT Note: As of August 30, 2021 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 t
Slide 44: Definitions
DEFINITIONS 44 HYATT PLACE, JACKSONVILLE, FL 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, Inco
Slide 45: Definitions Continued
DEFINITIONS CONTINUED 45 RESIDENCE INN, BURBANK, CA 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”)), excluding gains and los
Slide 46: Trademark Information
TRADEMARK INFORMATION “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 Marr
Slide 47: Contact Information
CONTACT INFORMATION 47 COURTYARD, RICHMOND, VA
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