Apple Hospitality REIT, Inc. · NYSE:APLE
Apple Hospitality REIT — Investor Presentation (June 2021)
39 slides from Apple Hospitality REIT's investor presentation, June 2021
Slide 1: Investor Presentation June 2021
INVESTOR PRESENTATION JUNE 2021 • NYSE: APLE
Slide 2: Forward-looking statements
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 taken in response to, the COVID-1
Slide 3: Company Profile & Proven Investment Strategy
C O M PA N Y P R O F I L E & P R O V E N I N V E S T M E N T S T R AT E G Y Scale Ownership of Industry-Leading Broad Geographic Consistent Strong, Flexible Upscale, Rooms- Brands and Operators Diversification Reinvestment(1) Balance Sheet(2) Focused Hotels 232 13 35 5 yrs 32% H OTELS BRANDS S TAT E
Slide 4: Management team with deep industry experience; mission and values
MANAGEMENT TEAM WITH DEEP INDUSTRY E X P E R I E N C E O V E R M U LT I P L E H OT E L C YC L E S MISSION We are a leading real estate investment • Average executive tenure with the Apple REIT company committed to increasing Companies is 14 years shareholder value through the distribution of attract
Slide 5: Key Takeaways - First Quarter 2021
K E Y TA K E A W AY S • FIRST 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 • Effi
Slide 6: MFFO outperformance preserves balance sheet and equity value
MFFO OUTPERFORMANCE MFFO outperformance preserves balance sheet and equity value Q1 2021 Trailing Twelve Months MFFO/AFFO Per Share Q1 2021 MFFO/AFFO Per Share $0.25 ($0.25) ($0.04) $0.04 $0.01 ($0.75) ($0.39) $- ($0.57) ($0.58) ($0.68) ($0.85) $(0.07) ($1.25) $(0.12) $(0.13) $(0.15) ($1.17) ($1.26)
Slide 7: Portfolio Positioned for Outperformance
PORTFOLIO POSITIONED FOR OUTPERFORMANCE Location Type by Number of Guest Rooms % of APLE Rooms-Focused Brand Type(1) Portfolio Diversified Portfolio Suburban 57% Urban 22% Portfolio with Across Location Significant Extended Stay 32% Types with Limited Extended Stay and Exposure to Urban Airport 8% S
Slide 8: Proven ability to achieve corporate-level breakeven at approximately $50 RevPAR
O P E R AT I N G T R E N D S Proven ability to achieve corporate-level breakeven at approximately $50 RevPAR Occ 2019 Occ ADR 2019 ADR RevPAR 100% $142 $139 $139 $141 90% $136 $137 $131 $130 HILTON GARDEN INN, ALLEN, TX $122 80% $133 70% $105 $102 $103 $101 $98 $97 $93 $95 60% $81 50% $68 40% $55 $5
Slide 9: Accelerating occupancy following seasonal declines
A C C E L E R AT I N G O C C U PA N C Y F O L L O W I N G SEASONAL DECLINES Recent occupancy trends highlight strength of demand 80% 77% 69% 68% 68% 68% 68% 70% 71% 71% 70% 66% 67% HAMPTON INN & SUITES, BOISE, ID 61% 60% 54% 55% 49% 50% 45% 45% Occupancy 40% 40% 30% 28% 20% HAMPTON INN & SUITES, ATL
Slide 10: Weekday vs. weekend occupancy
W E E K D AY V S . W E E K E N D O C C U PA N C Y Leisure travel continues to lead recovery Weekday occupancy is strengthening showing recovery in business demand 100% 88% 90% 84% 85% 83% 80% 82% 82% 81% 80% 77% 80% Occupancy 70% 64% 64% 64% 66% 64% 62% 63% 62% 63% 62% 63% 60% 51% 51% 50% 42% 40% 30
Slide 11: Building occupancy across portfolio
% O F H O T E L S B Y O C C U PA N C Y T I E R Building occupancy across portfolio 2019 15% 85% Q1 2020 16% 63% 21% Q2 2020 25% 20% 41% 9% 5% Q3 2020 4% 8% 41% 26% 21% Oct 2020 3% 3% 34% 34% 26% Nov 2020 4% 8% 45% 27% 16% Dec 2020 4% 14% 49% 24% 9% Jan 2021 3% 11% 47% 26% 13% Feb 2021 4% 32% 33% 30%
Slide 12: Achieved cost savings
A C H I E V E D C O S T S AV I N G S Swiftly adjusted operating model to reduce costs and maximize performance in current environment Reductions in Total Hotel Expense Expense Reduction Ratio(2) Key Areas of Focus and Total Revenue(1) Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2020 Q3 2020 Q4 2020 Q1 2021 ✓
Slide 13: Opportunity for long-term cost savings
O P P O R T U N I T Y F O R L O N G - T E R M C O S T S AV I N G S APLE has a proven record of maximizing and improving operating margins across economic cycles and is positioned to further enhance its operating The COVID-19 pandemic model through the recovery. provided the unique opportunity to ree
Slide 14: Proven Investment Strategy
P R O V E N I N V E S T M E N T S T R AT E G Y • Efficient operating model yields higher margins • Low dependence on large group business strengthens position in current environment Concentrate on Upscale, rooms-focused hotels • Scale ownership minimizes relative G&A load and provides fixed cost eff
Slide 15: Why Branded Select-Service Hotels?
W H Y B R A N D E D S E L E C T - S E R V I C E H OT E L S ? Efficient Operating Model Broad Consumer Appeal Maximize Shareholder Value HILTON GARDEN INN, BIRMINGHAM, AL • Total revenue primarily derived • High-quality hotels with strong • Ability to optimize mix of business from rooms sold value pr
Slide 16: Broad consumer appeal
BROAD CONSUMER APPEAL Rooms-focused hotels with industry-leading brands have broad consumer appeal Broad mix of demand generators, including: ✓ Business ✓ Health Care ✓ Leisure ✓ Education ✓ Government ✓ Athletics ✓ Military ✓ First Responders ✓ Construction ✓ Insurance ✓ Disaster Recovery ✓ Social
Slide 17: Industry-Leading Asset Management
INDUSTRY-LEADING ASSET MANAGEMENT Best-in-Class Operators Strategic Asset Management Approach • 100% of Apple Hospitality’s HOME2 SUITES, ATLANTA, GA portfolio operated by third-party property managers • Analytical, data-driven asset management to maximize property-level performance • 94% of hotels
Slide 18: Broad Geographic Diversification
B R O A D G E O G R A P H I C D I V E R S I F I C AT I O N Diversified Across 88 Markets ✓ 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 hotel
Slide 19: Apple REIT Companies Transaction History
2 0 - Y E A R T R AC K R E CO R D O F H OT E L T R A N S AC T I O N S Apple REIT Companies Transaction History 1999 – May 6, 2021 439 Having purchased as many TOTA L H OT E L S A C Q U I R E D as 74 hotels 207 in a single year through TOTA L H OT E L S S O L D individual hotel and small portfolio tr
Slide 20: 2020 & 2021 Portfolio Activity
2020 & 2021 PORTFOLIO ACTIVIT Y ACQUISITIONS DISPOSITIONS COMPLETED 2020: COMPLETED 2020: 116-room Hampton Inn & Suites by Hilton® & 105-room SpringHill Suites by Marriott® $13.0 million $46.7 million January 2020 108-room Home2 Suites by Hilton® April 2020 Sanford, FL sales price purchase price Cap
Slide 21: Well-Maintained Portfolio
W E L L - M A I N TA I N E D P O R T F O L I O Consistent reinvestment enhances long-term value and leads to traveler satisfaction outperformance HAMPTON INN & SUITES, MEMPHIS, TN 4.3 out of 5.00 weighted average TripAdvisor® rating(1) Upscale and Upper Midscale Reinvestment Statistics(3) 5 Years Av
Slide 22: Strong Balance Sheet & Liquidity Position
STRONG BALANCE SHEET & LIQUIDITY POSITION Total Liquidity (1) ($ in millions) Debt Composition(1) Debt Maturity Schedule (1) ($ in millions) Hotels: 10 Revolver Hotels: 1 Keys: 1,652 Term Loan Keys: 166 Rate: 3.8% Property Debt Rate: 4.4% Term loan Hotels: 4 Term loan Rate: 4.5%(2) Keys: 474 Rate: 3
Slide 23: Amendments to Unsecured Credit Facilities
A M E N D M E N T S T O U N S E C U R E D C R E D I T FA C I L I T I E S Successfully Achieved Key Objectives • Testing of the Minimum Fixed Charge Coverage Ratio and Minimum Unsecured Interest Coverage Ratio suspended until Q1 2022 ENHANCED • Testing for all other existing financial maintenance cov
Slide 24: Less restrictive covenant terms enhance ability to exit waiver period
A M E N D M E N T S T O U N S E C U R E D C R E D I T FA C I L I T I E S Less restrictive covenant terms enhance ability to exit the waiver period ORIGINAL TERMS ENHANCED TERMS(1) Testing begins Threshold Through Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Beyond Maximum Consolidated Lev
Slide 25: Conservative Capital Structure Positions APLE for External Growth
C O N S E R V AT I V E C A P I TA L S T R U C T U R E P O S I T I O N S A P L E FOR EXTERNAL GROWTH With positive cash flow and a conservative capital structure, APLE anticipates being in a position to exit its covenant waiver period ahead of peers with balance sheet capacity for external growth Ill
Slide 26: Strategic Objectives
S T R AT E G I C O B J E C T I V E S Grow Top Line Performance Enhance Margins Drive Value • Build off of base occupancy • Positioned to focus on • Continue to increase positive with all hotels open increasing profitability not cash flow minimizing cash burn • Continue focus on direct sales • Strate
Slide 27: ESG Initiatives
ESG INITIATIVES COURTYARD, CAROLINA BEACH, NC
Slide 28: Sustainability Initiatives
S U S TA I N A B I L I T Y I N I T I AT I V E S Apple Hospitality Key Metrics for 2020(1) Formal energy management With 11.3 total kWh per Approximately 19 Million Square Feet program established in square foot in 2020 as 212,000 MWh Energy Consumption compared to an average of 2018 to ensure that e
Slide 29: Social Responsibility
SOCIAL RESPONSIBILITY Key Metrics for Apple Hospitality since 2017 We are thoughtful in our Apple Gives, an employee-led charitable 480+ interactions with others and know that strong, caring HOURS VOLUNTEERED organization, was formed in 2017 to BY APPLE HOSPITALITY EMPLOYEES relationships are the co
Slide 30: Governance
GOVERNANCE 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 director not r
Slide 31: Appendix
APPENDIX COURTYARD, SANTA ANA, CA
Slide 32: Q1 2021 Performance at a Glance
YEAR-OVER-YEAR PERFORMANCE Q1 2021 Performance at a Glance ($ in thousands except statistical data) Three Months Ended March 31, % CHANGE % CHANGE 2021 2020 2019 to 2020 to 2019 RevPAR $55.09 $80.66 $100.71 (31.7%) (45.3%) Total Revenue $158,713 $238,010 $303,787 (33.3%) (47.8%) Adjusted Hotel EBITD
Slide 33: Strongest Quarterly Performance Since Onset of Pandemic
Q U A RT E R LY P E R F O R M A N C E Strongest Quarterly Performance Since Onset of Pandemic ($ in thousands except statistical data) Adjusted Hotel EBITDA RevPAR $63,297 $60,000 $50,000 $40,000 $81 $34,688 $35,427 $30,000 $23,296 $20,000 $28 $51 $55 $45 $10,000 $704 $0 Q1 2020 Q2 2020 Q3 2020 Q4 2
Slide 34: Reconciliation of Net Income (Loss) to EBITDA and Adjusted Hotel EBITDA
R E C O N C I L I AT I O N O F N E T I N C O M E ( L O S S ) TO E B I T D A , E B I T D A r e , A DJU ST E D E BI T DA re A ND A DJU ST E D HOT E L E BI T DA THE FOLLOWING TABLE RECONCILES THE COMPANY’S GAAP NET INCOME (LOSS) TO EBITDA, EBITDAre, ADJUSTED EBITDAre AND ADJUSTED HOTEL EBITDA ON A QUAR
Slide 35: Reconciliation of Net Loss to FFO and MFFO
R E C O N C I L I AT I O N O F N E T L O S S TO F F O A N D M F F O THE FOLLOWING TABLE RECONCILES THE COMPANY’S GAAP NET LOSS TO FFO and MFFO ON A QUARTERLY BASIS FROM March 31, 2020 THROUGH MARCH 31, 2021 (Unaudited) (in thousands, except per share amounts) Three months ended 3/31/2020 6/30/2020 9
Slide 36: Definitions
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, Depreciation and Amorti
Slide 37: Definitions Continued
DEFINITIONS CONTINUED 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 losses from the sale of certain r
Slide 38: Trademark Information
T R A D E M A R K I N F O R M AT I O N “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 Marriott®” are each a register
Slide 39: Contact Information
C O N TA C T I N F O R M AT I O N 814 East Main Street Richmond, VA 23219 (804) 344-8121 info@applehospitalityreit.com www.applehospitalityreit.com 39 COURTYARD, RICHMOND, VA
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