Apple Hospitality Reit, Inc. · NYSE:APLE
Apple Hospitality Reit — Investor Presentation (September 2017)
42 slides from Apple Hospitality Reit's investor presentation, Sep 8, 2017
Slide 1: Apple Hospitality REIT Investor Presentation
og I Le iia = u See & APPLE HOSPITALITY REIT INVESTOR PRESENTATION SEI WEMIBIEI 22a % & INNOSTES (ARIE
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 COMPANY PROFILE 33 STATES 87 MARKETS 230 HO rn EES 29,978 GUESTROOMS 98% SE.LECGiSSER VICE OR EXTENDED-ST Any 4 yrs AVERAGE EF REGIE AGE 24% TOTAL DEBT? TOTALZCAPITALIZATION $4.2 Billion EQUITY MARKET CAP Fairfield Inn & Suites, Tustin, CA Note: Hotel portfolio statistics as of Jun
Slide 4: Equity Market Capitalization
& APPLE HOSPITALITY REIT EQUITY MARKET CAPITALIZATION ($ in billions) MEE Upscale/Select Service Focus $13.5 (MEEEE Upper Upscale/Full Service Focus mgummmmmm Apple Hospitality Upscale/SelectService Focus $5.8 $4.2 $3.6 $3.5 $3.4 $2.2 $2.2 $2.1 $19 $1.5 — $08 $08 $06 HST PK APLE SHO RU” LHO DRH PEB
Slide 5: Proven Investment Strategy
® APPLE HOSPITALITY REIT PROVEN INVESTMENT STRATEGY 24%" \, Debi/Copitalization Hilton MARRIOTT Hire brand leading operators and Strategically Concentrate on Partner with the best Pursue broad enhance eeabichael '° |) Maintain a strong, Upscale, rooms brands in that geographic performance mainiain f
Slide 6: High-Quality Portfolio
APPLE HOSPITALITY REIT HIGH-QUALITY PORTFOLIO 98% of APLE’s Hotels are Select-Service or Extended-Stay | Hilton Gorden |
Slide 7: Why Select-Service and Extended-Stay Hotels?
r APPLE HOSPITALITY REIT Less: Rooms to fill Square footage to manage Staff Maintenance Complex More: Consumer demand Easily renovated Lender/buyer appeal Consistency in operations Adaptable to change (1) Apple Hospitality’s average annual Hole! EBITDA margin for the five years ending 12/31/16. WHY
Slide 8: Advantages of a Select-Service and Extended-Stay REIT
& APPLE HOSPITALITY REIT ADVANTAGES OF A SELECT-SERVICE AND EXTENDED-STAY REIT as Compared to a Full-Service REIT 80% High 76.7%°@ 73 9% 3 75% low 72 at : 6.1% 62.5% High 62.7% |_| |] 60% Low 62.0% Average Annual Return on Invested Assets o WHST mAPLE 2 40% 6 e 29.6% 20% 14.2%'3) High 12.6%) 10.2% L
Slide 9: Efficient Hotel Operations
& APPLE HOSPITALITY REIT EFFICIENT HOTEL OPERATIONS YTD 6/30/17 Hotel EBITDA Margin and RevPAR Comparison 41% 38% 38% 34% 33% 33% 32% MM (Upscale/SelectService Focus (NNN Upper Upscale/Full-Service Focus mmm Apple Hospitality Upscale/SelectService Focus 31% 31% cpt) PLE" INN RU" HT AHT = PEB- Ss LHO
Slide 10: Concentrated Brand Ownership
@ wre HOSPITALITY REIT CONCENTRATED BRAND OWNERSHIP HOME fs EMBASSY SUITES IEWOOD SUITES iy HiLTON With focus on Upscale Bante R 7 Select-Service and Garden Inn RENAISSANCE Extended-Stay Residence rN Inn | arnott. = Upscale TOWNEPLACE = Upper Midscale SUITES: » Upper Upscale One of the largest owner
Slide 11: Why Marriott and Hilton?
& APPLE HOSPITALITY REIT WHY MARRIOTT® AND HILTON®? @ NA Global Distribution Institutional Brands | RevPAR Premiums foster strong resale market, selectservice brands ee id 1 1 hal — financing flexibility, and outperform comparable hotels fee alee witn I ieee investor confidence across North America
Slide 12: 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 Expe rtise yields comparable hotel operating data to benchmark and drive perform
Slide 13: Benefits of Scale Ownership
& APPLE HOSPITALITY REIT BENEFITS OF SCALE OWNERSHIP Largest Select-Service Public Lodging REIT Unparalleled Access to Performance Data ¢ With current management of 235 hotels and more than 400 historically, unique ability to identify areas of opportunity and implement best practices * Unique variab
Slide 14: Broad Geographic Diversification
e& APPLE HOSPITALITY REIT BROAD GEOGRAPHIC DIVERSIFICATION Apple Hospitality REIT owns a property in this market Apple Hospitality REIT owns more than one property in this market Adjusted Hotel EBITDA contribution by market type Urban 22% Airport 7% Interstate 2% Resort 5% Small Metro 6% Disciplined
Slide 15: Management Companies
@& wre HOSPITALITY REIT MANAGEMENT COMPANIES TOP 10 APPLE HOSPITALITY OPERATORS. AS OF JUNE 30, 2017 Company Total # of Rank Name Properties(" 1 IBA 40 2. White Lodging 29 3 Dimension 24 4 McKibbon 18 5 Western 17 6 Marriott 14 7 Raymond 14 8 Newport 9 9 North Central 9 10 Vista Host g % of Apple Ho
Slide 16: Unique Management Contract Structure
& APPLE HOSPITALITY REIT UNIQUE MANAGEMENT CONTRACT STRUCTURE Apple Hospitality’s Unique 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
Slide 17: Well-Maintained Portfolio
r APPLE HOSPITALITY REIT WELL-MAINTAINED PORTFOLIO Quality Portfolio with Average Effective Age of 4 Years. ...the Result of Consistent Reinvestment... $514 $444 2011 2012 2013 2014 2015 2016 2017 and prior Years since built or last renovated Pp m Cumulative Capex in millions} Forecast ...Leads to T
Slide 18: Flexible Balance Sheet
& APPLE HOSPITALITY REIT FLEXIBLE BALANCE SHEET Debt Composition!) Debt Maturity Schedule!) ($ in millions) UNENCUMBERED PORTFOLIO 207 Hotels 25,873 Keys Keys: Rale 6.3% Term loan Rate: 2.5%!) 2017-2018 «= 2019 = 2020S 2021 Low debt and staggered maturities facilitate agile balance sheet strategy (1
Slide 19: Industry Fundamentals
& APPLE HOSPITALITY REIT INDUSTRY FUNDAMENTALS US Hotel Forecast % Change vs. Prior Year Supply Demand RevPAR STR CBRE PwC STR CBRE PwC 2.0% 1.9% 1.9% 2.1% 2.0% 1.9% 2.0% 2.2% 2.1% 1.9% 2.0% 1.8% 2.3% 2.8% 2.3% 2.3% 24% 2.0% Source: STR August 2017; CBRE Hotels Hotel Horizons September — November 20
Slide 20: Comparable Hotels Financial Highlights
& APPLE HOSPITALITY REIT COMPARABLE HOTELS FINANCIAL HIGHLIGHTS ($ in thousands except statistical data) Three Months Ended June 30, Six Months Ended June 30, 2017 2016 CHANGE 2017 2016 CHANGE RevPAR $112.08 $112.27 (0.2%) $105.59 $104.97 0.6% Revenue $330,952 $327,806 1.0% $620,143 $612,726 1.2% Ad
Slide 21: Corporate Governance
@& wre HOSPITALITY REIT CORPORATE GOVERNANCE Aligns with Shareholders « Audit, Compensation and Corporate Governance Committees are independent + Regular executive sessions of independent directors + Required resignation of an incumbent director not receiving majority of votes cast in election * 80%
Slide 22: 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 23: Appendix
@& wre HOSPITALITY REIT APPENDIX Sind ae i2
Slide 24: Company Overview
& APPLE HOSPITALITY REIT COMPANY OVERVIEW ENTITY EXCHANGE: TICKER DIVIDEND YIELD at 6/30/2017 AVERAGE TRADING VOLUME TIM 6/30/17 EQUITY MARKET CAP at 6/30/2017 NET DEBT at 6/30/2017 TOTAL CAPITALIZATION at 6/30/2017 REAL ESTATE PORTFOLIO at 6/30/2017 GEOGRAPHIC DIVERSIFICATION 2016 COMPARABLE HOTELS
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 Total Hotels Current Owned!!! Owners! Hilton Garden Inn® 58 Al Courtyard by Marriot® 63 40 Hampton by Hilton® 52 36 Fonewocdsuicsoy niion® 62 34 Total Hotels United States 55,517 5,214,886 Total Hotels Upscale and Upper Midscale 14,561 1
Slide 27: Consolidated Balance Sheets
) APREE HOSHITALIN REIT APPLE HOSPITALITY REIT, INC. CONSOLIDATED BALANCE SHEETS. {in thousands, except share data) June 30, December 31, 2017 2016 Assets (unaudited) Investment in real estate, net of accumulated depreciation of $644,718 and $557,597, respectively $ 4,770,883 4,823,489 Assets held f
Slide 28: Consolidated Statements of Operations and Comprehensive Income
© were noserauy as SEE HOSPITALITY REVE APPLE HOSPITALITY REIT, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited) {in thousands, except per share data} Three Months Ended Six Months Ended June 30, June 30, 2017 2016 2017 2016 Revenues: Room $ 306,283 $ 237,340 $ 575,676
Slide 29: 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 SEPTEMBER 30, 2015 THROUGH JUNE 30, 2017 (Unaudited) (in thousands) Three Months Ended 9/30/2015 12/31/2015 3/31/2016 6/30/2016
Slide 30: 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 AND SIX MONTHS ENDED JUNE 30, 2017 AND 2016 (Unaudited) {in thousands) Net income Depreciation of real estate owned Gain on sale of real estate Loss on impairment of depreciable real
Slide 31: Comparable Hotels Reconciliation to Actual Results
& APPLE HOSPITALITY REIT Room revenue Other revenue Total revenue Total operating expenses Adjusted Hotel EBITDA Adjusted Hotel EBITDA Margin % ADR (Comparable Hotels} Occupancy (Comparable Hotels} RevPAR (Comparable Hotels) ADR (Actual) Occupancy (Actual) RevPAR (Actual) onciliation to Actual Resul
Slide 32: Comparable Hotels Quarterly Operating Metrics and Statistical Data
@& wre HOSPITALITY REIT APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS QUARTERLY OPERATING METRICS AND STATISTICAL DATA (Unaudited) (in thousands except statistical data) Three Months Ended 9/30/2015 12/31/2015 3/31/2016 6/30/2016 9/30/2016 12/31/2016 3/31/2017. 6/30/2017. Room revenue $ 287,714 $ 2
Slide 33: Comparable Hotels Operating Metrics Top 20 Markets (Three Months)
& APPLE HOSPITALITY REIT APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS OPERATING METRICS TOP 20 MARKETS!) THREE MONTHS ENDED JUNE 30 (Unaudited) % of Adjusted Hotel Market Occupancy ADR ReyPAR EBITDA #ofHotels _@22017_Q22016 %Change _@22017 _Q22016 %Change _Q22017 22016 %Change _@22017 Top 20 Marke
Slide 34: Comparable Hotels Operating Metrics Top 20 Markets (Six Months)
& APPLE HOSPITALITY REIT APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS OPERATING METRICS TOP 20 MARKETS!) SIX MONTHS ENDED JUNE 30 (Unaudited) % of Adjusted Hotel Market Occupancy ADR RevPAR EBITDA #ofHotels _YTD 2017 YTD 2016 %Change _YTD 2017 YTD2016 %Change _YTD2017 YTD.2016 %Change _YTD 2017 To
Slide 35: Comparable Hotels Operating Metrics by Region (Three Months)
& APPLE HOSPITALITY REIT APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS OPERATING METRICS BY REGION THREE MONTHS ENDED JUNE 30 (Unaudited) % of Adjusted Hotel Region Occupancy ADR RevPAR EBITDA # of Hotels _@Q22017_@22016 %Change _Q2Z2017_Q22016 %Change _Q22017_Q22016 %Change _Q22017 STR Region East
Slide 36: Comparable Hotels Operating Metrics by Region (Six Months)
& APPLE HOSPITALITY REIT APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS OPERATING METRICS BY REGION SIX MONTHS ENDED JUNE 30 (Unaudited) % of Adjusted Hotel Region Occupancy ADR RevPAR EBITDA # of Hotels —_YTD 2017 YTD 2016 %Change _YTD 2017 YTD 2016 %Change YTD 2017 YTD 2016 %Change _YTD 2017 STR R
Slide 37: Comparable Hotels Operating Metrics by Chain Scale (Three Months)
& APPLE HOSPITALITY REIT APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS OPERATING METRICS BY CHAIN SCALE THREE MONTHS ENDED JUNE 30 (Unaudited) % of Adjusted Hotel Chain Scale/Brand Occupancy ADR RevPAR EBITDA # of Hotels Q22017_@2 2016 _% Change Q22017_Q2 2016 _% Change Q22017_@2 2016 _% Change Q2
Slide 38: Comparable Hotels Operating Metrics by Chain Scale (Six Months)
& APPLE HOSPITALITY REIT APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS OPERATING METRICS BY CHAIN SCALE SIX MONTHS ENDED JUNE 30 (Unaudited) % of Adjusted Hotel Chain Scale/Brand Occupancy ADR RevPAR EBITDA # of Hotels YTD 2017_YTD 2016 _% Change YTD 2017_YTD 2016 _% Change YTD 2017_YTD 2016 _% Cha
Slide 39: Definitions
& APPLE HOSPITALITY REIT DEFINITIONS GAAP Financi 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
Slide 40: Definitions (Continued)
& APPLE HOSPITALITY REIT DEFINITIONS (CONTINUED) FO 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 accepted
Slide 41: Trademark Information
& APPLE HOSPITALITY REIT TRADEMARK INFORMATION “Courtyard by Marriott®,” “Fairfield Inn by Marriott®,” “Fairfield Inn & Suites by Marriotl®,” “Marriotf® Hotels,” “Renaissance® Hotels,” “Residence Inn by Marriott®,” “SpringHill Suites by Marriott®,” and “TownePlace Suites by Marriott®” are each a reg
Slide 42: Contact Information
& APPLE HOSPITALITY REIT CONTACT INFORMATION 814 East Main Street Richmond, VA 23219 (804) 344-8121 www.applehospitalityreit.com 42
Apple Hospitality REIT — Investor Presentation (September 2017) on 6ix