Apple Hospitality Reit, Inc. · NYSE:APLE
Apple Hospitality Reit — Investor Presentation (December 2022)
45 slides from Apple Hospitality Reit's investor presentation, Dec 7, 2022
Slide 1: Investor Presentation December 2022
DECEMBER 2022 • NYSE: APLE INVESTOR PRESENTATION Exhibit 99.1
Slide 2: Forward-Looking Statements
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
Slide 3: Company Profile & Proven Investment Strategy
COMPANY PROFILE & PROVEN INVESTMENT STRATEGY Note: Hotel portfolio statistics as of November 7, 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
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
PROVEN INVESTMENT STRATEGY Concentrate on Upscale, rooms-focused hotels Efficient operating model yields higher margins Resilient group business Scale ownership minimizes relative G&A load and provides fixed cost efficiencies Unparalleled access to data and operational expertise Align with the best
Slide 6: Key Takeaways
KEY TAKEAWAYS Performance driven by strong leisure and improving business demand, consisting of both transient and small group bookings Q3 2022 occupancy was 76% and we achieved our highest quarterly RevPAR growth over 2019, with Q3 2022 RevPAR 8% ahead of Q3 2019 Occupancy for the month of October
Slide 7: Year-Over-Year Performance
YEAR-OVER-YEAR PERFORMANCE Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2019 % CHANGE to 2021 % CHANGE to 2019 2022 2021 2019 % CHANGE to 2021 % CHANGE to 2019 RevPAR $119.52 $100.14 $111.17 19.4% 7.5% $110.40 $79.94 $109.02 38.1% 1.3% Total Revenue $341,150 $277,164 $3
Slide 8: Efficient Operations
Upscale/Rooms-Focused YTD 9/30/2022 Hotel EBITDA Margin and RevPAR Comparison Upper Upscale/Full-Service EFFICIENT OPERATIONS AC HOTEL PORTLAND DOWNTOWN/WATERFRONT, ME Source: Company filings. Assumptions may vary by company. See explanation and reconciliation of Adjusted Hotel EBITDA to net income
Slide 9: Operating Trends
-20% -75% -54% -53% -45% -26% -10% -8% -17% -10% -1% +2% +4% +5% +7% +4% +12% % Change in RevPAR as Compared to Same Period of 2019 OPERATING TRENDS Upside to pre-pandemic levels with Q3 2022 RevPAR exceeding Q3 2019 before full return of occupancy RESIDENCE INN SAN DIEGO DOWNTOWN
Slide 10: Occupancy Trends
Occupancy 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 -18% -65% -39% -36% -25% -13% -11% -7% -15% -8% -5% -4% -4%
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. FAIRFIELD INN & SUITES, CHANDLER, AZ Leisure travel con
Slide 12: % of Hotels by Occupancy Tier
% OF HOTELS BY OCCUPANCY TIER 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) ALOFT PORTLAND, ME
Slide 13: Portfolio Positioned for Continued Outperformance
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 variety
Slide 14: Why Branded Select-Service Hotels?
WHY BRANDED SELECT-SERVICE HOTELS? 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 Cons
Slide 15: Broad Consumer Appeal
Rooms-focused hotels with industry-leading brands have broad consumer appeal BROAD CONSUMER APPEAL Independent HILTON GARDEN INN DOWNTOWN BIRMINGHAM HAMPTON INN & SUITES ATLANTA- DOWNTOWN SPRINGHILL SUITES LAFAYETTE SOUTH AT RIVER RANCH Note: Hotel portfolio statistics as of November 7, 2022. Based
Slide 16: Broad Geographic Diversification
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 depe
Slide 17: Additional Upside as Business Travel Strengthens
ADDITIONAL UPSIDE AS BUSINESS TRAVEL STRENGTHENS With approximately 61% of the Company’s hotels achieving Q3 2022 RevPAR that met or exceeded Q3 2019 RevPAR, there is significant room for additional upside as business travel strengthens, leisure travel remains strong, and the recovery expands into a
Slide 18: Strong Operating Margins
STRONG OPERATING MARGINS APLE has a proven record of maximizing and improving operating margins across economic cycles and is positioned to further enhance its operating model through the recovery. APLE is well positioned to maximize efficiencies and further strengthen its operating margins: Operati
Slide 19: Limited Near-Term Impact from New Supply
LIMITED NEAR-TERM IMPACT FROM NEW SUPPLY 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 a
Slide 20: Industry-Leading Asset Management
INDUSTRY-LEADING ASSET MANAGEMENT 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 op
Slide 21: Balance Sheet Poised for Future Growth
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 borrowin
Slide 22: Strong Balance Sheet & Liquidity Position
Debt Composition(1) STRONG BALANCE SHEET & LIQUIDITY POSITION Based on balances and hotels owned as of September 30, 2022, excluding unamortized fair value adjustment of assumed debt and unamortized debt issuance costs. Excludes yearly amortization. Interest rate includes effect of interest rate swa
Slide 23: Effective Portfolio Management & Strategic Growth
EFFECTIVE PORTFOLIO MANAGEMENT & STRATEGIC GROWTH HOMEWOOD SUITES AUSTIN/ROUND ROCK 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 gro
Slide 24: Recent Acquisition & Disposition Activity
RECENT ACQUISITION & DISPOSITION ACTIVITY Since the start of the pandemic, the Company has been a net acquirer, purchasing 14 hotels for approximately $558 million, while opportunistically disposing of 25 hotels for a total combined sales price of approximately $253 million. 11 of the hotels recentl
Slide 25: Hotels Acquired in 2020, 2021 and 2022
14 Hotels Acquired in 2020, 2021 and 2022 Brand Location Rooms Date Opened Date Acquired Purchase Price Hampton Inn & Suites(1)(2) Cape Canaveral, FL 116 April 2020 April 2020 $46.7 million Home2 Suites(1)(2) Cape Canaveral, FL 108 April 2020 April 2020 Hyatt House(1)(2) Tempe, AZ 105 August 2020 Au
Slide 26: Accretive Acquisitions: AC Hotel Louisville Downtown
ACCRETIVE ACQUISITIONS Purchased in October 2022 156-room AC Hotel by Marriott® Louisville Downtown Total price: $51 million or approximately $327,000 per key Primary demand generators: Leisure Sporting Events Health Care Insurance Automobile Manufacturing Shipping and Logistics Companies Food and B
Slide 27: Accretive Acquisitions: AC Hotel Pittsburgh Downtown
ACCRETIVE ACQUISITIONS Purchased in October 2022 134-room AC Hotel by Marriott® Pittsburgh Downtown Total price: $34 million or approximately $254,000 per key Primary demand generators: Professional Sporting Events Leisure Technology Robotics Financial Services Health Care Manufacturing Academic AC
Slide 28: Acquisitions Under Contract
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 Biotech M
Slide 29: Apple REIT Companies Transaction History
Apple REIT Companies Transaction History 1999 – November 7, 2022 448 TOTAL HOTELS ACQUIRED 228 TOTAL HOTELS SOLD 220 CURRENT PORTFOLIO 4 REITS SOLD IN 3 TRANSACTIONS 4 REITS MERGED TO FORM CURRENT APLE OVER 20-YEAR TRACK RECORD OF HOTEL TRANSACTIONS Note: Hotel transactions by the various Apple REIT
Slide 30: Well-Maintained Portfolio
WELL-MAINTAINED PORTFOLIO HILTON GARDEN INN SAN DIEGO/RANCHO BERNARDO The Tripadvisor® rating is based on lifetime scores for the Apple Hospitality portfolio of hotels through September 30, 2022. Average Effective Age represents years since hotels were built or last renovated. Average actual age of
Slide 31: U.S. Hotel Forecast
U.S. HOTEL FORECAST U.S. Hotel Forecast 2021 Actual 2022 Forecast 2023 Forecast 2024 Forecast Occupancy 57.6% 63.0% 64.6% 65.8% ADR $125 $148 $152 $157 RevPAR $72 $93 $98 $103 RevPAR Compared to 2019 -17% +8% +14% +20% HAMPTON INN & SUITES PORTLAND PEARL DISTRICT Source: STR 2022 CoStar Group August
Slide 32: ESG Initiatives
ESG INITIATIVES HILTON GARDEN INN MADISON DOWNTOWN
Slide 33: 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 34: 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 35: Board of Directors with Effective Experience
Board of Directors with Effective Experience Glade M. Knight – Executive Chairman Founder, Apple Hospitality REIT; Former Chairman/CEO, Cornerstone Realty NYSE:TCR Justin G. Knight – Director Chief Executive Officer, Apple Hospitality REIT Kristian M. Gathright – Director Former Executive Vice Presi
Slide 36: Appendix
APPENDIX COURTYARD SANTA ANA ORANGE COUNTY
Slide 37: Hotels Sold in 2020, 2021 and 2022
Hotels Sold in 2020, 2021 and 2022 Brand Location Rooms Age at Time of Sale Date Sold Sales Price SpringHill Suites Sanford, FL 105 20 yrs January 2020 $13.0 million SpringHill Suites Boise, ID 230 25 yrs February 2020 $32.0 million Hampton Inn & Suites Tulare, CA 86 12 yrs December 2020 $10.3 milli
Slide 38: Comparable Hotels Quarterly Operating Metrics
COMPARABLE HOTELS QUARTERLY OPERATING METRICS Comparable Hotels Quarterly Operating Metrics and Statistical Data (Unaudited) (in thousands, except statistical data) 2019 2021 2022 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Total revenue $281,556 $326,235 $320,486 $277,277 $152,134 $242,153 $284,036 $252,696 $
Slide 39: Same Store Hotels Quarterly Operating Metrics
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 periods
Slide 40: Reconciliation of Net Income (Loss) to EBITDA and Adjusted Hotel EBITDA
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 FOR 2019, 2021 AND 2022 (Unaudited) (in thous
Slide 41: Reconciliation of Net Income (Loss) to FFO and MFFO
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 FOR 2019, 2021 AND 2022 (Unaudited) (in thousands, except per share amounts) Note: The Consolidated Statements of Operations and Comprehensive
Slide 42: Definitions
DEFINITIONS 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, Inco
Slide 43: Definitions Continued
DEFINITIONS CONTINUED 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”)), excluding
Slide 44: 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 45: Contact Information
CONTACT INFORMATION 814 East Main Street Richmond, VA 23219 (804) 344-8121 info@applehospitalityreit.com www.applehospitalityreit.com COURTYARD RICHMOND DOWNTOWN
Apple Hospitality REIT — Investor Presentation (December 2022) on 6ix