Apple Hospitality Reit, Inc. · NYSE:APLE
Apple Hospitality Reit — Investor Presentation (November 2023)
53 slides from Apple Hospitality Reit's investor presentation, Nov 13, 2023
Slide 1: Investor Presentation November 2023
INVESTOR PRESENTATION NOVEMBER 2023 • NYSE: APLE Exhibit 99.1
Slide 2: Forward-Looking Statements
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 substantial risks and uncert
Slide 3: Company Profile & Proven Investment Strategy
COMPANY PROFILE & PROVEN INVESTMENT STRATEGY Note: Hotel portfolio statistics as of November 7, 2023. The Company’s portfolio also includes one non-hotel property leased to third parties. Market categorization based on STR designation. Average Effective Age represents years since hotels were built o
Slide 4: Company Overview
COMPANY OVERVIEW See following pages for reconciliation to actual revenue and net income. Note: Statistics above compare the Company's performance with the performance of specific industry indices using total shareholder return ("TSR"). Net Total Debt to Total Capitalization calculation based on (as
Slide 5: 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 6: 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 7: Key Takeaways
KEY TAKEAWAYS Meaningful year-over-year topline growth driven by seasonally strong leisure demand and improving business travel Q3 2023 Comparable Hotels Occupancy was 77% and ADR was $159, resulting in RevPAR of $123, an improvement of 3% over Q3 2022 Q3 2023 Comparable Hotels RevPAR was up more th
Slide 8: Year-Over-Year Performance
YEAR-OVER-YEAR PERFORMANCE Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 % CHANGE to 2022 2023 2022 % CHANGE to 2022 Comparable Hotels RevPAR $122.91 $119.31 3.0% $119.34 $110.23 8.3% Comparable Hotels Total Revenue $356,248 $342,913 3.9% $1,026,907 $944,641 8.7% Compara
Slide 9: Efficient Operations: Hotel EBITDA Margin and RevPAR Comparison
Upscale/Rooms-Focused YTD September 30, 2023 Hotel EBITDA Margin and RevPAR Comparison Upper Upscale/Full-Service EFFICIENT OPERATIONS ALOFT PORTLAND, ME Source: Company filings. Assumptions may vary by company. See explanation and reconciliation of Adjusted Hotel EBITDA to net income included in su
Slide 10: Comparable Hotels Operating Trends
+25% +22% +14% +5% +6% +5% +3% +3% +3% % Change in RevPAR Compared to Same Period of 2022 COMPARABLE HOTELS OPERATING TRENDS Q3 2023 produced highest Comparable Hotels RevPAR growth relative to 2019 since start of pandemic, with continued room for growth in occupancy Note: Comparable Hotels is defin
Slide 11: Comparable Hotels Occupancy Trends
Occupancy COMPARABLE HOTELS OCCUPANCY TRENDS Note: Comparable Hotels is defined as the 220 hotels owned by the Company as of September 30, 2023, and excludes one non-hotel property leased to third parties. For hotels acquired during the periods noted, the Company has included, as applicable, results
Slide 12: 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. Leisure travel strength continues Weekday occupancy sho
Slide 13: Portfolio Poised for Continued Outperformance
PORTFOLIO POISED FOR CONTINUED OUTPERFORMANCE Well positioned to benefit from increasing business transient demand Select-service hotels franchised with industry-leading brands provide strong value proposition and have proven appeal with broadest group of customers Broad geographic diversification p
Slide 14: Positioned for Outperformance Across Cycles
POSITIONED FOR OUTPERFORMANCE ACROSS CYCLES Embedded upside potential Inherent downside protection Outperformance across cycles Limited near-term portfolio impact from new supply High margins drive profitability Business transient demand continues to improve Balance sheet strength and liquidity for
Slide 15: Benefits of Branded Select-Service Hotels
BENEFITS OF BRANDED SELECT-SERVICE HOTELS Total revenue primarily derived from rooms sold Ability to cross-utilize associates to maximize efficiencies High margins Fewer outlets to manage Less public space to maintain Resilient group business Efficient Operating Model Broad Consumer Appeal Maximize
Slide 16: Broad Consumer Appeal
Rooms-focused hotels with industry-leading brands have broad consumer appeal BROAD CONSUMER APPEAL HAMPTON INN & SUITES PORTLAND-PEARL DISTRICT COURTYARD HOUSTON NASA/CLEAR LAKE HILTON GARDEN INN MADISON DOWNTOWN Note: Hotel portfolio statistics as of November 7, 2023. Based on number of guest rooms
Slide 17: Modern Accommodations and Amenities
MODERN ACCOMMODATIONS AND AMENITIES WITH BROAD CONSUMER APPEAL
Slide 18: 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 19: Market Strategy: High-Density Suburban
MARKET STRATEGY RESIDENCE INN LOS ANGELES BURBANK/DOWNTOWN HIGH-DENSITY SUBURBAN Properties ideally located in upscale submarkets with attractive cost structures that benefit from a broad mix of business and leisure demand generators and resilient group business. With proximity to an array of guest
Slide 20: Market Strategy: Urban
MARKET STRATEGY AC HOTEL PORTLAND DOWNTOWN/WATERFRONT, ME URBAN Properties located in business-friendly cities leading the recovery. Beneficiaries of demographic shifts and economic development, these urban locations are home to numerous demand generators, not heavily dependent on inbound internatio
Slide 21: Strong Operating Margins
STRONG OPERATING MARGINS APLE has a proven record of maximizing and improving operating margins across economic cycles. APLE is well positioned to maximize efficiencies and drive profitability: Broad consumer appeal allows for optimization of business mix as recovery continues to drive ADR and RevPA
Slide 22: 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 Nearly 50% of our hotels do not have any exposure to new projects currently under construction within a five-mile radius National supply growth o
Slide 23: 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 24: Proprietary Management Agreement Structure
PROPRIETARY MANAGEMENT AGREEMENT STRUCTURE HOMEWOOD SUITES MIAMI-AIRPORT/BLUE LAGOON Our unique management company contract structure better aligns owner and operator to maximize performance in all market environments. APLE’s Management Company Contract Structure Industry Standard Structure Variable
Slide 25: 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 26: Strong Balance Sheet & Liquidity Position
Debt Composition(1) STRONG BALANCE SHEET & LIQUIDITY POSITION Based on balances and hotels owned as of September 30, 2023, 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 27: Effective Portfolio Management & Strategic Growth
EFFECTIVE PORTFOLIO MANAGEMENT & STRATEGIC GROWTH SPRINGHILL SUITES LOS ANGELES BURBANK/DOWNTOWN Opportunistic Dispositions Strategic Growth Reduce exposure to lower growth markets Dispose of hotels where strong operating efficiencies are harder to achieve Optimize capital reinvestment program throu
Slide 28: Acquisitions and Dispositions Since Pandemic
18 hotels purchased for approximately $736 million(1) 12 acquisitions not open or stabilized in 2019 Our acquisition and disposition activity since the start of the pandemic has optimized our portfolio by lowering the average age of our assets, reducing near-term CapEx and increasing exposure to mar
Slide 29: Hotels Acquired 2020 - 2023
18 Hotels Acquired 2020 - 2023 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 August 2020 $
Slide 30: Recent Acquisitions: Courtyard Cleveland University Circle
RECENT ACQUISITIONS Acquired June 2023 154-room Courtyard by Marriott® Cleveland University Circle Hotel opened in April 2013 and underwent a complete renovation of guest rooms and interior public spaces prior to acquisition Total price: $31 million or approximately $201,000 per key Primary demand g
Slide 31: Recent Acquisitions: Courtyard Salt Lake City Downtown
RECENT ACQUISITIONS Acquired October 2023 175-room Courtyard by Marriott® Salt Lake City Downtown Hotel opened in October 2015 Total price: $48.1 million or approximately $275,000 per key Primary demand generators: Technology Defense Oil and Gas Transportation Health Care Financial Services Leisure
Slide 32: Recent Acquisitions: Hyatt House Salt Lake City
RECENT ACQUISITIONS Acquired October 2023 159-room Hyatt House® Salt Lake City/Downtown Hotel opened in January 2015 and underwent a full soft-goods renovation prior to acquisition Total price: $34.3 million or approximately $215,000 per key Primary demand generators: Technology Defense Oil and Gas
Slide 33: Recent Acquisitions: Residence Inn Seattle South/Renton
RECENT ACQUISITIONS Acquired October 2023 146-room Residence Inn by Marriott® Seattle South/Renton Hotel opened in August 2019 Total price: $55.5 million or approximately $380,000 per key Primary demand generators: Aviation Aerospace Manufacturing Technology Life Science Health Care Leisure RESIDENC
Slide 34: Acquisitions Under Contract: Embassy Suites South Jordan
ACQUISITIONS UNDER CONTRACT 192-room Embassy Suites by Hilton®South Jordan Salt Lake City Hotel opened in March 2018 Total price: $36.8 million or approximately $191,000 per key Primary demand generators: Health Care Technology Distribution Recreational Sports Outdoor Recreation EMBASSY SUITES SOUTH
Slide 35: Acquisitions Under Contract: Embassy Suites Madison
Hotel under development with anticipated completion of construction in mid-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 Man
Slide 36: Acquisitions Under Contract: Motto Nashville
Hotel to be developed with anticipated completion of construction in 2025 256 rooms(2) Anticipated gross purchase price: $96.7 million or approximately $378,000 per key Forward commitment with trusted developer Ideally located in downtown Nashville within walking distance of well-known music and ent
Slide 37: Apple REIT Companies Transaction History
Apple REIT Companies Transaction History 1999 – November 7, 2023 452 TOTAL HOTELS ACQUIRED 228 TOTAL HOTELS SOLD 223 CURRENT HOTEL PORTFOLIO(1) 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 A
Slide 38: Well-Maintained Portfolio
WELL-MAINTAINED PORTFOLIO HOMEWOOD SUITES NEW ORLEANS The Tripadvisor® rating is based on lifetime scores for the Apple Hospitality portfolio of hotels through September 30, 2023. Average Effective Age represents years since hotels were built or last renovated. Average actual age of hotels is 15 yea
Slide 39: U.S. Hotel Forecast
U.S. HOTEL FORECAST U.S. Hotel Forecast U.S. Hotel KPIs, year-over-year percentage changes 2022 Actual 2023 Forecast 2024 Forecast Occupancy +8.9% +0.8% +1.0% ADR +20.0% +3.6% +3.0% RevPAR +30.6% +4.5% +4.1% HYATT PLACE GREENVILLE DOWNTOWN Source: STR 2023 CoStar Group August 2023
Slide 40: ESG Initiatives
ALOFT PORTLAND, ME ESG INITIATIVES We own one of the largest and most geographically diverse portfolios of rooms-focused hotels in the United States and are dedicated to making a positive impact on the many communities our hotels serve. We are mindful of our environmental footprint and committed to
Slide 41: Environmental Stewardship
ENVIRONMENTAL STEWARDSHIP 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 in
Slide 42: 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 43: 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 Glenn W. Bunting – Director President, GB Corporation Jon A
Slide 44: Appendix
APPENDIX RESIDENCE INN SAN DIEGO DOWNTOWN
Slide 45: 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 46: Comparable Hotels Quarterly Operating Metrics
COMPARABLE HOTELS QUARTERLY OPERATING METRICS Comparable Hotels Quarterly Operating Metrics and Statistical Data (Unaudited) (in thousands, except statistical data) 2022 2023 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Operating income (Actual) $32,835 $80,745 $75,410 $17,488 $49,247 $83,029 $76,295 Operating margin % (Ac
Slide 47: 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) Represents the Company's actual Adjusted Hotel EBITDA which excludes Adjusted EBITDAre from its non-hotel property, the Company's indep
Slide 48: Reconciliation of Net Income to EBITDA and Adjusted Hotel EBITDA
RECONCILIATION OF NET INCOME TO EBITDA, EBITDAre, ADJUSTED EBITDAre AND ADJUSTED HOTEL EBITDA THE FOLLOWING TABLE RECONCILES THE COMPANY’S GAAP NET INCOME TO EBITDA, EBITDAre, ADJUSTED EBITDAre AND ADJUSTED HOTEL EBITDA ON A QUARTERLY BASIS FOR 2022 AND 2023 (Unaudited) (in thousands) 2022 2023 Q1 Q
Slide 49: Reconciliation of Net Income to FFO and MFFO
RECONCILIATION OF NET INCOME TO FFO AND MFFO THE FOLLOWING TABLE RECONCILES THE COMPANY’S GAAP NET INCOME TO FFO and MFFO ON A QUARTERLY BASIS FOR 2022 AND 2023 (Unaudited) (in thousands, except per share amounts) Note: The Consolidated Statements of Operations and Comprehensive Income and correspon
Slide 50: 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 51: 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 52: 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 53: Contact Information
CONTACT INFORMATION 814 East Main Street Richmond, VA 23219 (804) 344-8121 info@applehospitalityreit.com www.applehospitalityreit.com COURTYARD AND RESIDENCE INN RICHMOND DOWNTOWN
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