Apple Hospitality Reit, Inc. · NYSE:APLE
Apple Hospitality Reit — Investor Presentation (November 2017)
44 slides from Apple Hospitality Reit's investor presentation, Nov 13, 2017
Slide 1: Investor Presentation November 2017
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 REIT COMPANY PROFILE 34 STATES 88 MARKETS 238 HOmE EES 30,187 GUESTROOMS 99% Sob LE CPOE Reaver ere 4 years A\_E.ReN GEE ERE Cxt Vee A Cee anisms 24% 1eOur Ace Dibaba, TOW ALC A:PH EAL 2 Act |LOiN $4.2 Billion EQUITY MARKET CAP Homewood Suites, Denton, TX Note: Hotel portfolio st
Slide 4: Equity Market Capitalization
& APPLE HOSPITALITY REIT EQUITY MARKET CAPITALIZATION ($ in billions) MEE Upscale/Select Service Focus $13.7 (MEEEE Upper Upscale/Full Service Focus mgummmmmm Apple Hospitality Upscale/SelectService Focus $5.9 $4.2 $3.8 $3.6 $3.3 $2.5 $2.2 $2.2 $17 $1.6 $0.8 $08 $06 HST PK APLE RU SHO LHO PEB XHR DR
Slide 5: Proven Investment Strategy
® APPLE HOSPITALITY REIT PROVEN INVESTMENT STRATEGY 24%" \, Debi/Copitalization 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 flexible
Slide 6: High-Quality Portfolio
@& APPLE HOSPITALITY REIT HIGH-QUALITY PORTFOLIO 99% of APLE’s Hotels are Select-Service Courtyard, Chandler, AZ 01 Hampton Inn & Suites, Rosemont, IL
Slide 7: Why Select-Service Hotels?
r APPLE HOSPITALITY REIT WHY SELECT-SERVICE HOTELS? 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
Slide 8: Advantages of a Select-Service REIT
& APPLE HOSPITALITY REIT ADVANTAGES OF A SELECT-SERVICE REIT as Compared to a Full-Service REIT 80% High 76.7% 73 9% 3 75% low 72 rah = 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% Low 8.2% 9 5.9% Brio
Slide 9: Efficient Hotel Operations
& APPLE HOSPITALITY REIT EFFICIENT HOTEL OPERATIONS YTD 9/30/17 Hotel EBITDA Margin and RevPAR Comparison MME Upcale/SelectSenice Focus [GENE Upper Upscale/FullService Focus 42% (Qe Apple Hospitality Upscale/SelectService Focus 39% 38% CLDT PLE" INN PEB HT LHO AHT RU CHSP XHR DRH SHO HST PK r —RevPA
Slide 10: Concentrated Brand Ownership
e& APPLE HOSPITALITY REIT CONCENTRATED BRAND OWNERSHIP COURTYARD arnt MARRIOTT R With focus on Upscale RENAISSANCE oe SelectService Residence \ jaarriott = Upscale TOWNEPLACE = Upper Midscale 50% ‘SPRINGHILL SUITES: » Upper Upscale One of the largest owners for both Hilton® and Marriott® Note: Stati
Slide 11: Why Marriott and Hilton?
& APPLE HOSPITALITY REIT WHY MARRIOTT® AND HILTON®? Institutional Brands foster strong resale market, financing flexibility, and investor confidence Premier System Standards drive consistent quality, award-winning service, innovative design, and modern amenities Brand Channels Deliver Guests estimat
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 238 hotels and more than 400 historically, unique ability to identify areas of opportunity and implement best practices * Unique variab
Slide 14: Broad Geographic Diversification
& 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 5% Disciplined
Slide 15: Management Companies
@& wre HOSPITALITY REIT MANAGEMENT COMPANIES TOP 10 APPLE HOSPITALITY OPERATORS. AS OF OCTOBER 31, 2017 Company Total # of Rank Name Properties(" 1 IBA 42 2. White Lodging 28 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
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... $511 $444 2011 2012 2013 2014 2015 2016 2017 and prior Years since built or last renovated Pp m Cumulative Capex in millions} Forecast ...Leads to T
Slide 18: Flexible Balance Sheet
& APPLE HOSPITALITY REIT FLEXIBLE BALANCE SHEET ($ in millions) Debt Maturity Schedulet”) Hotels: 1 Keys: 130 Rate 4.1% Term loan Rate: 3.0%) Term loan i} Rate: 3.4%!) $16 Vv Hotels: 2 Keys: 180 UNENCUMBERED as PORTFOLIO Rate: 2.8% i 209 Hotels 26,083 Keys Keys: Rale 6.3% Term loan Rate: 2.5%!) 2017
Slide 19: Industry Fundamentals
& APPLE HOSPITALITY REIT INDUSTRY FUNDAMENTALS US Hotel Forecast % Change vs. Prior Year Supply Demand RevPAR STR CBRE PwC STR CBRE PwC 2.0% 1.9% 1.9% 2.1% 2.0% 1.9% 2.0% 2.2% 2.1% 1.9% 2.0% 1.8% 2.3% 2.8% 2.3% 2.3% 24% 2.0% Source: STR August 2017; CBRE Hotels Hotel Horizons September — November 20
Slide 20: Comparable Hotels Financial Highlights
& APPLE HOSPITALITY REIT COMPARABLE HOTELS FINANCIAL HIGHLIGHTS ($ in thousands except statistical data) Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 CHANGE 2017 2016 CHANGE RevPAR $109.77 $108.32 1.3% $107.10 $106.20 0.8% Revenue $321,858 $316,947 1.5% $935,162 $922,76
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
@ PPLE HOSPITALITY REIT APPENDIX Residence Inn, Salt Lake City, UT
Slide 24: Company Overview
& APPLE HOSPITALITY REIT COMPANY OVERVIEW ENTITY EXCHANGE: TICKER DIVIDEND YIELD at 9/30/2017 AVERAGE TRADING VOLUME TIM 9/30/17 EQUITY MARKET CAP at 9/30/2017 NET DEBT at 9/30/2017 TOTAL CAPITALIZATION at 9/30/2017 REAL ESTATE PORTFOLIO at 10/31/2017 GEOGRAPHIC DIVERSIFICATION at 10/31/2017 2016 CO
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 Owned!!! Hilton Garden Inn® Courtyard by Marriot® Hampton by Hilton® Homewood Suites by Hilton® Residence Inn by Marriott® SpringHill Suites by Marriot® TownePlace Suites by Marriot® Fairfield Inn by Marriott® and Fairfield
Slide 27: Consolidated Balance Sheets
) APREE HOSHITALIN REIT APPLE HOSPITALITY REIT, INC. CONSOLIDATED BALANCE SHEETS. {in thousands, except share data) September 30, December 31, 2017 2016 {unaudited} Assets Investment in real estate, net of accumulated depreciation of $686,787 and $557,597, respectively $ 4,742,590 4,823,489 Assets h
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 Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Revenues: Room $ 302,298 $ 255,26
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 DECEMBER 31, 2015 THROUGH SEPTEMBER 30, 2017 (Unaudited) (in thousands) Net income (loss} Depreciation Amortization of favorable
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 NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016 (Unaudited) (in thousands) Net income Depreciation of real estate owned (Gain) loss on sale of real estate Loss on impairment of depre
Slide 31: Comparable Hotels Operating Metrics and Statistical Data
& APPLE HOSPITALITY REIT APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS OPERATING METRICS AND STATISTICAL DATA (Unaudited) (in thousands except statistical data) Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 % Change 2017 2016 % Change Room revenue $ 299,987 $ 294,296 1.
Slide 32: Comparable Hotels Quarterly Operating Metrics
@& wre HOSPITALITY REIT APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS QUARTERLY OPERATING METRICS AND STATISTICAL DATA (Unaudited) (in thousands except statistical data) Three Months Ended 12/31/2015 3/31/2016 6/30/2016 9/30/2016 12/31/2016 3/31/2017 6/30/2017 9/30/2017 Room revenue $ 244,192 $ 260
Slide 33: Same Store Hotels Operating Metrics
& APPLE HOSPITALITY REIT APPLE HOSPITALITY REIT, INC. SAME STORE HOTELS OPERATING METRICS AND STATISTICAL DATA (Unaudited) (in thousands except statistical data) Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 % Change 2017 2016 % Change Room revenue $ 230,819 $ 227,863 1.
Slide 34: Same Store Hotels Quarterly Operating Metrics
& APPLE HOSPITALITY REIT APPLE HOSPITALITY REIT, INC. SAME STORE HOTELS QUARTERLY OPERATING METRICS AND STATISTICAL DATA (Unaudited) (in thousands except statistical data) Three Months Ended 3/31/2016 6/30/2016 9/30/2016 12/31/2016 3/31/2017 6/30/2017 9/30/2017 Room revenue $ 202,285 $ 232,836 $ 227
Slide 35: Comparable Hotels Top 20 Markets, Three Months
& APPLE HOSPITALITY REIT APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS OPERATING METRICS TOP 20 MARKETS!) THREE MONTHS ENDED SEPTEMBER 30 (Unaudited) % of Adjusted Hotel Top 20 Markets Occupancy ADR ReyPAR EBITDA #ofHotels _@32017_Q32016 %Change _@32017 _@32016 %Change _Q32017 32016 %Change _@3 201
Slide 36: Comparable Hotels Top 20 Markets, Nine Months
& APPLE HOSPITALITY REIT APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS OPERATING METRICS TOP 20 MARKETS!) NINE MONTHS ENDED SEPTEMBER 30 (Unaudited) % of Adjusted Hotel Top 20 Markets Occupancy ADR RevPAR EBITDA #ofHotels _YTD 2017 YTD 2016 %Change _YTD 2017 YTD2016 %Change _YTD2017 YTD.2016 %Chang
Slide 37: Comparable Hotels Operating Metrics by Region, Three Months
& APPLE HOSPITALITY REIT APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS OPERATING METRICS BY REGION THREE MONTHS ENDED SEPTEMBER 30 (Unaudited) % of Adjusted Hotel Region Occupancy ADR RevPAR EBITDA # of Hotels —_@Q3.2017_@3 2016 %Change _Q32017_Q32016 %Change _Q32017_Q32016 %Change _Q3 2017 STR Reg
Slide 38: Comparable Hotels Operating Metrics by Region, Nine Months
& APPLE HOSPITALITY REIT APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS OPERATING METRICS BY REGION NINE MONTHS ENDED SEPTEMBER 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
Slide 39: 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 SEPTEMBER 30 (Unaudited) % of Adjusted Hotel Chain Scale/Brand Occupancy ADR RevPAR EBITDA # of Hotels Q3 2017_@3 2016 _% Change Q3 2017_@3 2016 _% Change Q3 2017_@3 2016 _% Ch
Slide 40: Comparable Hotels Operating Metrics by Chain Scale, Nine Months
& APPLE HOSPITALITY REIT APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS OPERATING METRICS BY CHAIN SCALE NINE MONTHS ENDED SEPTEMBER 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 201
Slide 41: 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 42: 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 43: Trademark Information
& APPLE HOSPITALITY REIT TRADEMARK INFORMATION “Courtyard by Marriotl®,” “Fairfield Inn by Marriot®,” “Fairfield Inn & Suites by Marriotf®,” “Marriotf® Hotels,” “Renaissance® Hotels,” “Residence Inn by Marriotf®,” “SpringHill Suites by Marriott®,” and “TownePlace Suites by Marriott®” are each a regi
Slide 44: Contact Information
& APPLE HOSPITALITY REIT CONTACT INFORMATION 814 East Main Street Richmond, VA 23219 (804) 344-8121 www.applehospitalityreit.com 44
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