Apple Hospitality Reit, Inc. · NYSE:APLE
Apple Hospitality Reit — Investor Presentation (June 2020)
49 slides from Apple Hospitality Reit's investor presentation, Jun 2, 2020
Slide 1: Investor Presentation June 2020
& APPLE HOSPITALITY REIT — : INVESTOR PRESENTATION JUNE 2020 © NYSE: APLE
Slide 2: Forward-Looking Statements
& APPLE HOSPITALITY REIT. FORWARD-LOOKING STATEMENTS Cerlain statements made in this presentation are forwarddooking statements, including statements regarding the impact lo the Company's business and financial condition from, and measures being token in response to, the COVID-19 situation. These fo
Slide 3: Apple Hospitality at a glance
PPLE HOSPITALITY MOTELS GIGsE ST, moO Ms STATES MARKETS BRANDS ROOMS-FOCUSED AVERAGE EFFECTIVE AGE No‘: Hotel porto statsres as of May 15, 2020, Merket categorization based on STR designation. Average Elective Age represents years since hotels were bul or lst renovated
Slide 4: Apple Hospitality REIT Mission
APPLE HOSPITALITY REIT MISSION We are a leading real estate investment company committed to increasing shareholder value through the distribution of attractive dividends and long-term capital appreciation. lity - We are thoughtful in our interactions with others and know that strong, caring relation
Slide 5: Management Team with Deep Industry Experience
& APPLE HOSPITALITY REIT MANAGEMENT TEAM WITH DEEP INDUSTRY EXPERIENCE OVER MULTIPLE HOTEL CYCLES * Established and operated 8 public hospitality REITs * Raised and invested approximately $7 billion in hotel assets + Purchased 436 hotels * Managed over $925 million in CapEx and renovation spending A
Slide 6: Largest Publicly Traded Rooms-Focused Lodging REIT
& APPLE HOSPITALITY REIT. LARGEST PUBLICLY TRADED ROOMS-FOCUSED LODGING REIT EEE Upscale/Rooms Focused [Ei Upper Upscale/FullService Focused lim Upscale & Upper Upscale Combined Number of Guest Rooms HST PK APLE AHT RU PEB INN XHR SHO DRH HT CLOT Source: Public flings and company data as of March 31
Slide 7: APLE Trading
& APPLE HOSPITALITY REIT. APLE TRADING Total Return Performance May 18, 2015 to May 31, 2020 $180.00 $160.00 APLE (21.3%) $140.00 S&P 500 Index 58.5% $120.00 SNL U.S. REIT Hotel Index (43.8%) $100.00 Average Share Issue Price $80.00 (total issued - $140 million) $19.56 $60.00 Average Share Buyback P
Slide 8: Se APPLE HOSPITALITY RET
Se APPLE HOSPITALITY RET ~~ Residence Inn, Portland, ME
Slide 9: Proven Investment Strategy
& APPLE HOSPITALITY REIT PROVEN INVESTMENT STRATEGY Align with the best brands in the rooms-focused category Concentrate on Upscale, rooms: focused hotels Hire industry- leading operators and maximize performance through benchmarking and asset management Pursue broad geographic diversification 40%"
Slide 10: Why Select-Service Hotels?
AS @] Arr HosPrtaLity REIT WHY SELECT-SERVICE HOTELS? 99% of APLE’s Hotels are Rooms-Focused Less: More: Rooms to fill Square footage to manage Staff Maintenance Complex Volatility Dependence on group Consumer demand Resulting Easily renovated i Lender/buyer appeal Consistency in operations Adaptabl
Slide 11: Advantages of a Rooms-Focused REIT
& APPLE HOSPITALITY REIT. ADVANTAGES OF A ROOMS-FOCUSED REIT as Compared to Full-Service REITs with Scale 80% High 73.3% Low 64.2% High 63.9% Low 62.4% 60% g 5 S409 a 40% 6 High 29.9% ee Low 27.6% High 26.1% low 12.1% 20% High 15.9% High 3.6% High 2.8% bow 5.1% High 6.6% Low 1B% Low 1.6% low 5.6% 2.
Slide 12: Rooms-Focused Strategy
& APPLE HOSPITALITY REIT ROOMS-FOCUSED STRATEGY Portfolio Aligned with Industry-Leading Brands % of APLE ee alitye Portfolio courTyARD Extended Stay 33% Suite Product 23% Other Select Service A2% Full Service 2% 2019 Rooms Sold Segmentation Tronsient 86% Group 14% 0% 50% 100% Noto: Hotel portiolio s
Slide 13: Broad Geographic Diversification
& APPLE HOSPITALITY REIT BROAD GEOGRAPHIC DIVERSIFICATION "© Apple Hospitality REIT owns a hotel in this market ‘hon one hotel inthis market Note: Hotel portfolio staistis as of May 15, 2020. Location and market cotegorizotion based on STR designotion. Company's hotels owned os of Merch 31, 2020, {I
Slide 14: Benefits of Scale Ownership
& APPLE HOSPITALITY REIT BENEFITS OF SCALE OWNERSHIP Largest Rooms-Focused Publicly Traded Lodging REIT Unparalleled Access to Performance Data Current ownership of 233!) hotels and more than 430 historically provides unique ability to identify areas of opportunity and implement best practices Uniqu
Slide 15: Management Companies
& APPLE HOSPITALITY REIT. MANAGEMENT COMPANIES APLE’s Unique Management Company Contract Structure Industry Standard Structure Better aligns owner and ‘to maximize ps in all market Variable Management Fee!) 2.5% - 3.5% of Revenues Based on Property's Balanced Scorecard Performance: erty Base Managem
Slide 16: Portfolio Activity Under Contract
APPLE HOSPITALITY 8 PORTFOLIO ACTIVITY UNDER CONTRACT") (in thousands) sO Se al Hyatt House® and Hyatt Place® Tempe, AZ2i9) 2 254 2H 2020 $63,300 Hilton Garden Inn® Madison, WI) 1 176 1H 2021 49,600 TOTAL 3 430 $112,900 (1) As of Mey 15, 2020. Contracts entered into prior lo 2020. There are many con
Slide 17: Well-Maintained Portfolio
& APPLE HOSPITALITY REIT. WELL-MAINTAINED PORTFOLIO Strategically well positioned in competitive operating environment 4.3 out of 5.00 weighted average TripAdvisor® rating!) Consistent reinvestment leads to traveler satisfaction outperformance and more predictable future capital needs Upscale and Up
Slide 18: Flexible Balance Sheet
& APPLE HOSPITALITY REIT. FLEXIBLE BALANCE SHEET Debt Composition!) Debt Maturity Schedule'") n milli Hotels: 14 | Keys: 2,301 = mie Keys: 1,357 aera Rote 4'9% ates Revolver Rote: 2.4% UNENCUMBERED PORTFOLIO 200 Hotels Rate: 4.0% | | Term loon $294 Rate: a 5% 24,886 Keys / Property Debt 28% Keys: 35
Slide 19: Well Positioned
Slide 20: Efforts to Preserve Capital & Mitigate Impact of COVID-19
& APPLE HOSPITALITY REIT EFFORTS TO PRESERVE CAPITAL & MITIGATE IMPACT OF COVID-19 © Quickly worked with management companies to make swift operational changes to staffing & service models * Consolidated operations in markets where the Company owns multiple properties to maximize operational efficie
Slide 21: Occupancy Levels Before & During COVID-19
& APPLE HOSPITALITY REIT OCCUPANCY LEVELS BEFORE & DURING COVID-19 Began to see impact in March and ‘appear fo have bottomed out around 15% occupancy 16% 15% 15% BE PEL CP EEL LLL o Week ended Source: Weekly data provided by STR for the Company's hotels owned os of March 31, 2020, including all room
Slide 22: Industry Fundamentals
& APPLE HOSPITALITY REIT. INDUSTRY FUNDAMENTALS U.S. Hotel Forecast % Change vs. Prior Year STR CBRE PwC STR CBRE PwC Supply ee) | es | ieee | 2 | ies | ee Demand (45.0%) (37.0%) (45.9%) 49.1% 34.8% 62.1% Occupaney (45.8%) (38.0%) (41.4%) 45.5% 36.3% 49.9% ADR (21.6%) (22.5%) (19.9%) 1.7% 8.9% 10.6%
Slide 23: Liquidity Position
& APPLE HOSPITALITY REIT. LIQUIDITY POSITION Debt Summary as of March 31, 202011) Estimated Net Cash Use Analysis {$ in thousands) {$ in thousands, except per key amount) Mortgages (31 Hotels} $500,013 || Monthly at 15% to 20% Occupancy Unsecured (200 Hotels} Operations!2 $5,000 Revolver i ae 425,00
Slide 24: Well Positioned in Current Environment
& APPLE HOSPITALITY REIT. WELL POSITIONED IN CURRENT ENVIRONMENT Focused on Profitability + Management team with extensive transaction and operations experience + Strong regional and national operators with readily terminable contracts and flexibility to align performance goals + Analytical data-dri
Slide 25: Efficient Operations
& APPLE HOSPITALITY REIT. EFFICIENT OPERATIONS e Rate Investment Strategy Leads to Low Monthly Cas + — Efficient operating model of rooms-focused hotels has historically yielded high margins + Scale ownership of roomsfocused hotels minimizes G&A load per key and provides fixed cost efficiencies * Co
Slide 26: ESG Initiatives
& APPLE HOSPITALITY REIT ESG INITIATIVES Hampton Inn & Suites, Phoenix, AZ
Slide 27: Sustainability Initiatives
& APPLE HOSPITALITY REIT SUSTAINABILITY INITIATIVES Hospitality Key Metrics for Y Formal energy management Approximately 19 million Square Feet With 13.0 total kWh per program established in 245,000 MWh Energy Consumotion | s4uatte foot as compared to 2018 to ensure that energy, , u an average of 26
Slide 28: Social Responsibility
& APPLE HOSPITALITY REIT SOCIAL RESPONSIBILITY Apple Gives, an employeeled charitable organization, was formed in 2017 to expand our impact and further advance the achievement of our corporate philanthropic goals. Caring for others and our communities has always been at the forefront of our values.
Slide 29: Governance
& APPLE HOSPITALITY REIT GOVERNANCE + Audit, Compensation and Corporate Governance Committees are independent ae + Regular executive sessions of independent directors + Destaggered Board allows for annual elections of directors + Required resignation of an incumbent director not receiving majority o
Slide 30: Appendix
i APPLE HOSPITALITY REIT 9 Uy APPENDIX ae Homewood Suites, Miami, FL
Slide 31: History of Apple REIT Ownership
& APPLE HOSPITALITY REIT HISTORY OF APPLE REIT OWNERSHIP Total Hotels United States 57,229 5,416,419 Hilton Garden inn® 59 4 Total Hotels Upscale end Upper Midscale 16,991 1,945,086 Hampton by Hilton® 58 40 Hon} 4073 473,556 Courtyerd by Marriot? 63 36 Marriot? 4084 492,010 Homewood Suites by Hilton
Slide 32: Portfolio Activity 2015 - May 15, 2020
& APPLE HOSPITALITY REIT. PORTFOLIO ACTIVITY 2015 —- MAY 15, 20205 inthousands) ACQUISITIONS NUMBER OF NUMBER OF HOTELS 2015 7 1,051 $254,800 2016 57 7,337 1,320,000! 2017 6 784 161,800 2018 5 732 152,200 2019 3 343 59,300 1/1/2020 ~ 5/15/2020 2 224 46,700 TOTAL 80 10,471 $1,994,800 DISPOSITIONS NUN
Slide 33: 20-Year Record of Value Creation
& APPLE HOSPITALITY REIT. 20-YEAR RECORD OF VALUE CREATION pe EI Sib in si ole Fe Pasa lo Ten Piso ens Pent Soha foam: 3717 Foon 720 ee ree rat ig Eschtaly Hitan& Mant brands Esckavel Hilo & Mont brands Apple RET Comp eeepc Siow Sek Eschrge BO ee Peers ec pecer Rrra ‘Apple Suits Ponoko Hes 17 Homewo
Slide 34: Consolidated Balance Sheets
© wresosemaurv APPLE HOSPITALITY REIT, INC. CONSOLIDATED BALANCE SHEETS. {in thousands, except share data) December 31 2019 Assets Investment in real estate, net of accumulated depreciation and amortization of $1,096,718 and $1,054,429, respectively $4,776,695 $ 4,825,738 Assets held for sale - 12,0
Slide 35: Consolidated Statements of Operations
® Nole: The Consolidoted Stotemen's of Operations and Comprehensive Income (Loss) and corresponding footnotes can be found in the Company's Quarterly Report on Form 10-0 forthe quarter ended March 31, 2020. APPLE HOSPITALITY REIT, INC. APPLE HOSPITALITY REIT CONSOLIDATED STATEMENTS OF OPERATIONS AND
Slide 36: Net Income to EBITDA and Adjusted Hotel EBITDA Reconciliation
& APPLE HOSPITALITY REIT THE FOLLOWING TABLE RECONCILES THE COMPANY’S GAAP NET INCOME (LOSS) TO EBITDA, EBITDAre, ADJUSTED EBITDAre AND ADJUSTED HOTEL EBITDA ON A QUARTERLY BASIS FROM JUNE 30, 2018 THROUGH MARCH 31, 2020 (Unaudited) (in thousands} Net income (loss} Depreciation and emorlization Amot
Slide 37: Net Income to FFO and MFFO Reconciliation
& APPLE HOSPITALITY REIT THE FOLLOWING TABLE RECONCILES THE COMPANY'S GAAP NET INCOME (LOSS} TO FFO AND MFFO FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019 (Unaudited) (in thousands} Three Months Ended March 31, 2020 2019 Net income {loss} $ (2,769) $ 38,151 Depreciation of real estate owned A7
Slide 38: 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 March 3 2020 2019 % Change Total revenve $ 236870 $ 293,485 (19.3%) Total operating expenses, 173,977, 188,489 7% Adju
Slide 39: Comparable Hotels Quarterly Operating Metrics
& APPLE HOSPITALITY REIT 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 (Actuol Reconciliation to Actual Results Total Revenue (Actual)
Slide 40: 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} Total revenve Total operating expanses Adjusted Hotel EBITDA Adjusted Hotel EBITDA Margin % ADR (Same Store Hotels) ‘Occupancy (Seme Store
Slide 41: Same Store Hotels Quarterly Operating Metrics
& APPLE HOSPITALITY REIT ———————— ne APPLE HOSPITALITY REIT, INC. SAME STORE HOTELS QUARTERLY OPERATING METRICS AND STATISTICAL DATA (Unaudited} (in thousands except statistical data) Three Months Ended 3/31/2019 6/30/2019 9730/2019 12/31/2019 3/31/2020 Totol revenve $ 290,964 $ 393,936 $ 324,274 -$
Slide 42: Comparable Hotels Operating Metrics Top 20 Markets
& APPLE HOSPITALITY REIT APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS OPERATING METRICS TOP 20 MARKETS THREE MONTHS ENDED MARCH 31 (Unaudited) %of Adjusted Hotel Top 20 Markets Qccupang RovPAR EBITD, Foros QT 2070 QI 2019 Sechange GV 2020 Gl 2019 wa change G1 2020 QI 2019 wechange Ql 2020 Top 20 M
Slide 43: Comparable Hotels Operating Metrics by Region
& APPLE HOSPITALITY REIT THREE MONTHS ENDED MARCH 31 (Unaudited) APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS OPERATING METRICS BY REGION % of Adjusted Hotel Region Qecupene ADR RevPAR EBITDA #ofHotels —_Q12020_Q1 2019 % Change _@I 2020 _Q12019 % Change _@1 2020 12019 %Chenge _Q1 2020 STR Region E
Slide 44: Comparable Hotels Operating Metrics by Chain Scale
& APPLE HOSPITALITY REIT APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS OPERATING METRICS BY CHAIN SCALE THREE MONTHS ENDED MARCH 31 (Unaudited) % of Adjusted Hotel Chain Scalo/Brand Occupancy ADR RevPAR EBIIDA HofHoiels _QU2020 G1 2019 “%Changs _Q12020 G1 2019 %Changs _Q1 2020 G1 2019 %Changs _Q1 2
Slide 45: Comparable Hotels Operating Metrics by Location
& APPLE HOSPITALITY REIT APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS OPERATING METRICS BY LOCATION THREE MONTHS ENDED MARCH 31 (Unaudited) % of Adjusted cation Occupane ADR RevPaR Hotel EBITDA HofHoiels __Q1 2020 QI 2019 %Change __Q1 2020 G1 2019 % Change _Q1 2020 QI 2019 % Change _ QI 2020 STR L
Slide 46: Definitions
& APPLE HOSPITALITY REIT. DEFINITIONS Non-GAAP Financial Measures The Compony considers the following non-GAAP financial measures useful fo investors os key supplemental measures of its operating performance: Funds from Operations ("FFO"|; Madified FFO (’MFFO"); Earnings Before Interest, Income Toxe
Slide 47: Definitions (Continued)
& APPLE HOSPITALITY REIT. DEFINITIONS (CONTINUED) F£O-and MFFO The Compeny coleulates and presents FFO in eccordance with slandords established by Nereit, which defines FFO os net income loss) (computed in accordance with generclly ‘accepted accounting principles ("GAAP"), excluding gains and losses
Slide 48: Trademark Information
& APPLE HOSPITALITY REIT. TRADEMARK INFORMATION “Courtyard by Marriot," “Fairfield by Marriot®,” "Fairfield Inn by MarrioH®,” “Fairfield Inn & Suites by Marriot®," “Marriot? Hotels," "Renaissance? Hotels,” “Residence Inn by Marriott?,” “SpringHill Suites by Marriol®,” and “TownePlace Suites by Marti
Slide 49: Contact Information
& APPLE HOSPITALITY REIT. CONTACT INFORMATION 814 East Main Street Richmond, VA 23219 (804) 344-8121 www.applehospitalityreit.com
Apple Hospitality REIT — Investor Presentation (June 2020) on 6ix