Apple Hospitality Reit, Inc. · NYSE:APLE
Apple Hospitality Reit — Investor Presentation (May 2022)
45 slides from Apple Hospitality Reit's investor presentation, May 24, 2022
Slide 1: Investor Presentation May 2022
MAY 2022 • NYSE: APLE INVESTOR PRESENTATION Exhibit 99.1
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS 2 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 take
Slide 3: Company Profile & Proven Investment Strategy
COMPANY PROFILE & PROVEN INVESTMENT STRATEGY Note: Hotel portfolio statistics as of April 30, 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 b
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
5 PROVEN INVESTMENT STRATEGY
Slide 6: Key Takeaways
6 KEY TAKEAWAYS April 2022 occupancy was 77%, the highest since the onset of the pandemic with ADR, RevPar and Adjusted Hotel EBITDA exceeding April 2019 levels Additional upside as business travel increases and recovery spreads to increasing number of markets Average daily bookings higher than same
Slide 7: First Quarter 2022 Performance Highlights
7 FIRST QUARTER 2022 PERFORMANCE HIGHLIGHTS In March 2022, Occupancy and ADR reached highest levels since start of the pandemic, driving RevPAR to nearly 99% of the March 2019 level March 2022 Comparable Hotels Adjusted Hotel EBITDA Margin of 42%, 190 bps ahead of March 2019 Performance driven by st
Slide 8: Year-Over-Year Performance
YEAR-OVER-YEAR PERFORMANCE 8 COURTYARD VIRGINIA BEACH OCEANFRONT/NORTH 37TH STREET ($ in thousands except statistical data and per share amounts) First Quarter 2022 Performance at a Glance Note: See explanation and reconciliation of Adjusted Hotel EBITDA and Modified Funds from Operations (MFFO) to
Slide 9: Efficient Operations
Upscale/Rooms-Focused Q1 2022 Hotel EBITDA Margin and RevPAR Comparison Upper Upscale/Full-Service EFFICIENT OPERATIONS 9 COURTYARD FORT WORTH HISTORIC STOCKYARDS Source: Company filings. Assumptions may vary by company. See explanation and reconciliation of Adjusted Hotel EBITDA to net income (loss
Slide 10: MFFO Outperformance
MFFO/AFFO Per Share Since Onset of Pandemic(1) Q1 2022 MFFO/AFFO Per Share (2) Upper Upscale/Full-Service 10 MFFO OUTPERFORMANCE MFFO outperformance preserves balance sheet and equity value HAMPTON INN & SUITES, PHOENIX, AZ Source: Company filings. Assumptions may vary by company. MFFO/AFFO per shar
Slide 11: Operating Trends
OPERATING TRENDS 11 Significant progress in recovery narrowing gap to 2019, with April 2022 RevPAR exceeding April 2019 RevPAR HOME2 SUITES JACKSONVILLE, NC
Slide 12: Occupancy Trends
Occupancy 12 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 returning following impact of Omicron in January and February 2022
Slide 13: Weekday vs. Weekend Occupancy
Source: Data provided by STR for hotels owned by the Company for the periods noted, including all rooms available for consolidated hotels, and may differ from actual results achieved. Weekday occupancy includes Sunday through Thursday nights and weekend occupancy includes Friday and Saturday nights.
Slide 14: % of Hotels by Occupancy Tier
% OF HOTELS BY OCCUPANCY TIER 14 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) HAMPTON INN & SUITES CAPE CANAVERAL CRUISE PORT
Slide 15: Portfolio Positioned for Continued Outperformance
15 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 varie
Slide 16: Why Branded Select-Service Hotels?
WHY BRANDED SELECT-SERVICE HOTELS? 16 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 C
Slide 17: Broad Consumer Appeal
Rooms-focused hotels with industry-leading brands have broad consumer appeal BROAD CONSUMER APPEAL 17 Independent HILTON GARDEN INN DOWNTOWN BIRMINGHAM HAMPTON INN & SUITES ATLANTA- DOWNTOWN SPRINGHILL SUITES LAFAYETTE SOUTH AT RIVER RANCH Note: Hotel portfolio statistics as of April 30, 2022. Based
Slide 18: Broad Geographic Diversification
18 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 d
Slide 19: Additional Upside as Business Travel Strengthens
19 ADDITIONAL UPSIDE AS BUSINESS TRAVEL STRENGTHENS With only 33% of the Company’s hotels achieving Q1 2022 RevPAR that met or exceeded Q1 2019 RevPAR, there is significant room for additional upside as business travel strengthens, leisure travel remains strong, and the recovery expands into additio
Slide 20: Opportunity for Long-Term Cost Savings
OPPORTUNITY FOR LONG-TERM COST SAVINGS 20 HAMPTON INN & SUITES PHOENIX DOWNTOWN
Slide 21: Limited Near-Term Impact from New Supply
LIMITED NEAR-TERM IMPACT FROM NEW SUPPLY 21 New construction starts have meaningfully decreased since onset of pandemic with anticipated delays in completion due to supply-chain and labor challenges Almost 50% of our hotels do not have any exposure to new projects currently under construction within
Slide 22: Industry-Leading Asset Management
INDUSTRY-LEADING ASSET MANAGEMENT 22 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
Slide 23: Balance Sheet Poised for Future Growth
23 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 Early exit of the Extended Covenant Waiver Period provides enhanced flexibil
Slide 24: Strong Balance Sheet & Liquidity Position
Debt Composition(1) ($ in millions) 24 STRONG BALANCE SHEET & LIQUIDITY POSITION Based on balances and hotels owned as of March 31, 2022, excluding unamortized fair value adjustment of assumed debt and unamortized debt issuance costs. Excludes yearly amortization. Includes the $56 million one-year n
Slide 25: Effective Portfolio Management & Strategic Growth
25 EFFECTIVE PORTFOLIO MANAGEMENT & STRATEGIC GROWTH HAMPTON INN & SUITES AND HOME2 SUITES HUNTSVILLE/RESEARCH PARK AREA Opportunistic Dispositions Strategic Growth Our objective is to maximize long-term shareholder value through opportunistic dispositions and accretive acquisitions that improve the
Slide 26: Recent Acquisition & Disposition Activity
26 RECENT ACQUISITION & DISPOSITION ACTIVITY Since the start of the pandemic, the Company has been a net acquirer, purchasing 12 hotels for approximately $473 million, while opportunistically disposing of 24 hotels for a total combined sales price of approximately $245 million. Nine of the hotels re
Slide 27: Net Acquirers Since Onset of Pandemic
27 NET ACQUIRERS SINCE ONSET OF PANDEMIC These two hotels comprise a dual-branded property at one location. Contract entered into prior to 2020. There are a number of conditions to closing that have not yet been satisfied and there can be no assurance that a closing on this hotel will occur under th
Slide 28: Acquisitions Under Contract
28 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 Biotec
Slide 29: Apple REIT Companies Transaction History
Apple REIT Companies Transaction History 1999 – April 30, 2022 446 TOTAL HOTELS ACQUIRED 227 TOTAL HOTELS SOLD 219 CURRENT PORTFOLIO 4 REITS SOLD IN 3 TRANSACTIONS 4 REITS MERGED TO FORM CURRENT APLE OVER 20-YEAR TRACK RECORD OF HOTEL TRANSACTIONS 29 Note: Hotel transactions by the various Apple REI
Slide 30: Well-Maintained Portfolio
WELL-MAINTAINED PORTFOLIO 30 HILTON GARDEN INN OMAHA DOWNTOWN/OLD MARKET AREA The Tripadvisor® rating is based on lifetime scores for the Apple Hospitality portfolio of hotels through March 31, 2022. Average Effective Age represents years since hotels were built or last renovated. Average actual age
Slide 31: U.S. Hotel Forecast
U.S. HOTEL FORECAST 31 U.S. Hotel Forecast HAMPTON INN SAN DIEGO-DOWNTOWN Source: Tourism Economics and CoStar Group January 2022
Slide 32: ESG Initiatives
ESG INITIATIVES HAMPTON INN & SUITES PORTLAND PEARL DISTRICT
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 34 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
Slide 35: Governance
GOVERNANCE 35 Alignment with the best interests of our shareholders is at the forefront of our values. HILTON GARDEN INN LAFAYETTE/CAJUNDOME
Slide 36: Appendix
APPENDIX HYATT HOUSE & HYATT PLACE TEMPE/PHOENIX/UNIVERSITY
Slide 37: 2020 and 2021 Dispositions
37 2020 AND 2021 DISPOSITIONS 20-hotel portfolio sale
Slide 38: Comparable Hotels Quarterly Operating Metrics
38 COMPARABLE HOTELS QUARTERLY OPERATING METRICS Comparable Hotels Quarterly Operating Metrics and Statistical Data (Unaudited) (in thousands, except statistical data) Note: Comparable Hotels is defined as the 219 hotels owned by the Company as of March 31, 2022. For hotels acquired during the perio
Slide 39: Same Store Hotels Quarterly Operating Metrics
39 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 perio
Slide 40: Reconciliation of Net Income (Loss) to EBITDA and Adjusted Hotel EBITDA
40 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 FROM MARCH 31, 2019 THROUGH MARCH 31, 2022
Slide 41: Reconciliation of Net Income (Loss) to FFO and MFFO
41 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 FROM MARCH 31, 2019 THROUGH MARCH 31, 2022 (Unaudited) (in thousands, except per share amounts) Note: The Consolidated Statements of Operati
Slide 42: Definitions
DEFINITIONS 42 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, I
Slide 43: Definitions Continued
DEFINITIONS CONTINUED 43 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”)), excludi
Slide 44: Trademark Information
TRADEMARK INFORMATION 44 “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 M
Slide 45: Contact Information
CONTACT INFORMATION 45 COURTYARD RICHMOND DOWNTOWN
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