Apple Hospitality Reit, Inc. · NYSE:APLE

Apple Hospitality Reit — Investor Presentation (February 2018)

52 slides from Apple Hospitality Reit's investor presentation, Feb 27, 2018

  1. Slide 1: Apple Hospitality REIT Investor Presentation

    APPLE HOSPITALITY REIT INVESTOR PRESENTATION FEBRUARY 2018 « NYSE: APLE

  2. 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

  3. Slide 3: Company Profile

    EEE & APPLE HOSPITALITY REIT COMPANY PROFILE 34 SLATES 88 MARKETS 241 HOTELS 30,585 GUE SciR:O: 0 MES: 99% SEEECT SERVICE 4 years ANUEIR AGE ERE Cal iVees AG E 21% HOTAE PERT / TOTAL CAPITALIZATION $4.5 Billion Ee }aU a PBN es a WEN IRGC al Os) N de) Note: Hotel portfolio statistics as of February 2

  4. Slide 4: Equity Market Capitalization

    & APPLE HOSPITALITY REIT EQUITY MARKET CAPITALIZATION ($ in billions) $147 WE Upscale /Select Service Focus MEE Upper Upscale Full Service Focus mmm Apple Hospitality Upscale Select Service Focus $6.2 $4.5 $3.8 $37 $3.2 92.6 $23 $2.3 . . $1.6 $1.6 $10 $07 $07 HST PK APLE RU SHO LHO PEB XHR DRH CHSP

  5. Slide 5: Proven Investment Strategy

    & APPLE HOSPITALITY REIT PROVEN INVESTMENT STRATEGY f NV NV 21%" fe) OV) Mariott. Debt/Capitalization | Hire brand leadin . operators and ° ' Strategically Concentrate on Partner with the best Pursue broad enhance ee choad '0 Maintain a strong, upscale, rooms brands in that geographic performance .

  6. Slide 6: High-Quality Portfolio

    ‘ APPLE HOSPITALITY REIT HIGH-QUALITY PORTFOLIO 99% of APLE’s Hotels are Select-Service Courtyard, Virginia Beach, VA

  7. Slide 7: Why Select-Service Hotels?

    & APPLE HOSPITALITY REIT WHY SELECT-SERVICE HOTELS? Less: More: Rooms to fill Consumer demand Square footage to manage Easily renovated Sielii lender/buyer appeal Maintenance Consistency in operations Complex Adaptable to change (1) Apple Hospitality's average annual Hotel EBITDA margin for the five

  8. 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 74.3%P 73.0% Low 72.0% 62.6% High 62.8% 60% low 62.1% 40% % of Revenue 29. A% 20% 17.3%13) High 12 al 8.7% 9 Low 5.1% 5.9% Mrigh 6.6% Low 4.9% a 2.0% 2.1% 0% Operating Expense G&A Expense Capex A

  9. Slide 9: Efficient Hotel Operations

    & APPLE HOSPITALITY REIT EFFICIENT HOTEL OPERATIONS YTD 12/31/17 Hotel EBITDA Margin and RevPAR Comparison WEEE Upscale/Select Service Focus EEE Upper Upscale/Full Service Focus (QE Apple Hospitality Upscale/SelectService Focus 40% 7 38% 37% 34% 34% 34% 33% 33% 32% 32% 31% 31% cloT PLE"! INN PEB HT

  10. Slide 10: Concentrated Brand Ownership

    & APPLE HOSPITALITY REIT CONCENTRATED BRAND OWNERSHIP COURTYARD Marnott y,\\ 4) Avarmiott. a RENAISSANCE With focus on Upscale Select-Service - \» Upscale TOWNEPLACE = Upper Midscale = Upper Upscale One of the largest owners for both Hilton® and Marriott® Note: Statistics are based on the number of

  11. Slide 11: Why Marriott and Hilton?

    i @ 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 estim

  12. 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

  13. Slide 13: Benefits of Scale Ownership

    ——— @ APPLE HOSPITALITY REIT BENEFITS OF SCALE OWNERSHIP Largest Select-Service Focused Publicly Traded Lodging REIT Unparalleled Access to Performance Data With current management of 241 hotels and more than 400 historically, unique ability to identify areas of opportunity and implement best practi

  14. Slide 14: Broad Geographic Diversification

    e& APPLE HOSPITALITY REIT BROAD GEOGRAPHIC DIVERSIFICATION Adjusted Hotel EBITDA contribution by market type Urban 23% Airport 6% interstate 2% , Resort 5% Small Metro 5% Disciplined strategy of investing in urban, high-end suburban and developing markets where diverse demand generators and proximit

  15. Slide 15: Management Companies

    & APPLE HOSPITALITY REIT Rank 1 2 3 Company Name LBA White Lodging Dimension McKibbon Western Marriott Raymond Newport North Central Vista Host MANAGEMENT COMPANIES AS OF DECEMBER 31, 2017 Total # of Properties!') 42 28 14 14 % of Apple Hospitality Portfolio!) 18% 12% 10% 8% 7% 6% 6% A% 4% 4% 10 APP

  16. 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

  17. Slide 17: Well-Maintained Portfolio

    & APPLE HOSPITALITY REIT WELL-MAINTAINED PORTFOLIO Quality Portfolio with Average Effective Age of 4 Years." ...the Result of Consistent Reinvestment... $139 $174 0-7 Years 90% 2011 2012 2013 2014 2015 2016 2017 2018 and prior Forecast Years since built or last renovated B Cumulative CapEx ($ in mil

  18. Slide 18: Flexible Balance Sheet

    & APPLE HOSPITALITY REIT FLEXIBLE BALANCE SHEET ebt Composition") bt Maturity Schedule!!!) {$ in millions) Hotels: 1 Hotels: 14 Keys: 130 Keys: 2,227 Rate 4.1% Rate: 4.1% Term loan Term loan Rate: 3.4%!9) ) UNENCUMBERED PORTFOLIO ee Hotels: 2 Keys: 180 210 Hotels Rate: 4.8% - , Revolver Hotels: 3 Ho

  19. Slide 19: Industry Fundamentals

    & APPLE HOSPITALITY REIT INDUSTRY FUNDAMENTALS US Hotel Forecast % Change vs. Prior Year STR CBRE PwC STR CBRE Supply 2.0% 2.0% 2.0% 1.9% 1.9% Demand 2.3% 1.8% 2.2% 2.0% 1.9% RevPAR 2.7% 2.5% 2.7% 24% 2.0% Source: STR January 2018; CBRE Hotels Hotel Horizons March 2018 - May 2018 Edition; PwC Hospit

  20. Slide 20: Comparable Hotels Financial Highlights

    & APPLE HOSPITALITY REIT COMPARABLE HOTELS FINANCIAL HIGHLIGHTS ($ in thousands except statistical data} Three Months Ended December 31, Years Ended December 31, % % 2017 2016 CHANGE 2017 2016 CHANGE RevPAR $95.78 $92.55 3.5% $104.40 $102.80 1.6% Revenue $290,203 $278,149 4.3% $1,241,188 $1,215,119

  21. Slide 21: Corporate Governance

    & APPLE 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

  22. 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

  23. Slide 23: APLE Trading Total Return Performance

    & APPLE HOSPITALITY REIT $145.00 $135.00 $125.00 $115.00 $105.00 $95.00 $85.00 $75.00 APLE TRADING Total Return Performance May 18, 2015 to December 31, 2017 Total Return APLE S&P 500 SNL U.S. REIT Hotel + 28.3% + 32.7% +7.9% Average Share APLE Capital Markets : 19.55 Issue Price $ Average Share $17

  24. Slide 24: Appendix

    APPENDIX Fairfield Inn &Suites, Chandler, AZ

  25. Slide 25: Company Overview

    & APPLE HOSPITALITY REIT COMPANY OVERVIEW ENTITY EXCHANGE: TICKER DIVIDEND YIELD at 12/31/2017 AVERAGE TRADING V EQUITY MARKET CAP at 12/31/2017 -T DEBT at 12/31/2017 TOTAL CAPITALIZATION at 12/31/2017 REAL ESTATE PORTFOLIO at 2/22/2018 GEOGRAPHIC DIVERSIFICATION at 12/31/2017 2017 COMPARABLE HOTELS

  26. Slide 26: 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

  27. Slide 27: History of Apple REIT Brand Ownership

    & APPLE HOSPITALITY REIT (1) (2) (3) (4) (5) HISTORY OF APPLE REIT BRAND OWNERSHIP Total Hotels Current Hotel Owned!!! Ownership?! Hilton Garden Inn® Courtyard by Marriot® Hampton by Hilton® Homewood Suites by Hilton® Residence Inn by Marriott® SpringHill Suites by Marriott® TownePlace Suites by Mar

  28. Slide 28: Transactional Activity

    & APPLE HOSPITALITY REIT (3) TRANSACTIONAL ACTIVITY 2017 and 2018 Acquisitions Date Acquired Courtyard by Marriot® 2/2/2017 Hilton Garden Inn® 9/12/2017 Home?2 Suites by Hilton® 9/12/2017 Residence Inn by Marriott® 10/13/2017 Residence Inn by Marriott® 10/20/2017 Home? Suites by Hilton® 12/1/2017 Ha

  29. Slide 29: Consolidated Balance Sheets

    ® ABELE HOSPITALITY BRUT APPLE HOSPITALITY REIT, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share data) December 31, December 31, 2017 2016 Assets Investment in real estate, net of accumulated depreciation of $731,284 and $557,597, respectively $ 4,793,159 $ 4,823,489 Assets held for sal

  30. Slide 30: Consolidated Statements of Operations and Comprehensive Income

    © ——EE—e APPLE HOSPITALITY REIT, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (in thousands, except per share data) Three Months Ended Years Ended December 31, (Unaudited) December 31, 2017 2016 2017 2016 Revenues: Room $ 266,013 $ 257,360 $ 1,143,987 $ 956,119 Other 23,054 25

  31. Slide 31: 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 MARCH 31, 2016 THROUGH DECEMBER 31, 2017 (Unaudited) {in thousands} Three Months Ended 3/31/2016 _6/30/2016_ _ 9/30/2016 12/31/2

  32. Slide 32: Reconciliation of Net Income to FFO and MFFO

    & APPLE HOSPITALITY REIT THE FOLLOWING TABLE RECONCILES THE COMPANY’S GAAP NET INCOME (LOSS) TO FFO AND MFFO FOR THE THREE MONTHS AND YEARS ENDED DECEMBER 31, 2017 AND 2016 (Unaudited) {in thousands} Net income (loss) Depreciation of real estate owned (Gain) loss on sale of real estate Loss on impai

  33. Slide 33: 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 Years Ended December 31, December 31, 2017 2016 % Change 2017 2016 % Change Room revenue $ 267,180 $ 255,297 47% $ 1,14

  34. Slide 34: Comparable Hotels Quarterly Operating Metrics

    & APPLE HOSPITALITY REIT a APPLE HOSPITALITY REIT, INC. COMPARABLE 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 _12/31/2017 Room revenue $ 263,

  35. Slide 35: Same Store Hotels Operating Metrics and Statistical Data

    & APPLE HOSPITALITY REIT APPLE HOSPITALITY REIT, INC. SAME STORE HOTELS OPERATING METRICS AND STATISTICAL DATA (Unaudited) (in thousands except statistical data) Three Months Ended Years Ended December 31, December 31, 2017 2016 % Change 2017 2016 % Change Room revenue $ 199,219 $ 193,850 2.8% $ 864

  36. Slide 36: Same Store Hotels Quarterly Operating Metrics

    & APPLE HOSPITALITY REIT SAME STORE HOTELS QUARTERLY OPERATING METRICS AND STATISTICAL DATA (Unaudited) {in thousands except statistical data) Room revenue Other revenue Total revenue Total operating expenses Adjusted Hotel EBITDA Adjusted Hotel EBITDA Margin % ADR (Same Store Hotels) Occupancy (Sam

  37. Slide 37: Comparable Hotels Operating Metrics by Market

    & APPLE HOSPITALITY REIT APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS OPERATING METRICS BY MARKET THREE MONTHS ENDED DECEMBER 31 (Unaudited) % of Adjusted Hotel Occupancy ADR RevPAR EBITDA # of Hotels Q42017_Q4 2016 % Change Q42017_Q42016 % Change Q42017_Q4 2016 % Change Q4 2017 Top 20 Markets Los

  38. Slide 38: Comparable Hotels Operating Metrics by Market (Continued)

    & APPLE HOSPITALITY REIT APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS OPERATING METRICS BY MARKET THREE MONTHS ENDED DECEMBER 31 (Unaudited) (Continued) % of Adjusted Hotel Occupancy ADR ReyPAR EBITDA # of Hotels Q4 2017_Q4 2016 % Change Q42017_@Q4 2016 _% Change Q42017_@4 2016 _% Change Q4 2017 A

  39. Slide 39: Comparable Hotels Operating Metrics by Market (Continued)

    & APPLE HOSPITALITY REIT APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS OPERATING METRICS BY MARKET THREE MONTHS ENDED DECEMBER 31 (Unaudited) (Continued) % of Adjusted Hotel Occupancy ADR RevPAR EBITDA # of Hotels Q42017__Q4 2016 % Change Q4 2017 _@Q4 2016 % Change Q42017_@4 2016 % Change Q4 2017 A

  40. Slide 40: Comparable Hotels Operating Metrics by Market (Continued)

    & APPLE HOSPITALITY REIT APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS OPERATING METRICS BY MARKET THREE MONTHS ENDED DECEMBER 31 (Unaudited) (Continued) % of Adjusted Hotel Occupancy ADR RevPAR EBITDA # of Hotels —_Q4. 2017_ Q4.2016_% Change Q42017_Q42016 % Change Q42017_@42016 % Change Q4 2017 Al

  41. Slide 41: Comparable Hotels Operating Metrics by Market, Years Ended

    & APPLE HOSPITALITY REIT APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS OPERATING METRICS BY MARKET YEARS ENDED DECEMBER 31 (Unaudited) % of Adjusted Hotel Occupancy ADR RevPAR EBITDA #ofHotels _YID 2017 YTD 2016 %Change _YTID2017 YTD 2016 %Change _YTD2017 YTD2016 %Change _YTD 2017 Top 20 Markets Lo

  42. Slide 42: Comparable Hotels Operating Metrics by Market (Continued)

    & APPLE HOSPITALITY REIT APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS OPERATING METRICS BY MARKET YEARS ENDED DECEMBER 31 (Unaudited) (Continued) % of Adjusted Hotel Occupancy ADR RevPAR EBITDA. # of Hotels YTD 2017_YTD 2016 % Change YID 2017_YTD 2016 % Change YTD 2017_YTD 2016 % Change YTD 2017 A

  43. Slide 43: Comparable Hotels Operating Metrics by Market (Continued)

    & APPLE HOSPITALITY REIT APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS OPERATING METRICS BY MARKET YEARS ENDED DECEMBER 31 (Unaudited) (Continued) % of Adjusted Hotel Occupancy ADR RevPAR EBITDA # of Hotels YTD 2017_YTD 2016 % Change YID 2017_YTD 2016 % Change YTD 2017_YTD 2016 % Change YTD 2017, A

  44. Slide 44: Comparable Hotels Operating Metrics by Market (Continued)

    & APPLE HOSPITALITY REIT APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS OPERATING METRICS BY MARKET YEARS ENDED DECEMBER 31 (Unaudited) (Continued) % of Adjusted Hotel Occupancy ADR RevPAR EBITDA # of Hotels YTD 2017_YTD 2016 _% Change YTD 2017_YTD 2016 % Change YTD 2017_YTD 2016 % Change YTD 2017 A

  45. Slide 45: Comparable Hotels Operating Metrics by Region

    & APPLE HOSPITALITY REIT APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS OPERATING METRICS BY REGION THREE MONTHS ENDED DECEMBER 31 (Unaudited) % of Adjusted Hotel Region Occupancy ADR RevPAR EBITDA. # of Hotels Q42017_Q4 2016 % Change Q42017_Q42016 % Change Q4 2017 _Q42016 % Change Q4 2017 STR Regio

  46. Slide 46: Comparable Hotels Operating Metrics by Region, Years Ended

    & APPLE HOSPITALITY REIT APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS OPERATING METRICS BY REGION YEARS ENDED DECEMBER 31 (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 STR Re

  47. Slide 47: Comparable Hotels Operating Metrics by Chain Scale

    & APPLE HOSPITALITY REIT APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS OPERATING METRICS BY CHAIN SCALE THREE MONTHS ENDED DECEMBER 31 (Unaudited) % of Adjusted Hotel Chain Scale/Brand Occupancy ADR RevPAR EBITDA # of Hotels @42017__Q42016 % Change Q42017__Q4 2016 % Change Q42017__Q42016 % Change Q

  48. Slide 48: Comparable Hotels Operating Metrics by Chain Scale, Years Ended

    & APPLE HOSPITALITY REIT APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS OPERATING METRICS BY CHAIN SCALE YEARS ENDED DECEMBER 31 (Unaudited) % of Adjusted Hotel Chain Scale/Brand Occupancy ADR RevPAR EBITDA # of Hotels YID 2017_YTD 2016 % Change YTD 2017_YTD 2016 _% Change YTD 2017_ YTD 2016 _% Chan

  49. Slide 49: Definitions

    & APPLE HOSPITALITY REIT DEFINITIONS 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, Income Taxes

  50. Slide 50: Definitions (Continued)

    & APPLE HOSPITALITY REIT DEFINITIONS (CONTINUED) FFO 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 accept

  51. Slide 51: Trademark Information

    & APPLE HOSPITALITY REIT TRADEMARK INFORMATION “Courtyard by Marriot®,” “Fairfield Inn by Marriot®,” “Fairfield Inn & Suites by Marriott®,” “Marriotf® Hotels,” “Renaissance® Hotels,” “Residence Inn by Marriotf®,” “SpringHill Suites by Marriott®,” and “TownePlace Suites by Marriot®’ are each a regist

  52. Slide 52: Contact Information

    & APPLE HOSPITALITY REIT CONTACT INFORMATION 814 East Main Street Richmond, VA 23219 (804) 344-8121 www.applehospitalityreit.com 52

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