Apple Hospitality Reit, Inc. · NYSE:APLE
Apple Hospitality Reit — Investor Presentation (March 2021)
36 slides from Apple Hospitality Reit's investor presentation, Mar 9, 2021
Slide 1: Investor Presentation March 2021
MARCH 2021 • NYSE: APLE INVESTOR PRESENTATION Exhibit 99.1
Slide 2: Forward-looking statements
COVER PHOTOS: HYATT PLACE AND HYATT HOUSE, TEMPE, AZ; RESIDENCE INN, DANIA BEACH, FL; TOWNEPLACE SUITES, FORT WORTH, TX; HILTON GARDEN INN, HIGHLANDS RANCH, CO 2 HAMPTON INN & SUITES AND HOME2 SUITES, CAPE CANAVERAL, FL Certain statements made in this presentation are forward-looking statements, inc
Slide 3: Company Profile & Proven Investment Strategy
COMPANY PROFILE & PROVEN INVESTMENT STRATEGY Note: Hotel portfolio statistics as of March 8, 2021. Market categorization based on STR designation. Average Effective Age represents years since hotels were built or last renovated. Average actual age of hotels is 14 years. The TripAdvisor® rating is ba
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: Key Takeaways
KEY TAKEAWAYS 2020 OUTPERFORMANCE First publicly traded lodging REIT to return to positive cash flow All of the Company’s hotels were open and receiving reservations Efficient operating model of rooms-focused hotels allowed for swift operational changes and cost mitigation Retained hotel sales staff
Slide 6: 2020 Monthly Operating Statistics
2020 MONTHLY OPERATING STATISTICS 6 COURTYARD, VIRGINIA BEACH, VA Note: Explanation and reconciliation to net income (loss) determined in accordance with generally accepted accounting principles (“GAAP”) of non-GAAP financial measures, Adjusted Hotel EBITDA and Modified Funds from Operations (“MFFO”
Slide 7: RevPAR Trends
RevPAR TRENDS 7 SPRINGHILL SUITES, ORLANDO, FL HAMPTON INN, CYPRESS, CA COURTYARD, CHANDLER, AZ 2020 Monthly RevPAR 2020 Monthly RevPAR YOY % Change Year-over-year change steady through seasonally slower months
Slide 8: 2020 MFFO Outperformance
Apple Hospitality’s efficient operating model and capital structure resulted in leading 2020 MFFO performance 2020 OUTPERFORMANCE 8 HAMPTON INN & SUITES, PHOENIX, AZ Source: Company filings. Assumptions vary by company. Explanations of and reconciliations to net income (loss) determined in accordanc
Slide 9: Portfolio Positioned for Outperformance
PORTFOLIO POSITIONED FOR OUTPERFORMANCE 9 Not Dependent on Large Group Business Portfolio Diversified Across Location Types with Limited Exposure to Urban City Centers Rooms-Focused Portfolio with Significant Extended Stay and Suite Product Demand Index by Chain Scale(2) Note: Hotel portfolio statis
Slide 10: Building Occupancy Following Seasonal Declines
10 HAMPTON INN & SUITES, BOISE, ID HAMPTON INN & SUITES, ATLANTA, GA SPRINGHILL SUITES, BURBANK, CA Occupancy Source: Weekly data provided by STR for the Company’s hotels owned as of February 18, 2021, including all rooms available for consolidated hotels, and may differ from actual results achieved
Slide 11: % of Hotels by Occupancy Tier
% OF HOTELS BY OCCUPANCY TIER Week ended 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. Consolidated hotels included in 0% - 15% occupancy tier. Building occupancy
Slide 12: Proven Investment Strategy
PROVEN INVESTMENT STRATEGY 12
Slide 13: Why Branded Select-Service Hotels?
WHY BRANDED SELECT-SERVICE HOTELS? 13 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 sanitize Low dependence on large group business Efficient Operating
Slide 14: Efficient Hotel Operations
EFFICIENT HOTEL OPERATIONS 14 HOMEWOOD SUITES, CAPE CANAVERAL, FL 2019 Hotel EBITDA Margin and RevPAR Comparison Ability to produce strong operating margins with lower RevPAR Source: Public company filings as of December 31, 2019. Upscale/Rooms-Focused Upper Upscale/Full-Service Upscale & Upper Upsc
Slide 15: Broad Consumer Appeal
Business Leisure Government Military Construction Disaster Recovery Health Care Education Athletics First Responders Insurance Social Rooms-focused hotels with industry-leading brands have broad consumer appeal BROAD CONSUMER APPEAL Note: Hotel portfolio statistics as of March 8, 2021. 15 Broad mix
Slide 16: Industry-Leading Operators
INDUSTRY-LEADING OPERATORS 16 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 operat
Slide 17: Broad Geographic Diversification
BROAD GEOGRAPHIC DIVERSIFICATION 17 Broad geographic diversification provides exposure to wide variety of demand generators Nearly all markets benefit from drive-to demand Low dependence on inbound international travel with majority of hotels located outside of gateway markets Diversified Across 88
Slide 18: Apple REIT Companies Transaction History
Apple REIT Companies Transaction History 1999 – February 2021 439 TOTAL HOTELS ACQUIRED 205 TOTAL HOTELS SOLD 234 CURRENT PORTFOLIO 4 REITS SOLD IN 3 TRANSACTIONS 4 REITS MERGED TO FORM CURRENT APLE 20-YEAR TRACK RECORD OF HOTEL TRANSACTIONS 18 Note: Hotel transactions by the various Apple REIT Comp
Slide 19: 2020 & 2021 Portfolio Activity & Pending Transactions
2020 & 2021 PORTFOLIO ACTIVITY & PENDING TRANSACTIONS Note: As of March 8, 2021. 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 c
Slide 20: Well-Maintained Portfolio
WELL-MAINTAINED PORTFOLIO 20 HAMPTON INN & SUITES, MEMPHIS, TN SPRINGHILL SUITES, ALEXANDRIA, VA HOMEWOOD SUITES, AUSTIN, TX The TripAdvisor® rating is based on lifetime scores for the Apple Hospitality portfolio of hotels through December 31, 2020. Average Effective Age represents years since hotel
Slide 21: Strong Balance Sheet & Liquidity Position
Debt Composition(1) STRONG BALANCE SHEET & LIQUIDITY POSITION Based on balances and hotels owned as of December 31, 2020, excluding unamortized fair value adjustment of assumed debt and unamortized debt issuance costs. Excludes yearly amortization. Interest rate includes effect of interest rate swap
Slide 22: Amendments to Unsecured Credit Facilities
AMENDMENTS TO UNSECURED CREDIT FACILITIES 22 Note: See further information on the Company’s indebtedness and amendments to unsecured credit facilities in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, and related public filings. Following the Extended Covenant Waiver
Slide 23: Amendments to Unsecured Credit Facilities
AMENDMENTS TO UNSECURED CREDIT FACILITIES 23 Note: See further information on the Company’s indebtedness and amendments to unsecured credit facilities in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 and related public filings. Modified financial covenant thresholds a
Slide 24: Strategic Objectives
STRATEGIC OBJECTIVES 24 Build off of base occupancy with all hotels open Continue focus on direct sales efforts Optimize mix of business through strategic revenue management to drive rate Leverage internal revenue team to identify best practices and drive revenue across portfolio Grow Top Line Perfo
Slide 25: ESG Initiatives
ESG INITIATIVES COURTYARD, CAROLINA BEACH, NC
Slide 26: 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 27: 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 28: Governance
GOVERNANCE Alignment with the best interests of our shareholders is at the forefront of our values. 28 HILTON GARDEN INN, SACRAMENTO, CA
Slide 29: Appendix
APPENDIX COURTYARD, SANTA ANA, CA
Slide 30: Year-Over-Year Performance
30 YEAR-OVER-YEAR PERFORMANCE HAMPTON INN & SUITES, MEMPHIS, TN ($ in thousands except statistical data) 2020 Performance at a Glance Note: See explanation and reconciliation of Adjusted Hotel EBITDA to net income (loss) included in subsequent pages.
Slide 31: Reconciliation of Net Income (Loss) to EBITDA and Adjusted Hotel EBITDA
31 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 DECEMBER 31, 2
Slide 32: Reconciliation of Net Income (Loss) to FFO and MFFO
32 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, 2020 THROUGH DECEMBER 31, 2020 AND FOR THE YEAR ENDED DECEMBER 31, 2020 (Unaudited) (in thousands, except per share amounts)
Slide 33: Definitions
DEFINITIONS 33 HYATT PLACE, JACKSONVILLE, FL 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 34: Definitions Continued
DEFINITIONS CONTINUED 34 RESIDENCE INN, BURBANK, CA 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 gains and los
Slide 35: Trademark Information
TRADEMARK INFORMATION “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 Marriott®” are each a registered trademark of M
Slide 36: Contact Information
CONTACT INFORMATION 36 COURTYARD, RICHMOND, VA
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