Apple Hospitality Reit, Inc. · NYSE:APLE
Apple Hospitality Reit — Investor Presentation (March 2016)
44 slides from Apple Hospitality Reit's investor presentation, Mar 17, 2016
Slide 1: Investor Presentation March 2016
Slide 2: Forward Looking Statements
APPLE HOSPITALITY FORWARD LOOKING STATEMENTS
Slide 3: Company Profile
APPLE HOSPITALITY REIT COMPANY PROFILE
Slide 4: High Quality Portfolio
APPLE HOSPITALITY HIGH QUALITY PORTFOLIO
Slide 5: Management Team with Deep Industry Experience Over Multiple Hotel Cycles
APPLE HOSPITALITY MANAGEMENT TEAM WITH DEEP INDUSTRY EXPERIENCE OVER MULTIPLE HOTEL CYCLES + Average executive tenure with the Apple REIT Companies is more than 14 years + Established and operated 8 public hospitality REITs Raised and invested approximately $7 billion in hotel assets + Purchased ove
Slide 6: Proven Investment Strategy
APPLE HOSPITALITY PROVEN INVESTMENT STRATEGY 31x a Hire brand leading, Strategically operators and Concentrateon Pursue broad_—_—_—Partner wth the enhance FEMWESEIMASSELSO | Maintain a strong, Upscale, rooms geographic best brands in that performance ‘maintain flexible balance. focused product diver
Slide 7: Why Rooms Focused Product?
APPLE HOSPITALITY WHY ROOMS FOCUSED PRODUCT? Strong Simple, Consumer Efficient Demand & Operating Broad Appeal Model With more than 16,000 Upscale hotel rooms, Apple Hospitality is one of the largest owners of Upscale hotel rooms in the industry.
Slide 8: Efficient Hotel Operations
S (> apple HosrrTaurty EFFICIENT HOTEL OPERATIONS YID 12/31/15 Hotel EBITDA Margin and RevPAR Comparison =e Uap oxo — tenn 43% a ey 24% 33% 31% NK gy, wr 194 2 && & &. cor” ple, HT =| NN RL LHO™COPEBSOSHO.«ODRH | FCH OUST —revar er operating margins ream
Slide 9: Geographic Diversity
4 APPLE HOSPITALITY GEOGRAPHIC DIVERSITY
Slide 10: Concentrated Brand Ownership
4 APPLE HOSPITALITY CONCENTRATED BRAND OWNERSHIP Ranked among top five largest owners for both Hilton? and Marriott otal A6%, a“ @ Hilton’ MARRIOTT 54%,
Slide 11: Why Marriott & Hilton?
WHY MARRIOTT & HILTON? institutional Brainds foster strong resdle marker, financing flexibility and investor confidence Premier System Standards drive consistent quality, award winning service, innovative design, modern amenities Brand Channels Deliver Guests approximately 60% of allNorth ‘American
Slide 12: Benefits of Concentrated Brand Strategy
S (> ApPLe HosrrTAuity Ret BENEFITS OF CONCENTRATED BRAND STRATEGY One of the largest owners of Hilton® & Marriott? Upscale hotels
Slide 13: History of Apple REIT Brand Ownership
APPLE HOSPITALITY HISTORY OF APPLE REIT BRAND OWNERSHIP P| tl Hats One | Curent Hotel Ownership Embassy Suites by Hilton® 2 2 Hampton Inn by Hilton® and Hampton Inn & Suites by Hilton® 52 36 Hilton® 1 1 Hilton Garden Inn® 58 4l Home? Suites by Hilton® 5 5 Homewood Suites by Hilton® 6) 33 Courtyard b
Slide 14: High Quality Operators
APPLE HOSPITALITY HIGH QUALITY OPERATORS 1 00% portfolio operated by 3° party property managers 93% si of 3'4 party property management contracts are 2 independent of brand management 20 award winning operating companies provide a platform for comparative analytics and shared best practices 25% ” av
Slide 15: Management Contract Transformation
APPLE HOSPITALITY MANAGEMENT CONTRACT TRANSFORMATION Original Structure New Structure Variable Management Fee Base Management Fee 2.5% 3.5% oFhevenves Typically 3% of Revenues Sliding scale tied to hotel specific + balanced scorecard goals/performance compared to other participating hotels. Incentiv
Slide 16: Well Maintained Portfolio
APPLE HOSPITALITY WELL MAINTAINED PORTFOLIO : the Result of Consistent Reinvestment Quality Portfolio with Average Effective Age of 4 Years. 9% Years 2010 2011 2012 2013 2014 2015 2016 Year since built or lot renovated Cumulative CapEx ($ in millions) Leads to Traveler Satisfaction Outperformance YY
Slide 17: Portfolio Fine Tuning
APPLE HOSPITALITY PORTFOLIO “FINE TUNING” $120 WW WAPLE Portfolio" Acquisitions 7 $101 2015 RevPAR Average Age"! % 32) 150 38%! 128 Adjusted Hotel EBITDA Margin Average Number of Rooms
Slide 18: Flexible Balance Sheet
APPLE HOSPITALITY FLEXIBLE BALANCE SHEET 3.1X Net Debt / Adjusted EBITDA Debt Composition (") DEBT MATURITY SCHEDULE !" { millions} ees ee Rate: 6.0% fom Aes ie | tei Term loan foe: 5.38 tea tote 2.0 42%" NENCUMBERED PORTFOLIO 139 Hotels 5 17,755 keys ee ‘Mortgage Debt $22 $202 46% Bua [eo 2016 2017
Slide 19: Positive Industry Fundamentals
APPLE HOSPITALITY POSITIVE INDUSTRY FUNDAMENTALS US Hotel Forecast % Change vs. Prior Year es CBRE STR CBRE = CBRE 1.8% 1.9% 1.9% 2.3% 2.6% 2.3% 2.1% 2.1% Supply as Demand AeA | ees | DoS RevPAR 5.0% 5.5% 5.5% 45% 47% 3.8%
Slide 20: 2016 Guidance
APPLE HOSPITALITY REIT 2016 GUIDANCE er ee | low High Comparable Hotels RevPAR Growth 3.5% 5.5% Adjusted EBITDA $340 million $360 million
Slide 21: Comparable Hotels Financial Highlights
APPLE HOSPITALITY COMPARABLE HOTELS FINANCIAL HIGHLIGHTS {$ in thousonds except RevPAR) Three Months Ended December 31 ears Ende ember 31, 2015 2014 . 2015 2014 nce RevPAR $91.43 $86.30 5.9% $100.59 $94.41 65% Revenue $213,438 $199,429 7.0% $920,212 $854,620 7.7% Adjusted Hotel $74,903 $70,088 6.9%
Slide 22: Corporate Governance Aligns with Shareholders
APPLE HOSPITALITY CORPORATE GOVERNANCE ALIGNS WITH SHAREHOLDERS Audit, Compensation and Corporate Governance Committees are independent. Regular executive sessions of independent directors. Vote for non-staggered board at 2016 annual meeting. Vote for majority vote threshold for charter amendments a
Slide 23: Investment Summary
INVESTMENT SUMMARY Focused on Performance ‘Management team with . extensive transaction and operations experience Strong regional and national operators Analytical approach to drive property level results Scale to negotiate attractive + national contracts APPLE HOSPITALITY Structured to Reduce Risk
Slide 24: Appendix
Slide 25: Company Overview
COMPANY OVERVIEW DIVIDEND YIELD ot 12/31/2015 6.0% yield, annvcl rote of $1.20 per share, paid monthly AVERAGE TRADING VOLUME (1/1/16 - 2/29/16) 725,000 shores per day DEBT (12/31/2015) $1.0 Billion TOTAL CAPITALIZATION (12/31/2015) $4.5 Billion 1 Seng pgs et ae 25
Slide 26: 2015 Dispositions
APPLE HOSPITALITY 2015 Dispositions City State Brond Date Sold Rooms Huntvlle aL TownePlace Suites 2/26/2015 % Troy AL Courtyard 2/26/2015 90 Troy AL Hompton Ina 2/26/2015 2 Rogers AR Feild Inn & Suites 2/26/2015 99 Pueblo co Homplon inn & Suites 2/26/2015 al Port Wentwonth oA Hompton Inn 2/26/2015
Slide 27: 2015 Acquisitions
APPLE HOSPITALITY 2015 Acquisitions City Brand Date Acquired For Lauderdale cy Hampion lan 6/23/2015 Cypress cA Hompton Inn 6/29/2015 no Burbank cA SpringHil Suites 7/13/2015 170 Burbank cA Couryord af1/2015 190 Son Diage cA Couryord 9/1/2015 2as Syrocuse NY Couryord 10/16/2015 102 Syrocuse NY Resid
Slide 28: Consolidated Balance Sheets
APPLE HOSPITALITY ‘APPLE HOSPITALITY REIT, INC. CONSOLIDATED BALANCE SHEETS (inthowonds, eceptshore dla December 3 14 Asso Invesimant in real este nto of $423,057 ond $1 ‘Azste held fr sale oceumuloted dept 5589, reepectvey $3,641,787 $ 3,492,821 Reariced coth ~ furniture, fstres ond other escrowe u
Slide 29: Consolidated Statements of Operations and Comprehensive Income
APPLE HOSPITALITY ‘APPLE HOSPITALITY REIT, INC. CCONSOUDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) Hoa obebinttee Saeed watt Lowen pate 0 ere oe es Opting nce on loco on blac nae icon lad nt icone fon parce share {i foward, ence per shore da
Slide 30: Reconciliation of Net Income to EBITDA and Adjusted Hotel EBITDA
APPLE HOSPITALITY ‘THE FOLLOWING TABLE RECONCILES THE COMPANY'S GAAP NET INCOME (LOSS) TO EBITDA, ADJUSTED EBITDA AND ADJUSTED HOTEL EBITDA FOR THE THREE MONTHS AND YEARS ENDED DECEMBER 31, 2015 AND 2014 Net income (loss) Depreciation Amortization of favorable and unfavorable leases, net Interest an
Slide 31: Reconciliation of Net Income to FFO and MFFO
APPLE HOSPITALITY THE FOLLOWING TABLE RECONCILES THE COMPANY'S GAAP NET INCOME (LOSS) TO FFO AND MFFO. FOR THE THREE MONTHS AND YEARS ENDED DECEMBER 31, 2015 AND 2014 Net income (loss) Depreciation of reo estate owned Gain on sale of realestate Loss on impoirment of depreciable realestate asses “Amo
Slide 32: Comparable Hotels Operating Metrics and Statistical Data
APPLE HOSPITALITY ‘APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS OPERATING METRICS AND STATISTICAL DATA (Unaudited) (in thousonds excep! statistical doto} oom reac $190.48 “ $ saneis —$ 70723 78% To eves 213.498 70% 212 -854.620 Ade os ‘ s yom 6m save 102 S iri2 $1259 45m $3033 2H s $830 59% $ 1005
Slide 33: Comparable Hotels Operating Metrics and Statistical Data (Quarterly)
APPLE HOSPITALITY "APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS OPERATING METRICS AND STATISTICAL DATA (Unaudited) in thousonds except statistical doto} Three Months Ended 2/91/14 6/90/14 9/30/14 12/31/14_3/31/15__4/30/15_9/30/15_ 12/31/15 $ 179299 $ 209.051 § 5 04082 $224,108 $ $199,148 196.998 2
Slide 34: Comparable Hotels Operating Metrics by Region, Three Months
APPLE HOSPITALITY COMPARABLE HOTELS OPERATING METRICS BY REGION THREE MONTHS ENDED DECEMBER 31 (Unaudited) eof Adjusted Hotel Region/Stote Sccupa Average Daly Roto RevPAR EBITDA 7a Holss G4 2015 G4 2014 %.Chonge 242015 042014 % Change @42015 G4 2014 % Cronge 42015 as Nosh Conte Hlinis 4 658% 6828 B.
Slide 35: Operating Metrics by Region, Three Months (Continued)
APPLE HOSPITALITY COMPARABLE HOTELS OPERATING METRICS BY REGION THREE MONTHS ENDED DECEMBER 31 (Unaudited) (CONTINUED) Region/Siote Cccupane ‘Average Daly Rate RevPa EBITDA 7a Holes _G42015 42014 %Croage 042015 G4 2014 “i Chonge 242015 GA2014_% Crys 042015 Pose ‘sie 1 TLR BIR [129% $160.84 $156.13 3
Slide 36: Comparable Hotels Operating Metrics by Region, Year Ended
APPLE HOSPITALITY COMPARABLE HOTELS OPERATING METRICS BY REGION YEAR ENDED DECEMBER 31 (Unaudited) Sot Adjusted Hotel Region/Stote ccupan ‘Average Daily Rate Reva EBITDA 7a Hoist Y1D2015 Y1D2014 ‘change _YID 2015 _¥T02014_% Chonga 102015 102014 %Chonge _vID 2015 ou! Noth Coal tie 4 7A7R 73% «PRFID $
Slide 37: Operating Metrics by Region, Year Ended (Continued)
APPLE HOSPITALITY COMPARABLE HOTELS OPERATING METRICS BY REGION YEAR ENDED DECEMBER 31 (Unoudited) (CONTINUED) ed Agjied Ho! Region/Sete 2 eewpen Avvo Daily Rte ResPAR SIDA Hols 102015 YTO2014 Change __YTD2015_YID2014_% Change yr 2015 102014 %4Chonge 102015 Poole “Aetka 1 834% 8.1% AN ——$20892 $1929
Slide 38: Operating Metrics by Chain Scale, Three Months
APPLE HOSPITALITY COMPARABLE HOTELS OPERATING METRICS BY CHAIN SCALE THREE MONTHS ENDED DECEMBER 31 (Unaudited) sal Adjsed hon Sole eespone Aveoge Day Rote Rea Biba Far Holes _G42015 Q42014 Change 42015 @47014_% Change 042015 42014 Cuong 47015 Unsecle Coutyerd ad 695% 72K $126.08 $2045 5.2% se774 $0
Slide 39: Operating Metrics by Chain Scale, Year Ended
APPLE HOSPITALITY COMPARABLE HOTELS OPERATING METRICS BY CHAIN SCALE YEAR ENDED DECEMBER 31 (Unaudited) (CONTINUED) nel Ache hein Sele Cczipos Aree Day Rte sopan soe vies 102015102014 %.Chaye __WID2015_VD2014_%Choye __YIDZ015_Y1D2014 “Change _Y102015 Uoscol Coutyed 34 7058 728% 10% $1358 28H frm $75
Slide 40: Management Companies
APPLE HOSPITALITY MANAGEMENT COMPANIES Apple top %F Apple Hospi’ 7 Rank Properties (1) gtoseitlly ons 100% of Apple Hospitality’s portfolio Opsteior | operated by 3 party property BA 2s 168% 61% ee 2 Dimension 2 19% a 93% independent of brand management@l 2 White Lodging 21 12% a% i Winn * ee 20 ope
Slide 41: Definitions
APPLE HOSPITALITY DEFINITIONS
Slide 42: Definitions (Continued)
APPLE HOSPITALITY DEFINITIONS (CONTINUED)
Slide 43: Trademark Information
APPLE HOSPITALITY TRADEMARK INFORMATION
Slide 44: Contact Information
APPLE HOSPITALITY CONTACT INFORMATION 814 East Main Street Richmond, VA 23219 (804) 344-8121 www.applehospitalityreit.com
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