Apple Hospitality Reit, Inc. · NYSE:APLE

Apple Hospitality Reit — Investor Presentation (November 2016)

45 slides from Apple Hospitality Reit's investor presentation, Nov 14, 2016

  1. Slide 1: Investor Presentation

    APPLE HOSPITALITY Investor Presentation November 2016 © NYSE:APLE

  2. Slide 2: Forward-Looking Statements

    Cover photos Fairfield Ini APPLE HOSPITALITY 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 st

  3. Slide 3: Company Profile

    APPLE HOSPITALITY COMPANY PROFILE 33 States 96 sas = 236 Hotels Ai 30,299 Guestrooms 4 YTS. Average Effective Age 3 .OX Net Debt/Adjusted EBITDA $4.1 Billion Equity Market Cap e Note: Statistics as of September 30, 2016. Net Debt/Adjusted EBITDA calculation based on outstanding r debt less cash on h

  4. Slide 4: Residence Inn and Courtyard photos

    APPLE HOSPITALITY | , a & 4 + 5 + ¢ Tae ve arn itil it a! 5m ie & ba RESIDENCE INN COURTYARD Tustin, CA Kirkland WA" 149 Keys 150 Keys

  5. Slide 5: Equity Market Capitalization

    APPLE HOSPITALITY EQUITY MARKET CAPITALIZATION ($ millions) Mmmm «Upscale MEE Upper Upscale $11,492 MEE Apple Hospitality $4,135 $2,769 $2,699 $2,614 $1,913 $1,828 §1,699 $1149 $886 $755 $738 $566 HST PLE!) SHO LHO RU PEB DRH XHR INN FCH HT CLOT AHT Largest select service public lodging REIT with a

  6. Slide 6: Acquired Highly Complementary Apple REIT Ten Portfolio 9/1/16

    APPLE HOSPITALITY ACQUIRED HIGHLY COMPLEMENTARY APPLE REIT TEN PORTFOLIO 9/1/16 Strengthens position as the largest upscale select service focused lodging REIT Further diversifies broad geographically diversified portfolio Significant growth while maintaining an upscale select service portfolio with

  7. Slide 7: 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 o

  8. Slide 8: Proven Investment Strategy

    APPLE HOSPITALITY PROVEN INVESTMENT STRATEGY i] HHILTON 3 0 MARRIOTT Hire brand leading Strategically SnesT TM reinvest in assets to Concentrate on Pursue broad Partner with the enhance : Maintain a strong, ' f establish and , Upscale, rooms geographic best brands in that performance aa flexible bal

  9. Slide 9: Why Rooms Focused Product?

    APPLE HOSPITALITY WHY ROOMS FOCUSED PRODUCT? Strong Simple, : , Consumer Efficient High ee with Lower Volatility Demand & Operating Broad Appeal Model With more than 28,000 select service and extended stay hotel rooms, Apple Hospitality is one of the largest owners of select service and extended sta

  10. Slide 10: Efficient Hotel Operations

    4 @ APPLE HOSPITALITY REIT EFFICIENT HOTEL OPERATIONS YTD 9/30/16 Hotel EBITDA Margin and RevPAR Comparison EEE Upscole Upper Upscale MEN = Apple Hospitality 43% 39% 39% 36% 36% 36% 34% 34% 9 33% ' 32% 31% 28% $106 CLDT pte‘ INN RU HT PEB AHT LHO. XHR DRH SHO FCH HST Higher operating margins provide

  11. Slide 11: Geographic Diversity

    APPLE HOSPITALITY | GEOGRAPHIC DIVERSITY 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 proximity to guest amen

  12. Slide 12: Concentrated Brand Ownership

    APPLE HOSPITALITY CONCENTRATED BRAND OWNERSHIP Ranked among top five largest owners for both Hilton® and Marriott® HOMER] A HILTON C COURTYARD arnott WORLDWIDE _| MARRIOTT 50%, cS 50%, BB Upscale BB Upper Midscale R RENAISSANCE 1) Upper Upscale Residence Va arnott i) Hilton (1) Statistics are based

  13. Slide 13: Why Marriott & Hilton?

    APPLE HOSPITALITY WHY MARRIOTT® & HILTON ©2 Institutional Brands J foster strong resale market, financing flexibility and investor confidence [RRRRMI Premier System Standards drive consistent quality, award winning service, TY innovative design, and y\\ @ NA RevPAR Premiums select service brands out

  14. Slide 14: Benefits of Concentrated Brand Strategy

    4 APPLE HOSPITALITY BENEFITS OF CONCENTRATED BRAND STRATEGY One of the largest owners of Expe rfl se Hilton® & Marriott® Upscale hotels Unparalleled representation on Brand Advisory Boards with management serving on 7 boards Influence 14

  15. Slide 15: History of Apple REIT Brand Ownership

    APPLE HOSPITALITY HISTORY OF APPLE REIT BRAND OWNERSHIP Embassy Suites by Hilton® 2 2 Hampton Inn by Hilton® and Hampton Inn & Suites by Hilton® 52 36 Hilton® ] ] Hilton Garden Inn® 58 Al Home? Suites by Hilton® 6 fo) Homewood Suites by Hilton® 62 34 Courtyard by Marriott 62 39 Fairfield Inn by Marr

  16. Slide 16: High Quality Operators

    APPLE HOSPITALITY HIGH QUALITY OPERATORS tt portfolio operated by 34 party property managers 93% of 34 party property management contracts are on m independent of brand management 2? award winning operating companies provide a platform for comparative analytics and shared best practices 23% average

  17. Slide 17: Management Contract Transformation

    APPLE HOSPITALITY MANAGEMENT CONTRACT TRANSFORMATION Original Structure New Structure M Variable Management Fee Base l|anagement Fee 2.5% - 3.5% of Revenues Typically 3% of Revenues Sliding scale tied to hotel specific + balanced scorecard goals/performance compared to other participating hotels. In

  18. Slide 18: Well Maintained Portfolio

    APPLE HOSPITALITY WELL MAINTAINED PORTFOLIO 1 Quality Portfolio with Average Effective Age of 4 Years." ...the Result of Consistent Reinvestment... 9+ Years $450 $385 $313 $239 $181 $115 $139 2010 2011 2012 2013 2014 2015 2016 Forecast Years since built or last renovated Cumulative CapEx ($ in milli

  19. Slide 19: REIT Ten Merger Overview

    APPLE HOSPITALITY APPLE REIT TEN MERGER OVERVIEW (As of Closing Date 9/1/16) . Op risnanva « Proforma Apple Ten Combined Company") Enterprise Valuel”) $4.4 billion $1.3 billion $5.7 billion Equity Market Cap!!! $3.4 billion $1.0 billion $4.4 billion Hotels 180 56 236 Guestrooms 23,089 7,209 30,298 A

  20. Slide 20: Flexible Balance Sheet

    APPLE HOSPITALITY FLEXIBLE BALANCE SHEET Debt Composition!) DEBT MATURITY SCHEDULE!) ($ in millions) Hotels: 1 = oak Koy: 9,055 Rate: 4.5% dem lean Term loan : 2.8%i91 Rate: 2.8% Rate: 3.1%) Hotels: 2 Keys: 180 Rate: 4.8% $16 Hotels: 3 Revolver Keys: 322 Rate: 2.1% Rate: 5.9% UNENCUMBERED PORTFOLIO

  21. Slide 21: Positive Industry Fundamentals

    APPLE HOSPITALITY POSITIVE INDUSTRY FUNDAMENTALS US Hotel Forecast % Change vs. Prior Year STR CBRE PwC STR CBRE PwC Supply 16°20 IGeomN nT zal (Zt072m TON NO Demand 1.6% 1.7% 1.4% 1.6% 1.8% 1.5% RevPAR Can | ies | es | Ane | ies | eee Source: Smith Travel Research (STR] August 2016; CBRE Hotel Hori

  22. Slide 22: Comparable Hotels Financial Highlights

    APPLE HOSPITALITY COMPARABLE HOTELS FINANCIAL HIGHLIGHTS ($ in thousands except statistical data) Three Months Ended September 30, | Nine Months Ended September 30, 2016 2015 enki 2016 2015 aakice RevPAR $107.97 $106.37 1.5% $105.96 $102.86 3.0% Revenue $325,876 $316,070 3.1% $949,762 $910,525 4.3%

  23. Slide 23: 2016 Guidance

    & APPLE HOSPITALITY REIT 2016 GUIDANCE sag ee et eA Residence Inni'San Juan Capistrana; CA CURRENT OUTLOOK Low High Comparable Hotels RevPAR Growth!) 2.0% 4.0% Adjusted EBITDA?! $370 million $390 million Note: The Company's achievement of the current outlook is subject to risks and uncertainties, in

  24. Slide 24: 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. + Required resignation of an incumbent director not receiving majority of votes cast in election. + 80% of

  25. Slide 25: Investment Summary

    APPLE HOSPITALITY 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 Structured fo Reduce Risk Exclu

  26. Slide 26: Appendix

    & APPLE HOSPITALITY REIT APPENDIX

  27. Slide 27: Company Overview

    APPLE HOSPITALITY COMPANY OVERVIEW 6.5% yield, annual rate of $1.20 per share, paid monthly NET DEBT (9/30/2016) $1.3 Billion “ston ctl Merl nH er 2016 ED HOTEL EB MARGIN COMPARABLE HOTELS?) 39.1% 2015 CAPEX'"! $72 Million MANAGEMENT TEAM Md years average Indusiry experience EXECUTIVE TARGET COMPENS

  28. Slide 28: Consolidated Balance Sheets

    APPLE HOSPITALITY APPLE HOSPITALITY REIT, INC. CONSOLIDATED BALANCE SHEETS {in thousands, except share data) September 30, December 31, 2016 2015 (Unaudited) Assets Investment in real estate, net of accumulated depreciation of $526,973 and $423,057, respectively $ 4,894,216 $ 3,641,767 Restricted ca

  29. Slide 29: Consolidated Statements of Operations and Comprehensive Income

    APPLE HOSPITALITY APPLE HOSPITALITY REIT, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME [in thousands, except per share data) (Unaudited) Thr Months. Nine Months Ended 30, Septemb: Septembe 30, 2016 2015 2016 2015 Revenues: Room $ 255,269 = $ ~—-221,978 $ 698,759 $ 628,982 Olhe

  30. Slide 30: Reconciliation of Net Income to EBITDA, Adjusted EBITDA and Adjusted Hotel EBITDA

    APPLE HOSPITALITY THE FOLLOWING TABLE RECONCILES THE COMPANY'S GAAP NET INCOME TO EBITDA, ADJUSTED EBITDA AND ADJUSTED HOTEL EBITDA FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015 (Unaudited) {in thousands} Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 20

  31. Slide 31: Reconciliation of Net Income to FFO and MFFO

    APPLE HOSPITALITY THE FOLLOWING TABLE RECONCILES THE COMPANY'S GAAP NET INCOME TO FFO AND MFFO FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015 Net income Depreciation of real estate owned Gain on sale of real estate Loss on impairment of depreciable real estate assets Amortization of

  32. Slide 32: Comparable Hotels Operating Metrics and Statistical Data

    APPLE HOSPITALITY APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS OPERATING METRICS AND STATISTICAL DATA (Unaudited) {in thousands except statistical data) Three Months Ended Nine Months Ended September 30, September 30 2016 2015 % Change 2016 2015 % Change Room revenue $ 300,968 $ 291,846 3.1% $ 875

  33. Slide 33: Comparable Hotels Quarterly Operating Metrics and Statistical Data

    APPLE HOSPITALITY APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS QUARTERLY OPERATING METRICS AND STATISTICAL DATA (Unaudited) (in thousands except statistical data) Three Months Ended 12/31/2014 3/31/2015 6/30/2015 9/30/2015 12/31/2015 3/31/2016 6/30/2016 9/30/2016 Room revenue $ 232,610 $ 253,014 $

  34. Slide 34: Operating Statistics Summary Data

    APPLE HOSPITALITY APPLE HOSPITALITY REIT, INC. OPERATING STATISTICS SUMMARY DATA (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 % Change 2016 2015 ADR (Actual) $ 136.04 $ 133.18 21% $ 135.88 $ 130.12 4.4% Occupancy (Actual) 80.2% 80.5% {0.4%} 78.9% 78.6% 04% R

  35. Slide 35: Comparable Hotels Operating Metrics by Region, Three Months

    APPLE HOSPITALITY APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS OPERATING METRICS BY REGION THREE MONTHS ENDED SEPTEMBER 30: (Unaudited) % of Adjusted Region/State Occupane Average Daily Rate RoyPAR Hotel EBITDA #ofHotels 3.2016 _Q32015 %Change _Q32016 32015 %Change __Q3 2016 _Q3I2015 _%Change __ 3

  36. Slide 36: Comparable Hotels Operating Metrics by Region, Three Months

    APPLE HOSPITALITY APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS OPERATING METRICS BY REGION THREE MONTHS ENDED SEPTEMBER 30 (Unaudited) % of Adjusted Region/State Occupancy Average Daily Rate RevPAR Hotel EBITDA Hof Hotels 3.2016 _Q32015 % Change _Q3.2016 G32015 %Change QB 2016 _Q32015 _% Change __

  37. Slide 37: Comparable Hotels Operating Metrics by Region, Nine Months

    APPLE HOSPITALITY APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS OPERATING METRICS BY REGION NINE MONTHS ENDED SEPTEMBER 30 (Unaudited) % of Adjusted Region/State Occupane Average Daily Rate ReyPAR Hotel EBITDA # of Hotels YTD 2016 YTD 2015 _% Change YTD 2016 YTD 2015 _% Change YTD 2016 YTD 2015 _%

  38. Slide 38: Comparable Hotels Operating Metrics by Region, Nine Months

    APPLE HOSPITALITY APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS OPERATING METRICS BY REGION NINE MONTHS ENDED SEPTEMBER 30 (Unaudited) % of Adjusted Region/Stale Qcevpane; Ayerage Daily Rate ReyPAR Hotel EBITDA # of Hotels YTD 2016 YTD 2015 _% Change YTD 2016 YTD 2015 _% Change YTD 2016 YTD 2015 _%

  39. Slide 39: Comparable Hotels Operating Metrics by Chain Scale, Three Months

    APPLE HOSPITALITY APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS OPERATING METRICS BY CHAIN SCALE THREE MONTHS ENDED SEPTEMBER 30 (Unaudited) % of Adjusted Chain Scale/Brand Occupane Ayerage Daily Rate ReyPAR Hotel EBITDA #ofHotels _Q3 2016 Q32015 %Change QB 2016 QI2015 %Change QB 2016 QI201S %Chang

  40. Slide 40: Comparable Hotels Operating Metrics by Chain Scale, Nine Months

    APPLE HOSPITALITY APPLE HOSPITALITY REIT, INC. COMPARABLE HOTELS OPERATING METRICS BY CHAIN SCALE NINE MONTHS ENDED SEPTEMBER 30 (Unaudited) % of Adjusted Chain Scale/Brand Occupane Average Daily Rate RevPAR Hotel EBITDA #ofHolels YTD 2016 YTD 2015 %Change YTD 2016 YTD 2015 %Change YTD 2016 YTD 2015

  41. Slide 41: Management Companies

    APPLE HOSPITALITY MANAGEMENT COMPANIES TOP 11 APPLE HOSPITALITY OPERATORS AS OF SEPTEMBER 30, 2016 Conipainy Total # of ial Maple Apple:Hospitality’s %ok Rank Name Properties(") Hospitality Portfolio!) Operator's Portfolio!) 100% of Apple Hospitality’s portfolio 1 LBA 39 17% 62% operated by 3 party

  42. Slide 42: Definitions

    APPLE HOSPITALITY 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, Depre

  43. Slide 43: Definitions (Continued)

    APPLE HOSPITALITY 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 (computed in accordance with generally accepted accounting p

  44. Slide 44: Trademark Information

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

  45. Slide 45: Contact Information

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

Apple Hospitality REIT — Investor Presentation (November 2016) on 6ix