Apple Hospitality Reit, Inc. · NYSE:APLE
Apple Hospitality Reit — Investor Presentation (March 2022)
51 slides from Apple Hospitality Reit's investor presentation, Mar 4, 2022
Slide 1: Investor Presentation March 2022
MARCH 2022 • NYSE: APLE INVESTOR PRESENTATION Exhibit 99.1
Slide 2: Forward-Looking Statements
COVER PHOTOS: HYATT PLACE, GREENVILLE, SC; HILTON GARDEN INN, MADISON, WI; HYATT HOUSE & HYATT PLACE, TEMPE, AZ; SPRINGHILL SUITES, BURBANK, CA FORWARD-LOOKING STATEMENTS 2 HAMPTON INN & SUITES, PHOENIX, AZ Certain statements made in this presentation are forward-looking statements, including statem
Slide 3: Company Profile & Proven Investment Strategy
COMPANY PROFILE & PROVEN INVESTMENT STRATEGY Note: Hotel portfolio statistics as of February 22, 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 14 years. The Tripadvisor® rating i
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: Fourth Quarter and Full Year 2021 Performance Highlights
KEY TAKEAWAYS 5 FOURTH QUARTER AND FULL YEAR 2021 PERFORMANCE HIGHLIGHTS Strongest quarterly operational results relative to 2019 since beginning of pandemic with RevPAR down only 8% as compared to fourth quarter 2019 Performance driven by mix of leisure and business demand, consisting of both trans
Slide 6: Portfolio Positioned for Outperformance
Resilient Group Demand Rooms-Focused Concentration Location Diversification Market Diversification PORTFOLIO POSITIONED FOR OUTPERFORMANCE 6 Note: Hotel portfolio statistics as of February 22, 2022. Location and market categorization based on STR designation. Top 10 Markets based on Comparable Hotel
Slide 7: Quarterly Performance
7 QUARTERLY PERFORMANCE HAMPTON INN & SUITES, MEMPHIS, TN ($ in thousands except statistical data) Strongest seasonally adjusted quarterly performance since onset of pandemic Note: See explanation and reconciliation of Adjusted Hotel EBITDA to net income (loss) included in subsequent pages.
Slide 8: Year-Over-Year Performance
8 YEAR-OVER-YEAR PERFORMANCE RESIDENCE INN, DANIA BEACH, FL ($ in thousands except statistical data and per share amounts) Fourth Quarter and Full Year 2021 Performance at a Glance Note: See explanation and reconciliation of Adjusted Hotel EBITDA and Modified Funds from Operations (MFFO) to net inco
Slide 9: MFFO Outperformance
MFFO/AFFO Per Share Since Onset of Pandemic(1) Q4 2021 MFFO/AFFO Per Share (2) Upper Upscale/Full-Service MFFO OUTPERFORMANCE 9 MFFO outperformance preserves balance sheet and equity value HAMPTON INN & SUITES, PHOENIX, AZ Source: Company filings. Assumptions may vary by company. MFFO/AFFO per share
Slide 10: Operating Trends
Significant progress in recovery narrowing gap to 2019 10 OPERATING TRENDS HAMPTON INN & SUITES, PHOENIX, AZ
Slide 11: Occupancy Trends
Occupancy 11 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 2022
Slide 12: 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 13: % of Hotels by Occupancy Tier
% OF HOTELS BY OCCUPANCY TIER 13 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. HOME2 SUITES, ATLANTA, GA (1) HILTON GARDEN INN, BIRMINGHAM, AL
Slide 14: Achieved Cost Savings
ACHIEVED COST SAVINGS 14 HOMEWOOD SUITES, CAPE CANAVERAL, FL Reductions in Total Hotel Expense and Total Revenue(1) Demonstrated ability to adjust operating model and manage costs to maximize performance Reductions for each quarter as compared to the same quarter of 2019. Total hotel expense include
Slide 15: Opportunity for Long-Term Cost Savings
OPPORTUNITY FOR LONG-TERM COST SAVINGS 15 HOMEWOOD SUITES, CAPE CANAVERAL, FL Represents targeted reduction in year-over-year total hotel expense for every 1% decline in year-over-year total revenue and assumes as revenue recovers, service and amenity offerings will evolve from the extreme reduction
Slide 16: Proven Investment Strategy
PROVEN INVESTMENT STRATEGY 16
Slide 17: Why Branded Select-Service Hotels?
WHY BRANDED SELECT-SERVICE HOTELS? 17 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 and maintain Resilient group business Efficient Operating
Slide 18: Broad Consumer Appeal
Rooms-focused hotels with industry-leading brands have broad consumer appeal BROAD CONSUMER APPEAL Note: Hotel portfolio statistics as of February 22, 2022. 18 Broad mix of demand generators, including: Independent with limited dependence on large group business
Slide 19: Industry-Leading Asset Management
INDUSTRY-LEADING ASSET MANAGEMENT 19 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 20: Broad Geographic Diversification
BROAD GEOGRAPHIC DIVERSIFICATION 20 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 21: Effective Portfolio Management & Strategic Growth
21 HOMEWOOD SUITES, CAPE CANAVERAL, FL Opportunistic Dispositions Strategic Growth Our objective is to maximize long-term shareholder value through opportunistic dispositions and accretive acquisitions that improve the overall age, diversification and growth trajectory of our portfolio EFFECTIVE POR
Slide 22: Opportunistic Dispositions
Note: As of December 31, 2021. Based on buyers’ anticipated near-term capital reinvestment estimates. Average Effective Age represents years since hotels were built or last renovated. Complete list of hotels sold included in appendix. 22 Value is created through the strategic and timely disposition
Slide 23: Accretive Acquisitions: Cape Canaveral Cruise Port
23 Purchased in April 2020, following completion of construction(1) 116-room Hampton Inn & Suites® and 108-room Home2 Suites® Total price: $46.7 million or approximately $208,000 per key Forward commitment with trusted developer Primary demand generators: Aerospace and Defense Government University
Slide 24: Accretive Acquisitions: Hyatt House & Hyatt Place Tempe
24 Purchased in August 2020, following completion of construction(1) 105-room Hyatt House® and 154-room Hyatt Place® Total price: $64.6 million or approximately $249,000 per key Forward commitment with trusted developer Primary demand generators: Arizona State University Novus Innovation Corridor Te
Slide 25: Accretive Acquisitions: Hilton Garden Inn Madison Downtown
25 Purchased in February 2021, following completion of construction(1) 176 rooms Total price: $49.6 million or approximately $282,000 per key Forward commitment with trusted developer Primary demand generators: University of Wisconsin Government Insurance Biotech Manufacturing Telecommunications Tec
Slide 26: Accretive Acquisitions: AC Hotel Portland
26 Purchased in August 2021; hotel opened in July 2018 178 rooms Total price: $66.8 million or approximately $375,000 per key Primary demand generators: Leisure Government Professional and Business Services Manufacturing Trade Health Care AC HOTEL PORTLAND DOWNTOWN/WATERFRONT, ME ACCRETIVE ACQUISITI
Slide 27: Accretive Acquisitions: Hyatt Place Greenville Downtown
Purchased in September 2021; hotel opened in December 2018 130 rooms Total price: $30.0 million or approximately $231,000 per key Primary demand generators: Leisure Distribution and Logistics Manufacturing Technology New Ventures and Startups Health Care 27 HYATT PLACE GREENVILLE DOWNTOWN, SC ACCRET
Slide 28: Accretive Acquisitions: Aloft Portland
28 Purchased in September 2021, following completion of construction 157 rooms Total price: $51.2 million or approximately $326,000 per key Primary demand generators: Leisure Government Professional and Business Services Manufacturing Trade Health Care ALOFT PORTLAND, ME ACCRETIVE ACQUISITIONS
Slide 29: Accretive Acquisitions: Hilton Garden Inn Memphis Downtown
Purchased in October 2021; opened January 2019 150 rooms Total price: $38.0 million or approximately $253,000 per key Primary demand generators: Leisure Agriculture Manufacturing Government Technology Professional and Business Services Health Care 29 HILTON GARDEN INN MEMPHIS DOWNTOWN ACCRETIVE ACQU
Slide 30: Accretive Acquisitions: Hilton Garden Inn Fort Worth
30 HILTON GARDEN INN FORT WORTH MEDICAL CENTER ACCRETIVE ACQUISITIONS Purchased in November 2021; opened April 2012 157 rooms Total price: $29.5 million or approximately $188,000 per key Primary demand generators: Health Care Texas Christian University Leisure Will Rogers Memorial Center Defense/Aer
Slide 31: Accretive Acquisitions: Homewood Suites Fort Worth
31 HOMEWOOD SUITES FORT WORTH MEDICAL CENTER ACCRETIVE ACQUISITIONS Purchased in November 2021; opened June 2013 112 rooms Total price: $21.5 million or approximately $192,000 per key Primary demand generators: Health Care Texas Christian University Leisure Will Rogers Memorial Center Defense/Aerosp
Slide 32: Accretive Acquisitions: Hampton Inn & Suites Portland-Pearl District
32 HAMPTON INN & SUITES PORTLAND-PEARL DISTRICT, OR ACCRETIVE ACQUISITIONS Purchased in November 2021; opened September 2017 243 rooms Total price: $75.0 million or approximately $309,000 per key Primary demand generators: Leisure Technology Manufacturing Consumer Goods Banking Trade Professional an
Slide 33: Acquisitions Under Contract
33 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 34: Apple REIT Companies Transaction History
Apple REIT Companies Transaction History 1999 – February 22, 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 34 Note: Hotel transactions by the various Apple
Slide 35: Well-Maintained Portfolio
WELL-MAINTAINED PORTFOLIO 35 COURTYARD, COLLEGEVILLE, PA HILTON GARDEN INN, SILVER SPRING, MD HILTON GARDEN INN, RONKONKOMA, NY The Tripadvisor® rating is based on lifetime scores for the Apple Hospitality portfolio of hotels through December 31, 2021. Average Effective Age represents years since ho
Slide 36: Strong Balance Sheet & Liquidity Position
Debt Composition(1) STRONG BALANCE SHEET & LIQUIDITY POSITION Based on balances and hotels owned as of December 31, 2021, excluding unamortized fair value adjustment of assumed debt and unamortized debt issuance costs. Excludes yearly amortization. Includes the $56 million one-year note payable to t
Slide 37: Exited Extended Covenant Waiver Period
37 Exited Extended Covenant Waiver Period Note: See further information on the Company’s indebtedness and amendments to its unsecured credit facilities in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 and related public filings. Following the Extended Covenant Waiver
Slide 38: Amendments to Unsecured Credit Facilities
AMENDMENTS TO UNSECURED CREDIT FACILITIES 38 Note: See further information on the Company’s indebtedness and amendments to its unsecured credit facilities in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, and related public filings. Less restrictive covenant terms fol
Slide 39: ESG Initiatives
ESG INITIATIVES HAMPTON INN & SUITES, PORTLAND, OR
Slide 40: 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 41: 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 42: Governance
GOVERNANCE Alignment with the best interests of our shareholders is at the forefront of our values. 42 HILTON GARDEN INN, BIRMINGHAM, AL AC HOTEL, PORTLAND, ME
Slide 43: Appendix
APPENDIX HILTON GARDEN INN, MEMPHIS, TN
Slide 44: Reconciliation of Net Income (Loss) to EBITDA and Adjusted Hotel EBITDA
44 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 45: Reconciliation of Net Income (Loss) to FFO and MFFO
45 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 DECEMBER 31, 2021 (Unaudited) (in thousands, except per share amounts) Note: The Consolidated Statements of Oper
Slide 46: 2020 and 2021 Dispositions
46 2020 AND 2021 DISPOSITIONS 20-hotel portfolio sale Note: As of February 22, 2022.
Slide 47: 2020 and 2021 Acquisitions and Hotels Under Contract
47 2020 AND 2021 ACQUISITIONS AND HOTELS UNDER CONTRACT 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
Slide 48: Definitions
DEFINITIONS 48 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 49: Definitions Continued
DEFINITIONS CONTINUED 49 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 50: Trademark Information
TRADEMARK INFORMATION “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 Marr
Slide 51: Contact Information
CONTACT INFORMATION 51 COURTYARD, RICHMOND, VA
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