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Apple Hospitality REIT Reports Results of Operations for First Quarter 2023

Apple Hospitality REIT, Inc. (NYSE: APLE) (the “Company” or “Apple Hospitality”) today announced results of operations for the first quarter ended March 31, 2023.

Apple Hospitality REIT, Inc.

Selected Statistical and Financial Data

As of and For the Three Months Ended March 31

(Unaudited) (in thousands, except statistical and per share amounts)(1)

 

 

Three Months Ended

 

March 31,

 

2023

 

2022

 

% Change

 

 

 

 

 

 

Net income

$32,923

 

$18,002

 

82.9%

Net income per share

$0.14

 

$0.08

 

75.0%

 

 

 

 

 

 

Operating income

$49,247

 

$32,835

 

50.0%

Operating margin %

15.8%

 

12.6%

 

320 bps

 

 

 

 

 

 

Adjusted EBITDAre

$95,288

 

$78,298

 

21.7%

Comparable Hotels Adjusted Hotel EBITDA

$106,749

 

$88,366

 

20.8%

Comparable Hotels Adjusted Hotel EBITDA Margin %

34.3%

 

33.7%

 

60 bps

Modified funds from operations (MFFO)

$78,959

 

$63,460

 

24.4%

MFFO per share

$0.34

 

$0.28

 

21.4%

 

 

 

 

 

 

Average Daily Rate (ADR) (Actual)

$152.01

 

$137.03

 

10.9%

Occupancy (Actual)

72.0%

 

67.1%

 

7.3%

Revenue Per Available Room (RevPAR) (Actual)

$109.46

 

$91.98

 

19.0%

 

 

 

 

 

 

Comparable Hotels ADR

$152.01

 

$137.02

 

10.9%

Comparable Hotels Occupancy

72.0%

 

67.0%

 

7.5%

Comparable Hotels RevPAR

$109.46

 

$91.80

 

19.2%

 

 

 

 

 

 

Distributions paid

$73,399

 

$13,701

 

435.7%

Distributions paid per share

$0.32

 

$0.06

 

433.3%

 

 

 

 

 

 

Cash and cash equivalents

$6,093

 

 

 

 

Total debt outstanding

$1,425,147

 

 

 

 

Total debt outstanding, net of cash and cash equivalents

$1,419,054

 

 

 

 

Total debt outstanding, net of cash and cash equivalents, to total capitalization (2)

28.5%

 

 

 

 

____________________

(1)

Explanations of and reconciliations to net income determined in accordance with generally accepted accounting principles (“GAAP”) of non-GAAP financial measures, Adjusted EBITDAre, Comparable Hotels Adjusted Hotel EBITDA and MFFO, are included below.

(2)

Total debt outstanding, net of cash and cash equivalents ("net total debt outstanding"), divided by net total debt outstanding plus equity market capitalization based on the Company’s closing share price of $15.52 on March 31, 2023.

Comparable Hotels is defined as the 220 hotels owned by the Company as of March 31, 2023. For hotels acquired during the periods noted, the Company has included, as applicable, results of those hotels for periods prior to the Company's ownership, and for dispositions, results have been excluded for the Company's period of ownership. Results for periods prior to the Company's ownership have not been included in the Company's actual Consolidated Financial Statements and are included only for comparison purposes. Results included for periods prior to the Company's ownership are based on information from the prior owner of each hotel and have not been audited or adjusted.

Justin Knight, Chief Executive Officer of Apple Hospitality, commented, “Continued strength in leisure demand and increased business travel resulted in strong operating fundamentals for the quarter. First quarter 2023 Comparable Hotels RevPAR improved by 19%, ADR increased by 11% and Occupancy was up by more than 7% as compared to first quarter 2022. We work closely with the management teams at our hotels to counter inflationary pressures and improve operating efficiency while maintaining strong guest satisfaction necessary for sustained rate growth. While we are mindful of the potential for macroeconomic headwinds as we move through the year, our business continues to improve. Booking trends remain strong, the supply picture is favorable, and improvements in business travel have lifted midweek occupancies in recent weeks."

Mr. Knight continued, “We continue to execute against an investment strategy that has proven successful through multiple economic cycles. Our portfolio of select-service hotels is broadly diversified across high-end suburban, urban and developing markets that are home to a wide variety of demand generators. Our hotels are franchised with industry-leading brands, managed by some of the best management companies in the industry and provide a strong value proposition with broad consumer appeal. Underlying the strength of our portfolio is a balance sheet with low leverage and financial flexibility, a consistent reinvestment and portfolio management strategy, and a corporate team with tremendous experience. We are confident we are well positioned to continue to outperform and maximize shareholder value in any macroeconomic environment."

Hotel Portfolio Overview

As of March 31, 2023, Apple Hospitality owned 220 hotels with an aggregate of 28,984 guest rooms located in 87 markets throughout 37 states.

First Quarter 2023 Highlights

  • Strong operating performance: Comparable Hotels RevPAR was $109, a 19% increase over first quarter 2022 and a 6% increase over first quarter 2019. Comparable Hotels ADR was $152, an 11% increase over first quarter 2022 and a 9% increase over first quarter 2019. Comparable Hotels Occupancy was 72%, a 7% increase over first quarter 2022 and a 2% decline as compared to first quarter 2019. Comparable Hotels Occupancy, ADR and RevPAR exceeded industry averages as reported by STR. Based on preliminary results for the Company's portfolio for the month of April 2023, Comparable Hotels Occupancy was approximately 77%, in line with April 2022 and down 5% as compared to April 2019, with Comparable Hotels ADR growth of approximately 5% compared to April 2022 and 9% compared to April 2019.
  • Strong bottom-line performance: The Company achieved Comparable Hotels Adjusted Hotel EBITDA of approximately $107 million, a 21% improvement over first quarter 2022 and a 4% improvement over first quarter 2019. The Company achieved Comparable Hotels Adjusted Hotel EBITDA Margin of approximately 34%, a 60 bps improvement over first quarter 2022 and a 190 bps decline as compared to first quarter 2019.
  • Transactional activity: On February 27, 2023, the Company entered into a contract for the potential purchase of the Courtyard by Marriott Cleveland University Circle in Cleveland, Ohio, for $31 million.
  • Share repurchases: The Company purchased, under its Share Repurchase Program, approximately 0.3 million of its common shares at a weighted-average market purchase price of approximately $14.22 per common share, for an aggregate purchase price of approximately $4 million.
  • Balance sheet: The Company has maintained the strength and flexibility of its balance sheet. At March 31, 2023, the Company’s total debt to total capitalization, net of cash and cash equivalents, was approximately 29%. During the first quarter 2023, the Company repaid in full four secured mortgage loans for a total of approximately $37 million, increasing the number of unencumbered hotels in the Company’s portfolio as of March 31, 2023, to 205.
  • Monthly distributions: During the three months ended March 31, 2023, the Company paid distributions totaling $0.32 per common share, including a special cash distribution of $0.08 per common share, that was paid on January 17, 2023, to shareholders of record as of December 30, 2022. Based on the Company’s common stock closing price of $14.87 on May 1, 2023, the current annualized monthly cash distribution of $0.96 per common share represents an annual yield of approximately 6.5%.

The following tables highlight the Company’s monthly performance during the first quarter of 2023, as compared to the first quarters of 2022 and 2019 (in thousands, except statistical data):

 

January

 

February

 

March

 

 

 

January

 

February

 

March

 

 

 

January

 

February

 

March

 

 

 

2023

 

2023

 

2023

 

Q1 2023

 

2022

 

2022

 

2022

 

Q1 2022

 

2019

 

2019

 

2019

 

Q1 2019

ADR

$138.90

 

$154.81

 

$160.19

 

$152.01

 

$126.51

 

$135.43

 

$146.07

 

$137.03

 

$129.81

 

$137.05

 

$141.16

 

$136.36

Occupancy

63.6%

 

73.3%

 

79.3%

 

72.0%

 

56.2%

 

69.0%

 

76.4%

 

67.1%

 

66.1%

 

75.4%

 

80.2%

 

73.9%

RevPAR

$88.32

 

$113.42

 

$127.01

 

$109.46

 

$71.11

 

$93.42

 

$111.55

 

$91.98

 

$85.78

 

$103.35

 

$113.23

 

$100.71

Operating income (loss)

$3,524

 

$15,275

 

$30,448

 

$49,247

 

$(2,634)

 

$7,984

 

$27,485

 

$32,835

 

$8,025

 

$16,631

 

$29,195

 

$53,851

Adjusted Hotel EBITDA (1)

$21,655

 

$34,876

 

$50,218

 

$106,749

 

$15,166

 

$26,150

 

$46,620

 

$87,936

 

$26,418

 

$35,232

 

$47,154

 

$108,804

 

 

 

 

 

 

 

 

 

% Change

 

% Change

 

January

 

February

 

March

 

 

 

January

 

February

 

March

 

 

 

January

 

February

 

March

 

 

 

2023

 

2023

 

2023

 

Q1 2023

 

2022

 

2022

 

2022

 

Q1 2022

 

2019

 

2019

 

2019

 

Q1 2019

ADR

$138.90

 

$154.81

 

$160.19

 

$152.01

 

9.8%

 

14.3%

 

9.7%

 

10.9%

 

7.0%

 

13.0%

 

13.5%

 

11.5%

Occupancy

63.6%

 

73.3%

 

79.3%

 

72.0%

 

13.2%

 

6.2%

 

3.8%

 

7.3%

 

(3.8%)

 

(2.8%)

 

(1.1%)

 

(2.6%)

RevPAR

$88.32

 

$113.42

 

$127.01

 

$109.46

 

24.2%

 

21.4%

 

13.9%

 

19.0%

 

3.0%

 

9.7%

 

12.2%

 

8.7%

Operating income

$3,524

 

$15,275

 

$30,448

 

$49,247

 

n/a

 

91.3%

 

10.8%

 

50.0%

 

(56.1%)

 

(8.2%)

 

4.3%

 

(8.5%)

Adjusted Hotel EBITDA (1)

$21,655

 

$34,876

 

$50,218

 

$106,749

 

42.8%

 

33.4%

 

7.7%

 

21.4%

 

(18.0%)

 

(1.0%)

 

6.5%

 

(1.9%)

____________________

Note: Comparisons to 2019 operating results are included to provide a better understanding of the Company’s recovery from the impact of COVID-19 on hotel operations.

(1)

See explanation and reconciliation of Adjusted Hotel EBITDA to net income included below.

Board of Directors

On March 3, 2023, the Company announced the appointment of Carolyn Handlon to its Board of Directors, effective March 1, 2023. Following her appointment to the Board of Directors, Carolyn Handlon was appointed to the Company's Audit Committee and Nominating and Corporate Governance Committee, effective March 24, 2023.

Portfolio Activity

Contracts for Potential Acquisition

On February 27, 2023, the Company entered into a contract for the potential acquisition of the newly renovated, 154-room Courtyard by Marriott Cleveland University Circle in Cleveland, Ohio, for $31 million. In addition, as previously announced, the Company has an outstanding contract for the purchase of an Embassy Suites by Hilton in Madison, Wisconsin, for an anticipated total purchase price of approximately $79 million. The Embassy Suites in Madison is currently under development and expected to include 260 rooms. There are many conditions to closing on each of these hotels that have not yet been satisfied, and there can be no assurance that closings on these hotels will occur under the outstanding purchase contracts. Assuming all conditions to closing are met, the Company anticipates acquiring the hotel in Cleveland during the second quarter 2023 and the hotel in Madison following completion of construction, which is expected to occur in early 2024.

Capital Improvements

Apple Hospitality consistently reinvests in its hotels to maintain and enhance each property’s relevance and competitive position within its respective market. During the three months ended March 31, 2023, the Company invested approximately $18 million in capital expenditures. The Company anticipates investing approximately $70 million to $80 million in capital improvements during 2023, which includes comprehensive renovation projects for approximately 20 to 25 hotels.

Balance Sheet and Liquidity

Summary

As of March 31, 2023, the Company had approximately $1.4 billion of total outstanding debt with a current combined weighted-average interest rate of approximately 4.3%, cash on hand of approximately $6 million and availability under its revolving credit facility of approximately $610 million. Excluding unamortized debt issuance costs and fair value adjustments, the Company’s total outstanding debt as of March 31, 2023, was comprised of approximately $290 million in property-level debt secured by 15 hotels and approximately $1.1 billion outstanding under its unsecured credit facilities, including the remaining $50 million term loan availability which was drawn in January 2023. During the first quarter 2023, the Company repaid in full four secured mortgage loans for a total of approximately $37 million, increasing the number of unencumbered hotels in the Company’s portfolio as of March 31, 2023, to 205. The Company’s total debt to total capitalization, net of cash and cash equivalents at March 31, 2023, was approximately 29%, which provides Apple Hospitality with financial flexibility to fund capital requirements and pursue opportunities in the marketplace. As of March 31, 2023, the Company’s weighted-average debt maturities are 4.4 years.

Capital Markets

Share Repurchase Program

The Company has in place a Share Repurchase Program that provides for share repurchases in open market transactions. During the three months ended March 31, 2023, the Company purchased, under its Share Repurchase Program, approximately 0.3 million of its common shares at a weighted-average market purchase price of approximately $14.22 per common share, for an aggregate purchase price of approximately $4 million. As of March 31, 2023, the Company had approximately $339 million remaining under its Share Repurchase Program for the repurchase of shares. Shares were repurchased under a written trading plan as part of the Share Repurchase Program that provides for share repurchases in open market transactions and is intended to comply with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended.

ATM Program

The Company also has in place an at-the-market offering program (the “ATM Program”). As of March 31, 2023, the Company had approximately $224 million remaining under its ATM Program for the issuance of shares. No shares were sold under the ATM program during the first quarter 2023.

Shareholder Distributions

During the three months ended March 31, 2023, the Company paid distributions totaling $0.32 per common share, including a special cash distribution of $0.08 per common share, that was paid on January 17, 2023, to shareholders of record as of December 30, 2022. Based on the Company’s common stock closing price of $14.87 on May 1, 2023, the current annualized monthly cash distribution of $0.96 per common share represents an annual yield of approximately 6.5%. While the Company currently expects monthly distributions to continue, each distribution is subject to approval by the Company’s Board of Directors. The Company’s Board of Directors, in consultation with management, will continue to monitor the Company’s distribution rate and timing relative to the performance of its hotels, capital improvement needs, varying economic cycles, acquisitions, dispositions, other cash requirements and the Company’s REIT status for federal income tax purposes, and may make adjustments as it deems appropriate.

2023 Outlook

The Company is providing its operational and financial outlook for 2023, which is unchanged from the 2023 outlook previously provided. Given the current level of visibility into future performance as a result of short-term booking windows for the Company's portfolio of rooms-focused hotels and meaningful macroeconomic uncertainty, this outlook reflects a broad range of Comparable Hotels RevPAR Change, which is the change in Comparable Hotels RevPAR in 2023 compared to 2022, and other key metrics for 2023. This outlook is based on management’s current view and does not take into account any unanticipated developments in its business or changes in its operating environment, nor does it take into account any unannounced hotel acquisitions or dispositions. Results for the first quarter 2023 benefited significantly from the easier comparison to the first quarter 2022 when the Omicron variant negatively impacted lodging demand. The high end of the full year range reflects relatively steady macroeconomic conditions throughout 2023, with continued strength in leisure demand and improvement in business transient. The low end of the range reflects a softening of the economy beginning in the second quarter with Comparable Hotels RevPAR Change roughly flat compared to 2022 in the second half of the year. Comparable Hotels RevPAR Change and Comparable Hotels Adjusted Hotel EBITDA Margin % guidance include properties acquired, as if the hotels were owned as of January 1, 2022, and exclude dispositions and assets held for sale since January 1, 2022. For the full year 2023, the Company anticipates its 2023 results will be in the following range:

 

 

2023 Guidance(1)

 

 

Low-End

 

High-End

Net income

 

$165 Million

 

$209 Million

Comparable Hotels RevPAR Change

 

3.0%

 

7.0%

Comparable Hotels Adjusted Hotel EBITDA Margin %

 

35.3%

 

36.9%

Adjusted EBITDAre

 

$420 Million

 

$457 Million

Capital expenditures

 

$70 Million

 

$80 Million

____________________

(1)

Explanations of and reconciliations to net income guidance of Adjusted EBITDAre and Comparable Hotels Adjusted Hotel EBITDA guidance are included below.

First Quarter 2023 Earnings Conference Call

The Company will host a quarterly conference call for investors and interested parties at 10 a.m. Eastern Time on Wednesday, May 3, 2023. The conference call will be accessible by telephone and the internet. To access the call, participants from within the U.S. should dial 877-407-9039, and participants from outside the U.S. should dial 201-689-8470. Participants may also access the call via live webcast by visiting the Investor Information section of the Company's website at ir.applehospitalityreit.com. A replay of the call will be available from approximately 2 p.m. Eastern Time on May 3, 2023, through 11:59 p.m. Eastern Time on May 17, 2023. To access the replay, the domestic dial-in number is 844-512-2921, the international dial-in number is 412-317-6671, and the passcode is 13737167. The archive of the webcast will be available on the Company's website for a limited time.

About Apple Hospitality REIT, Inc.

Apple Hospitality REIT, Inc. (NYSE: APLE) is a publicly traded real estate investment trust (“REIT”) that owns one of the largest and most diverse portfolios of upscale, rooms-focused hotels in the United States. Apple Hospitality’s portfolio consists of 220 hotels with approximately 29,000 guest rooms located in 87 markets throughout 37 states. Concentrated with industry-leading brands, the Company’s portfolio consists of 96 Marriott-branded hotels, 119 Hilton-branded hotels, four Hyatt-branded hotels and one independent hotel. For more information, please visit www.applehospitalityreit.com.

Apple Hospitality REIT 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, Depreciation and Amortization (“EBITDA”); Earnings Before Interest, Income Taxes, Depreciation and Amortization for Real Estate (“EBITDAre”); Adjusted EBITDAre; and Adjusted Hotel EBITDA. These non-GAAP financial measures should be considered along with, but not as alternatives to, net income (loss), cash flow from operations or any other operating GAAP measure. FFO, MFFO, EBITDA, EBITDAre, Adjusted EBITDAre and Adjusted Hotel EBITDA are not necessarily indicative of funds available to fund the Company’s cash needs, including its ability to make cash distributions. Although FFO, MFFO, EBITDA, EBITDAre, Adjusted EBITDAre and Adjusted Hotel EBITDA, as calculated by the Company, may not be comparable to FFO, MFFO, EBITDA, EBITDAre, Adjusted EBITDAre and Adjusted Hotel EBITDA, as reported by other companies that do not define such terms exactly as the Company defines such terms, the Company believes these supplemental measures are useful to investors when comparing the Company’s results between periods and with other REITs. Reconciliations of these non-GAAP financial measures to net income (loss) are provided in the following pages.

Forward-Looking Statements Disclaimer

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are typically identified by use of statements that include phrases such as “may,” “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project,” “target,” “goal,��� “plan,” “should,” “will,” “predict,” “potential,” “outlook,” “strategy,” and similar expressions that convey the uncertainty of future events or outcomes. Such statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements.

Such factors include, but are not limited to, the ability of the Company to effectively acquire and dispose of properties and redeploy proceeds; the anticipated timing and frequency of shareholder distributions; the ability of the Company to fund capital obligations; the ability of the Company to successfully integrate pending transactions and implement its operating strategy; changes in general political, economic and competitive conditions and specific market conditions (including the potential effects of inflation or a recessionary environment); reduced business and leisure travel due to geopolitical uncertainty, including terrorism, travel-related health concerns, including COVID-19 or other widespread outbreaks of infectious or contagious diseases in the U.S.; inclement weather conditions, including natural disasters such as hurricanes, earthquakes and wildfires; government shutdowns, airline strikes or other disruptions; adverse changes in the real estate and real estate capital markets; financing risks; changes in interest rates; litigation risks; regulatory proceedings or inquiries; and changes in laws or regulations or interpretations of current laws and regulations that impact the Company’s business, assets or classification as a REIT. Although the Company believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore there can be no assurance that such statements included in this press release will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the results or conditions described in such statements or the objectives and plans of the Company will be achieved. In addition, the Company’s qualification as a REIT involves the application of highly technical and complex provisions of the Internal Revenue Code of 1986, as amended. Readers should carefully review the risk factors described in the Company’s filings with the Securities and Exchange Commission, including but not limited to those discussed in the section titled “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022. Any forward-looking statement that the Company makes speaks only as of the date of this press release. The Company undertakes no obligation to publicly update or revise any forward-looking statements or cautionary factors, as a result of new information, future events, or otherwise, except as required by law.

For additional information or to receive press releases by email, visit www.applehospitalityreit.com.

Apple Hospitality REIT, Inc.

Consolidated Balance Sheets

(in thousands, except share data)

 

 

 

March 31,

 

December 31,

 

 

2023

 

2022

 

 

(unaudited)

 

 

Assets

 

 

 

 

Investment in real estate, net of accumulated depreciation and amortization

of $1,537,998 and $1,492,097, respectively

 

$4,583,497

 

$4,610,962

Cash and cash equivalents

 

6,093

 

4,077

Restricted cash-furniture, fixtures and other escrows

 

32,686

 

39,435

Due from third party managers, net

 

71,120

 

43,331

Other assets, net

 

67,855

 

74,909

Total Assets

 

$4,761,251

 

$4,772,714

 

 

Liabilities

 

 

 

 

Debt, net

 

$1,417,679

 

$1,366,249

Finance lease liabilities

 

111,994

 

112,006

Accounts payable and other liabilities

 

78,716

 

116,064

Total Liabilities

 

1,608,389

 

1,594,319

 

 

 

 

 

Shareholders' Equity

 

Preferred stock, authorized 30,000,000 shares; none issued and outstanding

 

-

 

-

Common stock, no par value, authorized 800,000,000 shares; issued and

outstanding 229,013,349 and 228,644,861 shares, respectively

 

4,581,841

 

4,577,022

Accumulated other comprehensive income

 

28,775

 

36,881

Distributions greater than net income

 

(1,457,754)

 

(1,435,508)

Total Shareholders' Equity

 

3,152,862

 

3,178,395

 

 

 

 

 

Total Liabilities and Shareholders' Equity

 

$4,761,251

 

$4,772,714

 
____________________  

Note: The Consolidated Balance Sheets and corresponding footnotes can be found in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023.

Apple Hospitality REIT, Inc.

Consolidated Statements of Operations and Comprehensive Income

(Unaudited)

(in thousands, except per share data)

 

 

 

Three Months Ended

 

 

March 31,

 

 

2023

 

2022

Revenues:

 

 

 

 

 

 

Room

 

$

285,520

 

 

$

237,976

 

Food and beverage

 

 

12,949

 

 

 

8,464

 

Other

 

 

12,985

 

 

 

14,038

 

Total revenue

 

 

311,454

 

 

 

260,478

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

Hotel operating expense:

 

 

 

 

 

 

Operating

 

 

78,663

 

 

 

64,331

 

Hotel administrative

 

 

27,319

 

 

 

23,842

 

Sales and marketing

 

 

27,700

 

 

 

22,469

 

Utilities

 

 

11,698

 

 

 

10,290

 

Repair and maintenance

 

 

15,665

 

 

 

13,028

 

Franchise fees

 

 

13,644

 

 

 

11,266

 

Management fees

 

 

10,476

 

 

 

8,776

 

Total hotel operating expense

 

 

185,165

 

 

 

154,002

 

Property taxes, insurance and other

 

 

19,675

 

 

 

18,679

 

General and administrative

 

 

11,461

 

 

 

9,638

 

Depreciation and amortization

 

 

45,906

 

 

 

45,324

 

Total expense

 

 

262,207

 

 

 

227,643

 

 

 

 

 

 

 

 

Operating income

 

 

49,247

 

 

 

32,835

 

 

 

 

 

 

 

 

Interest and other expense, net

 

 

(16,004

)

 

 

(14,654

)

 

 

 

 

 

 

 

Income before income taxes

 

 

33,243

 

 

 

18,181

 

 

 

 

 

 

 

 

Income tax expense

 

 

(320

)

 

 

(179

)

 

 

 

 

 

 

 

Net income

 

$

32,923

 

 

$

18,002

 

 

 

 

 

 

 

 

Other comprehensive income (loss):

 

 

 

 

 

 

Interest rate derivatives

 

 

(8,106

)

 

 

27,219

 

 

 

 

 

 

 

 

Comprehensive income

 

$

24,817

 

 

$

45,221

 

 

 

 

 

 

 

 

Basic and diluted net income per common share

 

$

0.14

 

 

$

0.08

 

 

 

 

 

 

 

 

Weighted average common shares outstanding - basic and diluted

 

 

229,398

 

 

 

228,986

 

 
____________________

Note: The Consolidated Statements of Operations and Comprehensive Income and corresponding footnotes can be found in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023.

Apple Hospitality REIT, Inc.

Comparable Hotels Operating Metrics and Statistical Data

(Unaudited)

(in thousands, except statistical data)

 

 

 

Three Months Ended

 

 

March 31,

 

 

 

 

 

 

% Change

 

% Change

 

 

2023

 

2022

 

2022

 

2019

Operating income (Actual)

 

$49,247

 

$32,835

 

50.0%

 

(8.5%)

Operating margin % (Actual)

 

15.8%

 

12.6%

 

320 bps

 

(190 bps)

 

 

 

 

 

 

 

 

 

Comparable Hotels Total Revenue

 

$311,454

 

$262,496

 

18.7%

 

9.5%

Comparable Hotels Total Operating Expenses

 

204,705

 

174,130

 

17.6%

 

12.8%

Comparable Hotels Adjusted Hotel EBITDA

 

$106,749

 

$88,366

 

20.8%

 

3.8%

Comparable Hotels Adjusted Hotel EBITDA Margin %

 

34.3%

 

33.7%

 

60 bps

 

(190 bps)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ADR (Comparable Hotels)

 

$152.01

 

$137.02

 

10.9%

 

8.7%

Occupancy (Comparable Hotels)

 

72.0%

 

67.0%

 

7.5%

 

(2.3%)

RevPAR (Comparable Hotels)

 

$109.46

 

$91.80

 

19.2%

 

6.2%

 

 

 

 

 

 

 

 

 

ADR (Actual)

 

$152.01

 

$137.03

 

10.9%

 

11.5%

Occupancy (Actual)

 

72.0%

 

67.1%

 

7.3%

 

(2.6%)

RevPAR (Actual)

 

$109.46

 

$91.98

 

19.0%

 

8.7%

 

 

 

 

 

 

 

 

 

Reconciliation to Actual Results

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Revenue (Actual)

 

$311,454

 

$260,478

 

 

 

 

Revenue from acquisitions prior to ownership

 

-

 

2,518

 

 

 

 

Revenue from dispositions

 

-

 

(500)

 

 

 

 

Comparable Hotels Total Revenue

 

$311,454

 

$262,496

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Hotel EBITDA (AHEBITDA) (Actual)

 

$106,749

 

$87,936

 

 

 

 

AHEBITDA from acquisitions prior to ownership

 

-

 

573

 

 

 

 

AHEBITDA from dispositions

 

-

 

(143)

 

 

 

 

Comparable Hotels AHEBITDA

 

$106,749

 

$88,366

 

 

 

 

 
____________________

Note: Comparable Hotels is defined as the 220 hotels owned by the Company as of March 31, 2023. For hotels acquired during the periods noted, the Company has included, as applicable, results of those hotels for periods prior to the Company's ownership, and for dispositions, results have been excluded for the Company's period of ownership. Results for periods prior to the Company's ownership have not been included in the Company's actual Consolidated Financial Statements and are included only for comparison purposes. Results included for periods prior to the Company's ownership are based on information from the prior owner of each hotel and have not been audited or adjusted.

 

Comparisons to 2019 operating results are included to provide a better understanding of the Company’s recovery from the impact of COVID-19 on hotel operations.

 

Reconciliation of net income to non-GAAP financial measures is included in the following pages.

Apple Hospitality REIT, Inc.

Comparable Hotels Quarterly Operating Metrics and Statistical Data

(Unaudited)

(in thousands, except statistical data)

 

 

 

2019

 

2022

 

2023

 

 

Q1

 

Q2

 

Q3

 

Q4

 

Q1

 

Q2

 

Q3

 

Q4

 

Q1

Operating income (Actual)

 

$53,851

 

$78,103

 

$61,125

 

$40,708

 

$32,835

 

$80,745

 

$75,410

 

$17,488

 

$49,247

Operating margin % (Actual)

 

17.7%

 

22.9%

 

18.4%

 

14.0%

 

12.6%

 

23.9%

 

22.1%

 

5.8%

 

15.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comparable Hotels Total Revenue

 

$284,317

 

$330,391

 

$324,472

 

$280,885

 

$262,496

 

$342,015

 

$345,291

 

$300,465

 

$311,454

Comparable Hotels Total Operating Expenses

 

181,515

 

196,579

 

198,742

 

184,790

 

174,130

 

203,269

 

214,256

 

198,024

 

204,705

Comparable Hotels Adjusted Hotel EBITDA

 

$102,802

 

$133,812

 

$125,730

 

$96,095

 

$88,366

 

$138,746

 

$131,035

 

$102,441

 

$106,749

Comparable Hotels Adjusted Hotel EBITDA Margin %

 

36.2%

 

40.5%

 

38.7%

 

34.2%

 

33.7%

 

40.6%

 

37.9%

 

34.1%

 

34.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ADR (Comparable Hotels)

 

$139.89

 

$145.43

 

$144.03

 

$134.82

 

$137.02

 

$153.73

 

$158.13

 

$147.45

 

$152.01

Occupancy (Comparable Hotels)

 

73.7%

 

81.5%

 

80.1%

 

73.1%

 

67.0%

 

77.9%

 

75.7%

 

69.8%

 

72.0%

RevPAR (Comparable Hotels)

 

$103.10

 

$118.53

 

$115.39

 

$98.55

 

$91.80

 

$119.72

 

$119.77

 

$102.87

 

$109.46

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ADR (Actual)

 

$136.36

 

$141.60

 

$139.21

 

$131.41

 

$137.03

 

$153.35

 

$157.91

 

$147.30

 

$152.01

Occupancy (Actual)

 

73.9%

 

81.4%

 

79.9%

 

72.9%

 

67.1%

 

77.9%

 

75.7%

 

69.7%

 

72.0%

RevPAR (Actual)

 

$100.71

 

$115.30

 

$111.17

 

$95.85

 

$91.98

 

$119.41

 

$119.52

 

$102.71

 

$109.46

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation to Actual Results

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Revenue (Actual)

 

$303,787

 

$341,117

 

$331,722

 

$289,971

 

$260,478

 

$337,668

 

$341,150

 

$299,121

 

$311,454

Revenue from acquisitions prior to ownership

 

13,634

 

17,481

 

19,822

 

16,517

 

2,518

 

5,010

 

4,595

 

1,344

 

-

Revenue from dispositions

 

(33,104)

 

(28,207)

 

(27,072)

 

(25,603)

 

(500)

 

(663)

 

(454)

 

-

 

-

Comparable Hotels Total Revenue

 

$284,317

 

$330,391

 

$324,472

 

$280,885

 

$262,496

 

$342,015

 

$345,291

 

$300,465

 

$311,454

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Hotel EBITDA (AHEBITDA) (Actual)

 

$108,804

 

$134,759

 

$124,596

 

$96,836

 

$87,936

 

$136,515

 

$129,166

 

$101,962

 

$106,749

AHEBITDA from acquisitions prior to ownership

 

5,545

 

9,152

 

10,227

 

7,205

 

573

 

2,470

 

1,946

 

648

 

-

AHEBITDA from dispositions

 

(11,547)

 

(10,099)

 

(9,093)

 

(7,946)

 

(143)

 

(239)

 

(77)

 

(169)

 

-

Comparable Hotels AHEBITDA

 

$102,802

 

$133,812

 

$125,730

 

$96,095

 

$88,366

 

$138,746

 

$131,035

 

$102,441

 

$106,749

 
____________________

Note: Comparable Hotels is defined as the 220 hotels owned by the Company as of March 31, 2023. For hotels acquired during the periods noted, the Company has included, as applicable, results of those hotels for periods prior to the Company's ownership, and for dispositions, results have been excluded for the Company's period of ownership. Results for periods prior to the Company's ownership have not been included in the Company's actual Consolidated Financial Statements and are included only for comparison purposes. Results included for periods prior to the Company's ownership are based on information from the prior owner of each hotel and have not been audited or adjusted.

 

Comparisons to 2019 operating results are included to provide a better understanding of the Company’s recovery from the impact of COVID-19 on hotel operations.

 

Reconciliation of net income to non-GAAP financial measures is included in the following pages.

Apple Hospitality REIT, Inc.

Same Store Hotels Operating Metrics and Statistical Data

(Unaudited)

(in thousands, except statistical data)

 

 

 

Three Months Ended

 

 

March 31,

 

 

 

 

 

 

% Change

 

% Change

 

 

2023

 

2022

 

2022

 

2019

Operating income (Actual)

 

$49,247

 

$32,835

 

50.0%

 

(8.5%)

Operating margin % (Actual)

 

15.8%

 

12.6%

 

320 bps

 

(190 bps)

 

 

 

 

 

 

 

 

 

Same Store Hotels Total Revenue

 

$282,066

 

$240,054

 

17.5%

 

4.5%

Same Store Hotels Total Operating Expenses

 

186,246

 

158,769

 

17.3%

 

7.7%

Same Store Hotels Adjusted Hotel EBITDA

 

$95,820

 

$81,285

 

17.9%

 

(1.2%)

Same Store Hotels Adjusted Hotel EBITDA Margin %

 

34.0%

 

33.9%

 

10 bps

 

(190 bps)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ADR (Same Store Hotels)

 

$150.23

 

$135.71

 

10.7%

 

7.8%

Occupancy (Same Store Hotels)

 

72.1%

 

67.5%

 

6.8%

 

(2.8%)

RevPAR (Same Store Hotels)

 

$108.30

 

$91.67

 

18.1%

 

4.8%

 

 

 

 

 

 

 

 

 

ADR (Actual)

 

$152.01

 

$137.03

 

10.9%

 

11.5%

Occupancy (Actual)

 

72.0%

 

67.1%

 

7.3%

 

(2.6%)

RevPAR (Actual)

 

$109.46

 

$91.98

 

19.0%

 

8.7%

 

 

 

 

 

 

 

 

 

Reconciliation to Actual Results

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Revenue (Actual)

 

$311,454

 

$260,478

 

 

 

 

Revenue from acquisitions

 

(29,388)

 

(20,427)

 

 

 

 

Revenue from dispositions

 

-

 

3

 

 

 

 

Same Store Hotels Total Revenue

 

$282,066

 

$240,054

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Hotel EBITDA (AHEBITDA) (Actual)

 

$106,749

 

$87,936

 

 

 

 

AHEBITDA from acquisitions

 

(10,929)

 

(6,624)

 

 

 

 

AHEBITDA from dispositions

 

-

 

(27)

 

 

 

 

Same Store Hotels AHEBITDA

 

$95,820

 

$81,285

 

 

 

 

 
__________________

Note: Same Store Hotels is defined as the 204 hotels owned by the Company as of January 1, 2019 and during the entirety of the periods being compared. This information has not been audited.

 

Comparisons to 2019 operating results are included to provide a better understanding of the Company’s recovery from the impact of COVID-19 on hotel operations.

 

Reconciliation of net income to non-GAAP financial measures is included in the following pages.

Apple Hospitality REIT, Inc.

Same Store Hotels Quarterly Operating Metrics and Statistical Data

(Unaudited)

(in thousands, except statistical data)

 

 

 

2019

 

2022

 

2023

 

 

Q1

 

Q2

 

Q3

 

Q4

 

Q1

 

Q2

 

Q3

 

Q4

 

Q1

Operating income (Actual)

 

$53,851

 

$78,103

 

$61,125

 

$40,708

 

$32,835

 

$80,745

 

$75,410

 

$17,488

 

$49,247

Operating margin % (Actual)

 

17.7%

 

22.9%

 

18.4%

 

14.0%

 

12.6%

 

23.9%

 

22.1%

 

5.8%

 

15.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Same Store Hotels Total Revenue

 

$269,979

 

$310,174

 

$301,822

 

$261,702

 

$240,054

 

$309,822

 

$309,039

 

$270,885

 

$282,066

Same Store Hotels Total Operating Expenses

 

172,970

 

186,495

 

187,359

 

173,741

 

158,769

 

185,120

 

193,874

 

180,203

 

186,246

Same Store Hotels Adjusted Hotel EBITDA

 

$97,009

 

$123,679

 

$114,463

 

$87,961

 

$81,285

 

$124,702

 

$115,165

 

$90,682

 

$95,820

Same Store Hotels Adjusted Hotel EBITDA Margin %

 

35.9%

 

39.9%

 

37.9%

 

33.6%

 

33.9%

 

40.2%

 

37.3%

 

33.5%

 

34.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ADR (Same Store Hotels)

 

$139.36

 

$144.35

 

$142.25

 

$133.50

 

$135.71

 

$152.07

 

$155.09

 

$145.58

 

$150.23

Occupancy (Same Store Hotels)

 

74.2%

 

81.8%

 

80.1%

 

73.0%

 

67.5%

 

78.0%

 

75.5%

 

69.7%

 

72.1%

RevPAR (Same Store Hotels)

 

$103.36

 

$118.07

 

$113.90

 

$97.45

 

$91.67

 

$118.64

 

$117.12

 

$101.40

 

$108.30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ADR (Actual)

 

$136.36

 

$141.60

 

$139.21

 

$131.41

 

$137.03

 

$153.35

 

$157.91

 

$147.30

 

$152.01

Occupancy (Actual)

 

73.9%

 

81.4%

 

79.9%

 

72.9%

 

67.1%

 

77.9%

 

75.7%

 

69.7%

 

72.0%

RevPAR (Actual)

 

$100.71

 

$115.30

 

$111.17

 

$95.85

 

$91.98

 

$119.41

 

$119.52

 

$102.71

 

$109.46

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation to Actual Results

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Revenue (Actual)

 

$303,787

 

$341,117

 

$331,722

 

$289,971

 

$260,478

 

$337,668

 

$341,150

 

$299,121

 

$311,454

Revenue from acquisitions

 

(704)

 

(2,736)

 

(2,829)

 

(3,321)

 

(20,427)

 

(27,850)

 

(32,111)

 

(28,237)

 

(29,388)

Revenue from dispositions

 

(33,104)

 

(28,207)

 

(27,071)

 

(24,948)

 

3

 

4

 

-

 

1

 

-

Same Store Hotels Total Revenue

 

$269,979

 

$310,174

 

$301,822

 

$261,702

 

$240,054

 

$309,822

 

$309,039

 

$270,885

 

$282,066

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Hotel EBITDA (AHEBITDA) (Actual)

 

$108,804

 

$134,759

 

$124,596

 

$96,836

 

$87,936

 

$136,515

 

$129,166

 

$101,962

 

$106,749

AHEBITDA from acquisitions

 

(248)

 

(981)

 

(1,040)

 

(996)

 

(6,624)

 

(11,807)

 

(14,006)

 

(11,098)

 

(10,929)

AHEBITDA from dispositions

 

(11,547)

 

(10,099)

 

(9,093)

 

(7,879)

 

(27)

 

(6)

 

5

 

(182)

 

-

Same Store Hotels AHEBITDA

 

$97,009

 

$123,679

 

$114,463

 

$87,961

 

$81,285

 

$124,702

 

$115,165

 

$90,682

 

$95,820

____________________

Note: Same Store Hotels is defined as the 204 hotels owned by the Company as of January 1, 2019 and during the entirety of the periods being compared. This information has not been audited.

 

Comparisons to 2019 operating results are included to provide a better understanding of the Company’s recovery from the impact of COVID-19 on hotel operations.

 

Reconciliation of net income to non-GAAP financial measures is included in the following pages.

Apple Hospitality REIT, Inc.

Reconciliation of Net Income to EBITDA, EBITDAre, Adjusted EBITDAre and Adjusted Hotel EBITDA

(Unaudited)

(in thousands)

EBITDA is a commonly used measure of performance in many industries and is defined as net income (loss) excluding interest, income taxes, depreciation and amortization. The Company believes EBITDA is useful to investors because it helps the Company and its investors evaluate the ongoing operating performance of the Company by removing the impact of its capital structure (primarily interest expense) and its asset base (primarily depreciation and amortization). In addition, certain covenants included in the agreements governing the Company’s indebtedness use EBITDA, as defined in the specific credit agreement, as a measure of financial compliance.

In addition to EBITDA, the Company also calculates and presents EBITDAre in accordance with standards established by the National Association of Real Estate Investment Trusts (“Nareit”), which defines EBITDAre as EBITDA, excluding gains and losses from the sale of certain real estate assets (including gains and losses from change in control), plus real estate related impairments, and adjustments to reflect the entity’s share of EBITDAre of unconsolidated affiliates. The Company presents EBITDAre because it believes that it provides further useful information to investors in comparing its operating performance between periods and between REITs that report EBITDAre using the Nareit definition.

The Company also considers the exclusion of non-cash straight-line operating ground lease expense from EBITDAre useful, as this expense does not reflect the underlying performance of the related hotels (Adjusted EBITDAre).

The Company further excludes actual corporate-level general and administrative expense for the Company from Adjusted EBITDAre (Adjusted Hotel EBITDA) to isolate property-level operational performance over which the Company’s hotel operators have direct control. The Company believes Adjusted Hotel EBITDA provides useful supplemental information to investors regarding operating performance and is used by management to measure the performance of the Company’s hotels and effectiveness of the operators of the hotels.

The following table reconciles the Company’s GAAP net income to EBITDA, EBITDAre, Adjusted EBITDAre and Adjusted Hotel EBITDA on a quarterly basis for 2019, 2022 and 2023:

 

 

2019

 

2022

 

2023

 

 

Q1

 

Q2

 

Q3

 

Q4

 

Q1

 

Q2

 

Q3

 

Q4

 

Q1

Net income

 

$38,151

 

$62,090

 

$46,223

 

$25,453

 

$18,002

 

$65,345

 

$59,146

 

$2,312

 

$32,923

Depreciation and amortization

 

47,950

 

48,109

 

47,887

 

49,294

 

45,324

 

45,322

 

45,135

 

45,916

 

45,906

Amortization of favorable and unfavorable operating

leases, net

 

31

 

31

 

31

 

31

 

99

 

103

 

97

 

97

 

97

Interest and other expense, net

 

15,494

 

15,857

 

14,759

 

15,081

 

14,654

 

15,198

 

14,933

 

14,948

 

16,004

Income tax expense

 

206

 

156

 

143

 

174

 

179

 

202

 

1,331

 

228

 

320

EBITDA

 

101,832

 

126,243

 

109,043

 

90,033

 

78,258

 

126,170

 

120,642

 

63,501

 

95,250

(Gain) loss on sale of real estate

 

(1,213)

 

161

 

-

 

(3,969)

 

-

 

-

 

(1,785)

 

-

 

-

Loss on impairment of depreciable real estate assets

 

-

 

-

 

6,467

 

-

 

-

 

-

 

-

 

26,175

 

-

EBITDAre

 

100,619

 

126,404

 

115,510

 

86,064

 

78,258

 

126,170

 

118,857

 

89,676

 

95,250

Non-cash straight-line operating ground lease expense

 

48

 

47

 

47

 

46

 

40

 

38

 

38

 

38

 

38

Adjusted EBITDAre

 

100,667

 

126,451

 

115,557

 

86,110

 

78,298

 

126,208

 

118,895

 

89,714

 

95,288

General and administrative expense

 

8,137

 

8,308

 

9,039

 

10,726

 

9,638

 

10,307

 

10,271

 

12,248

 

11,461

Adjusted Hotel EBITDA

 

$108,804

 

$134,759

 

$124,596

 

$96,836

 

$87,936

 

$136,515

 

$129,166

 

$101,962

 

$106,749

Apple Hospitality REIT, Inc.

Reconciliation of Net Income to FFO and MFFO

(Unaudited)

(in thousands)

The Company calculates and presents FFO in accordance with standards established by Nareit, which defines FFO as net income (loss) (computed in accordance with GAAP), excluding gains and losses from the sale of certain real estate assets (including gains and losses from change in control), extraordinary items as defined by GAAP, and the cumulative effect of changes in accounting principles, plus real estate related depreciation, amortization and impairments, and adjustments for unconsolidated affiliates. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, most real estate industry investors consider FFO to be helpful in evaluating a real estate company’s operations. The Company further believes that by excluding the effects of these items, FFO is useful to investors in comparing its operating performance between periods and between REITs that report FFO using the Nareit definition. FFO as presented by the Company is applicable only to its common shareholders, but does not represent an amount that accrues directly to common shareholders.

The Company calculates MFFO by further adjusting FFO for the exclusion of amortization of finance ground lease assets, amortization of favorable and unfavorable operating leases, net and non-cash straight-line operating ground lease expense, as these expenses do not reflect the underlying performance of the related hotels. The Company presents MFFO when evaluating its performance because it believes that it provides further useful supplemental information to investors regarding its ongoing operating performance.

The following table reconciles the Company’s GAAP net income to FFO and MFFO for the three months ended March 31, 2023 and 2022:

 

 

Three Months Ended

March 31,

 

 

2023

 

2022

Net income

 

$32,923

 

$18,002

Depreciation of real estate owned

 

45,142

 

44,560

Funds from operations

 

78,065

 

62,562

Amortization of finance ground lease assets

 

759

 

759

Amortization of favorable and unfavorable operating leases, net

 

97

 

99

Non-cash straight-line operating ground lease expense

 

38

 

40

Modified funds from operations

 

$78,959

 

$63,460

Apple Hospitality REIT, Inc.

2023 Guidance Reconciliation of Net Income to EBITDA, EBITDAre, Adjusted EBITDAre, Adjusted Hotel EBITDA and Comparable Hotels Adjusted Hotel EBITDA

(Unaudited)

(in thousands)

The guidance of net income, EBITDA, EBITDAre, Adjusted EBITDAre, Adjusted Hotel EBITDA and Comparable Hotels Adjusted Hotel EBITDA (and all other guidance given) are forward-looking statements and are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors which may cause actual results and performance to differ materially from those expressed or implied by these forecasts. Although the Company believes the expectations reflected in the forecasts are based upon reasonable assumptions, there can be no assurance that the expectations will be achieved or that the results will not be materially different. Risks that may affect these assumptions and forecasts include, but are not limited to, the following: changes in political, economic, competitive and specific market conditions; the amount and timing of acquisitions and dispositions of hotel properties; the level of capital expenditures may change significantly, which will directly affect the level of depreciation expense, interest expense and net income; the amount and timing of debt repayments may change significantly based on market conditions, which will directly affect the level of interest expense and net income; the amount and timing of transactions involving the Company's common stock may change based on market conditions; and other risks and uncertainties associated with the Company's business described herein and in filings with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the year ended December 31, 2022.

The following table reconciles the Company’s GAAP net income guidance to EBITDA, EBITDAre, Adjusted EBITDAre, Adjusted Hotel EBITDA and Comparable Hotels Adjusted Hotel EBITDA guidance for the year ending December 31, 2023:

 

Year Ending December 31, 2023

 

Low-End

 

High-End

Net income

$164,750

 

$209,350

Depreciation and amortization

186,000

 

180,000

Amortization of favorable and unfavorable leases, net

405

 

405

Interest and other expense, net

68,000

 

66,000

Income tax expense

700

 

1,100

EBITDA and EBITDAre

$419,855

 

$456,855

Non-cash straight-line operating ground lease expense

145

 

145

Adjusted EBITDAre

$420,000

 

$457,000

General and administrative expense

35,000

 

40,000

Comparable Hotels Adjusted Hotel EBITDA(1)

$455,000

 

$497,000

____________________

(1)

Comparable Hotels Adjusted Hotel EBITDA and Adjusted Hotel EBITDA guidance are the same.

Apple Hospitality REIT, Inc.

Debt Summary

(Unaudited)

($ in thousands)

March 31, 2023

 

 

April 1 -

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair Market

 

 

 

2023

 

 

2024

 

 

2025

 

 

2026

 

 

2027

 

 

Thereafter

 

 

Total

 

 

Value

 

Total debt:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maturities

 

$

56,645

 

 

$

113,597

 

 

$

245,140

 

 

$

115,149

 

 

$

278,602

 

 

$

616,014

 

 

$

1,425,147

 

 

$

1,372,379

 

Average interest rates(1)

 

 

4.3

%

 

 

4.5

%

 

 

4.9

%

 

 

5.1

%

 

 

5.1

%

 

 

4.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Variable-rate debt:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maturities

 

$

50,000

 

 

$

85,000

 

 

$

175,000

 

 

$

40,500

 

 

$

275,000

 

 

$

385,000

 

 

$

1,010,500

 

 

$

1,007,586

 

Average interest rates(1)

 

 

4.3

%

 

 

4.7

%

 

 

5.2

%

 

 

5.5

%

 

 

5.6

%

 

 

5.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fixed-rate debt:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maturities

 

$

6,645

 

 

$

28,597

 

 

$

70,140

 

 

$

74,649

 

 

$

3,602

 

 

$

231,014

 

 

$

414,647

 

 

$

364,793

 

Average interest rates

 

 

4.1

%

 

 

4.1

%

 

 

4.0

%

 

 

4.0

%

 

 

4.1

%

 

 

4.1

%

 

 

 

 

 

 

____________________

(1)

The average interest rate gives effect to interest rate swaps, as applicable.

 

 

Note: See further information on the Company’s indebtedness in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023.

Apple Hospitality REIT, Inc.

Comparable Hotels Operating Metrics by Market

Three Months Ended March 31

(Unaudited)

 

Top 20 Markets

 

 

Occupancy

 

ADR

 

RevPAR

 

% of Adjusted

Hotel EBITDA

 

# of

Hotels

 

Q1 2023

Q1 2022

% Change

 

Q1 2023

Q1 2022

% Change

 

Q1 2023

Q1 2022

% Change

 

Q1 2023

Top 20 Markets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Phoenix, AZ

10

 

89.6%

78.9%

13.6%

 

$222.13

$176.34

26.0%

 

$198.94

$139.15

43.0%

 

13.7%

Los Angeles, CA

8

 

80.2%

80.8%

(0.7%)

 

$178.11

$171.30

4.0%

 

$142.91

$138.34

3.3%

 

5.4%

San Diego, CA

7

 

74.1%

67.9%

9.1%

 

$173.57

$148.63

16.8%

 

$128.58

$100.89

27.4%

 

5.4%

Fort Worth/Arlington, TX

6

 

82.0%

81.3%

0.9%

 

$160.73

$144.27

11.4%

 

$131.77

$117.31

12.3%

 

3.8%

Orange County, CA

6

 

73.4%

69.6%

5.5%

 

$167.70

$144.37

16.2%

 

$123.06

$100.48

22.5%

 

3.7%

Melbourne, FL

3

 

91.6%

83.6%

9.6%

 

$204.15

$176.39

15.7%

 

$187.09

$147.53

26.8%

 

3.4%

Miami, FL

3

 

89.4%

86.2%

3.7%

 

$194.74

$169.84

14.7%

 

$174.02

$146.36

18.9%

 

2.9%

Nashville, TN

5

 

75.8%

71.5%

6.0%

 

$154.31

$147.91

4.3%

 

$116.90

$105.71

10.6%

 

2.8%

Richmond/Petersburg, VA

3

 

67.9%

61.8%

9.9%

 

$185.44

$175.18

5.9%

 

$125.99

$108.24

16.4%

 

2.6%

Fort Lauderdale, FL

2

 

89.0%

85.6%

4.0%

 

$198.99

$170.29

16.9%

 

$177.06

$145.79

21.4%

 

2.3%

Austin, TX

7

 

74.6%

66.2%

12.7%

 

$129.05

$118.86

8.6%

 

$96.28

$78.67

22.4%

 

2.2%

Tucson, AZ

3

 

90.6%

87.3%

3.8%

 

$146.17

$131.81

10.9%

 

$132.47

$115.02

15.2%

 

2.1%

Seattle, WA

3

 

71.8%

62.8%

14.3%

 

$161.96

$146.71

10.4%

 

$116.32

$92.07

26.3%

 

2.0%

Dallas, TX

5

 

70.8%

59.9%

18.2%

 

$138.64

$125.94

10.1%

 

$98.20

$75.38

30.3%

 

2.0%

Orlando, FL

3

 

81.9%

75.1%

9.1%

 

$144.77

$137.81

5.1%

 

$118.52

$103.53

14.5%

 

1.9%

Alabama North

4

 

83.7%

75.4%

11.0%

 

$140.61

$120.70

16.5%

 

$117.63

$91.05

29.2%

 

1.7%

Florida Panhandle

5

 

71.4%

65.5%

9.0%

 

$135.21

$134.15

0.8%

 

$96.60

$87.83

10.0%

 

1.6%

Birmingham, AL

4

 

81.4%

72.1%

12.9%

 

$137.40

$135.56

1.4%

 

$111.86

$97.70

14.5%

 

1.6%

Houston, TX

6

 

67.0%

56.0%

19.6%

 

$116.04

$102.43

13.3%

 

$77.71

$57.33

35.5%

 

1.5%

Atlanta, GA

3

 

70.7%

59.6%

18.6%

 

$179.06

$147.94

21.0%

 

$126.56

$88.18

43.5%

 

1.5%

Top 20 Markets

96

 

78.2%

71.8%

8.9%

 

$167.67

$149.10

12.5%

 

$131.20

$107.05

22.6%

 

64.1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

All Other Markets

124

 

66.9%

63.1%

6.0%

 

$137.14

$125.85

9.0%

 

$91.79

$79.41

15.6%

 

35.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Portfolio

220

 

72.0%

67.0%

7.5%

 

$152.01

$137.02

10.9%

 

$109.46

$91.80

19.2%

 

100.0%

Note: Market categorization based on STR designation. Top 20 markets based on Comparable Hotels Adjusted Hotel EBITDA contribution.

Apple Hospitality REIT, Inc.

Comparable Hotels Operating Metrics by Region

Three Months Ended March 31

(Unaudited)

 

Region

 

 

Occupancy

 

ADR

 

RevPAR

 

% of Adjusted

Hotel EBITDA

 

# of

Hotels

 

Q1 2023

Q1 2022

% Change

 

Q1 2023

Q1 2022

% Change

 

Q1 2023

Q1 2022

% Change

 

Q1 2023

STR Region

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

East North Central

15

 

57.3%

50.9%

12.6%

 

$125.03

$112.51

11.1%

 

$71.68

$57.25

25.2%

 

2.4%

East South Central

27

 

74.9%

69.4%

7.9%

 

$141.25

$131.68

7.3%

 

$105.76

$91.37

15.7%

 

10.6%

Middle Atlantic

13

 

66.1%

59.8%

10.5%

 

$137.30

$127.08

8.0%

 

$90.80

$76.00

19.5%

 

2.6%

Mountain

21

 

82.0%

75.9%

8.0%

 

$184.23

$150.45

22.5%

 

$150.98

$114.11

32.3%

 

18.9%

New England

6

 

55.2%

50.7%

8.9%

 

$143.88

$131.45

9.5%

 

$79.40

$66.64

19.1%

 

1.0%

Pacific

32

 

74.6%

71.1%

4.9%

 

$171.91

$155.14

10.8%

 

$128.30

$110.23

16.4%

 

20.5%

South Atlantic

53

 

75.8%

71.9%

5.4%

 

$155.92

$140.91

10.7%

 

$118.17

$101.35

16.6%

 

26.4%

West North Central

17

 

62.8%

58.4%

7.5%

 

$127.57

$117.60

8.5%

 

$80.10

$68.70

16.6%

 

3.7%

West South Central

36

 

72.6%

66.2%

9.7%

 

$135.41

$126.00

7.5%

 

$98.30

$83.44

17.8%

 

13.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Portfolio

220

 

72.0%

67.0%

7.5%

 

$152.01

$137.02

10.9%

 

$109.46

$91.80

19.2%

 

100.0%

Note: Region categorization based on STR designation.

Apple Hospitality REIT, Inc.

Comparable Hotels Operating Metrics by Chain Scale

Three Months Ended March 31

(Unaudited)

 

Chain Scale/Brand

 

 

Occupancy

 

ADR

 

RevPAR

 

% of Adjusted

Hotel EBITDA

 

# of

Hotels

 

Q1 2023

Q1 2022

% Change

 

Q1 2023

Q1 2022

% Change

 

Q1 2023

Q1 2022

% Change

 

Q1 2023

Upscale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AC Hotels

3

 

63.2%

50.1%

26.1%

 

$155.12

$140.26

10.6%

 

$98.05

$70.27

39.5%

 

1.3%

Aloft

1

 

46.5%

32.7%

42.2%

 

$118.38

$133.69

(11.5%)

 

$55.09

$43.67

26.2%

 

0.0%

Courtyard

33

 

68.4%

62.5%

9.4%

 

$151.17

$135.90

11.2%

 

$103.45

$84.88

21.9%

 

16.2%

Hilton Garden Inn

40

 

69.3%

62.1%

11.6%

 

$147.08

$133.88

9.9%

 

$101.97

$83.08

22.7%

 

17.0%

Homewood Suites

30

 

80.3%

78.6%

2.2%

 

$151.47

$137.65

10.0%

 

$121.57

$108.26

12.3%

 

13.5%

Hyatt House

1

 

89.9%

79.1%

13.7%

 

$228.27

$163.07

40.0%

 

$205.15

$129.03

59.0%

 

1.1%

Hyatt Place

3

 

84.3%

72.8%

15.8%

 

$171.93

$150.70

14.1%

 

$144.96

$109.65

32.2%

 

2.3%

Residence Inn

29

 

73.0%

73.5%

(0.7%)

 

$157.79

$143.51

10.0%

 

$115.15

$105.47

9.2%

 

13.8%

SpringHill Suites

9

 

71.9%

64.8%

11.0%

 

$141.78

$126.62

12.0%

 

$101.98

$82.06

24.3%

 

3.6%

Upscale Total

149

 

71.9%

67.1%

7.2%

 

$151.66

$137.24

10.5%

 

$109.11

$92.07

18.5%

 

68.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Upper Midscale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fairfield

10

 

69.3%

64.5%

7.4%

 

$134.75

$121.92

10.5%

 

$93.39

$78.61

18.8%

 

3.2%

Hampton

37

 

69.7%

63.2%

10.3%

 

$156.57

$139.22

12.5%

 

$109.16

$88.01

24.0%

 

16.5%

Home2 Suites

10

 

83.2%

77.9%

6.8%

 

$153.83

$138.77

10.9%

 

$128.04

$108.16

18.4%

 

5.6%

TownePlace Suites

9

 

77.0%

80.3%

(4.1%)

 

$122.47

$113.49

7.9%

 

$94.30

$91.12

3.5%

 

3.0%

Upper Midscale Total

66

 

72.4%

67.4%

7.4%

 

$148.96

$133.25

11.8%

 

$107.78

$89.78

20.0%

 

28.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Upper Upscale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Embassy Suites

2

 

87.6%

86.7%

1.0%

 

$208.83

$182.57

14.4%

 

$183.01

$158.24

15.7%

 

1.9%

Marriott

2

 

61.1%

50.4%

21.2%

 

$169.89

$156.37

8.6%

 

$103.77

$78.87

31.6%

 

1.7%

Upper Upscale Total

4

 

70.1%

62.7%

11.8%

 

$186.35

$168.62

10.5%

 

$130.55

$105.70

23.5%

 

3.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Independents

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Independents

1

 

72.4%

63.4%

14.2%

 

$156.19

$132.77

17.6%

 

$113.15

$84.16

34.4%

 

(0.7)%

Independents Total

1

 

72.4%

63.4%

14.2%

 

$156.19

$132.77

17.6%

 

$113.15

$84.16

34.4%

 

(0.7)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Portfolio

220

 

72.0%

67.0%

7.5%

 

$152.01

$137.02

10.9%

 

$109.46

$91.80

19.2%

 

100.0%

Note: Chain scale categorization based on STR designation.

Apple Hospitality REIT, Inc.

Comparable Hotels Operating Metrics by Location

Three Months Ended March 31

(Unaudited)

 

Location

 

 

Occupancy

 

ADR

 

RevPAR

 

% of Adjusted

Hotel EBITDA

 

# of

Hotels

 

Q1 2023

Q1 2022

% Change

 

Q1 2023

Q1 2022

% Change

 

Q1 2023

Q1 2022

% Change

 

Q1 2023

STR Location

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Airport

18

 

81.7%

75.7%

7.9%

 

$154.96

$133.54

16.0%

 

$126.54

$101.13

25.1%

 

10.1%

Interstate

4

 

65.2%

59.0%

10.5%

 

$114.73

$113.81

0.8%

 

$74.75

$67.11

11.4%

 

0.8%

Resort

11

 

77.1%

71.3%

8.1%

 

$177.68

$162.22

9.5%

 

$137.07

$115.72

18.4%

 

8.0%

Small Metro/Town

11

 

79.1%

74.9%

5.6%

 

$161.99

$133.33

21.5%

 

$128.13

$99.92

28.2%

 

6.7%

Suburban

125

 

71.5%

67.8%

5.5%

 

$143.77

$130.53

10.1%

 

$102.78

$88.49

16.1%

 

46.9%

Urban

51

 

68.4%

61.2%

11.8%

 

$162.25

$148.52

9.2%

 

$110.99

$90.93

22.1%

 

27.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Portfolio

220

 

72.0%

67.0%

7.5%

 

$152.01

$137.02

10.9%

 

$109.46

$91.80

19.2%

 

100.0%

Note: Location categorization based on STR designation.

 

Contacts

Apple Hospitality REIT, Inc.

Kelly Clarke, Vice President, Investor Relations

804-727-6321

kclarke@applereit.com

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