Hotels

Apple Hospitality REIT Q2 2017 Total Revenues Up 28.7 Percent

Apple Hospitality REIT Q2 2017 Total Revenues Up 28.7 Percent

Apple Hospitality REIT

Apple Hospitality REIT, Inc. (NYSE: APLE) yesterday announced results of operations for the second quarter of 2017.

 

 Selected Statistical and Financial Data

As of and For the Three and Six Months Ended June 30

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

    
Three Months EndedSix Months Ended
June 30,June 30,
2017 2016% Change2017 2016% Change
 
Net income$87,606$54,71860.1%$121,971$89,40436.4%
Net income per share$0.39$0.3125.8%$0.55$0.517.8%
 
Adjusted EBITDA$125,987$100,51425.3%$225,065$179,12425.6%
Comparable Hotels Adjusted Hotel EBITDA$132,039$135,966(2.9%)$236,810$242,704(2.4%)
Comparable Hotels Adjusted Hotel EBITDA Margin39.9%41.5%(160 bps)38.2%39.6%(140 bps)
Modified funds from operations (MFFO)$113,650$90,36425.8%$200,531$159,67825.6%
MFFO per share$0.51$0.52(1.9%)$0.90$0.91(1.1%)
 
ADR (Actual)$137.56$138.16(0.4%)$135.58$135.79(0.2%)
Occupancy (Actual)81.5%82.2%(0.9%)78.0%78.2%(0.3%)
RevPAR (Actual)$112.10$113.59(1.3%)$105.70$106.13(0.4%)
 
Comparable Hotels ADR$137.53$137.080.3%$135.42$134.990.3%
Comparable Hotels Occupancy81.5%81.9%(0.5%)78.0%77.8%0.3%
Comparable Hotels RevPAR$112.08$112.27(0.2%)$105.59$104.970.6%
 
Distributions paid$66,903$52,35327.8%$133,811$104,71327.8%
Distributions paid per share$0.30$0.30$0.60$0.60
 
Total debt outstanding$1,309,064
Total debt to total capitalization (2)23.9%
 

(1) Explanations of and reconciliations to net income of Adjusted EBITDA, Comparable Hotels Adjusted Hotel EBITDA and MFFO are included below.

(2) Total debt outstanding divided by total debt outstanding plus equity market capitalization based on the Company’s closing share price of $18.71 on June 30, 2017.

Comparable Hotels is defined as the 235 hotels owned by the Company as of June 30, 2017. 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, President and Chief Executive Officer, commented, “As expected, lackluster business demand, calendar shifts, continued wage pressure, and outsized growth in 2016 in a few of our larger markets, made the second quarter challenging for us. I am pleased with our ability to navigate those challenges and continue to produce stable operating results during the quarter. While we anticipate continued headwinds from restrained corporate spending and rising labor costs, we have confidence that our broad geographic diversification, exposure to a wide mix of demand generators, and focus on the select-service and extended-stay segment of the industry position us to be successful.”

Hotel Portfolio Overview

Apple Hospitality owns a highly diversified hotel portfolio, which helps insulate the revenue stream of the Company from regional economic dislocations that may occur from time to time. As of June 30, 2017, Apple Hospitality owned 235 hotels with 29,978 rooms, comprised of 116 Marriott® branded hotels and 119 Hilton® branded hotels, with locations in 87 markets throughout 33 states.

Transactional Activity

Acquisitions

Effective September 1, 2016, Apple Hospitality completed its merger with Apple REIT Ten, Inc. (“Apple Ten”). The merger added 56 Marriott® and Hilton® branded primarily select-service and extended-stay hotels with 7,209 guestrooms to the Company’s portfolio. As consideration in the merger, the Company issued approximately 49 million common shares and paid approximately $94 million to the Apple Ten shareholders, and assumed approximately $257 million of debt.

Dispositions

As previously reported, Apple Hospitality completed the sale of its 224-room Hilton® hotel in Dallas, Texas, on April 20, 2017, for a gross sales price of approximately $56 million, including debt assumed by the buyer of approximately $27 million. As a result of the sale, the Company recognized a gain of approximately $16 million during the second quarter of 2017.

In June 2017, the Company entered into a contract for the sale of its 316-room Marriott® hotel in Fairfax, Virginia for a gross sales price of $42 million. The contract is subject to a number of conditions to closing, therefore, there can be no assurance that a closing will occur. If closing conditions are met, it is anticipated that the sale would be completed by the end of 2017. The Company currently estimates a gain on sale of approximately $1 million if a closing occurs.

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 six months ended June 30, 2017, the Company invested approximately $24 million in capital expenditures. The Company plans to continue to reinvest in its hotels and anticipates investing an additional $35 to $45 million in capital improvements during the remainder of 2017, which includes various scheduled renovation projects for approximately 15 to 20 properties.

Balance Sheet

As of June 30, 2017, Apple Hospitality had approximately $1.3 billion of total outstanding indebtedness with a current combined weighted average interest rate of approximately 3.4 percent for the remainder of 2017. Excluding unamortized debt issuance costs and fair value adjustments, the Company’s total outstanding indebtedness is comprised of approximately $433 million in property-level debt secured by 28 hotels and $876 million outstanding on its unsecured credit facilities. In July 2017, the Company entered into an unsecured $85 million seven-year term loan. The net proceeds from the term loan were used to pay down borrowings on the Company’s revolving credit facility. The term loan is subject to requirements and covenants similar to the Company’s unsecured $965 million credit facility. The interest rate for the term loan is equal to an annual rate of the one-month LIBOR plus a margin ranging from 1.80% to 2.60%, depending upon the Company’s leverage ratio. In conjunction with the term loan, the Company entered into an interest rate swap agreement to effectively fix the interest rate on $75 million of the $85 million term loan at 3.76%. Apple Hospitality’s undrawn capacity on its unsecured credit facilities at July 31, 2017, was approximately $340 million. The Company’s total debt to total capitalization at June 30, 2017, was approximately 24 percent, which provides Apple Hospitality with financial flexibility to fund capital requirements and pursue opportunities in the marketplace.

Shareholder Distributions

Apple Hospitality paid distributions of $0.30 per common share during the three-month period ended June 30, 2017. Based on the Company’s common share closing price of $18.10 on August 3, 2017, the annualized distribution of $1.20 per common share represents an annual yield of approximately 6.6 percent. The Company’s Board of Directors, in consultation with management, will continue to regularly monitor the Company’s distribution rate relative to the performance of its hotels, capital improvement needs, varying economic cycles, acquisitions, and dispositions. At its discretion, the Company’s Board of Directors may make adjustments as determined to be prudent in relation to other cash requirements of the Company.

2017 Outlook

Apple Hospitality is updating its operational and financial outlook for 2017. This outlook, which is based on management’s current view of both operating and economic fundamentals of the Company’s existing portfolio of hotels, 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. Comparable Hotels RevPAR Growth and Comparable Hotels Adjusted Hotel EBITDA Margin % guidance include properties acquired, including those acquired through the Apple Ten merger, as if the hotels were owned as of January 1, 2016, and exclude completed dispositions since January 1, 2016. For the full year 2017, the Company anticipates:

      2017 Guidance(1)
      Low-End High-End
         
Net income $207 Million $225 Million
     
Comparable Hotels RevPAR Growth 0.0% 1.5%
       
Comparable Hotels Adjusted Hotel EBITDA Margin %   36.8% 37.5%
       
Adjusted EBITDA   $425 Million $440 Million

(1) Explanations of and reconciliations to net income guidance of Adjusted EBITDA guidance are included below.

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 portfolios of upscale, select-service hotels in the United States. The Company’s portfolio consists of 235 hotels, with approximately 30,000 guestrooms, diversified across the Hilton® and Marriott® families of brands with locations in urban, high-end suburban and developing markets throughout 33 states.

 
Apple Hospitality REIT, Inc.
Consolidated Balance Sheets
(in thousands, except share data)
 
 
June 30,December 31,
20172016
(unaudited)
Assets
Investment in real estate, net of accumulated depreciation
of $644,718 and $557,597, respectively$4,770,883$4,823,489
Assets held for sale39,000
Restricted cash-furniture, fixtures and other escrows28,24429,425
Due from third party managers, net57,67631,460
Other assets, net 47,771  56,509 
Total Assets$4,904,574 $4,979,883 
 
Liabilities
Revolving credit facility$301,300$270,000
Term loans571,461570,934
Mortgage debt435,556497,029
Accounts payable and other liabilities 88,685  124,856 
Total Liabilities1,397,0021,462,819
 
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 223,055,340 and 222,938,648 shares, respectively4,455,1914,453,205
Accumulated other comprehensive income4,9594,589
Distributions greater than net income (952,578) (940,730)
Total Shareholders’ Equity 3,507,572  3,517,064 
 
Total Liabilities and Shareholders’ Equity$4,904,574 $4,979,883 

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 June 30, 2017.

   
Apple Hospitality REIT, Inc.
Consolidated Statements of Operations and Comprehensive Income

(Unaudited) (in thousands, except per share data)

 
Three Months EndedSix Months Ended
June 30,June 30,
2017201620172016
Revenues:
Room$306,283$237,340$575,676$443,490
Other 25,421  20,296  48,953  38,633 
Total revenue331,704257,636624,629482,123
 
Expenses:
Operating80,34561,459155,499118,288
Hotel administrative25,21718,85750,05337,055
Sales and marketing26,27019,89650,37937,915
Utilities10,1937,71919,94615,319
Repair and maintenance12,2799,60524,19518,689
Franchise fees14,16310,93326,63720,378
Management fees11,5458,94721,75716,984
Property taxes, insurance and other17,82113,07634,74825,528
Ground lease2,8392,5065,6554,972
General and administrative6,1515,06012,9059,888
Transaction and litigation costs (reimbursements)(2,586)1,116(2,586)1,409
Loss on impairment of depreciable real estate assets7,875
Depreciation 43,893  33,824  87,660  67,308 
Total expenses 248,130  192,998  494,723  373,733 
 
Operating income83,57464,638129,906108,390
 
Interest and other expense, net(11,849)(9,560)(23,566)(18,363)
Gain on sale of real estate 16,140    16,140   
 
Income before income taxes87,86555,078122,48090,027
 
Income tax expense (259) (360) (509) (623)
 
Net income$87,606 $54,718 $121,971 $89,404 
 
Other comprehensive income (loss):
Interest rate derivatives (1,175) (5,501) 370  (12,195)
 
Comprehensive income$86,431 $49,217 $122,341 $77,209 
 
Basic and diluted net income per common share$0.39 $0.31 $0.55 $0.51 
 
Weighted average common shares outstanding – basic and diluted223,052174,667223,049174,667

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 June 30, 2017.

 
Apple Hospitality REIT, Inc.
Comparable Hotels Operating Metrics and Statistical Data

(Unaudited) (in thousands except statistical data)

       
Three Months EndedSix Months Ended
June 30,June 30,
20172016% Change20172016% Change
 
Room revenue$305,743$303,3050.8%$572,478$566,0381.1%
Other revenue 25,209  24,501 2.9% 47,665  46,688 2.1%
Total revenue330,952327,8061.0%620,143612,7261.2%
 
Total operating expenses 198,913  191,840 3.7% 383,333  370,022 3.6%
 
Adjusted Hotel EBITDA$132,039 $135,966 (2.9%)$236,810 $242,704 (2.4%)
Adjusted Hotel EBITDA Margin %39.9%41.5%(160 bps)38.2%39.6%(140 bps)
 
 
ADR (Comparable Hotels)$137.53$137.080.3%$135.42$134.990.3%
Occupancy (Comparable Hotels)81.5%81.9%(0.5%)78.0%77.8%0.3%
RevPAR (Comparable Hotels)$112.08$112.27(0.2%)$105.59$104.970.6%
 
ADR (Actual)$137.56$138.16(0.4%)$135.58$135.79(0.2%)
Occupancy (Actual)81.5%82.2%(0.9%)78.0%78.2%(0.3%)
RevPAR (Actual)$112.10$113.59(1.3%)$105.70$106.13(0.4%)
 

Reconciliation to Actual Results

 
Total Revenue (Actual)$331,704$257,636$624,629$482,123
Revenue from acquisitions prior to ownership76,234141,713
Revenue from dispositions(705)(6,017)(4,392)(11,160)
Lease revenue intangible amortization (47) (47) (94) 50 
Comparable Hotels Total Revenue$330,952 $327,806 $620,143 $612,726 
 
Adjusted Hotel EBITDA (AHEBITDA) (Actual)$132,138$105,574$237,970$189,012
AHEBITDA from acquisitions prior to ownership32,07356,567
AHEBITDA from dispositions (99) (1,681) (1,160) (2,875)
Comparable Hotels AHEBITDA$132,039 $135,966 $236,810 $242,704 

Note:

Comparable Hotels is defined as the 235 hotels owned by the Company as of June 30, 2017. 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.

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)

         
Three Months Ended
9/30/201512/31/20153/31/20166/30/20169/30/201612/31/20163/31/20176/30/2017
 
Room revenue$287,714$246,492$262,733$303,305$296,647$253,823$266,735$305,743
Other revenue 22,939  23,654  22,187  24,501  23,563  23,563  22,456  25,209 
Total revenue310,653270,146284,920327,806320,210277,386289,191330,952
 
Total operating expenses 185,833  173,972  178,182  191,840  196,002  179,266  184,420  198,913 
 
Adjusted Hotel EBITDA$124,820 $96,174 $106,738 $135,966 $124,208 $98,120 $104,771 $132,039 
Adjusted Hotel EBITDA Margin %40.2%35.6%37.5%41.5%38.8%35.4%36.2%39.9%
 
 
ADR (Comparable Hotels)$132.53$126.59$132.66$137.08$134.79$127.71$133.09$137.53
Occupancy (Comparable Hotels)80.3%71.7%73.6%81.9%80.1%72.4%74.4%81.5%
RevPAR (Comparable Hotels)$106.47$90.73$97.65$112.27$108.03$92.43$99.02$112.08
 
ADR (Actual)$133.18$127.04$133.16$138.16$136.04$127.81$133.39$137.56
Occupancy (Actual)80.5%71.9%74.1%82.2%80.2%72.4%74.4%81.5%
RevPAR (Actual)$107.19$91.36$98.66$113.59$109.07$92.52$99.27$112.10
 

Reconciliation to Actual Results

 
Total Revenue (Actual)$240,555$213,033$224,487$257,636$276,471$282,431$292,925$331,704
Revenue from acquisitions prior to ownership75,54862,79965,47976,23449,452
Revenue from dispositions(5,417)(5,653)(5,143)(6,017)(5,666)(4,998)(3,687)(705)
Lease revenue intangible amortization (33) (33) 97  (47) (47) (47) (47) (47)
Comparable Hotels Total Revenue$310,653 $270,146 $284,920 $327,806 $320,210 $277,386 $289,191 $330,952 
 
Adjusted Hotel EBITDA (AHEBITDA) (Actual)$95,738$74,790$83,438$105,574$106,707$99,291$105,832$132,138
AHEBITDA from acquisitions prior to ownership30,55722,82524,49432,07318,985
AHEBITDA from dispositions (1,475) (1,441) (1,194) (1,681) (1,484) (1,171) (1,061) (99)
Comparable Hotels AHEBITDA$124,820 $96,174 $106,738 $135,966 $124,208 $98,120 $104,771 $132,039 

Note:

Comparable Hotels is defined as the 235 hotels owned by the Company as of June 30, 2017. 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.

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

Apple Hospitality REIT, Inc.

Reconciliation of Net Income (Loss) to EBITDA, Adjusted EBITDA 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.

The Company considers the exclusion or inclusion of certain additional items from EBITDA (Adjusted EBITDA) useful, including (i) the exclusion of transaction and litigation costs (reimbursements), gains or losses from sales of real estate, and the loss on impairment of depreciable real estate assets, as these items do not represent ongoing operations, and (ii) the exclusion of non-cash straight-line ground lease expense, as this expense does not reflect the underlying performance of the related hotels.

The Company further excludes actual corporate-level general and administrative expense for the Company from Adjusted EBITDA (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 (loss) to EBITDA, Adjusted EBITDA and Adjusted Hotel EBITDA on a quarterly basis from September 30, 2015 through June 30, 2017.

 
Three Months Ended
9/30/2015 12/31/2015 3/31/2016 6/30/2016 9/30/2016 12/31/2016 3/31/2017 6/30/2017
Net income (loss)$46,968$(17,792)$34,686$54,718$13,694$41,554$34,365$87,606
Depreciation32,35133,24433,48433,82437,34343,51243,76743,893
Amortization of favorable and unfavorable leases, net133133262119132161165168
Interest and other expense, net9,3028,8678,8039,56010,15611,50711,71711,849
Income tax (benefit) expense 138 26  263 360 (7) (185) 250 259 
EBITDA88,89224,47877,49898,58161,31896,54990,264143,775
Transaction and litigation costs (reimbursements)842(710)2931,11636,452(2,872)(2,586)
(Gain) Loss on sale of real estate72153(16,140)
Loss on impairment of depreciable real estate assets45,0005,4717,875
Non-cash straight-line ground lease expense 829 819  819 817 843  940  939 938 
Adjusted EBITDA$90,563$69,659 $78,610$100,514$104,084 $94,770 $99,078$125,987 
General and administrative expense 5,175 5,131  4,828 5,060 2,623  4,521  6,754 6,151 
Adjusted Hotel EBITDA$95,738$74,790 $83,438$105,574$106,707 $99,291 $105,832$132,138 
 

Apple Hospitality REIT, Inc.

2017 Guidance Reconciliation of Net Income to EBITDA and Adjusted EBITDA

(Unaudited) (in thousands)

The guidance of net income, EBITDA and Adjusted EBITDA, 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, 2016.

The following table reconciles the Company’s GAAP net income guidance to EBITDA and Adjusted EBITDA guidance for the year ended December 31, 2017.

 
Year Ended December 31, 2017
Low-End High-End
Net income$206,600$224,600
Depreciation176,000174,500
Amortization of favorable and unfavorable leases, net675675
Interest and other expense, net48,00046,000
Income tax expense 850  1,350 
EBITDA432,125447,125
Transaction and litigation reimbursements(2,600)(2,600)
Gain on sale of real estate(16,100)(16,100)
Loss on impairment of depreciable real estate assets7,8757,875
Non-cash straight-line ground lease expense 3,700  3,700 
Adjusted EBITDA$425,000 $440,000 
 

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 the National Association of Real Estate Investment Trusts (“NAREIT”), which defines FFO as net income (computed in accordance with generally accepted accounting principles (“GAAP”)), excluding gains or losses from sales of real estate, extraordinary items as defined by GAAP, the cumulative effect of changes in accounting principles, plus real estate related depreciation, amortization and impairments, and adjustments for unconsolidated partnerships and joint ventures. 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 further adjusts FFO (MFFO) for certain additional items that are not in NAREIT’s definition of FFO, including: (i) the exclusion of transaction and litigation costs (reimbursements), as these costs do not represent ongoing operations, and (ii) the exclusion of non-cash straight-line ground lease expense, as this expense does 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 and six months ended June 30, 2017 and 2016.

  

Three Months Ended

June 30,

Six Months Ended

June 30,

2017 20162017 2016
Net income$87,606$54,718$121,971$89,404
Depreciation of real estate owned43,66433,59487,20166,848
Gain on sale of real estate(16,140)(16,140)
Loss on impairment of depreciable real estate assets7,875
Amortization of favorable and unfavorable leases, net 168  119 333  381
Funds from operations115,29888,431201,240156,633
Transaction and litigation costs (reimbursements)(2,586)1,116(2,586)1,409
Non-cash straight-line ground lease expense 938  817 1,877  1,636
Modified funds from operations$113,650 $90,364$200,531 $159,678
 
        

  Apple Hospitality REIT, Inc.

         Debt Summary

         (Unaudited) ($ in thousands)

         June 30, 2017

 
 

July 1 –

December 31,

2017

2018201920202021ThereafterTotal

Fair Market

Value

Total debt:
Maturities$5,329$11,071$333,008$451,164$95,311$413,181$1,309,064$1,306,559
Average interest rates3.4%3.4%3.5%3.8%4.1%4.0%
 
Variable rate debt:
Maturities$$$301,300$425,000$50,000$100,000$876,300$877,317
Average interest rates (1)2.9%2.9%2.9%3.0%3.0%3.1%
 
Fixed rate debt:
Maturities$5,329$11,071$31,708$26,164$45,311$313,181$432,764$429,242
Average interest rates4.5%4.5%4.5%4.5%4.4%4.3%
 

(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 June 30, 2017.

           

 Apple Hospitality REIT, Inc.

         Comparable Hotels Operating Metrics Top 20 Markets(1)

         Three Months ended June 30

         (Unaudited)

 
Top 20 Markets   Occupancy ADR RevPAR 

% of Adjusted

Hotel EBITDA

# of HotelsQ2 2017 Q2 2016 % ChangeQ2 2017 Q2 2016 % ChangeQ2 2017 Q2 2016 % ChangeQ2 2017
Top 20 Markets
Los Angeles/Long Beach, CA892.4%91.6%0.9%$171.39$184.76(7.2)%$158.45$169.29(6.4)%5.6%
San Diego, CA784.4%80.5%4.9%$154.63$151.731.9%$130.56$122.086.9%5.2%
Chicago, IL880.1%81.5%(1.8)%$133.37$133.48(0.1)%$106.79$108.78(1.8)%4.6%
Nashville, TN588.9%92.8%(4.3)%$180.75$179.110.9%$160.67$166.28(3.4)%4.1%
Seattle, WA389.7%88.7%1.0%$211.03$195.358.0%$189.24$173.379.2%3.4%
Anaheim/Santa Ana, CA686.4%85.4%1.2%$146.19$143.441.9%$126.34$122.533.1%3.4%
Washington, DC-MD-VA581.6%81.7%(0.1)%$146.40$148.56(1.5)%$119.41$121.30(1.6)%3.1%
Richmond/Petersburg, VA480.2%75.4%6.4%$150.94$147.482.3%$121.03$111.138.9%3.1%
Dallas, TX977.8%83.7%

(7.0)%

$122.61$122.80(0.2)%$95.44$102.79(7.2)%3.0%
Omaha, NE481.0%81.9%(1.1)%$160.33$172.64(7.1)%$129.90$141.41(8.1)%2.8%
Austin, TX776.5%85.5%(10.5)%$129.20$134.42(3.9)%$98.84$114.93(14.0)%2.2%
Denver, CO384.6%82.2%2.9%$163.63$158.563.2%$138.41$130.396.2%2.2%
North Carolina East584.7%86.4%(1.9)%$130.75$126.053.7%$110.76$108.901.7%2.2%
Phoenix, AZ874.3%74.9%(0.8)%$109.81$105.624.0%$81.59$79.073.2%2.1%
Norfolk/Virginia Beach, VA486.0%81.0%6.1%$150.00$151.70(1.1)%$128.98$122.934.9%2.0%
Oklahoma City, OK481.2%83.0%(2.1)%$139.27$143.09(2.7)%$113.08$118.70(4.7)%1.9%
Fort Worth/Arlington, TX576.9%86.1%(10.6)%$132.48$124.216.7%$101.88$106.91(4.7)%1.7%
Idaho286.6%84.4%2.5%$130.80$130.530.2%$113.22$110.232.7%1.6%
Florida Panhandle581.2%80.6%0.7%$128.44$123.953.6%$104.34$99.964.4%1.6%
Boston, MA483.5% 85.8% (2.6)%$134.03 $132.07 1.5%$111.90 $113.25 (1.2)%1.5%
Top 20 Markets10682.5% 83.3% (1.0)%$145.56 $145.27 0.2%$120.08 $121.08 (0.8)%57.3%
                 
All Other Markets12980.5% 80.5% 0.0%$129.33 $128.60 0.6%$104.10 $103.47 0.6%42.7%
 
                       
Total Portfolio 235 81.5% 81.9% (0.5)% $137.53 $137.08 0.3% $112.08 $112.27 (0.2)% 100.0%
 

(1) Based on Comparable Hotels Adjusted Hotel EBITDA contribution.

Note: Market categorization is based on STR designation.

     

Apple Hospitality REIT, Inc.

         Comparable Hotels Operating Metrics Top 20 Markets(1)

         Six Months ended June 30

         (Unaudited)

 
Top 20 Markets   Occupancy ADR RevPAR 

% of Adjusted

Hotel EBITDA

# of HotelsYTD 2017 YTD 2016 % ChangeYTD 2017 YTD 2016 % ChangeYTD 2017 YTD 2016 % ChangeYTD 2017
Top 20 Markets      
Los Angeles/Long Beach, CA890.0%92.9%(3.1)%$166.17$181.50(8.4)%$149.56$168.63(11.3)%5.9%
San Diego, CA782.4%77.4%6.4%$152.16$147.333.3%$125.31$114.089.8%5.4%
Phoenix, AZ878.1%77.4%0.9%$137.08$132.333.6%$107.05$102.474.5%4.0%
Anaheim/Santa Ana, CA685.8%85.5%0.4%$146.92$143.112.7%$126.06$122.353.0%3.8%
Nashville, TN581.5%87.5%(6.9)%$172.43$170.581.1%$140.53$149.27(5.9)%3.8%
Dallas, TX976.7%80.6%(4.8)%$122.27$122.090.1%$93.77$98.37(4.7)%3.4%
Chicago, IL871.6%70.7%1.2%$125.30$127.43(1.7)%$89.65$90.14(0.5)%3.3%
Richmond/Petersburg, VA476.6%72.3%6.0%$150.46$146.832.5%$115.24$106.118.6%3.1%
Seattle, WA382.5%81.9%0.7%$192.26$178.127.9%$158.55$145.848.7%2.9%
Washington, DC-MD-VA571.7%73.6%(2.6)%$141.30$138.172.3%$101.32$101.69(0.4)%2.6%
Austin, TX776.8%81.3%(5.6)%$131.03$134.94(2.9)%$100.57$109.71(8.3)%2.6%
Omaha, NE474.9%75.8%(1.1)%$143.43$147.71(2.9)%$107.45$111.92(4.0)%2.2%
Denver, CO378.9%75.4%4.7%$152.91$150.671.5%$120.71$113.576.3%2.0%
Oklahoma City, OK478.7%80.0%(1.6)%$136.58$138.81(1.6)%$107.46$111.00(3.2)%1.9%
Miami/Hialeah, FL388.4%89.8%(1.6)%$156.19$169.13(7.6)%$138.02$151.92(9.1)%1.9%
Fort Lauderdale, FL387.5%88.1%(0.6)%$152.93$153.20(0.2)%$133.88$134.97(0.8)%1.9%
North Carolina East579.5%80.2%(0.8)%$116.94$113.952.6%$93.01$91.351.8%1.8%
Fort Worth/Arlington, TX574.7%83.6%(10.6)%$130.90$123.216.2%$97.83$103.01(5.0)%1.7%
Houston, TX665.4%64.0%2.1%$122.06$130.70(6.6)%$79.78$83.68(4.7)%1.7%
Idaho281.9% 80.2% 2.1%$128.28 $125.52 2.2%$105.08 $100.68 4.4%1.6%
Top 20 Markets10578.6% 79.2% (0.7)%$143.13 $143.52 (0.3)%$112.54 $113.67 (1.0)%57.5%
                 
All Other Markets13077.3% 76.3% 1.3%$127.42 $125.87 1.2%$98.50 $96.02 2.6%42.5%
 
                       
Total Portfolio 235 78.0% 77.8% 0.3% $135.42 $134.99 0.3% $105.59 $104.97 0.6% 100.0%
 

(1) Based on Comparable Hotels Adjusted Hotel EBITDA contribution.

Note: Market categorization is based on STR designation.

 
Apple Hospitality REIT, Inc.
Comparable Hotels Operating Metrics by Region
Three Months ended June 30
(Unaudited)
               
Region    Occupancy  ADR  RevPAR  

% of Adjusted

Hotel EBITDA

# of HotelsQ2 2017 Q2 2016 % ChangeQ2 2017 Q2 2016 % ChangeQ2 2017 Q2 2016 % ChangeQ2 2017
STR Region
East North Central1579.7%80.7%(1.3)%$132.80$132.710.1%$105.89$107.16(1.2)%7.4%
East South Central2782.3%83.1%(0.9)%$131.41$130.870.4%$108.15$108.74(0.5)%9.4%
Middle Atlantic1281.9%81.7%0.3%$162.61$168.65(3.6)%$133.21$137.78(3.3)%4.6%
Mountain1979.2%79.7%(0.5)%$124.42$118.834.7%$98.57$94.654.1%7.7%
New England483.5%85.8%(2.6)%$134.03$132.071.5%$111.90$113.25(1.2)%1.5%
Pacific3288.0%86.3%2.1%$165.91$164.880.6%$146.08$142.252.7%21.9%
South Atlantic6383.1%81.9%1.5%$132.11$130.441.3%$109.84$106.852.8%26.6%
West North Central1781.2%80.4%1.0%$136.03$139.21(2.3)%$110.50$111.93(1.3)%7.0%
West South Central4675.0%79.5%(5.7)%$123.92$125.82(1.5)%$92.91$100.04(7.1)%13.9%
                           
Total Portfolio 235  81.5% 81.9% (0.5)%  $137.53 $137.08 0.3%  $112.08 $112.27 (0.2)%  100.0%
 

Note: Region categorization is based on STR designation.

 
Apple Hospitality REIT, Inc.
Comparable Hotels Operating Metrics by Region
Six Months ended June 30
(Unaudited)
         
Region    Occupancy  ADR  RevPAR  

% of Adjusted

Hotel EBITDA

# of HotelsYTD 2017 YTD 2016 % ChangeYTD 2017 YTD 2016 % ChangeYTD 2017 YTD 2016 % ChangeYTD 2017
STR Region      
East North Central1572.3%71.7%0.8%$126.30$127.22(0.7)%$91.33$91.260.1%6.0%
East South Central2777.9%78.0%(0.0)%$127.52$127.490.0%$99.38$99.40(0.0)%9.0%
Middle Atlantic1275.9%74.8%1.4%$153.30$160.14(4.3)%$116.31$119.81(2.9)%3.4%
Mountain1979.4%78.4%1.3%$132.45$127.074.2%$105.19$99.605.6%9.8%
New England472.5%77.7%(6.6)%$130.75$129.421.0%$94.83$100.53(5.7)%1.2%
Pacific3285.3%83.8%1.8%$160.52$160.190.2%$136.99$134.262.0%22.2%
South Atlantic6379.2%78.4%1.0%$132.04$130.331.3%$104.64$102.232.4%26.9%
West North Central1775.4%73.4%2.8%$127.33$128.79(1.1)%$96.07$94.511.6%6.0%
West South Central4673.7%76.4%(3.5)%$124.36$125.14(0.6)%$91.69$95.63(4.1)%15.5%
                           
Total Portfolio 235  78.0% 77.8% 0.3%  $135.42 $134.99 0.3%  $105.59 $104.97 0.6%  100.0%
 

Note: Region categorization is based on STR designation.

               
Apple Hospitality REIT, Inc.
Comparable Hotels Operating Metrics by Chain Scale
Three Months ended June 30
(Unaudited)
 
Chain Scale/Brand    Occupancy  ADR  RevPAR  

% of Adjusted

Hotel EBITDA

# of HotelsQ2 2017 Q2 2016 % ChangeQ2 2017 Q2 2016 % ChangeQ2 2017 Q2 2016 % ChangeQ2 2017
Upscale
Courtyard4078.9%78.3%0.7%$143.02$146.21(2.2)%$112.77$114.50(1.5)%19.8%
Hilton Garden Inn4180.4%82.5%(2.5)%$137.60$136.311.0%$110.63$112.39(1.6)%19.3%
Homewood Suites3485.4%85.4%(0.0)%$137.37$136.780.4%$117.35$116.870.4%12.6%
Residence Inn3283.6%84.0%(0.4)%$147.99$146.001.4%$123.72$122.610.9%14.8%
SpringHill Suites1782.1% 80.5% 2.1%$123.98 $122.63 1.1%$101.80 $98.67 3.2%6.7%
Upscale Total16481.7% 82.0% (0.4)%$139.33 $139.14 0.1%$113.78 $114.08 (0.3)%73.2%
 
Upper Midscale
Fairfield Inn/Fairfield Inn & Suites1181.1%80.1%1.3%$118.97$118.400.5%$96.47$94.811.8%3.4%
Hampton Inn/Hampton Inn & Suites3682.2%83.6%(1.7)%$131.70$130.800.7%$108.21$109.34(1.0)%13.8%
Home2 Suites686.4%90.8%(4.8)%$129.14$126.352.2%$111.61$114.76(2.7)%2.5%
TownePlace Suites1279.8% 80.9% (1.3)%$107.40 $103.21 4.1%$85.73 $83.48 2.7%3.1%
Upper Midscale Total6582.0% 83.1% (1.3)%$125.58 $124.05 1.2%$102.96 $103.05 (0.1)%22.8%
 
Upper Upscale
Embassy Suites288.7%87.2%1.7%$176.62$178.23(0.9)%$156.71$155.480.8%1.4%
Marriott368.5%67.6%1.4%$149.60$148.730.6%$102.48$100.502.0%2.8%
Renaissance193.6% 87.4% 7.1%$267.76 $287.22 (6.8)%$250.49 $250.91 (0.2)%(0.2)%
Upper Upscale Total676.4% 74.6% 2.4%$176.83 $179.09 (1.3)%$135.16 $133.68 1.1%4.0%
                           
Total Portfolio 235  81.5% 81.9% (0.5)%  $137.53 $137.08 0.3%  $112.08 $112.27 (0.2)%  100.0%
 

Note: Chain scale categorization is based on STR designation.

 
Apple Hospitality REIT, Inc.
Comparable Hotels Operating Metrics by Chain Scale
Six Months ended June 30
(Unaudited)
         
Chain Scale/Brand    Occupancy  ADR  RevPAR  

% of Adjusted

Hotel EBITDA

# of HotelsYTD 2017 YTD 2016 % ChangeYTD 2017 YTD 2016 % ChangeYTD 2017 YTD 2016 % ChangeYTD 2017
Upscale      
Courtyard4074.8%74.5%0.4%$139.61$142.05(1.7)%$104.37$105.76(1.3)%19.6%
Hilton Garden Inn4176.3%77.2%(1.1)%$135.36$134.110.9%$103.32$103.51(0.2)%18.9%
Homewood Suites3482.4%82.3%0.0%$138.72$138.400.2%$114.29$113.970.3%13.4%
Residence Inn3281.0%80.5%0.7%$145.36$143.661.2%$117.78$115.611.9%15.2%
SpringHill Suites1778.2% 77.0% 1.5%$121.57 $120.42 1.0%$95.01 $92.71 2.5%6.7%
Upscale Total16478.1% 78.0% 0.1%$137.42 $137.17 0.2%$107.26 $106.96 0.3%73.8%
 
Upper Midscale
Fairfield Inn/Fairfield Inn & Suites1180.1%79.0%1.4%$120.19$118.821.2%$96.24$93.842.6%3.7%
Hampton Inn/Hampton Inn & Suites3677.7%77.8%(0.1)%$129.97$129.820.1%$101.02$101.04(0.0)%13.5%
Home2 Suites683.6%85.8%(2.6)%$125.89$122.073.1%$105.28$104.760.5%2.5%
TownePlace Suites1277.2% 77.3% (0.2)%$105.51 $101.35 4.1%$81.41 $78.39 3.9%3.2%
Upper Midscale Total6578.6% 78.5% 0.0%$124.09 $122.78 1.1%$97.49 $96.42 1.1%22.9%
 
Upper Upscale
Embassy Suites286.3%81.1%6.4%$169.75$169.87(0.1)%$146.46$137.696.4%1.3%
Marriott365.8%64.5%1.9%$149.42$148.120.9%$98.30$95.592.8%2.8%
Renaissance1 90.1% 83.5% 7.9%$227.78 $248.97 (8.5)%$205.22 $207.82 (1.2)%(0.8)%
Upper Upscale Total6 73.7% 70.8% 4.1%$168.12 $170.31 (1.3)%$123.86 $120.58 2.7%3.3%
                           
Total Portfolio  235 78.0% 77.8% 0.3%  $135.42 $134.99 0.3%  $105.59 $104.97 0.6%  100.0%
 

Note: Chain scale categorization is based on STR designation.

               
Apple Hospitality REIT, Inc.
Comparable Hotels Operating Metrics by Location
Three Months ended June 30
(Unaudited)
 
Location    Occupancy  ADR  RevPAR  

% of Adjusted

Hotel EBITDA

# of HotelsQ2 2017 Q2 2016 % ChangeQ2 2017 Q2 2016 % ChangeQ2 2017 Q2 2016 % ChangeQ2 2017
STR Location
Airport1685.3%87.0%(1.9)%$132.85$130.112.1%$113.38$113.130.2%6.7%
Interstate877.7%77.4%0.3%$113.55$113.65(0.1)%$88.20$88.020.2%2.5%
Resort986.7%81.3%6.7%$142.53$138.712.8%$123.56$112.749.6%5.0%
Small Metro/Town1976.2%77.7%(2.0)%$111.00$107.353.4%$84.60$83.461.4%4.5%
Suburban14880.8%81.4%(0.7)%$133.02$133.36(0.3)%$107.53$108.56(1.0)%57.5%
Urban3583.6%84.2%(0.7)%$165.04$165.42(0.2)%$137.91$139.22(0.9)%23.8%
                           
Total Portfolio 235  81.5% 81.9% (0.5)%  $137.53 $137.08 0.3%  $112.08 $112.27 (0.2)%  100.0%
 

Note: Location categorization is based on STR designation.

 
Apple Hospitality REIT, Inc.
Comparable Hotels Operating Metrics by Location
Six Months ended June 30
(Unaudited)
               
Location    Occupancy  ADR  RevPAR  

% of Adjusted

Hotel EBITDA

# of HotelsYTD 2017 YTD 2016 % ChangeYTD 2017 YTD 2016 % ChangeYTD 2017 YTD 2016 % ChangeYTD 2017
STR Location
Airport1682.9%83.5%(0.8)%$134.35$132.171.7%$111.36$110.390.9%7.0%
Interstate872.2%72.5%(0.4)%$111.63$112.57(0.8)%$80.65$81.63(1.2)%2.4%
Resort982.5%79.3%4.1%$144.09$140.882.3%$118.94$111.696.5%5.1%
Small Metro/Town1974.2%74.4%(0.3)%$116.73$113.392.9%$86.61$84.412.6%5.4%
Suburban14877.5%77.2%0.4%$131.31$132.07(0.6)%$101.71$101.94(0.2)%58.3%
Urban3579.1%79.4%(0.3)%$157.07$155.421.1%$124.28$123.350.8%21.8%
                           
Total Portfolio 235  78.0% 77.8% 0.3%  $135.42 $134.99 0.3%  $105.59 $104.97 0.6%  100.0%
 

Note: Location categorization is based on STR designation.

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