[Q2 2025 Performance Overview](index=1&type=section&id=Q2%202025%20Performance%20Overview) This section summarizes the company's financial and operational performance for Q2 2025, highlighting key profitability metrics and management's strategic commentary [Financial & Statistical Highlights](index=1&type=section&id=Financial%20%26%20Statistical%20Highlights) The company reported a decline in key profitability metrics for Q2 2025 compared to Q2 2024, with Net Income down 13.9% and Adjusted EBITDAre down 5.6%. Hotel operating metrics showed a slight decline, with Comparable Hotels RevPAR decreasing by 1.7% due to lower occupancy, though ADR remained relatively flat Q2 2025 Key Financial and Operating Metrics (YoY, in thousands) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Net Income | $63,648 | $73,931 | (13.9%) | | Adjusted EBITDAre | $133,006 | $140,916 | (5.6%) | | MFFO per share | $0.47 | $0.50 | (6.0%) | | Comparable Hotels RevPAR | $128.68 | $130.89 | (1.7%) | | Comparable Hotels ADR | $163.62 | $163.80 | (0.1%) | | Comparable Hotels Occupancy | 78.6% | 79.9% | (1.6%) | [CEO Commentary](index=2&type=section&id=CEO%20Commentary) The CEO noted that performance improved sequentially through the quarter after a challenging April, with preliminary July results showing positive RevPAR growth. The company is adapting to demand shifts by optimizing its business mix. The capital allocation strategy focuses on opportunistically selling assets to fund share repurchases while the stock trades at a discount, preserving balance sheet flexibility for future acquisitions - Comparable Hotels RevPAR declines moderated each month during Q2, and preliminary results for July show approximately **1% year-over-year growth**[6](index=6&type=chunk) - The company is actively managing its portfolio by selling assets to redeploy proceeds into share repurchases, taking advantage of the stock trading at an implied discount to private market values[7](index=7&type=chunk) - Management expressed confidence in the long-term outlook for the hospitality industry and the company's ability to maximize shareholder returns due to its high-quality, diversified portfolio and strong balance sheet[7](index=7&type=chunk) [Detailed Quarterly Performance](index=2&type=section&id=Detailed%20Quarterly%20Performance) For Q2 2025, Comparable Hotels RevPAR decreased 1.7% YoY to approximately $129, driven by a 1.6% drop in occupancy. Performance trends improved monthly, with the RevPAR decline narrowing from -4.0% in April to -0.2% in June. Bottom-line metrics also saw declines, with Comparable Hotels Adjusted Hotel EBITDA down 5.4% and MFFO down 7.9% Comparable Hotels Monthly Performance (Q2 2025 vs Q2 2024) | Metric | April % Change | May % Change | June % Change | Q2 2025 % Change | | :--- | :--- | :--- | :--- | :--- | | ADR | (1.2%) | 0.5% | 0.3% | (0.1%) | | Occupancy | (2.9%) | (1.3%) | (0.6%) | (1.6%) | | RevPAR | (4.0%) | (0.9%) | (0.2%) | (1.7%) | - Bottom-line performance for Q2 2025 saw declines, with Comparable Hotels Adjusted Hotel EBITDA at **$142 million** (-5.4% YoY) and MFFO at **$112 million** (-7.9% YoY)[13](index=13&type=chunk) [Portfolio & Capital Management](index=4&type=section&id=Portfolio%20%26%20Capital%20Management) This section details the company's strategic activities in portfolio management, capital improvements, balance sheet health, and shareholder returns during the quarter [Portfolio Activity](index=4&type=section&id=Portfolio%20Activity) The company was active in managing its portfolio, acquiring one hotel in Tampa for $18.8 million and placing three hotels under contract for sale for a combined $36.3 million. It also has a hotel in Nashville under a potential purchase contract. Additionally, the company regained possession of its New York Property from a third-party operator in April 2025 - Acquired the 126-room Homewood Suites by Hilton Tampa-Brandon for **$18.8 million** in June 2025[14](index=14&type=chunk) - Three hotels are currently under contract for sale for a combined gross price of approximately **$36.3 million**[16](index=16&type=chunk) - On April 4, 2025, the company recovered possession of its independent boutique hotel in New York, NY from a third-party operator and reinstated operations[18](index=18&type=chunk)[20](index=20&type=chunk) [Capital Improvements](index=5&type=section&id=Capital%20Improvements) The company invested approximately $32 million in capital expenditures in the first half of 2025 and plans to invest a total of $80 million to $90 million for the full year, targeting comprehensive renovations for approximately 20 hotels - Invested approximately **$32 million** in capital expenditures during the six months ended June 30, 2025[21](index=21&type=chunk) - Anticipates investing **$80 million to $90 million** in capital improvements for the full year 2025[21](index=21&type=chunk) [Balance Sheet and Liquidity](index=5&type=section&id=Balance%20Sheet%20and%20Liquidity) As of June 30, 2025, the company maintained a strong balance sheet with total debt of $1.5 billion, a net debt to total capitalization ratio of approximately 36%, and $475 million available on its revolving credit facility. Subsequent to the quarter's end, the company refinanced a term loan, increasing its size to $385 million and extending the maturity to 2030 Balance Sheet & Liquidity as of June 30, 2025 (in millions/billions) | Metric | Value | | :--- | :--- | | Total Outstanding Debt | ~$1.5 Billion | | Cash on Hand | ~$8 Million | | Revolving Credit Facility Availability | ~$475 Million | | Total Debt to Total Capitalization (net) | ~36% | - In July 2025, the company entered into a new **$385 million** term loan facility maturing in 2030, using proceeds to repay a **$225 million** facility and reduce the balance on its revolving credit facility[23](index=23&type=chunk) [Capital Markets and Shareholder Returns](index=5&type=section&id=Capital%20Markets%20and%20Shareholder%20Returns) The company repurchased 1.4 million common shares for $16.9 million in Q2 2025 under its Share Repurchase Program. It paid distributions of $0.24 per share during the quarter, representing a current annualized yield of approximately 8.2%. The at-the-market (ATM) offering program remained unused - During Q2 2025, the company repurchased approximately **1.4 million common shares** for an aggregate price of **$16.9 million**[24](index=24&type=chunk) - Paid distributions totaling **$0.24 per common share** in Q2 2025. The current annualized distribution of **$0.96 per share** represents an annual yield of approximately **8.2%** as of August 4, 2025[27](index=27&type=chunk) - No shares were sold under the **$500 million** at-the-market (ATM) offering program during the first six months of 2025[26](index=26&type=chunk) [2025 Outlook](index=6&type=section&id=2025%20Outlook) This section provides the company's updated financial guidance for the full year 2025, reflecting current market conditions and booking trends [Updated 2025 Guidance](index=6&type=section&id=Updated%202025%20Guidance) Citing economic uncertainty and slightly weaker booking data for late summer, the company updated its full-year 2025 guidance. The outlook for Net Income, Comparable Hotels RevPAR Change, and Adjusted EBITDAre was revised downwards compared to the midpoint of previous guidance - The company lowered its full-year guidance to reflect current booking trends, which have pulled back slightly year-over-year for August and September, and continued economic uncertainty[28](index=28&type=chunk) Updated Full Year 2025 Guidance (in millions) | Metric | Low-End | High-End | | :--- | :--- | :--- | | Net income | $161 Million | $187 Million | | Comparable Hotels RevPAR Change | (1.5%) | 0.5% | | Comparable Hotels Adjusted Hotel EBITDA Margin % | 33.5% | 34.5% | | Adjusted EBITDAre | $428 Million | $450 Million | | Capital expenditures | $80 Million | $90 Million | [Financial Statements & Reconciliations](index=9&type=section&id=Financial%20Statements%20%26%20Reconciliations) This section presents the company's consolidated financial statements, including balance sheet and statement of operations, along with reconciliations of non-GAAP financial measures [Consolidated Financial Statements](index=9&type=section&id=Consolidated%20Financial%20Statements) The Consolidated Balance Sheet as of June 30, 2025, shows total assets of $4.93 billion and total shareholders' equity of $3.20 billion. The Consolidated Statement of Operations for Q2 2025 reports total revenues of $384.4 million and net income of $63.6 million, a decrease from $73.9 million in Q2 2024 Consolidated Balance Sheet Summary (in thousands) | Account | June 30, 2025 | | :--- | :--- | | Total Assets | $4,929,092 | | Total Liabilities | $1,730,307 | | Total Shareholders' Equity | $3,198,785 | Consolidated Statement of Operations Summary (Q2 2025, in thousands) | Account | Amount | | :--- | :--- | | Total Revenue | $384,370 | | Operating Income | $84,851 | | Net Income | $63,648 | [Non-GAAP Reconciliations](index=11&type=section&id=Non-GAAP%20Reconciliations) The report provides detailed reconciliations for non-GAAP measures such as Adjusted EBITDAre and MFFO to the nearest GAAP measure, Net Income. For Q2 2025, Net Income of $63.6 million reconciled to Adjusted EBITDAre of $133.0 million and MFFO of $111.8 million Reconciliation of Net Income to MFFO (Q2 2025, in thousands) | Line Item | Amount | | :--- | :--- | | Net income | $63,648 | | Depreciation of real estate owned | $47,262 | | Funds from operations (FFO) | $110,910 | | Adjustments | $893 | | **Modified funds from operations (MFFO)** | **$111,803** | Reconciliation of Net Income to Adjusted EBITDAre (Q2 2025, in thousands) | Line Item | Amount | | :--- | :--- | | Net income | $63,648 | | Depreciation and amortization | $48,022 | | Interest and other expense, net | $20,963 | | EBITDAre | $132,975 | | **Adjusted EBITDAre** | **$133,006** | [Debt Summary](index=18&type=section&id=Debt%20Summary) As of June 30, 2025, the company had total debt of $1.53 billion with a weighted-average interest rate of approximately 5.0%. The debt is a mix of variable-rate ($1.19 billion) and fixed-rate ($342 million) instruments with maturities spread through 2029 and beyond. A significant refinancing of a $225 million term loan occurred in July 2025, extending maturity Total Debt Maturities as of June 30, 2025 (in thousands) | Period | Maturities | | :--- | :--- | | Jul 1 - Dec 31, 2025 | $257,983 | | 2026 | $377,649 | | 2027 | $278,602 | | 2028 | $334,066 | | 2029 | $162,294 | | Thereafter | $119,654 | | **Total** | **$1,530,248** | - Subsequent to the quarter end, on July 24, 2025, the company entered a new **$385 million** term loan facility maturing in 2030, repaying its **$225 million** facility that was due in the second half of 2025[79](index=79&type=chunk) [Detailed Operating Metrics](index=19&type=section&id=Detailed%20Operating%20Metrics) This section provides a detailed breakdown of comparable hotel operating metrics, segmented by market and location type, highlighting performance variations [Comparable Hotels Metrics by Market](index=19&type=section&id=Comparable%20Hotels%20Metrics%20by%20Market) Performance varied significantly across the company's top 30 markets in Q2 2025. Markets like Pittsburgh (+19.1%), Alaska (+10.6%), and Salt Lake City (+6.8%) showed strong RevPAR growth. Conversely, markets such as Fort Worth/Arlington (-13.5%), Phoenix (-11.8%), Nashville (-10.8%), and Washington D.C. (-8.9%) experienced notable declines. The top 30 markets collectively saw a RevPAR decrease of 0.8% - Strongest performing markets in Q2 2025 by RevPAR growth included **Pittsburgh, PA (+19.1%)** and **Alaska (+10.6%)**[83](index=83&type=chunk) - Weakest performing markets in Q2 2025 by RevPAR growth included **Fort Worth/Arlington, TX (-13.5%)**, **Phoenix, AZ (-11.8%)**, and **Washington, DC (-8.9%)**[83](index=83&type=chunk) [Comparable Hotels Metrics by Location](index=21&type=section&id=Comparable%20Hotels%20Metrics%20by%20Location) In Q2 2025, performance by location type was mixed. Suburban and Urban locations, which constitute over 82% of the portfolio's Adjusted Hotel EBITDA, saw RevPAR declines of 2.3% and 1.4%, respectively. Small Metro/Town locations were the only category to post positive RevPAR growth at 2.6% Q2 2025 RevPAR Performance by Location Type (YoY % Change) | Location Type | RevPAR % Change | | :--- | :--- | | Airport | (1.6%) | | Interstate | (0.2%) | | Resort | (1.0%) | | Small Metro/Town | 2.6% | | Suburban | (2.3%) | | Urban | (1.4%) | | **Total Portfolio** | **(1.7%)** |

Core Insights - Value investing remains a preferred strategy for identifying strong stocks across various market conditions [2] - Zacks has developed a Style Scores system to identify stocks with specific traits, particularly in the Value category [3] - Apple Hospitality REIT (APLE) and Clipper Realty (CLPR) are highlighted as strong value stocks currently [4][8] Company Analysis: Apple Hospitality REIT (APLE) - APLE has a Zacks Rank of 2 (Buy) and an A for Value, indicating strong potential [4] - The stock's P/E ratio is 7.86, significantly lower than the industry average of 15.47 [4] - APLE's Forward P/E has fluctuated between 6.69 and 10.85 over the past 12 months, with a median of 8.84 [4] - The P/B ratio stands at 0.87, compared to the industry's average of 1.77, indicating solid valuation [5] - Over the past year, APLE's P/B has ranged from 0.79 to 1.19, with a median of 1.05 [5] - The P/S ratio is 1.92, well below the industry's average of 3.8, suggesting undervaluation [6] - APLE's P/CF ratio is 7.37, compared to the industry's average of 15.28, indicating attractive cash flow valuation [7] - The P/CF has varied from 6.68 to 9.97 over the past year, with a median of 8.68 [7] Company Analysis: Clipper Realty (CLPR) - CLPR also holds a Zacks Rank of 2 (Buy) and a Value Score of A, indicating strong value characteristics [8] - The P/B ratio for CLPR is -1.06, contrasting with the industry's price-to-book ratio of 1.77 [8] - Over the past 12 months, CLPR's P/B has ranged from -19.36 to -1.06, with a median of -4.95 [8] Conclusion - Both APLE and CLPR are identified as impressive value stocks, likely undervalued based on their financial metrics and earnings outlook [9]

Group 1 - The article introduces a series focused on REITs for retirees, highlighting the first two out of ten recommended REITs [1] - The company offers a comprehensive research platform called iREIT®, which includes data on various investment vehicles such as REITs, mREITs, Preferreds, BDCs, MLPs, ETFs, Builders, and Asset Managers [1] - The iREIT® Tracker provides insights on over 250 tickers, including quality scores, buy targets, and trim targets [1] Group 2 - A new Ratings Tracker named iREIT Buy Zone has been added to assist members in screening for value [2] - The company is promoting a free 2-week trial for members to explore the new features [2] - The offer includes a free book along with the trial [4]

Company Overview - Apple Hospitality owns 220 upscale, rooms-focused hotels[8] with 29,767 guest rooms[8] across 37 states[8] - The company's net debt to total capitalization is 33%[8] with 72% of outstanding debt effectively fixed[8] - The company's equity market capitalization was $3.1 billion as of March 31, 2025[11] and net debt was $1.5 billion[11] - The company paid $243.7 million in distributions in 2024[11] Financial Performance - Full year 2024 revenue was $1.4 billion[11] with MFFO per share of $1.61[11] - Comparable Hotels RevPAR for the first quarter of 2025 was $111[26], with occupancy at 71%[26] and ADR at $157[26] - Comparable Hotels Total Revenue for Q1 2025 was $324.262 million[30], a decrease of 0.4% compared to Q1 2024[30] - Comparable Hotels Adjusted Hotel EBITDA for Q1 2025 was $104.866 million[30], a decrease of 5.4% compared to Q1 2024[30] Portfolio Management - The company has an average effective hotel age of 5 years[8] and an average TripAdvisor rating of 4.3[8] - The company repurchased approximately 2.4 million common shares for $32.3 million through April 2025[26] - The company has available liquidity of approximately $500 million under its revolving credit facility as of Q1 2025[26]

Group 1 - Apple Hospitality REIT, Inc. (APLE) has been added to the Zacks Rank 5 (Strong Sell) List due to a 4.4% downward revision in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1] - Assertio Holdings, Inc. (ASRT) is also on the Zacks Rank 5 (Strong Sell) List, with a significant 50% downward revision in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1] - Boot Barn Holdings, Inc. (BOOT) has seen a 9.3% downward revision in the Zacks Consensus Estimate for its current year earnings over the last 60 days, leading to its inclusion in the Zacks Rank 5 List [2]

Core Insights - Apple Hospitality REIT, Inc. (APLE) has acquired Homewood Suites by Hilton Tampa-Brandon for $18.8 million, aiming to leverage the economic growth in Tampa, FL [1][9] - The acquisition aligns with the company's strategy to invest in properties with strong growth potential, enhancing shareholder value [5][9] Acquisition Details - The hotel features 126 rooms and is strategically located to benefit from various demand generators including conventions, sporting events, and healthcare [2][3] - The purchase price of $18.8 million translates to approximately $149,000 per key, reflecting an attractive valuation below replacement cost and a 12% cap rate based on trailing 12-month results [5] Market Positioning - The hotel's location near major attractions and corporate offices positions it well for both leisure and business tourism [4][6] - The Tampa East submarket has shown a 15% increase in revenue per available room (RevPAR) over the past year, indicating a recovery in the hospitality sector [6] Portfolio Expansion - Following the acquisition, Apple Hospitality's portfolio now includes 221 hotels with 29,893 guest rooms across 37 states and the District of Columbia [8] - The company has plans for further expansion with an additional hotel under contract for purchase in Nashville and one for sale in Houston [7] Strategic Outlook - The acquisition reflects Apple Hospitality's commitment to geographic diversification and investment in high-demand markets [9] - Despite the positive developments, macroeconomic uncertainties and competitive pressures may impact future demand for the company's properties [10]

Core Insights - Share buyback activity by US equity real estate investment trusts (REITs) more than doubled in the first quarter of the year [2] - The total amount spent on buybacks reached approximately $993.2 million in common stock [2] Industry Summary - The analysis conducted by S&P Global Market Intelligence indicates a significant increase in buyback activities among US REITs [2] - This trend reflects a growing confidence in the market and a strategic move by REITs to enhance shareholder value [2]

Group 1 - Real estate investment trusts (REITs) have shown increased volatility since the onset of COVID-19, initially experiencing a significant decline alongside other asset classes [1] - Following the initial downturn, the REIT sector has seen a notable recovery [1] Group 2 - Roberts Berzins has over ten years of experience in financial management, focusing on helping top-tier corporates with financial strategies and large-scale financings [1] - Berzins has contributed to institutionalizing the REIT framework in Latvia to enhance liquidity in pan-Baltic capital markets [1] - His policy-level work includes developing national state-owned enterprise (SOE) financing guidelines and frameworks for channeling private capital into affordable housing [1]

Financial Data and Key Metrics Changes - In the first quarter, comparable hotels total revenue was $324 million, down 0.4% year-over-year, while adjusted hotel EBITDA was $105 million, down approximately 5% [8][16] - Comparable hotels RevPAR was $111, down 0.5%, with ADR at $157, up 1%, and occupancy at 71%, down 1.5% compared to the same period last year [8][9] Business Line Data and Key Metrics Changes - The company completed the sale of two hotels for approximately $21 million and entered into an agreement for the sale of the Houston Marriott for $16 million [2] - The company has repurchased approximately $32 million of common shares and paid distributions of nearly $89 million while maintaining a strong balance sheet [2][3] Market Data and Key Metrics Changes - The company noted that demand remained healthy across its portfolio despite challenges, with specific markets like Houston and Los Angeles showing RevPAR growth of nearly 8% and over 20%, respectively [11][12] - Government demand represented about 5% of the occupancy mix, with a decline in government room nights in March but an improvement in April [36][39] Company Strategy and Development Direction - The company is focused on capital allocation to refine its portfolio, drive earnings per share, and maximize long-term shareholder value [2][5] - The company plans to reinvest between $80 million and $90 million in its hotels during 2025, with major renovations at approximately 20 hotels [5][6] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating market shifts and highlighted the importance of a diversified portfolio to mitigate risks [7][20] - The company anticipates net income for the full year to be between $167 million and $195 million, with a decrease in RevPAR guidance reflecting macroeconomic uncertainties [19][20] Other Important Information - The company has approximately $1.5 billion in total outstanding debt, with a weighted average interest rate of 4.8% and cash on hand of approximately $15 million [18] - The company has completed approximately $338 million in hotel sales since the onset of the pandemic, allowing it to forego over $100 million in capital investments [4] Q&A Session Summary Question: Can you provide more color on the RevPAR guide? - Management indicated that the booking position has declined, leading to a 200 basis point drop in RevPAR expectations for the second half of the year, with Q2 expected to be the worst quarter [24][25] Question: How is the transaction market looking moving forward? - Management noted that the transaction market remains unchanged, with opportunities primarily in smaller asset sales, and they are optimistic about redeploying proceeds into share repurchases [27][28] Question: What are the trends in group bookings? - Management reported strong group bookings, particularly in smaller corporate and leisure groups, with no significant hesitancy observed [61][62] Question: How does the company view its CapEx philosophy? - Management stated that they plan to spend between $80 million and $90 million on CapEx this year, focusing on renovations and maintaining a competitive edge [40][42] Question: How is the company positioned for potential economic downturns? - Management expressed confidence that the lack of new supply in their markets positions them well to weather economic downturns, limiting downside risk and enhancing upside potential [75][76]

Financial Data and Key Metrics Changes - In the first quarter, total revenue for comparable hotels was $324 million, down 0.4% year-over-year, while adjusted hotel EBITDA was $105 million, down approximately 5% [9][16] - Comparable hotels RevPAR was $111, down 0.5%, with ADR at $157, up 1%, and occupancy at 71%, down 1.5% compared to the same period last year [9][10] - MFFO for the quarter was approximately $76 million, or $0.32 per share, down approximately 6% on a per share basis compared to the first quarter of the previous year [17] Business Line Data and Key Metrics Changes - Comparable hotels total hotel expenses increased by 2.2% year-over-year, with total payroll per occupied room at $42, up 4% [15][16] - Comparable hotels adjusted hotel EBITDA margin was 32.3%, down 180 basis points year-over-year, indicating effective cost management despite revenue challenges [16] Market Data and Key Metrics Changes - Government demand represented approximately 5% of the occupancy mix, down from 7% earlier in the year, with a decline in government room nights of about 15% in March [11][34] - Houston properties saw RevPAR growth of almost 8% due to a strong convention calendar, while Los Angeles hotels experienced over 20% RevPAR growth [12][13] Company Strategy and Development Direction - The company plans to reinvest between $80 million and $90 million in hotel renovations in 2025, focusing on maintaining competitiveness in the market [6][7] - The company has completed approximately $338 million in hotel sales since the pandemic began, optimizing its portfolio and reducing capital investment needs [4][5] Management's Comments on Operating Environment and Future Outlook - Management anticipates a challenging transaction market but remains confident in executing selective asset sales to optimize portfolio concentration [2][5] - The company expects net income for the full year to be between $167 million and $195 million, with a comparable hotels RevPAR change projected to be between negative 11% [18][19] Other Important Information - The company has approximately $1.5 billion in total outstanding debt, with a weighted average interest rate of 4.8% and a significant portion of debt fixed or hedged [17] - The company is closely monitoring potential impacts from tariffs on project costs and timelines, although no known delays are currently affecting planned projects [7] Q&A Session Summary Question: Can you provide more color on the RevPAR guidance? - Management indicated that the booking position has declined by 200 basis points since late February, with Q2 expected to be the worst quarter, implying about 1% RevPAR growth for the second half of the year [22][23] Question: How is the transaction market looking moving forward? - The transaction market remains largely unchanged, with uncertainty keeping larger transactions on the sidelines, but opportunities for smaller asset sales continue to exist [25][26] Question: What is the company's philosophy on CapEx spending? - Historically, the company has spent between 5% to 6% of revenues on CapEx, with plans to spend $80 million to $90 million this year on renovations and other needs [39][40] Question: How is the company managing cost mitigation? - The company is focused on productivity and reducing contract labor, achieving a reduction to 7% of total wages, while maintaining strong occupancy levels [65][66] Question: How does the company view its position in a potential recession? - Management believes the lack of new supply in their markets positions the company favorably, limiting downside risk and enhancing upside potential [68][69]