Company Overview - Brad Thomas has over 30 years of real estate investing experience and has been involved in over $1B in commercial real estate transactions [2] - Brad Thomas is the author of four books, including "REITs For Dummies" [2] - Brad Thomas co-leads the investing group iREIT®+HOYA Capital, which covers REITs, BDCs, MLPs, Preferreds, and other income-oriented alternatives [1] - The iREIT®+HOYA Capital team has a combined 100+ years of experience, including former hedge fund managers, portfolio managers, and advisors to a former U.S. President [1] Services and Offerings - iREIT® on Alpha provides in-depth research on REITs, mREIT, Preferreds, BDCs, MLPs, ETFs, Builders, and Asset Managers [1] - The iREIT® Tracker offers data on over 250 tickers, including quality scores, buy targets, and trim targets [1] Historical Context - Around the end of 2002, Brad Thomas co-owned over $100 million of commercial real estate, primarily shopping centers and net lease buildings [1]

Core Viewpoint - The article highlights 11 REITs that provide high-yield and safe dividend payouts, targeting cautious investors focused on income generation rather than share price fluctuations [1]. Group 1 - The identified REITs are suitable for investors seeking stable income without significant concern for the underlying share price [1]. - The article emphasizes the importance of cautious investment strategies in the current market environment [1].

Financial Data and Key Metrics Changes - Comparable hotels RevPAR growth was approximately 1% compared to Q3 2023, driven entirely by improvement in rate [8][10] - Third quarter adjusted EBITDAre was $129 million, up approximately 6% compared to Q3 2023, while modified funds from operations was $107 million, up approximately 3% [10][37] - Total revenue for comparable hotels was $378 million for Q3, up approximately 2% year-to-date through September [28] Business Line Data and Key Metrics Changes - Comparable hotels ADR was $163, up more than 1%, and occupancy was 77%, essentially flat compared to Q3 2023 [28] - Total hotel expenses increased year-over-year by 2.7% for Q3, decelerating from previous quarters [34] - Comparable Hotels Adjusted Hotel EBITDA margin was 36.8% for the quarter, down only 60 basis points compared to Q3 2023 [37] Market Data and Key Metrics Changes - Supply-demand dynamics remain favorable, with approximately 54% of hotels not having new upper upscale or upper midscale products under construction within a five-mile radius [11] - Actual rooms under construction within the same radius decreased by 7% year-over-year [11] - October preliminary results showed RevPAR up approximately 4% compared to October 2023 [10] Company Strategy and Development Direction - The company is focused on disciplined capital allocation, optimizing portfolio concentration through strategic dispositions and acquisitions [13][21] - Recent acquisitions have produced strong yields, with the seven hotels acquired since June yielding an unlevered 9% [19] - The company plans to continue investing in capital expenditures, expecting to spend between $75 million and $85 million during 2024 [23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of leisure travel and the continued improvement in business travel demand [25][26] - The operating environment is stable with favorable supply and demand dynamics, positioning the company for continued strong performance [45] - Management anticipates continued growth in midweek occupancy and rates, with a positive outlook for 2025 [54][56] Other Important Information - The company repurchased approximately 1.4 million common shares at an average price of $14.02 per share during Q3 [17] - Total debt outstanding as of September 30, 2024, was approximately $1.5 billion, with a weighted average interest rate of 4.9% [39] - The company has approximately $301 million remaining under its share repurchase program [41] Q&A Session Summary Question: Update on the disconnect between business transient and leisure rates - Management noted that the gap continues to shrink, with weekday ADR up about 6% relative to 2019 and weekend ADR up about 18% [49] Question: Assumptions for November and December RevPAR - Management projected some RevPAR growth for both November and December based on positive booking trends [51] Question: Expectations for 2025 expense growth - Management indicated that current trends are likely to continue into the coming year [52] Question: Excitement for 2025 and changes expected - Management highlighted the resilience of leisure travel and improvements in midweek occupancy as key factors for optimism [54] Question: Midweek occupancy growth potential - Management indicated there is still room for occupancy growth midweek, with 300 to 750 basis points of opportunity relative to 2019 [64] Question: Overall transaction marketplace and interest in acquisitions - Management noted that while there are ample opportunities, sellers remain reluctant to adjust pricing, leading to fewer transactions [70][72] Question: Group business performance and bookings for next year - Management stated that group business has consistently performed well, with no significant fluctuations expected [74] Question: Impact of shorter booking windows on staffing and planning - Management acknowledged that shorter booking windows require close monitoring of staffing and scheduling [78] Question: Capital allocation strategy regarding asset sales - Management expressed intent to be more aggressive in selling assets if the market remains favorable [82]

Core Insights - Apple Hospitality REIT reported revenue of $378.84 million for the quarter ended September 2024, marking a year-over-year increase of 5.8% [1] - The earnings per share (EPS) for the same period was $0.45, compared to $0.26 a year ago [1] - The reported revenue exceeded the Zacks Consensus Estimate of $377.56 million, resulting in a surprise of +0.34% [1] Revenue Breakdown - Room revenue was $346.06 million, slightly above the estimated $344.82 million, reflecting a +5.8% change year-over-year [3] - Other revenue was reported at $16.94 million, below the average estimate of $18.02 million, indicating a -3.5% year-over-year change [3] - Food and beverage revenue reached $15.84 million, surpassing the average estimate of $14.43 million, with a year-over-year increase of +16.7% [3] Earnings Performance - The diluted net earnings per share was $0.23, slightly below the average estimate of $0.25 [3] - The company has not delivered an EPS surprise, as the consensus EPS estimate was also $0.45 [1][3] Stock Performance - Over the past month, shares of Apple Hospitality REIT have returned -3.4%, while the Zacks S&P 500 composite has seen a +0.4% change [4] - The stock currently holds a Zacks Rank 4 (Sell), suggesting potential underperformance compared to the broader market in the near term [4]

Apple Hospitality REIT (APLE) came out with quarterly funds from operations (FFO) of $0.45 per share, in line with the Zacks Consensus Estimate. This compares to FFO of $0.45 per share a year ago. These figures are adjusted for non-recurring items.A quarter ago, it was expected that this hotel-owning real estate investment trust would post FFO of $0.44 per share when it actually produced FFO of $0.50, delivering a surprise of 13.64%.Over the last four quarters, the company has surpassed consensus FFO estima ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the unaudited consolidated financial statements and management's analysis of financial condition and operations [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited consolidated financial statements, including balance sheets, income, equity, and cash flow statements, with detailed notes on accounting policies and financial positions [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's assets, liabilities, and shareholders' equity at specific points in time | Metric (in thousands) | September 30, 2024 | December 31, 2023 | | :-------------------- | :----------------- | :---------------- | | Total Assets | $5,021,803 | $4,937,298 | | Total Liabilities | $1,724,934 | $1,613,317 | | Total Shareholders' Equity | $3,296,869 | $3,323,981 | - **Total Assets** increased by approximately **$84.5 million**, driven primarily by an increase in Investment in real estate, net[4](index=4&type=chunk) - **Total Liabilities** increased by approximately **$111.6 million**, mainly due to an increase in Debt, net[4](index=4&type=chunk) [Consolidated Statements of Operations and Comprehensive Income](index=4&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) This section details the company's revenues, expenses, net income, and comprehensive income over specific periods | Metric (in thousands) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :-------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Total Revenue | $378,843 | $358,260 | $1,098,432 | $1,031,344 | | Total Expense | $301,117 | $281,965 | $873,791 | $822,773 | | Operating Income | $77,726 | $76,295 | $242,856 | $208,571 | | Net Income | $56,266 | $58,512 | $184,247 | $156,724 | | Basic and Diluted Net Income per Common Share | $0.23 | $0.26 | $0.76 | $0.68 | - **Total revenue** increased by **5.7%** for the three months and **6.5%** for the nine months ended September 30, 2024, compared to the same periods in 2023[5](index=5&type=chunk) - **Net income** decreased by **3.8%** for the three months but increased by **17.6%** for the nine months ended September 30, 2024, year-over-year[5](index=5&type=chunk) [Consolidated Statements of Shareholders' Equity](index=5&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20Equity) This section outlines changes in the company's equity, including common stock, retained earnings, and other comprehensive income | Metric (in thousands) | September 30, 2024 | December 31, 2023 | | :-------------------- | :----------------- | :---------------- | | Total Shareholders' Equity | $3,296,869 | $3,323,981 | | Common Stock, Amount | $4,772,759 | $4,794,804 | | Accumulated Other Comprehensive Income | $4,792 | $20,404 | | Distributions Greater Than Net Income | $(1,480,682) | $(1,491,227) | - **Shareholders' equity** decreased from **$3,323,981 thousand** at December 31, 2023, to **$3,296,869 thousand** at September 30, 2024, primarily due to common shares repurchased and interest rate derivatives[7](index=7&type=chunk)[8](index=8&type=chunk) - **Common shares outstanding** decreased from **241,515,532** at December 31, 2023, to **239,925,065** at September 30, 2024[4](index=4&type=chunk) [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section reports the cash generated and used by the company's operating, investing, and financing activities | Metric (in thousands) | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :-------------------- | :----------------------------- | :----------------------------- | | Net Cash Provided by Operating Activities | $310,145 | $302,164 | | Net Cash Used in Investing Activities | $(216,870) | $(86,095) | | Net Cash Used in Financing Activities | $(98,176) | $(190,518) | | Net Change in Cash, Cash Equivalents and Restricted Cash | $(4,901) | $25,551 | - **Operating cash flow** increased slightly year-over-year, while investing activities saw a significant increase in cash used, primarily due to hotel acquisitions[9](index=9&type=chunk) - **Financing activities** used less cash in 2024 compared to 2023, mainly due to higher net proceeds from revolving credit facility and term loans[9](index=9&type=chunk) [Notes to Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the consolidated financial statements [1. Organization and Summary of Significant Accounting Policies](index=7&type=section&id=1.%20Organization%20and%20Summary%20of%20Significant%20Accounting%20Policies) This section describes the company's structure, business, and key accounting principles applied in financial reporting - Apple Hospitality REIT, Inc. is a self-advised REIT investing in income-producing lodging real estate in the U.S., owning **224 hotels (30,068 guest rooms)** in 37 states and D.C. as of September 30, 2024[10](index=10&type=chunk) - The unaudited consolidated financial statements are prepared in accordance with Form 10-Q, using GAAP, and include normal recurring accruals[11](index=11&type=chunk) - New accounting standards (ASU No. 2023-07 Segment Reporting and ASU No. 2023-09 Income Taxes) are expected to impact disclosures but not the consolidated financial statements[14](index=14&type=chunk)[16](index=16&type=chunk) [2. Investment in Real Estate](index=9&type=section&id=2.%20Investment%20in%20Real%20Estate) This section details the company's real estate portfolio, including acquisitions, dispositions, and carrying values | Investment Category (in thousands) | September 30, 2024 | December 31, 2023 | | :--------------------------------- | :----------------- | :---------------- | | Land | $844,711 | $828,868 | | Building and improvements | $5,095,351 | $4,917,105 | | Furniture, fixtures and equipment | $602,212 | $571,026 | | Total Gross Investment | $6,670,089 | $6,440,316 | | Investment in real estate, net | $4,873,083 | $4,777,374 | - The Company acquired **two hotels** during the nine months ended September 30, 2024, for a gross purchase price of **$196.3 million**, adding **496 guest rooms**[19](index=19&type=chunk)[20](index=20&type=chunk) - As of September 30, 2024, the Company had one outstanding contract for the potential purchase of a hotel in Nashville, Tennessee, for approximately **$98.2 million**, expected to be completed in late 2025[23](index=23&type=chunk) [3. Assets Held for Sale and Dispositions](index=10&type=section&id=3.%20Assets%20Held%20for%20Sale%20and%20Dispositions) This section reports on properties classified as held for sale and the financial impact of hotel dispositions - One hotel was classified as held for sale as of September 30, 2024, with an expected sale in November 2024 for **$3.1 million**, resulting in a **$2.3 million impairment loss**[24](index=24&type=chunk)[27](index=27&type=chunk) - During the nine months ended September 30, 2024, the Company sold **three hotels** for a combined gross sales price of approximately **$40.6 million**, realizing a combined gain of **$18.2 million**[25](index=25&type=chunk) - A portion of the proceeds from two hotel sales in February 2024 was used for a like-kind exchange for the AC Hotel in Washington, D.C., deferring **$15.1 million** in taxable gains[26](index=26&type=chunk) [4. Debt](index=11&type=section&id=4.%20Debt) This section provides a comprehensive overview of the company's debt structure, including credit facilities, term loans, and mortgages | Debt Category (in thousands) | September 30, 2024 | December 31, 2023 | | :--------------------------- | :----------------- | :---------------- | | Revolving credit facility | $110,500 | $- | | Term loans and senior notes, net | $1,134,667 | $1,088,904 | | Mortgage debt, net | $256,022 | $282,590 | | Total Debt, net | $1,501,189 | $1,371,494 | | Debt Type (in thousands) | September 30, 2024 | Percentage | December 31, 2023 | Percentage | | :----------------------- | :----------------- | :--------- | :---------------- | :--------- | | Fixed-rate debt | $1,116,514 | 74% | $1,228,002 | 89% | | Variable-rate debt | $390,500 | 26% | $150,000 | 11% | | Weighted-average interest rate of debt | 4.87% | | 4.26% | | - The Company has a **$1.2 billion credit facility**, a **$225 million term loan facility**, a **$130 million term loan facility** (increased from $85 million in July 2024), an **$85 million term loan facility**, and **$50 million and $75 million senior notes facilities**[32](index=32&type=chunk)[34](index=34&type=chunk)[35](index=35&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk)[38](index=38&type=chunk) - The Company was in compliance with all applicable debt covenants as of September 30, 2024[42](index=42&type=chunk) [5. Fair Value of Financial Instruments](index=15&type=section&id=5.%20Fair%20Value%20of%20Financial%20Instruments) This section discusses the fair value measurements of financial instruments, particularly debt and interest rate derivatives - The fair value of the Company's debt approximated its carrying value of **$1.5 billion** as of September 30, 2024[46](index=46&type=chunk) - The Company uses interest rate swaps to manage variable-rate debt risk, effectively fixing interest payments, with **12 active swaps** covering **$735.0 million** of variable-rate debt as of September 30, 2024[47](index=47&type=chunk)[48](index=48&type=chunk) - Approximately **$6.1 million** of net unrealized gains from cash flow hedges are expected to be reclassified as a decrease to interest and other expense within the next 12 months[49](index=49&type=chunk) [6. Related Parties](index=17&type=section&id=6.%20Related%20Parties) This section discloses transactions and relationships with entities and individuals considered related parties to the company - The Company engages in transactions with related parties, including Apple Realty Group, Inc. (ARG), owned by the Executive Chairman, for support services[50](index=50&type=chunk)[51](index=51&type=chunk) - ARG reimbursed the Company approximately **$1.0 million** for support services during the nine months ended September 30, 2024, recorded as a reduction to general and administrative expenses[52](index=52&type=chunk) - The Company also utilizes aircraft owned by an entity of its Executive Chairman, reimbursing at third-party rates, with costs less than **$0.1 million** for the nine months ended September 30, 2024[55](index=55&type=chunk) [7. Shareholders' Equity](index=18&type=section&id=7.%20Shareholders'%20Equity) This section details changes in shareholders' equity, including distributions, share repurchases, and capital activities - The Company paid distributions of **$0.24 per common share** for the three months and **$0.77 per common share** for the nine months ended September 30, 2024, totaling **$57.7 million** and **$185.9 million**, respectively[56](index=56&type=chunk) - The Board of Directors approved a one-year extension of the Share Repurchase Program in May 2024, authorizing repurchases up to **$335.4 million**[58](index=58&type=chunk) - During the nine months ended September 30, 2024, the Company repurchased approximately **2.4 million common shares** for **$34.7 million**, with **$300.8 million** remaining available under the program as of September 30, 2024[58](index=58&type=chunk) [8. Compensation Plans](index=18&type=section&id=8.%20Compensation%20Plans) This section outlines the company's executive and employee compensation plans, including incentive awards and related expenses - The 2024 Incentive Plan for executive management is based **50% on operational performance goals** (RevPAR growth, Adjusted Hotel EBITDA margin, Adjusted EBITDAre, MFFO per share, capital expenditures) and **50% on shareholder return metrics**[59](index=59&type=chunk)[60](index=60&type=chunk) - As of September 30, 2024, approximately **$10.4 million** was accrued for potential executive incentive compensation payments under the 2024 Incentive Plan[60](index=60&type=chunk) - Compensation expense recognized under the 2024 Incentive Plan was **$2.4 million** for the three months and **$10.4 million** for the nine months ended September 30, 2024[60](index=60&type=chunk) [9. Subsequent Events](index=20&type=section&id=9.%20Subsequent%20Events) This section reports significant events that occurred after the balance sheet date but before the financial statements were issued - On October 15, 2024, the Company paid **$19.2 million ($0.08 per common share)** in distributions to shareholders[65](index=65&type=chunk) - On October 18, 2024, a monthly cash distribution of **$0.08 per common share** was declared, payable on November 15, 2024[65](index=65&type=chunk) - In October 2024, the Company entered into agreements to sell **three hotels** for a combined gross sales price of **$28.0 million**, with sales expected in late 2024 or early 2025[66](index=66&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition and results of operations, including an overview of its business, recent hotel portfolio activities, detailed analysis of hotel operations, revenues, and various expenses. It also discusses non-GAAP financial measures, the current hotel portfolio, related party transactions, liquidity and capital resources, and the impact of external factors like inflation and seasonality [Forward-Looking Statements](index=21&type=section&id=Forward-Looking%20Statements) This section highlights statements about future expectations, risks, and uncertainties that may affect the company's performance - The report contains forward-looking statements regarding acquisitions, dispositions, distributions, capital funding, operating strategy, and market conditions[68](index=68&type=chunk)[69](index=69&type=chunk) - These statements involve known and unknown risks and uncertainties, including economic conditions, geopolitical uncertainty, health concerns, natural disasters, and changes in real estate markets or regulations[69](index=69&type=chunk) [Overview](index=21&type=section&id=Overview) This section provides a general description of the company's business, structure, and hotel portfolio - Apple Hospitality REIT, Inc. is a self-advised REIT focused on income-producing lodging real estate in the U.S.[71](index=71&type=chunk) - As of September 30, 2024, the Company owned **224 hotels (30,068 guest rooms)** across 37 states and D.C., primarily operating under Marriott or Hilton brands[71](index=71&type=chunk) - Hotels are managed by **16 unaffiliated hotel management companies**, and the Company's common shares are listed on the NYSE under 'APLE'[71](index=71&type=chunk) [Recent Hotel Portfolio Activities](index=21&type=section&id=Recent%20Hotel%20Portfolio%20Activities) This section details recent acquisitions, dispositions, and other significant changes to the company's hotel portfolio - During the nine months ended September 30, 2024, the Company acquired **two hotels** for **$196.3 million**: an AC Hotel in Washington, D.C., and an Embassy Suites in Madison, Wisconsin[72](index=72&type=chunk) - The Company sold **three hotels** for approximately **$40.6 million**, resulting in an **$18.2 million gain**, with proceeds used for acquisitions and general corporate purposes[74](index=74&type=chunk) - An operating lease for a New York boutique hotel is under legal proceedings due to the operator's failure to make payments, with the Company intending to transition management[76](index=76&type=chunk) [Hotel Operations](index=22&type=section&id=Hotel%20Operations) This section analyzes key operational metrics for the company's hotels, including ADR, occupancy, and RevPAR - As of September 30, 2024, the Company owned **224 hotels (30,068 guest rooms)**, compared to 220 hotels (28,929 guest rooms) as of September 30, 2023[77](index=77&type=chunk) | Metric | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :----- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | ADR | $162.57 | $159.36 | $159.78 | $157.61 | | Occupancy | 77.0% | 77.1% | 76.3% | 75.8% | | RevPAR | $125.10 | $122.91 | $121.84 | $119.48 | - **Comparable Hotels (223 hotels)** showed a **0.8% increase in RevPAR** for the three months and **1.1%** for the nine months ended September 30, 2024, year-over-year[81](index=81&type=chunk) - **Same Store Hotels (215 hotels)** reported a **0.6% increase in RevPAR** for the three months and **0.8%** for the nine months ended September 30, 2024, year-over-year[84](index=84&type=chunk) [Revenues](index=24&type=section&id=Revenues) This section discusses the drivers and trends in the company's total revenue for the reported periods | Metric (in millions) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Total Revenue | $378.8 | $358.3 | $1,100 | $1,000 | - **Revenue growth** was driven by additional hotel acquisitions in 2023 and 2024 and increased business transient demand[86](index=86&type=chunk) - Leisure demand showed increased rate sensitivity, and midweek rate growth was lower than weekend rates, impacting overall ADR growth[86](index=86&type=chunk) [Hotel Operating Expense](index=24&type=section&id=Hotel%20Operating%20Expense) This section analyzes the components and trends of hotel operating expenses, including labor and maintenance costs | Metric (in millions) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Hotel Operating Expense | $219.9 | $203.7 | $633.5 | $589.4 | | % of Total Revenue | 58.1% | 56.9% | 57.7% | 57.1% | - Increases in hotel operating expense were due to additional hotel acquisitions and amplified by increased labor costs, repairs and maintenance, and sales and marketing costs driven by inflationary pressures[87](index=87&type=chunk) - The Company anticipates a slightly more favorable operating expense environment for the remainder of 2024 as inflationary pressures moderate[87](index=87&type=chunk) [Property Taxes, Insurance and Other Expense](index=25&type=section&id=Property%20Taxes,%20Insurance%20and%20Other%20Expense) This section details expenses related to property taxes, insurance, and other miscellaneous operating costs | Metric (in millions) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Property Taxes, Insurance and Other Expense | $20.9 | $21.7 | $63.9 | $61.3 | | % of Total Revenue | 5.5% | 6.1% | 5.8% | 5.9% | - The decrease for the three months was primarily due to a state franchise tax refund from legislative changes[88](index=88&type=chunk) - The increase for the nine months was mainly due to higher casualty insurance premiums and property taxes in some locations, partially offset by successful tax assessment appeals and the tax refund[88](index=88&type=chunk) [General and Administrative Expense](index=25&type=section&id=General%20and%20Administrative%20Expense) This section discusses the trends and components of general and administrative expenses, including compensation costs | Metric (in millions) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | General and Administrative Expense | $9.2 | $11.1 | $30.8 | $34.6 | | % of Total Revenue | 2.4% | 3.1% | 2.8% | 3.4% | - Decreases in G&A expense were primarily due to reduced accruals for executive incentive compensation, partially offset by increased payroll and related benefit costs[89](index=89&type=chunk) [Loss on Impairment of Depreciable Real Estate Assets](index=25&type=section&id=Loss%20on%20Impairment%20of%20Depreciable%20Real%20Estate%20Assets) This section reports on impairment losses recognized on real estate assets identified for potential sale - A loss on impairment of depreciable real estate assets of approximately **$2.9 million** was recognized for the three and nine months ended September 30, 2024[90](index=90&type=chunk) - This loss was due to two properties identified for potential sale in the third quarter of 2024, with one already classified as held for sale[90](index=90&type=chunk) [Depreciation and Amortization Expense](index=25&type=section&id=Depreciation%20and%20Amortization%20Expense) This section details the depreciation and amortization expenses related to the company's real estate investments | Metric (in millions) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Depreciation and Amortization Expense | $48.1 | $45.5 | $142.7 | $137.4 | - Increases were primarily due to acquisitions of six hotels and one parking garage in 2023, two hotels in 2024, and renovations, partially offset by three hotel sales in 2024[91](index=91&type=chunk) [Interest and Other Expense, net](index=25&type=section&id=Interest%20and%20Other%20Expense,%20net) This section analyzes interest expenses, other financial costs, and their impact on net income | Metric (in millions) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Interest and Other Expense, net | $21.2 | $17.5 | $57.9 | $51.0 | - Interest expense increased due to higher average borrowings on variable-rate debt and higher average interest rates in the current inflationary environment[93](index=93&type=chunk) - The proportion of fixed-rate debt decreased as six interest rate swaps matured in 2024, while four new swaps were entered into at higher fixed rates[93](index=93&type=chunk) [Non-GAAP Financial Measures](index=26&type=section&id=Non-GAAP%20Financial%20Measures) This section presents and reconciles non-GAAP financial measures used by management to evaluate performance [FFO and MFFO](index=26&type=section&id=FFO%20and%20MFFO) This section defines and presents Funds from Operations (FFO) and Modified Funds from Operations (MFFO) - FFO (Funds from Operations) is calculated per Nareit standards, excluding gains/losses from real estate sales, extraordinary items, and accounting changes, plus real estate depreciation, amortization, and impairments[95](index=95&type=chunk) - MFFO (Modified Funds from Operations) further adjusts FFO by excluding amortization of finance ground lease assets, favorable/unfavorable operating leases, and non-cash straight-line operating ground lease expense[96](index=96&type=chunk) | Metric (in thousands) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :-------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net Income | $56,266 | $58,512 | $184,247 | $156,724 | | Funds from Operations | $106,545 | $103,246 | $309,322 | $291,829 | | Modified Funds from Operations | $107,439 | $104,139 | $312,008 | $294,497 | [EBITDA, EBITDAre, Adjusted EBITDAre and Adjusted Hotel EBITDA](index=27&type=section&id=EBITDA,%20EBITDAre,%20Adjusted%20EBITDAre%20and%20Adjusted%20Hotel%20EBITDA) This section defines and presents various EBITDA metrics used to assess operational performance - EBITDA is net income excluding interest, income taxes, depreciation, and amortization, used to evaluate ongoing operating performance[98](index=98&type=chunk) - EBITDAre, per Nareit standards, further excludes gains/losses from real estate sales and includes real estate related impairments[99](index=99&type=chunk) | Metric (in thousands) | Three Months Ended Sep 30, 2024 | Three Months Ended Sep 30, 2023 | Nine Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2023 | | :-------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net Income | $56,266 | $58,512 | $184,247 | $156,724 | | EBITDA | $125,971 | $121,892 | $385,843 | $346,250 | | EBITDAre | $128,867 | $121,892 | $370,524 | $346,250 | | Adjusted EBITDAre | $128,900 | $121,927 | $370,626 | $346,359 | | Adjusted Hotel EBITDA | $139,088 | $132,161 | $400,561 | $380,154 | [Hotels Owned](index=28&type=section&id=Hotels%20Owned) This section provides a detailed listing and breakdown of the company's hotel portfolio by brand and location - As of September 30, 2024, the Company owned **224 hotels** with **30,068 guest rooms** across 37 states and D.C.[105](index=105&type=chunk) | Brand | Number of Hotels | Number of Guest Rooms | | :---------------- | :--------------- | :-------------------- | | Hilton Garden Inn | 40 | 5,593 | | Hampton | 36 | 4,831 | | Courtyard | 35 | 4,982 | | Residence Inn | 30 | 3,695 | | Homewood Suites | 29 | 3,291 | | Fairfield | 10 | 1,213 | | Home2 Suites | 10 | 1,146 | | SpringHill Suites | 9 | 1,463 | | TownePlace Suites | 9 | 931 | | Embassy Suites | 4 | 770 | | AC Hotels | 4 | 702 | | Hyatt Place | 3 | 411 | | Marriott | 2 | 619 | | Hyatt House | 2 | 264 | | Aloft Hotels | 1 | 157 | | Total | 224 | 30,068 | - The largest concentrations of hotels by state are in **California (26 hotels, 3,722 rooms)**, **Texas (27 hotels, 3,328 rooms)**, and **Florida (22 hotels, 2,844 rooms)**[105](index=105&type=chunk) [Related Parties](index=38&type=section&id=Related%20Parties) This section discloses transactions and relationships with entities and individuals considered related parties to the company - The Company engages in related party transactions, including support services provided to Apple Realty Group, Inc. (ARG), owned by the Executive Chairman[114](index=114&type=chunk) - These transactions are not at arm's length, and the results of operations may differ if conducted with non-related parties[114](index=114&type=chunk) [Liquidity and Capital Resources](index=38&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's sources and uses of cash, capital structure, and financial flexibility [Capital Resources](index=38&type=section&id=Capital%20Resources) This section outlines the company's available sources of funds for short-term and long-term needs - Principal short-term liquidity sources are operating cash flows and the Revolving Credit Facility[115](index=115&type=chunk) - Long-term liquidity may come from debt financing, property dispositions, and common share offerings (including a **$500 million at-the-market program**)[115](index=115&type=chunk)[120](index=120&type=chunk) - As of September 30, 2024, the Company had **$6.1 million** in corporate cash and **$539.5 million** available under its Revolving Credit Facility[116](index=116&type=chunk) [Capital Uses](index=40&type=section&id=Capital%20Uses) This section details the anticipated expenditures and commitments requiring capital from the company - Anticipated liquidity requirements include share repurchases, capital improvements, debt service, hotel acquisitions, lease commitments, cash management, and shareholder distributions[121](index=121&type=chunk) [Distributions](index=40&type=section&id=Distributions) This section explains the company's dividend policy and requirements for maintaining REIT status - The Company must distribute at least **90% of its REIT taxable income** annually to maintain REIT status[122](index=122&type=chunk) - Current annual distribution rate is **$0.96 per common share**, payable monthly at **$0.08 per share**[123](index=123&type=chunk) - The Company may use its Revolving Credit Facility to maintain consistent monthly distributions, subject to Board approval and other cash requirements[123](index=123&type=chunk) [Share Repurchases](index=41&type=section&id=Share%20Repurchases) This section reports on the company's share repurchase program and related activities - The Share Repurchase Program, extended in May 2024, authorizes repurchases up to **$335.4 million** and ends in July 2025[124](index=124&type=chunk) - During the nine months ended September 30, 2024, approximately **2.4 million common shares** were repurchased for **$34.7 million**[124](index=124&type=chunk) - Repurchases are funded by cash on hand, disposition proceeds, or unsecured credit facilities, with **$300.8 million** remaining available as of September 30, 2024[124](index=124&type=chunk) [Capital Improvements](index=41&type=section&id=Capital%20Improvements) This section details planned and actual capital expenditures for property renovations and enhancements - The Company invested approximately **$47.7 million** in capital expenditures during the nine months ended September 30, 2024[125](index=125&type=chunk) - Anticipated capital expenditures for 2024 are **$75 million to $85 million**, including comprehensive renovations for about **20 properties**[125](index=125&type=chunk) - No existing or planned projects for new property development are currently underway[125](index=125&type=chunk) [Upcoming Debt Maturities and Debt Service Payments](index=41&type=section&id=Upcoming%20Debt%20Maturities%20and%20Debt%20Service%20Payments) This section outlines future debt obligations, maturities, and anticipated interest expense trends - Approximately **$340.1 million** in principal and interest payments are due on debt over the next 12 months, including **$34.0 million** in mortgages and **$225.0 million** in term loans maturing in Q2 and Q3 2025, respectively[126](index=126&type=chunk) - The Company plans to use funds from operations, Revolving Credit Facility borrowings, new financing, or refinancing to meet these obligations[126](index=126&type=chunk) - Interest expense is expected to be higher over the next 12 months due to increased Revolving Credit Facility borrowings and a decrease in variable-rate debt fixed by interest rate swaps[126](index=126&type=chunk) [Purchase Contract Commitments](index=42&type=section&id=Purchase%20Contract%20Commitments) This section discloses contractual obligations for future property acquisitions - As of September 30, 2024, the Company had one outstanding contract for a potential hotel purchase in Nashville, Tennessee, for approximately **$98.2 million**, expected to open in late 2025[128](index=128&type=chunk) - A **$1.1 million contract deposit** has been paid, and the Company plans to use available cash or borrowings for the purchase, though closing is subject to several conditions[128](index=128&type=chunk) [Cash Management Activities](index=42&type=section&id=Cash%20Management%20Activities) This section describes the company's practices for managing cash flows and intercompany balances - The Company and ARG (a related party) engage in cash management activities, advancing or deferring up to **$1 million**, with quarterly settlements to minimize cash on hand and reduce costs[129](index=129&type=chunk) [Impact of Inflation](index=42&type=section&id=Impact%20of%20Inflation) This section discusses how inflationary pressures affect the company's operations and pricing strategies - The Company relies on hotel operators' ability to adjust room rates daily to offset inflationary impacts on operating expenses[130](index=130&type=chunk) - Competitive pressures and other factors could limit rate increases, potentially preventing the Company from fully offsetting rising operating expenses[130](index=130&type=chunk) [Business Interruption](index=42&type=section&id=Business%20Interruption) This section addresses potential risks from natural disasters and the adequacy of insurance coverage - The Company is exposed to natural disasters, but management believes it has adequate insurance coverage[131](index=131&type=chunk) - There is no assurance that such events will not materially adversely affect the Company's financial position or results of operations[131](index=131&type=chunk) [Seasonality](index=42&type=section&id=Seasonality) This section explains the seasonal nature of the hotel industry and its impact on financial performance - The hotel industry is seasonal, with higher occupancy and revenues typically in the second and third quarters[132](index=132&type=chunk) - The Company expects to use cash on hand or available financing to meet cash requirements during periods of insufficient operating cash flow due to seasonal fluctuations[132](index=132&type=chunk) [Critical Accounting Policies and Estimates](index=42&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section highlights key accounting policies and management judgments that significantly impact financial reporting - The preparation of financial statements requires management to make estimates and assumptions that affect reported amounts[133](index=133&type=chunk) - No material changes to critical accounting policies or the methods/assumptions applied have occurred since the 2023 Annual Report on Form 10-K[133](index=133&type=chunk) [Subsequent Events](index=43&type=section&id=Subsequent%20Events) This section reports significant events that occurred after the balance sheet date but before the financial statements were issued - On October 15, 2024, the Company paid **$19.2 million ($0.08 per common share)** in distributions[134](index=134&type=chunk) - On October 18, 2024, a monthly cash distribution of **$0.08 per common share** was declared, payable on November 15, 2024[134](index=134&type=chunk) - In October 2024, agreements were made to sell **three hotels** for **$28.0 million**, with sales expected in late 2024 or early 2025[135](index=135&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=44&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section assesses the company's exposure to market risks, primarily focusing on interest rate fluctuations and their management - As of September 30, 2024, approximately **$390.5 million (26%)** of the Company's total debt was subject to variable interest rates, after accounting for interest rate swaps[137](index=137&type=chunk) - A **100 basis point change** in interest rates would impact the Company's annual net income by approximately **$3.9 million**[137](index=137&type=chunk) - The Company uses **12 interest rate swap agreements** to effectively fix interest payments on approximately **$735.0 million** of its variable-rate debt, with maturities ranging from May 2025 to December 2029[138](index=138&type=chunk) | Debt Type | October - December 2024 | 2025 | 2026 | 2027 | 2028 | Thereafter | Total | Fair Market Value | | :-------- | :---------------------- | :-------- | :-------- | :-------- | :-------- | :--------- | :---------- | :---------------- | | Total debt (Maturities in thousands) | $2,109 | $295,140 | $315,149 | $278,602 | $334,066 | $281,948 | $1,507,014 | $1,476,149 | | Average interest rates (1) | 4.9% | 4.9% | 5.0% | 5.0% | 4.4% | 3.8% | | | | Variable-rate debt (Maturities in thousands) | $- | $225,000 | $240,500 | $275,000 | $300,000 | $85,000 | $1,125,500 | $1,125,180 | | Average interest rates (1) | 5.1% | 5.2% | 5.3% | 5.3% | 4.7% | 3.0% | | | | Fixed-rate debt (Maturities in thousands) | $2,109 | $70,140 | $74,649 | $3,602 | $34,066 | $196,948 | $381,514 | $350,969 | | Average interest rates | 4.1% | 4.0% | 4.0% | 4.1% | 4.1% | 4.1% | | | [Item 4. Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) This section reports on the effectiveness of the company's disclosure controls and internal control over financial reporting - The Company's disclosure controls and procedures were effective as of September 30, 2024[141](index=141&type=chunk) - No material changes in internal control over financial reporting occurred during the last fiscal quarter[141](index=141&type=chunk) [PART II. OTHER INFORMATION](index=45&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information not covered in the financial statements, including legal proceedings and equity matters [Item 1. Legal Proceedings](index=45&type=section&id=Item%201.%20Legal%20Proceedings) This section discloses any material legal actions or threats that could impact the company's financial position - The Company is not currently involved in any material legal proceedings[142](index=142&type=chunk) - No litigation is threatened that would have a material adverse effect on the Company's financial position or results[142](index=142&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=45&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section summarizes the Company's common share repurchases during the third quarter of 2024 under its publicly announced Share Repurchase Program | Period | Total Number of Shares Purchased | Average Price per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | | :--------------------- | :------------------------------- | :---------------------- | :------------------------------------------------------------------------------- | | July 1 - July 31, 2024 | 537,296 | $14.18 | 537,296 | | August 1 - August 31, 2024 | 565,086 | $13.89 | 565,086 | | September 1 - September 30, 2024 | 264,828 | $13.94 | 264,828 | | Total | 1,367,210 | | 1,367,210 | - Approximately **$300.8 million** remained available under the **$335.4 million** Share Repurchase Program as of September 30, 2024[143](index=143&type=chunk) [Item 5. Other Information](index=45&type=section&id=Item%205.%20Other%20Information) This section covers miscellaneous disclosures, including trading arrangements and executive incentive award agreements - No director or officer adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements in Q3 2024[144](index=144&type=chunk) - In November 2024, the compensation committee approved a new form of Grant and Performance Award Agreement for future executive incentive awards, which will be based on operating goals and long-term metrics, settled in cash, common stock, or both[145](index=145&type=chunk) [Item 6. Exhibits](index=46&type=section&id=Item%206.%20Exhibits) This section lists all supplementary documents and certifications filed as part of the report - Exhibits include Amended and Restated Articles of Incorporation, Third Amended and Restated Bylaws, 2024 Omnibus Incentive Plan, Form of Restricted Stock Agreement, and the new Grant and Performance Award Agreement[146](index=146&type=chunk) - Certifications from the CEO, CFO, and CAO under Sarbanes-Oxley Act sections 302 and 906 are filed[146](index=146&type=chunk) - The financial statements are provided in iXBRL format as Exhibit 101[146](index=146&type=chunk) [Signatures](index=47&type=section&id=Signatures) This section contains the official certifications and signatures of the company's principal executive and financial officers - The report is signed by Justin G. Knight (CEO), Elizabeth S. Perkins (CFO), and Rachel S. Labrecque (CAO) on November 4, 2024[149](index=149&type=chunk)

[Results of Operations for Third Quarter 2024](index=1&type=section&id=Results%20of%20Operations%20for%20Third%20Quarter%202024) The company reported mixed financial results for Q3 2024, with a slight net income decrease offset by growth in Adjusted EBITDAre and RevPAR, supported by strong operating fundamentals and strategic capital allocation [Q3 2024 Key Financial & Operating Metrics](index=1&type=section&id=Q3%202024%20Key%20Financial%20%26%20Operating%20Metrics) For the third quarter of 2024, Apple Hospitality REIT reported a 3.8% decrease in Net Income to $56.3 million, while Adjusted EBITDAre grew by 5.7% to $128.9 million. Total portfolio RevPAR increased by 1.8% to $125.10, driven by a 2.0% rise in ADR, with occupancy remaining nearly flat. MFFO per share was stable at $0.45 Q3 2024 Financial Highlights (vs. Q3 2023) | Metric | Q3 2024 (in thousands) | Q3 2023 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Net Income | $56,266 | $58,512 | (3.8%) | | Net Income per Share | $0.23 | $0.26 | (11.5%) | | Operating Income | $77,726 | $76,295 | 1.9% | | Adjusted EBITDAre | $128,900 | $121,927 | 5.7% | | MFFO | $107,439 | $104,139 | 3.2% | | MFFO per Share | $0.45 | $0.45 | 0.0% | Q3 2024 Operating Metrics (Actual vs. Q3 2023) | Metric | Q3 2024 | Q3 2023 | % Change | | :--- | :--- | :--- | :--- | | ADR (Actual) | $162.57 | $159.36 | 2.0% | | Occupancy (Actual) | 77.0% | 77.1% | (0.1%) | | RevPAR (Actual) | $125.10 | $122.91 | 1.8% | [Management Commentary](index=2&type=section&id=Management%20Commentary) The CEO highlighted strong operating fundamentals, with a 1% Comparable Hotels RevPAR growth in Q3 2024, driven by steady business transient demand and strong leisure travel. The company emphasized its disciplined capital allocation strategy, including strategic acquisitions, dispositions, and share repurchases, while maintaining a strong balance sheet to maximize long-term shareholder value - Operating fundamentals remained strong during the quarter, with **Comparable Hotels RevPAR growth of approximately 1%** compared to Q3 2023, driven by slow but steady improvement in business transient demand and ongoing strength in leisure travel[3](index=3&type=chunk) - Preliminary results for October 2024 show continued momentum with **Comparable Hotels RevPAR growth of approximately 4%**, driven by increases in both occupancy and ADR[4](index=4&type=chunk) - The company highlighted its disciplined capital allocation strategy, which includes acquiring two hotels for **$196 million**, selling three for **$41 million**, and repurchasing **$35 million** in common shares since the beginning of the year through October[3](index=3&type=chunk) [Third Quarter 2024 Highlights](index=2&type=section&id=Third%20Quarter%202024%20Highlights) Key highlights for Q3 2024 include a 1% increase in Comparable Hotels RevPAR to $125, a 6% rise in Adjusted EBITDAre to $129 million, and a 3% increase in MFFO to $107 million. The company repurchased $19.2 million of its common shares, maintained a strong balance sheet with a net debt-to-capitalization ratio of approximately 30%, and paid distributions of $0.24 per share - **Comparable Hotels RevPAR was $125**, an increase of **approximately 1%** over Q3 2023[4](index=4&type=chunk) - **Adjusted EBITDAre increased by approximately 6% to $129 million**, and **MFFO grew by approximately 3% to $107 million** compared to Q3 2023[4](index=4&type=chunk) - The company repurchased approximately **1.4 million common shares for an aggregate price of $19.2 million** during the third quarter[4](index=4&type=chunk) - Maintained a strong balance sheet with total debt to total capitalization, net of cash, at **approximately 30%** as of September 30, 2024[5](index=5&type=chunk) [Portfolio Activity & Capital Allocation](index=2&type=section&id=Portfolio%20Activity%20%26%20Capital%20Allocation) The company actively managed its portfolio in 2024 through strategic acquisitions and dispositions, while committing significant capital to property improvements to enhance asset value [Portfolio Overview](index=2&type=section&id=Portfolio%20Overview) As of September 30, 2024, Apple Hospitality's portfolio consisted of 224 hotels with 30,068 guest rooms across 37 states and the District of Columbia. One hotel was classified as held for sale - As of September 30, 2024, the Company owned **224 hotels**, with an aggregate of **30,068 guest rooms** located in 87 markets throughout 37 states and the District of Columbia[3](index=3&type=chunk) [Acquisitions & Dispositions](index=3&type=section&id=Acquisitions%20%26%20Dispositions) In 2024, the company acquired two hotels for a total of $196.3 million and sold three hotels for a combined $40.6 million, resulting in a gain of $18.2 million. Additionally, the company has one hotel under contract for a potential acquisition in late 2025 and four hotels under contract for sale for a combined price of $31.1 million - Acquired **two hotels** in 2024 for a combined purchase price of approximately **$196.3 million**: the AC Hotel by Marriott Washington DC Convention Center and the Embassy Suites by Hilton Madison Downtown[8](index=8&type=chunk) - Sold **three hotels** during the first nine months of 2024 for a combined gross sales price of approximately **$40.6 million**, generating a gain of **$18.2 million**[10](index=10&type=chunk) - The company has **one hotel**, a Motto by Hilton in Nashville, under contract for a potential acquisition for approximately **$98.2 million**, expected in late 2025[9](index=9&type=chunk) - **Four hotels** are currently under contract for sale for a combined gross sales price of approximately **$31.1 million**, with closings expected in late 2024 or early 2025[11](index=11&type=chunk) [Capital Improvements](index=4&type=section&id=Capital%20Improvements) The company is committed to reinvesting in its properties to maintain competitiveness. Approximately $48 million was invested in capital expenditures in the first nine months of 2024, with a full-year forecast of $75 million to $85 million, including comprehensive renovations for about 20 hotels - Invested approximately **$48 million** in capital expenditures during the nine months ended September 30, 2024[13](index=13&type=chunk) - Anticipates investing a total of **$75 million to $85 million** in capital improvements for the full year 2024, which includes renovations for approximately **20 hotels**[13](index=13&type=chunk) [Financial Condition & Capital Markets](index=4&type=section&id=Financial%20Condition%20%26%20Capital%20Markets) The company maintained a strong financial position with manageable debt and ample liquidity, actively engaging in share repurchases and consistent shareholder distributions [Balance Sheet and Liquidity](index=4&type=section&id=Balance%20Sheet%20and%20Liquidity) As of September 30, 2024, the company had approximately $1.5 billion in total debt with a weighted-average interest rate of 4.9%. Liquidity remained strong with $6 million in cash and $540 million available under its revolving credit facility. The company's net debt to total capitalization was approximately 30%, and it increased its unencumbered hotel count to 210 after repaying a $20 million mortgage Debt and Liquidity as of September 30, 2024 | Metric | Value | | :--- | :--- | | Total Outstanding Debt | ~$1.5 billion | | Weighted-Average Interest Rate | ~4.9% | | Cash on Hand | ~$6 million | | Revolving Credit Facility Availability | ~$540 million | | Net Debt to Total Capitalization | ~30% | - In August 2024, the company repaid a **$20 million secured mortgage loan**, increasing the number of unencumbered hotels in its portfolio to **210**[14](index=14&type=chunk) - In July 2024, the company amended its unsecured term loan facility, increasing the amount from **$85 million to $130 million** and extending the maturity date to July 2026[15](index=15&type=chunk) [Capital Markets Activity](index=5&type=section&id=Capital%20Markets%20Activity) During Q3 2024, the company repurchased 1.4 million common shares for $19.2 million under its Share Repurchase Program, leaving $301 million of authorization. No shares were issued under its $500 million At-The-Market (ATM) Program during the quarter - In Q3 2024, the Company repurchased approximately **1.4 million common shares for $19.2 million** at a weighted-average price of **$14.02 per share**[16](index=16&type=chunk) - As of September 30, 2024, approximately **$301 million** remained available for repurchases under the Share Repurchase Program[16](index=16&type=chunk) - No shares were sold under the At-The-Market (ATM) offering program during the three and nine months ended September 30, 2024[17](index=17&type=chunk) [Shareholder Distributions](index=5&type=section&id=Shareholder%20Distributions) The company paid distributions totaling $0.24 per common share during the third quarter of 2024. The current annualized distribution of $0.96 per share represents an annual yield of approximately 6.5% based on the stock price on November 1, 2024. All distributions are subject to Board of Directors' approval - Paid distributions of **$0.24 per common share** during the three months ended September 30, 2024[18](index=18&type=chunk) - The current annualized regular monthly cash distribution of **$0.96 per common share** represents an annual yield of **6.5%** as of November 1, 2024[18](index=18&type=chunk) [Updated 2024 Outlook](index=5&type=section&id=Updated%202024%20Outlook) The company updated its full-year 2024 financial outlook, adjusting forecasts for Net Income, Adjusted EBITDAre, and Comparable Hotels RevPAR Change [Full Year 2024 Guidance](index=5&type=section&id=Full%20Year%202024%20Guidance) The company has updated its full-year 2024 outlook, adjusting its forecast for Net Income to a range of $204 million to $221 million and Adjusted EBITDAre to between $458 million and $469 million. The guidance for Comparable Hotels RevPAR Change is now 0.75% to 2.00%, while capital expenditures are projected to be between $75 million and $85 million - The company updated its 2024 guidance, decreasing the midpoint for Net Income by **$1 million**, decreasing Comparable Hotels RevPAR Change by **12.5 bps**, and decreasing Adjusted EBITDAre by **$1.5 million** compared to previous guidance[19](index=19&type=chunk) Updated Full-Year 2024 Guidance | Metric | Low-End | High-End | | :--- | :--- | :--- | | Net income | $204 Million | $221 Million | | Comparable Hotels RevPAR Change | 0.75% | 2.00% | | Comparable Hotels Adjusted Hotel EBITDA Margin % | 35.3% | 35.9% | | Adjusted EBITDAre | $458 Million | $469 Million | | Capital expenditures | $75 Million | $85 Million | [Financial Statements & Reconciliations](index=8&type=section&id=Financial%20Condition%20%26%20Capital%20Markets) The report provides comprehensive consolidated financial statements and detailed reconciliations of GAAP net income to key non-GAAP measures, alongside a summary of the company's debt structure [Consolidated Financial Statements](index=8&type=section&id=Consolidated%20Financial%20Statements) The Consolidated Balance Sheet as of September 30, 2024, shows Total Assets of $5.02 billion and Total Liabilities of $1.72 billion. The Consolidated Statement of Operations for Q3 2024 reported Total Revenue of $378.8 million and Net Income of $56.3 million Consolidated Balance Sheet Highlights (as of Sep 30, 2024) | Account | Amount (in thousands) | | :--- | :--- | | Total Assets | $5,021,803 | | Debt, net | $1,501,189 | | Total Liabilities | $1,724,934 | | Total Shareholders' Equity | $3,296,869 | Consolidated Statement of Operations (Q3 2024) | Account | Amount (in thousands) | | :--- | :--- | | Total Revenue | $378,843 | | Total Expense | $301,117 | | Operating Income | $77,726 | | Net Income | $56,266 | [Non-GAAP Reconciliations](index=14&type=section&id=Non-GAAP%20Reconciliations) The report provides detailed reconciliations of GAAP Net Income to key non-GAAP measures. For Q3 2024, Net Income of $56.3 million was reconciled to Adjusted EBITDAre of $128.9 million and Modified Funds From Operations (MFFO) of $107.4 million. These adjustments primarily account for depreciation, amortization, interest, and taxes Reconciliation of Net Income to Adjusted EBITDAre (Q3 2024) | Item | Amount (in thousands) | | :--- | :--- | | Net income | $56,266 | | Depreciation and amortization | $48,143 | | Interest and other expense, net | $21,217 | | Income tax expense | $243 | | Loss on impairment | $2,896 | | **Adjusted EBITDAre** | **$128,900** | Reconciliation of Net Income to MFFO (Q3 2024) | Item | Amount (in thousands) | | :--- | :--- | | Net income | $56,266 | | Depreciation of real estate owned | $47,383 | | Loss on impairment | $2,896 | | **Funds from operations (FFO)** | **$106,545** | | Other adjustments | $894 | | **Modified funds from operations (MFFO)** | **$107,439** | [Debt Summary](index=18&type=section&id=Debt%20Summary) As of September 30, 2024, the company's total debt was $1.507 billion with a weighted-average interest rate of 4.9%. The debt is laddered, with maturities extending beyond 2028. Variable-rate debt constituted approximately $1.126 billion of the total - **Total debt outstanding was $1.507 billion** with an average interest rate of **4.9%**[45](index=45&type=chunk) - The debt portfolio consists of **$1.126 billion in variable-rate debt** and **$381.5 million in fixed-rate debt**[45](index=45&type=chunk) [Detailed Operating Metrics](index=10&type=section&id=Detailed%20Operating%20Metrics) Detailed operating metrics reveal varied performance across comparable and same-store hotels, with insights into regional, market, location, and chain scale segment contributions [Comparable vs. Same Store Hotels Performance](index=10&type=section&id=Comparable%20vs.%20Same%20Store%20Hotels%20Performance) For Q3 2024, Comparable Hotels (223 properties) saw RevPAR grow by 0.8% to $125.30, while Same Store Hotels (215 properties) saw a smaller 0.6% RevPAR growth to $123.90. The Comparable Hotels portfolio showed slightly stronger revenue growth, benefiting from recent acquisitions, whereas the Same Store portfolio provides a more stabilized view of underlying performance Q3 2024 Performance: Comparable vs. Same Store Hotels | Metric | Comparable Hotels | Same Store Hotels | | :--- | :--- | :--- | | RevPAR | $125.30 (+0.8% YoY) | $123.90 (+0.6% YoY) | | Adjusted Hotel EBITDA | $139.2 million (+0.3% YoY) | $129.0 million (-0.8% YoY) | | Adj. Hotel EBITDA Margin | 36.8% (-60 bps) | 36.6% (-50 bps) | [Performance by Market, Region, and Location](index=19&type=section&id=Performance%20by%20Market%2C%20Region%2C%20and%20Location) In Q3 2024, performance varied significantly by market. Strong RevPAR growth was seen in markets like Chicago (+10.7%) and Melbourne, FL (+17.1%), while Nashville (-13.9%) and Denver (-7.5%) experienced declines. Regionally, the East North Central area showed strong RevPAR growth of 7.8%, whereas the East South Central region declined by 6.2%. Urban and Suburban locations, which constitute the bulk of the portfolio, showed modest RevPAR changes - Top 20 markets, representing **62.7% of Q3 Adjusted Hotel EBITDA**, saw an aggregate RevPAR increase of **1.1% YoY**[46](index=46&type=chunk) - By region, the Pacific region was the largest contributor to Q3 Adjusted Hotel EBITDA (**26.1%**), with RevPAR growth of **0.9%**. The East North Central region had the highest RevPAR growth at **7.8%**[48](index=48&type=chunk) - By location type, Suburban hotels (**45.1% of EBITDA**) saw RevPAR grow **1.7%**, while Urban hotels (**38.0% of EBITDA**) saw RevPAR grow **0.2%** in Q3 2024[52](index=52&type=chunk) [Performance by Chain Scale](index=22&type=section&id=Performance%20by%20Chain%20Scale) In Q3 2024, the Upper Upscale segment demonstrated the strongest performance with a 7.1% increase in RevPAR. The large Upscale segment, which accounts for nearly 74% of EBITDA, had flat RevPAR growth. The Upper Midscale segment saw a 1.6% increase in RevPAR Q3 2024 RevPAR Growth by Chain Scale | Chain Scale | RevPAR Growth (YoY) | % of Adj. Hotel EBITDA | | :--- | :--- | :--- | | Upscale | 0.0% | 73.6% | | Upper Midscale | 1.6% | 21.5% | | Upper Upscale | 7.1% | 4.9% |

Core Insights - The article expresses a personal opinion regarding the investment potential of EPR shares, indicating a beneficial long position in the stock [1] Group 1 - The article does not provide specific financial data or performance metrics related to EPR or the broader market [2]

Market Overview - The market is currently trading at 21x forward EPS, which is 1.2 standard deviations above its 30-year average, indicating it is one of the most expensive markets excluding the pandemic period [2][5] - Historically, higher valuations correlate with poorer returns, with the implied five-year annualized return expected to be below 5% at current valuations [5] - The market anticipates S&P 500 EPS growth to accelerate from 11% in 2024 to 15% in both 2025 and 2026, providing a rationale for continued investment despite elevated valuations [5] Investment Opportunities - Finding deep-value ideas is becoming more challenging as the market is not cheap, with previously undervalued sectors like real estate, consumer staples, and utilities showing significant capital gains recently [5] - NewLake Capital Partners, a REIT focused on the cannabis sector, has a market cap of $410 million and owns 32 properties across 12 states, with a 100% occupancy rate and a weighted average remaining lease term of 14 years [6][8] - NewLake Capital Partners expects 10.5% annual growth in the cannabis industry through at least 2027, positioning itself well for continued growth [11] - Apple Hospitality REIT, with a market cap of $3.4 billion, owns 224 hotels and has a strong focus on room revenue, achieving a 99% occupancy rate and a 13.2% increase in net income in the second quarter [21][23] - Apple Hospitality REIT pays a monthly dividend of $0.08 per share, translating to an annualized yield of 6.7%, with a healthy AFFO payout ratio of 72% [24] Valuation Insights - NewLake Capital Partners trades at a blended P/AFFO ratio of 9.9x, below its long-term average of 13.8x, with expected per-share AFFO growth of 8% this year [16][18] - A conservative P/AFFO ratio of 12x for NewLake would indicate a fair stock price of $27, representing a 37% upside from the current price [18] - Apple Hospitality REIT trades at a blended P/AFFO ratio of 10.7x, slightly below its long-term average, with expected per-share AFFO growth of 3% in both 2025 and 2026 [26]

iridi Foreword This article concentrates on an August 12, 2024, list of 52 Buy & Hold contenders published below. Yields for those maybe buy & hold 52 were all greater than 2.11% in early August. The advantage of focusing on mid-to-large-cap stocks is that these companies tend to be less volatile and also tend to have more resources (e.g., strong management, access to credit, etc.) to maintain their dividend payments over the long-haul. Any collection of stocks is more clearly understood when subjected ...