Apple Hospitality REIT(APLE) - 2018 Q4 - Annual Report

Part I Item 1. Business Apple Hospitality REIT, Inc. is a self-advised REIT primarily investing in income-producing lodging properties across 34 U.S. states, operating under Marriott, Hilton, or Hyatt brands - The Company is a self-advised REIT investing in 241 hotels (30,812 rooms) across 34 U.S. states, all operating under Marriott, Hilton, or Hyatt brands[9] - Primary business objective is to maximize shareholder value through long-term growth in cash available for distributions[10] - Investment strategies include selective acquisitions and dispositions of upscale, rooms-focused hotels, broad geographic diversification, franchising with leading brands, utilizing experienced operators, reinvesting in hotels, and maintaining low leverage[10][12] Hotel Operating Statistics (2017-2018) | Metric | 2018 | 2017 | Percent Change | | :-------- | :------ | :------ | :------------- | | ADR | $136.04 | $134.61 | 1.1% | | Occupancy | 76.9% | 77.4% | -0.6% | | RevPAR | $104.66 | $104.13 | 0.5% | Comparable Hotels Operating Statistics (2017-2018) | Metric | 2018 | 2017 | Percent Change | | :-------- | :------ | :------ | :------------- | | ADR | $136.11 | $135.22 | 0.7% | | Occupancy | 77.0% | 77.7% | -0.9% | | RevPAR | $104.80 | $105.00 | -0.2% | - In 2018, the Company acquired five hotels for approximately $152.2 million and sold three hotels for approximately $15.8 million. As of January 31, 2019, there were contracts for potential purchase of six additional hotels for $162.5 million and a contract to sell nine properties for $95 million[19][20] - The Company repurchased approximately 6.6 million common shares in 2018 for $104.3 million under its $464 million Share Repurchase Program[22] - The Company refinanced its $965 million credit facility to $850 million and increased its $150 million term loan facility to $225 million in 2018, reducing interest rates and extending maturities[30] - Total outstanding debt as of December 31, 2018, was approximately $1.4 billion with a weighted-average interest rate of 3.74%[31] - The Company maintains a monthly distribution rate of $1.20 per common share, funded by operating cash flow and revolving credit facility[35] Item 1A. Risk Factors The Company faces significant risks from hotel industry competition, economic conditions, operational dependencies, financial leverage, REIT compliance, and environmental factors - The hotel industry is highly competitive, with risks including over-building, competition from other lodging facilities (including alternative lodging companies like Airbnb), dependence on business/leisure travel, and increases in operating costs (energy, insurance, taxes, labor)[24][45][56] - Economic conditions in the U.S. and local markets significantly impact lodging industry performance, with downturns potentially reducing occupancy, room rates, and profitability, while many expenses remain fixed[48][49][50] - Dependence on Marriott, Hilton, and Hyatt brands exposes the Company to risks if brand recognition or perception is reduced, or if franchisor policies change[54][55] - Reliance on third-party hotel managers means the Company has limited control over day-to-day operations, and manager underperformance could adversely affect revenues and expenses[57][58] - Renovations and capital improvements are ongoing needs, which can reduce profitability due to costs and potential disruptions to occupancy and ADR[61] - Inability to obtain financing on favorable terms or comply with debt covenants could adversely affect operations, potentially leading to asset dispositions or equity issuance at disadvantageous times[67][68][69][70] - Failure to qualify or remain qualified as a REIT would subject the Company to U.S. federal income tax, significantly reducing earnings and distributions, and potentially impacting its market price[103][106][107][108] - REIT distribution requirements may force the Company to sell assets, incur debt, or issue equity under unfavorable conditions to meet distribution thresholds, potentially hindering growth[117][118][119] - The Company is exposed to risks from climate change (e.g., severe weather, rising sea-levels affecting properties) and significant costs related to environmental regulations and litigation[78][79][80][81][82] Item 1B. Unresolved Staff Comments The Company reported no unresolved staff comments from the SEC - No unresolved staff comments were reported[134] Item 2. Properties The Company owned 241 Marriott, Hilton, or Hyatt branded hotels across 34 states, managed by 23 unaffiliated companies, as of December 31, 2018 - As of December 31, 2018, the Company owned 241 hotels with 30,812 rooms in 34 states, all under Marriott, Hilton, or Hyatt brands[136] - Hotels are managed by 23 unaffiliated hotel management companies[136] Hotel Portfolio by Brand (December 31, 2018) | Brand | Number of Hotels | Number of Rooms | | :---------------- | :--------------- | :-------------- | | Hilton Garden Inn | 42 | 5,807 | | Courtyard | 40 | 5,460 | | Hampton | 40 | 5,029 | | Homewood Suites | 34 | 3,831 | | Residence Inn | 33 | 3,939 | | SpringHill Suites | 16 | 2,159 | | Fairfield | 11 | 1,300 | | TownePlace Suites | 11 | 1,110 | | Home2 Suites | 8 | 910 | | Marriott | 2 | 616 | | Embassy Suites | 2 | 316 | | Renaissance | 1 | 208 | | Hyatt Place | 1 | 127 | | Total | 241 | 30,812 | Investment in Real Estate, Net (December 31, 2018) | Category | Amount (in thousands) | | :------------------------ | :-------------------- | | Land | $737,822 | | Building and Improvements | 4,503,728 | | Furniture, Fixtures, and Equipment | 471,399 | | Franchise Fees | 13,354 | | Total Gross Investment| 5,726,303 | | Less Accumulated Depreciation | (909,893) | | Investment in Real Estate, net | $4,816,410 | - 13 of the Company's hotels are subject to ground leases and 31 hotels are encumbered by mortgage notes[138] Item 3. Legal Proceedings The Company is not aware of any material adverse legal proceedings impacting its financial position or operations - The Company is not currently involved in any litigation that would have a material adverse effect on its consolidated financial position or results of operations[148] Item 4. Mine Safety Disclosures This item is not applicable to the Company - Not Applicable[149] Part II Item 5. Market For Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities This section details the Company's NYSE-listed common equity, shareholder distributions, share repurchase program, and equity compensation plans - The Company's common shares are listed on the NYSE under the ticker symbol 'APLE' since May 18, 2015[149] Common Share Closing Prices | Date | Closing Price | | :------------- | :------------ | | Dec 31, 2018 | $14.26 | | Feb 15, 2019 | $16.36 | Cumulative Total Shareholder Return (May 2015 - Dec 2018) | Index / Company | 05/18/15 | 12/31/15 | 12/31/16 | 12/31/17 | 12/31/18 | | :-------------------------- | :------- | :------- | :------- | :------- | :------- | | Apple Hospitality REIT, Inc.| $100.00 | $115.73 | $123.34 | $128.27 | $99.81 | | S&P 500 Index | $100.00 | $97.29 | $108.92 | $132.70 | $126.88 | | SNL U.S. REIT Hotel Index | $100.00 | $81.94 | $101.55 | $107.92 | $93.39 | - As of February 15, 2019, there were approximately 224 million common shares outstanding[152] - To maintain REIT status, the Company is required to distribute at least 90% of its ordinary income. Distributions declared per common share were $1.20 for 2018 and 2017[154] - In 2018, the Company repurchased approximately 6.6 million common shares for $104.3 million under its $464 million Share Repurchase Program. As of December 31, 2018, $364.0 million remained available[155][390] Share Repurchases (Q4 2018) | Period | Total Number of Shares Purchased | Average Price per Share | Approximate Value Remaining (in thousands) | | :-------------------------- | :------------------------------- | :---------------------- | :----------------------------------------- | | Oct 1 - Oct 31, 2018 | 1,576,520 | $16.35 | $438,200 | | Nov 1 - Nov 30, 2018 | 2,554,278 | $16.03 | $397,200 | | Dec 1 - Dec 31, 2018 | 2,225,598 | $15.22 | $364,000 | - The 2014 Omnibus Incentive Plan authorizes the issuance of up to 10 million common shares for compensation. As of December 31, 2018, approximately 9.0 million shares were available[158][394] Item 6. Selected Financial Data This section presents a five-year summary of key financial data, including revenues, net income, per-share metrics, balance sheet items, and cash flows Selected Financial Data (2014-2018) | Metric (in thousands, except per share) | 2018 | 2017 | 2016 | 2015 | 2014 | | :-------------------------------------- | :---------- | :---------- | :---------- | :---------- | :---------- | | Revenues: | | | | | | | Room | $1,172,331 | $1,143,987 | $956,119 | $821,733 | $735,882 | | Food and beverage | 62,600 | 66,030 | 59,558 | 54,710 | 47,768 | | Other | 35,624 | 28,605 | 25,348 | 21,871 | 20,246 | | Total revenue | $1,270,555| $1,238,622| $1,041,025| $898,314 | $803,896 | | Net income | $206,086 | $182,492 | $144,652 | $117,288 | $6,833 | | Per Share: | | | | | | | Net income per common share | $0.90 | $0.82 | $0.76 | $0.65 | $0.04 | | Distributions declared per common share | $1.20 | $1.20 | $1.20 | $1.37 | $1.39 | | Balance Sheet Data (at end of period):| | | | | | | Investment in real estate, net | $4,816,410 | $4,793,159 | $4,823,489 | $3,641,767 | $3,492,821 | | Total assets | $4,928,672 | $4,902,338 | $4,979,883 | $3,722,775 | $3,776,805 | | Total debt, net | $1,412,242 | $1,222,196 | $1,337,963 | $998,103 | $706,626 | | Shareholders' equity | $3,409,010 | $3,571,085 | $3,517,064 | $2,647,058 | $3,014,624 | | Cash Flow From (Used In): | | | | | | | Operating activities | $404,812 | $384,071 | $331,171 | $279,628 | $251,593 | | Investing activities | $(210,160)$ | $(158,256)$ | $(162,200)$ | $(90,736)$ | $(34,700)$ | | Financing activities | $(190,811)$ | $(225,449)$ | $(162,197)$ | $(198,767)$ | $(211,885)$ | | Number of hotels owned at end of period | 241 | 239 | 235 | 179 | 191 | - Total revenue increased by 2.6% from 2017 to 2018, and net income increased by 12.9% over the same period[162] - The Company completed mergers with Apple REIT Ten, Inc. in 2016 and Apple REIT Seven, Inc. and Apple REIT Eight, Inc. in 2014, significantly expanding its portfolio[162] Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes the Company's financial condition and operating results, including hotel performance metrics, revenue/expense breakdown, non-GAAP measures, liquidity, and accounting policies - The Company is a self-advised REIT that owned 241 hotels with 30,812 rooms across 34 states as of December 31, 2018, all operating under Marriott, Hilton, or Hyatt brands[166] - In 2018, the Company acquired five hotels for $152.2 million and sold three hotels for $15.8 million. As of January 31, 2019, it had contracts for six potential acquisitions ($162.5 million) and nine dispositions ($95 million)[167][168] - Comparable Hotels RevPAR was virtually unchanged in 2018 compared to 2017, with a slight ADR increase and occupancy decrease. The Company forecasts slightly negative to slightly positive RevPAR growth for 2019[18][172][183] Total Revenue and Hotel Operating Expenses (2016-2018) | Metric (in thousands) | 2018 | Percent of Revenue | 2017 | Percent of Revenue | 2016 | Percent of Revenue | | :-------------------------- | :---------- | :----------------- | :---------- | :----------------- | :---------- | :----------------- | | Total revenue | $1,270,555 | 100.0% | $1,238,622 | 100.0% | $1,041,025 | 100.0% | | Hotel operating expense | 715,934 | 56.3% | 697,402 | 56.3% | 582,839 | 56.0% | | Property taxes, insurance and other expense | 74,640 | 5.9% | 69,391 | 5.6% | 56,860 | 5.5% | | Ground lease expense | 11,364 | 0.9% | 11,313 | 0.9% | 10,409 | 1.0% | | General and administrative expense | 24,294 | 1.9% | 26,341 | 2.1% | 17,032 | 1.6% | | Depreciation expense | 183,482 | | 176,499 | | 148,163 | | | Interest and other expense, net | 51,185 | | 47,343 | | 40,026 | | Comparable Hotels Operating Statistics (2016-2018) | Metric | 2018 | Change 2017 to 2018 | 2017 | Change 2016 to 2017 | 2016 | | :-------- | :------ | :------------------ | :------ | :------------------ | :------ | | ADR | $136.11 | 0.7% | $135.22 | 1.0% | $133.89 | | Occupancy | 77.0% | -0.9% | 77.7% | 0.8% | 77.1% | | RevPAR | $104.80 | -0.2% | $105.00 | 1.7% | $103.27 | Same Store Operating Results (2016-2018) | Metric | 2018 | Change 2017 to 2018 | 2017 | Change 2016 to 2017 | 2016 | | :-------- | :------ | :------------------ | :------ | :------------------ | :------ | | ADR | $136.92 | 0.7% | $136.01 | 1.0% | $134.71 | | Occupancy | 77.2% | -0.6% | 77.7% | 0.1% | 77.6% | | RevPAR | $105.70 | - | $105.69 | 1.1% | $104.50 | - Hotel operating expense as a percentage of total revenue remained at 56.3% in 2018, with increases in labor costs being a primary driver[184] - General and administrative expense decreased in 2018 due to lower executive compensation expense under the 2018 Incentive Plan[190] - Loss on impairment of depreciable real estate assets significantly decreased from $45.9 million in 2017 to $3.1 million in 2018[192] - Interest expense increased in 2018 due to higher average borrowings and an increase in the effective interest rate, partially offset by debt refinancing[194] Reconciliation of GAAP Net Income to FFO and MFFO (2016-2018) | Metric (in thousands) | 2018 | 2017 | 2016 | | :------------------------------------------ | :-------- | :-------- | :-------- | | Net income | $206,086 | $182,492 | $144,652 | | Depreciation of real estate owned | 182,527 | 175,581 | 147,244 | | (Gain) loss on sale of real estate | (152) | (16,295) | 153 | | Loss on impairment of depreciable real estate assets | 3,135 | 45,875 | 5,471 | | Funds from operations | 391,596 | 387,653 | 297,520 | | Transaction and litigation costs (reimbursements) | - | (2,586) | 34,989 | | Amortization of favorable and unfavorable leases, net | 647 | 663 | 674 | | Non-cash straight-line ground lease expense | 3,542 | 3,700 | 3,419 | | Modified funds from operations | $395,785| $389,430| $336,602| Reconciliation of GAAP Net Income to EBITDA, EBITDAre and Adjusted EBITDAre (2016-2018) | Metric (in thousands) | 2018 | 2017 | 2016 | | :------------------------------------------ | :-------- | :-------- | :-------- | | Net income | $206,086 | $182,492 | $144,652 | | Depreciation | 183,482 | 176,499 | 148,163 | | Amortization of favorable and unfavorable leases, net | 647 | 663 | 674 | | Interest and other expense, net | 51,185 | 47,343 | 40,026 | | Income tax expense | 587 | 847 | 431 | | EBITDA | 441,987 | 407,844 | 333,946 | | (Gain) loss on sale of real estate | (152) | (16,295) | 153 | | Loss on impairment of depreciable real estate assets | 3,135 | 45,875 | 5,471 | | EBITDAre | 444,970 | 437,424 | 339,570 | | Transaction and litigation costs (reimbursements) | - | (2,586) | 34,989 | | Non-cash straight-line ground lease expense | 3,542 | 3,700 | 3,419 | | Adjusted EBITDAre | $448,512| $438,538| $377,978| - The Company's principal liquidity sources are operating cash flow and its revolving credit facility. It anticipates these, along with debt financing and equity offerings, will be adequate for its liquidity requirements[225][233] - The Company adopted new accounting standards for revenue recognition, cash flow classification, restricted cash, and hedging activities in 2018, with no material impact on financial statements, except for retrospective adjustments to cash flow statements for restricted cash[313][314][315][318] - The Company plans to adopt the new lease accounting standard (Topic 842) in 2019, expecting to record $110 million to $125 million in right-of-use assets and lease liabilities, and reclassify certain ground leases as finance leases[320] Item 7A. Quantitative and Qualitative Disclosures About Market Risk The Company's primary market risk is interest rate fluctuations on variable-rate debt, managed through interest rate swaps - The Company's primary market risk is interest rate risk on its variable-rate debt[257] - As of December 31, 2018, approximately 26% ($371.3 million) of total outstanding debt was subject to variable interest rates[257] - A 100 basis point change in interest rates would impact the Company's annual net income by approximately $3.7 million[257] - The Company uses interest rate swaps to manage interest rate risk, effectively fixing interest payments on approximately $557.5 million of its variable-rate debt as of December 31, 2018[258] Debt Maturities and Average Interest Rates (December 31, 2018) | Category | 2019 | 2020 | 2021 | 2022 | 2023 | Thereafter | Total | Fair Market Value | | :---------------- | :------ | :------ | :------ | :-------- | :-------- | :---------- | :---------- | :---------------- | | Total debt: | | | | | | | | | | Maturities | $33,805 | $28,349 | $47,586 | $378,052 | $295,616 | $634,165 | $1,417,573 | $1,396,638 | | Average interest rates | 3.7% | 3.9% | 3.9% | 3.9% | 3.9% | 4.0% | | | | Variable rate debt: | | | | | | | | | | Maturities | - | - | - | $268,800 | $250,000 | $410,000 | $928,800 | $929,435 | | Average interest rates | 3.4% | 3.6% | 3.8% | 3.8% | 3.9% | 4.0% | | | | Fixed rate debt: | | | | | | | | | | Maturities | $33,805 | $28,349 | $47,586 | $109,252 | $45,616 | $224,165 | $488,773 | $467,203 | | Average interest rates | 4.4% | 4.4% | 4.4% | 4.2% | 4.1% | 4.1% | | | Item 8. Financial Statements and Supplementary Data This section contains the Company's audited consolidated financial statements, including balance sheets, income statements, cash flows, and related notes, along with auditor reports - Management concluded that the Company's internal control over financial reporting was effective as of December 31, 2018[268] - Ernst & Young LLP issued an unqualified opinion on the Company's consolidated financial statements and internal control over financial reporting as of December 31, 2018[271][279][280] Consolidated Balance Sheets (December 31, 2018 and 2017) | Asset/Liability (in thousands) | 2018 | 2017 | | :----------------------------- | :---------- | :---------- | | Investment in real estate, net | $4,816,410 | $4,793,159 | | Restricted cash | 33,632 | 29,791 | | Due from third party managers, net | 29,091 | 31,457 | | Other assets, net | 49,539 | 47,931 | | Total Assets | $4,928,672| $4,902,338| | Debt, net | $1,412,242 | $1,222,196 | | Accounts payable and other liabilities | 107,420 | 109,057 | | Total Liabilities | $1,519,662| $1,331,253| | Common stock | 4,495,073 | 4,588,188 | | Accumulated other comprehensive income | 10,006 | 9,778 | | Distributions greater than net income | (1,096,069) | (1,026,881) | | Total Shareholders' Equity | $3,409,010| $3,571,085| | Total Liabilities and Shareholders' Equity | $4,928,672| $4,902,338| Consolidated Statements of Operations and Comprehensive Income (2016-2018) | Revenue/Expense (in thousands) | 2018 | 2017 | 2016 | | :----------------------------- | :---------- | :---------- | :---------- | | Room revenue | $1,172,331 | $1,143,987 | $956,119 | | Food and beverage | 62,600 | 66,030 | 59,558 | | Other revenue | 35,624 | 28,605 | 25,348 | | Total revenue | $1,270,555| $1,238,622| $1,041,025| | Total hotel operating expense | 715,934 | 697,402 | 582,839 | | Property taxes, insurance and other | 74,640 | 69,391 | 56,860 | | Ground lease expense | 11,364 | 11,313 | 10,409 | | General and administrative | 24,294 | 26,341 | 17,032 | | Loss on impairment of depreciable real estate assets | 3,135 | 45,875 | 5,471 | | Depreciation | 183,482 | 176,499 | 148,163 | | Net income | $206,086 | $182,492 | $144,652 | | Basic and diluted net income per common share | $0.90 | $0.82 | $0.76 | Consolidated Statements of Cash Flows (2016-2018) | Cash Flow Activity (in thousands) | 2018 | 2017 | 2016 | | :-------------------------------- | :---------- | :---------- | :---------- | | Net cash provided by operating activities | $404,812 | $384,071 | $331,171 | | Net cash used in investing activities | $(210,160)$ | $(158,256)$ | $(162,200)$ | | Net cash used in financing activities | $(190,811)$ | $(225,449)$ | $(162,197)$ | | Net change in cash, cash equivalents and restricted cash | 3,841 | 366 | 6,774 | | Cash, cash equivalents and restricted cash, end of period | $33,632 | $29,791 | $29,425 | - The Company's investment in real estate, net, increased from $4,793.159 million in 2017 to $4,816.410 million in 2018[284] - Total debt, net, increased from $1,222.196 million in 2017 to $1,412.242 million in 2018[284] - The Company's qualification as a REIT involves complex Code provisions, and failure to qualify would result in significant tax liabilities[305][306] - The Company uses interest rate swaps to manage interest rate risks on its variable-rate debt, with a total notional amount of $682.5 million as of December 31, 2018[374][375] - The Company incurred approximately $43.9 million in management fees and $54.5 million in franchise royalty fees in 2018[243][404] - As of December 31, 2018, the Company had 13 hotels subject to ground leases, with estimated minimum future lease payments totaling $436.8 million[405][409] - Subsequent events in January-February 2019 include monthly distributions of $0.10 per share, a contract to purchase a 160-room hotel for $31.7 million, and repurchase of 0.2 million common shares for $3.6 million[253][254][255][419][421][422][423] Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The Company reported no changes in or disagreements with accountants on accounting and financial disclosure - None[425] Item 9A. Controls and Procedures Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2018 - The Company's disclosure controls and procedures were effective as of December 31, 2018[426] - No material changes in internal control over financial reporting occurred during the last fiscal quarter[426] Item 9B. Other Information The Company reported no other information required by this item - None[427] Part III Item 10. Directors, Executive Officers and Corporate Governance This section lists the Company's directors and executive officers, with further governance details incorporated from the 2019 Proxy Statement - Lists the Board of Directors and Executive Officers as of February 25, 2019[429][430] - Additional information is incorporated by reference from the Company's 2019 Proxy Statement[430] Item 11. Executive Compensation Information regarding executive compensation is incorporated by reference from the Company's 2019 Proxy Statement - Information on executive compensation is incorporated by reference from the Company's 2019 Proxy Statement[431] Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters Information concerning security ownership of certain beneficial owners and management, and related shareholder matters, is incorporated by reference from the Company's 2019 Proxy Statement - Information on security ownership and related shareholder matters is incorporated by reference from the Company's 2019 Proxy Statement[431] Item 13. Certain Relationships and Related Transactions, and Director Independence Information regarding certain relationships, related transactions, and director independence is incorporated by reference from the Company's 2019 Proxy Statement - Information on certain relationships, related transactions, and director independence is incorporated by reference from the Company's 2019 Proxy Statement[432] Item 14. Principal Accounting Fees and Services Information concerning principal accounting fees and services is incorporated by reference from the Company's 2019 Proxy Statement - Information on principal accounting fees and services is incorporated by reference from the Company's 2019 Proxy Statement[432] Part IV Item 15. Exhibits, Financial Statement Schedules This section lists financial statements, schedules, and a comprehensive exhibit listing, with financial statements incorporated from Item 8 - Financial statements of Apple Hospitality REIT, Inc. are incorporated by reference from Item 8[434] - Includes Schedule III – Real Estate and Accumulated Depreciation[435] - Provides a listing of various exhibits, including merger agreements, articles of incorporation, bylaws, compensation plans, and credit agreements[435][436][437] Item 16. Form 10-K Summary The Company states that no Form 10-K Summary is included - None[437] SCHEDULE III Real Estate and Accumulated Depreciation This schedule details the Company's real estate investments and accumulated depreciation, including property specifics and changes over 2016-2018 - Detailed listing of 241 hotel properties, including location, brand, acquisition date, and room count[438][440][441][442][443][444][445] - Identifies properties subject to ground leases (land cost $0) and those encumbered by mortgages[438][440][441][442][443][444][445] Real Estate Owned and Accumulated Depreciation Summary (2016-2018) | Metric (in thousands) | 2018 | 2017 | 2016 | | :-------------------------------- | :------------ | :------------ | :------------ | | Real estate owned: | | | | | Balance as of January 1 | $5,524,443 | $5,381,086 | $4,064,824 | | Acquisitions | 153,034 | 162,734 | 1,319,986 | | Improvements | 71,058 | 69,081 | 63,364 | | Dispositions | (19,097) | (42,583) | (11,951) | | Impairment of Depreciable Assets | (3,135) | (45,875) | (5,471) | | Balance at December 31 | $5,726,303| $5,524,443| $5,381,086| | Accumulated depreciation: | | | | | Balance as of January 1 | $(731,284)$ | $(557,597)$ | $(423,057)$ | | Depreciation Expense | (182,527) | (175,581) | (147,244) | | Accumulated Depreciation on Dispositions | 3,918 | 1,894 | 2,038 | | Balance at December 31 | $(909,893)$| $(731,284)$| $(557,597)$| Signatures This section contains the required signatures of the Company's executive officers and directors, certifying the report - The report is signed by Glade M. Knight (Executive Chairman), Justin G. Knight (President and CEO), Bryan Peery (CFO), and other Directors[448][449]