Apple Hospitality REIT(APLE) - 2021 Q4 - Annual Report

Hotel Operations - As of December 31, 2021, the Company owned 219 hotels with a total of 28,747 rooms, a decrease from 234 hotels and 29,937 rooms in 2020[17]. - The Average Daily Rate (ADR) for 2021 was $123.78, up from $111.49 in 2020, while occupancy increased to 66.3% from 46.1%[18]. - Revenue per Available Room (RevPAR) improved to $82.03 in 2021, compared to $51.34 in 2020, but still down from $105.72 in 2019[18]. - The hotel industry is historically seasonal, with higher occupancy rates and revenues typically in the second and third quarters, although COVID-19 disrupted these patterns in 2020 and 2021[54]. Acquisitions and Sales - The Company sold 23 hotels in 2021 for a total gross sales price of approximately $234.6 million, using proceeds for debt repayment and acquisitions[24]. - In 2021, the Company acquired eight hotels for an aggregate purchase price of approximately $311.9 million, funded through cash and borrowings[22]. - The Company has an outstanding contract for the potential purchase of a 260-room Embassy Suites in Madison, Wisconsin, for $78.6 million, expected to open in early 2024[23]. Financial Performance - As of December 31, 2021, the Company had approximately $1.4 billion in total outstanding debt with a weighted average interest rate of approximately 3.38%[37]. - The Company's total debt to total capitalization ratio was 28.1% as of December 31, 2021, indicating a strategy to maintain relatively low leverage compared to the real estate industry[38]. - The total debt outstanding as of December 31, 2021, was $1,444.0 million, with an average interest rate of 3.7%[273]. - Approximately 4.7 million common shares were sold under the ATM Program at a weighted-average market sales price of $16.26 per share, generating gross proceeds of approximately $76.0 million[42]. Debt Management - The Company has 13 interest rate swap agreements that effectively fix interest payments on approximately $770.0 million of variable-rate debt[271]. - The Company has a $425 million revolving credit facility and $820 million of term loans as part of its variable-rate debt[271]. - As of December 31, 2021, approximately $126.0 million, or 9% of the Company's total debt, was subject to variable interest rates[270]. - Every 100 basis points change in interest rates will impact the Company's annual net income by approximately $0.1 million[270]. Capital Expenditures - The Company plans to invest approximately $55 to $65 million in capital improvements in 2022, focusing on renovations for 20 to 25 properties[35]. - The Company plans to use future net proceeds from share sales primarily to pay down borrowings under its revolving credit facility and for general corporate purposes, including acquisitions[42]. Sustainability and Community Engagement - The Company has established a formal energy management program and aims to minimize its environmental impact through sustainability practices, with 98% of its portfolio enrolled in the EPA's Energy Star program[48]. - The Company is committed to charitable giving and community engagement through its employee-led organization, Apple Gives, which has contributed to over 100 non-profit organizations[53]. Management and Workforce - The Company has 63 team members as of December 31, 2021, and emphasizes an inclusive work environment with competitive compensation and benefits[49]. Risk Factors - The Company anticipates that future revenues could be negatively impacted by potential COVID-19 case increases and government restrictions[20]. - The management fee structure for over 80% of the Company's hotels is based on a variable management fee agreement, aligning incentives for performance[30]. Securities and Financial Instruments - The Company has a universal shelf registration statement that allows for the issuance of various securities, including common shares and unsecured debt securities, on a delayed or continuous basis[42]. - The maturity dates for the interest rate swaps range from August 2022 to December 2029[271]. - The average interest rates for variable-rate debt maturities range from 3.0% to 4.1%[273]. - The Company has not engaged in transactions involving derivative financial instruments other than interest rate swaps[270].