Apple Hospitality REIT(APLE) - 2024 Q1 - Quarterly Results

Executive Summary & Highlights Apple Hospitality REIT reported strong Q1 2024 financial and operational results, with strategic acquisitions, a robust balance sheet, and consistent shareholder distributions First Quarter 2024 Performance Overview Apple Hospitality REIT reported strong financial and operational results for Q1 2024, with significant increases in net income and operating income, alongside stable comparable hotel metrics. The company also highlighted strategic transactional activity and a robust balance sheet | Metric | 2024 ($ thousands) | 2023 ($ thousands) | % Change | | :---------------------------------------------- | :----------------- | :----------------- | :-------- | | Net income | $54,050 | $32,923 | 64.2% | | Net income per share | $0.22 | $0.14 | 57.1% | | Operating income | $71,615 | $49,247 | 45.4% | | Operating margin % | 21.7% | 15.8% | 590 bps | | Adjusted EBITDAre | $100,810 | $95,288 | 5.8% | | Comparable Hotels Adjusted Hotel EBITDA | $111,672 | $115,399 | (3.2%) | | Comparable Hotels Adjusted Hotel EBITDA Margin %| 33.7% | 35.3% | (160 bps) | | Modified funds from operations (MFFO) | $83,240 | $78,959 | 5.4% | | MFFO per share | $0.34 | $0.34 | 0.0% | | Average Daily Rate (ADR) (Actual) | $153.18 | $152.01 | 0.8% | | Occupancy (Actual) | 72.0% | 72.0% | 0.0% | | Revenue Per Available Room (RevPAR) (Actual) | $110.25 | $109.46 | 0.7% | | Comparable Hotels ADR | $154.10 | $154.08 | 0.0% | | Comparable Hotels Occupancy | 72.1% | 72.1% | 0.0% | | Comparable Hotels RevPAR | $111.09 | $111.14 | 0.0% | | Distributions paid | $70,156 | $73,399 | (4.4%) | | Distributions paid per share | $0.29 | $0.32 | (9.4%) | | Cash and cash equivalents | $4,942 | | | | Total debt outstanding | $1,506,734 | | | | Total debt outstanding, net of cash and cash equivalents | $1,501,792 | | | | Total debt outstanding, net of cash and cash equivalents, to total capitalization | 27.4% | | | CEO Commentary CEO Justin Knight noted that Q1 2024 Comparable Hotels RevPAR was seasonally stable, despite challenging year-over-year comparisons. Preliminary April 2024 results show RevPAR growth above the full-year guidance range, driven by continued strength in leisure demand, recovery in corporate demand, and limited near-term supply growth. The company also highlighted a strategic acquisition and a resilient investment strategy - Comparable Hotels RevPAR remained seasonally stable in Q1 2024, consistent with industry trends, despite challenging YoY comparisons due to the Super Bowl and Easter holiday shift[3] - Preliminary results for April 2024 indicate Comparable Hotels RevPAR growth above the high end of the full-year guidance range, supported by growth in both weekday and weekend occupancies[3] - The company acquired the AC Hotel Washington DC Convention Center, which is expected to be meaningfully additive to the portfolio by increasing exposure to high-growth markets and driving incremental profitability[3] Key Highlights The company achieved strong operating and bottom-line performance in Q1 2024, with stable comparable hotel metrics and increased Adjusted EBITDAre and MFFO. Strategic transactional activity included an acquisition and a disposition, with two more hotels under contract. The balance sheet remains strong, and the company continued its monthly distribution program - Strong operating performance: Comparable Hotels ADR, Occupancy, and RevPAR were flat YoY in Q1 2024, with occupancy and RevPAR exceeding industry averages. Preliminary April 2024 data shows approximately 80% occupancy and growth in ADR[5] - Strong bottom-line performance: Adjusted EBITDAre increased by 6% to approximately $101 million, and MFFO increased by 5% to approximately $83 million for Q1 2024[5] - Transactional activity: Acquired AC Hotel by Marriott Washington DC Convention Center for $116.8 million and sold two hotels in Rogers, Arkansas, for $33.5 million. Two additional hotels are under contract for purchase for an anticipated $177.5 million[5] - Capital markets: Entered into an ATM Program to sell up to $500 million of common shares. No shares were sold in Q1 2024[6] - Balance sheet: Total debt to total capitalization, net of cash and cash equivalents, was approximately 27% as of March 31, 2024[6] - Monthly distributions: Paid $0.29 per common share in Q1 2024, including a $0.05 special cash distribution. The current annualized regular monthly cash distribution of $0.96 per common share represents an annual yield of approximately 6.5%[6] Financial Performance The company's Q1 2024 financial performance showed increased total assets and debt, alongside significant growth in total revenue, operating income, and net income, partly due to a gain on real estate sale Consolidated Balance Sheets As of March 31, 2024, the company's total assets increased to $5.03 billion, primarily driven by an increase in investment in real estate. Total debt, net, also increased, while cash and cash equivalents decreased compared to December 31, 2023 | Asset/Liability/Equity | March 31, 2024 (unaudited, $ thousands) | December 31, 2023 ($ thousands) | | :----------------------------------------------------------------------------------------------------------------- | :-------------------------------------- | :------------------------------ | | Investment in real estate, net | $4,871,476 | $4,777,374 | | Assets held for sale | - | 15,283 | | Cash and cash equivalents | 4,942 | 10,287 | | Due from third-party managers, net | 63,048 | 36,437 | | Total Assets | $5,032,498 | $4,937,298 | | Debt, net | $1,500,698 | $1,371,494 | | Total Liabilities | 1,698,196 | 1,613,317 | | Common stock, issued and outstanding | 4,805,504 | 4,794,804 | | Total Shareholders' Equity | 3,334,302 | 3,323,981 | Consolidated Statements of Operations and Comprehensive Income For the three months ended March 31, 2024, total revenue increased by 5.8% year-over-year, driven by growth in room, food and beverage, and other revenues. Operating income saw a substantial 45.4% increase, and net income rose by 64.2%, partly due to a significant gain on the sale of real estate | Metric | Three Months Ended March 31, 2024 ($ thousands) | Three Months Ended March 31, 2023 ($ thousands) | | :----------------------------------- | :---------------------------------------------- | :---------------------------------------------- | | Room Revenue | $298,746 | $285,520 | | Food and beverage Revenue | $15,062 | $12,949 | | Other Revenue | $15,704 | $12,985 | | Total revenue | $329,512 | $311,454 | | Total hotel operating expense | $197,264 | $185,165 | | Property taxes, insurance and other | $20,992 | $19,675 | | General and administrative | $10,584 | $11,461 | | Depreciation and amortization | $46,823 | $45,906 | | Total expense | $275,663 | $262,207 | | Gain on sale of real estate | $17,766 | - | | Operating income | $71,615 | $49,247 | | Interest and other expense, net | $(17,309) | $(16,004) | | Income before income taxes | $54,306 | $33,243 | | Income tax expense | $(256) | $(320) | | Net income | $54,050 | $32,923 | | Basic and diluted net income per common share | $0.22 | $0.14 | | Weighted average common shares outstanding - basic and diluted | 242,408 | 229,398 | Operational Performance The company's Q1 2024 operational performance showed stable comparable hotel metrics but a slight decline in Adjusted Hotel EBITDA, while same store hotels experienced a marginal decrease in RevPAR and a contraction in EBITDA margin Comparable Hotels Operating Metrics Comparable Hotels metrics for Q1 2024 showed stable RevPAR, ADR, and Occupancy year-over-year. While total revenue increased, Adjusted Hotel EBITDA for comparable hotels saw a slight decrease, indicating some margin pressure. Monthly data revealed fluctuations, with March 2024 showing a decline in RevPAR compared to the previous year Comparable Hotels Operating Metrics (Q1 2024 vs Q1 2023) | Metric | 2024 ($ thousands) | March 31, 2023 ($ thousands) | % Change 2023 | | :--------------------------------------- | :----------------- | :--------------------------- | :------------ | | Comparable Hotels Total Revenue | $331,580 | $326,688 | 1.5% | | Comparable Hotels Total Operating Expenses | $219,908 | $211,289 | 4.1% | | Comparable Hotels Adjusted Hotel EBITDA | $111,672 | $115,399 | (3.2%) | | Comparable Hotels Adjusted Hotel EBITDA Margin % | 33.7% | 35.3% | (160 bps) | | ADR (Comparable Hotels) | $154.10 | $154.08 | 0.0% | | Occupancy (Comparable Hotels) | 72.1% | 72.1% | 0.0% | | RevPAR (Comparable Hotels) | $111.09 | $111.14 | 0.0% | Comparable Hotels Monthly Performance (Q1 2024 vs Q1 2023) | Metric | January 2024 | February 2024 | March 2024 | Q1 2024 | January 2023 | February 2023 | March 2023 | Q1 2023 | % Change January 2023 | % Change February 2023 | % Change March 2023 | % Change Q1 2023 | | :----------------------------------- | :----------- | :------------ | :--------- | :------ | :----------- | :------------ | :--------- | :------ | :-------------------- | :--------------------- | :------------------ | :--------------- | | ADR (Comparable Hotels) | $144.42 | $154.71 | $161.58 | $154.10 | $141.32 | $156.48 | $162.35 | $154.08 | 2.2% | (1.1%) | (0.5%) | 0.0% | | Occupancy (Comparable Hotels) | 64.6% | 74.1% | 77.8% | 72.1% | 63.8% | 73.4% | 79.3% | 72.1% | 1.3% | 1.0% | (1.9%) | 0.0% | | RevPAR (Comparable Hotels) | $93.24 | $114.61 | $125.65 | $111.09 | $90.17 | $114.86 | $128.76 | $111.14 | 3.4% | (0.2%) | (2.4%) | 0.0% | | Comparable Hotels Adjusted Hotel EBITDA ($ thousands) | $24,001 | $37,284 | $50,387 | $111,672| $24,258 | $37,510 | $53,631 | $115,399| (1.1%) | (0.6%) | (6.0%) | (3.2%) | Same Store Hotels Operating Metrics Same Store Hotels, defined as 217 hotels owned since January 1, 2023, experienced a slight decline in RevPAR, ADR, and Occupancy in Q1 2024 compared to Q1 2023. Total revenue increased marginally, but Adjusted Hotel EBITDA decreased by 4.0%, and the margin contracted by 180 bps, indicating operational cost pressures Same Store Hotels Operating Metrics (Q1 2024 vs Q1 2023) | Metric | 2024 ($ thousands) | March 31, 2023 ($ thousands) | % Change 2023 | | :--------------------------------------- | :----------------- | :--------------------------- | :------------ | | Same Store Hotels Total Revenue | $310,620 | $306,902 | 1.2% | | Same Store Hotels Total Operating Expenses | 207,827 | 199,823 | 4.0% | | Same Store Hotels Adjusted Hotel EBITDA | $102,793 | $107,079 | (4.0%) | | Same Store Hotels Adjusted Hotel EBITDA Margin % | 33.1% | 34.9% | (180 bps) | | ADR (Same Store Hotels) | $151.86 | $152.31 | (0.3%) | | Occupancy (Same Store Hotels) | 71.9% | 72.0% | (0.1%) | | RevPAR (Same Store Hotels) | $109.23 | $109.73 | (0.5%) | Same Store Hotels Quarterly Performance (Q1 2023 to Q1 2024) | Metric | Q1 2023 ($ thousands) | Q2 2023 ($ thousands) | Q3 2023 ($ thousands) | Q4 2023 ($ thousands) | Q1 2024 ($ thousands) | | :--------------------------------------- | :-------------------- | :-------------------- | :-------------------- | :-------------------- | :-------------------- | | Same Store Hotels Total Revenue | $306,902 | $355,920 | $351,343 | $300,565 | $310,620 | | Same Store Hotels Total Operating Expenses | 199,823 | 216,173 | 221,182 | 202,562 | 207,827 | | Same Store Hotels Adjusted Hotel EBITDA | $107,079 | $139,747 | $130,161 | $98,003 | $102,793 | | Same Store Hotels Adjusted Hotel EBITDA Margin % | 34.9% | 39.3% | 37.0% | 32.6% | 33.1% | | ADR (Same Store Hotels) | $152.31 | $160.79 | $159.36 | $149.56 | $151.86 | | Occupancy (Same Store Hotels) | 72.0% | 78.2% | 77.1% | 69.7% | 71.9% | | RevPAR (Same Store Hotels) | $109.73 | $125.69 | $122.88 | $104.19 | $109.23 | Portfolio Activity & Capital Management The company actively managed its hotel portfolio through acquisitions and dispositions, invested in capital improvements, maintained a strong balance sheet, engaged in capital markets activities, and continued shareholder distributions Hotel Portfolio Overview As of March 31, 2024, Apple Hospitality REIT owned a diversified portfolio of 224 hotels, totaling 29,886 guest rooms across 87 markets in 37 states and the District of Columbia - The company owned 224 hotels with 29,886 guest rooms as of March 31, 2024[4] - The portfolio is diversified across 87 markets in 37 states and the District of Columbia[4] Acquisitions and Dispositions In Q1 2024, Apple Hospitality acquired one hotel for $116.8 million and sold two hotels for $33.5 million, resulting in a $17.8 million gain on sale and deferring $15.1 million in taxable gains through a 1031 exchange. The company also has two additional hotels under contract for future acquisition - Acquired the 234-room AC Hotel by Marriott Washington DC Convention Center for approximately $116.8 million in March 2024[9] - Sold two hotels (Hampton Inn by Hilton and Homewood Suites by Hilton in Rogers, Arkansas) for a combined gross sales price of approximately $33.5 million in February 2024[12] - The sale resulted in a combined gain of approximately $17.8 million, with $15.1 million in taxable gains deferred through a 1031 exchange[12] - Two additional hotels are under contract for purchase: an Embassy Suites by Hilton in Madison, Wisconsin ($79.3 million, mid-2024 acquisition) and a Motto by Hilton in Nashville, Tennessee ($98.2 million, late 2025 acquisition)[10][11] Capital Improvements The company invested approximately $20 million in capital expenditures during Q1 2024 and plans to invest $75 million to $85 million for the full year 2024, including comprehensive renovations for about 20 hotels - Invested approximately $20 million in capital expenditures during the three months ended March 31, 2024[13] - Anticipates investing approximately $75 million to $85 million in capital improvements during 2024, including comprehensive renovation projects for approximately 20 hotels[13] Balance Sheet and Liquidity As of March 31, 2024, Apple Hospitality maintained a strong and flexible balance sheet with approximately $1.5 billion in total outstanding debt at a weighted-average interest rate of 4.6%. The company had $5 million cash on hand and $519 million available under its revolving credit facility, with a total debt to total capitalization of approximately 27% - Total outstanding debt was approximately $1.5 billion with a weighted-average interest rate of approximately 4.6% as of March 31, 2024[14] - Cash on hand was approximately $5 million, and availability under its revolving credit facility was approximately $519 million[14] - Total debt to total capitalization, net of cash and cash equivalents, was approximately 27%[14] - The company had 209 unencumbered hotels in its portfolio[14] Capital Markets Activity The company has a Share Repurchase Program with $335 million remaining, though no shares were repurchased in Q1 2024. Additionally, an At-The-Market (ATM) Program was established in February 2024, allowing for the sale of up to $500 million in common shares, with no shares sold under this program in Q1 2024 - Approximately $335 million remained under the Share Repurchase Program as of March 31, 2024, with no shares repurchased in Q1 2024[15] - Entered into an ATM Program in February 2024, allowing for the sale of up to $500 million of common shares. No shares were sold under this program in Q1 2024[16] Shareholder Distributions During Q1 2024, the company paid total distributions of $0.29 per common share, including a $0.05 special cash distribution. The current annualized regular monthly cash distribution of $0.96 per common share represents an annual yield of approximately 6.5% - Paid total distributions of $0.29 per common share in Q1 2024, which included a special cash distribution of $0.05 per common share[17] - The current annualized regular monthly cash distribution of $0.96 per common share represents an annual yield of approximately 6.5% based on the May 3, 2024 closing price[17] 2024 Outlook Apple Hospitality REIT updated its 2024 outlook, increasing the midpoint for Net Income, Adjusted EBITDAre, and Comparable Hotels Adjusted Hotel EBITDA Margin %, primarily driven by a strategic acquisition, while maintaining Comparable Hotels RevPAR Change guidance Updated Guidance Apple Hospitality REIT updated its 2024 outlook, increasing the midpoint for Net Income by $16 million, Adjusted EBITDAre by $9 million, and Comparable Hotels Adjusted Hotel EBITDA Margin % by 20 bps. Comparable Hotels RevPAR Change guidance was maintained. These increases are primarily driven by the acquisition of the AC Hotel Washington DC Convention Center - Net Income midpoint increased by $16 million, Adjusted EBITDAre by $9 million, and Comparable Hotels Adjusted Hotel EBITDA Margin % by 20 bps[18] - Comparable Hotels RevPAR Change guidance was maintained[18] - The increases in outlook are primarily driven by the acquisition of the AC Hotel Washington DC Convention Center in March 2024[18] Updated 2024 Outlook Ranges | Metric | Low-End ($ millions) | High-End ($ millions) | | :------------------------------------------- | :------------------- | :-------------------- | | Net income | $207 | $233 | | Comparable Hotels RevPAR Change | 2.0% | 4.0% | | Comparable Hotels Adjusted Hotel EBITDA Margin % | 34.8% | 35.8% | | Adjusted EBITDAre | $461 | $483 | | Capital expenditures | $75 | $85 | Non-GAAP Financial Measures Reconciliation The company provides comprehensive reconciliations of GAAP net income to various non-GAAP financial measures, including EBITDA, EBITDAre, Adjusted EBITDAre, Adjusted Hotel EBITDA, FFO, and MFFO, to offer investors supplemental insights into operating performance and facilitate comparisons EBITDA, EBITDAre, Adjusted EBITDAre, and Adjusted Hotel EBITDA Reconciliation The company provides reconciliations for EBITDA, EBITDAre, Adjusted EBITDAre, and Adjusted Hotel EBITDA, emphasizing their utility for investors in evaluating operating performance by adjusting for capital structure, asset base, and non-cash expenses. Adjusted Hotel EBITDA specifically isolates property-level operational performance - EBITDA is used to evaluate ongoing operating performance by removing the impact of capital structure and asset base[44] - EBITDAre, defined by Nareit, further adjusts EBITDA for gains/losses from real estate sales, impairments, and unconsolidated affiliates[45] - Adjusted EBITDAre excludes non-cash straight-line operating ground lease expense[45] - Adjusted Hotel EBITDA further excludes corporate-level general and administrative expense and Adjusted EBITDAre from non-hotel property to focus on property-level operational performance[46] Reconciliation of Net Income to EBITDA, EBITDAre, Adjusted EBITDAre and Adjusted Hotel EBITDA (Q1 2024) | Metric | Q1 2024 ($ thousands) | | :---------------------------------------------- | :-------------------- | | Net income | $54,050 | | Depreciation and amortization | 46,823 | | Amortization of favorable and unfavorable operating leases, net | 102 | | Interest and other expense, net | 17,309 | | Income tax expense | 256 | | EBITDA | 118,540 | | Gain on sale of real estate | (17,766) | | EBITDAre | 100,774 | | Non-cash straight-line operating ground lease expense | 36 | | Adjusted EBITDAre | 100,810 | | General and administrative expense | 10,584 | | Adjusted EBITDAre from non-hotel property | (1,601) | | Adjusted Hotel EBITDA | $109,793 | FFO and MFFO Reconciliation The company reconciles net income to Funds from Operations (FFO) and Modified FFO (MFFO), which are key supplemental measures for real estate companies. FFO adjusts for real estate-related depreciation, amortization, and gains/losses on sales, while MFFO further refines FFO by excluding certain non-cash lease expenses to better reflect ongoing operating performance - FFO, as defined by Nareit, is considered helpful in evaluating a real estate company's operations by excluding certain non-cash items like depreciation and gains/losses from real estate sales[48] - MFFO further adjusts FFO by excluding amortization of finance ground lease assets, amortization of favorable and unfavorable operating leases, net, and non-cash straight-line operating ground lease expense to provide a clearer view of underlying hotel performance[49] Reconciliation of Net Income to FFO and MFFO (Q1 2024 vs Q1 2023) | Metric | March 2024 ($ thousands) | 31, 2023 ($ thousands) | | :---------------------------------------------- | :----------------------- | :--------------------- | | Net income | $54,050 | $32,923 | | Depreciation of real estate owned | 46,059 | 45,142 | | Gain on sale of real estate | (17,766) | - | | Funds from operations | 82,343 | 78,065 | | Amortization of finance ground lease assets | 759 | 759 | | Amortization of favorable and unfavorable operating leases, net | 102 | 97 | | Non-cash straight-line operating ground lease expense | 36 | 38 | | Modified funds from operations | $83,240 | $78,959 | 2024 Guidance Reconciliation of Non-GAAP Measures The company provided a reconciliation of its 2024 GAAP net income guidance to various non-GAAP measures, including EBITDA, EBITDAre, Adjusted EBITDAre, Adjusted Hotel EBITDA, and Comparable Hotels Adjusted Hotel EBITDA. This reconciliation helps investors understand the components of the forward-looking financial targets 2024 Guidance Reconciliation (Low-End to High-End) | Metric | Low-End ($ thousands) | High-End ($ thousands) | | :---------------------------------------------- | :-------------------- | :--------------------- | | Net income | $206,544 | $232,944 | | Depreciation and amortization | 190,000 | 187,000 | | Amortization of favorable and unfavorable leases, net | 408 | 408 | | Interest and other expense, net | 81,000 | 79,000 | | Income tax expense | 700 | 1,100 | | EBITDA | $478,652 | $500,452 | | (Gain) loss on sale of real estate | (17,766) | (17,766) | | EBITDAre | $460,886 | $482,686 | | Non-cash straight-line operating ground lease expense | 135 | 135 | | Adjusted EBITDAre | $461,021 | $482,821 | | General and administrative expense | 37,500 | 42,500 | | AEBITDAre from non-hotel property | (1,500) | (3,500) | | Adjusted Hotel EBITDA | $497,021 | $521,821 | | AHEBITDA from acquisitions prior to ownership | 1,882 | 1,882 | | AHEBITDA from dispositions | (3) | (3) | | Comparable Hotels Adjusted Hotel EBITDA | $498,900 | $523,700 | Debt Summary As of March 31, 2024, Apple Hospitality REIT had total debt outstanding of approximately $1.507 billion, with a weighted-average debt maturity of 3.4 years. The debt portfolio is comprised of both variable-rate and fixed-rate debt, with varying maturities and average interest rates Debt Maturities and Average Interest Rates (as of March 31, 2024) | Maturity Period | Total Debt ($ thousands) | Average Interest Rate | | :----------------------- | :----------------------- | :-------------------- | | April 1 - December 31, 2024 | $111,329 | 4.8% | | 2025 | $295,140 | 5.1% | | 2026 | $205,649 | 5.4% | | 2027 | $278,602 | 5.3% | | 2028 | $334,066 | 4.7% | | Thereafter | $281,948 | 3.9% | | Total Debt | $1,506,734 | | | Variable-rate debt total | $1,101,000 | | | Fixed-rate debt total | $405,734 | | - The company's weighted-average debt maturities were 3.4 years as of March 31, 2024[14] Detailed Operating Metrics by Segment The company's Q1 2024 operating metrics varied across markets, regions, chain scales, and locations, with top markets and the South Atlantic region being significant Adjusted Hotel EBITDA contributors, and performance fluctuations observed across different segments By Market The top 20 markets contributed 64.9% of Comparable Hotels Adjusted Hotel EBITDA in Q1 2024, with Phoenix, AZ, being the largest contributor at 11.6%. Performance varied across markets, with some experiencing RevPAR declines (e.g., Phoenix, Fort Worth/Arlington) and others showing strong growth (e.g., Washington, DC, Las Vegas, Alaska) Comparable Hotels Operating Metrics for Top 20 Markets (Q1 2024) | Market | of Hotels | Occupancy Q1 2024 | % Change | ADR Q1 2024 | % Change | RevPAR Q1 2024 | % Change | % of Adjusted Hotel EBITDA Q1 2024 | | :--------------------- | :---------- | :---------------- | :------- | :---------- | :------- | :------------- | :------- | :--------------------------------- | | Phoenix, AZ | 10 | 88.1% | (1.7%) | $206.66 | (7.0%) | $181.99 | (8.5%) | 11.6% | | San Diego, CA | 7 | 74.2% | 0.1% | $177.69 | 2.4% | $131.83 | 2.5% | 5.1% | | Los Angeles, CA | 8 | 79.9% | (0.4%) | $176.86 | (0.7%) | $141.24 | (1.2%) | 4.9% | | Washington, DC | 5 | 73.3% | 5.3% | $174.96 | 5.9% | $128.28 | 11.5% | 3.2% | | Las Vegas, NV | 1 | 76.1% | 4.4% | $238.08 | 9.6% | $181.16 | 14.5% | 2.4% | | Alaska | 2 | 88.1% | 12.7% | $198.18 | 8.3% | $174.65 | 22.1% | 1.8% | | Top 20 Markets Total | 91 | 78.6% | 0.4% | $173.47 | 0.6% | $136.33 | 0.9% | 64.9% | | All Other Markets | 133 | 66.9% | (0.4%)| $136.00 | (0.8%)| $91.02 | (1.2%)| 35.1% | By Region In Q1 2024, the South Atlantic region contributed the largest share of Adjusted Hotel EBITDA at 26.9%, followed by the Mountain region at 21.1% and Pacific at 20.6%. Performance varied by region, with New England showing strong occupancy growth (13.0%) and Alaska (within Pacific region) showing significant RevPAR growth Comparable Hotels Operating Metrics by STR Region (Q1 2024) | STR Region | of Hotels | Occupancy Q1 2024 | % Change | ADR Q1 2024 | % Change | RevPAR Q1 2024 | % Change | % of Adjusted Hotel EBITDA Q1 2024 | | :----------------- | :---------- | :---------------- | :------- | :---------- | :------- | :------------- | :------- | :--------------------------------- | | East North Central | 16 | 57.0% | (0.2%) | $127.57 | 0.3% | $72.71 | 0.1% | 1.9% | | East South Central | 27 | 74.2% | (0.9%) | $141.20 | 0.0% | $104.71 | (1.0%) | 9.8% | | Middle Atlantic | 12 | 64.1% | (1.8%) | $138.60 | 3.1% | $88.85 | 1.3% | 2.9% | | Mountain | 25 | 79.5% | (1.1%) | $179.58 | (2.4%) | $142.71 | (3.5%) | 21.1% | | New England | 6 | 62.4% | 13.0% | $132.62 | (7.8%) | $82.72 | 4.2% | 1.1% | | Pacific | 33 | 76.5% | 2.0% | $173.02 | 0.5% | $132.31 | 2.5% | 20.6% | | South Atlantic | 54 | 75.2% | (0.8%) | $160.16 | 1.0% | $120.39 | 0.1% | 26.9% | | West North Central | 17 | 59.8% | (4.8%) | $130.74 | 2.5% | $78.14 | (2.4%) | 3.0% | | West South Central | 34 | 73.9% | 1.4% | $136.11 | (0.4%) | $100.52 | 0.9% | 12.7% | | Total Portfolio| 224 | 72.1% | 0.0% | $154.10 | 0.0% | $111.09 | 0.0% | 100.0% | By Chain Scale Upscale hotels accounted for the largest portion of Adjusted Hotel EBITDA (70.7%) in Q1 2024, with Courtyard, Hilton Garden Inn, and Residence Inn being significant contributors. Upper Midscale and Upper Upscale segments contributed 24.7% and 4.6% respectively. Performance varied by brand, with some showing strong RevPAR growth (e.g., Aloft, SpringHill Suites, Marriott) and others experiencing declines (e.g., Hyatt House, Hilton Garden Inn) Comparable Hotels Operating Metrics by Chain Scale/Brand (Q1 2024) | Chain Scale/Brand | of Hotels | Occupancy Q1 2024 | % Change | ADR Q1 2024 | % Change | RevPAR Q1 2024 | % Change | % of Adjusted Hotel EBITDA Q1 2024 | | :---------------- | :---------- | :---------------- | :------- | :---------- | :------- | :------------- | :------- | :--------------------------------- | | Upscale Total | 154 | 72.0% | (0.1%)| $155.10 | 0.4% | $111.72 | 0.4% | 70.7% | | AC Hotels | 4 | 70.2% | 4.2% | $192.18 | 3.3% | $134.86 | 7.5% | 3.2% | | Courtyard | 35 | 68.3% | 0.0% | $154.96 | 1.6% | $105.88 | 1.7% | 16.8% | | Hilton Garden Inn | 40 | 67.8% | (2.2%) | $144.10 | (2.0%) | $97.63 | (4.3%) | 14.3% | | Residence Inn | 30 | 74.8% | 1.6% | $160.15 | 0.9% | $119.75 | 2.6% | 14.6% | | SpringHill Suites | 10 | 73.5% | 1.9% | $161.34 | 3.1% | $118.57 | 5.1% | 6.1% | | Upper Midscale Total | 65 | 72.0% | (0.6%)| $147.24 | (1.5%)| $106.02 | (2.1%)| 24.7% | | Hampton | 36 | 69.8% | 0.0% | $153.74 | (2.5%) | $107.29 | (2.5%) | 13.8% | | Upper Upscale Total | 5 | 73.8% | 3.9% | $184.37 | 1.5% | $136.12 | 5.6% | 4.6% | | Marriott | 2 | 67.9% | 11.1% | $172.00 | 1.2% | $116.84 | 12.6% | 2.0% | By Location Suburban locations generated the largest share of Adjusted Hotel EBITDA (46.2%) in Q1 2024, followed by Urban (30.2%) and Airport (9.1%). Interstate locations showed the highest RevPAR growth (10.2%), while Airport and Resort locations experienced slight RevPAR declines Comparable Hotels Operating Metrics by STR Location (Q1 2024) | STR Location | of Hotels | Occupancy Q1 2024 | % Change | ADR Q1 2024 | % Change | RevPAR Q1 2024 | % Change | % of Adjusted Hotel EBITDA Q1 2024 | | :--------------- | :---------- | :---------------- | :------- | :---------- | :------- | :------------- | :------- | :--------------------------------- | | Airport | 18 | 80.1% | (2.0%) | $153.20 | (1.1%) | $122.71 | (3.0%) | 9.1% | | Interstate | 4 | 68.9% | 5.7% | $119.64 | 4.3% | $82.39 | 10.2% | 1.0% | | Resort | 11 | 75.2% | (2.5%) | $179.43 | 1.0% | $134.95 | (1.5%) | 7.4% | | Small Metro/Town | 9 | 84.6% | 3.3% | $166.40 | (3.3%) | $140.80 | (0.1%) | 6.1% | | Suburban | 128 | 71.0% | (1.0%) | $146.95 | 0.8% | $104.35 | (0.2%) | 46.2% | | Urban | 54 | 70.0% | 2.2% | $163.21 | (1.1%) | $114.24 | 1.0% | 30.2% | | Total Portfolio| 224 | 72.1% | 0.0% | $154.10 | 0.0% | $111.09 | 0.0% | 100.0% | Company Information & Disclaimers This section provides essential company information, including details on the Q1 2024 earnings call, an overview of Apple Hospitality REIT, explanations of non-GAAP financial measures, forward-looking statement disclaimers, and contact information Earnings Conference Call Apple Hospitality REIT hosted a conference call on May 7, 2024, to discuss its Q1 2024 earnings. Details for accessing the live call and replay were provided - The company hosted a quarterly conference call on Tuesday, May 7, 2024, at 10 a.m. Eastern Time[20] - Access to the call was available by telephone and live webcast, with a replay available until May 21, 2024[20][21] About Apple Hospitality REIT, Inc. Apple Hospitality REIT, Inc. is a publicly traded real estate investment trust (REIT) that owns one of the largest and most diverse portfolios of upscale, rooms-focused hotels in the United States, primarily under Marriott, Hilton, and Hyatt brands - Apple Hospitality REIT, Inc. (NYSE: APLE) is a publicly traded REIT[22] - The company owns one of the largest and most diverse portfolios of upscale, rooms-focused hotels in the U.S., consisting of 224 hotels with approximately 29,900 guest rooms[22] - The portfolio is concentrated with industry-leading brands: 101 Marriott-branded, 118 Hilton-branded, and five Hyatt-branded hotels[22] Non-GAAP Financial Measures Explanation The company utilizes several non-GAAP financial measures, including FFO, MFFO, EBITDA, EBITDAre, Adjusted EBITDAre, Adjusted Hotel EBITDA, Comparable Hotels Adjusted Hotel EBITDA, and Same Store Hotels Adjusted Hotel EBITDA, to provide investors with supplemental insights into its operating performance. These measures are presented as alternatives to GAAP measures and are useful for period-over-period and peer comparisons - The company uses non-GAAP financial measures such as FFO, MFFO, EBITDA, EBITDAre, Adjusted EBITDAre, Adjusted Hotel EBITDA, Comparable Hotels Adjusted Hotel EBITDA, and Same Store Hotels Adjusted Hotel EBITDA[23] - These measures are considered useful supplemental indicators of operating performance for investors, aiding in comparisons between periods and with other REITs[23] - Reconciliations of these non-GAAP measures to net income (loss) are provided in the report[23] Forward-Looking Statements Disclaimer The report contains forward-looking statements subject to known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially from expectations. These factors include economic conditions, travel disruptions, real estate market changes, financing risks, and regulatory impacts. The company disclaims any obligation to update these statements - The press release contains forward-looking statements identified by terms like "may," "believe," "expect," and "anticipate"[24] - Such statements involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from those expressed or implied[24] - Key risk factors include the ability to acquire/dispose of properties, economic conditions (inflation/recession), reduced travel, adverse changes in real estate markets, financing risks, and regulatory changes[25][26] - The company undertakes no obligation to publicly update or revise any forward-looking statements, except as required by law[26] Contact Information Contact details for investor relations are provided for inquiries regarding Apple Hospitality REIT, Inc - Contact: Kelly Clarke, Vice President, Investor Relations, at 804-727-6321 or kclarke@applereit.com[27]