Apple Hospitality REIT, Inc. (NYSE: APLE) yesterday announced results of operations for the first quarter ended March 31, 2021.

Apple Hospitality REIT, Inc.

Selected Statistical and Financial Data

As of and For the Three Months Ended March 31

(Unaudited) (in thousands, except statistical and per share amounts)(1)
         
   

Three Months Ended
   

March 31,
   

2021

2020

% Change
Net loss

$(46,435)

$(2,769)

n/m
Net loss per share

$(0.21)

$(0.01)

n/m
   
Adjusted EBITDAre

$27,308

$53,774

(49.2%)
Comparable Hotels Adjusted Hotel EBITDA

$35,686

$62,563

(43.0%)
Comparable Hotels Adjusted Hotel EBITDA Margin %

22.6%

26.7%

(410 bps)
Modified funds from operations (MFFO)

$8,682

$37,810

(77.0%)
MFFO per share

$0.04

$0.17

(76.5%)
   
Average Daily Rate (ADR) (Actual)

$99.19

$132.55

(25.2%)
Occupancy (Actual)

55.5%

60.9%

(8.9%)
Revenue Per Available Room (RevPAR) (Actual)

$55.09

$80.66

(31.7%)
   
Comparable Hotels ADR

$99.29

$133.05

(25.4%)
Comparable Hotels Occupancy

55.8%

60.9%

(8.4%)
Comparable Hotels RevPAR

$55.39

$81.01

(31.6%)
   
Cash and cash equivalents

$5,776
Total debt outstanding

$1,529,652
Total debt outstanding, net of cash and cash equivalents

$1,523,876
Total debt outstanding, net of cash and cash equivalents, to total capitalization (2)

31.9%
_____________________            
Note: n/m = not meaningful.            
(1)  

Explanations of and reconciliations to net loss determined in accordance with generally accepted accounting principles (“GAAP”) of non-GAAP financial measures, Adjusted EBITDAre, Comparable Hotels Adjusted Hotel EBITDA and MFFO, are included below.
(2)  

Total debt outstanding, net of cash and cash equivalents ("net total debt outstanding"), divided by net total debt outstanding plus equity market capitalization based on the Company’s closing share price of $14.57 on March 31, 2021.

Comparable Hotels is defined as the 232 hotels owned and held for use by the Company as of March 31, 2021. For hotels acquired during the periods noted, the Company has included, as applicable, results of those hotels for periods prior to the Company's ownership, and for dispositions, results have been excluded for the Company's period of ownership. Results for periods prior to the Company's ownership have not been included in the Company's actual Consolidated Financial Statements and are included only for comparison purposes. Results included for periods prior to the Company's ownership are based on information from the prior owner of each hotel and have not been audited or adjusted.

Justin Knight, Chief Executive Officer of Apple Hospitality, commented, “Performance across our portfolio of hotels continued to strengthen during the first quarter of this year with occupancy growth, driven by a mix of leisure and business demand, exceeding our internal expectations and enabling us to post our best quarterly results since the beginning of the pandemic. Our outstanding operational results during these unprecedented times highlight the broad consumer appeal, geographic diversification and efficient operating model of our portfolio, as well as the merits of our conservative capital structure. We are pleased to report Adjusted EBITDAre of approximately $27 million, MFFO of approximately $9 million and Comparable Hotels Adjusted Hotel EBITDA Margin of approximately 23% for the first quarter of this year. Our portfolio of rooms-focused hotels has performed better than the overall industry, as well as our chain scales, as reported by STR, even without a full return of business travel. We anticipate improved business demand as the year progresses, and this, combined with our efforts to further enhance the efficiency of our stabilized operating model, positions us for continued outperformance."

Mr. Knight continued, “With positive corporate level cash flow after G&A and debt service for the quarter and for last year, we have preserved the strength and flexibility of our balance sheet and the value of our equity. We remain intently focused on maximizing long-term value for our shareholders through strong operational performance and strategic capital allocation and are well positioned for growth in the early phase of the recovery.”

Operations Update

  • All hotels open: All of the Company’s hotels are open with enhanced health and sanitation measures in place.
  • Sequential improvement: Occupancy, ADR and RevPAR for the Company’s portfolio sequentially improved each month during the first quarter of 2021, driven by a wide variety of demand generators including leisure, government, health care, construction, disaster recovery, insurance, athletics, education, and local and regional business-related travel. Operationally, the Company produced its strongest quarterly results since the beginning of the pandemic with occupancy exceeding industry averages. Portfolio occupancy improvement and outperformance continued with the month of April reaching approximately 68%.
  • Increased operational efficiencies: Since the onset of the COVID-19 pandemic, the Company, its brands and its third-party management companies have implemented cost elimination and efficiency initiatives at each of the Company’s hotels by effectively managing labor costs, reducing or eliminating certain services and amenities, and renegotiating rates under various service contracts. Hotel operating expenses were reduced by approximately 33% and 41% during the first quarter of 2021, as compared to the same periods of 2020 and 2019, respectively.
  • Cash flow positive: The Company produced sufficient cash from hotel operations to cover property-level and corporate-level costs, including debt service and capital expenditures, during the first quarter of 2021, achieving Adjusted Hotel EBITDA of approximately $35 million and MFFO of approximately $9 million.

The following table highlights the Company’s monthly performance during the first quarter of 2021, as compared to the first quarters of 2020 and 2019 (in thousands, except statistical data):

Three

Three

Three

Months

Ended

Months

Ended

Months

Ended

January

2021

February

2021

March

2021

March 31,

2021

January

2020

February

2020

March

2020

March 31,

2020

January

2019

February

2019

March

2019

March 31,

2019

ADR

$95.15

$97.41

$103.27

$99.19

$129.46

$135.82

$131.93

$132.55

$129.81

$137.05

$141.16

$136.36

Occupancy

45.1%

55.2%

66.3%

55.5%

66.7%

75.7%

41.0%

60.9%

66.1%

75.4%

80.2%

73.9%

RevPAR

$42.94

$53.74

$68.46

$55.09

$86.34

$102.79

$54.08

$80.66

$85.78

$103.35

$113.23

$100.71

Adjusted Hotel EBITDA (1)

$4,612

$9,986

$20,829

$35,427

$23,135

$33,514

$6,648

$63,297

$26,418

$35,232

$47,154

$108,804
___________________

(1) See explanation and reconciliation of Adjusted Hotel EBITDA to net income (loss) included below.

As a result of the COVID-19 pandemic, the Company, its third-party management companies and the brands the Company’s hotels are franchised with aggressively worked to mitigate costs and uses of cash associated with operating the Company’s hotels in a low-occupancy environment. With the support of its brands and third-party management companies, the Company will continue to rethink brand standards, refine its operating model and allocate capital to maximize long-term profitability.

Board of Directors

On March 2, 2021, the Company announced the appointment of Howard Woolley to its Board of Directors, effective March 1, 2021. With Mr. Woolley’s appointment, the size of the Company’s Board of Directors increased from eight to nine members, with six members being independent. Mr. Woolley was also appointed to the Board’s Nominating and Corporate Governance Committee, effective March 1, 2021.

Portfolio Activity

Acquisitions

During the three months ended March 31, 2021, the Company closed on the purchase of the newly developed 176-room Hilton Garden Inn in Madison, Wisconsin, which was contracted for in 2019, for a total purchase price of approximately $50 million. The company has acquired five hotels for a total purchase price of approximately $161 million since the beginning of the COVID-19 pandemic.

Dispositions

During the three months ended March 31, 2021, the Company sold its 118-room Homewood Suites by Hilton in Charlotte, North Carolina, and its 140-room Homewood Suites by Hilton in Memphis, Tennessee, in two separate transactions for a total combined gross sales price of approximately $18 million, resulting in a combined gain on sale of approximately $4 million.

In April 2021, the Company sold its 102-room SpringHill Suites by Marriott in Overland Park, Kansas, for a gross sales price of approximately $5 million. The Company recognized an impairment loss of approximately $1 million in the first quarter of 2021 related to the sale of the hotel.

Capital Improvements

Apple Hospitality consistently reinvests in its hotels to maintain and enhance each property’s relevance and competitive position within its respective market. During the three months ended March 31, 2021, the Company invested approximately $2 million in capital expenditures. The Company plans to continue to reinvest in its hotels and anticipates investing an additional $23 million to $28 million in capital improvements during the remainder of 2021, depending in part on the pace of economic recovery.

Balance Sheet and Liquidity

Summary

As of March 31, 2021, Apple Hospitality had approximately $1.5 billion of total outstanding debt with a current combined weighted-average interest rate of approximately 3.9%, cash on hand of approximately $6 million and availability under its revolving credit facility of approximately $275 million. Excluding unamortized debt issuance costs and fair value adjustments, the Company’s total outstanding debt is comprised of approximately $510 million in property-level debt secured by 33 hotels and approximately $1.0 billion outstanding on its unsecured credit facilities. The number of unencumbered hotels in the Company’s portfolio as of March 31, 2021, was 200. The Company’s total debt to total capitalization, net of cash and cash equivalents at March 31, 2021, was approximately 32%. As of March 31, 2021, the Company’s weighted-average debt maturities are 4 years, with approximately $51 million, net of reserves, maturing in 2021.

Unsecured Credit Facilities Amendments

As a result of COVID-19 and the associated disruption to the Company’s operating results, as previously disclosed, the Company entered into amendments to each of its unsecured credit facilities in June 2020 and then again in March 2021 to temporarily waive the financial covenant testing under each of its unsecured credit facilities. The March 2021 amendments suspend the testing for all but two of the Company’s existing financial maintenance covenants under the unsecured credit facilities until the date the compliance certificate is required to be delivered for the fiscal quarter ending June 30, 2022 (unless the Company elects an earlier date) (the “Extended Covenant Waiver Period”). The testing for the Minimum Fixed Charge Coverage Ratio and the Minimum Unsecured Interest Coverage Ratio is suspended until the compliance certificate is required to be delivered for the fiscal quarter ending March 31, 2022. The March 2021 amendments also include: certain restrictions on share repurchases; an allowance for cash distributions of $0.01 per common share per quarter or to the extent required to maintain REIT status; up to $50 million for discretionary capital expenditures; additional flexibility regarding certain of the conditions relative to restrictions on acquisitions, including an increased allowance for acquiring unencumbered assets using up to $300 million in proceeds from asset sales and up to $300 million in equity issuances; less restrictive thresholds for certain financial covenant ratios for a transitional period once covenant testing recommences at the end of the Extended Covenant Waiver Period or if the Company opts out of the Extended Covenant Waiver Period early; and an increase in the interest rate under each of the unsecured credit facilities of 15 basis points during the Extended Covenant Waiver Period. As of March 31, 2021, the Company was in compliance with the applicable covenants of the credit agreements as amended.

Capital Markets

The Company terminated its written trading plan under its Share Repurchase Program in March 2020 and has not repurchased any shares under the Share Repurchase Program since that time. As of March 31, 2021, the Company had approximately $345 million remaining under its share repurchase authorization. The Share Repurchase Program may be suspended or terminated at any time by the Company and will end in July 2021 unless extended. Share repurchases are subject to certain restrictions during the Extended Covenant Waiver Period, and the Company does not anticipate utilizing the Share Repurchase Program during the Extended Covenant Waiver Period.

In August 2020, the Company entered into an equity distribution agreement pursuant to which the Company may sell, from time to time, up to an aggregate of $300 million of its common shares under an at-the-market offering program (the “ATM Program”). As of March 31, 2021, the Company had not sold any common shares under the ATM Program.

Shareholder Distributions

On April 15, 2021, the Company paid a quarterly distribution of $0.01 per common share for the first quarter of 2021. As a requirement under the amendments to its unsecured credit facilities, the Company is restricted in its ability to make distributions during the Extended Covenant Waiver Period, except for the payment of cash distributions of $0.01 per common share per quarter or to the extent required to maintain REIT status. The Company’s Board of Directors, in consultation with management, will continue to monitor hotel operations and intends to pay distributions as determined to be prudent in relation to the Company’s other cash requirements or in order to maintain its REIT status for federal income tax purposes, subject to the distribution restrictions as a condition to the amendments to the Company’s unsecured credit facilities during the Extended Covenant Waiver Period.

2021 Outlook

In light of uncertainties related to the ongoing COVID-19 pandemic, the Company does not expect to issue 2021 operational guidance until it has greater visibility into more predictable operating fundamentals and trends. The Company is providing the following full year 2021 outlook regarding certain corporate expenses, which is based on management’s current view and does not take into account any unanticipated developments in its business or changes in its operating environment:

  • General and administrative expenses are projected to be approximately $28 million to $32 million.
  • Interest expense is projected to be approximately $75 million to $80 million.
  • Capital expenditures are projected to be approximately $25 million to $30 million.

The Company does not intend to provide outlook updates unless deemed appropriate.

About Apple Hospitality REIT, Inc.

Apple Hospitality REIT, Inc. (NYSE: APLE) 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. Apple Hospitality’s portfolio consists of 232 hotels with more than 29,700 guest rooms located in 88 markets throughout 35 states. Concentrated with industry-leading brands, the Company’s portfolio consists of 103 Marriott-branded hotels, 124 Hilton-branded hotels, three Hyatt-branded hotels and two independent hotels.

Apple Hospitality REIT Non-GAAP Financial Measures

The Company considers the following non-GAAP financial measures useful to investors as key supplemental measures of its operating performance: Funds from Operations (“FFO”); Modified FFO (“MFFO”); Earnings Before Interest, Income Taxes, Depreciation and Amortization (“EBITDA”); Earnings Before Interest, Income Taxes, Depreciation and Amortization for Real Estate (“EBITDAre”); Adjusted EBITDAre; and Adjusted Hotel EBITDA. These non-GAAP financial measures should be considered along with, but not as alternatives to, net income (loss), cash flow from operations or any other operating GAAP measure. FFO, MFFO, EBITDA, EBITDAre, Adjusted EBITDAre and Adjusted Hotel EBITDA are not necessarily indicative of funds available to fund the Company’s cash needs, including its ability to make cash distributions. Although FFO, MFFO, EBITDA, EBITDAre, Adjusted EBITDAre and Adjusted Hotel EBITDA, as calculated by the Company, may not be comparable to FFO, MFFO, EBITDA, EBITDAre, Adjusted EBITDAre and Adjusted Hotel EBITDA, as reported by other companies that do not define such terms exactly as the Company defines such terms, the Company believes these supplemental measures are useful to investors when comparing the Company’s results between periods and with other REITs. Reconciliations of these non-GAAP financial measures to net income (loss) are provided in the following pages.

Apple Hospitality REIT, Inc.

Consolidated Balance Sheets

(in thousands, except share data)
         

March 31,

December 31,

2021

2020

(unaudited)

Assets

Investment in real estate, net of accumulated depreciation and amortization of $1,275,557 and $1,235,698, respectively

$4,712,480

$4,732,896

Assets held for sale

5,172

5,316

Cash and cash equivalents

5,776

5,556

Restricted cash-furniture, fixtures and other escrows

30,149

28,812

Due from third party managers, net

38,766

22,137

Other assets, net

33,589

35,042

Total Assets

$4,825,932

$4,829,759

Liabilities

Debt, net

$1,523,032

$1,482,571

Finance lease liabilities

221,027

219,981

Accounts payable and other liabilities

80,108

97,860

Total Liabilities

1,824,167

1,800,412

Shareholders' Equity

Preferred stock, authorized 30,000,000 shares; none issued and outstanding

-

-

Common stock, no par value, authorized 800,000,000 shares; issued and outstanding 223,656,264 and 223,212,346 shares, respectively

4,493,422

4,488,419

Accumulated other comprehensive loss

(26,720)

(42,802)

Distributions greater than net income

(1,464,937)

(1,416,270)

Total Shareholders' Equity

3,001,765

3,029,347

Total Liabilities and Shareholders' Equity

$4,825,932

$4,829,759
______________________        

Note: The Consolidated Balance Sheets and corresponding footnotes can be found in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021.

Apple Hospitality REIT, Inc.

Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(in thousands, except per share data)
     

Three Months Ended

March 31,

2021

2020

Revenues:

Room

$148,481

$217,979

Food and beverage

2,783

11,312

Other

7,449

8,719

Total revenue

158,713

238,010

Expenses:

Hotel operating expense:

Operating

38,150

68,029

Hotel administrative

17,744

23,643

Sales and marketing

14,888

24,359

Utilities

10,560

9,190

Repair and maintenance

10,225

11,793

Franchise fees

6,919

10,257

Management fees

5,254

7,995

Total hotel operating expense

103,740

155,266

Property taxes, insurance and other

19,688

19,595

General and administrative

8,119

9,523

Loss on impairment of depreciable real estate assets

10,754

-

Depreciation and amortization

48,710

49,522

Total expense

191,011

233,906

Gain on sale of real estate

4,484

8,839

Operating income (loss)

(27,814)

12,943

Interest and other expense, net

(18,513)

(15,566)

Loss before income taxes

(46,327)

(2,623)

Income tax expense

(108)

(146)

Net loss

$(46,435)

$(2,769)

Other comprehensive income (loss):

Interest rate derivatives

16,082

(42,166)

Comprehensive loss

$(30,353)

$(44,935)

Basic and diluted net loss per common share

$(0.21)

$(0.01)

Weighted average common shares outstanding - basic and diluted

223,733

224,294
_______________________        

Note: The Consolidated Statements of Operations and Comprehensive Loss and corresponding footnotes can be found in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021.

Apple Hospitality REIT, Inc.

Comparable Hotels Operating Metrics and Statistical Data

(Unaudited)

(in thousands, except statistical data)
     

Three Months Ended

March 31,

2021

2020

% Change

Total revenue

$158,089

$234,396

(32.6%)

Total operating expenses

122,403

171,833

(28.8%)

Adjusted Hotel EBITDA

$35,686

$62,563

(43.0%)

Adjusted Hotel EBITDA Margin %

22.6%

26.7%

(410 bps)

ADR (Comparable Hotels)

$99.29

$133.05

(25.4%)

Occupancy (Comparable Hotels)

55.8%

60.9%

(8.4%)

RevPAR (Comparable Hotels)

$55.39

$81.01

(31.6%)

ADR (Actual)

$99.19

$132.55

(25.2%)

Occupancy (Actual)

55.5%

60.9%

(8.9%)

RevPAR (Actual)

$55.09

$80.66

(31.7%)

Reconciliation to Actual Results

Total Revenue (Actual)

$158,713

$238,010

Revenue from acquisitions prior to ownership

-

-

Revenue from dispositions/assets held for sale

(624)

(3,614)

Comparable Hotels Total Revenue

$158,089

$234,396

Adjusted Hotel EBITDA (AHEBITDA) (Actual)

$35,427

$63,297

AHEBITDA from acquisitions prior to ownership

-

-

AHEBITDA from dispositions/assets held for sale

259

(734)

Comparable Hotels AHEBITDA

$35,686

$62,563
_____________________            

Note: Comparable Hotels is defined as the 232 hotels owned and held for use by the Company as of March 31, 2021. For hotels acquired during the periods noted, the Company has included, as applicable, results of those hotels for periods prior to the Company's ownership, and for dispositions, results have been excluded for the Company's period of ownership. Results for periods prior to the Company's ownership have not been included in the Company's actual Consolidated Financial Statements and are included only for comparison purposes. Results included for periods prior to the Company's ownership are based on information from the prior owner of each hotel and have not been audited or adjusted.
 

Reconciliation of net loss to non-GAAP financial measures is included in the following pages.

Apple Hospitality REIT, Inc.

Comparable Hotels Quarterly Operating Metrics and Statistical Data

(Unaudited)

(in thousands, except statistical data)
     

Three Months Ended

6/30/2019

9/30/2019

12/31/2019

3/31/2020

6/30/2020

9/30/2020

12/31/2020

3/31/2021

Total revenue

$333,215

$324,129

$282,288

$234,396

$79,992

$147,328

$132,387

$158,089

Total operating expenses

201,133

201,967

187,819

171,833

79,137

112,710

109,373

122,403

Adjusted Hotel EBITDA

$132,082

$122,162

$94,469

$62,563

$855

$34,618

$23,014

$35,686

Adjusted Hotel EBITDA Margin %

39.6%

37.7%

33.5%

26.7%

1.1%

23.5%

17.4%

22.6%

ADR (Comparable Hotels)

$142.54

$140.30

$132.01

$133.05

$100.90

$104.96

$97.99

$99.29

Occupancy (Comparable Hotels)

81.5%

79.9%

73.0%

60.9%

28.2%

48.7%

46.5%

55.8%

RevPAR (Comparable Hotels)

$116.14

$112.03

$96.31

$81.01

$28.47

$51.16

$45.59

$55.39

ADR (Actual)

$141.60

$139.21

$131.41

$132.55

$100.76

$104.78

$97.87

$99.19

Occupancy (Actual)

81.4%

79.9%

72.9%

60.9%

28.2%

48.6%

46.5%

55.5%

RevPAR (Actual)

$115.30

$111.17

$95.85

$80.66

$28.44

$50.94

$45.46

$55.09

Reconciliation to Actual Results

Total Revenue (Actual)

$341,117

$331,722

$289,971

$238,010

$81,078

$148,826

$133,965

$158,713

Revenue from acquisitions prior to ownership

798

675

73

-

-

-

-

-

Revenue from dispositions/assets held for sale

(8,700)

(8,268)

(7,756)

(3,614)

(1,086)

(1,498)

(1,578)

(624)

Comparable Hotels Total Revenue

$333,215

$324,129

$282,288

$234,396

$79,992

$147,328

$132,387

$158,089

Adjusted Hotel EBITDA (AHEBITDA) (Actual)

$134,759

$124,596

$96,836

$63,297

$704

$34,688

$23,296

$35,427

AHEBITDA from acquisitions prior to ownership

166

57

(1)

-

-

-

-

-

AHEBITDA from dispositions/assets held for sale

(2,843)

(2,491)

(2,366)

(734)

151

(70)

(282)

259

Comparable Hotels AHEBITDA

$132,082

$122,162

$94,469

$62,563

$855

$34,618

$23,014

$35,686
_______________________                                

Note: Comparable Hotels is defined as the 232 hotels owned and held for use by the Company as of March 31, 2021. For hotels acquired during the periods noted, the Company has included, as applicable, results of those hotels for periods prior to the Company's ownership, and for dispositions, results have been excluded for the Company's period of ownership. Results for periods prior to the Company's ownership have not been included in the Company's actual Consolidated Financial Statements and are included only for comparison purposes. Results included for periods prior to the Company's ownership are based on information from the prior owner of each hotel and have not been audited or adjusted.
 

Reconciliation of net income (loss) to non-GAAP financial measures is included in the following pages.

Apple Hospitality REIT, Inc.

Same Store Hotels Operating Metrics and Statistical Data

(Unaudited)

(in thousands, except statistical data)
     

Three Months Ended

March 31,

2021

2020

% Change

Total revenue

$155,637

$234,396

(33.6%)

Total operating expenses

120,327

171,833

(30.0%)

Adjusted Hotel EBITDA

$35,310

$62,563

(43.6%)

Adjusted Hotel EBITDA Margin %

22.7%

26.7%

(400 bps)

ADR (Same Store Hotels)

$99.12

$133.05

(25.5%)

Occupancy (Same Store Hotels)

56.1%

60.9%

(7.9%)

RevPAR (Same Store Hotels)

$55.61

$81.01

(31.4%)

ADR (Actual)

$99.19

$132.55

(25.2%)

Occupancy (Actual)

55.5%

60.9%

(8.9%)

RevPAR (Actual)

$55.09

$80.66

(31.7%)

Reconciliation to Actual Results

Total Revenue (Actual)

$158,713

$238,010

Revenue from acquisitions

(2,452)

-

Revenue from dispositions/assets held for sale

(624)

(3,614)

Same Store Hotels Total Revenue

$155,637

$234,396

Adjusted Hotel EBITDA (AHEBITDA) (Actual)

$35,427

$63,297

AHEBITDA from acquisitions

(376)

-

AHEBITDA from dispositions/assets held for sale

259

(734)

Same Store Hotels AHEBITDA

$35,310

$62,563
______________________            

Note: Same Store Hotels is defined as the 227 hotels owned by the Company as of January 1, 2020 and during the entirety of the periods being compared. This information has not been audited.
             

Reconciliation of net loss to non-GAAP financial measures is included in the following pages.

Apple Hospitality REIT, Inc.

Same Store Hotels Quarterly Operating Metrics and Statistical Data

(Unaudited)

(in thousands, except statistical data)
     
 

 Three Months Ended
 

3/31/2020

6/30/2020

9/30/2020

12/31/2020

3/31/2021

Total revenue

  

$234,396

$79,599

$146,176

$130,415

$155,637
 

Total operating expenses

  

171,833

78,827

111,690

107,720

120,327
 

Adjusted Hotel EBITDA

  

$62,563

$772

$34,486

$22,695

$35,310

Adjusted Hotel EBITDA Margin %

  

26.7%

1.0%

23.6%

17.4%

22.7%
 
 

ADR (Same Store Hotels)

  

$133.05

$100.83

$104.90

$97.99

$99.12

Occupancy (Same Store Hotels)

  

60.9%

28.2%

49.0%

46.6%

56.1%

RevPAR (Same Store Hotels)

  

$81.01

$28.47

$51.39

$45.67

$55.61
 

ADR (Actual)

  

$132.55

$100.76

$104.78

$97.87

$99.19

Occupancy (Actual)

  

60.9%

28.2%

48.6%

46.5%

55.5%

RevPAR (Actual)

  

$80.66

$28.44

$50.94

$45.46

$55.09
 

Reconciliation to Actual Results

  
 

Total Revenue (Actual)

  

$238,010

$81,078

$148,826

$133,965

$158,713

Revenue from acquisitions

  

-

(393)

(1,152)

(1,972)

(2,452)

Revenue from dispositions/assets held for sale

  

(3,614)

(1,086)

(1,498)

(1,578)

(624)

Same Store Hotels Total Revenue

  

$234,396

$79,599

$146,176

$130,415

$155,637
 

Adjusted Hotel EBITDA (AHEBITDA) (Actual)

  

$63,297

$704

$34,688

$23,296

$35,427

AHEBITDA from acquisitions

  

-

(83)

(132)

(319)

(376)

AHEBITDA from dispositions/assets held for sale

  

(734)

151

(70)

(282)

259

Same Store Hotels AHEBITDA

  

$62,563

$772

$34,486

$22,695

$35,310
_______________________                    

Note: Same Store Hotels is defined as the 227 hotels owned by the Company as of January 1, 2020 and during the entirety of the periods being compared. This information has not been audited.
   

Reconciliation of net income (loss) to non-GAAP financial measures is included in the following pages.

Apple Hospitality REIT, Inc.

Reconciliation of Net Income (Loss) to EBITDA, EBITDAre, Adjusted EBITDAre and Adjusted Hotel EBITDA

(Unaudited)

(in thousands)

EBITDA is a commonly used measure of performance in many industries and is defined as net income (loss) excluding interest, income taxes, depreciation and amortization. The Company believes EBITDA is useful to investors because it helps the Company and its investors evaluate the ongoing operating performance of the Company by removing the impact of its capital structure (primarily interest expense) and its asset base (primarily depreciation and amortization). In addition, certain covenants included in the agreements governing the Company’s indebtedness use EBITDA, as defined in the specific credit agreement, as a measure of financial compliance.

In addition to EBITDA, the Company also calculates and presents EBITDAre in accordance with standards established by the National Association of Real Estate Investment Trusts (“Nareit”), which defines EBITDAre as EBITDA, excluding gains and losses from the sale of certain real estate assets (including gains and losses from change in control), plus real estate related impairments, and adjustments to reflect the entity’s share of EBITDAre of unconsolidated affiliates. The Company presents EBITDAre because it believes that it provides further useful information to investors in comparing its operating performance between periods and between REITs that report EBITDAre using the Nareit definition.

The Company also considers the exclusion of non-cash straight-line operating ground lease expense from EBITDAre useful, as this expense does not reflect the underlying performance of the related hotels (Adjusted EBITDAre).

The Company further excludes actual corporate-level general and administrative expense for the Company from Adjusted EBITDAre (Adjusted Hotel EBITDA) to isolate property-level operational performance over which the Company’s hotel operators have direct control. The Company believes Adjusted Hotel EBITDA provides useful supplemental information to investors regarding operating performance and is used by management to measure the performance of the Company’s hotels and effectiveness of the operators of the hotels.

The following table reconciles the Company’s GAAP net income (loss) to EBITDA, EBITDAre, Adjusted EBITDAre and Adjusted Hotel EBITDA on a quarterly basis from March 31, 2019 through March 31, 2021:

Three Months Ended

3/31/2019

6/30/2019

9/30/2019

12/31/2019

3/31/2020

6/30/2020

9/30/2020

12/31/2020

3/31/2021

Net income (loss)

$38,151

$62,090

$46,223

$25,453

$(2,769)

$(78,243)

$(40,948)

$(51,247)

$(46,435)

Depreciation and amortization

47,950

48,109

47,887

49,294

49,522

49,897

50,171

50,196

48,710

Amortization of favorable and unfavorable operating leases, net

31

31

31

31

101

101

103

137

98

Interest and other expense, net

15,494

15,857

14,759

15,081

15,566

18,386

18,531

18,352

18,513

Income tax expense

206

156

143

174

146

58

61

67

108

EBITDA

101,832

126,243

109,043

90,033

62,566

(9,801)

27,918

17,505

20,994

(Gain) loss on sale of real estate

(1,213)

161

-

(3,969)

(8,839)

54

-

(2,069)

(4,484)

Loss on impairment of depreciable real estate assets

-

-

6,467

-

-

4,382

-

715

10,754

EBITDAre

100,619

126,404

115,510

86,064

53,727

(5,365)

27,918

16,151

27,264

Non-cash straight-line operating ground lease expense

48

47

47

46

47

44

44

45

44

Adjusted EBITDAre

$100,667

$126,451

$115,557

$86,110

$53,774

$(5,321)

$27,962

$16,196

$27,308

General and administrative expense

8,137

8,308

9,039

10,726

9,523

6,025

6,726

7,100

8,119

Adjusted Hotel EBITDA

$108,804

$134,759

$124,596

$96,836

$63,297

$704

$34,688

$23,296

$35,427

Apple Hospitality REIT, Inc.

Reconciliation of Net Loss to FFO and MFFO

(Unaudited)

(in thousands)

The Company calculates and presents FFO in accordance with standards established by Nareit, which defines FFO as net income (loss) (computed in accordance with GAAP), excluding gains and losses from the sale of certain real estate assets (including gains and losses from change in control), extraordinary items as defined by GAAP, and the cumulative effect of changes in accounting principles, plus real estate related depreciation, amortization and impairments, and adjustments for unconsolidated affiliates. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, most real estate industry investors consider FFO to be helpful in evaluating a real estate company’s operations. The Company further believes that by excluding the effects of these items, FFO is useful to investors in comparing its operating performance between periods and between REITs that report FFO using the Nareit definition. FFO as presented by the Company is applicable only to its common shareholders, but does not represent an amount that accrues directly to common shareholders.

The Company calculates MFFO by further adjusting FFO for the exclusion of amortization of finance ground lease assets, amortization of favorable and unfavorable operating leases, net and non-cash straight-line operating ground lease expense, as these expenses do not reflect the underlying performance of the related hotels. The Company presents MFFO when evaluating its performance because it believes that it provides further useful supplemental information to investors regarding its ongoing operating performance.

The following table reconciles the Company’s GAAP net loss to FFO and MFFO for the three months ended March 31, 2021 and 2020:

Three Months Ended

March 31,

2021

2020

Net loss

$(46,435)

$(2,769)

Depreciation of real estate owned

47,088

47,668

Gain on sale of real estate

(4,484)

(8,839)

Loss on impairment of depreciable real estate assets

10,754

-

Funds from operations

6,923

36,060

Amortization of finance ground lease assets

1,617

1,602

Amortization of favorable and unfavorable operating leases, net

98

101

Non-cash straight-line operating ground lease expense

44

47

Modified funds from operations

$8,682

$37,810

Apple Hospitality REIT, Inc.

Debt Summary

(Unaudited)

($ in thousands)

March 31, 2021
                                 

April 1 -

December 31,

Fair Market

2021

2022

2023

2024

2025

Thereafter

Total

Value

Total debt:

Maturities

$67,706

$259,731

$296,213

$338,597

$245,140

$322,265

$1,529,652

$1,488,025

Average interest rates (1)

3.9%

3.9%

4.1%

4.3%

4.4%

4.4%

Variable rate debt:

Maturities

$20,551

$149,900

$250,000

$310,000

$175,000

$85,000

$990,451

$965,647

Average interest rates (1)

3.7%

3.8%

4.1%

4.5%

5.0%

5.6%

Fixed rate debt:

Maturities

$47,155

$109,831

$46,213

$28,597

$70,140

$237,265

$539,201

$522,378

Average interest rates

4.3%

4.1%

4.0%

4.0%

4.0%

3.9%
                                 

(1) The average interest rate gives effect to interest rate swaps, as applicable.
 

Note: See further information on the Company’s indebtedness in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021.

Apple Hospitality REIT, Inc.

Comparable Hotels Operating Metrics Top 20 Markets

Three Months Ended March 31

(Unaudited)
                     

Top 20 Markets

  

Occupancy

ADR

RevPAR

% of

Adjusted

Hotel EBITDA
 

# of Hotels

Q1 2021

Q1 2020

%

Change

Q1 2021

Q1 2020

%

Change

Q1 2021

Q1 2020

% Change

Q1 2021

Top 20 Markets

  

Los Angeles, CA

  

8

83.0%

73.9%

12.3%

$112.12

$167.62

(33.1%)

$93.02

$123.87

(24.9%)

9.8%

Phoenix, AZ

  

11

61.8%

69.1%

(10.6%)

$108.04

$164.13

(34.2%)

$66.80

$113.47

(41.1%)

9.2%

North Carolina East

  

5

69.5%

66.2%

5.0%

$108.75

$107.92

0.8%

$75.63

$71.46

5.8%

4.3%

Orange County, CA

  

6

60.6%

66.0%

(8.2%)

$100.34

$145.49

(31.0%)

$60.84

$96.00

(36.6%)

4.3%

Florida Panhandle

  

5

66.5%

66.5%

0.0%

$111.49

$133.13

(16.3%)

$74.14

$88.59

(16.3%)

3.9%

San Diego, CA

  

7

46.9%

64.6%

(27.4%)

$110.56

$148.42

(25.5%)

$51.90

$95.94

(45.9%)

3.8%

Alabama North

  

4

69.1%

68.5%

0.9%

$111.03

$114.08

(2.7%)

$76.68

$78.13

(1.9%)

3.3%

Oklahoma City, OK

  

4

64.3%

58.3%

10.3%

$101.34

$122.89

(17.5%)

$65.12

$71.60

(9.1%)

3.2%

Seattle, WA

  

3

57.1%

67.9%

(15.9%)

$120.83

$163.43

(26.1%)

$68.94

$110.95

(37.9%)

2.9%

Melbourne, FL

  

3

49.1%

90.3%

(45.6%)

$129.70

$169.14

(23.3%)

$63.71

$152.80

(58.3%)

2.5%

Tucson, AZ

  

3

67.5%

75.9%

(11.1%)

$98.69

$143.26

(31.1%)

$66.60

$108.73

(38.7%)

2.5%

Miami, FL

  

3

72.4%

76.2%

(5.0%)

$104.14

$167.77

(37.9%)

$75.37

$127.85

(41.0%)

2.4%

Fort Worth/Arlington, TX

  

5

71.4%

61.6%

15.9%

$97.14

$134.43

(27.7%)

$69.35

$82.85

(16.3%)

2.4%

Alabama South

  

6

53.0%

64.2%

(17.4%)

$95.40

$111.33

(14.3%)

$50.60

$71.48

(29.2%)

2.3%

Fort Lauderdale, FL

  

2

78.9%

74.2%

6.3%

$99.40

$175.39

(43.3%)

$78.40

$130.11

(39.7%)

2.3%

Richmond/Petersburg, VA

  

5

45.7%

50.7%

(9.9%)

$110.04

$151.64

(27.4%)

$50.34

$76.85

(34.5%)

2.3%

Alaska

  

2

70.4%

67.8%

3.8%

$126.46

$138.91

(9.0%)

$89.07

$94.20

(5.4%)

2.2%

Texas West

  

2

80.5%

69.1%

16.5%

$98.61

$122.22

(19.3%)

$79.42

$84.48

(6.0%)

2.2%

Inland Empire, CA

  

1

96.0%

77.6%

23.7%

$151.69

$169.45

(10.5%)

$145.62

$131.48

10.8%

1.8%

Dallas, TX

  

8

59.2%

59.5%

(0.5%)

$84.30

$124.05

(32.0%)

$49.88

$73.83

(32.4%)

1.7%

Top 20 Markets

  

93

63.0%

66.3%

(5.0%)

$106.40

$144.80

(26.5%)

$67.08

$96.01

(30.1%)

69.3%
 

All Other Markets

  

139

50.7%

57.2%

(11.4%)

$93.12

$123.89

(24.8%)

$47.25

$70.92

(33.4%)

30.7%
 
 

Total Portfolio

  

232

55.8%

60.9%

(8.4%)

$99.29

$133.05

(25.4%)

$55.39

$81.01

(31.6%)

100.0%

Note: Market categorization based on STR designation. Top 20 markets based on Comparable Hotels Adjusted Hotel EBITDA contribution.

Apple Hospitality REIT, Inc.

Comparable Hotels Operating Metrics by Region

Three Months Ended March 31

(Unaudited)
                     

Region

  

Occupancy

ADR

RevPAR

% of

Adjusted

Hotel EBITDA
 

# of Hotels

Q1 2021

Q1 2020

%

Change

Q1 2021

Q1 2020

%

Change

Q1 2021

Q1 2020

%

Change

Q1 2021

STR Region

  

East North Central

  

16

35.6%

50.6%

(29.6%)

$81.88

$112.95

(27.5%)

$29.16

$57.19

(49.0%)

(3.1)%

East South Central

  

29

55.7%

63.0%

(11.6%)

$102.59

$124.24

(17.4%)

$57.12

$78.31

(27.1%)

13.1%

Middle Atlantic

  

12

48.0%

49.0%

(2.0%)

$99.04

$131.30

(24.6%)

$47.49

$64.35

(26.2%)

(2.2)%

Mountain

  

22

58.6%

65.8%

(10.9%)

$99.97

$147.21

(32.1%)

$58.55

$96.87

(39.6%)

13.8%

New England

  

5

41.6%

51.0%

(18.4%)

$96.86

$123.76

(21.7%)

$40.31

$63.12

(36.1%)

0.3%

Pacific

  

32

63.7%

67.8%

(6.0%)

$112.04

$155.83

(28.1%)

$71.41

$105.72

(32.5%)

27.9%

South Atlantic

  

58

60.8%

64.0%

(5.0%)

$100.58

$132.73

(24.2%)

$61.18

$84.92

(28.0%)

33.5%

West North Central

  

17

43.8%

54.0%

(18.9%)

$90.58

$115.87

(21.8%)

$39.71

$62.51

(36.5%)

1.6%

West South Central

  

41

58.7%

58.9%

(0.3%)

$90.54

$122.44

(26.1%)

$53.15

$72.16

(26.3%)

15.1%
 

Total Portfolio

  

232

55.8%

60.9%

(8.4%)

$99.29

$133.05

(25.4%)

$55.39

$81.01

(31.6%)

100.0%

Note: Region categorization based on STR designation.

Apple Hospitality REIT, Inc.

Comparable Hotels Operating Metrics by Chain Scale

Three Months Ended March 31

(Unaudited)
                     

Chain Scale/Brand

  

Occupancy

ADR

RevPAR

% of

Adjusted

Hotel

EBITDA
 

# of Hotels

Q1 2021

Q1 2020

%

Change

Q1 2021

Q1 2020

%

Change

Q1 2021

Q1 2020

%

Change

Q1 2021

Upscale

  

Courtyard

  

36

49.1%

57.5%

(14.6%)

$97.27

$136.44

(28.7%)

$47.79

$78.44

(39.1%)

12.7%

Hilton Garden Inn

  

42

46.8%

58.2%

(19.6%)

$93.85

$130.25

(27.9%)

$43.88

$75.77

(42.1%)

8.2%

Homewood Suites

  

31

69.9%

68.0%

2.8%

$103.94

$138.93

(25.2%)

$72.61

$94.48

(23.1%)

19.9%

Hyatt House

  

1

50.4%

$106.36

$53.64

0.3%

Hyatt Place

  

2

55.3%

73.8%

(25.1%)

$99.96

$100.29

(0.3%)

$55.31

$74.05

(25.3%)

0.7%

Residence Inn

  

33

66.9%

67.2%

(0.4%)

$112.50

$141.61

(20.6%)

$75.27

$95.17

(20.9%)

28.2%

SpringHill Suites

  

12

54.1%

55.3%

(2.2%)

$79.82

$122.73

(35.0%)

$43.17

$67.82

(36.3%)

2.9%

Upscale Total

  

157

56.0%

61.4%

(8.8%)

$100.19

$135.09

(25.8%)

$56.11

$82.94

(32.3%)

72.9%
 

Upper Midscale

  

Fairfield Inn / Fairfield Inn & Suites

  

11

55.5%

58.9%

(5.8%)

$77.37

$115.10

(32.8%)

$42.93

$67.83

(36.7%)

2.4%

Hampton Inn / Hampton Inn & Suites

  

39

51.3%

58.0%

(11.6%)

$96.41

$130.50

(26.1%)

$49.49

$75.72

(34.6%)

11.6%

Home2 Suites

  

10

68.1%

71.0%

(4.1%)

$101.94

$124.94

(18.4%)

$69.44

$88.69

(21.7%)

7.4%

TownePlace Suites

  

9

69.3%

68.0%

1.9%

$91.82

$113.91

(19.4%)

$63.62

$77.49

(17.9%)

5.6%

Upper Midscale Total

  

69

56.3%

61.0%

(7.7%)

$93.78

$125.18

(25.1%)

$52.77

$76.32

(30.9%)

27.0%
 

Upper Upscale

  

Embassy Suites

  

2

73.4%

69.0%

6.4%

$148.28

$176.00

(15.8%)

$108.90

$121.51

(10.4%)

3.2%

Marriott

  

2

33.3%

43.3%

(23.1%)

$110.71

$150.20

(26.3%)

$36.84

$65.03

(43.3%)

0.0%

Upper Upscale Total

  

4

46.9%

52.0%

(9.8%)

$130.61

$161.81

(19.3%)

$61.19

$84.18

(27.3%)

3.2%
 

Independents

  

Independents

  

2

55.7%

51.7%

7.7%

$113.30

$135.80

(16.6%)

$63.11

$70.21

(10.1%)

(3.1)%

Independents Total

  

2

55.7%

51.7%

7.7%

$113.30

$135.80

(16.6%)

$63.11

$70.21

(10.1%)

(3.1)%
 

Total Portfolio

  

232

55.8%

60.9%

(8.4%)

$99.29

$133.05

(25.4%)

$55.39

$81.01

(31.6%)

100.0%

Note: Chain scale categorization based on STR designation.

Apple Hospitality REIT, Inc.

Comparable Hotels Operating Metrics by Location

Three Months Ended March 31

(Unaudited)
                     

Location

  

Occupancy

ADR

RevPAR

% of

Adjusted

Hotel EBITDA
 

# of Hotels

Q1 2021

Q1 2020

%

Change

Q1 2021

Q1 2020

%

Change

Q1 2021

Q1 2020

%

Change

Q1 2021

STR Location

  

Airport

  

19

64.3%

69.3%

(7.2%)

$94.18

$130.02

(27.6%)

$60.58

$90.08

(32.7%)

8.5%

Interstate

  

6

57.7%

57.1%

1.1%

$97.73

$110.12

(11.3%)

$56.39

$62.86

(10.3%)

2.9%

Resort

  

11

52.6%

64.4%

(18.3%)

$110.90

$144.22

(23.1%)

$58.35

$92.88

(37.2%)

6.7%

Small Metro/Town

  

15

62.5%

66.3%

(5.7%)

$98.17

$127.98

(23.3%)

$61.37

$84.85

(27.7%)

9.3%

Suburban

  

138

56.8%

60.4%

(6.0%)

$98.05

$129.95

(24.5%)

$55.68

$78.43

(29.0%)

57.4%

Urban

  

43

48.9%

57.8%

(15.4%)

$103.13

$144.18

(28.5%)

$50.39

$83.31

(39.5%)

15.2%
 

Total Portfolio

  

232

55.8%

60.9%

(8.4%)

$99.29

$133.05

(25.4%)

$55.39

$81.01

(31.6%)

100.0%

Note: Location categorization based on STR designation.