Apple Hospitality REIT (APLE) Q1 2025 Earnings Call May 02, 2025 10:00 AM ET Speaker0 profile of our portfolio by both reducing potential downside and enhancing the upside impact of variability in lodging demand relative to past cycles. Supported by our strong operating performance, we continue to pay an attractive dividend. During the first quarter, we paid distributions totaling approximately $70,000,000 or $0.29 per share, which includes a special cash distribution of $05 per common share that was paid i ...

Apple Hospitality REIT (APLE) Q1 2025 Earnings Call May 02, 2025 10:00 AM ET Company Participants Justin Knight - CEO & DirectorLiz Perkins - Senior VP & CFOAri Klein - Director - Equity ResearchJay Kornreich - VP - Equity ResearchFloris van Dijkum - Managing DirectorMichael Herring - Senior Associate - Equity ResearchJack Armstrong - Equity Research Associate Conference Call Participants Michael Bellisario - Senior Research AnalystAustin Wurschmidt - Senior Equity Research Analyst Justin Knight profile of ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2025 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO _______ Commission File Number 001-37389 APPLE HOSPITALITY REIT, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of inco ...

Exhibit 99.1 Apple Hospitality REIT Reports Results of Operations for First Quarter 2025 RICHMOND, Va. (May 1, 2025) – Apple Hospitality REIT, Inc. (NYSE: APLE) (the "Company" or "Apple Hospitality") today announced results of operations for the first quarter ended March 31, 2025. 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) | | | Three Months Ended | | | --- | --- | --- ...

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Financial Data and Key Metrics Changes - Comparable hotels total revenue was $329 million for Q4 2024 and $1.4 billion for the full year, up approximately 4% and 2.5% compared to the same periods in 2023 [26] - Fourth quarter adjusted EBITDARE increased by approximately 7% and modified funds from operations (MFFO) rose by approximately 6% compared to Q4 2023 [10][36] - Comparable hotels RevPAR for Q4 was $109, up approximately 3%, with ADR at $153, up approximately 1%, and occupancy at 71%, up 2% compared to Q4 2023 [27] Business Line Data and Key Metrics Changes - The company achieved comparable hotels RevPAR growth of approximately 3% for Q4 and more than 1% for the full year, driven by improvements in both ADR and occupancy [9] - Comparable hotels occupancy for the full year was 75%, approximately 1% higher than 2023, while comparable hotels ADR was $159, up approximately 1% [27] Market Data and Key Metrics Changes - Approximately 55% of the company's hotels had no new upper upscale, upscale, or upper midscale product under construction within a five-mile radius at the end of Q4 [11] - The company noted that supply-demand dynamics remain favorable, with limited supply growth improving the overall risk profile of the portfolio [11] Company Strategy and Development Direction - The company continues to monitor its distribution rate and timing relative to hotel performance and potential capital uses, maintaining a disciplined approach to capital allocation [12][13] - The company has focused on optimizing its portfolio through strategic acquisitions and dispositions, with recent sales of six hotels for over $63 million [14][15] - The company plans to invest between $80 million and $90 million in capital expenditures during 2025, focusing on major renovations at approximately 20 hotels [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to produce strong returns for investors over the coming years, citing stable operating fundamentals and favorable supply-demand dynamics [22][23] - The outlook for 2025 includes expectations for net income between $173 million and $202 million, with comparable hotels RevPAR change projected between 1% and 3% [39][41] Other Important Information - The company paid distributions totaling $0.24 per common share during Q4, bringing the annual payout to approximately $244 million or $1.01 per common share [12][37] - The company has approximately $1.5 billion of total debt outstanding, with a weighted average interest rate of 4.7% and a debt maturity profile averaging three years [37][38] Q&A Session Summary Question: What operating expense growth has been assumed in the 2025 guidance? - Management indicated that normalizing for fixed cost hurdles, the assumed increase for total hotel expenses is around 4.2% at the midpoint, with variable expenses outside of fixed costs around 3.5% [49][50] Question: What percentage of the portfolio is considered non-core? - Management stated that between 7% and 10% of the portfolio fits the category of smaller hotels in tertiary markets with outsized CapEx needs [52] Question: How close is the midweek ADR to weekend ADR? - Management noted that midweek ADR continues to lag behind weekend ADR, with approximately 5% to go relative to pre-pandemic levels for meaningful rate growth [60][61] Question: What is the outlook for wage benefit growth this year? - Management expects wage benefit growth to be between 3.5% and 4% [130] Question: What is the company's strategy regarding capital redeployment? - Management highlighted that share repurchases have been the most attractive opportunity for redeployment, while also considering acquisitions based on market conditions [80][81]

Apple Hospitality REIT, Inc. (NYSE:APLE) Q4 2024 Earnings Conference Call February 25, 2025 10:00 AM ET Corporate Participants Kelly Clarke - VP of Investor Relations Justin Knight - Chief Executive Officer Liz Perkins - Chief Financial Officer Conference Call Participants Dori Kesten - Wells Fargo Austin Wurschmidt - KeyBanc Capital Markets Jay Kornreich - Wedbush Securities Floris van Dijkum - Compass Point Michael Bellisario - Baird Ari Klein - BMO Capital Markets Chris Darling - Green Street Operator G ...

Financial Performance - The Company reported an ADR of $158.94 for 2024, a 0.5% increase from $158.09 in 2023[22] - Occupancy rate improved to 75.1% in 2024, up from 74.4% in 2023, reflecting a 0.9% increase[22] - RevPAR increased by 1.4% to $119.36 in 2024, compared to $117.67 in 2023[22] - The Company anticipates low single-digit RevPAR growth for its Comparable Hotels in 2025 compared to 2024[22] Acquisitions and Sales - The Company acquired two hotels in 2024 for a total of $196.3 million, funded through property sales and a $650 million revolving credit facility[23] - Six hotels were sold in 2024 for a combined gross sales price of approximately $63.4 million, resulting in a gain of approximately $19.7 million[26] Capital Expenditures and Investments - The Company plans to invest approximately $80 million to $90 million in capital improvements during 2025, following $78.3 million in 2024[36] - The Company plans to use future net proceeds from the ATM Program for acquisitions, debt repayment, capital expenditures, and working capital[43] Debt and Financing - As of December 31, 2024, the Company had approximately $1.5 billion in total outstanding debt with a weighted-average interest rate of 4.71%[39] - The unused borrowing capacity under the Revolving Credit Facility was $567.5 million as of December 31, 2024, available for acquisitions and renovations[40] - Approximately $362.5 million, or 25% of total debt, was subject to variable interest rates as of December 31, 2024, with a potential $3.6 million impact on annual net income for every 100 basis points change in interest rates[230] - The Company has 12 interest rate swap agreements that fix interest payments on approximately $735.0 million of variable-rate debt, with maturities ranging from May 2025 to December 2029[231] - Total debt maturities are projected to reach $1,476.8 million by 2029, with an average interest rate decreasing from 4.7% in 2025 to 3.6% in 2029[233] - Variable-rate debt maturities total $1,097.5 million, with the average interest rate declining from 5.0% in 2025 to 3.3% in 2029[233] - Fixed-rate debt maturities amount to $379.3 million, with average interest rates ranging from 4.0% to 3.6% over the years 2025 to 2029[233] Shareholder Returns - Approximately $300.8 million remained available for share repurchases under the Share Repurchase Program as of December 31, 2024[29] - The Company entered into an equity distribution agreement allowing the sale of up to $500 million of common shares under the ATM Program, with no shares sold in 2024[42] - In 2023, the Company sold approximately 12.8 million shares under the Prior ATM Program at an average price of $17.05 per share, generating gross proceeds of approximately $218.6 million[42] - The annualized distribution rate was $0.96 per common share as of December 31, 2024, with a combined distribution of $0.13 per common share paid in January 2025[44] Risk Management and Corporate Responsibility - The Company maintains insurance coverage for various risks, including general liability and property, but certain catastrophic losses may not be insurable[45] - The hotel industry is seasonal, with higher occupancy and revenues typically in the second and third quarters, which may lead to quarterly revenue fluctuations[56] - The Company is committed to corporate responsibility, focusing on sustainable practices and community engagement through initiatives like Apple Gives[51] Workforce and Diversity - As of December 31, 2024, the Company had 65 team members, emphasizing a diverse and inclusive work environment with competitive benefits[52]

Financial Performance - Net income for Q4 2024 was $29.8 million, a 43.6% increase from $20.8 million in Q4 2023; full year net income reached $214.1 million, up 20.6% from $177.5 million in 2023[2] - Adjusted EBITDAre for Q4 2024 was approximately $97 million, a 7% increase from the same period in 2023; full year Adjusted EBITDAre was $467 million, also up 7%[10] - Total revenue for the year ended December 31, 2024, was $1,431,468,000, an increase of 6.5% compared to $1,343,800,000 in 2023[35] - Operating income for the three months ended December 31, 2024, was $49,903,000, up 28.3% from $38,910,000 in the same period of 2023[37] - Operating margin for the year ended December 31, 2024, improved to 20.5%, up 210 basis points from 18.4% in 2023[37] Hotel Operations - Comparable Hotels RevPAR grew approximately 3% in Q4 2024 and over 1% for the full year 2024 compared to the same periods in 2023[5] - Comparable Hotels Adjusted Hotel EBITDA for Q4 2024 was approximately $108 million, a 3% increase from Q4 2023; full year Comparable Hotels Adjusted Hotel EBITDA was $509 million, a slight improvement over 2023[9] - Average Daily Rate (ADR) for Comparable Hotels was $152.97 in Q4 2024, up 0.6% from Q4 2023; full year ADR was $158.94, up 0.5%[9] - Occupancy rate for Comparable Hotels was 71.3% for the three months ended December 31, 2024, compared to 69.9% in 2023, reflecting a 2.0% increase[37] Capital Expenditures and Investments - The Company invested approximately $78 million in capital expenditures during 2024 and anticipates investing between $80 million and $90 million in 2025[18] - The Company acquired two hotels for approximately $196 million and sold six non-core hotels for over $63 million during 2024[6] - The Company sold six hotels in 2024 for a combined gross sales price of approximately $63.4 million, resulting in a gain of approximately $19.7 million[14] Debt and Financial Position - Total debt to total capitalization, net of cash and cash equivalents, was approximately 28% as of December 31, 2024[12] - The Company maintained a strong balance sheet with total debt outstanding of $0 as of December 31, 2024[2] - As of December 31, 2024, the Company had approximately $1.5 billion in total outstanding debt with a weighted-average interest rate of approximately 4.7%[19] - Total liabilities as of December 31, 2024, were $1,704,061,000, an increase from $1,613,317,000 in 2023[34] Shareholder Returns - Distributions paid per share remained stable at $0.24 for Q4 2024, with an annualized yield of approximately 6.5% based on the stock price of $14.76[12] - The Company paid distributions totaling $1.01 per common share for the year ended December 31, 2024, amounting to approximately $243.7 million[22] - The Company repurchased approximately 2.4 million common shares at a weighted-average price of approximately $14.16 per share, totaling approximately $34.7 million in 2024[20] Future Guidance - For 2025, the Company anticipates net income guidance between $173 million and $202 million, with Comparable Hotels RevPAR Change guidance of 1.0% to 3.0%[24] - The company's net income guidance for the year ending December 31, 2025, ranges from $173,214 thousand to $202,114 thousand[64] - EBITDA is projected to be between $443,422 thousand and $467,722 thousand for the same period[64] Market Performance - The overall performance in the top 20 markets indicates a recovery trend, with several markets showing significant growth in both occupancy and revenue metrics[71] - The average Adjusted ADR across all top 20 markets was $162.00, a slight increase of 0.2% from $161.61 in Q4 2023[71] - The hotel occupancy rate in the top 20 markets improved to 73.3%, up from 66.8% in the previous year, indicating a 9.7% increase[77] Operational Efficiency - The operating margin for Q1 2024 is 21.7%, an improvement from 15.8% in Q1 2023, indicating enhanced operational efficiency[49] - Total portfolio occupancy increased to 75.1% in 2024 from 74.4% in 2023, a change of 0.9%[80] - The suburban segment contributed 44.1% to the adjusted hotel EBITDA in YTD 2024, with an occupancy rate of 75.5%[96]

Core Viewpoint - The article emphasizes the importance of value investing and highlights specific stocks, particularly Apple Hospitality REIT (APLE) and Xenia Hotels & Resorts (XHR), as strong candidates for value investors based on their financial metrics and rankings [2][9]. Company Analysis - Apple Hospitality REIT (APLE) has a Zacks Rank of 2 (Buy) and a Value grade of A, indicating strong potential for value investors [4]. - APLE's current P/E ratio is 9.46, significantly lower than the industry average of 15.14, suggesting it may be undervalued [4]. - The stock's Forward P/E has fluctuated between 8.35 and 10.93 over the past year, with a median of 9.42 [4]. - APLE's P/B ratio is 1.11, compared to the industry's average of 1.77, indicating an attractive valuation [5]. - The P/S ratio for APLE is 2.51, while the industry average is 4, further supporting the notion of undervaluation [6]. - APLE's P/CF ratio stands at 9.33, well below the industry's average of 16, reinforcing its appeal as a value stock [7]. Industry Comparison - Xenia Hotels & Resorts (XHR) also holds a Zacks Rank of 2 (Buy) and a Value grade of A, making it another attractive option for value investors [8]. - XHR's P/B ratio is 1.13, which is lower than the industry average of 1.77, indicating potential undervaluation [8]. - The valuation metrics for both APLE and XHR suggest that they are likely undervalued compared to their peers, making them standout options in the current market [9].