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 SeptemberJune 30, 2017
☐ | 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)
Virginia | 26-1379210 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
814 East Main Street Richmond, Virginia | 23219 | |
(Address of principal executive offices) | (Zip Code) |
(804) 344-8121
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common Shares, no par value | APLE | New York Stock Exchange |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒ | Accelerated filer ☐ | |
Non-accelerated filer | Smaller reporting company ☐ | |
Emerging growth company ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Number of registrant’s common shares outstanding as of November 1, 2017: 223,060,840
Apple Hospitality REIT, Inc.
Form 10-Q
Index
Page Number | ||||||
PART I. FINANCIAL INFORMATION | ||||||
Item 1. | 3 | |||||
3 | ||||||
Consolidated Statements of Operations and Comprehensive Income | 4 | |||||
Consolidated Statements of Shareholders’ Equity – three and six months ended June 30, 2021 and 2020 | 5 | |||||
Consolidated Statements of Cash Flows | 6 | |||||
7 | ||||||
Item 2. | 22 | |||||
Item 3. | 41 | |||||
Item 4. | 41 | |||||
PART II. OTHER INFORMATION | ||||||
Item 1. | 42 | |||||
Item | 42 | |||||
43 |
This Form 10-Q includes references to certain trademarks or service marks. The AC Hotels by Marriott®, Aloft Hotels®, Courtyard by Marriott®, Fairfield Inn by Marriott®, Fairfield Inn & Suites by Marriott®, Marriott® Hotels, Renaissance® Hotels, Residence Inn by Marriott®, SpringHill Suites by Marriott® and TownePlace Suites by Marriott® trademarks are the property of Marriott International, Inc. or one of its affiliates. The Embassy Suites by Hilton®, Hampton by Hilton®, Hampton Inn by Hilton® Hotels, Hampton Inn & Resorts,Suites by Hilton®, Hilton Garden Inn®, Home2 Suites by Hilton® and Homewood Suites by Hilton® trademarks are the property of Hilton Worldwide Holdings Inc. or one or more of its affiliates. The Hyatt®, Hyatt House® and Hyatt Place® trademarks are the property of Hyatt Hotels Corporation or one or more of its affiliates. For convenience, the applicable trademark or service mark symbol has been omitted but will be deemed to be included wherever the above referenced terms are used.
PART I. FINANCIAL INFORMATION
Apple Hospitality REIT, Inc.
(in thousands, except share data)
|
| June 30, |
|
| December 31, |
| ||
|
| 2021 |
|
| 2020 |
| ||
|
| (unaudited) |
|
|
|
|
| |
Assets |
|
|
|
|
|
|
|
|
Investment in real estate, net of accumulated depreciation and amortization of $1,228,937 and $1,235,698, respectively |
| $ | 4,459,866 |
|
| $ | 4,732,896 |
|
Assets held for sale |
|
| 208,026 |
|
|
| 5,316 |
|
Cash and cash equivalents |
|
| 2,899 |
|
|
| 5,556 |
|
Restricted cash-furniture, fixtures and other escrows |
|
| 31,215 |
|
|
| 28,812 |
|
Due from third party managers, net |
|
| 54,296 |
|
|
| 22,137 |
|
Other assets, net |
|
| 36,084 |
|
|
| 35,042 |
|
Total Assets |
| $ | 4,792,386 |
|
| $ | 4,829,759 |
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
Debt, net |
| $ | 1,396,408 |
|
| $ | 1,482,571 |
|
Finance lease liabilities |
|
| 222,081 |
|
|
| 219,981 |
|
Accounts payable and other liabilities |
|
| 79,574 |
|
|
| 97,860 |
|
Total Liabilities |
|
| 1,698,063 |
|
|
| 1,800,412 |
|
|
|
|
|
|
|
|
|
|
Shareholders' Equity |
|
|
|
|
|
|
|
|
Preferred stock, authorized 30,000,000 shares; NaN issued and outstanding |
|
| 0 |
|
|
| 0 |
|
Common stock, no par value, authorized 800,000,000 shares; issued and outstanding 228,340,959 and 223,212,346 shares, respectively |
|
| 4,569,332 |
|
|
| 4,488,419 |
|
Accumulated other comprehensive loss |
|
| (28,076 | ) |
|
| (42,802 | ) |
Distributions greater than net income |
|
| (1,446,933 | ) |
|
| (1,416,270 | ) |
Total Shareholders' Equity |
|
| 3,094,323 |
|
|
| 3,029,347 |
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Shareholders' Equity |
| $ | 4,792,386 |
|
| $ | 4,829,759 |
|
September 30, | December 31, | |||||||
2017 | 2016 | |||||||
(unaudited) | ||||||||
Assets | ||||||||
Investment in real estate, net of accumulated depreciation of $686,787 and $557,597, respectively | $ | 4,742,590 | $ | 4,823,489 | ||||
Assets held for sale | 40,626 | 39,000 | ||||||
Restricted cash-furniture, fixtures and other escrows | 30,299 | 29,425 | ||||||
Due from third party managers, net | 52,354 | 31,460 | ||||||
Other assets, net | 48,018 | 56,509 | ||||||
Total Assets | $ | 4,913,887 | $ | 4,979,883 | ||||
Liabilities | ||||||||
Revolving credit facility | $ | 216,700 | $ | 270,000 | ||||
Term loans | 655,988 | 570,934 | ||||||
Mortgage debt | 432,783 | 497,029 | ||||||
Accounts payable and other liabilities | 104,467 | 124,856 | ||||||
Total Liabilities | 1,409,938 | 1,462,819 | ||||||
Shareholders' Equity | ||||||||
Preferred stock, authorized 30,000,000 shares; none issued and outstanding | 0 | 0 | ||||||
Common stock, no par value, authorized 800,000,000 shares; issued and outstanding 223,060,840 and 222,938,648 shares, respectively | 4,455,390 | 4,453,205 | ||||||
Accumulated other comprehensive income | 5,218 | 4,589 | ||||||
Distributions greater than net income | (956,659 | ) | (940,730 | ) | ||||
Total Shareholders' Equity | 3,503,949 | 3,517,064 | ||||||
Total Liabilities and Shareholders' Equity | $ | 4,913,887 | $ | 4,979,883 |
See notes to consolidated financial statements.
Apple Hospitality REIT, Inc.
(Unaudited)
(in thousands, except per share data)
|
| Three Months Ended |
|
| Six Months Ended |
| ||||||||||
|
| June 30, |
|
| June 30, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Room |
| $ | 231,166 |
|
| $ | 76,828 |
|
| $ | 379,647 |
|
| $ | 294,807 |
|
Food and beverage |
|
| 5,088 |
|
|
| 839 |
|
|
| 7,871 |
|
|
| 12,151 |
|
Other |
|
| 11,150 |
|
|
| 3,411 |
|
|
| 18,599 |
|
|
| 12,130 |
|
Total revenue |
|
| 247,404 |
|
|
| 81,078 |
|
|
| 406,117 |
|
|
| 319,088 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hotel operating expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating |
|
| 53,186 |
|
|
| 19,707 |
|
|
| 91,336 |
|
|
| 87,736 |
|
Hotel administrative |
|
| 21,538 |
|
|
| 13,811 |
|
|
| 39,282 |
|
|
| 37,454 |
|
Sales and marketing |
|
| 20,380 |
|
|
| 9,430 |
|
|
| 35,268 |
|
|
| 33,789 |
|
Utilities |
|
| 9,352 |
|
|
| 6,308 |
|
|
| 19,912 |
|
|
| 15,498 |
|
Repair and maintenance |
|
| 11,886 |
|
|
| 6,348 |
|
|
| 22,111 |
|
|
| 18,141 |
|
Franchise fees |
|
| 10,865 |
|
|
| 3,656 |
|
|
| 17,784 |
|
|
| 13,913 |
|
Management fees |
|
| 8,203 |
|
|
| 2,557 |
|
|
| 13,457 |
|
|
| 10,552 |
|
Total hotel operating expense |
|
| 135,410 |
|
|
| 61,817 |
|
|
| 239,150 |
|
|
| 217,083 |
|
Property taxes, insurance and other |
|
| 17,321 |
|
|
| 18,702 |
|
|
| 37,009 |
|
|
| 38,297 |
|
General and administrative |
|
| 8,435 |
|
|
| 6,025 |
|
|
| 16,554 |
|
|
| 15,548 |
|
Loss on impairment of depreciable real estate assets |
|
| 0 |
|
|
| 4,382 |
|
|
| 10,754 |
|
|
| 4,382 |
|
Depreciation and amortization |
|
| 46,386 |
|
|
| 49,897 |
|
|
| 95,096 |
|
|
| 99,419 |
|
Total expense |
|
| 207,552 |
|
|
| 140,823 |
|
|
| 398,563 |
|
|
| 374,729 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain (loss) on sale of real estate |
|
| (864 | ) |
|
| (54 | ) |
|
| 3,620 |
|
|
| 8,785 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
| 38,988 |
|
|
| (59,799 | ) |
|
| 11,174 |
|
|
| (46,856 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other expense, net |
|
| (18,618 | ) |
|
| (18,386 | ) |
|
| (37,131 | ) |
|
| (33,952 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
| 20,370 |
|
|
| (78,185 | ) |
|
| (25,957 | ) |
|
| (80,808 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
| (87 | ) |
|
| (58 | ) |
|
| (195 | ) |
|
| (204 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
| $ | 20,283 |
|
| $ | (78,243 | ) |
| $ | (26,152 | ) |
| $ | (81,012 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate derivatives |
|
| (1,356 | ) |
|
| (4,195 | ) |
|
| 14,726 |
|
|
| (46,361 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) |
| $ | 18,927 |
|
| $ | (82,438 | ) |
| $ | (11,426 | ) |
| $ | (127,373 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net income (loss) per common share |
| $ | 0.09 |
|
| $ | (0.35 | ) |
| $ | (0.12 | ) |
| $ | (0.36 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding - basic and diluted |
|
| 224,772 |
|
|
| 223,278 |
|
|
| 224,255 |
|
|
| 223,786 |
|
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Revenues: | ||||||||||||||||
Room | $ | 302,298 | $ | 255,269 | $ | 877,974 | $ | 698,759 | ||||||||
Other | 22,628 | 21,202 | 71,581 | 59,835 | ||||||||||||
Total revenue | 324,926 | 276,471 | 949,555 | 758,594 | ||||||||||||
Expenses: | ||||||||||||||||
Operating | 79,975 | 69,082 | 235,474 | 187,370 | ||||||||||||
Hotel administrative | 24,842 | 20,866 | 74,895 | 57,921 | ||||||||||||
Sales and marketing | 25,488 | 21,329 | 75,867 | 59,244 | ||||||||||||
Utilities | 12,036 | 10,543 | 31,982 | 25,862 | ||||||||||||
Repair and maintenance | 12,199 | 10,478 | 36,394 | 29,167 | ||||||||||||
Franchise fees | 13,974 | 11,834 | 40,611 | 32,212 | ||||||||||||
Management fees | 11,315 | 9,205 | 33,072 | 26,189 | ||||||||||||
Property taxes, insurance and other | 17,598 | 14,787 | 52,346 | 40,315 | ||||||||||||
Ground lease | 2,831 | 2,615 | 8,486 | 7,587 | ||||||||||||
General and administrative | 5,350 | 2,623 | 18,255 | 12,511 | ||||||||||||
Transaction and litigation costs (reimbursements) | 0 | 36,452 | (2,586 | ) | 37,861 | |||||||||||
Loss on impairment of depreciable real estate assets | 0 | 5,471 | 7,875 | 5,471 | ||||||||||||
Depreciation | 44,110 | 37,343 | 131,770 | 104,651 | ||||||||||||
Total expenses | 249,718 | 252,628 | 744,441 | 626,361 | ||||||||||||
Operating income | 75,208 | 23,843 | 205,114 | 132,233 | ||||||||||||
Interest and other expense, net | (12,024 | ) | (10,156 | ) | (35,590 | ) | (28,519 | ) | ||||||||
Gain (loss) on sale of real estate | (157 | ) | 0 | 15,983 | 0 | |||||||||||
Income before income taxes | 63,027 | 13,687 | 185,507 | 103,714 | ||||||||||||
Income tax benefit (expense) | (203 | ) | 7 | (712 | ) | (616 | ) | |||||||||
Net income | $ | 62,824 | $ | 13,694 | $ | 184,795 | $ | 103,098 | ||||||||
Other comprehensive income (loss): | ||||||||||||||||
Interest rate derivatives | 259 | 4,261 | 629 | (7,934 | ) | |||||||||||
Comprehensive income | $ | 63,083 | $ | 17,955 | $ | 185,424 | $ | 95,164 | ||||||||
Basic and diluted net income per common share | $ | 0.28 | $ | 0.07 | $ | 0.83 | $ | 0.57 | ||||||||
Weighted average common shares outstanding - basic and diluted | 223,057 | 190,563 | 223,052 | 180,004 |
See notes to consolidated financial statements.
Apple Hospitality REIT, Inc.
(Unaudited)
(in thousands)thousands, except per share data)
Three Months Ended June 30, 2021 and 2020 |
| |||||||||||||||||||
|
| Common Stock |
|
| Accumulated Other |
|
| Distributions |
|
|
|
|
| |||||||
|
| Number of Shares |
|
| Amount |
|
| Comprehensive Income (Loss) |
|
| Greater Than Net Income |
|
| Total |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2021 |
|
| 223,656 |
|
| $ | 4,493,422 |
|
| $ | (26,720 | ) |
| $ | (1,464,937 | ) |
| $ | 3,001,765 |
|
Share based compensation, net |
|
| 8 |
|
|
| 843 |
|
|
| - |
|
|
| - |
|
|
| 843 |
|
Issuance of common shares, net |
|
| 4,677 |
|
|
| 75,067 |
|
|
| - |
|
|
| - |
|
|
| 75,067 |
|
Interest rate derivatives |
|
| - |
|
|
| - |
|
|
| (1,356 | ) |
|
| - |
|
|
| (1,356 | ) |
Net income |
|
| - |
|
|
| - |
|
|
| - |
|
|
| 20,283 |
|
|
| 20,283 |
|
Distributions declared to shareholders ($0.01 per share) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (2,279 | ) |
|
| (2,279 | ) |
Balance at June 30, 2021 |
|
| 228,341 |
|
| $ | 4,569,332 |
|
| $ | (28,076 | ) |
| $ | (1,446,933 | ) |
| $ | 3,094,323 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at March 31, 2020 |
|
| 223,017 |
|
| $ | 4,487,441 |
|
| $ | (46,864 | ) |
| $ | (1,245,773 | ) |
| $ | 3,194,804 |
|
Share based compensation, net |
|
| 207 |
|
|
| 593 |
|
|
| - |
|
|
| - |
|
|
| 593 |
|
Interest rate derivatives |
|
| - |
|
|
| - |
|
|
| (4,195 | ) |
|
| - |
|
|
| (4,195 | ) |
Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (78,243 | ) |
|
| (78,243 | ) |
Balance at June 30, 2020 |
|
| 223,224 |
|
| $ | 4,488,034 |
|
| $ | (51,059 | ) |
| $ | (1,324,016 | ) |
| $ | 3,112,959 |
|
Six Months Ended June 30, 2021 and 2020 |
| |||||||||||||||||||
|
| Common Stock |
|
| Accumulated Other |
|
| Distributions |
|
|
|
|
| |||||||
|
| Number of Shares |
|
| Amount |
|
| Comprehensive Income (Loss) |
|
| Greater Than Net Income |
|
| Total |
| |||||
Balance at December 31, 2020 |
|
| 223,212 |
|
| $ | 4,488,419 |
|
| $ | (42,802 | ) |
| $ | (1,416,270 | ) |
| $ | 3,029,347 |
|
Share based compensation, net |
|
| 452 |
|
|
| 5,847 |
|
|
| - |
|
|
| - |
|
|
| 5,847 |
|
Issuance of common shares, net |
|
| 4,677 |
|
|
| 75,066 |
|
|
| - |
|
|
| - |
|
|
| 75,066 |
|
Interest rate derivatives |
|
| - |
|
|
| - |
|
|
| 14,726 |
|
|
| - |
|
|
| 14,726 |
|
Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (26,152 | ) |
|
| (26,152 | ) |
Distributions declared to shareholders ($0.02 per share) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (4,511 | ) |
|
| (4,511 | ) |
Balance at June 30, 2021 |
|
| 228,341 |
|
| $ | 4,569,332 |
|
| $ | (28,076 | ) |
| $ | (1,446,933 | ) |
| $ | 3,094,323 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2019 |
|
| 223,863 |
|
| $ | 4,493,763 |
|
| $ | (4,698 | ) |
| $ | (1,198,052 | ) |
| $ | 3,291,013 |
|
Share based compensation, net |
|
| 882 |
|
|
| 8,607 |
|
|
| - |
|
|
| - |
|
|
| 8,607 |
|
Common shares repurchased |
|
| (1,521 | ) |
|
| (14,336 | ) |
|
| - |
|
|
| - |
|
|
| (14,336 | ) |
Interest rate derivatives |
|
| - |
|
|
| - |
|
|
| (46,361 | ) |
|
| - |
|
|
| (46,361 | ) |
Net loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (81,012 | ) |
|
| (81,012 | ) |
Distributions declared to shareholders ($0.20 per share) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| (44,952 | ) |
|
| (44,952 | ) |
Balance at June 30, 2020 |
|
| 223,224 |
|
| $ | 4,488,034 |
|
| $ | (51,059 | ) |
| $ | (1,324,016 | ) |
| $ | 3,112,959 |
|
Nine Months Ended | ||||||||
September 30, | ||||||||
2017 | 2016 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 184,795 | $ | 103,098 | ||||
Adjustments to reconcile net income to cash provided by operating activities: | ||||||||
Depreciation | 131,770 | 104,651 | ||||||
Loss on impairment of depreciable real estate assets | 7,875 | 5,471 | ||||||
Gain on sale of real estate | (15,983 | ) | 0 | |||||
Other non-cash expenses, net | 5,372 | 4,806 | ||||||
Changes in operating assets and liabilities, net of amounts acquired or assumed with acquisitions: | ||||||||
Increase in due from third party managers, net | (20,883 | ) | (14,350 | ) | ||||
Decrease (increase) in other assets, net | 8,507 | (1,014 | ) | |||||
Increase (decrease) in accounts payable and other liabilities | (20,944 | ) | 35,309 | |||||
Net cash provided by operating activities | 280,509 | 237,971 | ||||||
Cash flows from investing activities: | ||||||||
Cash consideration in Apple Ten merger | 0 | (93,590 | ) | |||||
Acquisition of hotel properties, net | (56,794 | ) | (23,994 | ) | ||||
Deposits and other disbursements for potential acquisitions | (1,810 | ) | 0 | |||||
Capital improvements | (41,370 | ) | (47,523 | ) | ||||
Decrease (increase) in capital improvement reserves | (1,351 | ) | 2,459 | |||||
Net proceeds from sale of real estate | 28,374 | 0 | ||||||
Net cash used in investing activities | (72,951 | ) | (162,648 | ) | ||||
Cash flows from financing activities: | ||||||||
Repurchases of common shares | 0 | (361 | ) | |||||
Repurchases of common shares to satisfy employee withholding requirements | (432 | ) | (459 | ) | ||||
Equity issuance costs | 0 | (1,176 | ) | |||||
Distributions paid to common shareholders | (200,716 | ) | (161,940 | ) | ||||
Net proceeds from (payments on) revolving credit facility | (53,300 | ) | 187,300 | |||||
Payments on extinguished credit facility | 0 | (111,100 | ) | |||||
Proceeds from term loans | 85,000 | 150,000 | ||||||
Proceeds from mortgage debt | 0 | 24,000 | ||||||
Payments of mortgage debt | (37,219 | ) | (157,823 | ) | ||||
Financing costs | (891 | ) | (3,764 | ) | ||||
Net cash used in financing activities | (207,558 | ) | (75,323 | ) | ||||
Net change in cash and cash equivalents | 0 | 0 | ||||||
Cash and cash equivalents, beginning of period | 0 | 0 | ||||||
Cash and cash equivalents, end of period | $ | 0 | $ | 0 | ||||
Supplemental cash flow information: | ||||||||
Interest paid | $ | 35,049 | $ | 30,192 | ||||
Supplemental disclosure of noncash investing and financing activities: | ||||||||
Stock consideration in Apple Ten merger (see note 2) | $ | 0 | $ | 956,086 | ||||
Accrued distribution to common shareholders | $ | 22,302 | $ | 22,325 | ||||
Mortgage debt assumed by buyer upon sale of real estate | $ | 27,073 | $ | 0 |
See notes to consolidated financial statements.
Apple Hospitality REIT, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
|
| Six Months Ended |
| |||||
|
| June 30, |
| |||||
|
| 2021 |
|
| 2020 |
| ||
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net loss |
| $ | (26,152 | ) |
| $ | (81,012 | ) |
Adjustments to reconcile net loss to cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
| 95,096 |
|
|
| 99,419 |
|
Loss on impairment of depreciable real estate assets |
|
| 10,754 |
|
|
| 4,382 |
|
Gain on sale of real estate |
|
| (3,620 | ) |
|
| (8,785 | ) |
Other non-cash expenses, net |
|
| 5,493 |
|
|
| 4,802 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Decrease (increase) in due from third party managers, net |
|
| (32,157 | ) |
|
| 2,029 |
|
Decrease (increase) in other assets, net |
|
| 145 |
|
|
| (270 | ) |
Increase (decrease) in accounts payable and other liabilities |
|
| 214 |
|
|
| (8,016 | ) |
Net cash provided by operating activities |
|
| 49,773 |
|
|
| 12,549 |
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Acquisition of hotel properties, net |
|
| (49,345 | ) |
|
| (25,095 | ) |
Refunds (payments) for potential acquisitions, net |
|
| (2,375 | ) |
|
| 416 |
|
Capital improvements |
|
| (4,906 | ) |
|
| (38,296 | ) |
Net proceeds from sale of real estate |
|
| 22,765 |
|
|
| 44,382 |
|
Net cash used in investing activities |
|
| (33,861 | ) |
|
| (18,593 | ) |
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Net proceeds related to issuance of common shares |
|
| 75,066 |
|
|
| - |
|
Repurchases of common shares |
|
| - |
|
|
| (14,336 | ) |
Repurchases of common shares to satisfy employee withholding requirements |
|
| (1,650 | ) |
|
| (1,748 | ) |
Distributions paid to common shareholders |
|
| (2,232 | ) |
|
| (67,324 | ) |
Net proceeds from (payments on) revolving credit facility |
|
| (23,800 | ) |
|
| 148,800 |
|
Proceeds from term loans and senior notes |
|
| - |
|
|
| 50,000 |
|
Proceeds from mortgage debt and other loans |
|
| - |
|
|
| 81,520 |
|
Payments of mortgage debt and other loans |
|
| (62,049 | ) |
|
| (39,170 | ) |
Financing costs |
|
| (1,501 | ) |
|
| (2,185 | ) |
Net cash provided by (used in) financing activities |
|
| (16,166 | ) |
|
| 155,557 |
|
|
|
|
|
|
|
|
|
|
Net change in cash, cash equivalents and restricted cash |
|
| (254 | ) |
|
| 149,513 |
|
|
|
|
|
|
|
|
|
|
Cash, cash equivalents and restricted cash, beginning of period |
|
| 34,368 |
|
|
| 34,661 |
|
|
|
|
|
|
|
|
|
|
Cash, cash equivalents and restricted cash, end of period |
| $ | 34,114 |
|
| $ | 184,174 |
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information: |
|
|
|
|
|
|
|
|
Interest paid |
| $ | 35,336 |
|
| $ | 29,598 |
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of noncash investing and financing activities: |
|
|
|
|
|
|
|
|
Notes payable originated from acquisitions |
| $ | - |
|
| $ | 21,704 |
|
Accrued distribution to common shareholders |
| $ | 2,279 |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
Reconciliation of cash, cash equivalents and restricted cash: |
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of period |
| $ | 5,556 |
|
| $ | - |
|
Restricted cash-furniture, fixtures and other escrows, beginning of period |
|
| 28,812 |
|
|
| 34,661 |
|
Cash, cash equivalents and restricted cash, beginning of period |
| $ | 34,368 |
|
| $ | 34,661 |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period |
| $ | 2,899 |
|
| $ | 156,461 |
|
Restricted cash-furniture, fixtures and other escrows, end of period |
|
| 31,215 |
|
|
| 27,713 |
|
Cash, cash equivalents and restricted cash, end of period |
| $ | 34,114 |
|
| $ | 184,174 |
|
See notes to consolidated financial statements.
6
Apple Hospitality REIT, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
1. Organization and Summary of Significant Accounting Policies
Organization
Apple Hospitality REIT, Inc., together with its wholly-owned subsidiaries (the “Company”), is a Virginia corporation that has elected to be treated as a real estate investment trust (“REIT”) for federal income tax purposes. The Company is a self-advised REIT that invests in income-producing real estate, primarily in the lodging sector, in the United States.States (“U.S.”). The Company’s fiscal year end is December 31. The Company has no foreign operations or assets and its operating structure includes only one1 reportable segment. The consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany accounts and transactions have been eliminated. Although the Company has interests in potential variable interest entities through its purchase commitments, it is not the primary beneficiary as the Company does not have any elements of power in the decision makingdecision-making process of these entities, and therefore does not consolidate the entities. As of SeptemberJune 30, 2017,2021, the Company owned 237232 hotels with an aggregate of 30,18829,753 rooms located in 3335 states, including one hotel20 hotels with 3162,133 rooms classified as held for sale, which waswere sold to an unrelated party in October 2017.July 2021. The Company’s common shares are listed on the New York Stock Exchange (“NYSE”) under the ticker symbol “APLE.”
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with the rules and regulations for reporting on Form 10-Q. Accordingly, they do not include all of the information required by U.S. generally accepted accounting principles generally accepted in the United States(“GAAP”) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These unaudited financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in its 2016 Annual Report on Form 10-K.10-K for the year ended December 31, 2020 (the “2020 Form 10-K”). Operating results for the three and ninesix months ended SeptemberJune 30, 20172021 are not necessarily indicative of the results that may be expected for the twelve month period ending December 31, 2017.
Use of Estimates
The preparation of the financial statements in conformity with United States generally accepted accounting principlesGAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.
Novel Coronavirus COVID-19 Pandemic
As a result of the current novel coronavirus COVID-19 pandemic (“COVID-19”) and the impact it has had on travel and the broader economy throughout the U.S. since March 2020, the Company’s hotels have experienced significant declines in occupancy, which have had and are expected to continue to have a significant negative effect on the Company’s revenue and operating results. While occupancy has recovered significantly during the first six months of 2021, there remains significant uncertainty as to when or if operations at the hotels will return to pre-pandemic levels.
Net Income (Loss) Per Common Share
Basic net income (loss) per common share is computed based upon the weighted average number of shares outstanding during the period. Diluted net income (loss) per common share is calculated after giving effect to all potential common shares that were dilutive and outstanding for the period. Basic and diluted net income (loss) per common share were the same for each of the periods presented.
Accounting Standards Recently Adopted
Reference Rate Reform
In January 2017,March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-01, Business Combinations2020-04, Reference Rate Reform (Topic 805), Clarifying the Definition of a Business848), which is intendedprovides optional guidance through December 31, 2022 to addease the potential burden in accounting for, or recognizing the effects of, reference rate reform on financial reporting. In January 2021, the FASB issued 2021-01, Reference Rate Reform (Topic 848), Scope, which further clarified the scope of the reference rate reform optional practical expedients and exceptions outlined in Topic 848. The amendments in ASU Nos. 2020-04 and 2021-01 apply to contract modifications that replace a reference rate affected by reference rate reform, providing optional expedients regarding the measurement of hedge effectiveness in hedging relationships that have been modified to replace a reference rate. The guidance in ASU Nos. 2020-04 and 2021-01 became effective upon issuance and the provisions of the ASUs have not had a material impact on the Company’s consolidated financial statements and related disclosures as of June 30, 2021.The provisions of these updates will generally affect the Company by allowing, among other things, the following:
7
• | Allowing modifications of the Company’s unsecured credit facilities (as defined below) to replace the London Interbank Offered Rate (LIBOR) with a substitute index to be accounted for as a non-substantial modification and not be considered a debt extinguishment. |
• | Allowing changes to the floating interest rate index used in the Company’s interest rate swaps to not be considered a change to the critical terms of the hedge and therefore not requiring a dedesignation of the hedging relationship. |
The Company has not entered into any contract modifications yet as it directly relates to reference rate reform but anticipates having to undertake such modifications in the future as a majority of the Company’s unsecured credit facilities and interest rate swaps are indexed to LIBOR.
Accounting Standards Recently Issued
Accounting for Certain Equity Options
In May 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2021-04, Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (Topics 260, 470, 718 and 815), which provides updated guidance to assist entities with evaluating whether transactions should be accountedclarify and reduce diversity in an issuer’s accounting for as acquisitions (or disposals)modifications or exchanges of assetsfreestanding equity-classified written call options that remain equity classified after modification or businesses.exchange. The standard isprovisions of this update are effective for annual and interim periods beginning after December 15, 2017 with early adoption permitted.2021. The Company adopted this standard effective January 1, 2017 on a prospective basis. Prior to the adoption of this standard, the Company’s acquisitions of hotel properties were accounted for as existing businesses, and therefore all transaction costs associated with the acquisitions, including title, legal, accounting, brokerage commissions and other related costs were expensed as incurred. Under the new standard, effective January 1, 2017, acquisitions of hotel properties (including the acquisition of three hotels during the first nine months of 2017, as discussed in Note 3) will generally be accounted for as acquisitions of a group of assets, with costs incurred to effect an acquisition being capitalized as part of the cost of the assets acquired, instead of accounted for separately as expenses in the period that they are incurred. Asset acquisitions now require the Company to complete its allocation of the purchase price at the time of the acquisition as the measurement period applicable to business combinations does not apply to asset acquisitions.
2. Merger with Apple REIT Ten, Inc.
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 (Actual) | 2016 (Proforma) | 2017 (Proforma) | 2016 (Proforma) | |||||||||||||
Total revenue | $ | 324,926 | $ | 325,924 | $ | 949,555 | $ | 949,760 | ||||||||
Net income | $ | 62,824 | $ | 59,960 | $ | 182,209 | $ | 176,985 | ||||||||
Basic and diluted net income per common share | $ | 0.28 | $ | 0.27 | $ | 0.82 | $ | 0.79 | ||||||||
Weighted average common shares outstanding - basic and diluted | 223,057 | 223,403 | 223,052 | 223,399 |
The Company’s investment in real estate consisted of the following (in thousands):
|
| June 30, |
|
| December 31, |
| ||
|
| 2021 |
|
| 2020 |
| ||
Land |
| $ | 692,586 |
|
| $ | 725,512 |
|
Building and improvements |
|
| 4,313,527 |
|
|
| 4,525,850 |
|
Furniture, fixtures and equipment |
|
| 466,206 |
|
|
| 499,865 |
|
Finance ground lease assets |
|
| 203,617 |
|
|
| 203,617 |
|
Franchise fees |
|
| 12,867 |
|
|
| 13,750 |
|
|
|
| 5,688,803 |
|
|
| 5,968,594 |
|
Less accumulated depreciation and amortization |
|
| (1,228,937 | ) |
|
| (1,235,698 | ) |
Investment in real estate, net |
| $ | 4,459,866 |
|
| $ | 4,732,896 |
|
September 30, | December 31, | |||||||
2017 | 2016 | |||||||
Land | $ | 711,826 | $ | 707,878 | ||||
Building and Improvements | 4,294,310 | 4,270,095 | ||||||
Furniture, Fixtures and Equipment | 411,376 | 391,421 | ||||||
Franchise Fees | 11,865 | 11,692 | ||||||
5,429,377 | 5,381,086 | |||||||
Less Accumulated Depreciation | (686,787 | ) | (557,597 | ) | ||||
Investment in Real Estate, net | $ | 4,742,590 | $ | 4,823,489 |
As of SeptemberJune 30, 2017,2021, the Company owned 237232 hotels with an aggregate of 30,18829,753 rooms located in 3335 states, including one hotel20 hotels with 3162,133 rooms classified as held for sale, which waswere sold to an unrelated party in October 2017.
The Company leases all of its hotels to its wholly-owned taxable REIT subsidiary (or a subsidiary thereof) under master hotel lease agreements.
Hotel Acquisitions
The Company acquired three1 hotel during the six months ended June 30, 2021. The hotel was a newly developed 176-room Hilton Garden Inn in Madison, Wisconsin managed by Raymond and purchased for $49.6 million on February 18, 2021.
During the year ended December 31, 2020, the Company acquired 4 hotels, including 2 hotels during the first ninesix months of 2017.ended June 30, 2020. The following table sets forth the location, brand, manager, date acquired, number of rooms and gross purchase price, excluding transaction costs, for each hotel. All dollar amounts are in thousands.
City |
| State |
| Brand |
| Manager |
| Date Acquired |
| Rooms |
|
| Gross Purchase Price |
| ||
Cape Canaveral |
| FL |
| Hampton |
| LBA |
| 4/30/2020 |
|
| 116 |
|
| $ | 24,102 |
|
Cape Canaveral |
| FL |
| Home2 Suites |
| LBA |
| 4/30/2020 |
|
| 108 |
|
|
| 22,602 |
|
Tempe |
| AZ |
| Hyatt House |
| Crestline |
| 8/13/2020 |
|
| 105 |
|
|
| 26,309 |
|
Tempe |
| AZ |
| Hyatt Place |
| Crestline |
| 8/13/2020 |
|
| 154 |
|
|
| 38,279 |
|
|
|
|
|
|
|
|
|
|
|
| 483 |
|
| $ | 111,292 |
|
City | State | Brand | Manager | Date Acquired | Rooms | Gross Purchase Price (a) | ||||||||||
Fort Worth | TX | Courtyard | LBA | 2/2/2017 | 124 | $ | 18,000 | |||||||||
Birmingham (b) | AL | Hilton Garden Inn | LBA | 9/12/2017 | 104 | 19,162 | ||||||||||
Birmingham (b) | AL | Home2 Suites | LBA | 9/12/2017 | 106 | 19,276 | ||||||||||
334 | $ | 56,438 |
8
The Company utilized $25.0 million of its available cash and entered into a one-year note payable with | |
Purchase Contract Commitments
As of SeptemberJune 30, 2017,2021, the Company had anoutstanding contracts forcontract to purchase the potential purchase of four additional hotelsfee interest in the land at the Seattle, Washington Residence Inn, currently held under a finance ground lease, for a total purchase price of approximately $146.1$80.0 million, consisting of a $24.0 million cash payment (utilizing available cash or borrowings under the Company’s unsecured credit facilities) and a one-year note payable to the seller for $56.0 million. Two of the hotels, the Salt Lake City Residence Inn and the Portland Residence Inn, which are already in operation, were acquired in October 2017. The two remaining hotels are under construction and are planned to be completed and opened for business over the next 12 months from September 30, 2017, at which time closing on these hotelsland purchase is expected to occur.close in August 2021 and will be accounted for as a retirement of the finance lease, with any difference between the carrying amount of the right-of-use asset ($94.9 million as of June 30, 2021) and the finance lease liability ($110.5 million as of June 30, 2021) applied as an adjustment to the carrying amount of the acquired land. Although the Company is working towards acquiring the two hotels under construction,completing this acquisition, there are many conditions to closing that have not yet been satisfied and there can be no assurance that closing will occur.
3. Assets Held for Sale and Dispositions
Assets Held for Sale
In April 2021, the Company entered into a closing onpurchase contract with an unrelated party for the sale of 20 of its hotels for a total gross sales price of approximately $211.0 million. Since the buyer under the contract had completed its due diligence and had made a non-refundable deposit, as of June 30, 2021, the Company classified the hotels as assets held for sale in its consolidated balance sheet at their carrying value. As discussed below, during the first quarter of 2021, the Company recognized an impairment loss to adjust the carrying values of four of these hotels will occur underto their fair values. In July 2021, the outstanding purchase contracts. The following table summarizesCompany completed the location, brand, date of purchase contract, expected number of rooms, refundable (if the seller does not meet its obligations under the contract) contract deposits paid, and gross purchase price for eachsale of the contracts outstanding at September 30, 2017. All dollar amounts are20 hotels which resulted in thousands.
Location | Brand | Date of Purchase Contract | Rooms | Refundable Deposits | Gross Purchase Price | |||||||||||
Operating (a) | ||||||||||||||||
Salt Lake City, UT | Residence Inn | 8/22/2017 | 136 | $ | 500 | $ | 25,500 | |||||||||
Portland, ME | Residence Inn | 8/30/2017 | 179 | 1,000 | 55,750 | |||||||||||
Under development (b) | ||||||||||||||||
Phoenix, AZ | Hampton | 10/25/2016 | 210 | 500 | 44,100 | |||||||||||
Orlando, FL | Home2 Suites | 1/18/2017 | 128 | 3 | 20,736 | |||||||||||
653 | $ | 2,003 | $ | 146,086 |
9
City | State | Brand | Rooms | |||||
Montgomery | AL | Hilton Garden Inn | 97 | |||||
Montgomery | AL | Homewood Suites | 91 | |||||
Rogers | AR | Residence Inn | 88 | |||||
Phoenix | AZ | Courtyard | 127 | |||||
Lakeland | FL | Courtyard | 78 | |||||
Albany | GA | Fairfield | 87 | |||||
Schaumburg | IL | Hilton Garden Inn | 166 | |||||
Andover | MA | SpringHill Suites | 136 | |||||
Fayetteville | NC | Residence Inn | 92 | |||||
Greenville | SC | Residence Inn | 78 | |||||
Jackson | TN | Hampton | 85 | |||||
Johnson City | TN | Courtyard | 90 | |||||
Allen | TX | Hampton | 103 | |||||
Allen | TX | Hilton Garden Inn | 150 | |||||
Beaumont | TX | Residence Inn | 133 | |||||
Burleson/Fort Worth | TX | Hampton | 88 | |||||
El Paso | TX | Hilton Garden Inn | 145 | |||||
Irving | TX | Homewood Suites | 77 | |||||
Richmond | VA | SpringHill Suites | 103 | |||||
Vancouver | WA | SpringHill Suites | 119 | |||||
Total | 2,133 |
Dispositions
During the first quarter of 2017,six months ended June 30, 2021, the Company identified two properties for potential sale: the Columbus, Georgia SpringHill Suites and TownePlace Suites hotels. In April 2017, the Company entered intosold 3 hotels in 3 separate contractstransactions with the same unrelated party for the sale of these propertiesparties for a total combined gross sales price of approximately $10.0 million. Due to the change$23.6 million, resulting in a combined gain on sale of approximately $4.5 million, net of transaction costs, which is included in the anticipated hold periodCompany’s consolidated statement of operations for eachthe six months ended June 30, 2021. The three hotels had a total carrying value of theseapproximately $18.2 million at the time of sale. The following table lists the three hotels sold:
City | State | Brand | Date Sold | Rooms | ||||||
Charlotte | NC | Homewood Suites | 2/25/2021 | 118 | ||||||
Memphis | TN | Homewood Suites | 3/16/2021 | 140 | ||||||
Overland Park | KS | SpringHill Suites | 4/30/2021 | 102 | ||||||
Total | 360 |
During the year ended December 31, 2020, the Company reviewed the estimated undiscounted cash flows generated by each property (including its sale price, net of estimated selling costs) and determined that,sold 3 hotels in 3 transactions with unrelated parties for each hotel, the undiscounted cash flows were less than its carrying value; therefore the Company recognized an impairment loss of approximately $7.9 million in the first quarter of 2017 to adjust the bases of these properties to their estimated fair values, which were based on the contracted sale price, net of estimated selling costs, a Level 1 input under the fair value hierarchy. In May 2017, both of these contracts were terminated.
City | State | Brand | Date Sold | Rooms | ||||||
Sanford | FL | SpringHill Suites | 1/16/2020 | 105 | ||||||
Boise | ID | SpringHill Suites | 2/27/2020 | 230 | ||||||
Tulare | CA | Hampton | 12/30/2020 | 86 | ||||||
Total | 421 |
Excluding gains on sale of its 316-room Marriott hotel in Fairfax, Virginia, acquired byreal estate, the Company in the merger with Apple Ten in September 2016, for a gross sales price of $41.5 million, as amended. The hotel was classified as held for sale at its historical cost (which was less than the contract price, net of costs to sell) in the Company’s consolidated balance sheet as of September 30, 2017.
10
Hotel Sale Contracts and Loss on Impairment of Depreciable Real Estate Assets
During the first quarter of 2021, the Company identified 20 hotels for potential sale and, in April 2021, entered into a purchase contract with an unrelated party for the sale of the hotels for a gross sales price of $211.0 million. As a result, the Company recognized impairment losses totaling approximately $9.4 million in the first quarter of 2021, to adjust the carrying values of four of these hotels to their estimated fair values. The fair values of these properties were based on broker opinions of value using multiple methods to determine their value, including but not limited to replacement value, discounted cash flows and the income approach based on historical and forecasted operating results of the specific properties. These valuations are Level 3 inputs under the fair value hierarchy. The Company completed the sale of the hotels in July 2021.
Additionally, during the first quarter of 2021, the Company identified the Overland Park, Kansas SpringHill Suites for potential sale and, in February 2021, entered into a purchase contract with an unrelated party for the sale of the hotel for a gross sales price of $5.3 million. As a result, the Company recognized an impairment loss totaling approximately $1.3 million in the first quarter of 2021, to adjust the carrying value of the hotel to its estimated fair value less cost to sell, which was based on the contracted sales price, a Level 1 input under the fair value hierarchy. The Company completed the sale of the hotel in April 2021.
In June 2020, the Company entered into a purchase contract with an unrelated party for the sale of its 140-room Memphis, Tennessee Homewood Suites for a gross sales price of approximately $9.0 million. As a result, the Company recognized an impairment loss of approximately $4.4 million in the second quarter of 2020, representing the difference between the carrying value of the hotel and the contracted sales price, net of estimated selling costs, which is a Level 1 input under the fair value hierarchy. The Company completed the sale of the hotel in March 2021, and used the net proceeds from the sale to pay down borrowings on the Company’s revolving credit facility.
4. Debt
Summary
As of June 30, 2021 and December 31, 2020, the Company’s debt consisted of the following (in thousands):
|
| June 30, 2021 |
|
| December 31, 2020 |
| ||
Revolving credit facility |
| $ | 82,000 |
|
| $ | 105,800 |
|
Term loans and senior notes, net |
|
| 864,221 |
|
|
| 864,225 |
|
Mortgage debt, net |
|
| 450,187 |
|
|
| 512,546 |
|
Debt, net |
| $ | 1,396,408 |
|
| $ | 1,482,571 |
|
|
|
|
|
|
|
|
|
|
The aggregate amounts of principal payable under the Company’s total debt obligations as of June 30, 2021 (including the revolving credit facility, term loans, senior notes and mortgage debt), for each of the next five fiscal years and thereafter are as follows (in thousands):
2021 (July - December) |
| $ | 8,674 |
|
2022 |
|
| 191,831 |
|
2023 |
|
| 296,213 |
|
2024 |
|
| 338,597 |
|
2025 |
|
| 245,140 |
|
Thereafter |
|
| 322,265 |
|
|
|
| 1,402,720 |
|
Unamortized fair value adjustment of assumed debt |
|
| 1,130 |
|
Unamortized debt issuance costs |
|
| (7,442 | ) |
Total |
| $ | 1,396,408 |
|
The Company uses interest rate swaps to manage its interest rate risk on a portion of its variable-rate debt. Throughout the terms of these interest rate swaps, the Company pays a fixed rate of interest and receives a floating rate of interest equal to the London Inter-Bank Offered Rate for a one-month term (“one-month LIBOR”). The swaps are designed to effectively fix the interest payments on variable-rate debt instruments. See Note 5 for more information on the interest rate swap agreements. The Company’s total fixed-rate
11
and variable-rate debt, after giving effect to its interest rate swaps in effect at June 30, 2021 and December 31, 2020, is set forth below. All dollar amounts are in thousands.
|
| June 30, 2021 |
|
| Percentage |
|
| December 31, 2020 |
|
| Percentage |
| ||||
Fixed-rate debt (1) |
| $ | 1,270,720 |
|
|
| 91 | % |
| $ | 1,287,219 |
|
|
| 86 | % |
Variable-rate debt |
|
| 132,000 |
|
|
| 9 | % |
|
| 201,351 |
|
|
| 14 | % |
Total |
| $ | 1,402,720 |
|
|
|
|
|
| $ | 1,488,570 |
|
|
|
|
|
Weighted-average interest rate of debt |
|
| 3.96 | % |
|
|
|
|
|
| 3.86 | % |
|
|
|
|
(1) | Fixed-rate debt includes the portion of variable-rate debt where the interest payments have been effectively fixed by interest rate swaps as of the respective balance sheet date. See Note 5 for more information on the interest rate swap agreements. |
Credit Facilities
Credit Facilities Amendments
In early 2021, as a result of the continued disruption from COVID-19 and the related uncertainty with respect to the Company’s operating results, the Company anticipated that it could potentially not be in compliance with certain covenants under each of its unsecured credit facilities, as previously amended, in future periods if the existing Covenant Waiver Period (as defined below) under such facilities was not extended. As a result, on March 1, 2021, the Company entered into amendments to each of the unsecured credit facilities (the “March 2021 amendments”).
The Company previously entered into amendments in June 2020 that suspended the testing of the Company’s existing financial maintenance covenants under the unsecured credit facilities until the date the compliance certificate was required to be delivered for the fiscal quarter ending June 30, 2021 (unless the Company elects an earlier date) (the “Covenant Waiver Period”), and imposed certain restrictions that applied during such testing suspension period. The March 2021 amendments extended 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 was 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 was suspended until the compliance certificate is required to be delivered for the fiscal quarter ending March 31, 2022 (unless the Company elects an earlier date).
The March 2021 amendments also provided for, among other restrictions, the following during the Extended Covenant Waiver Period:
● | Mandatory prepayments of amounts outstanding under the Company’s unsecured credit facilities of net cash proceeds from certain debt and equity issuances and asset dispositions, subject to various exceptions, including an allowance of $300 million for acquiring unencumbered assets with proceeds from assets sales and a $300 million allowance for acquiring unencumbered assets funded by common equity so long as outstanding borrowings under the revolving credit facility were less than $275 million. A portion of the mandatory prepayments would be available for future borrowing under the revolving credit facility; |
● | A minimum liquidity covenant of $125 million; |
● | Restrictions on the Company’s and its subsidiaries’ ability to incur additional indebtedness (except for maturities beyond 2026) or prepay certain existing indebtedness, except that the Company was permitted to prepay (prior to maturity) up to $35 million of secured debt maturities in 2021; |
● | Restrictions on the Company’s ability to make cash distributions (except the payment of cash dividends of $0.01 per common share per quarter or to the extent required to maintain REIT status) and share repurchases; |
● | Maximum discretionary capital expenditures of $50 million; |
12
● | Limitations on additional investments; and |
● | An increase in the applicable interest rate under the unsecured credit facilities until the end of the Extended Covenant Waiver Period to a rate that corresponded to the highest leverage-based applicable interest rate margin plus 0.15% with respect to the unsecured credit facilities. |
The amendments also modified the calculation of the existing financial covenants for the four quarters subsequent to the end of the Extended Covenant Waiver Period to annualize calculated amounts to the extent the most recently ended fiscal quarter was not at least four fiscal quarters from the end of the Extended Covenant Waiver Period, and provided for a LIBOR floor under the credit agreements of 25 basis points for Eurodollar Rate Loans and 1.25% for Base Rate Loans on the revolving credit facility, and any term loans under the credit agreements that were not hedged. The March 2021 amendments also modified certain of the existing financial maintenance covenants to less restrictive levels upon exiting the Extended Covenant Waiver Period as follows (capitalized terms are defined in the credit agreements):
● | Maximum Consolidated Leverage Ratio of 8.50 to 1.00 for the first two fiscal quarters, 8.00 to 1.00 for two fiscal quarters, 7.50 to 1.00 for one fiscal quarter and then a ratio of 6.50 to 1.00 thereafter; |
● | Minimum Fixed Charge Coverage Ratio of 1.05 to 1.00 for the first fiscal quarter, 1.25 to 1.00 for one fiscal quarter and then a ratio of 1.50 to 1.00 thereafter; |
● | Minimum Unsecured Interest Coverage Ratio of no less than 1.25 to 1.00 for one fiscal quarter, 1.50 to 1.00 for one fiscal quarter, 1.75 to 1.00 for one fiscal quarter and a ratio of 2.00 to 1.00 thereafter; and |
● | Maximum Unsecured Leverage Ratio of 65% for two fiscal quarters and 60% thereafter. |
Except as otherwise set forth in the amendments, the terms of the credit agreements remain in effect.
In July 2021, the Company notified its lenders under its unsecured credit facilities that it had elected to exit the Extended Covenant Waiver Period effective on July 29, 2021 pursuant to the terms of each of its unsecured credit facilities. Upon exiting the Extended Covenant Waiver Period, the Company is no longer subject to the restrictions described above regarding its investing and financing activities that were applicable during the Extended Covenant Waiver Period, including, but not limited to, limitations on the acquisition of property, payment of distributions to shareholders, limitations on capital expenditures and use of proceeds from the sale of property or common shares of the Company. Those restrictions, including the restriction on payment of distributions to shareholders, were still in place throughout the second quarter of 2021.
As of June 30, 2021, the Company met the applicable financial maintenance covenants based on the annualized results of the three months ended June 30, 2021 at the levels required for the first quarter tested upon exiting the Extended Covenant Waiver Period. The Company anticipates continuing to meet the applicable financial maintenance covenants in future periods, although there can be no assurances and the unsecured credit facilities do not provide for the Company re-entering the Extended Covenant Waiver Period once it has elected to exit.
$965850 Million Credit Facility
The Company utilizes an unsecured “$965850 million credit facility” comprised of (i) a $540$425 million revolving credit facility with an initial maturity date of May 18, 2019July 27, 2022 (the “Revolving Credit Facility”) and (ii) a $425 million term loan facility consisting of 2 term loans: a $200 million term loan with a maturity date of May 18, 2020, consistingJuly 27, 2023, and a $225 million term loan with a maturity date of three term loans, all funded during 2015January 31, 2024 (the “$425 million term loans”loan facility”). Subject to certain conditions including covenant compliance and additional fees, the $425 million revolving credit facility maturity date may be extended up to one year andif certain criteria are met at the amounttime of the total credit facility may be increased from $965 million to $1.25 billion.extension. The Company may make voluntary prepayments in whole or in part, at any time. Interest payments on the $965$850 million credit facility are due monthly and the interest rate, subject to certain exceptions, is equal to an annual rate of the one-month LIBOR (the London Inter-Bank Offered Rate for a one-month term) plus a margin ranging from 1.50%1.35% to 2.30%2.25%, depending upon the Company’s leverage ratio, as calculated under the terms of the credit agreement. In conjunction with the $425 million term loans,As of June 30, 2021, the Company entered into two interest rate swap agreements, which effectively fixhad availability of $343 million under the interest rate on $322.5 million of the outstanding balance at approximately 3.10%, subject to adjustment based on the Company’s leverage ratio, through maturity. See Note 6 for more information on the interest rate swap agreements.revolving credit facility. The Company is also required to pay quarterly an unused facility fee at an annual rate of 0.20% or 0.30%0.25% on the unused portion of the $425 million revolving credit facility, based on the amount of borrowings outstanding during the quarter.
$150225 Million Term Loan Facility
The Company entered intohas an unsecured $150$225 million term loan facility withthat is comprised of (i) a syndicate of commercial banks (the “$150 million term loan facility”), consisting of a term loan of up to $50 million that will mature on April 8, 2021 (the “$50 million term loan”) and a term loan of up to $100 million that will mature on April 8, 2023 (the “$100 million term loan,” and collectively with the $50 million term loan the “$150 million term loans”). The Company initially borrowed $50 million under the $150with a maturity date of August 2, 2023, and (ii) a $175 million term loan facility on April 8, 2016 and borrowed the remaining $100 million on September 30, 2016.with a maturity date of August 2, 2025. The credit agreement contains requirements and covenants similar to the Company’s $965$850 million credit facility. The Company may make voluntary prepayments in whole or in part, at any time, subject to certain conditions. Interest payments on the $150$225 million term loan facility are due monthly and the interest rate, subject to certain exceptions, is equal to an annual rate of the one-month LIBOR plus a margin ranging from 1.45%1.35% to 2.20% for the $50 million term loan and 1.80% to 2.60% for the $100 million term loan,2.50%, depending upon the Company’s leverage ratio, as calculated under the terms of the credit agreement. The Company also entered into two interest rate swap agreements which, beginning on September 30, 2016, effectively fix the interest rate on the $50 million term loan and $100 million term loan at 2.54% and 3.13%, respectively, subject to adjustment based on the Company’s leverage ratio, through maturity. See Note 6 for more information on the interest rate swap agreements. Proceeds from the $150 million term loan facility were used to pay down outstanding borrowings on the Company’s revolving credit facility, using the increased availability to repay scheduled mortgage debt maturities through the end of the first quarter of 2017.
On July 25, 2017, the Company entered into an unsecured $85 million term loan with a syndicate of commercial banks,facility with a maturity date of July 25, 2024, consisting of 1 term loan that was funded at closing (the “$85 million term loan” and, together with the $425 million term loans and the $150 million term loans, the “term loans”). Net proceeds from the“2017 $85 million term loan were used to pay down outstanding borrowings on the Company’s revolving credit facility. Subject to certain conditions including covenant compliance and additional fees, the $85 million term loan may be increased to $125 million. facility”). The credit agreement, as amended and restated in August 2018, contains requirements and covenants similar to the Company’s $965$850 million credit facility. The Company may make voluntary prepayments in whole or in part, at any time, subject to certain conditions. Interest payments on the 2017 $85 million term loan facility are due monthly, and the interest rate, subject to certain exceptions, is equal to an annual rate of the one-month LIBOR plus a margin ranging from 1.80%1.30% to 2.60%2.10%, depending upon the Company’s leverage ratio, as calculated under the terms of the credit agreement, for the remainder of the term.
2019 $85 Million Term Loan Facility
On December 31, 2019, the Company entered into an unsecured $85 million term loan facility with a maturity date of December 31, 2029, consisting of 1 term loan funded at closing (the “2019 $85 million term loan facility”). Net proceeds from the 2019 $85 million term loan facility were used to pay down borrowings on the Company’s revolving credit facility. The credit agreement contains requirements and covenants similar to the Company’s $850 million credit facility. The Company may make voluntary prepayments in whole or in part, subject to certain conditions. Interest payments on the 2019 $85 million term loan facility are due monthly and the interest rate, subject to certain exceptions, is equal to an annual rate of the one-month LIBOR plus a margin ranging from 1.70% to 2.55%, depending upon the Company’s leverage ratio, as calculated under the terms of the credit agreement. In conjunction
$50 Million Senior Notes Facility
On March 16, 2020, the Company entered into an unsecured $50 million senior notes facility with a maturity date of March 31, 2030, consisting of senior notes totaling $50 million funded at closing (the “$50 million senior notes facility” and, collectively with the $850 million credit facility, the $225 million term loan facility, the 2017 $85 million term loan the Company entered into two interest rate swap agreements (one in May 2017 with a notional amount of $75 million, effective July 31, 2017,facility and the other in August 2017 with a notional amount of $10 million, effective August 10, 2017), which effectively fix the interest rate on the2019 $85 million term loan facility, each as amended, the “unsecured credit facilities”). Net proceeds from the $50 million senior notes facility were available to provide funding for general corporate purposes. The note agreement contains requirements and covenants similar to the Company’s $850 million credit facility. The Company may make voluntary prepayments in whole or in part, at approximately 3.76%,any time, subject to adjustment basedcertain conditions, including make-whole provisions. Interest payments on the $50 million senior notes facility are due quarterly and the interest rate, subject to certain exceptions, ranges from an annual rate of 3.60% to 4.35% depending on the Company’s leverage ratio,, through maturity. See Note 6 for more information on as calculated under the interest rate swap agreements.
As of SeptemberJune 30, 20172021 and December 31, 2016,2020, the details of the Company’s revolvingunsecured credit facility and term loansfacilities were as set forth below. All dollar amounts are in thousands.
|
|
|
|
|
| Outstanding Balance |
| |||||
|
| Interest Rate (1) |
| Maturity Date |
| June 30, 2021 |
|
| December 31, 2020 |
| ||
Revolving credit facility (2) |
| LIBOR + 1.40% - 2.25% |
| 7/27/2022 |
| $ | 82,000 |
|
| $ | 105,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Term loans and senior notes |
|
|
|
|
|
|
|
|
|
|
|
|
$200 million term loan |
| LIBOR + 1.35% - 2.20% |
| 7/27/2023 |
|
| 200,000 |
|
|
| 200,000 |
|
$225 million term loan |
| LIBOR + 1.35% - 2.20% |
| 1/31/2024 |
|
| 225,000 |
|
|
| 225,000 |
|
$50 million term loan |
| LIBOR + 1.35% - 2.20% |
| 8/2/2023 |
|
| 50,000 |
|
|
| 50,000 |
|
$175 million term loan |
| LIBOR + 1.65% - 2.50% |
| 8/2/2025 |
|
| 175,000 |
|
|
| 175,000 |
|
2017 $85 million term loan |
| LIBOR + 1.30% - 2.10% |
| 7/25/2024 |
|
| 85,000 |
|
|
| 85,000 |
|
2019 $85 million term loan |
| LIBOR + 1.70% - 2.55% |
| 12/31/2029 |
|
| 85,000 |
|
|
| 85,000 |
|
$50 million senior notes |
| 3.60% - 4.35% |
| 3/31/2030 |
|
| 50,000 |
|
|
| 50,000 |
|
Term loans and senior notes at stated value |
|
|
|
|
|
| 870,000 |
|
|
| 870,000 |
|
Unamortized debt issuance costs |
|
|
|
|
|
| (5,779 | ) |
|
| (5,775 | ) |
Term loans and senior notes, net |
|
|
|
|
|
| 864,221 |
|
|
| 864,225 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit facilities, net (2) |
|
|
|
|
| $ | 946,221 |
|
| $ | 970,025 |
|
Weighted-average interest rate (3) |
|
|
|
|
|
| 3.86 | % |
|
| 3.64 | % |
As of September 30, 2017 | As of December 31, 2016 | |||||||||||||||||||||
Maturity Date | Outstanding Balance | Interest Rate | Outstanding Balance | Interest Rate | ||||||||||||||||||
Revolving credit facility (1) | 5/18/2019 | $ | 216,700 | 2.78 | % | (2 | ) | $ | 270,000 | 2.32 | % | (2 | ) | |||||||||
Term loans | ||||||||||||||||||||||
$425 million term loans | 5/18/2020 | 425,000 | 3.01 | % | (3 | ) | 425,000 | 2.90 | % | (3 | ) | |||||||||||
$50 million term loan | 4/8/2021 | 50,000 | 2.54 | % | (4 | ) | 50,000 | 2.54 | % | (4 | ) | |||||||||||
$100 million term loan | 4/8/2023 | 100,000 | 3.13 | % | (4 | ) | 100,000 | 3.13 | % | (4 | ) | |||||||||||
$85 million term loan | 7/25/2024 | 85,000 | 3.76 | % | (4 | ) | 0 | n/a | ||||||||||||||
Total term loans at stated value | 660,000 | 575,000 | ||||||||||||||||||||
Unamortized debt issuance costs | (4,012 | ) | (4,066 | ) | ||||||||||||||||||
Total term loans | 655,988 | 570,934 | ||||||||||||||||||||
Total revolving credit facility and term loans | $ | 872,688 | $ | 840,934 |
(1) | Interest rates on all of the unsecured credit facilities increased to 0.15% above the highest rate shown for each loan during the Extended Covenant Waiver Period. |
(2) | Excludes unamortized debt issuance costs related to the revolving credit facility |
(3) | Interest rate |
Mortgage Debt
As of SeptemberJune 30, 2017,2021, the Company had approximately $430.1$450.7 million in outstanding property levelmortgage debt secured by 28 properties with maturity dates ranging from June 2020September 2022 to December 2026,May 2038, stated interest rates ranging from 3.55%3.40% to 6.25%5.00% and effective interest rates ranging from 3.55%3.40% to 4.97%. The loans generally provide for monthly payments of principal and interest on an amortized basis and defeasance or prepayment penalties if prepaid. As a result of the effects of the COVID-19 pandemic on certain hotels, the associated lenders granted temporary deferrals of principal and interest payments during 2020, however all payments resumed as of December 31, 2020. The following table sets forth the hotel properties securing each loan, the interest rate, loan assumption or origination date, maturity date, the principal amount assumed or originated, and the outstanding balance prior to any fair value adjustments or debt issuance costs as of SeptemberJune 30, 20172021 and December 31, 20162020 for each of the Company’s mortgage debt obligations. All dollar amounts are in thousands.
15
Location |
| Brand |
| Interest Rate (1) |
|
| Loan Assumption or Origination Date |
| Maturity Date |
| Principal Assumed or Originated |
|
| Outstanding balance as of June 30, 2021 |
|
| Outstanding balance as of December 31, 2020 |
| ||||
Cape Canaveral, FL |
| Hampton |
|
| (2 | ) |
| 4/30/2020 |
| (3) |
| $ | 10,852 |
|
| $ | - |
|
| $ | 10,275 |
|
Cape Canaveral, FL |
| Home2 Suites |
|
| (2 | ) |
| 4/30/2020 |
| (3) |
|
| 10,852 |
|
|
| - |
|
|
| 10,275 |
|
Colorado Springs, CO |
| Hampton |
|
| 6.25 | % |
| 9/1/2016 |
| (4) |
|
| 7,923 |
|
|
| - |
|
|
| 7,317 |
|
Franklin, TN |
| Courtyard |
|
| 6.25 | % |
| 9/1/2016 |
| (4) |
|
| 14,679 |
|
|
| - |
|
|
| 13,563 |
|
Franklin, TN |
| Residence Inn |
|
| 6.25 | % |
| 9/1/2016 |
| (4) |
|
| 14,679 |
|
|
| - |
|
|
| 13,563 |
|
Grapevine, TX |
| Hilton Garden Inn |
|
| 4.89 | % |
| 8/29/2012 |
| 9/1/2022 |
|
| 11,810 |
|
|
| 9,256 |
|
|
| 9,434 |
|
Collegeville/Philadelphia, PA |
| Courtyard |
|
| 4.89 | % |
| 8/30/2012 |
| 9/1/2022 |
|
| 12,650 |
|
|
| 9,914 |
|
|
| 10,105 |
|
Hattiesburg, MS |
| Courtyard |
|
| 5.00 | % |
| 3/1/2014 |
| 9/1/2022 |
|
| 5,732 |
|
|
| 4,640 |
|
|
| 4,729 |
|
Kirkland, WA |
| Courtyard |
|
| 5.00 | % |
| 3/1/2014 |
| 9/1/2022 |
|
| 12,145 |
|
|
| 9,831 |
|
|
| 10,018 |
|
Rancho Bernardo/San Diego, CA |
| Courtyard |
|
| 5.00 | % |
| 3/1/2014 |
| 9/1/2022 |
|
| 15,060 |
|
|
| 12,190 |
|
|
| 12,422 |
|
Seattle, WA |
| Residence Inn |
|
| 4.96 | % |
| 3/1/2014 |
| 9/1/2022 |
|
| 28,269 |
|
|
| 22,857 |
|
|
| 23,294 |
|
Anchorage, AK |
| Embassy Suites |
|
| 4.97 | % |
| 9/13/2012 |
| 10/1/2022 |
|
| 23,230 |
|
|
| 18,313 |
|
|
| 18,660 |
|
Somerset, NJ |
| Courtyard |
|
| 4.73 | % |
| 3/1/2014 |
| 10/6/2022 |
|
| 8,750 |
|
|
| 7,042 |
|
|
| 7,179 |
|
Tukwila, WA |
| Homewood Suites |
|
| 4.73 | % |
| 3/1/2014 |
| 10/6/2022 |
|
| 9,431 |
|
|
| 7,590 |
|
|
| 7,737 |
|
Huntsville, AL |
| Homewood Suites |
|
| 4.12 | % |
| 3/1/2014 |
| 2/6/2023 |
|
| 8,306 |
|
|
| 6,608 |
|
|
| 6,742 |
|
Prattville, AL |
| Courtyard |
|
| 4.12 | % |
| 3/1/2014 |
| 2/6/2023 |
|
| 6,596 |
|
|
| 5,248 |
|
|
| 5,354 |
|
San Diego, CA |
| Residence Inn |
|
| 3.97 | % |
| 3/1/2014 |
| 3/6/2023 |
|
| 18,600 |
|
|
| 14,761 |
|
|
| 15,061 |
|
Miami, FL |
| Homewood Suites |
|
| 4.02 | % |
| 3/1/2014 |
| 4/1/2023 |
|
| 16,677 |
|
|
| 13,270 |
|
|
| 13,537 |
|
New Orleans, LA |
| Homewood Suites |
|
| 4.36 | % |
| 7/17/2014 |
| 8/11/2024 |
|
| 27,000 |
|
|
| 22,376 |
|
|
| 22,766 |
|
Westford, MA |
| Residence Inn |
|
| 4.28 | % |
| 3/18/2015 |
| 4/11/2025 |
|
| 10,000 |
|
|
| 8,464 |
|
|
| 8,605 |
|
Denver, CO |
| Hilton Garden Inn |
|
| 4.46 | % |
| 9/1/2016 |
| 6/11/2025 |
|
| 34,118 |
|
|
| 29,904 |
|
|
| 30,387 |
|
Oceanside, CA |
| Courtyard |
|
| 4.28 | % |
| 9/1/2016 |
| 10/1/2025 |
|
| 13,655 |
|
|
| 12,463 |
|
|
| 12,605 |
|
Omaha, NE |
| Hilton Garden Inn |
|
| 4.28 | % |
| 9/1/2016 |
| 10/1/2025 |
|
| 22,682 |
|
|
| 20,701 |
|
|
| 20,936 |
|
Boise, ID |
| Hampton |
|
| 4.37 | % |
| 5/26/2016 |
| 6/11/2026 |
|
| 24,000 |
|
|
| 21,914 |
|
|
| 22,146 |
|
Burbank, CA |
| Courtyard |
|
| 3.55 | % |
| 11/3/2016 |
| 12/1/2026 |
|
| 25,564 |
|
|
| 22,863 |
|
|
| 23,315 |
|
San Diego, CA |
| Courtyard |
|
| 3.55 | % |
| 11/3/2016 |
| 12/1/2026 |
|
| 25,473 |
|
|
| 22,782 |
|
|
| 23,232 |
|
San Diego, CA |
| Hampton |
|
| 3.55 | % |
| 11/3/2016 |
| 12/1/2026 |
|
| 18,963 |
|
|
| 16,960 |
|
|
| 17,295 |
|
Burbank, CA |
| SpringHill Suites |
|
| 3.94 | % |
| 3/9/2018 |
| 4/1/2028 |
|
| 28,470 |
|
|
| 26,679 |
|
|
| 27,078 |
|
Santa Ana, CA |
| Courtyard |
|
| 3.94 | % |
| 3/9/2018 |
| 4/1/2028 |
|
| 15,530 |
|
|
| 14,553 |
|
|
| 14,770 |
|
Richmond, VA |
| Courtyard |
|
| 3.40 | % |
| 2/12/2020 |
| 3/11/2030 |
|
| 14,950 |
|
|
| 14,594 |
|
|
| 14,739 |
|
Richmond, VA |
| Residence Inn |
|
| 3.40 | % |
| 2/12/2020 |
| 3/11/2030 |
|
| 14,950 |
|
|
| 14,594 |
|
|
| 14,739 |
|
Portland, ME |
| Residence Inn |
|
| 3.43 | % |
| 3/2/2020 |
| 4/1/2030 |
|
| 33,500 |
|
|
| 33,500 |
|
|
| 33,500 |
|
San Jose, CA |
| Homewood Suites |
|
| 4.22 | % |
| 12/22/2017 |
| 5/1/2038 |
|
| 30,000 |
|
|
| 26,853 |
|
|
| 27,392 |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 575,096 |
|
|
| 450,720 |
|
|
| 512,770 |
|
Unamortized fair value adjustment of assumed debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 1,130 |
|
|
| 1,624 |
|
Unamortized debt issuance costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (1,663 | ) |
|
| (1,848 | ) |
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 450,187 |
|
| $ | 512,546 |
|
Location | Brand | Interest Rate (1) | Loan Assumption or Origination Date | Maturity Date | Principal Assumed or Originated | Outstanding balance as of September 30, 2017 | Outstanding balance as of December 31, 2016 | |||||||||||||||||
Irving, TX | Homewood Suites | 5.83 | % | 12/29/2010 | (2 | ) | $ | 6,052 | $ | 0 | $ | 5,072 | ||||||||||||
Gainesville, FL | Homewood Suites | 5.89 | % | 9/1/2016 | (2 | ) | 12,051 | 0 | 11,966 | |||||||||||||||
Duncanville, TX | Hilton Garden Inn | 5.88 | % | 10/21/2008 | (2 | ) | 13,966 | 0 | 12,126 | |||||||||||||||
Dallas, TX | Hilton | 3.95 | % | 5/22/2015 | (3 | ) | 28,000 | 0 | 27,246 | |||||||||||||||
San Juan Capistrano, CA | Residence Inn | 4.15 | % | 9/1/2016 | 6/1/2020 | 16,210 | 15,858 | 16,104 | ||||||||||||||||
Colorado Springs, CO | Hampton | 6.25 | % | 9/1/2016 | 7/6/2021 | 7,923 | 7,787 | 7,883 | ||||||||||||||||
Franklin, TN | Courtyard | 6.25 | % | 9/1/2016 | 8/6/2021 | 14,679 | 14,429 | 14,604 | ||||||||||||||||
Franklin, TN | Residence Inn | 6.25 | % | 9/1/2016 | 8/6/2021 | 14,679 | 14,429 | 14,604 | ||||||||||||||||
Grapevine, TX | Hilton Garden Inn | 4.89 | % | 8/29/2012 | 9/1/2022 | 11,810 | 10,487 | 10,707 | ||||||||||||||||
Collegeville/Philadelphia, PA | Courtyard | 4.89 | % | 8/30/2012 | 9/1/2022 | 12,650 | 11,233 | 11,468 | ||||||||||||||||
Hattiesburg, MS | Courtyard | 5.00 | % | 3/1/2014 | 9/1/2022 | 5,732 | 5,249 | 5,357 | ||||||||||||||||
Rancho Bernardo, CA | Courtyard | 5.00 | % | 3/1/2014 | 9/1/2022 | 15,060 | 13,790 | 14,074 | ||||||||||||||||
Kirkland, WA | Courtyard | 5.00 | % | 3/1/2014 | 9/1/2022 | 12,145 | 11,121 | 11,350 | ||||||||||||||||
Seattle, WA | Residence Inn | 4.96 | % | 3/1/2014 | 9/1/2022 | 28,269 | 25,871 | 26,409 | ||||||||||||||||
Anchorage, AK | Embassy Suites | 4.97 | % | 9/13/2012 | 10/1/2022 | 23,230 | 20,706 | 21,133 | ||||||||||||||||
Somerset, NJ | Courtyard | 4.73 | % | 3/1/2014 | 10/6/2022 | 8,750 | 7,990 | 8,160 | ||||||||||||||||
Tukwila, WA | Homewood Suites | 4.73 | % | 3/1/2014 | 10/6/2022 | 9,431 | 8,611 | 8,795 | ||||||||||||||||
Prattville, AL | Courtyard | 4.12 | % | 3/1/2014 | 2/6/2023 | 6,596 | 5,989 | 6,123 | ||||||||||||||||
Huntsville, AL | Homewood Suites | 4.12 | % | 3/1/2014 | 2/6/2023 | 8,306 | 7,541 | 7,711 | ||||||||||||||||
San Diego, CA | Residence Inn | 3.97 | % | 3/1/2014 | 3/6/2023 | 18,600 | 16,865 | 17,248 | ||||||||||||||||
Miami, FL | Homewood Suites | 4.02 | % | 3/1/2014 | 4/1/2023 | 16,677 | 15,138 | 15,479 | ||||||||||||||||
Syracuse, NY | Courtyard | 4.75 | % | 10/16/2015 | 8/1/2024 | (4 | ) | 11,199 | 10,706 | 10,905 | ||||||||||||||
Syracuse, NY | Residence Inn | 4.75 | % | 10/16/2015 | 8/1/2024 | (4 | ) | 11,199 | 10,706 | 10,905 | ||||||||||||||
New Orleans, LA | Homewood Suites | 4.36 | % | 7/17/2014 | 8/11/2024 | 27,000 | 25,087 | 25,577 | ||||||||||||||||
Westford, MA | Residence Inn | 4.28 | % | 3/18/2015 | 4/11/2025 | 10,000 | 9,448 | 9,626 | ||||||||||||||||
Denver, CO | Hilton Garden Inn | 4.46 | % | 9/1/2016 | 6/11/2025 | 34,118 | 33,253 | 33,857 | ||||||||||||||||
Oceanside, CA | Courtyard | 4.28 | % | 9/1/2016 | 10/1/2025 | 13,655 | 13,394 | 13,576 | ||||||||||||||||
Omaha, NE | Hilton Garden Inn | 4.28 | % | 9/1/2016 | 10/1/2025 | 22,682 | 22,248 | 22,550 | ||||||||||||||||
Boise, ID | Hampton | 4.37 | % | 5/26/2016 | 6/11/2026 | 24,000 | 23,522 | 23,813 | ||||||||||||||||
Burbank, CA | Courtyard | 3.55 | % | 11/3/2016 | 12/1/2026 | 25,564 | 25,081 | 25,564 | ||||||||||||||||
San Diego, CA | Courtyard | 3.55 | % | 11/3/2016 | 12/1/2026 | 25,473 | 24,992 | 25,473 | ||||||||||||||||
San Diego, CA | Hampton | 3.55 | % | 11/3/2016 | 12/1/2026 | 18,963 | 18,605 | 18,963 | ||||||||||||||||
$ | 514,669 | 430,136 | 494,428 | |||||||||||||||||||||
Unamortized fair value adjustment of assumed debt | 4,556 | 5,229 | ||||||||||||||||||||||
Unamortized debt issuance costs | (1,909 | ) | (2,628 | ) | ||||||||||||||||||||
Total | $ | 432,783 | $ | 497,029 |
(1) | Interest rates are the rates per the loan agreement. For loans assumed, the Company adjusted the interest rates per the loan agreement to market rates and is amortizing the adjustments to interest expense over the life of the loan. |
(2) | Interest rate was variable based on one-month LIBOR plus 3.00%. As of April 12, 2021, the date the loan was fully repaid, the interest rate was 3.11%. In July 2020, the principal amount of the note was reduced by approximately $1.1 million representing a credit from the developer for shared construction savings. |
(3) | Loan was repaid in full |
2017 (October - December) | $ | 2,701 | ||
2018 | 11,071 | |||
2019 | 248,408 | |||
2020 | 451,164 | |||
2021 | 95,311 | |||
Thereafter | 498,181 | |||
1,306,836 | ||||
Unamortized fair value adjustment of assumed debt | 4,556 | |||
Unamortized debt issuance costs related to term loans and mortgage debt | (5,921 | ) | ||
Total | $ | 1,305,471 |
5. Fair Value of Financial Instruments
Except as described below, the carrying value of the Company’s financial instruments approximates fair value due to the short-term nature of these financial instruments.
Debt
The Company estimates the fair value of its debt by discounting the future cash flows of each instrument at estimated market rates consistent with the maturity of a debt obligation with similar credit terms and credit characteristics, which are Level 3 inputs under the fair value hierarchy. Market rates take into consideration general market conditions and maturity. As of SeptemberJune 30, 20172021, both
16
the carrying value and estimated fair value of the Company’s debt were approximately $1.4 billion. As of December 31, 2016,2020, both the carrying value and estimated fair value of the Company’s debt were approximately $1.3$1.5 billion. Both the carrying value and estimated fair value of the Company’s debt (as discussed above) isare net of unamortized debt issuance costs related to term loans, senior notes and mortgage debt for each specific year.
Derivative Instruments
Currently, the Company uses interest rate swaps to manage its interest rate risksrisk on variable ratevariable-rate debt. Throughout the terms of these interest rate swaps, the Company pays a fixed rate of interest and receives a floating rate of interest equal to the one monthone-month LIBOR. The swaps are designed to effectively fix the interest payments on variable ratevariable-rate debt instruments. These swap instruments are recorded at fair value and, if in an asset position, are included in other assets, net, and, if in a liability position, are included in accounts payable and other liabilities in the Company’s consolidated balance sheets. The fair values of the Company’s interest rate swap agreements are determined using the market standard methodology of netting the discounted future fixed cash payments and the discounted expected variable cash receipts, which is considered a Level 2 measurement under the fair value hierarchy. The variable cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. The following table sets forth information for each of the Company’s interest rate swap agreements outstanding as of SeptemberJune 30, 20172021 and December 31, 2016.2020. All dollar amounts are in thousands.
|
|
|
|
|
|
|
|
|
|
|
|
|
| Fair Value Asset (Liability) |
| |||||
Notional Amount at June 30, 2021 |
|
| Origination Date |
| Effective Date |
| Maturity Date |
| Swap Fixed Interest Rate |
|
| June 30, 2021 |
|
| December 31, 2020 |
| ||||
Active interest rate swaps designated as cash flow hedges at June 30, 2021: |
|
|
|
|
|
|
|
|
| |||||||||||
| 100,000 |
|
| 4/7/2016 |
| 9/30/2016 |
| 3/31/2023 |
| 1.33% |
|
| $ | (1,954 | ) |
| $ | (2,681 | ) | |
| 75,000 |
|
| 5/31/2017 |
| 7/31/2017 |
| 6/30/2024 |
| 1.96% |
|
|
| (3,346 | ) |
|
| (4,639 | ) | |
| 10,000 |
|
| 8/10/2017 |
| 8/10/2017 |
| 6/30/2024 |
| 2.01% |
|
|
| (462 | ) |
|
| (636 | ) | |
| 50,000 |
|
| 6/1/2018 |
| 1/31/2019 |
| 6/30/2025 |
| 2.89% |
|
|
| (4,451 | ) |
|
| (5,911 | ) | |
| 50,000 |
|
| 7/2/2019 |
| 7/5/2019 |
| 7/18/2024 |
| 1.65% |
|
|
| (1,791 | ) |
|
| (2,593 | ) | |
| 50,000 |
|
| 8/21/2019 |
| 8/23/2019 |
| 8/18/2024 |
| 1.32% |
|
|
| (1,288 | ) |
|
| (2,036 | ) | |
| 50,000 |
|
| 8/21/2019 |
| 8/23/2019 |
| 8/30/2024 |
| 1.32% |
|
|
| (1,291 | ) |
|
| (2,049 | ) | |
| 85,000 |
|
| 12/31/2019 |
| 12/31/2019 |
| 12/31/2029 |
| 1.86% |
|
|
| (4,795 | ) |
|
| (8,677 | ) | |
| 25,000 |
|
| 12/6/2018 |
| 1/31/2020 |
| 6/30/2025 |
| 2.75% |
|
|
| (2,088 | ) |
|
| (2,801 | ) | |
| 50,000 |
|
| 12/7/2018 |
| 5/18/2020 |
| 1/31/2024 |
| 2.72% |
|
|
| (3,050 | ) |
|
| (3,967 | ) | |
| 75,000 |
|
| 8/21/2019 |
| 5/18/2020 |
| 5/18/2025 |
| 1.27% |
|
|
| (1,794 | ) |
|
| (3,294 | ) | |
| 75,000 |
|
| 7/31/2020 |
| 8/18/2020 |
| 8/18/2022 |
| 0.13% |
|
|
| 8 |
|
|
| 14 |
| |
| 75,000 |
|
| 8/21/2019 |
| 5/18/2021 |
| 5/18/2026 |
| 1.30% |
|
|
| (1,774 | ) |
|
| (3,415 | ) | |
| 770,000 |
|
|
|
|
|
|
|
|
|
|
|
|
| (28,076 | ) |
|
| (42,685 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Matured interest rate swap at June 30, 2021: |
|
|
|
|
|
|
|
|
| |||||||||||
$ | 50,000 |
|
| 4/7/2016 |
| 9/30/2016 |
| 3/31/2021 |
| 1.09% |
|
|
| - |
|
|
| (117 | ) | |
|
|
|
|
|
| $ | (28,076 | ) |
| $ | (42,802 | ) |
Fair Value Asset (Liability) | |||||||||||||||||||
Hedge Type | Notional Amount at September 30, 2017 | Origination Date | Maturity Date | Swap Fixed Interest Rate | September 30, 2017 | December 31, 2016 | |||||||||||||
Cash flow hedge | $ | 212,500 | 5/21/2015 | 5/18/2020 | 1.58 | % | $ | 538 | $ | (198 | ) | ||||||||
Cash flow hedge | 110,000 | 7/2/2015 | 5/18/2020 | 1.62 | % | 166 | (246 | ) | |||||||||||
Cash flow hedge | 50,000 | 4/7/2016 | 3/31/2021 | 1.09 | % | 1,168 | 1,289 | ||||||||||||
Cash flow hedge | 100,000 | 4/7/2016 | 3/31/2023 | 1.33 | % | 3,148 | 3,744 | ||||||||||||
Cash flow hedge | 75,000 | 5/31/2017 | 6/30/2024 | 1.96 | % | 202 | 0 | ||||||||||||
Cash flow hedge | 10,000 | 8/10/2017 | 6/30/2024 | 2.01 | % | (4 | ) | 0 | |||||||||||
$ | 557,500 | $ | 5,218 | $ | 4,589 |
The Company assesses, both at inception and on an ongoing basis, the effectiveness of its qualifying cash flow hedges. ChangesAs of June 30, 2021, all of the 13 active interest rate swap agreements listed above were designated as cash flow hedges. The change in the fair value onof the effective portion of allCompany’s designated cash flow hedges areis recorded to accumulated other comprehensive income,loss, a component of shareholders’ equity in the Company’s consolidated balance sheets. Changes in fair value on the ineffective portion of all designated cash flow hedges are recorded to interest and other expense, net in the Company’s consolidated statements of operations.
The following table presents the effect of derivative instruments in cash flow hedging relationships in the Company’s consolidated statements of operations and comprehensive income (loss) for the three and six months ended June 30, 2021 and 2020 (in thousands):
17
|
| Net Unrealized Loss Recognized in Other Comprehensive Income (Loss) |
|
| Net Unrealized Loss Reclassified from Accumulated Other Comprehensive Income (Loss) to Interest and Other Expense, net |
| ||||||||||
|
| Three Months Ended June 30, |
|
| Three Months Ended June 30, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
Interest rate derivatives in cash flow hedging relationships |
| $ | (4,131 | ) |
| $ | (6,394 | ) |
| $ | (2,775 | ) |
| $ | (2,199 | ) |
|
| Net Unrealized Gain (Loss) Recognized in Other Comprehensive Income (Loss) |
|
| Net Unrealized Loss Reclassified from Accumulated Other Comprehensive Income (Loss) to Interest and Other Expense, net |
| ||||||||||
|
| Six Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
Interest rate derivatives in cash flow hedging relationships |
| $ | 9,236 |
|
| $ | (48,661 | ) |
| $ | (5,490 | ) |
| $ | (2,300 | ) |
6. Related Parties
The Company has, and is expected to continue to engage in, transactions with related parties. These transactions cannot be construed to be at arm’s length and the results of the Company’s operations may be different if these transactions were conducted with non-related parties. There have been no changes to the contracts and relationships discussed in the Company’s 2016 Annual Report on2020 Form 10-K. Below is a summary of the significant related party relationships in effect during the ninesix months ended SeptemberJune 30, 20172021 and 2016.
Glade M. Knight, Executive Chairman of the Company, was Chairman and Chief Executive Officer of Apple Ten. Apple Ten’s advisors, Apple Ten Advisors, Inc. (“A10A”) andowns Apple Realty Group, Inc. (“ARG”), are wholly owned by Mr. Knight.which receives support services from the Company and reimburses the Company for the cost of these services as discussed below. Mr. Knight is also currently a partner and Chief Executive Officer of Energy 11 GP, LLC and Energy Resources 12 GP, LLC, which are the respective general partners of Energy 11, L.P. and Energy Resources 12, L.P. Justin G. Knight, the Company’s President and Chief Executive Officer, and a member, each of the Company’s Board of Directors, also served as President of Apple Ten prior to the merger.
The Company provided to Apple Ten the advisoryprovides support services, contemplated under the A10A advisory agreement and received an annual advisory fee and was reimbursed by Apple Ten forincluding the use of the Company’s employees and corporate office, to ARG and other costs associated withis reimbursed by ARG for the advisory agreement. Additionally,cost of these services. Under this cost sharing structure, amounts reimbursed to the Company provided support servicesinclude both compensation for personnel and office related costs (including office rent, utilities, office supplies, etc.) used by ARG. The amounts reimbursed to Apple Ten’s advisors, who agreed to reimburse the Company for itsare based on the actual costs in providing these services. Bothof the advisory feesservices and a good faith estimate of the proportionate amount of time incurred by the Company’s employees on behalf of ARG. Total reimbursed costs receivedallocated by the Company from Apple Ten were recorded as general and administrative expense by Apple Ten and reductions to general and administrative expense by the Company and, therefore, the termination of the subcontract agreement had no financial impact on the combined company after the effective time of the merger. After the merger, the Company has continued and will continue to provide support services to ARG for activities unrelated to Apple Ten.
As part of the cost sharing arrangement, certain day-to-day transactions may result in amounts due to or from the Company and ARG. To efficiently manage cash disbursements, the Company or ARG may make payments for the other company. Under this cash management process, each company may advance or defer up to $1 million at any time. Each quarter, any outstanding amounts are settled between the companies. This process allows each company to minimize its cash on hand and reduces the cost for each company. The amounts outstanding at any point in time are not significant to either of the companies.
The Company, through its wholly-owned subsidiary, Apple Air Holding, LLC, (“Apple Air”)
Distributions
Subsequent to the distribution paid in March 2020, the Company announced the suspension of its monthly distributions due to the impact of COVID-19 on its operating cash flows. Prior to the suspension of its distributions, the Company’s current annual distribution rate, payable monthly, iswas $1.20 per common share. For the threesix months ended SeptemberJune 30, 2017 and 2016,2020, the Company paid distributions of $0.30 per common share for a total of $66.9 million and $57.2 million, respectively. For$67.3 million. The distributions paid during the ninesix months ended SeptemberJune 30, 2017 and 2016,2020 included the distribution paid in January 2020, totaling $22.4 million, that was declared in December 2019. As discussed in Note 4, as a requirement under the amendments to its unsecured credit facilities, the Company paidwas restricted in its ability to make distributions during the Extended Covenant Waiver Period, except for the payment of cash distributions of $0.90$0.01 per common share for a totalper quarter or to the extent required to maintain REIT status. In the first quarter of $200.7 million and $161.9 million, respectively. Additionally, in September 2017,2021, the Company declared a monthlyquarterly distribution of $0.10$0.01 per common share totaling $22.3in March 2021, which totaled $2.2 million whichand was recorded aspaid on April 15, 2021. In the second quarter of 2021, the Company declared a payable as of September 30, 2017 and paid in October 2017. As of December 31, 2016, a monthlyquarterly distribution of $0.10$0.01 per common share totaling $22.3in June 2021, which was paid on July 15, 2021, resulting in an accrued distribution of $2.3 million was recorded as a payable and paid in January 2017. These accrued distributions were included in accounts payable and other liabilities in the Company’s consolidated balance sheets.
Issuance of Shares
On February 28, 2017,August 12, 2020, the Company entered into an equity distribution agreement with Robert W. Baird & Co. Incorporated, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Canaccord Genuity Inc., FBR Capital Markets & Co., Jefferies LLC, KeyBanc Capital Markets Inc. and Scotia Capital (USA) Inc. (collectively, the “Sales Agents”), pursuant to which the Company may sell, from time to time, up to an aggregate of $300 million of its common shares through the Sales Agentsunder an at-the-market offering program (the “ATM Program”). During the nine months ended September 30, 2017,second quarter of 2021, the Company had nosold approximately 4.7 million common shares under its ATM Program at a weighted-average market sales price of approximately $16.26 per common share and received aggregate gross proceeds of approximately $76.0 million, before $0.9 million of commissions and issuance costs. The Company used the entire $75.1 million of net proceeds from the sale of these shares to pay down borrowings on its revolving credit facility. As of June 30, 2021, approximately $224.0 million remained available for issuance under the ATM Program.
Share Repurchases
In May 2021, the Company’s Board of Directors approved a one-year extension of its existing share repurchase program, authorizing share repurchases up to an aggregate of $345 million (the “Share Repurchase Program”). The Share Repurchase Program
8. Compensation Plans
The Company annually establishes an executive incentive plan (“2017for its executive management. Under the incentive plan for 2021 (the “2021 Incentive Plan”), effective January 1, 2017, and established incentive goals for 2017. Under the 2017 Incentive Plan, participants are eligible to receive a bonusincentive compensation based on the achievement of certain 20172021 performance measures, consisting of operational performance metrics (including targeted Modified Funds from Operations per share, Comparable Hotels revenue per available room growth and Adjusted Hotel EBITDA Margin growth) and shareholder return metrics (including shareholder return relative to a peer group and total shareholder return, over one-year, two-year and two-yearthree-year periods). The components ofWith respect to the operational performance metrics, the first half of the year, for the period of January 1 – June 30, 2021, will be based on operational performance metrics including portfolio occupancy growth, expense management, successful negotiation of amendments to each of the Company’s unsecured credit facilities and shareholder returneffective allocation of capital to drive incremental returns, with no specific target or weighting assigned to each metric. The Compensation Committee intends to review performance mid-year to determine the feasibility of reverting back to operational performance metrics for the second half of the year that are equally weighted andmore consistent with the twoCompany’s historical operational performance metrics. The operational performance metrics each account for 50% of the total target incentive compensation. The shareholder return metrics are weighted 75% for relative shareholder return metrics and 25% for total shareholder return metrics, and account for 50% of the total target incentive compensation. At June 30, 2021, the range of potential aggregate payouts under the 20172021 Incentive Plan iswas $0 - $18$22.4 million. Based on performance through SeptemberJune 30, 2017,2021, the Company has accrued approximately $4.7 $6.0
19
million as a liability for potential executive bonusincentive compensation payments under the 20172021 Incentive Plan, which is included in accounts payable and other liabilities in the Company’s consolidated balance sheet as of SeptemberJune 30, 2017.2021. Compensation expense recognized by the Company under the 20172021 Incentive Plan is included in general and administrative expenseexpenses in the Company’s consolidated statementsstatement of operations and totaled approximately $1.2$3.1 million and $4.7$6.0 million for the three and ninesix months ended SeptemberJune 30, 2017, respectively.2021. Approximately 25% of target awards under the 20172021 Incentive Plan, if any, will be paid in cash, and 75% will be issued in stock under the Company’s 2014 Omnibus Incentive Plan, approximately two-thirds of which wouldwill vest at the end of 2017in December 2021 and one-third of which wouldwill vest atin December 2022.
Under the end of 2018. During 2016 and 2015, comparable executive incentive plans were approved by the Compensation Committee (“2016 Incentive Plan” and “2015plan for 2020 (the “2020 Incentive Plan”) that were effective January 1, 2016 and January 1, 2015, respectively. The, the Company recorded a (decrease) increase of approximately $(0.8)$1.1 million and $2.8$2.5 million toin general and administrative expense related to the 2016 Incentive Planexpenses in the Company’sits consolidated statementsstatement of operations for the three and ninesix months ended SeptemberJune 30, 2016, respectively,2020.
During the six months ended June 30, 2020, the Company accrued expense associated with 2 separation agreements of approximately $1.25 million each, totaling approximately $2.5 million, in connection with the decrease resulting from the reductionretirements of the previously recorded executive bonus accrual due to lower anticipated 2016 performance.
Share-Based Compensation Awards
The following table sets forth information pertaining to the share-based compensation issued under the 2020 Incentive Plan and the incentive plan for 2019 (the “2019 Incentive Plan”).
|
| 2020 Incentive Plan |
|
|
| 2019 Incentive Plan |
|
| ||
Period common shares issued |
| First Quarter 2021 |
|
|
| First Quarter 2020 |
|
| ||
|
|
|
|
|
|
|
|
|
|
|
Common shares earned under each incentive plan |
|
| 555,726 |
|
|
|
| 665,552 |
|
|
Common shares surrendered on issuance date to satisfy tax withholding obligations |
|
| 117,647 |
|
|
|
| 60,616 |
|
|
Common shares earned and issued under each incentive plan, net of common shares surrendered on issuance date to satisfy tax withholding obligations |
|
| 438,079 |
|
|
|
| 604,936 |
|
|
Closing stock price on issuance date |
| $ | 14.03 |
|
|
| $ | 13.01 |
|
|
Total share-based compensation earned, including the surrendered shares (in millions) |
| $ | 7.8 |
| (1) |
| $ | 8.7 |
| (2) |
Of the total common shares earned and issued, total common shares unrestricted at time of issuance |
|
| 160,216 |
|
|
|
| 426,553 |
|
|
Of the total common shares earned and issued, total common shares restricted at time of issuance |
|
| 277,863 |
|
|
|
| 178,383 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted common shares vesting date |
| December 10, 2021 |
|
|
| December 11, 2020 |
|
| ||
Common shares surrendered on vesting date to satisfy tax withholding requirements resulting from vesting of restricted common shares |
| n/a |
|
|
|
| 60,066 |
|
|
(1) | Of the total 2020 share-based compensation, approximately $5.9 million was recorded as a liability as of December 31, 2020 and is included in accounts payable and other liabilities in the Company’s consolidated balance sheet at December 31, 2020. The remaining $1.9 million, which is subject to vesting on December 10, 2021 and excludes any restricted shares forfeited or vested prior to that date, will be recognized as share-based compensation expense proportionately throughout 2021. For the three and six months ended June 30, 2021, the Company recognized approximately $0.5 million and $1.0 million, respectively, of share-based compensation expense related to restricted share awards. |
(2) | Of the total 2019 share-based compensation, approximately $1.2 million, which vested on December 11, 2020, was recognized as share-based compensation expense proportionately throughout 2020. For the three and six months ended June 30, 2020, the |
20
Company recognized approximately $0.3 million and $0.6 million, respectively, of share-based compensation expense related to restricted share awards. |
Additionally, in conjunction with the appointment of 5 new officers of the Company receivedon April 1, 2020, the Company issued to the new officer group a total of approximately 200,000 restricted common shares with an additional $2.6aggregate grant date fair value of approximately $1.8 million. For each grantee, the restricted shares will vest on March 31, 2023 if the individual remains in service of the Company through the date of vesting. The expense associated with the awards will be amortized over the 3-year restriction period. For the three months ended June 30, 2021 and 2020, the Company recognized approximately $0.1 million in each respective period, of proceeds from its directorshare-based compensation expense related to these awards, and officer insurance carriers, which was included as a reduction in transaction$0.3 million and litigation costs (reimbursements) in the Company’s consolidated statements of operations$0.1 million, respectively, for the ninesix months ended September 30, 2017. The Company does not anticipate additional costs or reimbursements related to this litigation.
9. Subsequent Events
On July 15, 2021, the Company paid approximately $22.3$2.3 million, or $0.10$0.01 per outstanding common share, in distributions to its common shareholders.
On October 5, 2017,July 22, 2021, the Company completed the sale of the Fairfax, Virginia Marriott for a sale price20 of approximately $41.5 million. The Company usedits hotels. A portion of the net proceeds from the sale were used to pay down borrowings on itsthe Company’s revolving credit facility.facility and the remaining proceeds are available for general corporate purposes, including acquisitions of hotel properties. See Note 43 for additional information.
In July 2021, the Company closedentered into a contract for the purchase of 2 hotels in Portland, Maine, one existing and 1 currently under development that is planned to be completed and open for business during the third quarter of 2021, for an anticipated gross purchase price of approximately $117.9 million. The two hotels consist of an AC Hotel and an Aloft Hotel containing a total of 335 guest rooms. Although the Company is working towards acquiring these hotels, there are many conditions to closing that have not yet been satisfied, and there can be no assurance that closings on these hotels will occur under the outstanding purchase contracts.
In July 2021, the Company entered into a contract for the purchase of an existing 179-room Residence InnHyatt Place hotel in Portland, MaineGreenville, South Carolina, containing 130 guest rooms, for aan anticipated gross purchase price of approximately $55.8$30.0 million.
In July 2021, the Company entered into a contract for the purchase of an existing 136-room Residence InnEmbassy Suites hotel that will be constructed in Salt Lake City, UtahMadison, Wisconsin for aan anticipated gross purchase price of $25.5 million.
In July 2021, the Company notified its lenders under its unsecured credit facilities that it had elected to exit the Extended Covenant Waiver Period effective on July 29, 2021 pursuant to the terms of each of its unsecured credit facilities, as amended. Upon exiting the Extended Covenant Waiver Period, the Company is no longer subject to the additional restrictions described above in Note 4 regarding its investing and financing activities that were applicable during the Extended Covenant Waiver Period, including, but not limited to, limitations on the acquisition of property, payment of distributions to shareholders, limitations on capital expenditures and use of proceeds from the sale of property or common shares of the Company. Those restrictions, including the restriction on payment of distributions to shareholders, were still in place throughout the second quarter of 2021. As of June 30, 2021, the Company met the financial maintenance covenants based on the annualized results of the three months ended June 30, 2021 at the levels required for the first quarter tested upon exiting the Extended Covenant Waiver Period as described in Note 4.
21
Forward-Looking Statements
This Quarterly Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are typically identified by use of termsstatements that include phrases such as “may,” “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project,” “target,” “goal,” “plan,” “should,” “will,” “predict,” “potential,” “outlook,” “strategy,” and similar expressions that convey the uncertainty of future events or outcomes. Such statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of Apple Hospitality REIT, Inc. (the “Company”)the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements.
Currently, one of the most significant factors that could cause actual outcomes to differ materially from the Company’s forward-looking statements continues to be the adverse effect of COVID-19, including resurgences and variants, on the Company’s business, financial performance and condition, operating results and cash flows, the real estate market and the hospitality industry specifically, and the global economy and financial markets generally. The significance, extent and duration of the continued impacts caused by the COVID-19 outbreak on the Company will depend on future developments, which are highly uncertain and cannot be predicted with confidence at this time, including the scope, severity and duration of the pandemic, the extent and effectiveness of the actions taken to contain the pandemic or mitigate its impact, the speed of the vaccine distribution, the efficacy, acceptance and availability of vaccines, the duration of associated immunity and efficacy of the vaccines against variants of COVID-19, the potential for additional hotel closures/consolidations that may be mandated or advisable, whether based on increased COVID-19 cases, new variants or other factors, the slowing or potential rollback of “reopenings” in certain states, and the direct and indirect economic effects of the pandemic and containment measures, among others. Moreover, investors are cautioned to interpret many of the risks identified under the section titled “Risk Factors” in the Company’s 2020 Form 10-K as being heightened as a result of the ongoing and numerous adverse impacts of COVID-19. Such additional factors include, but are not limited to, the ability of the Company to effectively acquire and dispose of properties; the ability of the Company to successfully integrate pending transactions and implement its operating strategy; changes in general political, economic and competitive conditions and specific market conditions; reduced business and leisure travel due to travel-related health concerns, including the widespread outbreak of COVID-19 or an increase in COVID-19 cases or any other infectious or contagious diseases in the U.S. or abroad; adverse changes in the real estate and real estate capital markets; financing risks; the outcome of current and futurechanges in interest rates; litigation including any legal proceedings that have been or may be instituted against the Company or others;risks; regulatory proceedings or inquiries; and changes in laws or regulations or interpretations of current laws and regulations that impact the Company’s business, assets or classification as a real estate investment trust (“REIT”).REIT. Although the Company believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore there can be no assurance that such statements included in this Quarterly Report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the results or conditions described in such statements or the objectives and plans of the Company will be achieved. In addition, the Company’s qualification as a REIT involves the application of highly technical and complex provisions of the Internal Revenue Code.Code of 1986, as amended. Readers should carefully review the risk factors described in the Company’s filings with the Securities and Exchange Commission (“SEC”), including but not limited to those discussed in the section titled “Risk Factors” in the Company’s Annual Report on2020 Form 10-K for the year ended December 31, 2016.10-K. Any forward-looking statement that the Company makes speaks only as of the date of this Quarterly Report. The Company undertakes no obligation to publicly update or revise any forward-looking statements or cautionary factors, as a result of new information, future events, or otherwise, except as required by law.
The following discussion and analysis should be read in conjunction with the Company’s Unaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q, as well as the information contained in the Company’s Annual Report on2020 Form 10-K for the year ended December 31, 2016.
Overview
The Company is a Virginia corporation that has elected to be treated as a REIT for federal income tax purposes. The Company is self-advised and invests in income-producing real estate, primarily in the lodging sector, in the United States.U.S. As of SeptemberJune 30, 2017,2021, the Company owned 237232 hotels with an aggregate of 30,18829,753 rooms located in urban, high-end suburban and developing markets throughout 3335 states, including one hotel20 hotels with 3162,133 rooms classified as held for sale, which waswere sold to an unrelated party in October 2017. AllJuly 2021. Substantially all of the Company’s hotels operate under Marriott or Hilton brands. The hotels are operated and managed under separate management agreements with 2216 hotel management companies, none of which are affiliated with the Company. The Company’s common shares are listed on the New York Stock ExchangeNYSE under the ticker symbol “APLE.”
The Impact of COVID-19 on the Company and Hospitality Industry
Since first being reported in December 2019, COVID-19 has spread globally, including to every state in the U.S. On March 11, 2020, the World Health Organization declared COVID-19 a pandemic, and on March 13, 2020, the U.S. declared a national emergency with respect to COVID-19.
22
The outbreak of COVID-19 has not only specifically reduced travel, but also has had a detrimental impact on regional and global economies and financial markets. The global, national and local impact of the outbreak has continued to evolve and many countries, including the U.S., as well as state and local governments, have reacted and continue to react with a wide variety of measures intended to control its spread, including states of emergency, mandatory quarantines, implementation of “stay at home” orders, business closures, border closings, and restrictions on travel and large gatherings, which has resulted in, and may continue to result in, cancellation of events, including sporting events, conferences and meetings. The pandemic triggered a period of material global economic slowdown and the National Bureau of Economic Research declared that the U.S. entered a recession in February 2020. While the Company’s operating results and the overall economy in the U.S. continue to show signs of recovery, the Company cannot presently determine the extent or duration of the overall operational and financial effects that COVID-19 will have on the Company, its business, the hospitality industry and the economy, or whether the recovery will continue.
The effects of the pandemic on the hotel industry are unprecedented. COVID-19 disrupted the industry and dramatically reduced business and leisure travel, which has had a significant adverse impact on, and management expects COVID-19 will continue to significantly adversely impact and disrupt, the Company’s business, financial performance and condition, operating results and cash flows. While a number of initial restrictions put into place during 2020 have eased, occupancy and average daily rate (“ADR”) during the first two quarters of 2021 were still generally below 2019 pre-pandemic levels. Additionally, while the development and distribution of vaccines have helped contribute to improved conditions over the first half of 2021, there can be no assurances that the vaccines will contain the spread of the virus and its variants and allow the economy to fully recover. The Company expects the decline in revenue associated with COVID-19 and the overall influence on the U.S. economy to negatively impact the Company’s operating results for an extended period of time. While the Company has experienced significant recoveries in leisure travel through the second quarter of 2021, the Company does not expect a full recovery in results until business travel improves and government restrictions on travel and business operations are lifted.
Since the beginning of the pandemic, the Company, its management companies and its brands have taken steps to minimize costs and cash outflow to maintain a sound liquidity position. The Company has implemented cost elimination and efficiency initiatives at each of the Company’s hotels by reducing labor costs, reducing or eliminating certain amenities and reducing rates under various service contracts, enhanced its sales efforts by focusing on COVID-19-specific demand opportunities in certain markets and has strategically targeted and maximized performance based on available demand, reduced non-essential capital improvement projects planned for 2021, and entered into amendments to its unsecured credit facilities that provided for the temporary waiver of financial covenant testing for the majority of its financial maintenance covenants. Cost reduction initiatives, including those discussed above, are not expected to fully, or even materially, offset revenue losses from COVID-19. The extent and duration of COVID-19 effects continue to remain unknown, and these uncertainties continue to make it difficult to predict operating results for the Company’s hotels for the near future. Therefore, while the Company has experienced continued improvement through the first half of 2021 and expects continued improvement through the rest of the year, future revenues and operating results could be negatively impacted by, among other things, historical seasonal trends, an increase in COVID-19 cases, state and local governments and businesses reverting back to tighter mitigation restrictions, deterioration of consumer sentiment or significant inflationary pressures. Therefore, there can be no assurances that the Company will not experience setbacks or further declines in hotel revenues or earnings at its hotels and the Company cannot predict how long the effects will continue to impact the Company’s operating results as compared to pre-pandemic levels.
2021 Hotel Portfolio Activities
The Company continually monitors market conditions and attempts to maximize shareholder value by investing in properties that it believes provide superior value inover the long term. Consistent with this strategy and the Company’s focus on investing in select-servicerooms-focused hotels, in 2019 the Company entered into a contract to purchase a 176-room Hilton Garden Inn to be constructed in Madison, Wisconsin. Construction of the hotel was completed in February 2021 and the Company acquired three newly constructed hotelsthe hotel on February 18, 2021 for an aggregatea gross purchase price of approximately $56.4$49.6 million, during the first nine months of 2017: a 124-room Courtyard by Marriott hotel in Fort Worth, Texas and a 104-room Hilton Garden Inn and 106-room Home2 Suites dual-branded hotel in Birmingham, Alabama. The purchase price for each of these properties was funded throughutilizing borrowings on the Company’s $540 million revolving credit facility (the “revolving credit facility”). In October 2017,facility.
As of July 31, 2021, the Company completed the purchase of two additional hotels (a 136-room Residence Inn hotel in Salt Lake City, Utah and a 179-room Residence Inn hotel in Portland, Maine) for an aggregate purchase price of approximately $81.3 million. The Company also hashad separate outstanding contracts for the potential purchase of four hotels, consisting of two additional hotels that are under constructionin Portland, Maine, one hotel in Greenville, South Carolina and one hotel in Madison, Wisconsin for a total combined purchase price of approximately $64.8 million, which$226.5 million. Two of the hotels are plannedalready in operation, one is in development and scheduled to open during the third quarter of 2021, and one is in development and scheduled to open no earlier than 2023. Closings on three of these hotels are expected to occur in the second half of 2021, while closing on the remaining hotel is expected upon completion of development. Although the Company is working towards acquiring these hotels, there are many conditions to closing that have not yet been satisfied and there can be completed and opened for business over the next 12 months from September 30, 2017, at which time closingno assurance that closings on these hotels will occur under the outstanding purchase contracts. The Company plans to utilize its available cash (including a portion of the proceeds from the sale of 20 hotels in July 2021) or borrowings under its unsecured credit facilities available at closing to purchase hotels under contract if closings occur. The Company also entered into a contract during the second quarter of 2021 to purchase the fee interest in the land at its Seattle, Washington Residence Inn, which is currently under a ground lease, for a purchase price of $80.0 million, consisting of a $24.0 million cash payment and a one-year note payable to the seller for $56.0 million. The land purchase is expected to close in August 2021 and the Company plans to utilize its available cash (including a portion of the proceeds from the sale of 20 hotels in July 2021) or borrowings under its unsecured credit
23
facilities available at closing to purchase the land. Although the Company is working towards completing this acquisition, there are many conditions to closing that have not yet been satisfied and there can be no assurance that closing will occur.
For its existing portfolio, the Company monitors each property’s profitability, market conditions and capital requirements and attempts to maximize shareholder value by disposing of properties when it believes that superior value can be provided by the proceeds from the sale of the property. As a result,
See Note 32 titled “Investment in Real Estate” and Note 43 titled “Assets Held for Sale and Dispositions” in the Company’s Unaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q, for additional information concerning these transactions.
Hotel Operations
As of SeptemberJune 30, 2017,2021, the Company owned 237232 hotels with a total of 30,18829,753 rooms as compared to 236233 hotels with a total of 30,29929,759 rooms as of SeptemberJune 30, 2016, however, results2020. Results of operations are included only for the period of ownership for hotels acquired or disposed of during the current reporting period and prior year. During the ninesix months ended SeptemberJune 30, 2017,2021, the Company acquired threeone newly constructed hotel on February 18, 2021 and sold three hotels (one on February 2, 2017,25, 2021, one on March 16, 2021 and two on September 12, 2017) and sold one hotel on April 20, 2017.30, 2021). During 2016,2020, the Company acquired 56 hotels in the Apple REIT Ten, Inc. (“Apple Ten”) merger effective September 1, 2016 (the “Apple Ten merger”), acquired one additionaltwo newly constructed hotelhotels on July 1, 2016April 30, 2020 and two newly constructed hotels on August 13, 2020, and sold three hotels (one on January 16, 2020, one hotelon February 27, 2020 and one on December 6, 2016.30, 2020). As a result, the comparability of results for the three and ninesix months ended SeptemberJune 30, 20172021 and 20162020 as discussed below is significantly impacted by these transactions.
In evaluating financial condition and operating performance, the most important indicators on which the Company focuses are revenue measurements, such as average occupancy, ADR and revenue per available room (“RevPAR”), and expenses, such as hotel operating expenses, general and administrative expenses and other expenses described below.
The following is a summary of the results from operations of the Company’s hotels for their respective periods of ownership by the Company.Company:
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||||||||||||||||||||||||||
(in thousands, except statistical data) |
| 2021 |
|
| Percent of Revenue |
|
| 2020 |
|
| Percent of Revenue |
|
| Percent Change |
|
| 2021 |
|
| Percent of Revenue |
|
| 2020 |
|
| Percent of Revenue |
|
| Percent Change |
| ||||||||||
Total revenue |
| $ | 247,404 |
|
|
| 100.0 | % |
| $ | 81,078 |
|
|
| 100.0 | % |
|
| 205.1 | % |
| $ | 406,117 |
|
|
| 100.0 | % |
| $ | 319,088 |
|
|
| 100.0 | % |
|
| 27.3 | % |
Hotel operating expense |
|
| 135,410 |
|
|
| 54.7 | % |
|
| 61,817 |
|
|
| 76.2 | % |
|
| 119.0 | % |
|
| 239,150 |
|
|
| 58.9 | % |
|
| 217,083 |
|
|
| 68.0 | % |
|
| 10.2 | % |
Property taxes, insurance and other expense |
|
| 17,321 |
|
|
| 7.0 | % |
|
| 18,702 |
|
|
| 23.1 | % |
|
| -7.4 | % |
|
| 37,009 |
|
|
| 9.1 | % |
|
| 38,297 |
|
|
| 12.0 | % |
|
| -3.4 | % |
General and administrative expense |
|
| 8,435 |
|
|
| 3.4 | % |
|
| 6,025 |
|
|
| 7.4 | % |
|
| 40.0 | % |
|
| 16,554 |
|
|
| 4.1 | % |
|
| 15,548 |
|
|
| 4.9 | % |
|
| 6.5 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on impairment of depreciable real estate assets |
|
| - |
|
|
|
|
|
|
| 4,382 |
|
|
|
|
|
| n/a |
|
|
| 10,754 |
|
|
|
|
|
|
| 4,382 |
|
|
|
|
|
|
| 145.4 | % | |
Depreciation and amortization expense |
|
| 46,386 |
|
|
|
|
|
|
| 49,897 |
|
|
|
|
|
|
| -7.0 | % |
|
| 95,096 |
|
|
|
|
|
|
| 99,419 |
|
|
|
|
|
|
| -4.3 | % |
Gain (loss) on sale of real estate |
|
| (864 | ) |
|
|
|
|
|
| (54 | ) |
|
|
|
|
| n/a |
|
|
| 3,620 |
|
|
|
|
|
|
| 8,785 |
|
|
|
|
|
|
| -58.8 | % | |
Interest and other expense, net |
|
| 18,618 |
|
|
|
|
|
|
| 18,386 |
|
|
|
|
|
|
| 1.3 | % |
|
| 37,131 |
|
|
|
|
|
|
| 33,952 |
|
|
|
|
|
|
| 9.4 | % |
Income tax expense |
|
| 87 |
|
|
|
|
|
|
| 58 |
|
|
|
|
|
|
| 50.0 | % |
|
| 195 |
|
|
|
|
|
|
| 204 |
|
|
|
|
|
|
| -4.4 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
| 20,283 |
|
|
|
|
|
|
| (78,243 | ) |
|
|
|
|
| n/a |
|
|
| (26,152 | ) |
|
|
|
|
|
| (81,012 | ) |
|
|
|
|
|
| 67.7 | % | |
Adjusted hotel EBITDA (1) |
|
| 94,814 |
|
|
|
|
|
|
| 704 |
|
|
|
|
|
| n/a |
|
|
| 130,241 |
|
|
|
|
|
|
| 64,001 |
|
|
|
|
|
|
| 103.5 | % | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of hotels owned at end of period |
|
| 232 |
|
|
|
|
|
|
| 233 |
|
|
|
|
|
|
| -0.4 | % |
|
| 232 |
|
|
|
|
|
|
| 233 |
|
|
|
|
|
|
| -0.4 | % |
ADR |
| $ | 120.56 |
|
|
|
|
|
| $ | 100.76 |
|
|
|
|
|
|
| 19.7 | % |
| $ | 111.19 |
|
|
|
|
|
| $ | 122.48 |
|
|
|
|
|
|
| -9.2 | % |
Occupancy |
|
| 70.7 | % |
|
|
|
|
|
| 28.2 | % |
|
|
|
|
|
| 150.7 | % |
|
| 63.2 | % |
|
|
|
|
|
| 44.5 | % |
|
|
|
|
|
| 42.0 | % |
RevPAR |
| $ | 85.28 |
|
|
|
|
|
| $ | 28.44 |
|
|
|
|
|
|
| 199.9 | % |
| $ | 70.23 |
|
|
|
|
|
| $ | 54.55 |
|
|
|
|
|
|
| 28.7 | % |
(1) | See reconciliation of Adjusted Hotel EBITDA to net income (loss) in “Non-GAAP Financial Measures” below. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||
(in thousands, except statistical data) | 2017 | Percent of Revenue | 2016 | Percent of Revenue | Percent Change | 2017 | Percent of Revenue | 2016 | Percent of Revenue | Percent Change | ||||||||||||||||||||||||||||||
Total revenue | $ | 324,926 | 100.0 | % | $ | 276,471 | 100.0 | % | 17.5 | % | $ | 949,555 | 100.0 | % | $ | 758,594 | 100.0 | % | 25.2 | % | ||||||||||||||||||||
Hotel operating expense | 179,829 | 55.3 | % | 153,337 | 55.5 | % | 17.3 | % | 528,295 | 55.6 | % | 417,965 | 55.1 | % | 26.4 | % | ||||||||||||||||||||||||
Property taxes, insurance and other expense | 17,598 | 5.4 | % | 14,787 | 5.3 | % | 19.0 | % | 52,346 | 5.5 | % | 40,315 | 5.3 | % | 29.8 | % | ||||||||||||||||||||||||
Ground lease expense | 2,831 | 0.9 | % | 2,615 | 0.9 | % | 8.3 | % | 8,486 | 0.9 | % | 7,587 | 1.0 | % | 11.8 | % | ||||||||||||||||||||||||
General and administrative expense | 5,350 | 1.6 | % | 2,623 | 0.9 | % | 104.0 | % | 18,255 | 1.9 | % | 12,511 | 1.6 | % | 45.9 | % | ||||||||||||||||||||||||
Transaction and litigation costs (reimbursements) | - | 36,452 | n/a | (2,586 | ) | 37,861 | n/a | |||||||||||||||||||||||||||||||||
Loss on impairment of depreciable real estate assets | - | 5,471 | n/a | 7,875 | 5,471 | 43.9 | % | |||||||||||||||||||||||||||||||||
Depreciation expense | 44,110 | 37,343 | 18.1 | % | 131,770 | 104,651 | 25.9 | % | ||||||||||||||||||||||||||||||||
Interest and other expense, net | 12,024 | 10,156 | 18.4 | % | 35,590 | 28,519 | 24.8 | % | ||||||||||||||||||||||||||||||||
Gain (loss) on sale of real estate | (157 | ) | - | n/a | 15,983 | - | n/a | |||||||||||||||||||||||||||||||||
Income tax expense (benefit) | 203 | (7 | ) | n/a | 712 | 616 | 15.6 | % | ||||||||||||||||||||||||||||||||
Number of hotels owned at end of period | 237 | 236 | 0.4 | % | 237 | 236 | 0.4 | % | ||||||||||||||||||||||||||||||||
ADR | $ | 136.73 | $ | 136.04 | 0.5 | % | $ | 135.97 | $ | 135.88 | 0.1 | % | ||||||||||||||||||||||||||||
Occupancy | 80.0 | % | 80.2 | % | -0.2 | % | 78.7 | % | 78.9 | % | -0.3 | % | ||||||||||||||||||||||||||||
RevPAR | $ | 109.45 | $ | 109.07 | 0.3 | % | $ | 106.96 | $ | 107.18 | -0.2 | % |
24
The following table highlights the quarterly impact of COVID-19 on the Company’s ADR, Occupancy, RevPAR, net income (loss) and adjusted hotel earnings before interest, income taxes, depreciation and amortization for real estate (“Adjusted Hotel EBITDA”) during the last five quarters (in thousands except statistical data):
|
| 2nd Quarter |
|
| 3rd Quarter |
|
| 4th Quarter |
|
| 1st Quarter |
|
| 2nd Quarter |
| |||||
|
| 2020 |
|
| 2020 |
|
| 2020 |
|
| 2021 |
|
| 2021 |
| |||||
ADR |
| $ | 100.76 |
|
| $ | 104.78 |
|
| $ | 97.87 |
|
| $ | 99.19 |
|
| $ | 120.56 |
|
Occupancy |
|
| 28.2 | % |
|
| 48.6 | % |
|
| 46.5 | % |
|
| 55.5 | % |
|
| 70.7 | % |
RevPAR |
| $ | 28.44 |
|
| $ | 50.94 |
|
| $ | 45.46 |
|
| $ | 55.09 |
|
| $ | 85.28 |
|
Net income (loss) |
| $ | (78,243 | ) |
| $ | (40,948 | ) |
| $ | (51,247 | ) |
| $ | (46,435 | ) |
| $ | 20,283 |
|
Adjusted Hotel EBITDA (1) |
| $ | 704 |
|
| $ | 34,688 |
|
| $ | 23,296 |
|
| $ | 35,427 |
|
| $ | 94,814 |
|
(1) | See reconciliation of Adjusted Hotel EBITDA to net income (loss) in “Non-GAAP Financial Measures” below. |
Beginning in March 2020, COVID-19 caused widespread cancellations of both business and leisure travel throughout the U.S., resulting in significant decreases in RevPAR throughout the Company’s hotel portfolio and the hospitality industry as a whole. With the overall uncertainty of the longevity of COVID-19 in the U.S. and the resulting economic decline, it is difficult to project the depth and duration of revenue declines for the industry and Company; however, the Company currently expects declines in revenue and operating results as compared to 2019 to continue throughout the remainder of 2021 and potentially into future years. While the Company experienced its most significant decline in operating results during the second quarter of 2020 as compared to previous quarters, occupancy and RevPAR have since shown improvement, with average occupancy reaching 70.7% by the second quarter of 2021, resulting in the strongest operating results since the onset of the pandemic. Although the Company expects continued recovery in rate and occupancy, future revenues and operating results could be negatively impacted by, among other things, historical seasonal trends, an increase in COVID-19 cases, state and local governments and businesses reverting back to tighter mitigation restrictions, deterioration of consumer sentiment or significant inflationary pressures.
Comparable Hotels Operating Results
The following table reflects certain operating statistics for the Company’s 236212 hotels owned and held for use as of SeptemberJune 30, 20172021 (“Comparable Hotels”). The Company defines metrics from Comparable Hotels as results generated by the 236212 hotels owned and held for use as of the end of the reporting period. These metrics do not includeperiod, and excludes the results generated by the Fairfax, Virginia Marriott hotel which washotels held for sale as of September 30, 2017 and sold on October 5, 2017.sale. For the hotels acquired during the current reporting period and prior year, the Company has included, as applicable, results of those hotels for periods prior to the Company’s ownership using information provided by the properties’ prior owners at the time of acquisition and not adjusted by the Company. This information has not been audited, either for the periods owned or prior to ownership by the Company. For dispositions and assets held for sale, results have been excluded for the Company’s period of ownership.
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||||||||||
|
| 2021 |
|
| 2020 |
|
| Percent Change |
|
| 2021 |
|
| 2020 |
|
| Percent Change |
| ||||||
ADR |
| $ | 121.80 |
|
| $ | 101.51 |
|
|
| 20.0 | % |
| $ | 112.20 |
|
| $ | 123.89 |
|
|
| -9.4 | % |
Occupancy |
|
| 70.8 | % |
|
| 28.2 | % |
|
| 151.1 | % |
|
| 63.3 | % |
|
| 44.5 | % |
|
| 42.2 | % |
RevPAR |
| $ | 86.22 |
|
| $ | 28.61 |
|
|
| 201.4 | % |
| $ | 70.97 |
|
| $ | 55.14 |
|
|
| 28.7 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2017 | 2016 | Percent Change | 2017 | 2016 | Percent Change | |||||||||||||||||||
ADR | $ | 136.83 | $ | 134.79 | 1.5 | % | $ | 135.84 | $ | 134.88 | 0.7 | % | ||||||||||||
Occupancy | 80.2 | % | 80.4 | % | -0.2 | % | 78.8 | % | 78.7 | % | 0.1 | % | ||||||||||||
RevPAR | $ | 109.77 | $ | 108.32 | 1.3 | % | $ | 107.10 | $ | 106.20 | 0.8 | % |
Same Store Operating Results
The following table reflects certain operating statistics for the Company’s 177207 hotels owned and held for use by the Company as of January 1, 20162020 and during the entirety of the reporting periods being compared.compared (“Same Store Hotels”). This information has not been audited.
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||||||||||
|
| 2021 |
|
| 2020 |
|
| Percent Change |
|
| 2021 |
|
| 2020 |
|
| Percent Change |
| ||||||
ADR |
| $ | 121.79 |
|
| $ | 101.44 |
|
|
| 20.1 | % |
| $ | 112.09 |
|
| $ | 123.90 |
|
|
| -9.5 | % |
Occupancy |
|
| 71.3 | % |
|
| 28.2 | % |
|
| 152.8 | % |
|
| 63.7 | % |
|
| 44.6 | % |
|
| 42.8 | % |
RevPAR |
| $ | 86.79 |
|
| $ | 28.62 |
|
|
| 203.2 | % |
| $ | 71.35 |
|
| $ | 55.22 |
|
|
| 29.2 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2017 | 2016 | Percent Change | 2017 | 2016 | Percent Change | |||||||||||||||||||
ADR | $ | 138.86 | $ | 136.60 | 1.7 | % | $ | 137.09 | $ | 136.09 | 0.7 | % | ||||||||||||
Occupancy | 80.2 | % | 80.5 | % | -0.4 | % | 79.0 | % | 79.0 | % | 0.0 | % | ||||||||||||
RevPAR | $ | 111.42 | $ | 110.02 | 1.3 | % | $ | 108.23 | $ | 107.49 | 0.7 | % |
As discussed above, hotel performance is impacted by many factors, including the economic conditions in the U.S. as well as each individual locality. COVID-19 has been negatively affecting the U.S. hotel industry since March 2020. The Company’s revenue and operating results improved during the three and six months ended June 30, 2021 compared to the three and six months ended June 30, 2020, which is consistent with the overall lodging industry. However, as a result of COVID-19, the Company’s revenue and operating results have declined as compared to 2019 and the Company expects these declines relative to 2019 levels to continue
25
throughout the remainder of 2021. The Company can give no assurances of the amount or period of decline due to the uncertainty regarding the duration and long-term impact of as well as governmental and consumer response to, COVID-19.
Revenues
The Company’s principal source of revenue is hotel revenue consisting of room, food and beverage, and other related revenue. For the three months ended SeptemberJune 30, 20172021 and 2016,2020, the Company had total revenue of $324.9$247.4 million and $276.5$81.1 million, respectively. For the ninesix months ended SeptemberJune 30, 20172021 and 2016,2020, the Company had total revenue of $949.6$406.1 million and $758.6$319.1 million, respectively. For the three months ended SeptemberJune 30, 20172021 and 2016,2020, respectively, Comparable Hotels achieved combined average occupancy of 80.2%70.8% and 80.4%28.2%, ADR of $136.83$121.80 and $134.79$101.51 and RevPAR of $109.77$86.22 and $108.32.$28.61. For the ninesix months ended SeptemberJune 30, 20172021 and 2016,2020, respectively, Comparable Hotels achieved combined average occupancy of 78.8%63.3% and 78.7%44.5%, ADR of $135.84$112.20 and $134.88$123.89 and RevPAR of $107.10$70.97 and $106.20.$55.14. ADR is calculated as room revenue divided by the number of rooms sold, and RevPAR is calculated as occupancy multiplied by ADR.
Compared to the same periodsperiod in 2016,2020, during the three and nine months ended SeptemberJune 30, 2017,2021, the Company experienced increases in ADR and occupancy, resulting in increasesan increase of 1.3% and 0.8%201.4% in RevPAR for Comparable Hotels. As compared to the second quarter of 2019 (pre-COVID-19), Comparable Hotels respectively. The Company’s growth duringRevPAR for the first nine monthssecond quarter of 2017 was impacted2021 decreased by 26.8% as a declineresult of reductions in rate and occupancy. During March 2020, the hotel industry and the Company began to see a significant decrease in occupancy as both mandated and voluntary restrictions on travel were implemented throughout the U.S. For Comparable Hotels, average occupancy declined to 28.2% for the second quarter of 2020 before improving over subsequent quarters to 70.8% in the Los Angeles market duesecond quarter of 2021 driven predominately by increased leisure demand as a result of improved consumer confidence in travel and the lifting of some COVID-19 mitigation restrictions, but also by increased demand from a wide variety of demand generators such as government, healthcare, construction, disaster recovery, insurance, athletics, education and local and regional business-related travel. Revenue recovery in the second quarter of 2021 was led by leisure transient and group demand, with increased demand from small corporate and government business. Suburban markets continued to outsized growth in 2016 fromsee stronger demand than urban markets. Throughout the Porter Ranch gas leak. The Company anticipates that with its geographically diverse portfolio ofhospitality industry, upscale and upper midscale select-service hotels, on a comparable basis, overall RevPAR growthmid-scale chain scales have outperformed luxury and upper upscale and suburban locations have outperformed urban locations. Occupancy increased throughout the second quarter of 2021 and the trend continued into July, with estimated occupancy of approximately 75% for the remainder of the year will approximate industry averages. Although certain markets will vary based on local supply/demand dynamics and local market economic conditions, with continued overall room rate improvement combined with expected stable overall demand growth compared to supply growth, themonth. The Company on a comparable basis, and industry are forecasting a low single-digit percentage increase in revenue for the full year of 2017 as compared to 2016, withexpects this trend expected to gradually continue, into 2018. Markets with above average growth in the third quarter and first nine months of 2017 for the Company and industry included Richmond, Knoxville, Kansas City, St. Louis and San Diego. Markets that were below average for the Company and industry included Dallas, Austin and Philadelphia. Additionally, in the third quarter of 2017, Houston and certain Florida markets experiencedhowever, future revenues could be negatively impacted by, among other things, historical seasonal trends, an increase in demand dueCOVID-19 cases, state and local governments and businesses reverting back to evacuationtighter mitigation restrictions or deterioration of consumer sentiment.
Hotel Operating Expense
The Company, its management companies and restoration efforts related to hurricanes Harvey and Irma, which led to increased RevPAR for the Company and industry in those markets. While certain ofbrands the Company’s hotels incurred minor windare franchised with have all aggressively worked to mitigate the costs and water related damage fromuses of cash associated with operating the hurricanes,hotels in a low-occupancy environment and are thoughtfully working to position the overallhotels to adapt to the changes that may occur to guest preferences in the future. The impact was not material.
Hotel operating expense consists of direct room operating expense, hotel administrative expense, sales and marketing expense, utilities expense, repair and maintenance expense, franchise fees and management fees. ForHotel operating expense for the three months ended SeptemberJune 30, 20172021 and 2016, respectively, hotel operating expense2020 totaled $179.8$135.4 million and $153.3$61.8 million, respectively, or 55.3%54.7% and 55.5%76.2% of total revenue for eachthe respective period. Forperiods. Hotel operating expense for the ninesix months ended SeptemberJune 30, 20172021 and 2016, respectively, hotel operating expense2020 totaled $528.3$239.2 million and $418.0$217.1 million, respectively, or 55.6%58.9% and 55.1%68.0% of total revenue for eachthe respective period. Overall hotel operational expenses for the first nine months of 2017 include the results of the 57 hotels acquired during 2016, including one hotel acquired on July 1, 2016 and 56 hotels acquired with the Apple Ten merger effective September 1, 2016, for the full period and three hotels acquired in 2017 from their respective dates of acquisition. Expenses for 2017 also include the results of one hotel sold on April 20, 2017 until the date of sale. Expenses for the first nine months of 2016 include the results of one hotel sold on December 6, 2016 and the hotel sold on April 20, 2017 for the full period, and the results of one hotel acquired on July 1, 2016 from the date of acquisition and the 56 hotels acquired in the Apple Ten merger for the month of September 2016. For the Company’s Comparable Hotels,periods. Comparatively, prior to COVID-19, hotel operating expense as a percentagewas 54.9% and 56.2%, respectively, of total revenue increased approximately 20 and 90 basis points, respectively, for the three and ninesix months ended SeptemberJune 30, 2017 as compared to the same periods in 2016. During the first nine months of 2017, the Company experienced increases in labor costs as a percentage of revenue, which was the primary cause of the increase2019. Included in hotel operating expense. Although laborexpense for the six months ended June 30, 2021 are an additional $1.8 million of utility costs were the primary causeresulting from extraordinary rate increases and fees assessed at some of the increaseCompany’s hotels in hotel operating expensesTexas as a result of winter and ice storms in the thirdfirst quarter of 2017, these increases did moderate as compared to the same period in 2016.2021. The Company anticipates continued increases in labor costs due to government regulations surrounding wages, healthcarehas worked and other benefits, other wage-related initiatives and lower unemployment rates. Although operating expenses will increase as revenue increases, the Company will continue to work with its management companies to reduce costs as a percentageoptimize staffing models, and adjust food and beverage offerings and other amenities, among other efficiency initiatives, to mitigate the impact of revenue where possible while maintaining qualitydeclines on its results of operations. For example, the Company has reduced service and amenity offerings as allowed by the relaxation of certain brand standards and the Company also successfully reduced rates under various service levels at each property.
26
Property Taxes, Insurance and Other Expense
Property taxes, insurance, and other expense for the three months ended SeptemberJune 30, 20172021 and 2016 totaled $17.62020 was $17.3 million and $14.8$18.7 million, respectively, or 5.4%7.0% and 5.3% of total revenue, respectively, and for Comparable Hotels, 5.4% and 5.5%23.1% of total revenue for eachthe respective period.periods. For the ninesix months ended SeptemberJune 30, 20172021 and 2016,2020, property taxes, insurance, and other expense totaled $52.3$37.0 million and $40.3$38.3 million, respectively, or 5.5%9.1% and 5.3% of total revenue, respectively, and for Comparable Hotels, 5.5%12.0% of total revenue for each period. For the Company’s Comparable Hotels, real estaterespective periods. Prior to COVID-19, property taxes, increased slightly duringinsurance and other expense for the first ninethree and six months ended June 30, 2019 totaled $19.2 million and $38.9 million, respectively, or 5.6% and 6.0% of 2017 comparedtotal revenue for the respective periods. The decrease from 2019 and 2020 to the first nine months of 2016, with tax increases at certain locations2021 was primarily due to the reassessment of property values by localities related to the improved economy, partially offset by decreases at other locations due to successful appeals of tax assessments. With the economy continuing to improve, the Company anticipates continued increases in property tax assessments duringtaxes in certain localities. Although the remainder of 2017. The Company will continue to aggressively appeal tax assessments and monitor locality guidance as a result of COVID-19, it does not currently anticipate further significant decreases in certain jurisdictionsproperty taxes in 2021 as compared to attempt to minimize tax increases as warranted.
General and Administrative Expense
General and administrative expense for the three months ended SeptemberJune 30, 20172021 and 20162020 was $5.4$8.4 million and $2.6$6.0 million, respectively, or 1.6%3.4% and 0.9%7.4% of total revenue respectively.for the respective periods. For the ninesix months ended SeptemberJune 30, 20172021 and 2016,2020, general and administrative expense was $18.3$16.6 million and $12.5$15.5 million, respectively, or 1.9%4.1% and 1.6%4.9% of total revenue respectively.for the respective periods. The principal components of general and administrative expense are payroll and related benefit costs, legal fees, accounting fees and reporting expenses. In addition, during the first eight months of 2016, the Company provided to Apple Ten the advisory services contemplated under their advisory agreement, and the Company received fees and reimbursement of expenses payable under the advisory agreement from Apple Ten totaling approximately $3.5 million, which were recorded as reductions to generalGeneral and administrative expenses. Effective September 1, 2016,expense for the six months ended June 30, 2020 included the accrual of approximately $2.5 million in separation benefits awarded in connection with the completionretirements of the Apple Ten merger,Company’s former Chief Operating Officer and former Chief Financial Officer on March 31, 2020. Excluding the advisory agreement was terminated and the Company no longer receives the fees and reimbursement of expenses payable under the advisory agreement from Apple Ten, which resulted in an increase in the Company’s general and administrative expenses from the prior period. Although expense for the Company in total dollars increased from the prior period, since both the advisory fees and reimbursed costs received by the Company from Apple Ten were recorded asseparation benefit accrual, general and administrative expense increased by Apple Ten and as reductionsapproximately $3.5 million for the six months ended June 30, 2021 compared to general and administrative expense by the Company, the termination of the advisory agreement had no financial impact on the combined company after the effective time of the Apple Ten merger. General and administrative expense alsosix months ended June 30, 2020 primarily due to increased accruals for both the third quarter and first nine months of 2017incentive compensation related to anticipated higher shareholder return performance in 2021 as compared to the prior year due to an increased accrual as of September 30, 2017 for the Company’s executive incentive plan related to better projected performance under the plan. In comparison, the accrual for potential executive bonus payments was reduced during the third quarter of 2016 by approximately $0.8 million, due to lower than previously anticipated 2016 performance, resulting in a decrease in executive compensation expense for the period. The increases in the third quarter and the first nine months of 2017 over the same periods of 2016 were $1.7 million and $1.0 million, respectively.
Loss on Impairment of Depreciable Real Estate Assets
Loss on impairment of depreciable real estate assets was approximately $7.9$10.8 million for the ninesix months ended SeptemberJune 30, 2017, and related to2021, consisting of impairment losses of $1.3 million for the Columbus, GeorgiaOverland Park, Kansas SpringHill Suites and TownePlace Suites hotels that$9.4 million for four hotel properties identified by the Company identified for potential sale duringin the first quarter of 2017. For each of the three and nine months ended September 30, 2016, loss2021 for potential sale. Loss on impairment of depreciable real estate assets was approximately $5.5$4.4 million for both the three and related tosix months ended June 30, 2020, consisting of an impairment charge for the Chesapeake, Virginia Marriott hotel that the Company identified for potential sale during the period.
Depreciation and Amortization Expense
Depreciation and amortization expense for the three months ended SeptemberJune 30, 20172021 and 20162020 was $44.1$46.4 million and $37.3$49.9 million, respectively. For the ninesix months ended SeptemberJune 30, 20172021 and 2016,2020, depreciation and amortization expense was $131.8$95.1 million and $104.7$99.4 million, respectively. Depreciation and amortization expense primarily represents expense of the Company’s hotel buildings and related improvements, and associated personal property (furniture, fixtures, and equipment) for theirthe respective periods owned. The increase wasdecreases of approximately $3.5 million and $4.3 million, respectively, for the three and six months ended June 30, 2021 and 2020 were primarily due to the increase in the number of properties owned as a result of the Apple Ten merger effective September 1, 2016, the acquisition of three hotels in 2017 and one hotel in July 2016 and renovationsdispositions completed throughout 20172020 and 2016.
Interest and Other Expense, net
Interest and other expense, net for the three months ended SeptemberJune 30, 20172021 and 20162020 was $12.0$18.6 million and $10.2$18.4 million, respectively,respectively. For the six months ended June 30, 2021 and 2020, interest and other expense, net was $37.1 million and $34.0 million, respectively. Interest and other expense, net for the six months ended June 30, 2020 is net of approximately $0.1$0.8 million and $0.2 million, respectively, of interest capitalized associated with renovation projects. For the nine months ended September 30, 2017 and 2016,Additionally, interest and other expense, net was $35.6for the three months ended June 30, 2021 and 2020 includes approximately $2.9 million and $28.5$2.8 million, respectively, of interest recorded on the Company’s finance lease liabilities. For the six months ended June 30, 2021 and 2020, interest and other expense, net includes approximately $5.8 million and $5.7 million, respectively, of interest recorded on the Company’s finance lease liabilities.
Interest expense related to the Company’s debt instruments increased in the six months ended June 30, 2021 as compared to the six months ended June 30, 2020 as a result of increased interest rates on the Company’s unsecured credit facilities associated with the amendments to obtain covenant waivers. However, the Company anticipates interest expense to be lower for the remainder of 2021 compared to the same period of 2020 due to reduced average borrowings and lower interest rates for the second half of the year; the reduction in average borrowings has been and is net of approximately $0.7 million and $1.2 million of interest capitalized associated with renovation projects, respectively. The increase in interest expense wasexpected to be primarily due to an increasepaydowns on the revolving credit facility resulting from the sale of hotel properties, proceeds from the sale of common shares under the ATM program and increased cash flows from improved operations, while interest rates are expected to decrease on the Company’s unsecured credit facilities as a result of exiting the Extended Covenant Waiver Period (as discussed below under “Liquidity and Capital Resources”) for the remainder of the year.
27
See Note 4 titled “Debt” in the Company’s average outstanding borrowings during the first nine months of 2017 as compared to 2016 which is primarily attributable to (a) mortgage debt assumedUnaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in the Apple Ten merger effective September 1, 2016 and (b) borrowings to fund (i) the cash payment portionthis Quarterly Report on Form 10-Q, for additional discussion of the Apple Ten merger, (ii) the repayment of Apple Ten’s outstanding balance on its extinguishedCompany’s amended unsecured credit facility assumed in the Apple Ten merger and (iii) the acquisition of four hotels (one in July 2016, one in February 2017 and two in September 2017); which increases were partially offset by the sale of two hotels (one in December 2016 and one in April 2017). The impact of higher debt balances and the increasing cost of variable rate debt was partially offset by a reduction in the average interest rate incurred on the Company’s total outstanding debt, resulting from the repayment of maturing fixed-rate mortgage debt with lower rate borrowings primarily from its $150 million term loan facility and new mortgage debt originations.
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 FFOFunds from Operations (“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 EBITDA (“Adjusted EBITDA”).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.
FFO and MFFO
The Company calculates and presents FFO in accordance with standards established by the National Association of Real Estate Investment Trusts (“NAREIT”Nareit”), which defines FFO as net income (loss) (computed in accordance with generally accepted accounting principles (“GAAP”))GAAP), excluding gains orand losses from salesthe 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 partnerships and joint ventures.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 NAREITNareit 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 adjustsadjusting FFO for certain additional items that are not in NAREIT’s definition of FFO, including: (i) the exclusion of transactionamortization of finance ground lease assets, amortization of favorable and litigation costs (reimbursements) as these costs do not represent ongoing operationsunfavorable operating leases, net and (ii) the exclusion of non-cash straight-line operating ground lease expense, as this expense doesthese 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 income (loss) to FFO and MFFO for the three and ninesix months ended SeptemberJune 30, 20172021 and 20162020 (in thousands).:
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
Net income (loss) |
| $ | 20,283 |
|
| $ | (78,243 | ) |
| $ | (26,152 | ) |
| $ | (81,012 | ) |
Depreciation of real estate owned |
|
| 44,764 |
|
|
| 48,044 |
|
|
| 91,852 |
|
|
| 95,712 |
|
(Gain) loss on sale of real estate |
|
| 864 |
|
|
| 54 |
|
|
| (3,620 | ) |
|
| (8,785 | ) |
Loss on impairment of depreciable real estate assets |
|
| - |
|
|
| 4,382 |
|
|
| 10,754 |
|
|
| 4,382 |
|
Funds from operations |
|
| 65,911 |
|
|
| (25,763 | ) |
|
| 72,834 |
|
|
| 10,297 |
|
Amortization of finance ground lease assets |
|
| 1,618 |
|
|
| 1,602 |
|
|
| 3,235 |
|
|
| 3,204 |
|
Amortization of favorable and unfavorable operating leases, net |
|
| 98 |
|
|
| 101 |
|
|
| 196 |
|
|
| 202 |
|
Non-cash straight-line operating ground lease expense |
|
| 43 |
|
|
| 44 |
|
|
| 87 |
|
|
| 91 |
|
Modified funds from operations |
| $ | 67,670 |
|
| $ | (24,016 | ) |
| $ | 76,352 |
|
| $ | 13,794 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Net income | $ | 62,824 | $ | 13,694 | $ | 184,795 | $ | 103,098 | ||||||||
Depreciation of real estate owned | 43,880 | 37,114 | 131,081 | 103,962 | ||||||||||||
(Gain) loss on sale of real estate | 157 | - | (15,983 | ) | - | |||||||||||
Loss on impairment of depreciable real estate assets | - | 5,471 | 7,875 | 5,471 | ||||||||||||
Amortization of favorable and unfavorable leases, net | 165 | 132 | 498 | 513 | ||||||||||||
Funds from operations | 107,026 | 56,411 | 308,266 | 213,044 | ||||||||||||
Transaction and litigation costs (reimbursements) | - | 36,452 | (2,586 | ) | 37,861 | |||||||||||
Non-cash straight-line ground lease expense | 917 | 843 | 2,794 | 2,479 | ||||||||||||
Modified funds from operations | $ | 107,943 | $ | 93,706 | $ | 308,474 | $ | 253,384 |
EBITDA, EBITDAre, Adjusted EBITDAre and Adjusted Hotel EBITDA
EBITDA is a commonly used measure of performance in many industries and is defined as net income (loss) excluding interest, income taxes, and 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.
28
In addition to EBITDA, the Company considers the exclusion of
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 for the three and ninesix months ended SeptemberJune 30, 20172021 and 20162020 (in thousands).:
|
| Three Months Ended June 30, |
|
| Six Months Ended June 30, |
| ||||||||||
|
| 2021 |
|
| 2020 |
|
| 2021 |
|
| 2020 |
| ||||
Net income (loss) |
| $ | 20,283 |
|
| $ | (78,243 | ) |
| $ | (26,152 | ) |
| $ | (81,012 | ) |
Depreciation and amortization |
|
| 46,386 |
|
|
| 49,897 |
|
|
| 95,096 |
|
|
| 99,419 |
|
Amortization of favorable and unfavorable operating leases, net |
|
| 98 |
|
|
| 101 |
|
|
| 196 |
|
|
| 202 |
|
Interest and other expense, net |
|
| 18,618 |
|
|
| 18,386 |
|
|
| 37,131 |
|
|
| 33,952 |
|
Income tax expense |
|
| 87 |
|
|
| 58 |
|
|
| 195 |
|
|
| 204 |
|
EBITDA |
|
| 85,472 |
|
|
| (9,801 | ) |
|
| 106,466 |
|
|
| 52,765 |
|
(Gain) loss on sale of real estate |
|
| 864 |
|
|
| 54 |
|
|
| (3,620 | ) |
|
| (8,785 | ) |
Loss on impairment of depreciable real estate assets |
|
| - |
|
|
| 4,382 |
|
|
| 10,754 |
|
|
| 4,382 |
|
EBITDAre |
|
| 86,336 |
|
|
| (5,365 | ) |
|
| 113,600 |
|
|
| 48,362 |
|
Non-cash straight-line operating ground lease expense |
|
| 43 |
|
|
| 44 |
|
|
| 87 |
|
|
| 91 |
|
Adjusted EBITDAre |
|
| 86,379 |
|
|
| (5,321 | ) |
|
| 113,687 |
|
|
| 48,453 |
|
General and administrative expense |
|
| 8,435 |
|
|
| 6,025 |
|
|
| 16,554 |
|
|
| 15,548 |
|
Adjusted Hotel EBITDA |
| $ | 94,814 |
|
| $ | 704 |
|
| $ | 130,241 |
|
| $ | 64,001 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table reconciles the Company’s GAAP net income (loss) to EBITDA, EBITDAre, Adjusted EBITDAre and Adjusted Hotel EBITDA by quarter for the last five quarters (in thousands):
|
| 2nd Quarter |
|
| 3rd Quarter |
|
| 4th Quarter |
|
| 1st Quarter |
|
| 2nd Quarter |
| |||||
|
| 2020 |
|
| 2020 |
|
| 2020 |
|
| 2021 |
|
| 2021 |
| |||||
Net income (loss) |
| $ | (78,243 | ) |
| $ | (40,948 | ) |
| $ | (51,247 | ) |
| $ | (46,435 | ) |
| $ | 20,283 |
|
Depreciation and amortization |
|
| 49,897 |
|
|
| 50,171 |
|
|
| 50,196 |
|
|
| 48,710 |
|
|
| 46,386 |
|
Amortization of favorable and unfavorable operating leases, net |
|
| 101 |
|
|
| 103 |
|
|
| 137 |
|
|
| 98 |
|
|
| 98 |
|
Interest and other expense, net |
|
| 18,386 |
|
|
| 18,531 |
|
|
| 18,352 |
|
|
| 18,513 |
|
|
| 18,618 |
|
Income tax expense |
|
| 58 |
|
|
| 61 |
|
|
| 67 |
|
|
| 108 |
|
|
| 87 |
|
EBITDA |
|
| (9,801 | ) |
|
| 27,918 |
|
|
| 17,505 |
|
|
| 20,994 |
|
|
| 85,472 |
|
(Gain) loss on sale of real estate |
|
| 54 |
|
|
| - |
|
|
| (2,069 | ) |
|
| (4,484 | ) |
|
| 864 |
|
Loss on impairment of depreciable real estate assets |
|
| 4,382 |
|
|
| - |
|
|
| 715 |
|
|
| 10,754 |
|
|
| - |
|
EBITDAre |
|
| (5,365 | ) |
|
| 27,918 |
|
|
| 16,151 |
|
|
| 27,264 |
|
|
| 86,336 |
|
Non-cash straight-line operating ground lease expense |
|
| 44 |
|
|
| 44 |
|
|
| 45 |
|
|
| 44 |
|
|
| 43 |
|
Adjusted EBITDAre |
|
| (5,321 | ) |
|
| 27,962 |
|
|
| 16,196 |
|
|
| 27,308 |
|
|
| 86,379 |
|
General and administrative expense |
|
| 6,025 |
|
|
| 6,726 |
|
|
| 7,100 |
|
|
| 8,119 |
|
|
| 8,435 |
|
Adjusted Hotel EBITDA |
| $ | 704 |
|
| $ | 34,688 |
|
| $ | 23,296 |
|
| $ | 35,427 |
|
| $ | 94,814 |
|
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Net income | $ | 62,824 | $ | 13,694 | $ | 184,795 | $ | 103,098 | ||||||||
Depreciation | 44,110 | 37,343 | 131,770 | 104,651 | ||||||||||||
Amortization of favorable and unfavorable leases, net | 165 | 132 | 498 | 513 | ||||||||||||
Interest and other expense, net | 12,024 | 10,156 | 35,590 | 28,519 | ||||||||||||
Income tax expense (benefit) | 203 | (7 | ) | 712 | 616 | |||||||||||
EBITDA | 119,326 | 61,318 | 353,365 | 237,397 | ||||||||||||
Transaction and litigation costs (reimbursements) | - | 36,452 | (2,586 | ) | 37,861 | |||||||||||
(Gain) loss on sale of real estate | 157 | - | (15,983 | ) | - | |||||||||||
Loss on impairment of depreciable real estate assets | - | 5,471 | 7,875 | 5,471 | ||||||||||||
Non-cash straight-line ground lease expense | 917 | 843 | 2,794 | 2,479 | ||||||||||||
Adjusted EBITDA | $ | 120,400 | $ | 104,084 | $ | 345,465 | $ | 283,208 |
Hotels Owned
As of SeptemberJune 30, 2017,2021, the Company owned 237232 hotels with an aggregate of 30,18829,753 rooms located in 33 states.35 states, including 20 hotels with 2,133 rooms classified as held for sale as detailed in Note 3 titled “Assets Held for Sale and Dispositions” in the Company’s Unaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q, which were sold to an unrelated party in July 2021. The following tables summarize the number of hotels and rooms by brand and by state:
Number of Hotels and Guest Rooms by Brand |
| |||||
|
| Number of |
| Number of |
| |
Brand |
| Hotels |
| Rooms |
| |
Hilton Garden Inn |
| 42 |
|
| 5,843 |
|
Hampton |
| 39 |
|
| 4,986 |
|
Courtyard |
| 36 |
|
| 4,948 |
|
Residence Inn |
| 33 |
|
| 3,939 |
|
Homewood Suites |
| 31 |
|
| 3,473 |
|
SpringHill Suites |
| 12 |
|
| 1,603 |
|
Fairfield |
| 11 |
|
| 1,300 |
|
Home2 Suites |
| 10 |
|
| 1,146 |
|
TownePlace Suites |
| 9 |
|
| 931 |
|
Marriott |
| 2 |
|
| 619 |
|
Embassy Suites |
| 2 |
|
| 316 |
|
Hyatt Place |
| 2 |
|
| 281 |
|
Independent |
| 2 |
|
| 263 |
|
Hyatt House |
| 1 |
|
| 105 |
|
Total |
| 232 |
|
| 29,753 |
|
30
Number of Hotels and Guest Rooms by State |
| |||||||
|
| Number of |
|
| Number of |
| ||
State |
| Hotels |
|
| Rooms |
| ||
Alabama |
|
| 15 |
|
|
| 1,434 |
|
Alaska |
|
| 2 |
|
|
| 304 |
|
Arizona |
|
| 14 |
|
|
| 1,903 |
|
Arkansas |
|
| 3 |
|
|
| 336 |
|
California |
|
| 26 |
|
|
| 3,721 |
|
Colorado |
|
| 4 |
|
|
| 567 |
|
Florida |
|
| 23 |
|
|
| 2,922 |
|
Georgia |
|
| 6 |
|
|
| 672 |
|
Idaho |
|
| 1 |
|
|
| 186 |
|
Illinois |
|
| 8 |
|
|
| 1,420 |
|
Indiana |
|
| 4 |
|
|
| 479 |
|
Iowa |
|
| 3 |
|
|
| 301 |
|
Kansas |
|
| 3 |
|
|
| 320 |
|
Louisiana |
|
| 3 |
|
|
| 422 |
|
Maine |
|
| 1 |
|
|
| 179 |
|
Maryland |
|
| 2 |
|
|
| 233 |
|
Massachusetts |
|
| 4 |
|
|
| 466 |
|
Michigan |
|
| 1 |
|
|
| 148 |
|
Minnesota |
|
| 3 |
|
|
| 405 |
|
Mississippi |
|
| 2 |
|
|
| 168 |
|
Missouri |
|
| 4 |
|
|
| 544 |
|
Nebraska |
|
| 4 |
|
|
| 621 |
|
New Jersey |
|
| 5 |
|
|
| 629 |
|
New York |
|
| 4 |
|
|
| 554 |
|
North Carolina |
|
| 9 |
|
|
| 973 |
|
Ohio |
|
| 2 |
|
|
| 252 |
|
Oklahoma |
|
| 4 |
|
|
| 545 |
|
Pennsylvania |
|
| 3 |
|
|
| 391 |
|
South Carolina |
|
| 5 |
|
|
| 538 |
|
Tennessee |
|
| 12 |
|
|
| 1,362 |
|
Texas |
|
| 31 |
|
|
| 3,755 |
|
Utah |
|
| 3 |
|
|
| 393 |
|
Virginia |
|
| 13 |
|
|
| 1,825 |
|
Washington |
|
| 4 |
|
|
| 609 |
|
Wisconsin |
|
| 1 |
|
|
| 176 |
|
Total |
|
| 232 |
|
|
| 29,753 |
|
|
|
|
|
|
|
|
|
|
Number of Hotels and Guest Rooms by Brand | ||||||||
Number of | Number of | |||||||
Brand | Hotels | Rooms | ||||||
Hilton Garden Inn | 42 | 5,807 | ||||||
Courtyard | 40 | 5,460 | ||||||
Hampton | 36 | 4,422 | ||||||
Homewood Suites | 34 | 3,831 | ||||||
Residence Inn | 32 | 3,696 | ||||||
SpringHill Suites | 17 | 2,248 | ||||||
TownePlace Suites | 12 | 1,196 | ||||||
Fairfield Inn | 11 | 1,300 | ||||||
Home2 Suites | 7 | 775 | ||||||
Marriott | 3 | 932 | ||||||
Embassy Suites | 2 | 316 | ||||||
Renaissance | 1 | 205 | ||||||
Total | 237 | 30,188 |
Number of Hotels and Guest Rooms by State | ||||||||
Number of | Number of | |||||||
State | Hotels | Rooms | ||||||
Alabama | 15 | 1,434 | ||||||
Alaska | 1 | 169 | ||||||
Arizona | 11 | 1,434 | ||||||
Arkansas | 4 | 408 | ||||||
California | 27 | 3,807 | ||||||
Colorado | 4 | 567 | ||||||
Florida | 23 | 2,851 | ||||||
Georgia | 6 | 596 | ||||||
Idaho | 2 | 416 | ||||||
Illinois | 8 | 1,420 | ||||||
Indiana | 4 | 479 | ||||||
Iowa | 3 | 301 | ||||||
Kansas | 4 | 422 | ||||||
Louisiana | 4 | 541 | ||||||
Maryland | 2 | 233 | ||||||
Massachusetts | 4 | 466 | ||||||
Michigan | 1 | 148 | ||||||
Minnesota | 2 | 244 | ||||||
Mississippi | 2 | 168 | ||||||
Missouri | 4 | 544 | ||||||
Nebraska | 4 | 621 | ||||||
New Jersey | 5 | 629 | ||||||
New York | 4 | 550 | ||||||
North Carolina | 12 | 1,337 | ||||||
Ohio | 2 | 252 | ||||||
Oklahoma | 4 | 545 | ||||||
Pennsylvania | 3 | 391 | ||||||
South Carolina | 5 | 538 | ||||||
Tennessee | 12 | 1,356 | ||||||
Texas | 34 | 4,072 | ||||||
Utah | 2 | 257 | ||||||
Virginia | 15 | 2,383 | ||||||
Washington | 4 | 609 | ||||||
Total | 237 | 30,188 |
The following table summarizes the location, brand, manager, date acquired or completed and number of rooms for each of the 237232 hotels the Company owned as of SeptemberJune 30, 2017.2021.
City |
| State |
| Brand |
| Manager |
| Date Acquired or Completed |
| Rooms |
|
| |
Anchorage |
| AK |
| Embassy Suites |
| Stonebridge |
| 4/30/2010 |
|
| 169 |
|
|
Anchorage |
| AK |
| Home2 Suites |
| Stonebridge |
| 12/1/2017 |
|
| 135 |
|
|
Auburn |
| AL |
| Hilton Garden Inn |
| LBA |
| 3/1/2014 |
|
| 101 |
|
|
Birmingham |
| AL |
| Courtyard |
| LBA |
| 3/1/2014 |
|
| 84 |
|
|
Birmingham |
| AL |
| Hilton Garden Inn |
| LBA |
| 9/12/2017 |
|
| 104 |
|
|
Birmingham |
| AL |
| Home2 Suites |
| LBA |
| 9/12/2017 |
|
| 106 |
|
|
Birmingham |
| AL |
| Homewood Suites |
| McKibbon |
| 3/1/2014 |
|
| 95 |
|
|
Dothan |
| AL |
| Hilton Garden Inn |
| LBA |
| 6/1/2009 |
|
| 104 |
|
|
Dothan |
| AL |
| Residence Inn |
| LBA |
| 3/1/2014 |
|
| 84 |
|
|
Huntsville |
| AL |
| Hampton |
| LBA |
| 9/1/2016 |
|
| 98 |
|
|
Huntsville |
| AL |
| Hilton Garden Inn |
| LBA |
| 3/1/2014 |
|
| 101 |
|
|
Huntsville |
| AL |
| Home2 Suites |
| LBA |
| 9/1/2016 |
|
| 77 |
|
|
Huntsville |
| AL |
| Homewood Suites |
| LBA |
| 3/1/2014 |
|
| 107 |
|
|
Mobile |
| AL |
| Hampton |
| McKibbon |
| 9/1/2016 |
|
| 101 |
|
|
Montgomery |
| AL |
| Hilton Garden Inn |
| LBA |
| 3/1/2014 |
|
| 97 |
| (1) |
Montgomery |
| AL |
| Homewood Suites |
| LBA |
| 3/1/2014 |
|
| 91 |
| (1) |
Prattville |
| AL |
| Courtyard |
| LBA |
| 3/1/2014 |
|
| 84 |
|
|
Rogers |
| AR |
| Hampton |
| Raymond |
| 8/31/2010 |
|
| 122 |
|
|
Rogers |
| AR |
| Homewood Suites |
| Raymond |
| 4/30/2010 |
|
| 126 |
|
|
Rogers |
| AR |
| Residence Inn |
| Raymond |
| 3/1/2014 |
|
| 88 |
| (1) |
Chandler |
| AZ |
| Courtyard |
| North Central |
| 11/2/2010 |
|
| 150 |
|
|
Chandler |
| AZ |
| Fairfield |
| North Central |
| 11/2/2010 |
|
| 110 |
|
|
Phoenix |
| AZ |
| Courtyard |
| North Central |
| 11/2/2010 |
|
| 164 |
|
|
Phoenix |
| AZ |
| Courtyard |
| North Central |
| 9/1/2016 |
|
| 127 |
| (1) |
Phoenix |
| AZ |
| Hampton |
| North Central |
| 9/1/2016 |
|
| 125 |
|
|
Phoenix |
| AZ |
| Hampton |
| North Central |
| 5/2/2018 |
|
| 210 |
|
|
Phoenix |
| AZ |
| Homewood Suites |
| North Central |
| 9/1/2016 |
|
| 134 |
|
|
Phoenix |
| AZ |
| Residence Inn |
| North Central |
| 11/2/2010 |
|
| 129 |
|
|
Scottsdale |
| AZ |
| Hilton Garden Inn |
| North Central |
| 9/1/2016 |
|
| 122 |
|
|
Tempe |
| AZ |
| Hyatt House |
| Crestline |
| 8/13/2020 |
|
| 105 |
|
|
Tempe |
| AZ |
| Hyatt Place |
| Crestline |
| 8/13/2020 |
|
| 154 |
|
|
Tucson |
| AZ |
| Hilton Garden Inn |
| Western |
| 7/31/2008 |
|
| 125 |
|
|
Tucson |
| AZ |
| Residence Inn |
| Western |
| 3/1/2014 |
|
| 124 |
|
|
Tucson |
| AZ |
| TownePlace Suites |
| Western |
| 10/6/2011 |
|
| 124 |
|
|
Agoura Hills |
| CA |
| Homewood Suites |
| Dimension |
| 3/1/2014 |
|
| 125 |
|
|
Burbank |
| CA |
| Courtyard |
| Huntington |
| 8/11/2015 |
|
| 190 |
|
|
Burbank |
| CA |
| Residence Inn |
| Marriott |
| 3/1/2014 |
|
| 166 |
|
|
Burbank |
| CA |
| SpringHill Suites |
| Marriott |
| 7/13/2015 |
|
| 170 |
|
|
Clovis |
| CA |
| Hampton |
| Dimension |
| 7/31/2009 |
|
| 86 |
|
|
Clovis |
| CA |
| Homewood Suites |
| Dimension |
| 2/2/2010 |
|
| 83 |
|
|
Cypress |
| CA |
| Courtyard |
| Dimension |
| 3/1/2014 |
|
| 180 |
|
|
Cypress |
| CA |
| Hampton |
| Dimension |
| 6/29/2015 |
|
| 110 |
|
|
Oceanside |
| CA |
| Courtyard |
| Marriott |
| 9/1/2016 |
|
| 142 |
|
|
Oceanside |
| CA |
| Residence Inn |
| Marriott |
| 3/1/2014 |
|
| 125 |
|
|
Rancho Bernardo/San Diego |
| CA |
| Courtyard |
| InnVentures |
| 3/1/2014 |
|
| 210 |
|
|
Sacramento |
| CA |
| Hilton Garden Inn |
| Dimension |
| 3/1/2014 |
|
| 153 |
|
|
San Bernardino |
| CA |
| Residence Inn |
| InnVentures |
| 2/16/2011 |
|
| 95 |
|
|
San Diego |
| CA |
| Courtyard |
| Huntington |
| 9/1/2015 |
|
| 245 |
|
|
San Diego |
| CA |
| Hampton |
| Dimension |
| 3/1/2014 |
|
| 177 |
|
|
San Diego |
| CA |
| Hilton Garden Inn |
| InnVentures |
| 3/1/2014 |
|
| 200 |
|
|
32
City |
| State |
| Brand |
| Manager |
| Date Acquired or Completed |
| Rooms |
|
| |
San Diego |
| CA |
| Residence Inn |
| Dimension |
| 3/1/2014 |
|
| 121 |
|
|
San Jose |
| CA |
| Homewood Suites |
| Dimension |
| 3/1/2014 |
|
| 140 |
|
|
San Juan Capistrano |
| CA |
| Residence Inn |
| Marriott |
| 9/1/2016 |
|
| 130 |
|
|
Santa Ana |
| CA |
| Courtyard |
| Dimension |
| 5/23/2011 |
|
| 155 |
|
|
Santa Clarita |
| CA |
| Courtyard |
| Dimension |
| 9/24/2008 |
|
| 140 |
|
|
Santa Clarita |
| CA |
| Fairfield |
| Dimension |
| 10/29/2008 |
|
| 66 |
|
|
Santa Clarita |
| CA |
| Hampton |
| Dimension |
| 10/29/2008 |
|
| 128 |
|
|
Santa Clarita |
| CA |
| Residence Inn |
| Dimension |
| 10/29/2008 |
|
| 90 |
|
|
Tustin |
| CA |
| Fairfield |
| Marriott |
| 9/1/2016 |
|
| 145 |
|
|
Tustin |
| CA |
| Residence Inn |
| Marriott |
| 9/1/2016 |
|
| 149 |
|
|
Colorado Springs |
| CO |
| Hampton |
| Chartwell |
| 9/1/2016 |
|
| 101 |
|
|
Denver |
| CO |
| Hilton Garden Inn |
| Stonebridge |
| 9/1/2016 |
|
| 221 |
|
|
Highlands Ranch |
| CO |
| Hilton Garden Inn |
| Dimension |
| 3/1/2014 |
|
| 128 |
|
|
Highlands Ranch |
| CO |
| Residence Inn |
| Dimension |
| 3/1/2014 |
|
| 117 |
|
|
Boca Raton |
| FL |
| Hilton Garden Inn |
| Dimension |
| 9/1/2016 |
|
| 149 |
|
|
Cape Canaveral |
| FL |
| Hampton |
| LBA |
| 4/30/2020 |
|
| 116 |
|
|
Cape Canaveral |
| FL |
| Homewood Suites |
| LBA |
| 9/1/2016 |
|
| 153 |
|
|
Cape Canaveral |
| FL |
| Home2 Suites |
| LBA |
| 4/30/2020 |
|
| 108 |
|
|
Fort Lauderdale |
| FL |
| Hampton |
| Dimension |
| 6/23/2015 |
|
| 156 |
|
|
Fort Lauderdale |
| FL |
| Residence Inn |
| LBA |
| 9/1/2016 |
|
| 156 |
|
|
Gainesville |
| FL |
| Hilton Garden Inn |
| McKibbon |
| 9/1/2016 |
|
| 104 |
|
|
Gainesville |
| FL |
| Homewood Suites |
| McKibbon |
| 9/1/2016 |
|
| 103 |
|
|
Jacksonville |
| FL |
| Homewood Suites |
| McKibbon |
| 3/1/2014 |
|
| 119 |
|
|
Jacksonville |
| FL |
| Hyatt Place |
| Crestline |
| 12/7/2018 |
|
| 127 |
|
|
Lakeland |
| FL |
| Courtyard |
| LBA |
| 3/1/2014 |
|
| 78 |
| (1) |
Miami |
| FL |
| Courtyard |
| Dimension |
| 3/1/2014 |
|
| 118 |
|
|
Miami |
| FL |
| Hampton |
| White Lodging |
| 4/9/2010 |
|
| 121 |
|
|
Miami |
| FL |
| Homewood Suites |
| Dimension |
| 3/1/2014 |
|
| 162 |
|
|
Orlando |
| FL |
| Fairfield |
| Marriott |
| 7/1/2009 |
|
| 200 |
|
|
Orlando |
| FL |
| Home2 Suites |
| LBA |
| 3/19/2019 |
|
| 128 |
|
|
Orlando |
| FL |
| SpringHill Suites |
| Marriott |
| 7/1/2009 |
|
| 200 |
|
|
Panama City |
| FL |
| Hampton |
| LBA |
| 3/12/2009 |
|
| 95 |
|
|
Panama City |
| FL |
| TownePlace Suites |
| LBA |
| 1/19/2010 |
|
| 103 |
|
|
Pensacola |
| FL |
| TownePlace Suites |
| McKibbon |
| 9/1/2016 |
|
| 97 |
|
|
Tallahassee |
| FL |
| Fairfield |
| LBA |
| 9/1/2016 |
|
| 97 |
|
|
Tallahassee |
| FL |
| Hilton Garden Inn |
| LBA |
| 3/1/2014 |
|
| 85 |
|
|
Tampa |
| FL |
| Embassy Suites |
| White Lodging |
| 11/2/2010 |
|
| 147 |
|
|
Albany |
| GA |
| Fairfield |
| LBA |
| 1/14/2010 |
|
| 87 |
| (1) |
Atlanta/Downtown |
| GA |
| Hampton |
| McKibbon |
| 2/5/2018 |
|
| 119 |
|
|
Atlanta/Perimeter Dunwoody |
| GA |
| Hampton |
| LBA |
| 6/28/2018 |
|
| 132 |
|
|
Atlanta |
| GA |
| Home2 Suites |
| McKibbon |
| 7/1/2016 |
|
| 128 |
|
|
Macon |
| GA |
| Hilton Garden Inn |
| LBA |
| 3/1/2014 |
|
| 101 |
|
|
Savannah |
| GA |
| Hilton Garden Inn |
| Newport |
| 3/1/2014 |
|
| 105 |
|
|
Cedar Rapids |
| IA |
| Hampton |
| Aimbridge |
| 9/1/2016 |
|
| 103 |
|
|
Cedar Rapids |
| IA |
| Homewood Suites |
| Aimbridge |
| 9/1/2016 |
|
| 95 |
|
|
Davenport |
| IA |
| Hampton |
| Aimbridge |
| 9/1/2016 |
|
| 103 |
|
|
Boise |
| ID |
| Hampton |
| Raymond |
| 4/30/2010 |
|
| 186 |
|
|
Des Plaines |
| IL |
| Hilton Garden Inn |
| Raymond |
| 9/1/2016 |
|
| 252 |
|
|
Hoffman Estates |
| IL |
| Hilton Garden Inn |
| White Lodging |
| 9/1/2016 |
|
| 184 |
|
|
Mettawa |
| IL |
| Hilton Garden Inn |
| White Lodging |
| 11/2/2010 |
|
| 170 |
|
|
Mettawa |
| IL |
| Residence Inn |
| White Lodging |
| 11/2/2010 |
|
| 130 |
|
|
33
City |
| State |
| Brand |
| Manager |
| Date Acquired or Completed |
| Rooms |
|
| |
Rosemont |
| IL |
| Hampton |
| Raymond |
| 9/1/2016 |
|
| 158 |
|
|
Schaumburg |
| IL |
| Hilton Garden Inn |
| White Lodging |
| 11/2/2010 |
|
| 166 |
| (1) |
Skokie |
| IL |
| Hampton |
| Raymond |
| 9/1/2016 |
|
| 225 |
|
|
Warrenville |
| IL |
| Hilton Garden Inn |
| White Lodging |
| 11/2/2010 |
|
| 135 |
|
|
Indianapolis |
| IN |
| SpringHill Suites |
| White Lodging |
| 11/2/2010 |
|
| 130 |
|
|
Merrillville |
| IN |
| Hilton Garden Inn |
| White Lodging |
| 9/1/2016 |
|
| 124 |
|
|
Mishawaka |
| IN |
| Residence Inn |
| White Lodging |
| 11/2/2010 |
|
| 106 |
|
|
South Bend |
| IN |
| Fairfield |
| White Lodging |
| 9/1/2016 |
|
| 119 |
|
|
Overland Park |
| KS |
| Fairfield |
| Raymond |
| 3/1/2014 |
|
| 110 |
|
|
Overland Park |
| KS |
| Residence Inn |
| Raymond |
| 3/1/2014 |
|
| 120 |
|
|
Wichita |
| KS |
| Courtyard |
| Aimbridge |
| 3/1/2014 |
|
| 90 |
|
|
Lafayette |
| LA |
| Hilton Garden Inn |
| LBA |
| 7/30/2010 |
|
| 153 |
|
|
Lafayette |
| LA |
| SpringHill Suites |
| LBA |
| 6/23/2011 |
|
| 103 |
|
|
New Orleans |
| LA |
| Homewood Suites |
| Dimension |
| 3/1/2014 |
|
| 166 |
|
|
Andover |
| MA |
| SpringHill Suites |
| Marriott |
| 11/5/2010 |
|
| 136 |
| (1) |
Marlborough |
| MA |
| Residence Inn |
| Crestline |
| 3/1/2014 |
|
| 112 |
|
|
Westford |
| MA |
| Hampton |
| Crestline |
| 3/1/2014 |
|
| 110 |
|
|
Westford |
| MA |
| Residence Inn |
| Crestline |
| 3/1/2014 |
|
| 108 |
|
|
Annapolis |
| MD |
| Hilton Garden Inn |
| Crestline |
| 3/1/2014 |
|
| 126 |
|
|
Silver Spring |
| MD |
| Hilton Garden Inn |
| Crestline |
| 7/30/2010 |
|
| 107 |
|
|
Portland |
| ME |
| Residence Inn |
| Crestline |
| 10/13/2017 |
|
| 179 |
|
|
Novi |
| MI |
| Hilton Garden Inn |
| White Lodging |
| 11/2/2010 |
|
| 148 |
|
|
Maple Grove |
| MN |
| Hilton Garden Inn |
| North Central |
| 9/1/2016 |
|
| 121 |
|
|
Rochester |
| MN |
| Hampton |
| Raymond |
| 8/3/2009 |
|
| 124 |
|
|
St. Paul |
| MN |
| Hampton |
| Raymond |
| 3/4/2019 |
|
| 160 |
|
|
Kansas City |
| MO |
| Hampton |
| Raymond |
| 8/31/2010 |
|
| 122 |
|
|
Kansas City |
| MO |
| Residence Inn |
| Raymond |
| 3/1/2014 |
|
| 106 |
|
|
St. Louis |
| MO |
| Hampton |
| Raymond |
| 8/31/2010 |
|
| 190 |
|
|
St. Louis |
| MO |
| Hampton |
| Raymond |
| 4/30/2010 |
|
| 126 |
|
|
Hattiesburg |
| MS |
| Courtyard |
| LBA |
| 3/1/2014 |
|
| 84 |
|
|
Hattiesburg |
| MS |
| Residence Inn |
| LBA |
| 12/11/2008 |
|
| 84 |
|
|
Carolina Beach |
| NC |
| Courtyard |
| Crestline |
| 3/1/2014 |
|
| 144 |
|
|
Charlotte |
| NC |
| Fairfield |
| Newport |
| 9/1/2016 |
|
| 94 |
|
|
Durham |
| NC |
| Homewood Suites |
| McKibbon |
| 12/4/2008 |
|
| 122 |
|
|
Fayetteville |
| NC |
| Home2 Suites |
| LBA |
| 2/3/2011 |
|
| 118 |
|
|
Fayetteville |
| NC |
| Residence Inn |
| LBA |
| 3/1/2014 |
|
| 92 |
| (1) |
Greensboro |
| NC |
| SpringHill Suites |
| Newport |
| 3/1/2014 |
|
| 82 |
|
|
Jacksonville |
| NC |
| Home2 Suites |
| LBA |
| 9/1/2016 |
|
| 105 |
|
|
Wilmington |
| NC |
| Fairfield |
| Crestline |
| 3/1/2014 |
|
| 122 |
|
|
Winston-Salem |
| NC |
| Hampton |
| McKibbon |
| 9/1/2016 |
|
| 94 |
|
|
Omaha |
| NE |
| Courtyard |
| Marriott |
| 3/1/2014 |
|
| 181 |
|
|
Omaha |
| NE |
| Hampton |
| White Lodging |
| 9/1/2016 |
|
| 139 |
|
|
Omaha |
| NE |
| Hilton Garden Inn |
| White Lodging |
| 9/1/2016 |
|
| 178 |
|
|
Omaha |
| NE |
| Homewood Suites |
| White Lodging |
| 9/1/2016 |
|
| 123 |
|
|
Cranford |
| NJ |
| Homewood Suites |
| Dimension |
| 3/1/2014 |
|
| 108 |
|
|
Mahwah |
| NJ |
| Homewood Suites |
| Dimension |
| 3/1/2014 |
|
| 110 |
|
|
Mount Laurel |
| NJ |
| Homewood Suites |
| Newport |
| 1/11/2011 |
|
| 118 |
|
|
Somerset |
| NJ |
| Courtyard |
| Newport |
| 3/1/2014 |
|
| 162 |
|
|
West Orange |
| NJ |
| Courtyard |
| Newport |
| 1/11/2011 |
|
| 131 |
|
|
Islip/Ronkonkoma |
| NY |
| Hilton Garden Inn |
| Crestline |
| 3/1/2014 |
|
| 166 |
|
|
New York |
| NY |
| Independent |
| Highgate |
| 3/1/2014 |
|
| 208 |
|
|
34
City |
| State |
| Brand |
| Manager |
| Date Acquired or Completed |
| Rooms |
|
| |
Syracuse |
| NY |
| Courtyard |
| Crestline |
| 10/16/2015 |
|
| 102 |
|
|
Syracuse |
| NY |
| Residence Inn |
| Crestline |
| 10/16/2015 |
|
| 78 |
|
|
Mason |
| OH |
| Hilton Garden Inn |
| Raymond |
| 9/1/2016 |
|
| 110 |
|
|
Twinsburg |
| OH |
| Hilton Garden Inn |
| Aimbridge |
| 10/7/2008 |
|
| 142 |
|
|
Oklahoma City |
| OK |
| Hampton |
| Raymond |
| 5/28/2010 |
|
| 200 |
|
|
Oklahoma City |
| OK |
| Hilton Garden Inn |
| Raymond |
| 9/1/2016 |
|
| 155 |
|
|
Oklahoma City |
| OK |
| Homewood Suites |
| Raymond |
| 9/1/2016 |
|
| 100 |
|
|
Oklahoma City (West) |
| OK |
| Homewood Suites |
| Chartwell |
| 9/1/2016 |
|
| 90 |
|
|
Collegeville/Philadelphia |
| PA |
| Courtyard |
| Newport |
| 11/15/2010 |
|
| 132 |
|
|
Malvern/Philadelphia |
| PA |
| Courtyard |
| Newport |
| 11/30/2010 |
|
| 127 |
|
|
Pittsburgh |
| PA |
| Hampton |
| Newport |
| 12/31/2008 |
|
| 132 |
|
|
Charleston |
| SC |
| Home2 Suites |
| LBA |
| 9/1/2016 |
|
| 122 |
|
|
Columbia |
| SC |
| Hilton Garden Inn |
| Newport |
| 3/1/2014 |
|
| 143 |
|
|
Columbia |
| SC |
| TownePlace Suites |
| Newport |
| 9/1/2016 |
|
| 91 |
|
|
Greenville |
| SC |
| Residence Inn |
| McKibbon |
| 3/1/2014 |
|
| 78 |
| (1) |
Hilton Head |
| SC |
| Hilton Garden Inn |
| McKibbon |
| 3/1/2014 |
|
| 104 |
|
|
Chattanooga |
| TN |
| Homewood Suites |
| LBA |
| 3/1/2014 |
|
| 76 |
|
|
Franklin |
| TN |
| Courtyard |
| Chartwell |
| 9/1/2016 |
|
| 126 |
|
|
Franklin |
| TN |
| Residence Inn |
| Chartwell |
| 9/1/2016 |
|
| 124 |
|
|
Jackson |
| TN |
| Hampton |
| Newport |
| 12/30/2008 |
|
| 85 |
| (1) |
Johnson City |
| TN |
| Courtyard |
| LBA |
| 9/25/2009 |
|
| 90 |
| (1) |
Knoxville |
| TN |
| Homewood Suites |
| McKibbon |
| 9/1/2016 |
|
| 103 |
|
|
Knoxville |
| TN |
| SpringHill Suites |
| McKibbon |
| 9/1/2016 |
|
| 103 |
|
|
Knoxville |
| TN |
| TownePlace Suites |
| McKibbon |
| 9/1/2016 |
|
| 97 |
|
|
Memphis |
| TN |
| Hampton |
| Crestline |
| 2/5/2018 |
|
| 144 |
|
|
Nashville |
| TN |
| Hilton Garden Inn |
| Dimension |
| 9/30/2010 |
|
| 194 |
|
|
Nashville |
| TN |
| Home2 Suites |
| Dimension |
| 5/31/2012 |
|
| 119 |
|
|
Nashville |
| TN |
| TownePlace Suites |
| LBA |
| 9/1/2016 |
|
| 101 |
|
|
Addison |
| TX |
| SpringHill Suites |
| Marriott |
| 3/1/2014 |
|
| 159 |
|
|
Allen |
| TX |
| Hampton |
| Aimbridge |
| 9/26/2008 |
|
| 103 |
| (1) |
Allen |
| TX |
| Hilton Garden Inn |
| Aimbridge |
| 10/31/2008 |
|
| 150 |
| (1) |
Arlington |
| TX |
| Hampton |
| Western |
| 12/1/2010 |
|
| 98 |
|
|
Austin |
| TX |
| Courtyard |
| White Lodging |
| 11/2/2010 |
|
| 145 |
|
|
Austin |
| TX |
| Fairfield |
| White Lodging |
| 11/2/2010 |
|
| 150 |
|
|
Austin |
| TX |
| Hampton |
| Dimension |
| 4/14/2009 |
|
| 124 |
|
|
Austin |
| TX |
| Hilton Garden Inn |
| White Lodging |
| 11/2/2010 |
|
| 117 |
|
|
Austin |
| TX |
| Homewood Suites |
| Dimension |
| 4/14/2009 |
|
| 97 |
|
|
Austin/Round Rock |
| TX |
| Hampton |
| Dimension |
| 3/6/2009 |
|
| 94 |
|
|
Austin/Round Rock |
| TX |
| Homewood Suites |
| Dimension |
| 9/1/2016 |
|
| 115 |
|
|
Beaumont |
| TX |
| Residence Inn |
| Western |
| 10/29/2008 |
|
| 133 |
| (1) |
Burleson/Fort Worth |
| TX |
| Hampton |
| LBA |
| 10/7/2014 |
|
| 88 |
| (1) |
Dallas |
| TX |
| Homewood Suites |
| Western |
| 9/1/2016 |
|
| 130 |
|
|
Denton |
| TX |
| Homewood Suites |
| Chartwell |
| 9/1/2016 |
|
| 107 |
|
|
El Paso |
| TX |
| Hilton Garden Inn |
| Western |
| 12/19/2011 |
|
| 145 |
| (1) |
El Paso |
| TX |
| Homewood Suites |
| Western |
| 3/1/2014 |
|
| 114 |
|
|
Fort Worth |
| TX |
| Courtyard |
| LBA |
| 2/2/2017 |
|
| 124 |
|
|
Fort Worth |
| TX |
| TownePlace Suites |
| Western |
| 7/19/2010 |
|
| 140 |
|
|
Frisco |
| TX |
| Hilton Garden Inn |
| Western |
| 12/31/2008 |
|
| 102 |
|
|
Grapevine |
| TX |
| Hilton Garden Inn |
| Western |
| 9/24/2010 |
|
| 110 |
|
|
Houston |
| TX |
| Courtyard |
| LBA |
| 9/1/2016 |
|
| 124 |
|
|
Houston |
| TX |
| Marriott |
| Western |
| 1/8/2010 |
|
| 206 |
|
|
35
City |
| State |
| Brand |
| Manager |
| Date Acquired or Completed |
| Rooms |
|
| |
Houston |
| TX |
| Residence Inn |
| Western |
| 3/1/2014 |
|
| 129 |
|
|
Houston |
| TX |
| Residence Inn |
| Western |
| 9/1/2016 |
|
| 120 |
|
|
Irving |
| TX |
| Homewood Suites |
| Western |
| 12/29/2010 |
|
| 77 |
| (1) |
Lewisville |
| TX |
| Hilton Garden Inn |
| Aimbridge |
| 10/16/2008 |
|
| 165 |
|
|
San Antonio |
| TX |
| TownePlace Suites |
| Western |
| 3/1/2014 |
|
| 106 |
|
|
Shenandoah |
| TX |
| Courtyard |
| LBA |
| 9/1/2016 |
|
| 124 |
|
|
Stafford |
| TX |
| Homewood Suites |
| Western |
| 3/1/2014 |
|
| 78 |
|
|
Texarkana |
| TX |
| Hampton |
| Aimbridge |
| 1/31/2011 |
|
| 81 |
|
|
Provo |
| UT |
| Residence Inn |
| Dimension |
| 3/1/2014 |
|
| 114 |
|
|
Salt Lake City |
| UT |
| Residence Inn |
| Huntington |
| 10/20/2017 |
|
| 136 |
|
|
Salt Lake City |
| UT |
| SpringHill Suites |
| White Lodging |
| 11/2/2010 |
|
| 143 |
|
|
Alexandria |
| VA |
| Courtyard |
| Marriott |
| 3/1/2014 |
|
| 178 |
|
|
Alexandria |
| VA |
| SpringHill Suites |
| Marriott |
| 3/28/2011 |
|
| 155 |
|
|
Charlottesville |
| VA |
| Courtyard |
| Crestline |
| 3/1/2014 |
|
| 139 |
|
|
Manassas |
| VA |
| Residence Inn |
| Crestline |
| 2/16/2011 |
|
| 107 |
|
|
Richmond |
| VA |
| Independent |
| Crestline |
| 10/9/2019 |
|
| 55 |
|
|
Richmond |
| VA |
| Courtyard |
| White Lodging |
| 12/8/2014 |
|
| 135 |
|
|
Richmond |
| VA |
| Marriott |
| White Lodging |
| 3/1/2014 |
|
| 413 |
|
|
Richmond |
| VA |
| Residence Inn |
| White Lodging |
| 12/8/2014 |
|
| 75 |
|
|
Richmond |
| VA |
| SpringHill Suites |
| McKibbon |
| 9/1/2016 |
|
| 103 |
| (1) |
Suffolk |
| VA |
| Courtyard |
| Crestline |
| 3/1/2014 |
|
| 92 |
|
|
Suffolk |
| VA |
| TownePlace Suites |
| Crestline |
| 3/1/2014 |
|
| 72 |
|
|
Virginia Beach |
| VA |
| Courtyard |
| Crestline |
| 3/1/2014 |
|
| 141 |
|
|
Virginia Beach |
| VA |
| Courtyard |
| Crestline |
| 3/1/2014 |
|
| 160 |
|
|
Kirkland |
| WA |
| Courtyard |
| InnVentures |
| 3/1/2014 |
|
| 150 |
|
|
Seattle |
| WA |
| Residence Inn |
| InnVentures |
| 3/1/2014 |
|
| 234 |
|
|
Tukwila |
| WA |
| Homewood Suites |
| Dimension |
| 3/1/2014 |
|
| 106 |
|
|
Vancouver |
| WA |
| SpringHill Suites |
| InnVentures |
| 3/1/2014 |
|
| 119 |
| (1) |
Madison |
| WI |
| Hilton Garden Inn |
| Raymond |
| 2/18/2021 |
|
| 176 |
|
|
Total |
|
|
|
|
|
|
|
|
|
| 29,753 |
|
|
Related Parties
The Company has, and is expected to continue to engage in, transactions with related parties. These transactions cannot be construed to be at arm’s length and the results of the Company’s operations may be different if these transactions were conducted with non-related parties. See Note 76 titled “Related Parties” in the Company’s Unaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q, for additional information concerning the Company’s related party transactions.
Liquidity and Capital Resources
Capital Resources
The Company’s principal short term sources of liquidity are the operating cash flowflows generated from the Company’s properties and availability under its $540 million unsecured revolving credit facility,facility. Periodically, the Company may receive proceeds from the strategic dispositionadditional secured and unsecured debt financing, dispositions of its hotel properties (such as the sale of three hotels in the first half of 2021 for proceeds of approximately $24 million and the sale of 20 hotels in July 2021 for proceeds from potentialof approximately $211 million discussed above in “2021 Hotel Portfolio Activities”) and offerings of the Company’s common shares.
As of June 30, 2021, the Company had $1.4 billion of total outstanding debt consisting of $450.7 million of mortgage debt and $952.0 million outstanding under its unsecured credit facilities, excluding unamortized debt issuance costs and fair value adjustments. As of June 30, 2021, the Company had available corporate cash on hand of approximately $2.9 million as well as unused borrowing capacity under its revolving credit facility which as of September 30, 2017 had unused borrowing capacity of approximately $323.3 million, is available for share repurchases, acquisitions, hotel renovations and development, working capital and other general corporate funding purposes,$343 million. In the near term, the impact of COVID-19 on the global economy, including the payment of distributions to shareholders. As of September 30, 2017,any sustained decline in the Company’s revolving credit facility had an outstanding principal balance of approximately $216.7 million with an annual variable interest rate of approximately 2.78%.
36
raise debt or equity capital to fund long-term liquidity requirements. The credit agreementagreements governing the revolvingunsecured credit facility containsfacilities contain mandatory prepayment requirements, customary affirmative covenants,and negative covenants and events of default. The credit agreement requiresagreements require that the Company comply with various covenants, which include, among others, a minimum tangible net worth, maximum debt limits, minimum interest and fixed charge coverage ratios limits on dividend payments and share repurchases and restrictions on certain investments. The
As a result of COVID-19 and the associated disruption to the Company’s operating results, during the second quarter of 2020, the Company was inanticipated that it may not be able to maintain compliance with the applicablecertain of these covenants at September 30, 2017.
● | Maximum Consolidated Leverage Ratio of 8.50 to 1.00 for the first two fiscal quarters, 8.00 to 1.00 for two fiscal quarters, 7.50 to 1.00 for one fiscal quarter and then a ratio of 6.50 to 1.00 thereafter; |
● | Minimum Fixed Charge Coverage Ratio of 1.05 to 1.00 for the first fiscal quarter, 1.25 to 1.00 for one fiscal quarter and then a ratio of 1.50 to 1.00 thereafter; |
● | Minimum Unsecured Interest Coverage Ratio of no less than 1.25 to 1.00 for one fiscal quarter, 1.50 to 1.00 for one fiscal quarter, 1.75 to 1.00 for one fiscal quarter and a ratio of 2.00 to 1.00 thereafter; and |
● | Maximum Unsecured Leverage Ratio of 65% for two fiscal quarters and 60% thereafter. |
Except as otherwise set forth in the amendments, the terms of the credit agreements remain in effect.
The Company’s annualized results for the three months ended June 30, 2021 met the financial maintenance covenants based on the thresholds stipulated for the first fiscal quarter tested upon exiting the Extended Covenant Waiver Period as described in Note 4 titled “Debt” in the Company’s Unaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q. As a result, in July 2021, the Company notified its lenders under its unsecured $85 million term loan with a syndicatecredit facilities that it had elected to exit the Extended Covenant Waiver Period effective on July 29, 2021. Upon exiting the Extended Covenant Waiver Period, the Company is no longer subject to the restrictions described above regarding its investing and financing activities that were applicable during the Extended Covenant Waiver Period, including, but not limited to, limitations on the acquisition of commercial banks, with a maturity dateproperty, payment of July 25, 2024. The Company used the netdistributions to shareholders, limitations on capital expenditures and use of proceeds from the $85 million term loansale of property or common shares of the Company. Those restrictions, including the restriction on payment of distributions to pay downshareholders, were still in place throughout the borrowings onsecond quarter of 2021. The Company anticipates continuing to meet the Company’s revolving credit facility. applicable financial maintenance covenants in future periods, although there can be no assurances it will be able to do so.
See Note 54 titled “Debt” in the Company’s Unaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q, for additional information relateda description of the Company’s debt instruments as of June 30, 2021.
On August 12, 2020, the Company entered into an equity distribution agreement pursuant to which the $85Company may sell, from time to time, up to an aggregate of $300 million term loan.
37
Capital Uses
The Company anticipates that cash flow from operations, availability under its revolving credit facility,facilities, additional borrowings and proceeds from hotel dispositions and equity offerings will be adequate to meet its anticipated liquidity requirements, including debt service, hotel acquisitions, hotel renovations, share repurchases, and required distributions to shareholders (the Company is not required to make distributions at its current rate for REIT purposes) and share repurchases.
Distributions
To maintain its REIT status, the Company is required to distribute at least 90% of its ordinary income. Distributions paid during the nine months ended September 30, 2017 totaled approximately $200.7 million or $0.90 per common share and were paid at a monthly rate of $0.10 per common share. For the same period, the Company’s net cash generated from operations was approximately $280.5 million, which included a payment of approximately $19.4 million, net of reimbursements received from the Company’s directors and officers insurance carriers, during the first nine months of 2017 to settle the Apple Ten merger lawsuit which isAs discussed in Note 104, titled “Legal Proceedings”“Debt” in the Company’s Unaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q.
The Company, as it has done historically due to seasonality, the Company may use its revolving credit facility to maintain the consistency of the monthly distribution rate,distributions, taking into consideration any acquisitions, dispositions, capital improvements and economic cycles. Any distribution will be subject to approval of the Company’s Board of Directors and there can be no assurance of the classification or duration of distributions at the current annualany particular distribution rate. The Board of Directors monitors the Company’s distribution rate relative to the performance of theits hotels on an ongoing basis and may make adjustments to the distribution rate as determined to be prudent in relation to other cash requirements of the Company. If cash flow from operations and the revolving credit facility are not adequate to meet liquidity requirements, the Company may utilize additional financing sources to make distributions. Although the Company has relatively low levels of debt, there can be no assurances it will be successful with this strategy and may need to reduce its distributions to minimum levels required levels.to maintain its qualification as a real estate investment trust. If the Company were unable to extend its maturing debt in future periods or if it were to default on its debt, it may be unable to make distributions.
Share Repurchases
In connection withMay 2021, the implementationCompany’s Board of the ATMDirectors approved a one-year extension of its existing share repurchase program, authorizing share repurchases up to an aggregate of $345 million (the “Share Repurchase Program”). The Share Repurchase Program in February 2017may be suspended or terminated at any time by the Company and will end in July 2022 if not terminated its existing written trading plan underearlier. During the Company’s share repurchase program. In January 2016,first three months of 2020, the Company purchased, under its share repurchase program,Share Repurchase Program approximately 20,0001.5 million of its common shares at a weighted-average market purchase price of approximately $18.10$9.42 per common share, for an aggregate purchase price, including commissions, of approximately $0.4$14.3 million. The shares were repurchased under a written trading plan that provided for share repurchases in open market transactions and was intended to comply with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. In March 2020 the Company didterminated its written trading plan under the Share Repurchase Program and has not repurchaserepurchased any shares since that time. Repurchases under the Share Repurchase Program have been funded, and the Company intends to fund any future purchases, with cash on hand or availability under its unsecured credit facilities subject to any applicable restrictions under the Company’s unsecured credit facilities. The timing of share repurchases and the number of common shares under its share repurchase program during the first nine months of 2017.
Capital Improvements
The Company has ongoing capital commitmentsis committed to fund its capital improvements. To maintainmaintaining and enhanceenhancing each property’s competitive position in its market, themarket. The Company has invested in and plans to continue to reinvest in its hotels. Under certain loan and management agreements, the Company is required to place in escrow funds for the repair, replacement and refurbishing of furniture, fixtures, and equipment, based on a percentage of gross revenues, provided that such amount may be used for the Company’s capital expenditures with respect to the hotels. As of SeptemberJune 30, 2017,2021, the Company held $26.8approximately $28.2 million in reserve related to these properties. During the ninesix months ended SeptemberJune 30, 2017,2021, the Company invested approximately $41.9$4.9 million in capital expenditures and anticipates spending an additional $25$20-25 million during the remainder of 2017,2021, which includes various scheduled renovation projects for approximately 15five to ten properties. The Company does not currently have any existing or planned projects for new property development.
Purchase Contract Commitments
As of September 30, 2017,July 31, 2021, the Company had separate outstanding contracts for the potential purchase of four additional hotels, consisting of two hotels in Portland, Maine, one hotel in Greenville, South Carolina and one hotel in Madison, Wisconsin for a total combined purchase price of approximately $146.1$226.5 million. Two of the hotels the Salt Lake City Residence Inn and the Portland Residence Inn, which are already in operation, were acquiredone is in October 2017. The two remainingdevelopment and scheduled to open during
38
the third quarter of 2021, and one is in development and scheduled to open no earlier than 2023. Closings on three of these hotels are under construction and are plannedexpected to be completed and opened for business overoccur in the next 12 months from September 30, 2017, at which timesecond half of 2021, while closing on these hotelsthe remaining hotel is expected to occur.upon completion of development. Although the Company is working towards acquiring these hotels, there are many conditions to closing that have not yet been satisfied and there can be no assurance that a closingclosings on these hotels will occur under the outstanding purchase contracts. The Company plans to utilize its available cash (including a portion of the proceeds from the sale of 20 hotels in July 2021) or borrowings under its unsecured credit facilities available at closing to purchase hotels under contract if closings occur. The Company also entered into a contract during the second quarter of 2021 to purchase the fee interest in the land at its Seattle, Washington Residence Inn, which is currently under a ground lease, for a purchase price of $80.0 million, consisting of a $24.0 million cash payment (utilizing available cash or borrowings under its unsecured credit facilities) and a one-year note payable to the seller for each of$56.0 million. The land purchase is expected to close in August 2021. Although the Salt Lake City Residence InnCompany is working towards completing this acquisition, there are many conditions to closing that have not yet been satisfied and Portland Residence Inn was funded through the Company’s revolving credit facility and it is anticipatedthere can be no assurance that the purchase price for the remaining outstanding contractsclosing will be funded similarly.
Cash Management Activities
As part of the cost sharing arrangements discussed in Note 76 titled “Related Parties” in the Company’s Unaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q, certain day-to-day transactions may result in amounts due to or from the Company and Apple Realty Group, Inc. (“ARG”).ARG. To efficiently manage cash disbursements, the Company or ARG may make payments for the other company. Under the cash management process, each company may advance or defer up to $1 million at any time. Each quarter, any outstanding amounts are settled between the companies. This process allows each company to minimize its cash on hand and reduces the cost for each company. The amounts outstanding at any point in time are not significant to either of the companies.
Business Interruption
Being in the real estate industry, the Company is exposed to natural disasters on both a local and national scale. Although management believes there is adequate insurance to cover this exposure, there can be no assurance that such events will not have a material adverse effect on the Company’s financial position or results of operations.
Seasonality
The hotel industry historically has been seasonal in nature. Seasonal variations in occupancy at the Company’s hotels may cause quarterly fluctuations in its revenues. Generally, occupancy rates and hotel revenues are greater in the second and third quarters than in the first and fourth quarters. However, due to the effects of COVID-19, these typical seasonal patterns were disrupted in 2020 and the first half of 2021 and may also be disrupted in the remainder of 2021. To the extent that cash flow from operations is insufficient during any quarter, due to temporary or seasonal fluctuations in revenue, the Company expects to utilize cash on hand or available financing sources to meet cash requirements.
New Accounting Standards
See Note 1 titled “Organization and Summary of Significant Accounting Policies” in the Company’s Unaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q, for information on the adoption of the guidance in the reference rate reform accounting standards effective in March 2020 and January 2021 as well as recent accounting standards updates to be adopted in the future.
Subsequent Events
On July 15, 2021, the Company paid approximately $2.3 million, or $0.01 per outstanding common share, in distributions to its common shareholders.
On July 22, 2021, the Company completed the sale of 20 of its hotels. A portion of the net proceeds from the sale were used to pay down borrowings on the Company’s revolving credit facility and the remaining proceeds are available for general corporate purposes, including acquisitions of hotel properties. See Note 3 titled “Assets Held for Sale and Dispositions” in the Company’s Unaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q, for additional information on the adoption of accounting standards in the first nine months of 2017 and the anticipated adoption of recently issued accounting standards.
In October 2017,July 2021, the Company paid approximately $22.3 million, or $0.10 per outstanding common share, in distributions to its common shareholders.
In July 2021, the Company entered into a contract for the purchase of an existing 179-room Residence InnHyatt Place hotel in Portland, MaineGreenville, South Carolina, containing 130 guest rooms, for aan anticipated gross purchase price of approximately $55.8$30.0 million.
39
is working towards acquiring this hotel, there are many conditions to closing that have not yet been satisfied, and there can be no assurance that closing on this hotel will occur under the outstanding purchase contract.
In July 2021, the Company entered into a contract for the purchase of an existing 136-room Residence InnEmbassy Suites hotel that will be constructed in Salt Lake City, UtahMadison, Wisconsin for aan anticipated gross purchase price of $25.5 million.
In July 2021, the Company notified its lenders under its unsecured credit facilities that it had elected to exit the Extended Covenant Waiver Period effective July 29, 2021 pursuant to the terms of each of its unsecured credit facilities, as amended. Upon exiting the Extended Covenant Waiver Period, the Company is no longer subject to the additional restrictions regarding its investing and financing activities that were applicable during the Extended Covenant Waiver Period, including, but not limited to, limitations on the acquisition of property, payment of distributions to shareholders, limitations on capital expenditures and use of proceeds from the sale of property or common shares of the Company. Those restrictions, including the restriction on payment of distributions to shareholders, were still in place throughout the second quarter of 2021. As of June 30, 2021, the Company met the financial maintenance covenants based on the annualized results of the three months ended June 30, 2021 at the levels required for the first quarter tested upon exiting the Extended Covenant Waiver Period as described in Note 4, titled “Debt” in the Company’s Unaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q.
40
As of SeptemberJune 30, 2017,2021, the Company’s financial instruments were not exposed to significant market risk due to foreign currency exchange risk, commodity price risk or equity price risk. However, the Company is exposed to interest rate risk due to possible changes in short term interest rates as it invests its cash or borrows on its revolving credit facility and due to the portion of its variablevariable-rate debt that is not fixed by interest rate term loan.swaps. As of SeptemberJune 30, 2017,2021, after giving effect to interest rate swaps, as described below, approximately $319.2$132.0 million, or approximately 24%9% of the Company’s total debt outstanding, was subject to variable interest rates. Based on the Company’s variable ratevariable-rate debt outstanding as of SeptemberJune 30, 2017,2021, every 100 basis points change in interest rates will impact the Company’s annual net income by approximately $3.2$1.3 million (subject to the LIBOR floor as discussed in Note 4 titled “Debt” in the Company’s Unaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q), all other factors remaining the same. With the exception of interest rate swap transactions, the Company has not engaged in transactions in derivative financial instruments or derivative commodity instruments. The Company’s cash balance at September 30, 2017 was $0.
As of SeptemberJune 30, 2017,2021, the Company’s variable ratevariable-rate debt consisted of its $540unsecured credit facilities, including borrowings outstanding under its $425 million revolving credit facility and six$820 million of term loans totaling $660 million.loans. Currently, the Company uses interest rate swaps to manage its interest rate risk on a portion of its variable ratevariable-rate debt. As of SeptemberJune 30, 2017,2021, the Company had six13 interest rate swap agreements that effectively fix the interest payments on approximately $557.5$770.0 million of the Company’s variable ratevariable-rate debt outstanding (consisting of five term loans) through maturity.with swap maturity dates ranging from August 2022 to December 2029. Under the terms of all of the Company’s interest rate swaps, the Company pays a fixed rate of interest and receives a floating rate of interest equal to the one monthone-month LIBOR.
In addition to its variable ratevariable-rate debt and interest rate swaps discussed above, the Company has assumed or originated fixed interest rate mortgages payable to lenders under permanent financing arrangements.arrangements as well as one $50 million fixed-rate senior notes facility. The following table summarizes the annual maturities and average interest rates of the Company’s mortgage debt the six term loans and borrowings outstanding under the $540 million revolvingits unsecured credit facilityfacilities at SeptemberJune 30, 2017.2021. All dollar amounts are in thousands.
|
| July 1 - December 31, 2021 |
|
| 2022 |
|
| 2023 |
|
| 2024 |
|
| 2025 |
|
| Thereafter |
|
| Total |
|
| Fair Market Value |
| ||||||||
Total debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maturities |
| $ | 8,674 |
|
| $ | 191,831 |
|
| $ | 296,213 |
|
| $ | 338,597 |
|
| $ | 245,140 |
|
| $ | 322,265 |
|
| $ | 1,402,720 |
|
| $ | 1,402,628 |
|
Average interest rates (1) |
|
| 4.0 | % |
|
| 4.0 | % |
|
| 4.1 | % |
|
| 4.3 | % |
|
| 4.4 | % |
|
| 4.4 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Variable-rate debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maturities |
| $ | - |
|
| $ | 82,000 |
|
| $ | 250,000 |
|
| $ | 310,000 |
|
| $ | 175,000 |
|
| $ | 85,000 |
|
| $ | 902,000 |
|
| $ | 894,967 |
|
Average interest rates (1) |
|
| 3.8 | % |
|
| 3.9 | % |
|
| 4.1 | % |
|
| 4.5 | % |
|
| 5.0 | % |
|
| 5.6 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed-rate debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maturities |
| $ | 8,674 |
|
| $ | 109,831 |
|
| $ | 46,213 |
|
| $ | 28,597 |
|
| $ | 70,140 |
|
| $ | 237,265 |
|
| $ | 500,720 |
|
| $ | 507,661 |
|
Average interest rates |
|
| 4.2 | % |
|
| 4.1 | % |
|
| 4.0 | % |
|
| 4.0 | % |
|
| 4.0 | % |
|
| 3.9 | % |
|
|
|
|
|
|
|
|
October 1 - December 31, 2017 | 2018 | 2019 | 2020 | 2021 | Thereafter | Total | Fair Market Value | |||||||||||||||||||||||||
Total debt: | ||||||||||||||||||||||||||||||||
Maturities | $ | 2,701 | $ | 11,071 | $ | 248,408 | $ | 451,164 | $ | 95,311 | $ | 498,181 | $ | 1,306,836 | $ | 1,307,025 | ||||||||||||||||
Average interest rates | 3.5 | % | 3.5 | % | 3.5 | % | 3.8 | % | 4.0 | % | 4.0 | % | ||||||||||||||||||||
Variable rate debt: | ||||||||||||||||||||||||||||||||
Maturities | $ | - | $ | - | $ | 216,700 | $ | 425,000 | $ | 50,000 | $ | 185,000 | $ | 876,700 | $ | 877,783 | ||||||||||||||||
Average interest rates (1) | 3.0 | % | 3.0 | % | 3.0 | % | 3.1 | % | 3.3 | % | 3.4 | % | ||||||||||||||||||||
Fixed rate debt: | ||||||||||||||||||||||||||||||||
Maturities | $ | 2,701 | $ | 11,071 | $ | 31,708 | $ | 26,164 | $ | 45,311 | $ | 313,181 | $ | 430,136 | $ | 429,242 | ||||||||||||||||
Average interest rates | 4.5 | % | 4.5 | % | 4.5 | % | 4.5 | % | 4.4 | % | 4.3 | % |
(1) | The average interest rate gives effect to interest rate swaps, as applicable. |
Senior management, including the Chief Executive Officer, Chief Financial Officer and Chief FinancialAccounting Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based on this evaluation process, the Chief Executive Officer, Chief Financial Officer and Chief FinancialAccounting Officer have concluded that the Company’s disclosure controls and procedures were effective as of SeptemberJune 30, 2017.2021. There have been no changes in the Company’s internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II. OTHER INFORMATION
The Company is or may be a party to various legal proceedings that arise in the ordinary course of business. The Company is not currently involved in any litigation nor, to management’s knowledge, is any litigation threatened against the Company where the outcome would, in management’s judgment based on information currently available to the legal proceedings previously disclosed inCompany, have a material adverse effect on the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 (the “2016 Form 10-K”) except as described in Note 10 titled “Legal Proceedings” in the Company’s Unaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q, which information is incorporated by reference herein.
Exhibit Number | Description of Documents | |
3.1 | ||
3.2 | ||
31.1 | ||
31.2 | ||
31.3 | ||
32.1 | ||
101 | The following materials from | |
104 | The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, formatted as Inline XBRL and contained in Exhibit 101. |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Apple Hospitality REIT, Inc. | |||||
By: | /s/ Justin G. Knight | Date: | |||
Justin G. Knight, | |||||
Chief Executive Officer (Principal Executive Officer) | |||||
By: | /s/ | Date: | |||
Elizabeth S. Perkins, | |||||
Chief Financial Officer (Principal Financial | |||||
By: | /s/ Rachel S. Labrecque | Date: Aug 5, 2021 | |||
Rachel S. Labrecque, | |||||
Chief Accounting Officer (Principal Accounting Officer) |
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