ForFor the ~~quart~~~~erly~~quarterly period ended March 31~~, 201~~9 31, 2020

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 every Interactive Data File required to be submitted 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 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,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

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 May ~~1, 2019: 223,865,950~~15, 2020: 223,216,628

As previously disclosed in the Current Report on Form 8-K filed by Apple Hospitality REIT, ~~Inc~~.Inc. (the “Company”) with the Securities and Exchange Commission (the “SEC”) on May 6, 2020, the Company relied on the SEC’s Order Under Section 36 of the Securities Exchange Act of 1934 Modifying Exemptions From the Reporting and Proxy Delivery Requirements for Public Companies, dated March 25, 2020 (Release No. 34-88465), to delay the filing of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 (the “Form 10-Q”) due to circumstances related to COVID-19. The need to address the immediate and evolving impacts of COVID-19 on the Company’s business and operations, including impacts on the operations at each of its hotel properties, increased the demands on the Company’s employees at a time when “stay at home” orders, including in Virginia, where the Company’s headquarters is located, impacted normal working patterns. This slowed the Company’s normal quarterly close and financial reporting processes related to its Form 10-Q.

This Form 10-Q includes references to certain trademarks or service marks. The Courtyard by Marriott®, Fairfield 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®, Hampton Inn & 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.

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 (“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 ~~one~~1 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 making process of these entities, and therefore does not consolidate the entities. As of March 31, ~~2019,~~2020, the Company owned ~~234~~231 hotels with an aggregate of ~~30,046~~29,535 rooms located in 34 states. The Company’s common shares are listed on the New York Stock Exchange (“NYSE”) under the ticker symbol “APLE.”

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 (“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 Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 (the ~~“2018~~“2019 Form 10-K”). Operating results for the three months ended March 31, ~~2019~~2020 are not necessarily indicative of the results that may be expected for the twelve month period ending December 31, ~~2019.~~2020.

The preparation of the financial statements in conformity with GAAP 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.

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., the Company’s hotels have experienced significant declines in occupancy, which has had and is expected to continue to have a significant negative effect on the Company’s revenue and operating results. There remains significant uncertainty as to when operations at the hotels will return to normalized levels. As of May 15, 2020, each of the Company’s hotels were open and receiving reservations. The Company has intentionally consolidated operations for 38 hotels in market clusters to maximize operational efficiencies.

Cash and cash equivalents include highly liquid investments with original maturities of three months or less. The fair market value of cash and cash equivalents approximates their carrying value. The Company’s cash and cash equivalents are distributed among several major banks, but the balances may at times exceed federal depository insurance limits.

The Company monitors its properties on an ongoing basis by analytically reviewing financial performance and considers each property individually for purposes of reviewing for indicators of impairment. Due to the impact of COVID-19 on the Company’s operating results, the Company considered this event as a potential indicator of impairment and, as a result, the Company performed a recoverability analysis for each of its properties consistent with its annual process. The analysis compared each property’s net book value to its estimated operating income, based on assumptions and estimates about the property’s future revenues, expenses, capital expenditures and recovery from disruption resulting from COVID-19. If events or circumstances change, such as the Company’s intended hold period for a property or if the operating performance of a property remains at current levels or declines substantially for an extended period of time, the Company’s carrying value for a particular property may not be recoverable, and an impairment loss will be recorded. Impairment losses are measured as the difference between the asset’s fair value and its carrying value. The Company’s recoverability analyses did not identify any impairment losses for the three months ended March 31, 2020 and 2019.

Basic net income per common share is computed based upon the weighted average number of shares outstanding during the period. Diluted net income 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 per common share were the same for each of the periods presented.

Certain prior period amounts in the consolidated financial statements have been reclassified to conform to the current period presentation with no effect on previously reported net income or shareholders’ equity. ~~With the adoption of Accounting Standards Update (“ASU”) No. 2016-02,~~ ~~Leases (Topic 842)~~, the Company recorded a cumulative-effect adjustment to distributions greater than net income, a component of shareholders’ equity, as of January 1, 2019. See “Accounting Standards Recently Adopted” below and Note 9 for more information.

In ~~February 2016,~~August 2018, the Financial Accounting Standards Board (“FASB”) issued ~~ASU~~Accounting Standards Update (“ASU”) No. ~~2016-02,~~2018-13, ~~Leases~~Fair Value Measurement (Topic ~~842)~~820), Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement, which ~~replaces~~ ~~Leases (Topic 840)~~,removes, modifies and ~~along with subsequent amendments, provides~~adds fair value disclosure requirements, including a new requirement to disclose the ~~principles for the recognition, measurement, presentation~~range and ~~disclosure~~weighted average of ~~leases for both parties~~significant observable inputs used to ~~a contract (i.e. lessees and lessors). Under this standard, lessees~~develop Level 3 fair value measurements. Certain disclosures are required to ~~recognize most leases~~be applied retrospectively and others applied prospectively. The Company adopted this standard as of January 1, 2020, and the adoption did not have a material impact on ~~their balance sheets as right-of-use assets~~the Company’s consolidated financial statements and lease liabilities. Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. Leases with a term of 12 months or less are accounted for similarly to the previous accounting guidance under ~~Leases (Topic 840)~~, for operating leases. The standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. related disclosures.

In ~~July 2018,~~March 2020, the FASB issued ASU No. ~~2018-11,~~2020-04, ~~Leases~~Reference Rate Reform (Topic ~~842)~~848), ~~Targeted Improvements,~~ which provides ~~entities another~~ optional ~~transition method, which~~guidance through December 31, 2022 to ease the ~~Company elected,~~potential burden in accounting for, or recognizing the effects of, reference rate reform on financial reporting. The amendments in ASU No. 2020-04 apply to ~~apply~~contract modifications that replace a reference rate affected by reference rate reform, providing optional expedients regarding the ~~standard using~~measurement of hedge effectiveness in hedging relationships that have been modified to replace a reference rate. The guidance in ASU No. 2020-04 became effective upon issuance and the modified retrospective approach at its effective date, versus restating the prior periods presented, and recognizing a cumulative-effect adjustment to the opening balance of retained earnings for the effect of initially applying Topic 842 in the period of adoption. Consequently, an entity’s reporting for periods presented prior to adoptionprovisions of the ~~new lease requirements in~~ASU did not have a material impact on the Company’s consolidated financial statements ~~would continue in accordance with~~ ~~Leases (Topic 840)~~~~, including disclosures.~~and related disclosures as of March 31, 2020.

The Company adopted this standard effective January 1, 2019, electing to recognize and measure its leases prospectively at the beginning of the period of adoption through a cumulative-effect adjustment to shareholders’ equity, without restating the presentation of periods prior to the effective date, which continue to be reported in accordance with the Company’s historical accounting policy. At adoption, the Company recorded a cumulative-effect adjustment totaling approximately $5.2 million to distributions greater than net income, a component of shareholders’ equity in the Company’s consolidated balance sheet. The Company elected to apply certain practical expedients allowed under the standard including (i) to use hindsight in determining the term as well as assessing the impairment of its existing leases, (ii) to not assess whether existing land easements not previously accounted for as leases are or contain leases, and (iii) to not evaluate short-term leases. The Company has elected not to apply the package of practical expedients under the standard which would have allowed the Company to not reassess at the date of adoption: (i) whether any existing contracts meet the definition of a lease, (ii) the lease classification for any existing leases, and (iii) the accounting for initial direct costs of any existing leases.

At adoption of the new standard, the Company recorded right-of-use assets and lease liabilities for its ground leases and certain other operating leases measured at the estimated present value of the remaining minimum lease payments under the leases. Four of the Company’s ground leases that were previously classified as operating leases under Topic 840 are classified as financing leases under Topic 842. For these finance leases, effective January 1, 2019, the Company recognizes depreciation and amortization expense and interest and other expense, net in the Company’s consolidated statements of operations, instead of operating ground lease expense. While the total expense recognized over the life of a lease is unchanged, the timing of expense recognition for these finance leases results in higher expense recognition during the earlier years of the lease and lower expense during the later years of the lease. In addition to recording operating and financing right-of-use assets and lease liabilities, the Company also reclassified at adoption its intangible assets for below market leases and intangible liabilities for above market leases, as well as its accrued straight-line lease liabilities for its operating leases, to the beginning right-of-use assets. The Company derecognized its accrued straight-line lease liabilities related to its finance leases, which are included in the cumulative-effect adjustment noted above. The Company is also a lessor in certain retail lease agreements related to its real estate, however, there was no material change to the accounting for these leasing arrangements. See Note 9 for more information regarding the Company’s lease assets and liabilities.

The Company’s investment in real estate consisted of the following (in thousands):

~~Effective January 1, 2019, the Company adopted ASU No. 2016-02,~~ ~~Leases (Topic 842~~), as amended and, as a result, recorded finance ground lease assets for four of its ground leases, which are included in investment in real estate, net. See Note 9 for more information regarding the Company’s finance ground lease assets.

As of March 31, ~~2019,~~2020, the Company owned ~~234~~231 hotels with an aggregate of ~~30,046~~29,535 rooms located in 34 states.

The Company leases all of its hotels to its wholly-owned taxable REIT subsidiary (or a subsidiary thereof) under master hotel lease agreements.

~~The~~There were 0 acquisitions during the three months ended March 31, 2020. During the year ended December 31, 2019, the Company acquired ~~two~~3 hotels, including 2 hotels during the three months ended March 31, 2019. 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.

During the year ended December 31, 2018, the Company acquired five hotels including two hotels in the first three months of 2018. 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.

The Company used borrowings under its revolving credit facility to purchase each of these hotels. The acquisitions of these hotel properties were accounted for as an acquisition of a group of assets, with costs incurred to effect the acquisition, which were not significant, capitalized as part of the cost of the assets acquired. For the two hotels acquired during the three months ended March 31, 2019, the amount of revenue and operating income included in the Company’s consolidated statement of operations from the date of acquisition through March 31, 2019 was approximately $0.7 million and $0.1 million, respectively. For the two hotels acquired during the three months ended March 31, 2018, the amount of revenue and operating income included in the Company’s consolidated statement of operations from the date of acquisition through March 31, 2018 was approximately $2.4 million and $0.8 million, respectively.

As of March 31, ~~2019,~~2020, the Company had outstanding contracts, all of which were entered into prior to 2020, for the potential purchase of ~~four~~6 hotels for a total expected purchase price of approximately ~~$110.0~~$208.8 million. NaN of the hotels, the newly developed Hampton Inn & Suites and Home2 Suites in Cape Canaveral, Florida, were acquired in April 2020. Also, subsequent to March 31, 2020, the Company exercised its right to terminate the contract to purchase the Courtyard hotel in Denver, Colorado and the refundable deposit of approximately $0.6 million ~~which~~was repaid to the Company. The 3 remaining hotels are under development and are planned to be completed and opened for business over the next 15five to 2115 months from March 31, ~~2019,~~2020, at which time closings on these hotels are expected to occur. Although the Company is working towards acquiring these hotels, in each case there are ~~many~~a number of 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. If the sellers meet all of the conditions to closing, the Company is obligated to specifically perform under these contracts. As the properties are under development, at this time, the sellers have not met all of the conditions to closing. The following table summarizes 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 each of the contracts outstanding at March 31, ~~2019.~~2020 that have not been terminated. All dollar amounts are in thousands.

The Company ~~intends~~utilized $25.0 million of its available cash and entered into a one-year note payable with the developer secured by the hotels for $21.7 million to ~~use borrowings under~~fund the purchase price of the Cape Canaveral, Florida hotels. The note payable bears interest, which is payable monthly, at a floating annual rate equal to the London Inter-Bank Offered Rate for a one-month term (“one-month LIBOR”) plus a margin of 2.0% for the first six months of the loan term and 3.0% for the second six months of the loan term. The Company plans to utilize its ~~credit facilities~~available cash at closing to purchase the remaining hotels under contract if ~~a closing occurs.~~closings occur.

~~In February 2019,~~During the three months ended March 31, 2020, the Company ~~terminated its purchase and sale agreement~~sold 2 hotels in 2 transactions with an unrelated ~~party for the sale of 16 of its hotels and entered into two purchase and sale agreements with the same unrelated party for the sale of a total of nine hotels~~parties for a total combined gross sales price of ~~$95.0 million. On March 28, 2019, the Company completed the sale of the hotels,~~approximately $45.0 million, resulting in a combined gain on sale of approximately ~~$1.8~~$8.8 million, which is included in the Company’s consolidated statement of operations for the three months ended March 31, ~~2019.~~2020. The ~~nine~~two hotels had a total carrying value of approximately ~~$93.0~~$35.7 million at the time of ~~the~~ sale. The following table lists the ~~nine~~two hotels sold:

During the year ended December 31, 2019, the Company sold 11 hotels in 3 transactions with unrelated parties for a total combined gross sales price of approximately $121.7 million, resulting in a combined gain on sale of approximately $5.6 million, which is included in the Company’s consolidated statement of operations for the year ended December 31, 2019. The 11 hotels had a total carrying value of approximately $115.1 million at the time of the sale. The following table lists the 11 hotels sold:

During the year ended December 31, 2018, the Company sold three hotels in two transactions with unrelated parties for a total combined gross sales price of approximately $15.8 million, resulting in a combined gainExcluding gains on sale of ~~approximately $0.2 million, which is included in~~real estate, the Company’s consolidated statement of operations for the year ended December 31, 2018. Of the three hotels sold, two of the hotels (the Columbus, Georgia 89-room SpringHill Suites and 86-room TownePlace Suites) were sold on July 13, 2018 for a combined gross sales price of $10.0 million, resulting in no gain or loss on the sale, and one hotel (the 72-room Springdale, Arkansas Residence Inn) was sold on November 29, 2018 for a gross sales price of approximately $5.8 million, resulting in a gain of approximately $0.2 million. During the second quarter of 2018, the Company recognized impairment losses of approximately $3.1 million related to these three hotels, which is included in the Company’s consolidated statement of operations for the year ended December 31, 2018, and consisted of approximately $0.5 million to adjust the bases of the two Columbus hotels that sold in July 2018 to their estimated fair values, which were based on the contracted sales prices, net of estimated selling costs, and approximately $2.6 million to adjust the basis of the Springdale, Arkansas Residence Inn that sold in November 2018 to its estimated fair value, which was based on the offers received at that time, net of estimated selling costs.

~~The~~ Company’s consolidated statements of operations include operating income ~~excluding gain on sale of real estate,~~ of approximately ~~$1.2~~$0.1 million and ~~$1.5~~$2.6 million for the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, respectively, relating to the results of operations of the ~~twelve~~13 hotels noted above (the two hotels sold ~~as noted above~~in the first three months of 2020 and the 11 hotels sold in 2019) for the period of ownership. The sale of these properties does not represent a strategic shift that has, or will have, a major effect on the Company’s operations and financial results, and therefore the operating results for the period of ownership of these properties are included in income from continuing operations for the three months ended March 31, ~~2019~~2020 and ~~2018.~~2019. The net proceeds from the sales were used to pay down borrowings on the Company’s revolving credit facility.

As of March 31, ~~2019~~2020, and December 31, ~~2018,~~2019, the Company’s debt consisted of the following (in thousands):

The aggregate amounts of principal payable under the Company’s total debt obligations as of March 31, ~~2019~~2020 (including the revolving credit facility, term loans, senior notes and mortgage debt), for the five years subsequent to March 31, ~~2019~~2020 and thereafter are as follows (in thousands):

The Company uses interest rate swaps to manage its interest rate risks 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”).~~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 and variable-rate debt, after giving effect to its interest rate swaps in effect at March 31, 2020 and December 31, 2019, is set forth below. All dollar amounts are in thousands.

~~On July 27, 2018, the~~The Company ~~entered into~~utilizes an ~~amendment and restatement of its then outstanding~~ unsecured ~~$965 million credit facility, which was repaid at closing, reducing the borrowing capacity to $850 million, reducing the annual interest rate and extending the maturity dates (the~~ “$850 million credit facility”~~). The $850 million credit facility is~~ comprised of (i) a $425 million revolving credit facility with an initial maturity date of July 27, 2022 and (ii) a $425 million term loan facility consisting of ~~two~~2 term loans: a $200 million term loan with a maturity date of July 27, 2023, and a $225 million term loan with a maturity date of January 31, 2024 ~~both funded at closing~~ (the “$425 million term loan facility”). At closing, the Company repaid the $425 million outstanding under the term loans of the $965 million credit facility with the proceeds from the $425 million term loan facility under the $850 million credit facility and borrowed approximately $196 million under the $425 million revolving credit facility to repay the outstanding balance of the extinguished revolving credit facility and to pay closing costs. 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. The Company may make voluntary prepayments in whole or in part, at any time. Interest payments on the $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 plus a margin ranging from 1.35% to 2.25%, depending upon the Company’s leverage ratio, as calculated under the terms of the credit agreement. The Company is also required to pay quarterly an unused facility fee at an annual rate of 0.20% or 0.25% on the unused portion of the $425 million revolving credit facility, based on the amount of borrowings outstanding during the quarter. In response to the disruption to the operations of the Company’s hotels and to the financial markets and broader economy caused by COVID-19, the Company borrowed its entire availability under its revolving credit facility in March 2020 and, at March 31, 2020, had an outstanding balance of $425.0 million and 0 remaining availability under its credit facilities.

~~On August 2, 2018, the~~The Company ~~entered into~~has an ~~amendment and restatement of its then outstanding $150~~unsecured $225 million term loan facility which was repaid at closing, increasing the borrowing capacity to $225 million, reducing the annual interest rate and extending the maturity dates (the “$225 million term loan facility”). The $225 million term loan facilitythat is comprised of (i) a $50 million term loan with a maturity date of August 2, 2023, which was funded ~~at closing,~~on August 2, 2018, and (ii) a $175 million term loan with a maturity date of August 2, 2025, of which $100 million was ~~drawn at closing~~funded on August 2, 2018 and the remaining $75 million was ~~drawn~~funded on January 29, 2019. ~~At closing, the Company repaid the $150 million outstanding under the $150 million term loan facility with the proceeds from the $225 million term loan 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, at any time, subject to certain conditions. Interest payments on the $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 1.35% to 2.50%, depending upon the Company’s leverage ratio, as calculated under the terms of the credit agreement.

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 $850 million credit facility and the $225~~“2017 $85 million term loan ~~facility, the “credit facilities”~~facility”). ~~Although no material terms were changed, the~~The credit agreement, ~~was~~as amended and restated in August 2018, ~~as a result of the refinancings noted above. The amended and restated 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, at any time, subject to certain conditions. Interest payments on the $85 million term loan are due monthly. In July 2019, the Company entered into an amendment of the $85 million term loan to reduce the interest rate margin from 1.80% - 2.60% to 1.30% - 2.10%, depending upon the Company’s leverage ratio, as calculated under the terms of the credit agreement, for the remainder of the term.

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 ~~1.80%~~1.70% to ~~2.60%~~2.55%, depending upon the Company’s leverage ratio, as calculated under the terms of the credit agreement.

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 facility and the 2019 $85 million term loan facility, the “credit facilities”). Net proceeds from the $50 million senior notes facility are 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 any time, subject to certain 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 ratio of Consolidated Total Indebtedness to Consolidated EBITDA as defined in the agreement.

As of March 31, ~~2019~~2020, and December 31, ~~2018,~~2019, the details of the Company’s credit facilities were as set forth below. All dollar amounts are in thousands.

The credit agreements governing the credit facilities contain mandatory prepayment requirements, customary affirmative ~~covenants,~~and negative covenants and events of default. The credit agreements 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 and restrictions on certain investments. The Company was in compliance with the applicable covenants at March 31, ~~2019.~~2020. As a result of COVID-19 and the associated disruption to the Company’s operating results, the Company anticipates that it may not be in compliance with certain of these covenants in future periods. In April 2020, the Company notified the lenders under its credit facilities of the anticipated non-compliance with certain covenants and anticipates entering into amendments to each of the credit facilities that will provide for waivers of each of the covenants for four quarters beginning with the quarter ending June 30, 2020. The terms of the amendments are expected to include minimum liquidity requirements and restrictions on the amount of the Company’s distributions, capital expenditures, share repurchases and acquisitions among other items during the covenant relief period. Additionally, the Company anticipates the amendments to require that the interest rate under its credit facilities increase, during the covenant relief period, to the highest interest rate margin under each of the credit agreements which would range from 75-80 basis points of an increase above current margins depending on the agreement. Although the Company anticipates completing these amendments, there are many conditions to closing, including but not limited to finalizing the terms of the amendments and completing the amendments themselves, and there can be no assurances that the Company will be able to complete the amendments with the noted terms or at all. If the amendments are not entered into, as currently anticipated, and the Company does not meet the covenant requirements in future periods, the Company will be in default under each credit facility, which may result in a potential acceleration of amounts due under each credit facility, which would have a material adverse effect on the Company if it is unable to obtain alternative sources of capital to repay such amounts.

As of March 31, ~~2019,~~2020, the Company had approximately ~~$485.4~~$500.0 million in outstanding mortgage debt secured by 31 properties, with maturity dates ranging from ~~June 2020~~July 2021 to January 2038, stated interest rates ranging from ~~3.55%~~3.40% to 6.25% 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. 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 March 31, ~~2019~~2020 and December 31, ~~2018~~2019 for each of the Company’s mortgage debt obligations. All dollar amounts are in thousands.

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.

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 March 31, ~~2019~~2020, the carrying value and estimated fair value of the Company’s debt were approximately $1.8 billion and $1.6 billion, respectively. As of December 31, ~~2018,~~2019, both the carrying value and estimated fair value of the Company’s debt were approximately ~~$1.4~~$1.3 billion. Both the carrying value and estimated fair value of the Company’s debt (as discussed above) is net of unamortized debt issuance costs related to term loans, senior notes and mortgage debt for each specific year.

Currently, the Company uses interest rate swaps to manage its interest rate risks on 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 one-month LIBOR. The swaps are designed to effectively fix the interest payments on variable-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 March 31, ~~2019~~2020 and December 31, ~~2018.~~2019. All dollar amounts are in thousands.

⁽¹⁾

In June 2018 the Company entered into a forward interest rate swap agreement with a commercial bank, which beginning January 31, 2019 effectively fixes the interest rate on $50 million of the Company's variable-rate debt.

⁽²⁾

In December 2018 the Company entered into a forward interest rate swap agreement with a commercial bank, which beginning January 31, 2020 will effectively fix the interest rate on $25 million of the Company's variable-rate debt.

⁽³⁾

In December 2018 the Company entered into a forward interest rate swap agreement with a commercial bank, which beginning May 18, 2020 will effectively fix the interest rate on $50 million of the Company's variable-rate debt.

Index

The Company assesses, both at inception and on an ongoing basis, the effectiveness of its qualifying cash flow hedges. For the three months ended March 31, 2020, all of the interest rate swap agreements listed above, with the exception of the $110 million agreement, were designated as cash flow hedges. The Company discontinued hedge accounting on the $110 million interest rate swap agreement during the three months ended March 31, 2020 due to a change in the forecasted interest payments being hedged. As a result, the unrealized loss incurred during the three months ended March 31, 2020 of $0.2 million was recorded to interest and other expense, net in the Company’s statement of operations. The change in the fair value of the Company’s designated cash flow hedges is recorded to accumulated other comprehensive income (loss), a component of shareholders’ equity in the Company’s consolidated balance sheets. Amounts reported in accumulated other comprehensive income (loss) will be reclassified to interest and other expense, net as interest payments are made or received on the Company’s variable-rate derivatives. The Company estimates that approximately ~~$4.4~~$9.5 million of net unrealized ~~gains~~losses included in accumulated other comprehensive ~~income~~loss at March 31, ~~2019~~2020 will be reclassified as ~~a decrease~~an increase to interest and other expense, net within the next 12 months.

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 for the three months ended March 31, ~~2019~~2020 and ~~2018~~2019 (in thousands):

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 ~~2018~~2019 Form 10-K. Below is a summary of the significant related party relationships in effect during the three months ended March 31, ~~2019~~2020 and ~~2018.~~2019.

Glade M. Knight, Executive Chairman of the Company, owns Apple Realty Group, Inc. (“ARG”), 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., each of which receive support services from ARG.

The Company provides support services, including the use of the Company’s employees and corporate office, to ARG and is reimbursed by ARG for the cost of these services. The amounts reimbursed to the Company are based on the actual costs of the services and a good faith estimate of the proportionate amount of time incurred by the Company’s employees on behalf of ARG. Total reimbursed costs allocated by the Company to ARG for the three months ended March 31, ~~2019~~2020 and ~~2018~~2019 totaled approximately $0.3 million ~~and $0.2 million, respectively,~~for each respective period, and are recorded as a reduction to general and administrative expenses in the Company’s consolidated statements of operations.

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. As of March 31, ~~2019~~2020, and December 31, ~~2018,~~2019, total amounts due from ARG for reimbursements under the cost sharing structure totaled approximately $0.3 million and ~~$0.4~~$0.5 million, respectively, and are included in other assets, net in the Company’s consolidated balance sheets.

The Company, through a wholly-owned subsidiary, Apple Air Holding, LLC, owns a Learjet used primarily for acquisition, asset management, renovation and investor and public relations purposes. The aircraft is also leased to affiliates of the Company based on third party rates, which leasing activity was not significant during the reporting periods. The Company also utilizes aircraft, owned through two entities, one of which is owned by the Company’s Executive Chairman, and the other, by its ~~President and~~ Chief Executive Officer, for acquisition, asset management, renovation and investor and public relations purposes, and reimburses these entities at third party rates. Total costs incurred for the use of these aircraft during the three months ended March 31, 2020 and 2019 ~~and 2018~~ were ~~approximately $0.05~~less than $0.1 million ~~and $0.03 million, respectively,~~for each respective period and are included in general and administrative expenses in the Company’s consolidated statements of operations.

~~The~~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 three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, the Company paid distributions of $0.30 per common share for a total of $67.3 million and $67.2 million, ~~and $69.1 million,~~ respectively. ~~Additionally,~~The distributions paid during the three months ended March 31, 2020 include the distribution paid in ~~March 2019, the Company declared a monthly distribution of $0.10 per common share,~~January 2020, totaling $22.4 million, that was declared in December 2019, which was recorded as a payable as of March 31, 2019 and paid in April 2019. As of December 31, 2018, a monthly distribution of $0.10 per common share, totaling $22.4 million, was recorded as a payable and paid in January 2019. These accrued distributions were included in accounts payable and other liabilities in the Company’s consolidated balance ~~sheets.~~sheet at December 31, 2019.

In May ~~2018,~~2020, the Company’s Board of Directors approved an extension of its existing share repurchase program (the “Share Repurchase Program”), authorizing share repurchases up to an aggregate of ~~$464~~$345 million. The Share Repurchase Program may be suspended or terminated at any time by the Company and will end in July ~~2019~~2021 if not terminated earlier. ~~In March 2018,~~During the first three months of 2020 and 2019, the Company ~~established~~purchased, under its Share Repurchase Program, approximately 1.5 million and 0.3 million of its common shares, respectively, at a weighted-average market purchase price of approximately $9.42 and $14.93 per common share, respectively, for an aggregate purchase price, including commissions, of approximately $14.3 million and $4.1 million, respectively. The shares were repurchased under a written trading plan ~~as part of the Share Repurchase Program~~ that ~~provides~~provided for share repurchases in open market transactions, ~~that is~~and was intended to comply with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. During the three months ended March 31, 2019, the Company purchased, under its Share Repurchase Program, approximately 0.3 million of its common shares at a weighted-average market purchase price of approximately $14.93 per common share for an aggregate purchase price, including commissions, of approximately $4.1 million. During the three months ended March 31, 2018, the Company purchased, under its Share Repurchase Program, approximately 0.3 million of its common shares at a weighted-average market purchase price of approximately $16.89 per common share for an aggregate purchase price, including commissions, of approximately $4.3 million. Repurchases under the Share Repurchase Program have been funded, and the Company intends to fund future repurchases, with cash on hand or availability under its credit facilities. As of March 31, ~~2019,~~2020, approximately ~~$359.9~~$345.4 million remained available for purchase under the Share Repurchase Program. In March 2020 the Company terminated its written trading plan.

The Company annually establishes an incentive plan for its executive management. Under the incentive plan for ~~2019~~2020 (the ~~“2019~~“2020 Incentive Plan”), participants are eligible to receive a bonus based on the achievement of certain ~~2019~~2020 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 three-year periods). The operational performance metrics are equally weighted and 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. ~~The~~At March 31, 2020, the range of potential aggregate payouts under the ~~2019~~2020 Incentive Plan iswas $0 - ~~$18~~$13.9 million. The range of payout under the 2020 Incentive Plan reflects a voluntary reduction of $0 - $5.2 million of the potential payout to the Company’s Chief Executive Officer in response to the expected decline in the Company’s operating results due to COVID-19. Based on performance through March 31, ~~2019,~~2020, the Company has accrued approximately ~~$2.2~~$1.5 million as a liability for potential executive bonus payments under the ~~2019~~2020 Incentive Plan, which is included in accounts payable and other liabilities in the Company’s consolidated balance sheet as of March 31, ~~2019~~2020 and in general and administrative expenses in the Company’s consolidated statement of operations for the three months ended March 31, ~~2019.~~2020. Approximately 25% of awards under the ~~2019~~2020 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 will vest ~~at the end of 2019~~in December 2020 and one-third of which will vest in December ~~2020.~~2021. Under the incentive plan for ~~2018~~2019 (the ~~“2018~~“2019 Incentive Plan”), the Company recorded approximately ~~$1.9~~$2.2 million in general and administrative expenses in its consolidated statement of operations for the three months ended March 31, 2019.

During the three months ended March 31, 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 retirements of the Company’s former Executive Vice President and Chief Operating Officer and the Company’s former Executive Vice President and Chief Financial Officer which, pursuant to the separation and general release agreements executed and amended in March 2020, will be paid at a mutually agreed-upon date in 2020. The accrued expense was included in accounts payable and other liabilities in the Company’s consolidated balance sheet as of March 31, 2020 and in general and administrative expenses in the Company’s consolidated statement of operations for the three months ended March 31, ~~2018.~~ 2020.

During the three months ended March 31, 2019, the Company ~~accrued for~~incurred a one-time separation payment of $0.5 million in connection with the retirement of the Company’s Executive Vice President and Chief Legal Officer which, pursuant to the separation and general release agreement executed in March 2019, was paid in April 2019 and iswas included ~~in accounts payable and other liabilities in the Company’s consolidated balance sheet as of March 31, 2019 and~~ in general and administrative expenses in the Company’s consolidated statement of operations for the three months ended March 31, 2019.

The following table sets forth information pertaining to the share-based compensation issued under the ~~2018~~2019 Incentive Plan and the incentive plan for ~~2017~~2018 (the ~~“2017~~“2018 Incentive Plan”).

~~The Company is the lessee on certain ground leases, hotel equipment leases and office space leases. As of March 31, 2019,~~On April 30, 2020, the Company had 13 hotels subject to ground leases and three parking lot ground leases with remaining terms ranging from approximately four to 87 years. Certain of its ground leases have options to extend beyond the initial lease term by periods ranging from five to 120 years.

~~The Company adopted ASU No. 2016-02,~~ ~~Leases (Topic 842)~~, as discussed further in Note 1 in the section titled “Accounting Standards Recently Adopted”, effective January 1, 2019, which requires leases with durations greater than twelve months to be recognizedclosed on the balance sheet as right-of-use (“ROU”) assets and lease liabilities. Prior year financial statements were not restated under the new standard and, therefore, those amounts are not presented below.

Under the new standard, the Company’s leases are classified as operating or finance leases. For leases with terms greater than 12 months, the Company recognizes a ROU asset and lease liability at the estimated present value of the minimum lease payments over the lease term. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Many of the Company’s leases include rental escalation clauses (including fixed schedule rent increases) and renewal options that are factored into the determination of lease payments when appropriate and the present value of the remaining lease payments is adjusted accordingly. The Company utilizes interest rates implicit in the lease if determinable or, if not, it estimates its incremental borrowing rate from information available at lease commencement, to determine the present value of the lease payments. At transition to the new standard, the Company used information available at that time to determine the incremental borrowing rates on its existing leases at January 1, 2019 based on estimates of rates the Company would pay for senior collateralized loans with terms similar to each lease.

Twelve of the Company’s hotel and parking lot ground leases as well as all of its hotel equipment leases and office space leases are classified as operating leases, for which the Company recorded ROU assets and lease liabilities at adoption of the new standard. The ROU assets are included in other assets, net and the lease liabilities are included in accounts payable and other liabilities in the Company’s consolidated balance sheet. In addition, the Company also reclassified at adoption of the new standard, its intangible assets for below market ground leases and intangible liabilities for above market ground leases related to these leases from other assets, net and accounts payable and other liabilities in the consolidated balance sheet, respectively, as well as accrued straight-line lease liabilities related to these leases from accounts payable and other liabilities in the consolidated balance sheet to the beginning ROU assets. Lease expense is recognized on a straight-line basis over the term of the respective lease and the value of each lease intangible is amortized over the term of the respective lease. Costs related to operating ground leases are included in operating ground lease expense, while costs related to hotel equipment leases are included in hotel operating expense and property taxes, insurance and other expense, and costs related to office space leases are included in general and administrative expense in the Company’s consolidated statements of operations.

Four of the Company’s hotel ground leases are classified as finance leases, for which the Company recorded ROU assets and lease liabilities at adoption of the new standard. The ROU assets are recorded as finance ground lease assets within investment in real estate, net and the lease liabilities are recorded as finance lease liabilities in the Company’s consolidated balance sheet. In addition, the Company also reclassified at adoption of the new standard, its intangible assets for below market ground leases and intangible liabilities for above market ground leases related to these leases from other assets, net and accounts payable and other liabilities in the consolidated balance sheet, respectively, to the beginning ROU assets. At adoption of the new standard, the Company recorded a cumulative-effect adjustment totaling approximately $5.2 million, which included the derecognition of accrued straight-line lease liabilities related to the finance leases, to distributions greater than net income, a component of shareholders’ equity in the Company’s consolidated balance sheet. The ROU asset and value of each lease intangible is amortized over the term of the respective lease. Costs related to finance ground leases are included in depreciation and amortization expense and interest and other expense, net in the Company’s consolidated statement of operations.

~~The following table sets forth the lease-related assets and liabilities included in the Company’s consolidated balance sheet as of March 31, 2019. All dollar amounts are in thousands.~~

The following table sets forth the lease costs related to the Company’s operating and finance ground leases included in the Company’s consolidated statement of operations for the three months ended March 31, 2019 (in thousands):

The following table reconciles the undiscounted cash flows for each of the next five years and total of the remaining years to the operating lease liabilities and finance lease liabilities included in the Company’s consolidated balance sheet as of March 31, 2019 (in thousands):

~~The following table sets forth supplemental cash flow information related to the Company’s operating and finance leases for the three months ended March 31, 2019 (in thousands):~~

~~In April 2019, the Company paid approximately $22.4 million, or $0.10 per outstanding common share, in distributions to its common shareholders.~~

~~In April 2019, the Company declared a regular monthly cash distribution of $0.10 per common share for the month of May 2019. The distribution is payable on May 15, 2019.~~

~~In April 2019, the Company entered into a purchase contract for~~ the purchase of the newly developed Hampton Inn & Suites and Home2 Suites in Cape Canaveral, Florida, a ~~hotel to be constructed in Denver, Colorado,~~combined 224-room dual-branded complex, for a gross purchase price of approximately $46.7 million. The Company utilized $25.0 million of its available cash and entered into a ~~minimum~~one-year note payable with the developer secured by the hotels for $21.7 million to fund the purchase price of ~~$49.1 million,~~the Cape Canaveral, Florida hotels. The note payable bears interest, which is ~~subject~~payable monthly, at a floating annual rate equal to ~~adjustment based on~~one-month LIBOR plus a margin of 2.0% for the ~~actual number~~first six months of ~~rooms. The~~the loan term and 3.0% for the second six months of the loan term.

In May 2020, the contract to purchase the Courtyard hotel ~~is planned~~in Denver, Colorado was terminated and the refundable deposit of approximately $0.6 million was repaid to ~~be a Courtyard by Marriott which is expected to contain a minimum of 182 guest rooms. Although~~ the ~~Company 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 a closing on this hotel will occur.~~

Item 2. 2. Management’s Discussion and Analysis of Financial Condition and Results of ~~Operation~~sof Operations

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 statements 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 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 is the potential increased adverse effect of COVID-19 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. The significance, extent and duration of the 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 Company’s ability to complete the anticipated amendments to its credit facilities on the terms and timing anticipated, or at all, 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 Annual Report on Form 10-K for the fiscal year ended December 31, 2019 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 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; litigation 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 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. 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 ~~2018~~2019 Form ~~10-K.~~10-K and in Part II, Item 1A of this Form 10-Q. 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 ~~2018~~2019 Form 10-K.

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 U.S. As of March 31, ~~2019,~~2020, the Company owned ~~234~~231 hotels with an aggregate of ~~30,046~~29,535 rooms located in urban, high-end suburban and developing markets throughout 34 states. ~~All~~Substantially all of the Company’s hotels operate under Marriott ~~Hilton~~ or ~~Hyatt~~Hilton brands. The hotels are operated and managed under separate management agreements with 2320 hotel management companies, none of which are affiliated with the Company. The Company’s common shares are listed on the NYSE under the ticker symbol “APLE.”

~~New Lease Accounting Standard~~COVID-19 and the Company’s Actions to Mitigate its Impact

Since first being reported in December 2019, COVID-19 has spread globally, including to every state in the U.S. On ~~January 1, 2019,~~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.

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 been rapidly evolving and many countries, including the U.S., as well as state and local governments, have reacted by instituting 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 cancellation of events, including sporting events, conferences and meetings. Many experts predict that the outbreak will trigger a period of material global economic slowdown or a global recession and many experts believe that the U.S. is already in a recession. The Company cannot presently determine the extent or duration of the overall operational and financial effects that COVID-19 will have on the Company.

The effects of the pandemic on the hotel industry are unprecedented. COVID-19 has disrupted the industry and its consequences have dramatically reduced business and leisure travel, which has had a significant adverse impact on, and will continue to significantly adversely impact and disrupt, the Company’s business, financial performance and condition, operating results and cash flows. For example, average occupancy for the Company’s Comparable Hotels (as defined below) declined from approximately 76% in February to below 20% by the end of March and for the entire month of April, which has been accompanied by declines in average daily rate (“ADR”) of approximately 30% for the month of April compared to 2019. The Company expects this significant decline in revenue associated with COVID-19 throughout its portfolio and the overall decline in the U.S. economy to negatively impact the Company’s revenue and operating results for an extended period of time. The Company does not expect a material improvement in results until business travel and general consumer confidence related to risks associated with the COVID-19 pandemic improves and government restrictions on travel and “stay at home” orders are lifted.

The following table highlights the impact beginning in March to the Company’s ADR, Occupancy and revenue per available room (“RevPAR”).

The Company, its management companies and the brands the Company’s hotels are franchised with have all aggressively worked to mitigate the costs and uses of cash associated with operating the hotels in a low-occupancy environment and are thoughtfully working to position the hotels to adapt to the changes that may occur to guest preferences in the future. The impact of the situation has varied and will vary by market and hotel. With the support of its brands and third-party management companies, the Company ~~adopted ASU No. 2016-02,~~ ~~Leases (Topic 842)~~~~, electing~~will continue to ~~recognize~~evaluate and ~~measure~~implement additional measures as the situation evolves.

The following is a brief summary of certain measures the Company, its ~~leases prospectively~~management companies and its brands have taken to minimize costs and cash outflow to maintain a sound liquidity position.

Despite the ~~beginning~~cost reduction initiatives discussed above, the Company does not expect to be able to fully, or even materially, offset revenue losses from the COVID-19 pandemic. The significance, extent and duration of ~~the period of adoption through a cumulative-effect adjustment~~COVID-19 effects are not currently known and these uncertainties make it difficult to shareholders’ equity, without restating the presentation of periods prior to the effective date (the “new lease accounting standard”). Under the new lease accounting standard, beginning in 2019, four ofpredict operating results for the Company’s ~~ground leases~~hotels for the remainder of 2020. Therefore, there can be no assurances that ~~were previously accounted for as operating leases are accounted for as finance leases. For these finance leases, effective January 1, 2019~~ the Company ~~recognizes depreciation and amortization expense and interest and other expense, net~~will not experience further declines in the Company’s consolidated statements of operations, instead of operating ground lease expense. Results prior to January 1, 2019 have not been restated. As a result, the comparability of operating ground lease expense, depreciation and amortization expense, and interest and other expense, net are affected by the implementation of the new lease accounting standard. See Note 1 titled “Organization and Summary of Significant Accounting Policies” and Note 9 titled “Leases” 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 the new lease accounting standard.hotel revenues or earnings at its hotels.

The following discussion regarding the Company’s approach to acquisitions and dispositions reflects the Company’s historical strategy. While the Company anticipates it will continue to approach the acquisition and disposition of hotels similarly over the long term, the detrimental impact of COVID-19 to the Company and overall lodging industry may limit the Company’s ability to effectively acquire or dispose of hotels until the industry recovers.

The Company continually monitors market conditions and attempts to maximize shareholder value by investing in properties that it believes provide superior value over the long term. Consistent with this strategy and the Company’s focus on investing in rooms-focused hotels, in 2018 the Company ~~acquired two hotels for an aggregate~~entered into a contract to purchase ~~price of approximately $52.4 million during the first three months of 2019:~~ a ~~160-room~~combined 224-room dual-branded Hampton Inn & Suites and Home2 Suites complex to be constructed in ~~St. Paul, Minnesota~~Cape Canaveral, Florida. Construction of the hotels was completed in April 2020 and the Company acquired the hotels. The purchase price was approximately $46.7 million, funded by $25.0 million of cash on hand and a ~~128-room Home2 Suites~~one-year note with the developer for $21.7 million payable in ~~Orlando, Florida.~~2021. Also, as of ~~April 30, 2019,~~May 15, 2020, the Company had outstanding contracts, all of which were entered into prior to 2020, for the potential purchase of ~~five~~three hotels ~~that are~~ under development for a total expected purchase price of approximately ~~$159.2~~$113.0 million, which are planned to be completed and opened for business over the next 15five to 2715 months from March 31, ~~2019,~~2020, at which time closings on these hotels are expected to occur. In each case, there are a number of 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. If the sellers meet all of the conditions to closing, the Company is obligated to specifically perform under these contracts. The Company ~~utilized its revolving credit facility to fund the completed acquisitions and~~ plans to utilize its ~~credit facilities~~available cash at closing for any additional acquisitions.

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 from the sale of the property. As a result, ~~in March 2019,~~during the first quarter of 2020, the Company sold ~~nine~~two hotels for a total combined gross sales price of ~~$95.0 million.~~$45.0 million and recognized a gain on sale of approximately $8.8 million in the first quarter of 2020. The net proceeds from the sales were used to pay down borrowings on the Company’s revolving credit facility.

See Note 2 titled “Investment in Real Estate” ~~and~~, Note 3 titled “Dispositions” and Note 9 titled “Subsequent Events” 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.

Effective January 20, 2020, the Company converted its New York, New York Renaissance hotel to an independent boutique hotel. As anticipated, the operating results of the hotel declined in the first quarter of 2020 (prior to COVID-19) as compared to the first quarter of 2019 as the management team worked to replace revenue that was historically generated from the Renaissance brand system and have experienced further declines due to COVID-19.

~~Although~~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 ~~performance can be influenced by many factors including local competition, local~~portfolio and ~~general economic conditions~~the hospitality industry as a whole. With the overall uncertainty of the longevity of COVID-19 in the U.S. and the ~~performance~~resulting economic decline, it is difficult to project the duration of ~~individual managers assigned to each hotel, performance of~~revenue declines for the ~~Company’s hotels~~industry and Company; however, the Company currently expects the decline in revenue and operating results as compared to ~~other hotels within their respective local markets,~~2019 to continue throughout the remainder of 2020 with the second quarter having the largest decline, moderating in ~~general, has met~~the third and fourth quarters of 2020. Although these are the Company’s current expectations, ~~for~~there can be no assurances of the amount or period ~~owned. Over~~of declines due to the ~~past several years, improvements in~~uncertainty regarding the general U.S. economy have been offset by increased lodging supply in many markets, offsetting increases in demand in the lodging sector. With essentially flat growth in revenue per available room (“RevPAR”), the Company produced stable operating results during the first three monthsduration and long-term impact of 2019 on a comparable basis (as defined below). There is no way to predict future economic conditions, and there continue to be additional factors that could negatively affect the lodging industry and the Company, including but not limited to, increased hotel supply in certain markets, labor uncertainty both for the economy as a whole and the lodging industry in particular, global volatility, government fiscal policies and economic concerns in the U.S. The Company, on a comparable basis, is forecasting slightly negative to slightly positive RevPAR growth for the full year of 2019 as compared to 2018, which reflects modestly lower expectations for demand growth, consistent with lower expected Gross Domestic Product growth in the U.S., relatively consistent anticipated hotel supply growth and slightly favorable comparisons caused by natural disasters.COVID-19.

As of March 31, ~~2019,~~2020, the Company owned 231 hotels with a total of 29,535 rooms as compared to 234 hotels with a total of 30,046 rooms as ~~compared to 241 hotels with a total of 30,585 rooms as~~ of March 31, ~~2018.~~2019. 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 three months ended March 31, 2020, the Company sold one hotel on January 16, 2020 and one hotel on February 28, 2020. During 2019, the Company acquired one newly developed hotel on March 19, 2019 and two existing ~~hotel~~hotels (one on March 4, 2019 and one ~~newly constructed hotel~~ on ~~March 19, 2019,~~October 9, 2019), and sold ~~nine~~11 hotels (nine on March 28, ~~2019. During 2018, the Company acquired one newly constructed hotel on May 2, 2018 and four existing hotels (two on February 5, 2018,~~2019, one on ~~June 28, 2018~~December 19, 2019 and one on December ~~7, 2018), and sold three hotels (two on July 13, 2018 and one on November 29, 2018)~~30, 2019). As a result, the comparability of results for the three months ended March 31, ~~2019~~2020 and ~~2018~~2019 as discussed below is impacted by these ~~transactions.~~transactions in addition to the impact of COVID-19 beginning in March 2020.

In evaluating financial condition and operating performance, the most important indicators on which the Company focuses are revenue measurements, such as average occupancy, ~~average daily rate (“ADR”)~~ADR and 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:

The following table reflects certain operating statistics for the Company’s ~~234~~231 hotels owned as of March 31, ~~2019~~2020 (“Comparable Hotels”). The Company defines metrics from Comparable Hotels as results generated by the ~~234~~231 hotels owned as of the end of the reporting period. 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, results have been excluded for the Company’s period of ownership.

The following table reflects certain operating statistics for the ~~227~~228 hotels owned by the Company as of January 1, ~~2018~~2019 and during the entirety of the reporting periods being compared (“Same Store Hotels”). This information has not been audited.

As discussed above, hotel performance is impacted by many factors, including the economic conditions in the U.S. as well as each individual locality. ~~Economic indicators in~~COVID-19 has negatively affected the U.S. ~~have generally been favorable, which has been offset by increased lodging supply~~hotel industry beginning in ~~many of the Company’s markets.~~March 2020. As a result of COVID-19, the Company’s revenue and operating results ~~for its Comparable Hotels and Same Store Hotels were generally unchanged~~declined during the first three months of ~~2019~~2020 as compared to ~~2018,~~the first three months of 2019, which is consistent with ~~industry/brand averages. The~~the overall lodging industry. Compared to 2019, the Company expects ~~its RevPAR growth~~the decline in revenue and operating results ~~for its Comparable Hotels for~~to continue throughout the ~~full year~~remainder of ~~2019~~2020 with the second quarter having the largest decline, moderating in the third and fourth quarters of 2020, but the Company can give no assurances of the amount or period of decline due to ~~be slightly negative to slightly positive compared to its performance in 2018.~~the uncertainty regarding the duration and long term impact of COVID-19.

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 March 31, ~~2019~~2020 and ~~2018,~~2019, the Company had total revenue of ~~$303.8~~$238.0 million and ~~$298.4~~$303.8 million, respectively. For the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, respectively, Comparable Hotels achieved combined average occupancy of ~~74.1%~~60.8% and ~~74.9%~~74.0%, ADR of ~~$137.41~~$132.66 and ~~$135.76~~$137.51 and RevPAR of ~~$101.76~~$80.70 and ~~$101.69.~~$101.81. 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 period in ~~2018,~~2019, during the first quarter of ~~2019,~~2020, the Company experienced ~~a 1.2% increase~~decreases in ADR and occupancy, resulting in a ~~1.1%~~decrease of 20.7% in RevPAR for Comparable Hotels. For the first two months of 2020 (before COVID-19 significantly impacted the Company’s performance) and 2019, respectively, Comparable Hotels achieved combined average occupancy of 71.1% and 70.7% (an increase of 0.6%), ADR of $132.88 and $134.62 (a decrease of 1.3%) and RevPAR of $94.45 and $95.18 (a decrease of 0.8%). During March, the hotel industry and the Company began to see a significant decrease in occupancy ~~for~~as both mandated and voluntary restrictions on travel were implemented throughout the U.S. For Comparable Hotels, ~~leaving RevPAR for Comparable Hotels virtually unchanged. Markets/areas with above average growth~~the Company experienced occupancy of approximately 41.0% in ~~the first quarter of 2019~~March and below 20% for the Company and industry included Atlanta, Georgia, Sacramento, California, Raleigh/Durham, North Carolina and Phoenix and Tucson, Arizona. Markets that were below average for the Company and industry included Houston, Texas, Minneapolis, Minnesota and southern Florida. The Company also experienced increased revenue duemonth of April, with ADR declines by April of approximately 30% compared to demand in the Florida panhandle, eastern North Carolina and Anchorage, Alaska related to recovery and restoration efforts related to hurricanes Florence and Michael and the earthquake in Anchorage, Alaska.2019.

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. ~~For~~Hotel operating expense for the three months ended March 31, 2020 and 2019 totaled $155.3 million and ~~2018, respectively, hotel operating expense totaled~~ $175.4 million, respectively, or 65.2% and ~~$172.3 million or~~ 57.8% of total revenue for each respective period. ~~For the Company’s Comparable Hotels,~~Included in hotel operating expense ~~as a percentage of revenue increased slightly~~ for the three months ended March 31, ~~2019 as compared to the same period~~2020 were approximately $1.6 million in ~~2018. Increases in labor~~separation and furlough costs for hotel employees as a ~~percentage~~result of ~~revenue during~~ the ~~first three months of 2019 as compared to the same period in 2018 were offset by decreases in utility costs.~~occupancy declines discussed above. The Company ~~anticipates continued increases in labor costs due to government regulations surrounding wages, healthcare~~has worked and ~~other benefits, other wage-related initiatives and lower unemployment rates. The Company~~ will continue to work with its management companies to make reductions in staffing models, consolidate operations in markets with multiple properties, adjust or reduce ~~costs as a percentage~~food and beverage offerings and other amenities, among other efficiency initiatives to mitigate the impact of revenue ~~where possible while maintaining quality~~declines on its results of operations. For example, in some markets the Company is “clustering” hotels, whereby multiple properties in a market have consolidated their operations to increase efficiency; certain brand standards have been reduced; and the Company has also successfully reduced or deferred payments under various service ~~levels at each property.~~contracts. Although certain operating costs of a hotel are more fixed in nature, such as base utility and maintenance costs, the Company is working to reduce all non-essential costs including service contracts, utilities in areas not utilized and certain maintenance costs. Additionally, as the Company modifies operations to address concerns related to COVID-19, the Company expects to incur increased operating costs related to the supplying of personal protective equipment for employees as well as increased sanitation, social distancing and other measures.

Property taxes, insurance, and other expense for the three months ended March 31, 2020 and 2019 totaled $19.6 million in each respective period, or 8.2% and ~~2018 totaled $19.2 million and $17.2 million, respectively, or 6.3% and 5.8%~~6.5% of total revenue for each respective ~~period, which is consistent with~~period. Although the increase in Comparable Hotels expense as a percentage of revenue for the same periods. For the Company’s Comparable Hotels, real estate taxes increased during the first three months of 2019 compared to the first three months of 2018, with tax increases at certain locations 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 during the remainder of 2019. The Company will continue to aggressively appeal ~~tax~~ assessments in certain jurisdictions to attempt to minimize tax increases as warranted. Additionally, due to increased losses incurred by property insurance carriers during the past few years, the Company’s property insurance costs increasedand monitor locality guidance as a ~~percentage~~result of ~~revenue for the first three months of 2019~~COVID-19, it does not currently anticipate significant decreases in property taxes in 2020 as compared to 2019, as many assessments are made at the ~~first three months~~beginning of ~~2018 and are anticipated to increase for the remainder of 2019.~~each calendar year.

Operating ground lease expense for the three months ended March 31, 2019 and 2018 was $0.4 million and $2.9 million, respectively. Operating ground lease expense in 2019 primarily represents the expense incurred by the Company to lease land for nine of its hotel properties. Operating ground lease expense in 2018 primarily represents the expense incurred by the Company to lease land for 13 of its hotel properties, including approximately $2.4 million of expense related to four ground leases that were previously classified as operating leases that are classified as finance leases under the new lease accounting standard effective January 1, 2019.

General and administrative expense for the three months ended March 31, 2020 and 2019 ~~and 2018~~ was ~~$8.1~~$9.5 million and ~~$6.9~~$8.1 million, respectively, or ~~2.7%~~4.0% and ~~2.3%~~2.7% of total revenue for each respective period. The principal components of general and administrative expense are payroll and related benefit costs, legal fees, accounting fees and reporting expenses. ~~The increase in~~General and administrative expense ~~was due primarily to increased accruals for anticipated performance under the Company’s incentive plans which included an expense of $0.5 million~~ for the ~~retirement~~three months ended March 31, 2020 included the accrual of approximately $2.5 million in separation benefits awarded in connection with the previously announced retirements of the Company’s former Chief ~~Legal Officer.~~

~~Depreciation~~former Chief Financial Officer on March 31, 2020. General and administrative expense for the three months ended March 31, 2019 included the accrual of approximately $0.5 million for the separation payment in connection with the retirement of the Company’s former Chief Legal Officer.

As discussed above, in order to minimize costs, the Company’s Executive Chairman voluntarily agreed to forego six months of salary, the Chief Executive Officer volunteered to reduce his target compensation by 60 percent and ~~2018~~the non-employee directors on the Board of Directors volunteered as a group to reduce their annual director fees by more than 15 percent. Additionally, in light of the decline in revenue and operating results due to COVID-19 and the associated impact on the current operational and shareholder return metrics in the 2020 Incentive Plan (see Note 8 titled “Compensation Plans” in the Company’s Unaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q for additional details), the Company anticipates a reduced payout for executive management compared to the originally established performance metrics for target compensation.

Depreciation and amortization expense for the three months ended March 31, 2020 and 2019 was $49.5 million and $48.0 million, ~~and $44.8 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 their respective periods owned. ~~The increase was primarily due to the increase in the number of properties owned as a result of the acquisition of two hotels in the first quarter of 2019~~Depreciation and ~~five hotels in 2018 and renovations completed throughout 2019 and 2018. Additionally,~~amortization expense for the three months ended March 31, ~~2019, depreciation~~2020 and ~~amortization expense~~2019 also includes ~~approximately~~$1.6 million and $1.0 million, respectively, of ~~expense associated with~~ amortization of the Company’s four finance ground lease ~~ROU assets in accordance with~~assets. The remaining increase of approximately $0.9 million was primarily due to renovations completed throughout 2019 and the ~~new lease accounting standard.~~first quarter of 2020.

Interest and other expense, net for the three months ended March 31, 2020 and 2019 ~~and 2018~~ was ~~$15.5~~$15.6 million and ~~$11.9~~$15.5 million, respectively, and is net of approximately $0.7 million and $0.5 million, ~~in each respective period~~respectively, of interest capitalized associated with renovation projects. Additionally, interest and other expense, net for the three months ended March 31, 2020 and 2019 includes approximately $2.8 million and $1.8 million, respectively, of interest recorded on the Company’s four finance lease ~~liabilities in accordance with the new lease accounting standard.~~liabilities. Interest expense related to the Company’s debt ~~increased~~instruments decreased as a result of ~~increased~~decreased average borrowings in the first ~~quarter~~three months of ~~2019~~2020 as compared to the first ~~quarter~~three months of ~~2018 resulting from acquisitions and share repurchases, partially offset by the repayment of borrowings with proceeds from dispositions, combined with an increase~~2019 as well as a decrease in the Company’s effective interest rate during the first ~~quarter~~three months of 2019 as compared to the first quarter of 2018, due to an increase in interest rates on the Company’s variable-rate debt, with the one-month LIBOR increasing from 1.88% at March 31, 2018 to 2.49% at March 31, 2019. While approximately 77% of the Company’s outstanding debt was effectively fixed-rate debt at March 31, 2019, the Company does expect interest costs for its remaining variable-rate debt to be higher in 20192020 as compared to the same period in ~~2018~~2019, due to ~~higher expected~~lower average interest ~~rates as~~rates. However, the Company anticipates interest expense to be higher for the remainder of 2020 compared to the ~~prior year. The impact from higher interest rates will be partially mitigated by the Company’s 2018 debt refinancing, resulting in lower spreads charged on outstanding~~same period of 2019 due to increased borrowings under its revolving credit facility as compared to the same periods in 2019 related to declines in operating results. In March 2020, the Company drew the remaining availability under its revolving credit facility as a precautionary measure in order to increase its cash position and ~~$575 million~~preserve financial flexibility in light of ~~its outstanding term loans by 10 to 15 basis points, depending on~~uncertainty in the financial markets resulting from COVID-19. Additionally, as discussed further above in Note 4 titled “Debt” in the Company’s ~~leverage ratio.~~ Unaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q, interest rate margins for the Company’s unsecured debt are anticipated to increase for the remainder of the year to the highest margin under each facility as a condition to obtaining waivers on those facilities’ covenants.

The Company considers the following non-GAAP financial measures useful to investors as key supplemental measures of its operating performance: Funds from Operations (“FFO”), Modified FFO (“MFFO”), Earnings before Interest, Income Taxes, Depreciation and Amortization (“EBITDA”), Earnings Before Interest, Income Taxes, Depreciation and Amortization for Real Estate (“EBITDAre”), and Adjusted EBITDAre (“Adjusted EBITDAre”). These non-GAAP financial measures should be considered along with, but not as alternatives to, net income, cash flow from operations or any other operating GAAP measure. FFO, MFFO, EBITDA, EBITDAre and Adjusted EBITDAre 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 and Adjusted EBITDAre, as calculated by the Company, may not be comparable to FFO, MFFO, EBITDA, EBITDAre and Adjusted EBITDAre 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.

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

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

The following table reconciles the Company’s GAAP net income (loss) to FFO and MFFO for the three months ended March 31, ~~2019~~2020 and ~~2018~~2019 (in thousands).:

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

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

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

The following table reconciles the Company’s GAAP net income (loss) to EBITDA, EBITDAre and Adjusted EBITDAre for the three months ended March 31, ~~2019~~2020 and ~~2018~~2019 (in thousands).:

As of March 31, ~~2019,~~2020, the Company owned ~~234~~231 hotels with an aggregate of ~~30,046~~29,535 rooms located in 34 states. The following tables summarize the number of hotels and rooms by brand and by state:

Index

Number of Hotels and Guest Rooms by State

Number of

Number of

State

Hotels

Rooms

Alabama
15 1,434
Alaska
2 304
Arizona
12 1,644
Arkansas
3 336
California
27 3,807
Colorado
4 567
Florida
23 2,912
Georgia
6 672
Idaho
2 416
Illinois
8 1,420
Indiana
4 479
Iowa
3 301
Kansas
4 422
Louisiana
3 422
Maine
1 179
Maryland
2 233
Massachusetts
4 466
Michigan
1 148
Minnesota
3 404
Mississippi
2 168
Missouri
4 544
Nebraska
4 621
New Jersey
5 629
New York
4 553
North Carolina
11 1,213
Ohio
2 252
Oklahoma
4 545
Pennsylvania
3 391
South Carolina
5 538
Tennessee
13 1,502
Texas
31 3,755
Utah
3 393
Virginia
12 1,767
Washington
4 609
Total
234 30,046

~~Index~~

The following table summarizes the location, brand, manager, date acquired or completed and number of rooms for each of the ~~234~~231 hotels the Company owned as of March 31, ~~2019.~~2020.

City

State

Brand

Manager

Date Acquired or Completed

Rooms

Anchorage

Embassy Suites

Stonebridge

4/30/2010

169

Anchorage

Home2 Suites

Stonebridge

12/1/2017

135

Auburn

Hilton Garden Inn

LBA

3/1/2014

101

Birmingham

Courtyard

LBA

3/1/2014

Birmingham

Hilton Garden Inn

LBA

9/12/2017

104

Birmingham

Home2 Suites

LBA

9/12/2017

106

Birmingham

Homewood Suites

McKibbon

3/1/2014

Dothan

Hilton Garden Inn

LBA

6/1/2009

104

Dothan

Residence Inn

LBA

3/1/2014

Huntsville

Hampton

LBA

9/1/2016

Huntsville

Hilton Garden Inn

LBA

3/1/2014

101

Huntsville

Home2 Suites

LBA

9/1/2016

Huntsville

Homewood Suites

LBA

3/1/2014

107

Mobile

Hampton

McKibbon

9/1/2016

101

Montgomery

Hilton Garden Inn

LBA

3/1/2014

Montgomery

Homewood Suites

LBA

3/1/2014

Prattville

Courtyard

LBA

3/1/2014

Rogers

Hampton

Raymond

8/31/2010

122

Rogers

Homewood Suites

Raymond

4/30/2010

126

Rogers

Residence Inn

Raymond

3/1/2014

Chandler

Courtyard

North Central

11/2/2010

150

Chandler

Fairfield

North Central

11/2/2010

110

Phoenix

Courtyard

North Central

11/2/2010

164

Phoenix

Courtyard

North Central

9/1/2016

127

Phoenix

Hampton

North Central

9/1/2016

125

Phoenix

Hampton

North Central

5/2/2018

210

Phoenix

Homewood Suites

North Central

9/1/2016

134

Phoenix

Residence Inn

North Central

11/2/2010

129

Scottsdale

Hilton Garden Inn

North Central

9/1/2016

122

Tucson

Hilton Garden Inn

Western

7/31/2008

125

Tucson

Residence Inn

Western

3/1/2014

124

Tucson

TownePlace Suites

Western

10/6/2011

124

Agoura Hills

Homewood Suites

Dimension

3/1/2014

125

Burbank

Courtyard

Huntington

8/11/2015

190

Burbank

Residence Inn

Marriott

3/1/2014

166

Burbank

SpringHill Suites

Marriott

7/13/2015

170

Clovis

Hampton

Dimension

7/31/2009

Clovis

Homewood Suites

Dimension

2/2/2010

Cypress

Courtyard

Dimension

3/1/2014

180

Cypress

Hampton

Dimension

6/29/2015

110

Oceanside

Courtyard

Marriott

9/1/2016

142

Oceanside

Residence Inn

Marriott

3/1/2014

125

Rancho Bernardo/San Diego

Courtyard

InnVentures

3/1/2014

210

Sacramento

Hilton Garden Inn

Dimension

3/1/2014

153

San Bernardino

Residence Inn

InnVentures

2/16/2011

~~Index~~

~~City~~

~~State~~

~~Brand~~

~~Manager~~

~~Date Acquired or Completed~~

~~Rooms~~

San Diego

Courtyard

Huntington

9/1/2015

245

San Diego

Hampton

Dimension

3/1/2014

177

San Diego

Hilton Garden Inn

InnVentures

3/1/2014

200

San Diego

Residence Inn

Dimension

3/1/2014

121

~~San Jose~~

~~Homewood Suites~~

~~Dimension~~

~~3/1/2014~~

~~140~~

~~San Juan Capistrano~~

~~Residence Inn~~

~~Marriott~~

~~9/1/2016~~

~~130~~

~~Santa Ana~~

~~Courtyard~~

~~Dimension~~

~~5/23/2011~~

~~155~~

~~Santa Clarita~~

~~Courtyard~~

~~Dimension~~

~~9/24/2008~~

~~140~~

~~Santa Clarita~~

~~Fairfield~~

~~Dimension~~

~~10/29/2008~~

~~Santa Clarita~~

~~Hampton~~

~~Dimension~~

~~10/29/2008~~

~~128~~

~~Santa Clarita~~

~~Residence Inn~~

~~Dimension~~

~~10/29/2008~~

~~Tulare~~

~~Hampton~~

~~InnVentures~~

~~3/1/2014~~

~~Tustin~~

~~Fairfield~~

~~Marriott~~

~~9/1/2016~~

~~145~~

~~Tustin~~

~~Residence Inn~~

~~Marriott~~

~~9/1/2016~~

~~149~~

~~Colorado Springs~~

~~Hampton~~

~~Chartwell~~

~~9/1/2016~~

~~101~~

~~Denver~~

~~Hilton Garden Inn~~

~~Stonebridge~~

~~9/1/2016~~

~~221~~

~~Highlands Ranch~~

~~Hilton Garden Inn~~

~~Dimension~~

~~3/1/2014~~

~~128~~

~~Highlands Ranch~~

~~Residence Inn~~

~~Dimension~~

~~3/1/2014~~

~~117~~

~~Boca Raton~~

~~Hilton Garden Inn~~

~~White Lodging~~

~~9/1/2016~~

~~149~~

~~Cape Canaveral~~

~~Homewood Suites~~

~~LBA~~

~~9/1/2016~~

~~153~~

~~Fort Lauderdale~~

~~Hampton~~

~~Vista Host~~

~~12/31/2008~~

~~109~~

~~Fort Lauderdale~~

~~Hampton~~

~~LBA~~

~~6/23/2015~~

~~156~~

~~Fort Lauderdale~~

~~Residence Inn~~

~~LBA~~

~~9/1/2016~~

~~156~~

~~Gainesville~~

~~Hilton Garden Inn~~

~~McKibbon~~

~~9/1/2016~~

~~104~~

~~Gainesville~~

~~Homewood Suites~~

~~McKibbon~~

~~9/1/2016~~

~~103~~

~~Jacksonville~~

~~Homewood Suites~~

~~McKibbon~~

~~3/1/2014~~

~~119~~

~~Jacksonville~~

~~Hyatt Place~~

~~LBA~~

~~12/7/2018~~

~~127~~

~~Lakeland~~

~~Courtyard~~

~~LBA~~

~~3/1/2014~~

~~Miami~~

~~Courtyard~~

~~Dimension~~

~~3/1/2014~~

~~118~~

~~Miami~~

~~Hampton~~

~~White Lodging~~

~~4/9/2010~~

~~121~~

~~Miami~~

~~Homewood Suites~~

~~Dimension~~

~~3/1/2014~~

~~162~~

~~Orlando~~

~~Fairfield~~

~~Marriott~~

~~7/1/2009~~

~~200~~

~~Orlando~~

~~Home2 Suites~~

~~LBA~~

~~3/19/2019~~

~~128~~

~~Orlando~~

~~SpringHill Suites~~

~~Marriott~~

~~7/1/2009~~

~~200~~

~~Panama City~~

~~Hampton~~

~~LBA~~

~~3/12/2009~~

~~Panama City~~

~~TownePlace Suites~~

~~LBA~~

~~1/19/2010~~

~~103~~

~~Pensacola~~

~~TownePlace Suites~~

~~McKibbon~~

~~9/1/2016~~

~~Sanford~~

~~SpringHill Suites~~

~~LBA~~

~~3/1/2014~~

~~105~~

~~Tallahassee~~

~~Fairfield~~

~~LBA~~

~~9/1/2016~~

~~Tallahassee~~

~~Hilton Garden Inn~~

~~LBA~~

~~3/1/2014~~

~~Tampa~~

~~Embassy Suites~~

~~White Lodging~~

~~11/2/2010~~

~~147~~

~~Albany~~

~~Fairfield~~

~~LBA~~

~~1/14/2010~~

~~Atlanta/Downtown~~

~~Hampton~~

~~McKibbon~~

~~2/5/2018~~

~~119~~

~~Atlanta/Perimeter Dunwoody~~

~~Hampton~~

~~LBA~~

~~6/28/2018~~

~~132~~

~~Atlanta~~

~~Home2 Suites~~

~~McKibbon~~

~~7/1/2016~~

~~128~~

~~Macon~~

~~Hilton Garden Inn~~

~~LBA~~

~~3/1/2014~~

~~101~~

~~Savannah~~

~~Hilton Garden Inn~~

~~Newport~~

~~3/1/2014~~

~~105~~

Index

City

State

Brand

Manager

Date Acquired or Completed

Rooms

San Jose

Homewood Suites

Dimension

3/1/2014

140

San Juan Capistrano

Residence Inn

Marriott

9/1/2016

130

Santa Ana

Courtyard

Dimension

5/23/2011

155

Santa Clarita

Courtyard

Dimension

9/24/2008

140

Santa Clarita

Fairfield

Dimension

10/29/2008

Santa Clarita

Hampton

Dimension

10/29/2008

128

Santa Clarita

Residence Inn

Dimension

10/29/2008

Tulare

Hampton

InnVentures

3/1/2014

Tustin

Fairfield

Marriott

9/1/2016

145

Tustin

Residence Inn

Marriott

9/1/2016

149

Colorado Springs

Hampton

Chartwell

9/1/2016

101

Denver

Hilton Garden Inn

Stonebridge

9/1/2016

221

Highlands Ranch

Hilton Garden Inn

Dimension

3/1/2014

128

Highlands Ranch

Residence Inn

Dimension

3/1/2014

117

Boca Raton

Hilton Garden Inn

White Lodging

9/1/2016

149

Cape Canaveral

Homewood Suites

LBA

9/1/2016

153

Fort Lauderdale

Hampton

LBA

6/23/2015

156

Fort Lauderdale

Residence Inn

LBA

9/1/2016

156

Gainesville

Hilton Garden Inn

McKibbon

9/1/2016

104

Gainesville

Homewood Suites

McKibbon

9/1/2016

103

Jacksonville

Homewood Suites

McKibbon

3/1/2014

119

Jacksonville

Hyatt Place

Crestline

12/7/2018

127

(1)

Lakeland

Courtyard

LBA

3/1/2014

Miami

Courtyard

Dimension

3/1/2014

118

Miami

Hampton

White Lodging

4/9/2010

121

Miami

Homewood Suites

Dimension

3/1/2014

162

Orlando

Fairfield

Marriott

7/1/2009

200

Orlando

Home2 Suites

LBA

3/19/2019

128

Orlando

SpringHill Suites

Marriott

7/1/2009

200

Panama City

Hampton

LBA

3/12/2009

Panama City

TownePlace Suites

LBA

1/19/2010

103

Pensacola

TownePlace Suites

McKibbon

9/1/2016

Tallahassee

Fairfield

LBA

9/1/2016

Tallahassee

Hilton Garden Inn

LBA

3/1/2014

Tampa

Embassy Suites

White Lodging

11/2/2010

147

Albany

Fairfield

LBA

1/14/2010

Atlanta/Downtown

Hampton

McKibbon

2/5/2018

119

Atlanta/Perimeter Dunwoody

Hampton

LBA

6/28/2018

132

Atlanta

Home2 Suites

McKibbon

7/1/2016

128

Macon

Hilton Garden Inn

LBA

3/1/2014

101

Savannah

Hilton Garden Inn

Newport

3/1/2014

105

Cedar Rapids

Hampton

Aimbridge

9/1/2016

103

Cedar Rapids

Homewood Suites

Aimbridge

9/1/2016

Davenport

Hampton

Aimbridge

9/1/2016

103

Boise

Hampton

Raymond

4/30/2010

186

Des Plaines

Hilton Garden Inn

Raymond

9/1/2016

252

Hoffman Estates

Hilton Garden Inn

White Lodging

9/1/2016

184

Mettawa

Hilton Garden Inn

White Lodging

11/2/2010

170

Mettawa

Residence Inn

White Lodging

11/2/2010

130

Rosemont

Hampton

Raymond

9/1/2016

158

Schaumburg

Hilton Garden Inn

White Lodging

11/2/2010

166

Skokie

Hampton

Raymond

9/1/2016

225

Warrenville

Hilton Garden Inn

White Lodging

11/2/2010

135

Index

City

State

Brand

Manager

Date Acquired or Completed

Rooms

Indianapolis

SpringHill Suites

White Lodging

11/2/2010

130

Merrillville

Hilton Garden Inn

White Lodging

9/1/2016

124

Mishawaka

Residence Inn

White Lodging

11/2/2010

106

South Bend

Fairfield

White Lodging

9/1/2016

119

Overland Park

Fairfield

True North

3/1/2014

110

Overland Park

Residence Inn

True North

3/1/2014

120

Overland Park

SpringHill Suites

True North

3/1/2014

102

Wichita

Courtyard

Aimbridge

3/1/2014

Lafayette

Hilton Garden Inn

LBA

7/30/2010

153

Lafayette

SpringHill Suites

LBA

6/23/2011

103

New Orleans

Homewood Suites

Dimension

3/1/2014

166

Andover

SpringHill Suites

Marriott

11/5/2010

136

Marlborough

Residence Inn

True North

3/1/2014

112

Westford

Hampton

True North

3/1/2014

110

Westford

Residence Inn

True North

3/1/2014

108

Annapolis

Hilton Garden Inn

Crestline

3/1/2014

126

Silver Spring

Hilton Garden Inn

White Lodging

7/30/2010

107

Portland

Residence Inn

Crestline

10/13/2017

179

(1)

Novi

Hilton Garden Inn

White Lodging

11/2/2010

148

Maple Grove

Hilton Garden Inn

North Central

9/1/2016

120

Rochester

Hampton

Raymond

8/3/2009

124

St. Paul

Hampton

Vista Host

3/4/2019

160

Kansas City

Hampton

Raymond

8/31/2010

122

Kansas City

Residence Inn

True North

3/1/2014

106

St. Louis

Hampton

Raymond

8/31/2010

190

St. Louis

Hampton

Raymond

4/30/2010

126

Hattiesburg

Courtyard

LBA

3/1/2014

Hattiesburg

Residence Inn

LBA

12/11/2008

Carolina Beach

Courtyard

Crestline

3/1/2014

144

Charlotte

Fairfield

Newport

9/1/2016

Charlotte

Homewood Suites

McKibbon

9/24/2008

118

Durham

Homewood Suites

McKibbon

12/4/2008

122

Fayetteville

Home2 Suites

LBA

2/3/2011

118

Fayetteville

Residence Inn

LBA

3/1/2014

Greensboro

SpringHill Suites

Newport

3/1/2014

Jacksonville

Home2 Suites

LBA

9/1/2016

105

Wilmington

Fairfield

Crestline

3/1/2014

122

Winston-Salem

Hampton

McKibbon

9/1/2016

Omaha

Courtyard

Marriott

3/1/2014

181

Omaha

Hampton

White Lodging

9/1/2016

139

Omaha

Hilton Garden Inn

White Lodging

9/1/2016

178

Omaha

Homewood Suites

White Lodging

9/1/2016

123

Cranford

Homewood Suites

Dimension

3/1/2014

108

Mahwah

Homewood Suites

Dimension

3/1/2014

110

Mount Laurel

Homewood Suites

Newport

1/11/2011

118

Somerset

Courtyard

Newport

3/1/2014

162

West Orange

Courtyard

Newport

1/11/2011

131

Islip/Ronkonkoma

Hilton Garden Inn

Crestline

3/1/2014

165

New York

Independent

Highgate

3/1/2014

208

Syracuse

Courtyard

Crestline

10/16/2015

102

Syracuse

Residence Inn

Crestline

10/16/2015

Mason

Hilton Garden Inn

Raymond

9/1/2016

110

Twinsburg

Hilton Garden Inn

Interstate

10/7/2008

142

Index

City

State

Brand

Manager

Date Acquired or Completed

Rooms

~~Cedar Rapids~~

~~Hampton~~

~~Schulte~~

~~9/1/2016~~

~~103~~

~~Cedar Rapids~~

~~Homewood Suites~~

~~Schulte~~

~~9/1/2016~~

~~Davenport~~

~~Hampton~~

~~Schulte~~

~~9/1/2016~~

~~103~~

~~Boise~~

~~Hampton~~

~~Raymond~~

~~4/30/2010~~

~~186~~

~~Boise~~

~~SpringHill Suites~~

~~InnVentures~~

~~3/1/2014~~

~~230~~

~~Des Plaines~~

~~Hilton Garden Inn~~

~~Raymond~~

~~9/1/2016~~

~~252~~

~~Hoffman Estates~~

~~Hilton Garden Inn~~

~~White Lodging~~

~~9/1/2016~~

~~184~~

~~Mettawa~~

~~Hilton Garden Inn~~

~~White Lodging~~

~~11/2/2010~~

~~170~~

~~Mettawa~~

~~Residence Inn~~

~~White Lodging~~

~~11/2/2010~~

~~130~~

~~Rosemont~~

~~Hampton~~

~~Raymond~~

~~9/1/2016~~

~~158~~

~~Schaumburg~~

~~Hilton Garden Inn~~

~~White Lodging~~

~~11/2/2010~~

~~166~~

~~Skokie~~

~~Hampton~~

~~Raymond~~

~~9/1/2016~~

~~225~~

~~Warrenville~~

~~Hilton Garden Inn~~

~~White Lodging~~

~~11/2/2010~~

~~135~~

~~Indianapolis~~

~~SpringHill Suites~~

~~White Lodging~~

~~11/2/2010~~

~~130~~

~~Merrillville~~

~~Hilton Garden Inn~~

~~White Lodging~~

~~9/1/2016~~

~~124~~

~~Mishawaka~~

~~Residence Inn~~

~~White Lodging~~

~~11/2/2010~~

~~106~~

~~South Bend~~

~~Fairfield~~

~~White Lodging~~

~~9/1/2016~~

~~119~~

~~Overland Park~~

~~Fairfield~~

~~True North~~

~~3/1/2014~~

~~110~~

~~Overland Park~~

~~Residence Inn~~

~~True North~~

~~3/1/2014~~

~~120~~

~~Overland Park~~

~~SpringHill Suites~~

~~True North~~

~~3/1/2014~~

~~102~~

~~Wichita~~

~~Courtyard~~

~~Aimbridge~~

~~3/1/2014~~

~~Lafayette~~

~~Hilton Garden Inn~~

~~LBA~~

~~7/30/2010~~

~~153~~

~~Lafayette~~

~~SpringHill Suites~~

~~LBA~~

~~6/23/2011~~

~~103~~

~~New Orleans~~

~~Homewood Suites~~

~~Dimension~~

~~3/1/2014~~

~~166~~

~~Andover~~

~~SpringHill Suites~~

~~Marriott~~

~~11/5/2010~~

~~136~~

~~Marlborough~~

~~Residence Inn~~

~~True North~~

~~3/1/2014~~

~~112~~

~~Westford~~

~~Hampton~~

~~True North~~

~~3/1/2014~~

~~110~~

~~Westford~~

~~Residence Inn~~

~~True North~~

~~3/1/2014~~

~~108~~

~~Annapolis~~

~~Hilton Garden Inn~~

~~White Lodging~~

~~3/1/2014~~

~~126~~

~~Silver Spring~~

~~Hilton Garden Inn~~

~~White Lodging~~

~~7/30/2010~~

~~107~~

~~Portland~~

~~Residence Inn~~

~~Pyramid~~

~~10/13/2017~~

~~179~~

~~Novi~~

~~Hilton Garden Inn~~

~~White Lodging~~

~~11/2/2010~~

~~148~~

~~Maple Grove~~

~~Hilton Garden Inn~~

~~North Central~~

~~9/1/2016~~

~~120~~

~~Rochester~~

~~Hampton~~

~~Raymond~~

~~8/3/2009~~

~~124~~

~~St. Paul~~

~~Hampton~~

~~Vista Host~~

~~3/4/2019~~

~~160~~

~~Kansas City~~

~~Hampton~~

~~Raymond~~

~~8/31/2010~~

~~122~~

~~Kansas City~~

~~Residence Inn~~

~~True North~~

~~3/1/2014~~

~~106~~

~~St. Louis~~

~~Hampton~~

~~Raymond~~

~~8/31/2010~~

~~190~~

~~St. Louis~~

~~Hampton~~

~~Raymond~~

~~4/30/2010~~

~~126~~

~~Hattiesburg~~

~~Courtyard~~

~~LBA~~

~~3/1/2014~~

~~Hattiesburg~~

~~Residence Inn~~

~~LBA~~

~~12/11/2008~~

~~Carolina Beach~~

~~Courtyard~~

~~Crestline~~

~~3/1/2014~~

~~144~~

~~Charlotte~~

~~Fairfield~~

~~Newport~~

~~9/1/2016~~

~~Charlotte~~

~~Homewood Suites~~

~~McKibbon~~

~~9/24/2008~~

~~118~~

~~Durham~~

~~Homewood Suites~~

~~McKibbon~~

~~12/4/2008~~

~~122~~

~~Fayetteville~~

~~Home2 Suites~~

~~LBA~~

~~2/3/2011~~

~~118~~

~~Fayetteville~~

~~Residence Inn~~

~~Aimbridge~~

~~3/1/2014~~

~~Greensboro~~

~~SpringHill Suites~~

~~Newport~~

~~3/1/2014~~

~~Index~~

~~City~~

~~State~~

~~Brand~~

~~Manager~~

~~Date Acquired or Completed~~

~~Rooms~~

~~Jacksonville~~

~~Home2 Suites~~

~~LBA~~

~~9/1/2016~~

~~105~~

~~Wilmington~~

~~Fairfield~~

~~Crestline~~

~~3/1/2014~~

~~122~~

~~Winston-Salem~~

~~Courtyard~~

~~McKibbon~~

~~3/1/2014~~

~~122~~

~~Winston-Salem~~

~~Hampton~~

~~McKibbon~~

~~9/1/2016~~

~~Omaha~~

~~Courtyard~~

~~Marriott~~

~~3/1/2014~~

~~181~~

~~Omaha~~

~~Hampton~~

~~White Lodging~~

~~9/1/2016~~

~~139~~

~~Omaha~~

~~Hilton Garden Inn~~

~~White Lodging~~

~~9/1/2016~~

~~178~~

~~Omaha~~

~~Homewood Suites~~

~~White Lodging~~

~~9/1/2016~~

~~123~~

~~Cranford~~

~~Homewood Suites~~

~~Dimension~~

~~3/1/2014~~

~~108~~

~~Mahwah~~

~~Homewood Suites~~

~~Dimension~~

~~3/1/2014~~

~~110~~

~~Mount Laurel~~

~~Homewood Suites~~

~~Newport~~

~~1/11/2011~~

~~118~~

~~Somerset~~

~~Courtyard~~

~~Newport~~

~~3/1/2014~~

~~162~~

~~West Orange~~

~~Courtyard~~

~~Newport~~

~~1/11/2011~~

~~131~~

~~Islip/Ronkonkoma~~

~~Hilton Garden Inn~~

~~White Lodging~~

~~3/1/2014~~

~~165~~

~~New York~~

~~Renaissance~~

~~Highgate~~

~~3/1/2014~~

~~208~~

~~Syracuse~~

~~Courtyard~~

~~New Castle~~

~~10/16/2015~~

~~102~~

~~Syracuse~~

~~Residence Inn~~

~~New Castle~~

~~10/16/2015~~

~~Mason~~

~~Hilton Garden Inn~~

~~Schulte~~

~~9/1/2016~~

~~110~~

~~Twinsburg~~

~~Hilton Garden Inn~~

~~Interstate~~

~~10/7/2008~~

~~142~~

Oklahoma City

Hampton

Raymond

5/28/2010

200

Oklahoma City

Hilton Garden Inn

Raymond

9/1/2016

155

Oklahoma City

Homewood Suites

Raymond

9/1/2016

100

Oklahoma City (West)

Homewood Suites

Chartwell

9/1/2016

Collegeville/Philadelphia

Courtyard

White Lodging

11/15/2010

132

Malvern/Philadelphia

Courtyard

White Lodging

11/30/2010

127

Pittsburgh

Hampton

~~Vista Host~~Newport

12/31/2008

132

Charleston

Home2 Suites

LBA

9/1/2016

122

Columbia

Hilton Garden Inn

Newport

3/1/2014

143

Columbia

TownePlace Suites

Newport

9/1/2016

Greenville

Residence Inn

McKibbon

3/1/2014

Hilton Head

Hilton Garden Inn

McKibbon

3/1/2014

104

Chattanooga

Homewood Suites

LBA

3/1/2014

Franklin

Courtyard

Chartwell

9/1/2016

126

Franklin

Residence Inn

Chartwell

9/1/2016

124

Jackson

Hampton

Vista Host

12/30/2008

Johnson City

Courtyard

LBA

9/25/2009

Knoxville

Homewood Suites

McKibbon

9/1/2016

103

Knoxville

SpringHill Suites

McKibbon

9/1/2016

103

Knoxville

TownePlace Suites

McKibbon

9/1/2016

Memphis

Hampton

Crestline

2/5/2018

144

Memphis

Homewood Suites

Hilton

3/1/2014

140

Nashville

Hilton Garden Inn

Vista Host

9/30/2010

194

Nashville

Home2 Suites

Vista Host

5/31/2012

119

Nashville

TownePlace Suites

LBA

9/1/2016

101

Addison

SpringHill Suites

Marriott

3/1/2014

159

Allen

Hampton

Interstate

9/26/2008

103

Allen

Hilton Garden Inn

Interstate

10/31/2008

150

Arlington

Hampton

Western

12/1/2010

~~Index~~

~~City~~

~~State~~

~~Brand~~

~~Manager~~

~~Date Acquired or Completed~~

~~Rooms~~

Austin

Courtyard

White Lodging

11/2/2010

145

Austin

Fairfield

White Lodging

11/2/2010

150

Austin

Hampton

Vista Host

4/14/2009

124

Austin

Hilton Garden Inn

White Lodging

11/2/2010

117

Austin

Homewood Suites

Vista Host

4/14/2009

Austin/Round Rock

Homewood Suites

Vista Host

9/1/2016

115

Beaumont

Residence Inn

Western

10/29/2008

133

Burleson/Fort Worth

Hampton

LBA

10/7/2014

Dallas

Homewood Suites

Western

9/1/2016

130

Denton

Homewood Suites

Chartwell

9/1/2016

107

El Paso

Hilton Garden Inn

Western

12/19/2011

145

El Paso

Homewood Suites

Western

3/1/2014

114

Fort Worth

Courtyard

LBA

2/2/2017

124

Fort Worth

TownePlace Suites

Western

7/19/2010

140

Frisco

Hilton Garden Inn

Western

12/31/2008

102

Grapevine

Hilton Garden Inn

Western

9/24/2010

110

Houston

Courtyard

LBA

9/1/2016

124

Houston

Marriott

Western

1/8/2010

206

Houston

Residence Inn

Western

3/1/2014

129

Houston

Residence Inn

Western

9/1/2016

120

Irving

Homewood Suites

Western

12/29/2010

Lewisville

Hilton Garden Inn

Interstate

10/16/2008

165

Round Rock

Hampton

Vista Host

3/6/2009

San Antonio

TownePlace Suites

Western

3/1/2014

106

Index

City

State

Brand

Manager

Date Acquired or Completed

Rooms

Shenandoah

Courtyard

LBA

9/1/2016

124

Stafford

Homewood Suites

Western

3/1/2014

Texarkana

Hampton

Aimbridge

1/31/2011

Provo

Residence Inn

Dimension

3/1/2014

114

Salt Lake City

Residence Inn

Huntington

10/20/2017

136

Salt Lake City

SpringHill Suites

White Lodging

11/2/2010

143

Alexandria

Courtyard

Marriott

3/1/2014

178

Alexandria

SpringHill Suites

Marriott

3/28/2011

155

Charlottesville

Courtyard

Crestline

3/1/2014

139

Manassas

Residence Inn

Crestline

2/16/2011

107

Richmond

Independent

Crestline

10/9/2019

Richmond

Courtyard

White Lodging

12/8/2014

135

Richmond

Marriott

White Lodging

3/1/2014

410

Richmond

Residence Inn

White Lodging

12/8/2014

Richmond

SpringHill Suites

McKibbon

9/1/2016

103

Suffolk

Courtyard

Crestline

3/1/2014

Suffolk

TownePlace Suites

Crestline

3/1/2014

Virginia Beach

Courtyard

Crestline

3/1/2014

141

Virginia Beach

Courtyard

Crestline

3/1/2014

160

Kirkland

Courtyard

InnVentures

3/1/2014

150

Seattle

Residence Inn

InnVentures

3/1/2014

234

Tukwila

Homewood Suites

Dimension

3/1/2014

106

Vancouver

��

SpringHill Suites

InnVentures

3/1/2014

119

Total

~~30,046~~29,535

~~Index~~

(1) Manager noted was effective as of April 1, 2020.

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 6 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~~Prior to the impact of COVID-19, the Company’s principal ~~daily~~short term sources of liquidity ~~are~~were the operating cash ~~flow~~flows generated from the Company’s properties and availability under its revolving credit facility. Periodically, the Company may ~~receive~~have received proceeds from strategic additional secured and unsecured debt financing, dispositions of its hotel properties (such as the sale of two hotels in the first quarter of 2020 for proceeds of approximately $45 million discussed above in “2020 Portfolio Activities”) and offerings of the Company’s common shares. As a result of the deterioration of the Company’s operating cash flows from declines in occupancy caused by COVID-19, the Company anticipates significantly reduced cash from operations until travel increases in the U.S. To increase readily available liquidity, in March 2020, the Company drew down the remaining availability under its $425 million revolving credit facility and had available cash of approximately $437 million as of March 31, 2020. The Company has also taken several steps to preserve capital and increase liquidity, including postponing approximately $50 million of non-essential capital improvements and suspending its monthly distributions. The Company anticipates funding its near-term cash needs with cash on hand.

As of March 31, ~~2019,~~2020, the Company had ~~$1.4~~$1.8 billion of total outstanding debt consisting of ~~$485.4~~$500.0 million of mortgage debt and ~~$925.4 million~~$1.3 billion outstanding under its credit facilities, excluding unamortized debt issuance costs and fair value adjustments. The ~~Company’s unused~~Company, as discussed above, has drawn all of its borrowing capacity under its $425 million revolving credit facility as of March 31, ~~2019 was $234.6 million, which is available~~2020. In the near term, the impact of COVID-19 on the global economy, including any sustained decline in the Company’s performance, may make it more difficult or costly for ~~acquisitions, hotel renovations, share repurchases, working~~the Company to raise debt or equity capital ~~and other general corporate funding purposes, including the payment of distributions~~ to ~~shareholders.~~fund long-term liquidity requirements.

Index

The credit agreements governing the credit facilities contain mandatory prepayment requirements, customary affirmative ~~covenants,~~and negative covenants and events of default. The credit agreements 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 and restrictions on certain investments. The Company was in compliance with the applicable covenants at March 31, ~~2019.~~2020. As a result of COVID-19 and the associated disruption to the Company’s operating results, the Company anticipates that it may not be in compliance with certain of these covenants in future periods. In April 2020, the Company notified the lenders under its credit facilities of the anticipated non-compliance with certain covenants and anticipates entering into amendments to each of the credit facilities that will provide for waivers of each of the covenants for four quarters beginning with the quarter ending June 30, 2020. The terms of the amendments are expected to include minimum liquidity requirements and restrictions on the amount of the Company’s distributions, capital expenditures, share repurchases and acquisitions among other items during the covenant relief period. Additionally, the Company anticipates the amendments to require the interest rate under its credit facilities to increase, during the covenant relief period, to the highest interest rate margin under each of the credit agreements which would range from 75-80 basis points of an increase above current margins depending on the agreement. Although the Company anticipates completing these amendments, there are many conditions to closing, including but not limited to finalizing the terms of the amendments and completing the amendments themselves, and there can be no assurances that the Company will be able to complete the amendments with the noted terms or at all. If the amendments are not entered into, as currently anticipated, and the Company does not meet the covenant requirements in future periods, the Company will be in default under each credit facility, which may result in a potential acceleration of amounts due under each credit facility, which would have a material adverse effect on the Company if it is unable to obtain alternative sources of capital to repay such amounts.

See 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, for a description of the Company’s debt instruments as of March 31, ~~2019.~~2020.

During the first quarter of 2019, the Company completed the sale of nine hotels for a total gross sales price of $95.0 million and completed the acquisition of two hotels for a total gross purchase price of approximately $52.4 million. The ~~Company used the proceeds from the sale to reduce its outstanding balance on its revolving credit facility and utilized availability under the revolving credit facility to acquire the two hotels.~~

~~In addition, the~~ Company has a universal shelf registration statement on Form S-3 (No. 333-231021) that was automatically effective upon filing on April 25, 2019. The Company may offer an indeterminate number or amount, as the case may be, of (1) common shares, no par value per share; (2) preferred shares, no par value per share; (3) depository shares representing ~~its~~the Company’s preferred shares; (4) warrants exercisable for the Company’s common shares, preferred shares or depository shares representing preferred shares; (5) rights to purchase common shares; and (6) unsecured senior or subordinate debt securities, all of which may be issued from time to time on a delayed or continuous basis pursuant to Rule 415 under the Securities ~~Act.~~ Act of 1933, as amended. Future offerings will depend on a variety of factors to be determined by the Company, including market conditions, the trading price of the Company’s common shares and opportunities for uses of any proceeds.

During April and May 2020, the Company applied for and received approximately $18 million in loans under the CARES Act Paycheck Protection Program. Due to subsequent guidance issued by the Small Business Administration and the Department of Treasury, related to the intended participants in this program, the Company repaid all amounts received. The Company will continue to evaluate relief initiatives and stimulus packages, including any accompanying restrictions on its business that would be imposed by such packages, that may be or become available to the Company under government stimulus programs.

Capital Uses

~~The~~Although there can be no assurances, the Company anticipates that available cash ~~flow from operations, availability under its credit facilities, additional borrowings and proceeds from hotel dispositions and equity offerings~~of $437.3 million as of March 31, 2020, will be adequate to meet ~~its~~near-term anticipated ~~liquidity requirements, including~~operating cash flow deficits resulting from the effect of COVID-19, debt service, hotel acquisitions ~~hotel renovations, share repurchases,~~ and ~~required distributions to shareholders (the~~capital expenditures. However, if the Company is ~~not required~~unable to ~~make distributions at its~~meet these near term anticipated capital uses, it is unable to obtain the covenant waivers noted above and the lenders accelerate the amounts due under the credit facilities or if the Company is unable to refinance maturing debt in the future, it may need to raise capital through disposition of assets, issuance of equity or issuance of debt, which may be more costly to the Company in the current ~~rate for REIT purposes).~~environment.

Distributions

To maintain its REIT status, the Company is required to distribute at least 90% of its ordinary income. Distributions paid during the three months ended March 31, ~~2019~~2020 totaled approximately ~~$67.2~~$67.3 million or $0.30 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 ~~$56.2~~$33.3 million. This shortfall includes a return of capital and was funded primarily by borrowings on the Company’s revolving credit facility. ~~At this time,~~In March 2020, the Company ~~does not anticipate~~announced the suspension of its monthly distributions ~~for~~as a result of COVID-19 and the ~~full year of 2019~~impact on its business. Subject to ~~exceed net cash generated from operations.~~

~~Index~~

~~The~~the distribution restrictions discussed above anticipated to be a condition to the proposed amendments to the Company’s ~~current annual distribution rate, payable monthly, is $1.20 per common share. As it has done historically, due to seasonality,~~unsecured credit facilities during the Company may use its revolving credit facility to maintain the consistency of the monthly distribution rate, taking into consideration any acquisitions, dispositions, capital improvements and economic cycles. Any distribution will be subject to approval ofcovenant relief period, the Company’s Board of Directors, in consultation with management, will continue to monitor hotel operations and ~~there can be no assurance of the classification or duration of~~intends to resume monthly distributions at ~~the current annual distribution rate. The Board of Directors monitors the Company’s distribution rate relative to the performance of its hotels on an ongoing basis~~a time and ~~may make adjustments to the distribution rate as~~level determined to be prudent in relation to the Company’s 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 required levels. 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.requirements.

Index

Share Repurchases

~~During 2018,~~In May 2020, the Company’s Board of Directors approved an extension of its existing Share Repurchase Program, authorizing share repurchases up to an aggregate of ~~$464~~$345 million. The Share Repurchase Program may be suspended or terminated at any time by the Company and will end in July ~~2019~~2021 if not terminated earlier. During the first three months ~~ended March 31,~~of 2020 and 2019, the Company purchased, under its Share Repurchase Program, approximately 1.5 million and 0.3 million of its common shares, respectively, at a weighted-average market purchase price of approximately $9.42 and $14.93 per common share, respectively, for an aggregate purchase price, including commissions, of approximately $14.3 million and $4.1 ~~million. During the three months ended March 31, 2018, the Company purchased, under its Share Repurchase Program, approximately 0.3~~ million, ~~of its common shares at a weighted-average market purchase price of approximately $16.89 per common share for an aggregate purchase price, including commissions, of approximately $4.3 million.~~respectively. Repurchases under the Share Repurchase Program have been funded, and the Company intends to fund future repurchases, with cash on hand or availability under its credit facilities. AsThe 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 ~~31, 2019, approximately $359.9 million remained available for purchase~~2020 the Company terminated its written trading plan under the Share Repurchase Program. The timing of share repurchases and the number of common shares to be repurchased under the Share Repurchase Program will depend upon prevailing market conditions, regulatory requirements and other factors. As of March 31, 2020, approximately $345.4 million remained available for purchase under the Share Repurchase Program. As discussed above, the Company anticipates a restriction on share repurchases during the covenant relief period to be a condition to the proposed amendments to the Company’s unsecured credit facilities.

Capital Improvements

The Company has ongoing capital commitments to fund its capital improvements. To maintain and enhance each property’s competitive position in its market, the Company has invested in and, subject to improved operating results, 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 March 31, ~~2019,~~2020, the Company held ~~$28.9~~$30.3 million in reserve related to these properties. During the three months ended March 31, ~~2019,~~2020, the Company invested approximately ~~$18.7~~$23.9 million in capital expenditures, and anticipates spending an additional ~~$60~~$10 million to ~~$70~~$15 million during the remainder of ~~2019, which includes various scheduled renovation projects~~2020. This estimate is approximately $50 million less than originally planned for ~~approximately 20~~the entire year of 2020 as the Company has postponed all planned non-essential capital improvements in order to ~~25 properties.~~maintain a sound liquidity position as a result of COVID-19. The Company does not currently have any existing or planned projects for new property development.

Hotel Contract Commitments

As of ~~April 30, 2019,~~March 31, 2020, the Company had outstanding contracts, all of which were entered into prior to 2020, for the potential purchase of ~~five~~six newly developed hotels for a total expected purchase price of approximately ~~$159.2~~$208.8 million. ~~All five~~Two of the hotels, the newly developed Hampton Inn & Suites and Home2 Suites in Cape Canaveral, Florida, a combined 224-room dual-branded complex, were acquired in April 2020 for a gross purchase price of approximately $46.7 million. Additionally, in May 2020, the contract to purchase the Courtyard hotel in Denver, Colorado for $49.1 million was terminated. The three remaining hotels (with a total expected purchase price of approximately $113.0 million) are under development and are planned to be completed and opened for business over the next 15five to 2715 months from March 31, ~~2019,~~2020, at which time closings on these hotels are expected to occur. Although the Company is working towards acquiring these ~~five~~ 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. ItIf the sellers meet all of the conditions to closing, the Company is ~~anticipated that~~obligated to specifically perform under these contracts. As the properties are under development, at this time, the sellers have not met all of the conditions to closing. As discussed above, the Company utilized $25.0 million of available cash and entered into a $21.7 million one-year note payable with the developer to fund the purchase ~~price for~~of the ~~five~~Cape Canaveral, Florida hotels ~~will be funded through~~and plans to utilize its available cash at closing to purchase the ~~Company’s credit facilities.~~remaining hotels under contract if closings occur.

Cash Management Activities

As part of the cost sharing arrangements discussed in Note 6 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 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.

Index

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.~~quarters, however, due to the effects of COVID-19, these typical seasonal patterns may not occur in 2020. 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 new ~~lease~~fair value measurement accounting standard on January 1, ~~2019.~~2020 and the guidance in the reference rate reform accounting standard effective in March 2020.

Subsequent Events

InOn April ~~2019,~~30, 2020, the Company ~~paid approximately $22.4 million, or $0.10 per outstanding common share, in distributions to its common shareholders.~~

~~In April 2019, the Company declared a regular monthly cash distribution of $0.10 per common share for the month of May 2019. The distribution is payable~~closed on ~~May 15, 2019.~~

~~In April 2019, the Company entered into a purchase contract for~~ the purchase of the newly developed Hampton Inn & Suites and Home2 Suites in Cape Canaveral, Florida, a ~~hotel to be constructed in Denver, Colorado,~~combined 224-room dual-branded complex, for a gross purchase price of approximately $46.7 million. The Company utilized $25.0 million of its available cash and entered into a ~~minimum~~one-year note payable with the developer secured by the hotels for $21.7 million to fund the purchase price of ~~$49.1 million,~~the Cape Canaveral, Florida hotels. The note payable bears interest, which is ~~subject~~payable monthly, at a floating annual rate equal to ~~adjustment based on~~one-month LIBOR plus a margin of 2.0% for the ~~actual number~~first six months of ~~rooms. The hotel is planned to be a Courtyard by Marriott which is expected to contain a minimum~~the loan term and 3.0% for the second six months of ~~182 guest rooms. Although~~ the ~~Company 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 a closing on this hotel will occur.~~loan term.

In May 2020, the contract to purchase the Courtyard hotel in Denver, Colorado was terminated and the refundable deposit of approximately $0.6 million was repaid to the Company.

Item 3.3. Quantitative and Qualitative ~~Disclosure~~sDisclosures About Market Risk

As of March 31, ~~2019,~~2020, 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 variable-rate term debt that is not fixed by interest rate swaps. As of March 31, ~~2019,~~2020, after giving effect to interest rate swaps, as described below, approximately ~~$317.9~~$377.5 million, or approximately ~~23%~~21% of the Company’s total debt outstanding, was subject to variable interest rates. Based on the Company’s variable-rate debt outstanding as of March 31, ~~2019,~~2020, every 100 basis points change in interest rates will impact the Company’s annual net income by approximately ~~$3.2~~$3.8 million, 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 and cash equivalents at~~As of March 31, ~~2019 were $0.~~2020, the Company had two interest rate swaps due to mature on May 18, 2020 and two interest rate swaps that will become effective on the same date, resulting in a net decrease in the notional amount of $197.5 million, which will result in a corresponding increase in the amount of the Company’s variable-rate debt that is not fixed by interest rate swaps.

As of March 31, ~~2019,~~2020, the Company’s variable-rate debt consisted of its credit facilities, including borrowings outstanding under its $425 million revolving credit facility and ~~$735~~$820 million of term loans. Currently, the Company uses interest rate swaps to manage its interest rate risk on a portion of its variable-rate debt. As of March 31, ~~2019,~~2020, the Company had ~~seven~~12 interest rate swap agreements that effectively fix the interest payments on approximately ~~$607.5~~$867.5 million of the Company’s variable-rate debt ~~outstanding.~~outstanding with swap maturity dates ranging from May 2020 (representing two swaps with a total notional amount of $322.5 million) to December 2029. In addition, ~~in December 2018,~~ the Company has entered into ~~two~~a total of three interest rate swap agreements which, beginning ~~January 31,~~May 18, 2020 and May 18, ~~2020,~~2021, will effectively fix the interest rate on ~~$25~~$125 million and ~~$50~~$75 million, respectively, of its variable-rate debt. 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-month LIBOR. See Note 5 titled “Fair Value of Financial Instruments” in the Company’s Unaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q, for a description of the Company’s interest rate swaps as of March 31, 2020.

Index

In addition to its variable-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 and borrowings outstanding under its credit facilities at March 31, ~~2019.~~2020. All dollar amounts are in thousands.

	April 1 - December 31, 2019			2020			2021			2022			2023			Thereafter			Total		Fair Market Value		April 1 - December 31, 2020			2021			2022			2023			2024			Thereafter			Total		Fair Market Value
Total debt:
Maturities	$	30,391		$	28,349		$	47,586		$	299,652		$	295,615		$	709,165		$	1,410,758	$	1,405,036	$	10,431		$	48,185		$	534,872		$	296,256		$	338,643		$	566,626		$	1,795,013	$	1,601,781
Average interest rates⁽¹⁾		3.8	%		3.9	%		4.0	%		4.0	%		4.0	%		4.1	%
Average interest rates⁽¹⁾⁽²⁾																								3.3	%		3.3	%		3.3	%		3.5	%		3.7	%		3.8	%

Variable rate debt:
Variable-rate debt:
Maturities	$	-		$	-		$	-		$	190,400		$	250,000		$	485,000		$	925,400	$	926,103	$	-		$	-		$	425,000		$	250,000		$	310,000		$	260,000		$	1,245,000	$	1,103,142
Average interest rates⁽¹⁾		3.5	%		3.6	%		3.8	%		3.9	%		3.9	%		4.1	%
Average interest rates⁽¹⁾⁽²⁾																								2.9	%		2.9	%		3.0	%		3.2	%		3.5	%		3.7	%

Fixed rate debt:
Fixed-rate debt:
Maturities	$	30,391		$	28,349		$	47,586		$	109,252		$	45,615		$	224,165		$	485,358	$	478,933	$	10,431		$	48,185		$	109,872		$	46,256		$	28,643		$	306,626		$	550,013	$	498,639
Average interest rates(2)		4.4	%		4.4	%		4.4	%		4.2	%		4.1	%		4.1	%						4.3	%		4.2	%		4.0	%		3.9	%		3.9	%		3.8	%

⁽¹⁾

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

⁽²⁾ The Company anticipates entering into an amendment to each of its unsecured credit facilities to waive certain covenants under the agreements. The amendments are expected to require that the interest rates on each of its unsecured credit facilities increase to the highest interest rate margin under each facility (75-80 basis points above the current margin) during the covenant relief period.

Item 4.4. Controls and Procedures

Senior management, including the Chief Executive Officer, Chief Financial Officer and Chief ~~Financial~~Accounting 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 ~~Financial~~Accounting Officer have concluded that the Company’s disclosure controls and procedures were effective as of March 31, ~~2019.~~2020. 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.

Index

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

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 Company, have a material adverse effect on the Company’s consolidated financial position or results of operations.

Item 1A. Risk Factors

~~For~~“Item 1A. Risk Factors” of the Company’s 2019 Form 10-K includes a discussion of the Company’s potential risks and ~~uncertainties, see~~uncertainties. The information below updates, and should be read in conjunction with, the ~~section titled “Risk Factors”~~risk factors and information disclosed in the ~~2018~~Company’s 2019 Form 10-K. ~~There~~Except as presented below, there have been no material changes tofrom the risk factors ~~previously disclosed~~described in the ~~2018~~Company’s 2019 Form 10-K.

The current widespread outbreak of COVID-19 has significantly adversely impacted and disrupted, and is expected to continue to significantly adversely impact and disrupt, the Company’s business, financial performance and condition, operating results and cash flows, as could any future outbreak of another highly infectious or contagious disease.

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.

The outbreak of COVID-19 has had a detrimental impact, and another pandemic in the future could similarly impact, regional and global economies and financial markets. The global, national and local impact of the outbreak has been rapidly evolving and many countries, including the U.S., and state and local governments have reacted by instituting a wide variety of measures intended to control its spread, including states of emergency, mandatory quarantines, implementing “stay at home” orders, business closures, border closings, and restricting travel and large gatherings, which has resulted in cancellation of events, including sporting events, conferences and meetings. Many experts predict that the outbreak will trigger a period of material global economic slowdown or a global recession and many experts believe that the U.S. is already in a recession.

The effects of the pandemic on the hotel industry are unprecedented. COVID-19 has disrupted the industry and its consequences have dramatically reduced business and leisure travel, which has had a significant adverse impact, and will continue to significantly adversely impact and disrupt the Company’s business, financial performance and condition, operating results and cash flows. Since March 2020, the Company has experienced a significant decline in revenue throughout its portfolio which the Company expects to continue for an extended period of time. Substantially all of the Company’s properties are currently operating at significantly reduced levels and the Company has reduced certain services and amenities. Although currently all of the Company’s hotels are open, the Company may need or elect to temporarily suspend operations at properties in the future depending on the length and severity of COVID-19 and related effects. If operations at the Company’s hotel properties are suspended, the Company cannot give any assurance as to when they will resume operations at a full or reduced level.

Additional factors that would negatively impact the Company’s ability to successfully operate during or following COVID-19 or another pandemic, or that could otherwise significantly adversely impact and disrupt its business, financial performance and condition, operating results and cash flows, include:

●

sustained negative consumer, or business sentiment or continued corporate travel policy restrictions, including beyond the end of COVID-19, which could further adversely impact demand for lodging;

●

an expansion of the number of postponed and cancelled events, including sporting events, conferences and meetings;

●

the Company’s ability to reopen hotels that are temporarily closed in a timely manner, and its ability to attract customers to its hotels when they are able to reopen;

●

a severe disruption or instability in the global financial markets or deterioration in credit and financing conditions;

●

increased costs and potential difficulty accessing supplies to maintain hotels, including hotels that are no longer in operation and increased sanitation, social distancing and other mitigation measures, such as personal protective equipment at hotels; and

●

increased labor costs to attract employees due to perceived risk of exposure to COVID-19, as well as potential for increased workers’ compensation claims if hotel employees are exposed to COVID-19 through the workplace.

Index

The results of these factors could include:

●

decreased demand resulting in hotel properties not generating revenue sufficient to meet its operating expenses, which may adversely affect the value of the Company’s hotel properties, potentially requiring the Company to recognize significant non-cash impairment charges or other significant unanticipated cash or non-cash costs;

●

the scaling back or delay of a significant amount of planned capital expenditures, including planned renovation projects, which could adversely affect the value of the Company’s properties;

●

a material adverse effect on the Company’s ability to consummate acquisitions and dispositions of hotel properties;

●

continued suspension of the Company’s monthly distributions or a change in the amount or frequency of distributions when the Company resumes paying distributions;

●

increased indebtedness and decreased operating results, which could increase the Company’s risk of default under its loan agreements or other long-term contracts;

●

increased volatility of the Company’s stock price;

●

disruptions in the Company’s supply chains, which may increase costs for essential capital improvements or may impact hotels that are under development and that the Company expects to acquire following completion;

●

declines in regional and local economies, reducing travel to and from the localities;

●

increased risk that the Company could be required to close on the purchase under its existing contracts for newly developed hotels, where the hotel is not legally allowed to open due to temporary regulations resulting from COVID-19 mitigation;

●

increased risk in the Company’s ability to retain and the continued service and availability of personnel, including the Company’s senior leadership team and key field personnel, such as general managers, and the Company’s ability to recruit, attract and retain skilled personnel to the extent its management or personnel are impacted by the outbreak of pandemic or epidemic disease and are not available or allowed to conduct work;

●

disruptions as a result of corporate employees working remotely, including risk of cybersecurity incidents and disruptions to internal control procedures; and

●

difficulty accessing debt and equity capital on attractive terms, or at all, including covenant deferral, under its secured and unsecured indebtedness, or capital necessary to fund business operations or address maturing liabilities.

Moreover, many risk factors set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 should be interpreted as heightened risks as a result of the ongoing and numerous adverse impacts of COVID-19.

The significance, extent and duration of the impacts caused by COVID-19 on the Company’s business, financial condition, operating results and cash flows, remains largely uncertain and dependent on future developments that are highly uncertain and cannot be accurately predicted at this time, such as the continued severity, duration, transmission rate and geographic spread of COVID-19 in the U.S., the extent and effectiveness of actions taken to contain the pandemic or mitigate its impact, the timing of and manner in which containment efforts are reduced or lifted, and the response of the overall economy, the financial markets and the population, particularly in areas in which the Company operates, once the current containment measures are reduced or lifted. As a result, the Company cannot provide an estimate of the overall impact of COVID-19 on its business or when, or if, the Company will be able to resume pre-COVID-19 levels of operations. COVID-19 presents material uncertainty and risk with respect to the Company’s business, financial performance and condition, operating results and cash flows.

The spread of the COVID-19 outbreak has caused severe disruptions in the U.S. and global economy and financial markets and could potentially create widespread business continuity issues of an as yet unknown magnitude and duration.

COVID-19 has caused, and is likely to continue to cause, severe economic, market and other disruptions worldwide. The Company cannot predict whether conditions in the bank lending, capital and other financial markets will continue to deteriorate as a result of the pandemic, or whether the Company’s access to capital and other sources of funding will become constrained, which could adversely affect the availability and terms of future borrowings, renewals or refinancings.

Additionally, a prolonged economic recession, including lower GDP growth, corporate earnings, consumer confidence, employment rates, income levels and personal wealth, could result in significantly below-average lodging demand by both group and transient travelers that continues beyond the lifting of travel and other government restrictions and after COVID-19 has largely subsided. There can also be no guarantee that the demand for lodging, and consumer confidence in travel generally, will recover as quickly as other industries. All of the above factors could materially negatively impact the Company’s business, financial performance and condition, operating results and cash flows.

Index

Item 2. 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following is a summary of all share repurchases during the first quarter of ~~2019.~~ 2020.

Issuer Purchases of Equity Securities	Issuer Purchases of Equity Securities										Issuer Purchases of Equity Securities
		(a)			(b)		(c)		(d)			(a)		(b)		(c)		(d)
Period		Total Number of Shares Purchased			Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands) ⁽¹⁾			Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands) ⁽¹⁾
January 1 - January 31, 2019			244,800		$	14.81		244,800	$	360,400
February 1 - February 28, 2019			27,979		$	15.95		27,979	$	359,900
March 1 - March 31, 2019			31,156	(2)	$	16.46		1,400	$	359,900
January 1 - January 31, 2020													-		-		-	$	359,800
February 1 - February 29, 2020													20,000	$	13.88		20,000	$	359,500
March 1 - March 31, 2020 ⁽²⁾													1,635,159	$	9.66		1,500,783	$	345,400
Total			303,935					274,179					1,655,159				1,520,783

⁽¹⁾

Represents amount outstanding under the Company's ~~authorized $464 million~~ share repurchase program. This program may be suspended or terminated at any time by the Company. ~~If not terminated earlier,~~This program was suspended in March 2020. In May 2020, the Company's Board of Directors approved an extension of the program ~~will end in~~authorizing share repurchases up to an aggregate of $345 million through July 2019. Refer to Note 7 titled “Shareholders’ Equity” in the Company’s Unaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q, for more information on the Company’s share repurchase program.2021.

⁽²⁾

Includes ~~29,756~~134,376 common shares surrendered to the Company to satisfy tax withholding obligations associated with the issuance of common shares awarded to employees.

Index

Item 6. 6. Exhibits

Exhibit ~~Exhibit~~Number ~~Number~~	Description of Documents

3.1	Amended and Restated Articles of Incorporation of the Company, as amended (Incorporated by reference to Exhibit 3.1 to the Company’s quarterly report on Form 10-Q (SEC File No. 001-37389) filed August 6, 2018)

3.2	~~Second~~Third Amended and Restated Bylaws of the Company ~~(Incorporated by reference to Exhibit 3.1 to the Company’s current report on Form 8-K (SEC File No. 001-37389) filed February 18, 2016)~~(FILED HEREWITH)

10.1*	~~First Amendment to~~Separation Agreement and General Release, dated as of March 4, 2020, by and between the ~~Company’s Executive Severance Pay Plan~~ (~~Incorporated~~Company and Kristian Gathright (Incorporated by reference to Exhibit 10.1 to the Company’s current report on Form 8-K (SEC File No. 001-37389) filed March ~~27, 2019~~)5, 2020)

10.2*	Separation Agreement and General Release, dated as of March ~~22, 2019,~~4, 2020, by and between the Company and ~~David P. Buckley~~Bryan Peery (Incorporated by reference to Exhibit 10.2 to the Company’s current report on Form 8-K (SEC File No. 001-37389) filed March 5, 2020)

10.3*	Second Amendment to the Apple REIT, Inc. Executive Severance Pay Plan (Incorporated by reference to Exhibit 10.3 to the Company’s current report on Form 8-K (SEC File No. 001-37389) filed March 5, 2020)

10.4*	Amendment, dated March 30, 2020, to Separation Agreement and General Release, dated as of March 4, 2020, by and between the Company and Kristian Gathright (FILED HEREWITH)

10.5*	Amendment, dated March 30, 2020, to Separation Agreement and General Release, dated as of March 4, 2020, by and between the Company and Bryan Peery (FILED HEREWITH)

10.6	First Amendment, dated February 14, 2020, to Second Amended and Restated Credit Agreement dated as of July 27, ~~2019)~~2018, among the Company, as borrower, certain subsidiaries of the Company, as guarantors, Bank of America, N.A., as Administrative Agent, KeyBank National Association and Wells Fargo Bank, National Association, as Co-Syndication Agents, U.S. Bank National Association, as Documentation Agent, Regions Bank as Managing Agent, the Lenders and Letter of Credit Issuers party thereto, and Merrill Lynch, Pierce, Fenner & Smith Incorporated, KeyBanc Capital Markets, Wells Fargo Securities, LLC and U.S. Bank National Association, as Joint Lead Arrangers, and Merrill Lynch, Pierce, Fenner & Smith Incorporated, KeyBanc Capital Markets and Wells Fargo Securities, LLC, as Joint Bookrunners (FILED HEREWITH)

31.1	Certification of the Company’s Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (FILED HEREWITH)

31.2	Certification of the Company’s Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (FILED HEREWITH)

31.3	Certification of the Company’s Chief Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (FILED HEREWITH)

32.1	Certification of the Company’s Chief Executive Officer, Chief Financial Officer and Chief ~~Financial~~Accounting Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (FURNISHED HEREWITH)

101	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2019~~2020 formatted in ~~XBRL (eXtensible~~iXBRL (Inline eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations and Comprehensive Income (Loss), (iii) the Consolidated Statements of Shareholders’ Equity, (iv) the Consolidated Statements of Cash Flows, and (v) related notes to these financial statements, tagged as blocks of text and in detail (FILED ~~HEREWITH~~) HEREWITH)

104	The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, formatted as Inline XBRL and contained in Exhibit 101.

* Denotes Management Contract or Compensation Plan

Index

SIGNATURES

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: May ~~8, 2019~~18, 2020
	Justin G. Knight,
	~~President and~~ Chief Executive Officer (Principal Executive Officer)

By:	/s/ ~~Bryan Peery~~Elizabeth S. Perkins	Date: May ~~8, 2019~~18, 2020
	~~Bryan Peery,~~Elizabeth S. Perkins,
	Chief Financial Officer (Principal Financial ~~and~~ Officer)

By:	/s/ Rachel S. Labrecque	Date: May 18, 2020
	Rachel S. Labrecque,
	Chief Accounting Officer (Principal Accounting Officer)

0001418121 aple:InterestRateSwap7Member us-gaap:DesignatedAsHedgingInstrumentMember 2020-03-31

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)

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares, no par value	APLE	New York Stock Exchange

~~Title of each class~~	~~Trading Symbol~~	~~Name of each exchange on which registered~~
~~Common Shares, no par value~~	~~APLE~~	~~New York Stock Exchange~~

			Page Number
PART I. FINANCIAL INFORMATION

	Item 1.	Financial Statements (Unaudited)

		Consolidated Balance Sheets – March 31, ~~2019~~2020 and December 31, ~~2018~~ 2019	34

		Consolidated Statements of Operations and Comprehensive Income (Loss) – Three months ended March 31, ~~2019~~2020 and ~~2018~~	4

		~~Consolidated Statements of Shareholders’ Equity - Three months ended March 31,~~ 2019 ~~and 2018~~	5

		Consolidated Statements of ~~Cash Flows -~~Shareholders’ Equity – Three months ended March 31, ~~2019~~2020 and ~~2018~~2019	6

		Consolidated Statements of Cash Flows – Three months ended March 31, 2020 and 2019	7

		Notes to Consolidated Financial Statements	78

	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2220

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3736

	Item 4.	Controls and Procedures	3837

PART II. OTHER INFORMATION

	Item 1.	Legal Proceedings	3938

	Item 1A.	Risk Factors	3938

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3940

	Item 6.	Exhibits	4041

Signatures			4142

	March 31,			December 31,			March 31,			December 31,
	2019			2018			2020			2019
	(unaudited)						(unaudited)
Assets
Investment in real estate, net of accumulated depreciation and amortization of $923,877 and $909,893, respectively	$	4,891,503		$	4,816,410
Investment in real estate, net of accumulated depreciation and amortization of $1,096,718 and $1,054,429, respectively							$	4,776,695		$	4,825,738
Assets held for sale								-			12,093
Cash and cash equivalents								437,260			-
Restricted cash-furniture, fixtures and other escrows		32,269			33,632			33,335			34,661
Due from third party managers, net		51,358			29,091			22,040			26,926
Other assets, net		49,257			49,539			37,040			42,993
Total Assets	$	5,024,387		$	4,928,672		$	5,306,370		$	4,942,411

Liabilities
Debt, net	$	1,405,616		$	1,412,242		$	1,789,281		$	1,320,407
Finance lease liabilities		162,818			-			217,180			216,627
Accounts payable and other liabilities		88,926			107,420			105,105			114,364
Total Liabilities		1,657,360			1,519,662			2,111,566			1,651,398

Shareholders' Equity
Preferred stock, authorized 30,000,000 shares; none issued and outstanding		-			-
Common stock, no par value, authorized 800,000,000 shares; issued and outstanding 223,868,180 and 223,997,348 shares, respectively		4,493,362			4,495,073
Accumulated other comprehensive income		3,962			10,006
Preferred stock, authorized 30,000,000 shares; NaN issued and outstanding								-			-
Common stock, no par value, authorized 800,000,000 shares; issued and outstanding 223,017,081 and 223,862,913 shares, respectively								4,487,441			4,493,763
Accumulated other comprehensive loss								(46,864	)		(4,698	)
Distributions greater than net income		(1,130,297	)		(1,096,069	)		(1,245,773	)		(1,198,052	)
Total Shareholders' Equity		3,367,027			3,409,010			3,194,804			3,291,013

Total Liabilities and Shareholders' Equity	$	5,024,387		$	4,928,672		$	5,306,370		$	4,942,411

Large accelerated filer ☒	☒	Accelerated filer ☐	☐
Non-accelerated filer ☐	☐	Smaller reporting company ☐	☐
		Emerging growth company	☐

	Three Months Ended						Three Months Ended
	March 31,						March 31,
	2019			2018			2020			2019
Revenues:
Room	$	279,470		$	274,836		$	217,979		$	279,470
Food and beverage		15,015			15,710			11,312			15,015
Other		9,302			7,843			8,719			9,302
Total revenue		303,787			298,389			238,010			303,787

Expenses:
Hotel operating expense:
Operating		75,580			75,954			68,029			75,580
Hotel administrative		25,630			25,102			23,643			25,630
Sales and marketing		27,694			25,332			24,359			27,694
Utilities		9,939			10,283			9,190			9,939
Repair and maintenance		12,866			12,453			11,793			12,866
Franchise fees		13,111			12,733			10,257			13,111
Management fees		10,629			10,472			7,995			10,629
Total hotel operating expense		175,449			172,329			155,266			175,449
Property taxes, insurance and other		19,208			17,229			19,595			19,613
Operating ground lease		405			2,850
General and administrative		8,137			6,877			9,523			8,137
Depreciation and amortization		47,950			44,840			49,522			47,950
Total expense		251,149			244,125			233,906			251,149

Gain on sale of real estate		1,213			-			8,839			1,213

Operating income		53,851			54,264			12,943			53,851

Interest and other expense, net		(15,494	)		(11,919	)		(15,566	)		(15,494	)

Income before income taxes		38,357			42,345
Income (loss) before income taxes								(2,623	)		38,357

Income tax expense		(206	)		(163	)		(146	)		(206	)

Net income	$	38,151		$	42,182
Net income (loss)							$	(2,769	)	$	38,151

Other comprehensive income (loss):
Other comprehensive loss:
Interest rate derivatives		(6,044	)		6,292			(42,166	)		(6,044	)

Comprehensive income	$	32,107		$	48,474
Comprehensive income (loss)							$	(44,935	)	$	32,107

Basic and diluted net income per common share	$	0.17		$	0.18
Basic and diluted net income (loss) per common share							$	(0.01	)	$	0.17

Weighted average common shares outstanding - basic and diluted		223,932			230,515			224,294			223,932

	Common Stock						Accumulated Other Comprehensive Income (Loss)			Distributions Greater Than Net Income						Common Stock						Accumulated Other Comprehensive Income (Loss)			Distributions Greater Than Net Income
	Number of Shares			Amount			Accumulated Other Comprehensive Income (Loss)			Distributions Greater Than Net Income			Total			Number of Shares			Amount			Accumulated Other Comprehensive Income (Loss)			Distributions Greater Than Net Income			Total

Balance at December 31, 2019																	223,863		$	4,493,763		$	(4,698	)	$	(1,198,052	)	$	3,291,013
Share based compensation, net																	675			8,014			-			-			8,014
Common shares repurchased																	(1,521	)		(14,336	)		-			-			(14,336	)
Interest rate derivatives																	-			-			(42,166	)		-			(42,166	)
Net loss																	-			-			-			(2,769	)		(2,769	)
Distributions declared to shareholders ($0.20 per share)																	-			-			-			(44,952	)		(44,952	)
Balance at March 31, 2020																	223,017		$	4,487,441		$	(46,864	)	$	(1,245,773	)	$	3,194,804

Balance at December 31, 2018		223,997		$	4,495,073		$	10,006		$	(1,096,069	)	$	3,409,010			223,997		$	4,495,073		$	10,006		$	(1,096,069	)	$	3,409,010
Cumulative effect of the adoption of ASU 2016-02 related to leases		-			-			-			(5,201	)		(5,201	)		-			-			-			(5,201	)		(5,201	)
Share based compensation, net		145			2,385			-			-			2,385			145			2,385			-			-			2,385
Common shares repurchased		(274	)		(4,096	)		-			-			(4,096	)		(274	)		(4,096	)		-			-			(4,096	)
Interest rate derivatives		-			-			(6,044	)		-			(6,044	)		-			-			(6,044	)		-			(6,044	)
Net income		-			-			-			38,151			38,151			-			-			-			38,151			38,151
Distributions declared to shareholders ($0.30 per share)		-			-			-			(67,178	)		(67,178	)		-			-			-			(67,178	)		(67,178	)
Balance at March 31, 2019		223,868		$	4,493,362		$	3,962		$	(1,130,297	)	$	3,367,027			223,868		$	4,493,362		$	3,962		$	(1,130,297	)	$	3,367,027

Balance at December 31, 2017		229,962		$	4,588,188		$	9,778		$	(1,026,881	)	$	3,571,085
Share based compensation, net		390			5,684			-			-			5,684
Issuance of common shares, net		243			4,679			-			-			4,679
Common shares repurchased		(255	)		(4,304	)		-			-			(4,304	)
Interest rate derivatives		-			-			6,292			-			6,292
Net income		-			-			-			42,182			42,182
Distributions declared to shareholders ($0.30 per share)		-			-			-			(69,144	)		(69,144	)
Balance at March 31, 2018		230,340		$	4,594,247		$	16,070		$	(1,053,843	)	$	3,556,474

Location ~~(1)~~	Brands	Date of Purchase Contract	Rooms		Refundable Deposits		Gross Purchase Price		Brands	Date of Purchase Contract	Rooms		Refundable Deposits		Gross Purchase Price
Cape Canaveral, FL ~~(2)~~(1)	Hampton and Home2 Suites	4/11/2018		224	$	3	$	46,704	Hampton and Home2 Suites	4/11/2018		224	$	3	$	46,704
Tempe, AZ (3)	Hyatt House and Hyatt Place	6/13/2018		254		720		63,341
Tempe, AZ (2)(3)									Hyatt House and Hyatt Place	6/13/2018		254		720		63,341
Madison, WI (2)									Hilton Garden Inn	7/9/2019		176		283		49,632
				478	$	723	$	110,045				654	$	1,006	$	159,677

(1) Newly developed hotels were acquired on April 30, 2020 and opened during April 2020. These hotels are part of a combined 224-room, dual-branded complex.
(2) These hotels are currently under development. The table shows the expected number of rooms upon hotel completion and the expected franchise brands. Assuming all conditions to closing are met, the purchases of these hotels are expected to occur over the next 15five to 2115 months from March 31, ~~2019.~~2020. If the seller meets all of the conditions to closing, the Company is obligated to specifically perform under the contract. As the properties are under development, at this time, the seller has not met all of the conditions to closing.
~~(2)~~	(3) These hotels are part of ~~an adjoining combined 224-room, dual-branded complex that will be located on the same site.~~
~~(3)~~		~~These hotels are part of an adjoining~~a combined 254-room, dual-branded ~~complex that will be located on the same site.~~complex.

	March 31, 2019		December 31, 2018		March 31, 2020		December 31, 2019
Revolving credit facility	$	190,400	$	268,800	$	425,000	$	50,900
Term loans, net		728,702		653,382
Term loans and senior notes, net						864,084		813,934
Mortgage debt, net		486,514		490,060		500,197		455,573
Debt, net	$	1,405,616	$	1,412,242	$	1,789,281	$	1,320,407

2019 (April - December)	$	30,391
2020		28,349
2021		47,586
2022		299,652
2023		295,615
Thereafter		709,165
		1,410,758
Unamortized fair value adjustment of assumed debt		3,203
Unamortized debt issuance costs related to term loans and mortgage debt		(8,345	)
Total	$	1,405,616

2020 (April - December)	$	10,431
2021		48,185
2022		534,872
2023		296,256
2024		338,643
Thereafter		566,626
		1,795,013
Unamortized fair value adjustment of assumed debt		2,300
Unamortized debt issuance costs		(8,032	)
Total	$	1,789,281

	March 31, 2019			Percentage			December 31, 2018			Percentage			March 31, 2020			Percentage			December 31, 2019			Percentage
Fixed-rate debt ⁽¹⁾	$	1,092,858			77	%	$	1,046,273			74	%	$	1,417,513			79	%	$	1,297,467			98	%
Variable-rate debt ⁽²⁾		317,900			23	%		371,300			26	%		377,500			21	%		28,400			2	%
Total	$	1,410,758					$	1,417,573					$	1,795,013					$	1,325,867
Weighted-average interest rate of debt(2)		3.80	%					3.74	%					3.35	%					3.59	%

			Outstanding Balance								Outstanding Balance
	Interest Rate	Maturity Date	March 31, 2019			December 31, 2018			Interest Rate	Maturity Date	March 31, 2020			December 31, 2019
Revolving credit facility ⁽¹⁾	LIBOR + 1.40% - 2.25%	7/27/2022	$	190,400		$	268,800		LIBOR + 1.40% - 2.25%	7/27/2022	$	425,000		$	50,900

Term loans
Term loans and senior notes
$200 million term loan	LIBOR + 1.35% - 2.20%	7/27/2023		200,000			200,000		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		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		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			100,000		LIBOR + 1.65% - 2.50%	8/2/2025		175,000			175,000
$85 million term loan	LIBOR + 1.80% - 2.60%	7/25/2024		85,000			85,000
Term loans at stated value				735,000			660,000
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			-
Term loans and senior notes at stated value												870,000			820,000
Unamortized debt issuance costs	Unamortized debt issuance costs			(6,298	)		(6,618	)				(5,916	)		(6,066	)
Term loans, net				728,702			653,382
Term loans and senior notes, net												864,084			813,934

Revolving credit facility and term loans, net⁽¹⁾			$	919,102		$	922,182
Credit facilities, net⁽¹⁾											$	1,289,084		$	864,834
Weighted-average interest rate⁽²⁾	Weighted-average interest rate⁽²⁾			3.45	%		3.37	%				2.97	%		3.14	%

	March 31,			December 31,
	2019			2018

Land	$	730,614		$	737,822
Building and Improvements		4,461,084			4,503,728
Furniture, Fixtures and Equipment		465,457			471,399
Finance ground lease assets		144,768			-
Franchise Fees		13,457			13,354
		5,815,380			5,726,303
Less Accumulated Depreciation and Amortization		(923,877	)		(909,893	)
Investment in Real Estate, net	$	4,891,503		$	4,816,410

	March 31,			December 31,
	2020			2019

Land	$	721,934		$	724,054
Building and Improvements		4,450,646			4,458,383
Furniture, Fixtures and Equipment		489,465			486,386
Finance Ground Lease Assets		197,617			197,617
Franchise Fees		13,751			13,727
		5,873,413			5,880,167
Less Accumulated Depreciation and Amortization		(1,096,718	)		(1,054,429	)
Investment in Real Estate, net	$	4,776,695		$	4,825,738

Location		Brand	Interest Rate (1)			Loan Assumption or Origination Date	Maturity Date		Principal Assumed or Originated		Outstanding balance as of March 31, 2019			Outstanding balance as of December 31, 2018				Brand	Interest Rate (1)			Loan Assumption or Origination Date	Maturity Date		Principal Assumed or Originated		Outstanding balance as of March 31, 2020			Outstanding balance as of December 31, 2019
San Juan Capistrano, CA		Residence Inn		4.15	%	9/1/2016	6/1/2020		$	16,210	$	15,341		$	15,431			Residence Inn		4.15	%	9/1/2016		(2)	$	16,210	$	-		$	15,073
Colorado Springs, CO		Hampton		6.25	%	9/1/2016	7/6/2021			7,923		7,580			7,617			Hampton		6.25	%	9/1/2016	7/6/2021			7,923		7,433			7,471
Franklin, TN		Courtyard		6.25	%	9/1/2016	8/6/2021			14,679		14,047			14,115			Courtyard		6.25	%	9/1/2016	8/6/2021			14,679		13,776			13,847
Franklin, TN		Residence Inn		6.25	%	9/1/2016	8/6/2021			14,679		14,047			14,115			Residence Inn		6.25	%	9/1/2016	8/6/2021			14,679		13,776			13,847
Grapevine, TX		Hilton Garden Inn		4.89	%	8/29/2012	9/1/2022			11,810		10,020			10,101			Hilton Garden Inn		4.89	%	8/29/2012	9/1/2022			11,810		9,691			9,775
Collegeville/Philadelphia, PA		Courtyard		4.89	%	8/30/2012	9/1/2022			12,650		10,732			10,820			Courtyard		4.89	%	8/30/2012	9/1/2022			12,650		10,381			10,471
Hattiesburg, MS		Courtyard		5.00	%	3/1/2014	9/1/2022			5,732		5,018			5,058			Courtyard		5.00	%	3/1/2014	9/1/2022			5,732		4,856			4,897
Rancho Bernardo/San Diego, CA		Courtyard		5.00	%	3/1/2014	9/1/2022			15,060		13,183			13,289			Courtyard		5.00	%	3/1/2014	9/1/2022			15,060		12,756			12,866
Kirkland, WA		Courtyard		5.00	%	3/1/2014	9/1/2022			12,145		10,631			10,717			Courtyard		5.00	%	3/1/2014	9/1/2022			12,145		10,287			10,376
Seattle, WA		Residence Inn		4.96	%	3/1/2014	9/1/2022			28,269		24,728			24,928			Residence Inn		4.96	%	3/1/2014	9/1/2022			28,269		23,923			24,130
Anchorage, AK		Embassy Suites		4.97	%	9/13/2012	10/1/2022			23,230		19,798			19,957			Embassy Suites		4.97	%	9/13/2012	10/1/2022			23,230		19,160			19,324
Somerset, NJ		Courtyard		4.73	%	3/1/2014	10/6/2022			8,750		7,629			7,692			Courtyard		4.73	%	3/1/2014	10/6/2022			8,750		7,376			7,441
Tukwila, WA		Homewood Suites		4.73	%	3/1/2014	10/6/2022			9,431		8,223			8,291			Homewood Suites		4.73	%	3/1/2014	10/6/2022			9,431		7,950			8,020
Prattville, AL		Courtyard		4.12	%	3/1/2014	2/6/2023			6,596		5,705			5,754			Courtyard		4.12	%	3/1/2014	2/6/2023			6,596		5,507			5,558
Huntsville, AL		Homewood Suites		4.12	%	3/1/2014	2/6/2023			8,306		7,184			7,246			Homewood Suites		4.12	%	3/1/2014	2/6/2023			8,306		6,935			6,999
San Diego, CA		Residence Inn		3.97	%	3/1/2014	3/6/2023			18,600		16,058			16,198			Residence Inn		3.97	%	3/1/2014	3/6/2023			18,600		15,496			15,640
Miami, FL		Homewood Suites		4.02	%	3/1/2014	4/1/2023			16,677		14,423			14,547			Homewood Suites		4.02	%	3/1/2014	4/1/2023			16,677		13,924			14,051
Syracuse, NY		Courtyard		4.75	%	10/16/2015	8/1/2024	(2)		11,199		10,283			10,357
Syracuse, NY		Residence Inn		4.75	%	10/16/2015	8/1/2024	(2)		11,199		10,283			10,357
New Orleans, LA		Homewood Suites		4.36	%	7/17/2014	8/11/2024			27,000		24,052			24,232			Homewood Suites		4.36	%	7/17/2014	8/11/2024			27,000		23,328			23,513
Westford, MA		Residence Inn		4.28	%	3/18/2015	4/11/2025			10,000		9,071			9,137			Residence Inn		4.28	%	3/18/2015	4/11/2025			10,000		8,809			8,876
Denver, CO		Hilton Garden Inn		4.46	%	9/1/2016	6/11/2025			34,118		31,975			32,198			Hilton Garden Inn		4.46	%	9/1/2016	6/11/2025			34,118		31,082			31,311
Oceanside, CA		Courtyard		4.28	%	9/1/2016	10/1/2025			13,655		13,012			13,077			Courtyard		4.28	%	9/1/2016	10/1/2025			13,655		12,743			12,812
Omaha, NE		Hilton Garden Inn		4.28	%	9/1/2016	10/1/2025			22,682		21,613			21,722			Hilton Garden Inn		4.28	%	9/1/2016	10/1/2025			22,682		21,167			21,280
Boise, ID		Hampton		4.37	%	5/26/2016	6/11/2026			24,000		22,906			23,015			Hampton		4.37	%	5/26/2016	6/11/2026			24,000		22,478			22,588
Burbank, CA		Courtyard		3.55	%	11/3/2016	12/1/2026			25,564		24,075			24,247			Courtyard		3.55	%	11/3/2016	12/1/2026			25,564		23,375			23,552
San Diego, CA		Courtyard		3.55	%	11/3/2016	12/1/2026			25,473		23,990			24,161			Courtyard		3.55	%	11/3/2016	12/1/2026			25,473		23,292			23,468
San Diego, CA		Hampton		3.55	%	11/3/2016	12/1/2026			18,963		17,859			17,986			Hampton		3.55	%	11/3/2016	12/1/2026			18,963		17,339			17,471
Burbank, CA		SpringHill Suites		3.94	%	3/9/2018	4/1/2028			28,470		27,846			28,018			SpringHill Suites		3.94	%	3/9/2018	4/1/2028			28,470		27,138			27,317
Santa Ana, CA		Courtyard		3.94	%	3/9/2018	4/1/2028			15,530		15,189			15,283			Courtyard		3.94	%	3/9/2018	4/1/2028			15,530		14,803			14,901
Richmond, VA																		Courtyard		3.40	%	2/12/2020	3/11/2030			14,950		14,950			-
Richmond, VA																		Residence Inn		3.40	%	2/12/2020	3/11/2030			14,950		14,950			-
Portland, ME																		Residence Inn		3.43	%	3/2/2020	4/1/2030			33,500		33,500			-
San Jose, CA		Homewood Suites		4.22	%	12/22/2017	1/1/2038			30,000		28,857			29,107			Homewood Suites		4.22	%	12/22/2017	1/1/2038			30,000		27,832			28,092
									$	528,600		485,358			488,773										$	569,602		500,013			454,967
Unamortized fair value adjustment of assumed debt	Unamortized fair value adjustment of assumed debt											3,203			3,428		Unamortized fair value adjustment of assumed debt											2,300			2,526
Unamortized debt issuance costs	Unamortized debt issuance costs											(2,047	)		(2,141	)	Unamortized debt issuance costs											(2,116	)		(1,920	)
Total	Total										$	486,514		$	490,060		Total										$	500,197		$	455,573

Notional Amount at March 31, 2020								Fair Value Asset (Liability)
Notional Amount at March 31, 2020		Origination Date	Effective Date	Maturity Date	Swap Fixed Interest Rate			March 31, 2020			December 31, 2019

Interest rate swaps designated as cash flow hedges at March 31, 2020:
$	212,500	5/19/2015	5/21/2015	5/18/2020		1.58	%	$	(240	)	$	78
	50,000	4/7/2016	9/30/2016	3/31/2021		1.09	%		(370	)		317
	100,000	4/7/2016	9/30/2016	3/31/2023		1.33	%		(3,077	)		707
	75,000	5/31/2017	7/31/2017	6/30/2024		1.96	%		(5,085	)		(1,286	)
	10,000	8/10/2017	8/10/2017	6/30/2024		2.01	%		(697	)		(185	)
	50,000	6/1/2018	1/31/2019	6/30/2025		2.89	%		(6,506	)		(3,407	)
	50,000	7/2/2019	7/5/2019	7/18/2024		1.65	%		(2,777	)		(193	)
	50,000	8/21/2019	8/23/2019	8/18/2024		1.32	%		(2,092	)		595
	50,000	8/21/2019	8/23/2019	8/30/2024		1.32	%		(2,094	)		603
	85,000	12/31/2019	12/31/2019	12/31/2029		1.86	%		(10,170	)		(842	)
	25,000	12/6/2018	1/31/2020	6/30/2025		2.75	%		(3,072	)		(1,501	)
	50,000	12/7/2018	5/18/2020	1/31/2024		2.72	%		(4,481	)		(2,139	)
	75,000	8/21/2019	5/18/2020	5/18/2025		1.27	%		(3,242	)		1,222
	75,000	8/21/2019	5/18/2021	5/18/2026		1.30	%		(2,961	)		1,309
	957,500								(46,864	)		(4,722	)

Interest rate swaps not designated as hedges at March 31, 2020:
	110,000	7/2/2015	7/2/2015	5/18/2020		1.62	%		(130	)		24
$	1,067,500							$	(46,994	)	$	(4,698	)

(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) Loan was repaid in full in March 2020.	~~Outstanding principal balance is callable by lender or prepayable by the Company on August 1, 2019.~~

	Notional Amount at March 31, 2019				Swap Fixed Interest Rate			Fair Value Asset (Liability)
Hedge Type	Notional Amount at March 31, 2019		Origination Date	Maturity Date	Swap Fixed Interest Rate			March 31, 2019			December 31, 2018
Cash flow hedge	$	212,500	5/21/2015	5/18/2020		1.58	%	$	1,880		$	2,744
Cash flow hedge		110,000	7/2/2015	5/18/2020		1.62	%		924			1,361
Cash flow hedge		50,000	4/7/2016	3/31/2021		1.09	%		1,141			1,519
Cash flow hedge		100,000	4/7/2016	3/31/2023		1.33	%		3,206			4,477
Cash flow hedge		75,000	5/31/2017	6/30/2024		1.96	%		738			1,905
Cash flow hedge		10,000	8/10/2017	6/30/2024		2.01	%		72			226
Cash flow hedge ⁽¹⁾		50,000	6/1/2018	6/30/2025		2.89	%		(2,105	)		(1,276	)
Cash flow hedge ⁽²⁾		25,000	12/6/2018	6/30/2025		2.75	%		(778	)		(379	)
Cash flow hedge ⁽³⁾		50,000	12/7/2018	1/31/2024		2.72	%		(1,116	)		(571	)
	$	682,500						$	3,962		$	10,006

	Net Unrealized Gain (Loss) Recognized in Other Comprehensive Income					Net Unrealized Gain Reclassified from Accumulated Other Comprehensive Income to Interest and Other Expense, net
	Three Months Ended March 31,					Three Months Ended March 31,
	2019			2018		2019		2018
Interest rate derivatives in cash flow hedging relationships	$	(4,770	)	$	6,348	$	1,274	$	56

	Net Unrealized Loss Recognized in Other Comprehensive Income (Loss)						Net Unrealized Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) to Interest and Other Expense, net
	Three Months Ended March 31,						Three Months Ended March 31,
	2020			2019			2020			2019
Interest rate derivatives in cash flow hedging relationships	$	(42,267	)	$	(4,770	)	$	(101	)	$	1,274

	2018 Incentive Plan			2017 Incentive Plan			2019 Incentive Plan			2018 Incentive Plan

Period common shares issued	First Quarter 2019			First Quarter 2018			First Quarter 2020			First Quarter 2019

Common shares earned under each incentive plan		156,926			415,866			665,552			156,926
Common shares surrendered on issuance date to satisfy tax withholding obligations		24,999			48,533			60,616			24,999
Common shares earned and issued under each incentive plan, net of common shares surrendered on issuance date to satisfy tax withholding obligations		131,927			367,333			604,936			131,927
Closing stock price on issuance date	$	16.49		$	16.92		$	13.01		$	16.49
Total share-based compensation earned, including the surrendered shares (in millions)	$	2.6	(1)	$	7.0	(2)	$	8.7	(1)	$	2.6	(2)
Of the total common shares earned and issued, total common shares unrestricted at time of issuance		105,345			223,421			426,553			105,345
Of the total common shares earned and issued, total common shares restricted at time of issuance		26,582			143,912			178,383			26,582

Restricted common shares vesting date	December 13, 2019			December 14, 2018			December 11, 2020			December 13, 2019
Common shares surrendered on vesting date to satisfy tax withholding requirements resulting from vesting of restricted common shares		n/a			41,389			n/a			5,502

(1)	Of the total ~~2018~~2019 share-based compensation, approximately ~~$2.4~~$7.5 million was recorded as a liability as of December 31, ~~2018~~2019 and is included in accounts payable and other liabilities in the Company's consolidated balance sheet at December 31, ~~2018.~~2019. The remaining ~~$0.2~~$1.2 million, which is subject to vesting on December 11, 2020 and excludes any restricted shares forfeited or vested prior to that date, will be recognized as share-based compensation expense proportionately throughout 2020. For the three months ended March 31, 2020, the Company recognized approximately $0.3 million of share-based compensation expense related to restricted share awards.
(2) Of the total 2018 share-based compensation, approximately $0.2 million, which vested on December 13, 2019, ~~will be~~was recognized as share-based compensation expense proportionately throughout 2019. For the three months ended March 31, 2019, the Company recognized approximately $0.05 million of share-based compensation expense related to ~~the unvested~~ restricted share awards.
~~(2)~~	Of the total 2017 share-based compensation, approximately $1.2 million, which vested on December 14, 2018, was recognized as share-based compensation expense proportionately throughout 2018. For the three months ended March 31, 2018, the Company recognized approximately $0.3 million of share-based compensation expense related to the unvested restricted share awards.

	Consolidated Balance Sheet Classification	March 31, 2019
Assets
Operating lease assets, net	Other assets, net	$	29,332
Finance ground lease assets, net ⁽¹⁾	Investment in real estate, net		143,810
Total lease assets		$	173,142

Liabilities
Operating lease liabilities	Accounts payable and other liabilities	$	12,716
Finance lease liabilities	Finance lease liabilities		162,818
Total lease liabilities		$	175,534

Weighted-average remaining lease term
Operating leases		36 years
Finance leases		33 years

Weighted-average discount rate
Operating leases			5.42	%
Finance leases			5.28	%

	Consolidated Statement of Operations Classification	Three Months Ended March 31, 2019
Operating lease costs ⁽¹⁾	Operating ground lease expense	$	405
Finance lease costs:
Amortization of lease assets	Depreciation and amortization expense		1,041
Interest on lease liabilities	Interest and other expense, net		1,826
Total lease costs		$	3,272

	Operating leases		Finance leases
2019 (Apr- Dec)	$	1,075	$	5,569
2020		1,246		7,385
2021		1,021		7,552
2022		854		7,702
2023		784		8,051
Thereafter		33,187		363,147
Total minimum lease payments		38,167		399,406
Less: amount of lease payments representing interest		25,451		236,588
Present value of lease liabilities	$	12,716	$	162,818

	Three Months Ended March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	377
Operating cash flows for finance leases		1,443

	Two Months Ended February 29, 2020						Three Months Ended March 31, 2020			Two Months Ended February 28, 2019						Three Months Ended March 31, 2019			Percent Change
	Two Months Ended February 29, 2020			March 2020			Three Months Ended March 31, 2020			Two Months Ended February 28, 2019			March 2019			Three Months Ended March 31, 2019			Two Months Ended February			March			Three Months Ended March

ADR	$	132.73		$	131.93		$	132.55		$	133.48		$	141.16		$	136.36			-0.6	%		-6.5	%		-2.8	%
Occupancy		71.0	%		41.0	%		60.9	%		70.5	%		80.2	%		73.9	%		0.7	%		-48.9	%		-17.6	%
RevPAR	$	94.28		$	54.08		$	80.66		$	94.12		$	113.23		$	100.71			0.2	%		-52.2	%		-19.9	%

	Three Months Ended March 31,															Three Months Ended March 31,
(in thousands, except statistical data)	2019			Percent of Revenue			2018			Percent of Revenue			Percent Change			2020			Percent of Revenue			2019			Percent of Revenue			Percent Change

Total revenue	$	303,787			100.0	%	$	298,389			100.0	%		1.8	%	$	238,010			100.0	%	$	303,787			100.0	%		-21.7	%
Hotel operating expense		175,449			57.8	%		172,329			57.8	%		1.8	%		155,266			65.2	%		175,449			57.8	%		-11.5	%
Property taxes, insurance and other expense		19,208			6.3	%		17,229			5.8	%		11.5	%		19,595			8.2	%		19,613			6.5	%		-0.1	%
Operating ground lease expense		405			0.1	%		2,850			1.0	%		-85.8	%
General and administrative expense		8,137			2.7	%		6,877			2.3	%		18.3	%		9,523			4.0	%		8,137			2.7	%		17.0	%

Depreciation and amortization expense		47,950						44,840						6.9	%		49,522						47,950						3.3	%
Gain on sale of real estate		1,213						-						n/a			8,839						1,213						n/a
Interest and other expense, net		15,494						11,919						30.0	%		15,566						15,494						0.5	%
Income tax expense		206						163						26.4	%		146						206						-29.1	%

Number of hotels owned at end of period		234						241						-2.9	%		231						234						-1.3	%
ADR	$	136.36					$	134.32						1.5	%	$	132.55					$	136.36						-2.8	%
Occupancy		73.9	%					74.6	%					-0.9	%		60.9	%					73.9	%					-17.6	%
RevPAR	$	100.71					$	100.18						0.5	%	$	80.66					$	100.71						-19.9	%

	Three Months Ended March 31,
	2019				2018 (1)
Net income	$	38,151		$	42,182
Depreciation and amortization		47,950			44,840
Amortization of favorable and unfavorable operating leases, net		31			206
Interest and other expense, net		15,494			11,919
Income tax expense		206			163
EBITDA		101,832			99,310
Gain on sale of real estate		(1,213	)		-
EBITDAre		100,619			99,310
Non-cash straight-line operating ground lease expense		48			904
Adjusted EBITDAre	$	100,667		$	100,214


⁽¹⁾								EBITDA, EBITDAre and Adjusted EBITDAre for the three months ended March 31, 2018 include approximately $1.4 million of lease payments recorded to operating ground lease expense related to four of the Company's ground leases that were classified as operating leases during 2018. Under the new lease accounting standard, effective January 1, 2019 these four ground leases are classified as finance leases, for which the Company recognizes depreciation and amortization expense and interest and other expense, net in the Company's consolidated statements of operations (which are both excluded from EBITDA, EBITDAre and Adjusted EBITDAre calculations), instead of operating ground lease expense.

Number of Hotels and Guest Rooms by Brand	Number of Hotels and Guest Rooms by Brand					Number of Hotels and Guest Rooms by Brand
		Number of		Number of			Number of		Number of
Brand		Hotels		Rooms			Hotels		Rooms
Hilton Garden Inn			41		5,665			41		5,665
Hampton			40		5,065			39		4,956
Courtyard			37		5,070			36		4,948
Residence Inn			33		3,939			33		3,939
Homewood Suites			33		3,731			33		3,731
SpringHill Suites			15		2,040			13		1,705
Fairfield			11		1,300			11		1,300
Home2 Suites			9		1,038			9		1,038
TownePlace Suites			9		931			9		931
Marriott			2		616			2		616
Embassy Suites			2		316			2		316
Renaissance			1		208
Independent								2		263
Hyatt Place			1		127			1		127
Total			234		30,046			231		29,535