Apple Hospitality REIT Reports Results of Operations for Fourth Quarter and Full Year 2024

Apple Hospitality REIT, Inc. (NYSE:APLE) (the "Company" or "Apple Hospitality") today announced results of operations for the fourth quarter and full year ended December 31, 2024.

Justin Knight, Chief Executive Officer of Apple Hospitality, commented, "Driven by steady improvement in business transient demand, the ongoing strength in leisure travel and muted supply growth, we achieved Comparable Hotels RevPAR growth of approximately 3% for the fourth quarter and more than 1% for the full year 2024, as compared to the same periods of 2023, respectively. We remain intently focused on maximizing the profitability of our hotels through strategic asset management. Bolstered by recent acquisitions, continued strength in ADR and moderating expense growth, we are pleased to report strong bottom-line performance for the quarter and the full year 2024. Although winter weather conditions tempered our performance in January, we have seen improvement in February and expect to see continued positive momentum in operating fundamentals as we move through 2025.

"Our thoughts and prayers are with everyone impacted by California's wildfires," Mr. Knight said. "We are fortunate that our hotels did not sustain any material damage and have remained open and operational. We commend the operating teams at our hotels for their courage and their dedication to the well-being of our guests and associates. As recovery from the fires moves forward, we will continue to support the ongoing efforts of our operating teams to care for guests, associates and their surrounding communities."

Mr. Knight continued, "Our disciplined approach to capital allocation and portfolio management has defined our strategy throughout our history and was especially evident in 2024. During the year, we acquired two hotels for $196 million, sold six non-core hotels for more than $63 million, repurchased approximately $35 million in common shares and reinvested $78 million in our existing portfolio. We continue to actively seek opportunities that will further optimize our portfolio, drive earnings per share and maximize long-term value for our shareholders. Our differentiated strategy of investing in a broadly diversified portfolio of high-quality, rooms-focused hotels with low leverage has been tested across economic cycles and consistently yielded compelling results for our investors. We are confident we are well positioned for continued outperformance."

Hotel Portfolio Overview

As of December 31, 2024, Apple Hospitality owned 221 hotels with an aggregate of 29,764 guest rooms located in 86 markets throughout 37 states and the District of Columbia, including two hotels classified as held for sale, one of which was sold in February 2025 while the other is expected to be sold in the first quarter of 2025.

Fourth Quarter and Full Year 2024 Highlights

• Strong operating performance: Comparable Hotels ADR was $153 for the fourth quarter 2024 and $159 for the full year 2024, both up approximately 1% as compared to the same periods of 2023; Comparable Hotels Occupancy was 71% for the fourth quarter 2024 and 75% for the full year 2024, up 2% and approximately 1% as compared to the same periods of 2023, respectively; and Comparable Hotels RevPAR was $109 for the fourth quarter 2024 and $119 for the full year 2024, up approximately 3% and 1% as compared to the same periods of 2023, respectively. Comparable Hotels Occupancy, ADR and RevPAR exceeded industry averages as reported by STR for the full year 2024. Preliminary results for the month of January 2025 show a slight improvement in Comparable Hotels RevPAR as compared to January 2024, driven by growth in ADR offsetting a decline in occupancy related to extreme winter weather conditions.
• Strong bottom-line performance: The Company achieved Comparable Hotels Adjusted Hotel EBITDA of approximately $108 million for the fourth quarter 2024 and $509 million for the full year 2024, an improvement of 3% as compared to the fourth quarter 2023 and a slight improvement over the full year 2023. Comparable Hotels Adjusted Hotel EBITDA Margin was approximately 32.9% for the fourth quarter 2024 and 36.0% for the full year 2024, down 40 bps and 70 bps to the same periods of 2023, respectively. The Company achieved Adjusted EBITDAre of approximately $97 million for the fourth quarter 2024 and $467 million for the full year 2024, both up approximately 7% as compared to the same periods of 2023. The Company achieved MFFO of approximately $77 million for the fourth quarter 2024 and $389 million for the full year 2024, both up approximately 6% as compared to the same periods of 2023.
• Transactional activity: As previously announced, during the year ended December 31, 2024, the Company acquired two hotels for a combined total purchase price of approximately $196.3 million and sold six hotels for a combined gross sales price of approximately $63.4 million. Subsequent to year end, in February 2025, the Company sold one additional hotel for $8.3 million. The Company currently has one additional hotel under contract for purchase for an anticipated total purchase price of approximately $98.2 million and one additional hotel under contract for sale for a gross sales price of approximately $12.7 million.
• Capital markets: During the year ended December 31, 2024, the Company purchased, under its Share Repurchase Program, approximately 2.4 million common shares at a weighted-average market purchase price of approximately $14.16 per common share, for an aggregate purchase price of approximately $34.7 million.
• Balance sheet: The Company has maintained the strength and flexibility of its balance sheet. At December 31, 2024, the Company's total debt to total capitalization, net of cash and cash equivalents, was approximately 28%.
• Monthly distributions: During the three months ended December 31, 2024, the Company paid distributions totaling $0.24 per common share. Based on the Company's common stock closing price of $14.76 on February 21, 2025, the current annualized regular monthly cash distribution of $0.96 per common share represents an annual yield of approximately 6.5%.
• Corporate Responsibility Report: In December 2024, the Company published its annual Corporate Responsibility Report which details the Company's performance and initiatives in this area and features its commitment to environmental sustainability, governance and resiliency, corporate employees, hotel associates and guests, communities and other stakeholders. The Company's 2024 Corporate Responsibility Report and related materials can be found on the Corporate Responsibility section of the Company's website.

The Company is providing monthly performance detail for its Comparable Hotels with comparisons to the respective periods of 2023. The following table highlights the Company's Comparable Hotels monthly performance during the fourth quarter of 2024 as compared to the fourth quarter of 2023 (in thousands, except statistical data):

Portfolio Activity

2024 Acquisitions

As previously announced, during 2024, the Company acquired two hotels for a combined total purchase price of approximately $196.3 million. The acquisitions include the following:

• In March 2024, the Company acquired the 234-room AC Hotel by Marriott Washington DC Convention Center for a total purchase price of approximately $116.8 million, or $499,000 per key.
• In June 2024, the Company acquired the newly built, 262-room Embassy Suites by Hilton Madison Downtown for a total purchase price of approximately $79.5 million, or $303,000 per key.

Contract for Potential Acquisition

As previously announced, the Company continues to have one additional hotel under contract for purchase, a Motto by Hilton that is under development in downtown Nashville, Tennessee, for an anticipated total purchase price of approximately $98.2 million with an expected 260 rooms, which the Company anticipates acquiring in late 2025 following completion of construction. There are many conditions to closing on this hotel that have not yet been satisfied, and there can be no assurance that a closing on this hotel will occur under the outstanding purchase contract.

2024 Dispositions

As previously announced, during the year ended December 31, 2024, the Company sold six hotels for a combined gross sales price of approximately $63.4 million, resulting in a combined gain on the sales of approximately $19.7 million, which is included in the Company's consolidated statement of operations for the year ended December 31, 2024. The Company's 2024 dispositions include the following:

• In February 2024, the Company sold the 122-room Hampton Inn by Hilton Bentonville/Rogers and the 126-room Homewood Suites by Hilton Bentonville-Rogers in one transaction, for a combined gross sales price of approximately $33.5 million. The Company used a portion of the net proceeds from the sale of these two hotels to complete a 1031 exchange with the acquisition of the AC Hotel Washington DC Convention Center in March 2024, which resulted in the deferral of taxable gains of $15.1 million.
• In May 2024, the Company sold the 82-room SpringHill Suites by Marriott Greensboro for a gross sales price of approximately $7.1 million.
• In November 2024, the Company sold the 90-room Courtyard by Marriott Wichita East for a gross sales price of approximately $3.1 million.
• In December 2024, the Company sold the 97-room TownePlace Suites by Marriott Knoxville Cedar Bluff for a gross sales price of approximately $9.4 million.
• In December 2024, the Company sold the 117-room Hilton Garden Inn Austin North for a gross sales price of approximately $10.4 million.

During the year ended December 31, 2024, the Company recognized an impairment loss of approximately $3.1 million in the aggregate with respect to three of the properties sold.

2025 Disposition

In February 2025, the Company sold the 76-room Homewood Suites by Hilton Chattanooga-Hamilton Place for a gross sales price of approximately $8.3 million.

Contract for Potential Disposition

In December 2024, the Company entered into a contract for the sale of its 130-room SpringHill Suites by Marriott Indianapolis Fishers for a gross sales price of approximately $12.7 million. The Company expects to complete the sale of the hotel during the first quarter 2025. There are many conditions to closing on the sale of this hotel that have not yet been satisfied, and there can be no assurance that closing on the sale of this hotel will occur under the outstanding sale agreement.

Capital Improvements

Apple Hospitality consistently reinvests in its hotels to maintain and enhance each property's relevance and competitive position within its respective market. During the year ended December 31, 2024, the Company invested approximately $78 million in capital expenditures. The Company anticipates investing approximately $80 million to $90 million in capital improvements during 2025, which includes comprehensive renovation projects for approximately 20 hotels.

Balance Sheet and Liquidity

As of December 31, 2024, the Company had approximately $1.5 billion of total outstanding debt with a current combined weighted-average interest rate of approximately 4.7%, cash on hand of approximately $10 million and availability under its revolving credit facility of approximately $568 million. Excluding unamortized debt issuance costs and fair value adjustments, the Company's total outstanding debt as of December 31, 2024, was comprised of approximately $254 million in property-level debt secured by 14 hotels and approximately $1.2 billion outstanding under its unsecured credit facilities. The Company continues to maintain a strong and flexible balance sheet, and in July 2024, amended its unsecured $85 million term loan facility, which increased the amount of the term loan facility to $130 million, with the additional $45 million funded at closing, and extended the maturity date to July 25, 2026, with the optionality, subject to certain conditions, to extend the maturity date further to July 25, 2027. Additionally, in August 2024, the Company repaid in full one secured mortgage loan, for a total of approximately $20 million. The number of unencumbered hotels in the Company's portfolio as of December 31, 2024, was 207. The Company's total debt to total capitalization, net of cash and cash equivalents at December 31, 2024, was approximately 28%, which provides Apple Hospitality with financial flexibility to fund capital requirements and pursue opportunities in the marketplace. As of December 31, 2024, the Company's weighted-average debt maturities were approximately three years.

Capital Markets

Share Repurchase Program

The Company has in place a Share Repurchase Program that provides for share repurchases in open market transactions. During the year ended December 31, 2024, the Company purchased, under its Share Repurchase Program, approximately 2.4 million common shares at a weighted-average market purchase price of approximately $14.16 per common share, for an aggregate purchase price of approximately $34.7 million. As of December 31, 2024, the Company had approximately $301 million remaining under its Share Repurchase Program for the repurchase of shares.

ATM Program

The Company also has in place an at-the-market offering program (the "ATM Program"). As of December 31, 2024, the Company had $500 million remaining under its ATM Program for the issuance of shares. No shares were sold under the current or prior ATM Program during the three months and year ended December 31, 2024.

Shareholder Distributions

During the three months ended December 31, 2024, the Company paid distributions totaling $0.24 per common share. During the year ended December 31, 2024, the Company paid distributions totaling $1.01 per common share for a total of approximately $243.7 million. On January 15, 2025, the Company paid a regular monthly cash distribution of $0.08 per common share and a special cash distribution of $0.05 per common share, for a combined distribution of $0.13 per common share, to shareholders of record as of December 31, 2024.

Based on the Company's common stock closing price of $14.76 on February 21, 2025, the current annualized regular monthly cash distribution of $0.96 per common share represents an annual yield of approximately 6.5%. While the Company currently expects monthly distributions to continue, each distribution is subject to approval by the Company's Board of Directors. The Company's Board of Directors, in consultation with management, will continue to monitor the Company's distribution rate and timing relative to the performance of its hotels, capital improvement needs, varying economic cycles, acquisitions, dispositions, other cash requirements and the Company's REIT status for federal income tax purposes, and may make adjustments as it deems appropriate.

2025 Outlook

The Company is providing its operational and financial outlook for 2025. This outlook, which is based on management's current view of both operating and economic fundamentals of the Company's existing portfolio of hotels, does not take into account any unanticipated developments in its business or changes in its operating environment, nor does it take into account any unannounced hotel acquisitions or dispositions. Comparable Hotels RevPAR Change guidance, which is the change in Comparable Hotels RevPAR in 2025 compared to 2024, and Comparable Hotels Adjusted Hotel EBITDA Margin % guidance include properties acquired and announced for acquisition by year-end 2025 as if the hotels were owned as of January 1, 2024, exclude completed dispositions since January 1, 2024, exclude announced dispositions anticipated to close by year-end 2025, and exclude one non-hotel property. Results for periods prior to the Company's ownership are not included in the Company's actual Consolidated Financial Statements, are based on information from the prior owner of each hotel, and have not been audited or adjusted. For the full year 2025, the Company anticipates its 2025 results will be in the following range:

Fourth Quarter and Full Year 2024 Earnings Conference Call

The Company will host a quarterly conference call for investors and interested parties at 10 a.m. Eastern Time on Tuesday, February 25, 2025. The conference call will be accessible by telephone and the internet. To access the call, participants from within the U.S. should dial 877-407-9039, and participants from outside the U.S. should dial 201-689-8470. Participants may also access the call via live webcast by visiting the Investor Information section of the Company's website at ir.applehospitalityreit.com. A replay of the call will be available from approximately 2 p.m. Eastern Time on February 25, 2025, through 11:59 p.m. Eastern Time on March 11, 2025. To access the replay, the domestic dial-in number is 844-512-2921, the international dial-in number is 412-317-6671, and the passcode is 13750570. The archive of the webcast will be available on the Company's website for a limited time.

About Apple Hospitality REIT, Inc.

Apple Hospitality REIT, Inc. (NYSE:APLE) is a publicly traded real estate investment trust ("REIT") that owns one of the largest and most diverse portfolios of upscale, rooms-focused hotels in the United States. Apple Hospitality's portfolio consists of 220 hotels with approximately 29,700 guest rooms located in 85 markets throughout 37 states and the District of Columbia. Concentrated with industry-leading brands, the Company's hotel portfolio consists of 98 Marriott-branded hotels, 117 Hilton-branded hotels and five Hyatt-branded hotels. For more information, please visit www.applehospitalityreit.com.

Apple Hospitality REIT Non-GAAP Financial Measures

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

Forward-Looking Statements Disclaimer

This press release 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.

Such factors include, but are not limited to, the ability of the Company to effectively acquire and dispose of properties and redeploy proceeds; the anticipated timing and frequency of shareholder distributions; the ability of the Company to fund capital obligations; 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 (including the potential effects of inflation or a recessionary environment); reduced business and leisure travel due to geopolitical uncertainty, including terrorism and acts of war; travel-related health concerns, including widespread outbreaks of infectious or contagious diseases in the U.S.; inclement weather conditions, including natural disasters such as hurricanes, earthquakes and wildfires; government shutdowns, airline strikes or equipment failures, or other disruptions; adverse changes in the real estate and real estate capital markets; financing risks; changes in interest rates; 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 press release 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 of 1986, as amended. Readers should carefully review the risk factors described in the Company's filings with the Securities and Exchange Commission, including but not limited to those discussed in the section titled "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024. Any forward-looking statement that the Company makes speaks only as of the date of this press release. 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.

For additional information or to receive press releases by email, visit www.applehospitalityreit.com.

Apple Hospitality REIT, Inc.

Reconciliation of Net Income to EBITDA, EBITDAre, Adjusted EBITDAre and Adjusted Hotel EBITDA

(Unaudited)

(in thousands)

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

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

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

The Company further excludes actual corporate-level general and administrative expense for the Company as well as Adjusted EBITDAre from the non-hotel property from Adjusted EBITDAre (Adjusted Hotel EBITDA) to isolate property-level operational performance over which the Company's hotel operators have direct control. The Company believes Adjusted Hotel EBITDA provides useful supplemental information to investors regarding operating performance and it is used by management to measure the performance of the Company's hotels and effectiveness of the operators of the hotels. In addition, Adjusted EBITDAre and Adjusted Hotel EBITDA are both components of key compensation measures of operational performance within the Company's 2024 incentive plan.

The following table reconciles the Company's GAAP net income to EBITDA, EBITDAre, Adjusted EBITDAre and Adjusted Hotel EBITDA on a quarterly basis for 2023 and 2024: