Apple Hospitality REIT, Inc. [APLE] Filings

10-Q 1 aple-20220930.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO _______

Commission File Number 001-37389

APPLE HOSPITALITY REIT, INC.

(Exact name of registrant as specified in its charter)


Virginia		26-1379210
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

814 East Main Street Richmond, Virginia		23219
(Address of principal executive offices)		(Zip Code)

(804) 344-8121

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically 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.


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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Number of registrant’s common shares outstanding as of November 4, 2022: 228,752,610

Apple Hospitality REIT, Inc.

Form 10-Q

Index


			Page Number
PART I. FINANCIAL INFORMATION

	Item 1.	Financial Statements (Unaudited)	3

		Consolidated Balance Sheets – September 30, 2022 and December 31, 2021	3

		Consolidated Statements of Operations and Comprehensive Income – three and nine months ended September 30, 2022 and 2021	4

		Consolidated Statements of Shareholders’ Equity – three and nine months ended September 30, 2022 and 2021	5

		Consolidated Statements of Cash Flows – nine months ended September 30, 2022 and 2021	6

		Notes to Consolidated Financial Statements	7

	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	22

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41

	Item 4.	Controls and Procedures	41

PART II. OTHER INFORMATION

	Item 1.	Legal Proceedings	42

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42

	Item 6.	Exhibits	43

Signatures			44

This Form 10-Q includes references to certain trademarks or service marks. The AC Hotels by Marriott®, Aloft Hotels®, Courtyard by Marriott®, Fairfield by Marriott®, Marriott® 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®, 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.

Index

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Apple Hospitality REIT, Inc.

Consolidated Balance Sheets

(in thousands, except share data)


	September 30,			December 31,
	2022			2021
	(unaudited)
Assets
Investment in real estate, net of accumulated depreciation and amortization of $1,446,221 and $1,311,262, respectively	$	4,567,000		$	4,677,185
Cash and cash equivalents		25,573			3,282
Restricted cash-furniture, fixtures and other escrows		38,821			36,667
Due from third party managers, net		65,110			40,052
Other assets, net		80,999			33,341
Total Assets	$	4,777,503		$	4,790,527

Liabilities
Debt, net	$	1,318,319		$	1,438,758
Finance lease liabilities		111,969			111,776
Accounts payable and other liabilities		94,219			92,672
Total Liabilities		1,524,507			1,643,206

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 228,833,710 and 228,255,642 shares, respectively		4,579,198			4,569,352
Accumulated other comprehensive income (loss)		38,354			(15,508	)
Distributions greater than net income		(1,364,556	)		(1,406,523	)
Total Shareholders' Equity		3,252,996			3,147,321

Total Liabilities and Shareholders' Equity	$	4,777,503		$	4,790,527

See notes to consolidated financial statements.

Index

Apple Hospitality REIT, Inc.

Consolidated Statements of Operations and Comprehensive Income

(Unaudited)

(in thousands, except per share data)


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2022			2021			2022			2021
Revenues:
Room	$	315,940		$	260,415		$	866,286		$	640,062
Food and beverage		11,870			6,315			32,353			14,186
Other		13,340			10,434			40,657			29,033
Total revenue		341,150			277,164			939,296			683,281

Expenses:
Hotel operating expense:
Operating		81,320			61,954			221,715			153,290
Hotel administrative		27,516			23,126			78,711			62,408
Sales and marketing		28,533			23,015			78,494			58,283
Utilities		13,383			11,410			34,226			31,322
Repair and maintenance		15,632			12,600			43,468			34,711
Franchise fees		14,949			12,274			41,015			30,058
Management fees		11,734			9,574			31,955			23,031
Total hotel operating expense		193,067			153,953			529,584			393,103
Property taxes, insurance and other		19,052			17,927			56,510			54,936
General and administrative		10,271			13,261			30,216			29,815
Loss on impairment of depreciable real estate assets		-			-			-			10,754
Depreciation and amortization		45,135			44,217			135,781			139,313
Total expense		267,525			229,358			752,091			627,921

Gain on sale of real estate		1,785			44			1,785			3,664

Operating income		75,410			47,850			188,990			59,024

Interest and other expense, net		(14,933	)		(15,977	)		(44,785	)		(53,108	)

Income before income taxes		60,477			31,873			144,205			5,916

Income tax expense		(1,331	)		(114	)		(1,712	)		(309	)

Net income	$	59,146		$	31,759		$	142,493		$	5,607

Other comprehensive income:
Interest rate derivatives		16,024			3,426			53,862			18,152

Comprehensive income	$	75,170		$	35,185		$	196,355		$	23,759

Basic and diluted net income per common share	$	0.26		$	0.14		$	0.62		$	0.02

Weighted average common shares outstanding - basic and diluted		228,991			228,436			228,992			225,664

See notes to consolidated financial statements.

Index

Apple Hospitality REIT, Inc.

Consolidated Statements of Shareholders' Equity

(Unaudited)

(in thousands, except per share data)


Three Months Ended September 30, 2022 and 2021
	Common Stock						Accumulated Other			Distributions
	Number of Shares			Amount			Comprehensive Income (Loss)			Greater Than Net Income			Total

Balance at June 30, 2022		228,886		$	4,579,590		$	22,330		$	(1,380,294	)	$	3,221,626
Share based compensation, net		45			996			-			-			996
Equity issuance costs		-			(12	)		-			-			(12	)
Common shares repurchased		(97	)		(1,376	)		-			-			(1,376	)
Interest rate derivatives		-			-			16,024			-			16,024
Net income		-			-			-			59,146			59,146
Distributions declared to shareholders ($0.19 per share)		-			-			-			(43,408	)		(43,408	)
Balance at September 30, 2022		228,834		$	4,579,198		$	38,354		$	(1,364,556	)	$	3,252,996

Balance at June 30, 2021		228,341		$	4,569,332		$	(28,076	)	$	(1,446,933	)	$	3,094,323
Share based compensation, net		13			915			-			-			915
Issuance of common shares, net		-			(30	)		-			-			(30	)
Interest rate derivatives		-			-			3,426			-			3,426
Net income		-			-			-			31,759			31,759
Distributions declared to shareholders ($0.01 per share)		-			-			-			(2,279	)		(2,279	)
Balance at September 30, 2021		228,354		$	4,570,217		$	(24,650	)	$	(1,417,453	)	$	3,128,114

Apple Hospitality REIT, Inc. [APLE] Filings
10-Q	[2022-11-07]
10-Q	[2022-08-04]
10-Q	[2022-05-05]
10-K	[2022-02-22]
10-Q	[2021-11-04]
10-Q	[2021-08-05]
10-Q	[2021-05-06]
10-K	[2021-02-23]
10-Q	[2020-11-05]
10-Q	[2020-08-06]
10-Q	[2020-05-18]
10-K	[2020-02-24]
10-Q	[2019-11-04]
10-Q	[2019-08-05]
10-Q	[2019-05-08]
10-K	[2019-02-25]
10-Q	[2018-11-05]
10-Q	[2018-08-06]
10-Q	[2018-05-07]
10-K	[2018-02-22]
10-Q	[2017-11-06]
10-Q	[2017-08-07]
10-Q	[2017-05-04]
10-K	[2017-02-27]
10-Q	[2016-11-07]
10-Q	[2016-08-08]
10-Q	[2016-05-05]
10-K	[2016-02-25]
10-Q	[2015-11-05]
10-Q	[2015-08-06]
10-Q	[2015-05-07]
10-K	[2015-03-06]
10-Q	[2014-11-05]
10-Q	[2014-08-06]
10-Q	[2014-05-14]
10-K	[2014-03-11]
10-Q	[2013-11-06]
10-Q	[2013-08-08]
10-Q	[2013-05-06]
10-K	[2013-03-07]
10-Q	[2012-11-06]
10-Q	[2012-08-13]
10-Q	[2012-05-07]
10-K	[2012-03-12]