Apple Hospitality REIT, Inc. [APLE] Filings

10-Q 1 aple-10q_20210930.htm 10-Q aple-10q_20210930.htm

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, 2021

☐	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 1, 2021: 228,354,214

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, 2021 and December 31, 2020	3

		Consolidated Statements of Operations and Comprehensive Income (Loss) – three and nine months ended September 30, 2021 and 2020	4

		Consolidated Statements of Shareholders’ Equity – three and nine months ended September 30, 2021 and 2020	5

		Consolidated Statements of Cash Flows – nine months ended September 30, 2021 and 2020	6

		Notes to Consolidated Financial Statements	7

	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	21

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39

	Item 4.	Controls and Procedures	39

PART II. OTHER INFORMATION

	Item 1.	Legal Proceedings	40

	Item 6.	Exhibits	40

Signatures			41

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®, 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.

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,
	2021			2020
	(unaudited)
Assets
Investment in real estate, net of accumulated depreciation and amortization of $1,266,122 and $1,235,698, respectively	$	4,541,424		$	4,732,896
Assets held for sale		-			5,316
Cash and cash equivalents		39,432			5,556
Restricted cash-furniture, fixtures and other escrows		34,446			28,812
Due from third party managers, net		52,322			22,137
Other assets, net		37,203			35,042
Total Assets	$	4,704,827		$	4,829,759

Liabilities
Debt, net	$	1,366,621		$	1,482,571
Finance lease liabilities		111,706			219,981
Accounts payable and other liabilities		98,386			97,860
Total Liabilities		1,576,713			1,800,412

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 228,354,214 and 223,212,346 shares, respectively		4,570,217			4,488,419
Accumulated other comprehensive loss		(24,650	)		(42,802	)
Distributions greater than net income		(1,417,453	)		(1,416,270	)
Total Shareholders' Equity		3,128,114			3,029,347

Total Liabilities and Shareholders' Equity	$	4,704,827		$	4,829,759

See notes to consolidated financial statements.

Index

Apple Hospitality REIT, Inc.

Consolidated Statements of Operations and Comprehensive Income (Loss)

(Unaudited)

(in thousands, except per share data)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2021			2020			2021			2020
Revenues:
Room	$	260,415		$	140,116		$	640,062		$	434,923
Food and beverage		6,315			2,235			14,186			14,386
Other		10,434			6,475			29,033			18,605
Total revenue		277,164			148,826			683,281			467,914

Expenses:
Hotel operating expense:
Operating		61,954			33,124			153,290			120,860
Hotel administrative		23,126			16,625			62,408			54,079
Sales and marketing		23,015			13,728			58,283			47,517
Utilities		11,410			9,967			31,322			25,465
Repair and maintenance		12,600			8,842			34,711			26,983
Franchise fees		12,274			6,603			30,058			20,516
Management fees		9,574			4,873			23,031			15,425
Total hotel operating expense		153,953			93,762			393,103			310,845
Property taxes, insurance and other		17,927			20,523			54,936			58,820
General and administrative		13,261			6,726			29,815			22,274
Loss on impairment of depreciable real estate assets		-			-			10,754			4,382
Depreciation and amortization		44,217			50,171			139,313			149,590
Total expense		229,358			171,182			627,921			545,911

Gain on sale of real estate		44			-			3,664			8,785

Operating income (loss)		47,850			(22,356	)		59,024			(69,212	)

Interest and other expense, net		(15,977	)		(18,531	)		(53,108	)		(52,483	)

Income (loss) before income taxes		31,873			(40,887	)		5,916			(121,695	)

Income tax expense		(114	)		(61	)		(309	)		(265	)

Net income (loss)	$	31,759		$	(40,948	)	$	5,607		$	(121,960	)

Other comprehensive income (loss):
Interest rate derivatives		3,426			2,739			18,152			(43,622	)

Comprehensive income (loss)	$	35,185		$	(38,209	)	$	23,759		$	(165,582	)

Basic and diluted net income (loss) per common share	$	0.14		$	(0.18	)	$	0.02		$	(0.55	)

Weighted average common shares outstanding - basic and diluted		228,436			223,293			225,664			223,620

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, 2021 and 2020
	Common Stock					Accumulated Other			Distributions
	Number of Shares		Amount			Comprehensive Income (Loss)			Greater Than Net Income			Total

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

Balance at June 30, 2020		223,224	$	4,488,034		$	(51,059	)	$	(1,324,016	)	$	3,112,959
Share based compensation, net		7		591			-			-			591
Issuance of common shares, net		-		(337	)		-			-			(337	)
Interest rate derivatives		-		-			2,739			-			2,739
Net loss		-		-			-			(40,948	)		(40,948	)
Balance at September 30, 2020		223,231	$	4,488,288		$	(48,320	)	$	(1,364,964	)	$	3,075,004

Nine Months Ended September 30, 2021 and 2020
	Common Stock				Accumulated Other			Distributions
	Number of Shares		Amount		Comprehensive Income (Loss)			Greater Than Net Income			Total
Balance at December 31, 2020		223,212	$	4,488,419	$	(42,802	)	$	(1,416,270	)	$	3,029,347
Share based compensation, net		465		6,762		-			-			6,762
Issuance of common shares, net		4,677		75,036		-			-			75,036
Interest rate derivatives		-		-		18,152			-			18,152
Net income		-		-		-			5,607			5,607
Distributions declared to shareholders ($0.03 per share)		-		-		-			(6,790	)		(6,790	)
Balance at September 30, 2021		228,354	$

Apple Hospitality REIT, Inc. [APLE] Filings
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]