Apple Hospitality REIT, Inc. Q4 FY2024 earnings call

• Acknowledged the teams at hotels in Southern California impacted by wildfires and noted hotels remained operational. - Travel trends were strong, driven by business transient and leisure travel. - Achieved strong bottom-line performance with adjusted EBITDARE and modified funds from operations growth. - Capital allocation activities included acquiring two hotels for $196M, selling six hotels for over $63M, repurchasing ~$35M in common shares, and reinvesting $78M in existing portfolio. - Recent acquisitions contributed to portfolio performance, though some hotels faced challenges. - Anticipated $80M to $90M in capital expenditures for 2025 with major renovations at ~20 hotels.

Comparable hotels RevPAR for the fourth quarter of 2024 was up approximately 3%, and for the full year 2024, it was up more than 1%. Adjusted EBITDARE for the fourth quarter of 2024 was up approximately 7% compared to the same period in 2023, and modified funds from operations for the fourth quarter was up approximately 6% compared to the same period in 2023. For the full year 2024, adjusted EBITDARE was up approximately 7% and modified funds from operations was up approximately 6%. Recent acquisitions contributed positively, with seven hotels acquired since June 2024 and open for the full year producing an unlevered 9% yield after CapEx on a trailing twelve-month basis.

• Full-year 2025 net income expected between $173M and $202M. - Comparable hotels RevPAR change expected between 1% and 3%. - Comparable hotel EBITDA margin expected between 34.2% and 35.2%. - Adjusted EBITDAre expected between $447M and $471M. - Assumed total hotel expenses to increase by ~4.2% at midpoint, with variable expenses outside fixed costs around 3.5%.

• Challenging transaction market with low deal volume year-over-year. - Weather-related disruptions impacting hotel performance. - Potential impact of unanticipated macro events on operating performance and financial results.

Q: Dori Kesten asks about normalized operating expense growth for 2025.

A: Liz Perkins responds that there were one-time tax benefits and decreased property insurance premiums in 2024, normalizing for that, it's about a 5% assumed increase to property taxes, with total hotel expenses assumed to increase by 4.2% at midpoint.

Q: Austin Wurschmidt asks about midweek ADR and transaction market.

A: Liz Perkins says midweek ADR is getting closer to pre-pandemic levels, and Justin Knight discusses that the transaction market is challenging with fewer bidders for portfolios, but expects changes if interest rates reduce or industry performance reaccelerates.

Q: Jay Kornreich asks about RevPAR growth opportunity and cadence.

A: Liz Perkins says opportunity to outperform comes from both business and leisure, with midweek growth at the midpoint of guidance and a slow start to 2025 due to weather-related events.

Q: Floris Van Dijkum asks about portfolio redeployment and debt.

A: Justin Knight says 7%-10% of portfolio fits certain categories for redeployment, and Liz Perkins discusses borrowing and prefunding maturing loans considering interest savings.