Richmond, Virginia-based real estate investment trust Apple Hospitality REIT achieved both strong operating and bottom-line performance during the third quarter, according to a news release.
In comparison to the third quarter in 2019, Apple REIT recorded a 7.5% improvement in revenue per available room in the most recent quarter, despite a 5.3% decline in occupancy. In terms of average daily rate growth, it achieved a 13.4% increase.
Subsequent to quarter end, occupancy in October for Apple REIT's portfolio reached roughly 78%, a 7% increase in comparison to October 2021 and a 4% decrease compared to 2019.
Its comparable hotels adjusted hotel earnings before interest, taxes, depreciation and amortization improved 19% and 4% in comparison to the third quarters of 2021 and 2019, respectively, to $129 million.
Apple REIT's comparable hotels adjusted hotel EBITDA margin for the third quarter declined 40 and 80 basis points in comparison to the third quarters of 2021 and 2019, respectively, to 38%.
At the start of the third quarter this year, Apple REIT adjusted and restated its existing $850 million credit facility, which led to raising the total credit facility to roughly $1.2 billion as well as extending the maturity dates, the release states.
Transaction Activity
During the quarter, Apple Hospitality REIT completed the sale of the independent 55-room The Berkeley Hotel in Richmond, Virginia, for $8.5 million, or $153,636 per key.
The true buyer of the property, according to hospitality data by CoStar Group, is Glen Allen, Virginia-based private developer and owner Kalyan Hospitality.
The recorded consideration was $6.15 million, roughly $111,818 per key, CoStar data notes. However, the reported $8.45 million sale price included the value of the hotel's FF&E (furniture, fixtures and equipment).
According to the company news release, this disposition resulted in a gain on sale of roughly $1.8 million.
Subsequent to quarter end, Apple REIT in October acquired the 156-room AC Hotel by Marriott Louisville Downtown and the 134-room AC Hotel by Marriott Pittsburgh Downtown for a combined purchase price of $85 million, the news release states.
CoStar data shows the seller as Concord Hospitality Enterprises for both properties.
Apple REIT President and CEO Justin Knight said during a call reporting second-quarter earnings results in August that his team has been patient with the hotel transactions market.
"As we were initially underwriting, the portfolios often contained assets that we thought would be less additive to our portfolio, and that impacted the value for us and our pricing and competitiveness around the portfolio," Knight said on the company's second-quarter earnings call. "As the portfolios are coming back to market, sellers are increasingly willing to consider disposition of a subset of the larger portfolio, which puts us in a position to more effectively align the makeup of the portfolio that we're underwriting with our existing strategy and the portfolio we currently have."
Currently, Apple Hospitality has an outstanding contract for the acquisition of an Embassy Suites by Hilton in Madison, Wisconsin, for an anticipated purchase price of $79 million, the third-quarter earnings release states.
"The hotel is currently under development and expected to include 260 rooms. 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 under the outstanding purchase contract. Assuming all conditions to closing are met, the [Apple Hospitality] anticipates acquiring the hotel following completion of construction, which is expected to occur in early 2024," the release states.
Balance Sheet and Liquidity
Apple Hospitality ended the third quarter with roughly $1.3 billion of total outstanding debt and $26 million cash on hand.
Additionally, it has availability under its revolving credit facility of $650 million and term loan availability of $100 million, of which half of that was drawn subsequent to quarter end.
In comparison to the third quarter in 2019, Apple REIT recorded a 7.5% improvement in revenue per available room in the most recent quarter, despite a 5.3% decline in occupancy. In terms of average daily rate growth, it achieved a 13.4% increase.
Subsequent to quarter end, occupancy in October for Apple REIT's portfolio reached roughly 78%, a 7% increase in comparison to October 2021 and a 4% decrease compared to 2019.
Its comparable hotels adjusted hotel earnings before interest, taxes, depreciation and amortization improved 19% and 4% in comparison to the third quarters of 2021 and 2019, respectively, to $129 million.
Apple REIT's comparable hotels adjusted hotel EBITDA margin for the third quarter declined 40 and 80 basis points in comparison to the third quarters of 2021 and 2019, respectively, to 38%.
At the start of the third quarter this year, Apple REIT adjusted and restated its existing $850 million credit facility, which led to raising the total credit facility to roughly $1.2 billion as well as extending the maturity dates, the release states.
Transaction Activity
During the quarter, Apple Hospitality REIT completed the sale of the independent 55-room The Berkeley Hotel in Richmond, Virginia, for $8.5 million, or $153,636 per key.
The true buyer of the property, according to hospitality data by CoStar Group, is Glen Allen, Virginia-based private developer and owner Kalyan Hospitality.
The recorded consideration was $6.15 million, roughly $111,818 per key, CoStar data notes. However, the reported $8.45 million sale price included the value of the hotel's FF&E (furniture, fixtures and equipment).
According to the company news release, this disposition resulted in a gain on sale of roughly $1.8 million.
Subsequent to quarter end, Apple REIT in October acquired the 156-room AC Hotel by Marriott Louisville Downtown and the 134-room AC Hotel by Marriott Pittsburgh Downtown for a combined purchase price of $85 million, the news release states.
CoStar data shows the seller as Concord Hospitality Enterprises for both properties.
Apple REIT President and CEO Justin Knight said during a call reporting second-quarter earnings results in August that his team has been patient with the hotel transactions market.
"As we were initially underwriting, the portfolios often contained assets that we thought would be less additive to our portfolio, and that impacted the value for us and our pricing and competitiveness around the portfolio," Knight said on the company's second-quarter earnings call. "As the portfolios are coming back to market, sellers are increasingly willing to consider disposition of a subset of the larger portfolio, which puts us in a position to more effectively align the makeup of the portfolio that we're underwriting with our existing strategy and the portfolio we currently have."
Currently, Apple Hospitality has an outstanding contract for the acquisition of an Embassy Suites by Hilton in Madison, Wisconsin, for an anticipated purchase price of $79 million, the third-quarter earnings release states.
"The hotel is currently under development and expected to include 260 rooms. 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 under the outstanding purchase contract. Assuming all conditions to closing are met, the [Apple Hospitality] anticipates acquiring the hotel following completion of construction, which is expected to occur in early 2024," the release states.
Balance Sheet and Liquidity
Apple Hospitality ended the third quarter with roughly $1.3 billion of total outstanding debt and $26 million cash on hand.
Additionally, it has availability under its revolving credit facility of $650 million and term loan availability of $100 million, of which half of that was drawn subsequent to quarter end.