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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
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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
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
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(Zip Code) |
(
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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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.
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).
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.
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Accelerated filer ☐ |
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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
Number of registrant’s common shares outstanding as of August 2, 2022:
Apple Hospitality REIT, Inc.
Form 10-Q
Index
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Page Number |
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PART I. FINANCIAL INFORMATION |
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Item 1. |
3 |
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Consolidated Balance Sheets – June 30, 2022 and December 31, 2021 |
3 |
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4 |
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Consolidated Statements of Shareholders’ Equity – three and six months ended June 30, 2022 and 2021 |
5 |
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Consolidated Statements of Cash Flows – six months ended June 30, 2022 and 2021 |
6 |
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7 |
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Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations |
21 |
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Item 3. |
39 |
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Item 4. |
39 |
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PART II. OTHER INFORMATION |
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Item 1. |
40 |
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Item 2. |
40 |
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Item 6. |
41 |
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42 |
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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.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Apple Hospitality REIT, Inc.
Consolidated Balance Sheets
(in thousands, except share data)
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June 30, |
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December 31, |
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2022 |
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2021 |
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(unaudited) |
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Assets |
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Investment in real estate, net of accumulated depreciation and amortization of $ |
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$ |
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$ |
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Cash and cash equivalents |
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Restricted cash-furniture, fixtures and other escrows |
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Due from third party managers, net |
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Other assets, net |
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Total Assets |
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$ |
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$ |
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Liabilities |
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Debt, net |
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$ |
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$ |
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Finance lease liabilities |
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Accounts payable and other liabilities |
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Total Liabilities |
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Shareholders' Equity |
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Preferred stock, authorized |
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Common stock, no par value, authorized |
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Accumulated other comprehensive income (loss) |
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( |
) |
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Distributions greater than net income |
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( |
) |
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( |
) |
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Total Shareholders' Equity |
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Total Liabilities and Shareholders' Equity |
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$ |
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$ |
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See notes to consolidated financial statements.
3
Apple Hospitality REIT, Inc.
Consolidated Statements of Operations and Comprehensive Income (Loss)
(Unaudited)
(in thousands, except per share data)
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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2022 |
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2021 |
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2022 |
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2021 |
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Revenues: |
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Room |
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$ |
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$ |
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$ |
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$ |
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Food and beverage |
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Other |
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Total revenue |
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Expenses: |
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Hotel operating expense: |
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Operating |
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Hotel administrative |
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Sales and marketing |
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Utilities |
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Repair and maintenance |
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Franchise fees |
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Management fees |
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Total hotel operating expense |
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Property taxes, insurance and other |
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General and administrative |
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Loss on impairment of depreciable real estate assets |
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Depreciation and amortization |
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Total expense |
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Gain (loss) on sale of real estate |
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( |
) |
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Operating income |
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Interest and other expense, net |
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( |
) |
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( |
) |
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( |
) |
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( |
) |
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Income (loss) before income taxes |
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( |
) |
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Income tax expense |
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( |
) |
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( |
) |
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( |
) |
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( |
) |
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|
Net income (loss) |
|
$ |
|
|
|
$ |
|
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$ |
|
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$ |
( |
) |
|
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Other comprehensive income (loss): |
|
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Interest rate derivatives |
|
|
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( |
) |
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|
|
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|
|
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|
Comprehensive income (loss) |
|
$ |
|
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|
$ |
|
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|
$ |
|
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|
$ |
( |
) |
|
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|
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|
Basic and diluted net income (loss) per common share |
|
$ |
|
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|
$ |
|
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|
$ |
|
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$ |
( |
) |
|
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|
Weighted average common shares outstanding - basic and diluted |
|
|
|
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|
|
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|
|
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|
|
|
|
|
|
See notes to consolidated financial statements.
4
Apple Hospitality REIT, Inc.
Consolidated Statements of Shareholders' Equity
(Unaudited)
(in thousands, except per share data)
|
Three Months Ended June 30, 2022 and 2021 |
|
|||||||||||||||||||
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Common Stock |
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Accumulated Other |
|
|
Distributions |
|
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|||||||
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Number of Shares |
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Amount |
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Comprehensive Income (Loss) |
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Greater Than Net Income |
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Total |
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|
Balance at March 31, 2022 |
|
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|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
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|
Share based compensation, net |
|
|
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|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
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|
Equity issuance costs |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
Common shares repurchased |
|
|
( |
) |
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
Interest rate derivatives |
|
|
- |
|
|
|
- |
|
|
|
|
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|
|
- |
|
|
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|
Net income |
|
|
- |
|
|
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- |
|
|
|
- |
|
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|
|
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|
Distributions declared to shareholders ($ |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
|
Balance at June 30, 2022 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
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|
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|
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|
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|
|
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|
|
|
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|
Balance at March 31, 2021 |
|
|
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
|
Share based compensation, net |
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
Issuance of common shares, net |
|
|
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|
|
|
|
|
- |
|
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|
- |
|
|
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|
|
|
Interest rate derivatives |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
( |
) |
|
Net income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Distributions declared to shareholders ($ |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
|
Balance at June 30, 2021 |
|
|
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
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|
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|
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|
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|
|
Six Months Ended June 30, 2022 and 2021 |
|
|||||||||||||||||||
|
|
|
Common Stock |
|
|
Accumulated Other |
|
|
Distributions |
|
|
|
|
|
|||||||
|
|
|
Number of Shares |
|
|
Amount |
|
|
Comprehensive Income (Loss) |
|
|
Greater Than Net Income |
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|
Total |
|
|||||
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|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2021 |
|
|
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
|
Share based compensation, net |
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
Equity issuance costs |
|
|
- |
|
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
Common shares repurchased |
|
|
( |
) |
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
Interest rate derivatives |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
Net income |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Distributions declared to shareholders ($ |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
|
Balance at June 30, 2022 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2020 |
|
|
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
|
Share based compensation, net |
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
Issuance of common shares, net |
|
|
|
|
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
Interest rate derivatives |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
Net loss |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
|
Distributions declared to shareholders ($ |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
( |
) |
|
|
( |
) |
|
Balance at June 30, 2021 |
|
|
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
See notes to consolidated financial statements.
5
Apple Hospitality REIT, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
|
|
|
Six Months Ended |
|
|||||
|
|
|
June 30, |
|
|||||
|
|
|
2022 |
|
|
2021 |
|
||
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
|
|
|
$ |
( |
) |
|
Adjustments to reconcile net income (loss) to cash provided by operating activities: |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
|
|
|
|
|
|
|
Loss on impairment of depreciable real estate assets |
|
|
- |
|
|
|
|
|
|
Gain on sale of real estate |
|
|
- |
|
|
|
( |
) |
|
Other non-cash expenses, net |
|
|
|
|
|
|
|
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
|
Increase in due from third party managers, net |
|
|
( |
) |
|
|
( |
) |
|
Decrease (increase) in other assets, net |
|
|
( |
) |
|
|
|
|
|
Increase in accounts payable and other liabilities |
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
Acquisition of hotel properties, net |
|
|
- |
|
|
|
( |
) |
|
Disbursements for potential acquisitions, net |
|
|
- |
|
|
|
( |
) |
|
Capital improvements |
|
|
( |
) |
|
|
( |
) |
|
Net proceeds from sale of real estate |
|
|
- |
|
|
|
|
|
|
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
Net proceeds (disbursements) related to issuance of common shares |
|
|
( |
) |
|
|
|
|
|
Repurchases of common shares |
|
|
( |
) |
|
|
- |
|
|
Repurchases of common shares to satisfy employee withholding requirements |
|
|
( |
) |
|
|
( |
) |
|
Distributions paid to common shareholders |
|
|
( |
) |
|
|
( |
) |
|
Net proceeds from (payments on) revolving credit facility |
|
|
( |
) |
|
|
( |
) |
|
Proceeds from term loans and senior notes |
|
|
|
|
|
|
- |
|
|
Payments of mortgage debt and other loans |
|
|
( |
) |
|
|
( |
) |
|
Principal payments on finance leases |
|
|
( |
) |
|
|
- |
|
|
Financing costs |
|
|
( |
) |
|
|
( |
) |
|
Net cash used in financing activities |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
Net change in cash, cash equivalents and restricted cash |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
Cash, cash equivalents and restricted cash, beginning of period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, cash equivalents and restricted cash, end of period |
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow information: |
|
|
|
|
|
|
|
|
|
Interest paid |
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of noncash investing and financing activities: |
|
|
|
|
|
|
|
|
|
Accrued distribution to common shareholders |
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of cash, cash equivalents and restricted cash: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of period |
|
$ |
|
|
|
$ |
|
|
|
Restricted cash-furniture, fixtures and other escrows, beginning of period |
|
|
|
|
|
|
|
|
|
Cash, cash equivalents and restricted cash, beginning of period |
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period |
|
$ |
|
|
|
$ |
|
|
|
Restricted cash-furniture, fixtures and other escrows, end of period |
|
|
|
|
|
|
|
|
|
Cash, cash equivalents and restricted cash, end of period |
|
$ |
|
|
|
$ |
|
|
See notes to consolidated financial statements.
6
Apple Hospitality REIT, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
1. Organization and Summary of Significant Accounting Policies
Organization
Apple Hospitality REIT, Inc., formed in November 2007 as a Virginia corporation, together with its wholly-owned subsidiaries (the “Company”), is a self-advised real estate investment trust (“REIT”) that invests in income-producing real estate, primarily in the lodging sector, in the United States (“U.S.”). The Company’s fiscal year end is December 31. The Company has no foreign operations or assets, and its operating structure includes only
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with the rules and regulations for reporting on Form 10-Q. Accordingly, they do not include all of the information required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These unaudited financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Form 10-K”). Operating results for the three and six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the twelve-month period ending December 31, 2022.
Use of Estimates
The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.
Coronavirus COVID-19 Pandemic
As a result of the coronavirus COVID-19 pandemic (“COVID-19”) and subsequent variants and the impact it has had on travel and the broader economy throughout the U.S. since March 2020, the Company’s hotels experienced significant declines in occupancy. While occupancy recovered significantly during 2021 and the first half of 2022, due to the continued impacts from the COVID-19 variants on the hotel industry and the general economy, there remains uncertainty as to when operations at the hotels will fully return to pre-pandemic levels.
Net Income (Loss) Per Common Share
Basic net income (loss) per common share is computed based upon the weighted average number of shares outstanding during the period. Diluted net income (loss) per common share is calculated after giving effect to all potential common shares that were dilutive and outstanding for the period. Basic and diluted net income (loss) per common share were the same for each of the periods presented.
Accounting Standards Recently Adopted
Reference Rate Reform
In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2020-04, Reference Rate Reform (Topic 848), which provides optional guidance through December 31, 2022 to ease the potential burden in accounting for, or recognizing the effects of, reference rate reform on financial reporting. In January 2021, the FASB issued 2021-01, Reference Rate Reform (Topic 848), Scope, which further clarified the scope of the reference rate reform optional practical expedients and exceptions outlined in Topic 848. The amendments in ASU Nos. 2020-04 and 2021-01 apply to contract modifications that replace a reference rate affected by reference rate reform, providing optional expedients regarding the measurement of hedge effectiveness in hedging relationships that have been modified to replace a reference rate. The guidance in ASU Nos. 2020-04 and 2021-01 became effective upon issuance and the provisions of the ASUs have not had a material impact on the Company’s consolidated financial statements and related disclosures as of June 30, 2022. The provisions of these updates will generally affect the Company by allowing, among other things, the following:
7
|
|
• |
Modifications of the Company’s unsecured credit facilities (as defined below) to replace the London Interbank Offered Rate (“LIBOR”) with a substitute index to be accounted for as a non-substantial modification and not considered a debt extinguishment. |
|
|
• |
Changes to the floating interest rate index used in the Company’s interest rate swaps to not be considered a change to the critical terms of the hedge and therefore not requiring a dedesignation of the hedging relationship. |
In July 2022, the Company amended each of its unsecured credit facilities and interest rate swap agreements to replace LIBOR with the Secured Overnight Financing Rate (“SOFR”) as the reference rate. In accordance with ASU 2020-04, as amended, these amendments will be accounted for as non-substantial modifications. See Note 4 for more information regarding amendments made to the Company’s unsecured credit facilities and interest rate swap agreements.
Accounting for Certain Equity Options
In May 2021, the FASB issued ASU No. 2021-04, Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options (Topics 260, 470, 718 and 815), which provides updated guidance to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options that remain equity classified after modification or exchange. The provisions of this update are effective for annual and interim periods beginning after December 15, 2021. The adoption of this update is not material to the Company’s consolidated financial statements.
Accounting for Funds Received as Government Assistance
In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832) to increase the transparency of government assistance disclosures including the disclosure of (1) the types of assistance, (2) an entity’s accounting for the assistance, and (3) the effect of the assistance on an entity’s financial statements. The provisions of this update are effective for annual periods beginning after December 15, 2021. The adoption of this update is not expected to have a material impact on the Company’s consolidated financial statements.
2. Investment in Real Estate
The Company’s investment in real estate consisted of the following (in thousands):
|
|
|
June 30, |
|
|
December 31, |
|
||
|
|
|
2022 |
|
|
2021 |
|
||
|
Land |
|
$ |
|
|
|
$ |
|
|
|
Building and improvements |
|
|
|
|
|
|
|
|
|
Furniture, fixtures and equipment |
|
|
|
|
|
|
|
|
|
Finance ground lease assets |
|
|
|
|
|
|
|
|
|
Franchise fees |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less accumulated depreciation and amortization |
|
|
( |
) |
|
|
( |
) |
|
Investment in real estate, net |
|
$ |
|
|
|
$ |
|
|
As of June 30, 2022, the Company owned
The Company leases all of its hotels to its wholly-owned taxable REIT subsidiary (or a subsidiary thereof) under master hotel lease agreements.
8
Hotel Acquisitions
There were
|
City |
|
State |
|
Brand |
|
Manager |
|
Date Acquired |
|
Rooms |
|
|
Gross Purchase Price |
|
||
|
Madison |
|
WI |
|
Hilton Garden Inn |
|
|
|
|
|
|
|
|
|
$ |
|
|
|
Portland |
|
ME |
|
AC Hotels |
|
|
|
|
|
|
|
|
|
|
|
|
|
Greenville |
|
SC |
|
Hyatt Place |
|
|
|
|
|
|
|
|
|
|
|
|
|
Portland |
|
ME |
|
Aloft |
|
|
|
|
|
|
|
|
|
|
|
|
|
Memphis |
|
TN |
|
Hilton Garden Inn |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fort Worth |
|
TX |
|
Hilton Garden Inn |
|
|
|
|
|
|
|
|
|
|
|
|
|
Fort Worth |
|
TX |
|
Homewood Suites |
|
|
|
|
|
|
|
|
|
|
|
|
|
Portland |
|
OR |
|
Hampton |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
In 2021, the Company used borrowings under its Revolving Credit Facility (as defined below) to purchase the Madison, Wisconsin and Memphis, Tennessee hotels, used available cash to purchase the Portland, Maine and Greenville, South Carolina hotels and used a mix of available cash and borrowings under its Revolving Credit Facility to purchase the Fort Worth, Texas and Portland, Oregon hotels. The acquisitions of these hotel properties were accounted for as acquisitions of asset groups, whereby costs incurred to effect the acquisitions (which were not significant) were capitalized as part of the cost of the assets acquired. For the
Seattle Land Acquisition
On August 16, 2021, the Company purchased the fee interest in the land at the Seattle, Washington Residence Inn, previously held under a finance ground lease. The Company utilized $
Hotel Purchase Contract Commitments
As of June 30, 2022, the Company had
9
3. Dispositions
There were no dispositions during the six months ended June 30, 2022. During the year ended December 31, 2021, the Company sold
|
City |
|
State |
|
Brand |
|
Date Sold |
|
Rooms |
|
|
|
Charlotte |
|
NC |
|
Homewood Suites |
|
|
|
|
|
|
|
Memphis |
|
TN |
|
Homewood Suites |
|
|
|
|
|
|
|
Overland Park |
|
KS |
|
SpringHill Suites |
|
|
|
|
|
|
|
Montgomery |
|
AL |
|
Hilton Garden Inn |
|
|
|
|
|
|
|
Montgomery |
|
AL |
|
Homewood Suites |
|
|
|
|
|
|
|
Rogers |
|
AR |
|
Residence Inn |
|
|
|
|
|
|
|
Phoenix |
|
AZ |
|
Courtyard |
|
|
|
|
|
|
|
Lakeland |
|
FL |
|
Courtyard |
|
|
|
|
|
|
|
Albany |
|
GA |
|
Fairfield |
|
|
|
|
|
|
|
Schaumburg |
|
IL |
|
Hilton Garden Inn |
|
|
|
|
|
|
|
Andover |
|
MA |
|
SpringHill Suites |
|
|
|
|
|
|
|
Fayetteville |
|
NC |
|
Residence Inn |
|
|
|
|
|
|
|
Greenville |
|
SC |
|
Residence Inn |
|
|
|
|
|
|
|
Jackson |
|
TN |
|
Hampton |
|
|
|
|
|
|
|
Johnson City |
|
TN |
|
Courtyard |
|
|
|
|
|
|
|
Allen |
|
TX |
|
Hampton |
|
|
|
|
|
|
|
Allen |
|
TX |
|
Hilton Garden Inn |
|
|
|
|
|
|
|
Beaumont |
|
TX |
|
Residence Inn |
|
|
|
|
|
|
|
Burleson/Fort Worth |
|
TX |
|
Hampton |
|
|
|
|
|
|
|
El Paso |
|
TX |
|
Hilton Garden Inn |
|
|
|
|
|
|
|
Irving |
|
TX |
|
Homewood Suites |
|
|
|
|
|
|
|
Richmond |
|
VA |
|
SpringHill Suites |
|
|
|
|
|
|
|
Vancouver |
|
WA |
|
SpringHill Suites |
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
Excluding gains on sale of real estate, the Company’s consolidated statements of operations include an operating loss of approximately $(
Loss on Impairment of Depreciable Real Estate Assets
During the first quarter of 2021, the Company identified
Additionally, during the first quarter of 2021, the Company identified the Overland Park, Kansas SpringHill Suites for potential sale and, in February 2021, entered into a purchase contract with an unrelated party for the sale of the hotel for a gross sales price of $
10
4. Debt
Summary
As of June 30, 2022 and December 31, 2021, the Company’s debt consisted of the following (in thousands):
|
|
|
June 30, 2022 |
|
|
December 31, 2021 |
|
||
|
Revolving credit facility |
|
$ |
|
|
|
$ |
|
|
|
Term loans and senior notes, net |
|
|
|
|
|
|
|
|
|
Mortgage debt, net |
|
|
|
|
|
|
|
|
|
Debt, net |
|
$ |
|
|
|
$ |
|
|
The aggregate amounts of principal payable under the Company’s total debt obligations as of June 30, 2022 (including the Revolving Credit Facility, term loans, senior notes and mortgage debt), for each of the next five fiscal years and thereafter are as follows (in thousands):
|
2022 (July - December) |
|
$ |
|
|
|
2023 |
|
|
|
|
|
2024 |
|
|
|
|
|
2025 |
|
|
|
|
|
2026 |
|
|
|
|
|
Thereafter |
|
|
|
|
|
|
|
|
|
|
|
Unamortized fair value adjustment of assumed debt |
|
|
|
|
|
Unamortized debt issuance costs |
|
|
( |
) |
|
Total |
|
$ |
|
|
The Company uses interest rate swaps to manage its interest rate risk on a portion of its variable-rate debt. Throughout the terms of these interest rate swaps, the Company pays a fixed rate of interest and receives a floating rate of interest equal to the London Inter-Bank Offered Rate for a one-month term (“one-month LIBOR”). The swaps are designed to effectively fix the interest payments on variable-rate debt instruments. See Note 5 for more information on the interest rate swap agreements. The Company’s total fixed-rate and variable-rate debt, after giving effect to its interest rate swaps in effect at June 30, 2022 and December 31, 2021, is set forth below. All dollar amounts are in thousands.
|
|
|
June 30, 2022 |
|
|
Percentage |
|
|
December 31, 2021 |
|
|
Percentage |
|
||||
|
Fixed-rate debt (1) |
|
$ |
|
|
|
|
|
% |
|
$ |
|
|
|
|
|
% |
|
Variable-rate debt |
|
|
|
|
|
|
|
% |
|
|
|
|
|
|
|
% |
|
Total |
|
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
Weighted-average interest rate of debt |
|
|
|
% |
|
|
|
|
|
|
|
% |
|
|
|
|
|
(1) |
|
Credit Facilities
$850 Million Credit Facility
Prior to the Company’s debt refinancing in July 2022 (as discussed below), the Company utilized an unsecured credit facility comprised of (i) a $
11
$225 Million Term Loan Facility
The Company also has an unsecured term loan facility that is comprised of (i) a $
2017 $85 Million Term Loan Facility
On July 25, 2017, the Company entered into an unsecured term loan facility with a maturity date of
2019 $85 Million Term Loan Facility
On December 31, 2019, the Company entered into an unsecured term loan facility with a maturity date of
$50 Million Senior Notes Facility
On March 16, 2020, the Company entered into an unsecured senior notes facility with a maturity date of
$75 Million Senior Notes Facility
On June 2, 2022, the Company entered into an unsecured senior notes facility with a maturity date of
12
As of June 30, 2022 and December 31, 2021, the details of the Company’s unsecured credit facilities were as set forth in the table below, which does not give effect to the debt refinancing in July 2022. All dollar amounts are in thousands.
|
|
|
|
|
|
|
Outstanding Balance |
|
|||||
|
|
|
Interest Rate (1) |
|
Maturity Date |
|
June 30, 2022 |
|
|
December 31, 2021 |
|
||
|
Revolving credit facility (2) |
|
|
|
(4) |
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Term loans and senior notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
$200 million term loan |
|
|
|
(4) |
|
|
|
|
|
|
|
|
|
$225 million term loan |
|
|
|
(4) |
|
|
|
|
|
|
|
|
|
$50 million term loan |
|
|
|
|
|
|
|
|
|
|
|
|
|
$175 million term loan |
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 $85 million term loan |
|
|
|
|
|
|
|
|
|
|
|
|
|
2019 $85 million term loan |
|
|
|
|
|
|
|
|
|
|
|
|
|
$50 million senior notes |
|
|
|
|
|
|
|
|
|
|
|
|
|
$75 million senior notes |
|
|
|
|
|
|
|
|
|
|
- |
|
|
Term loans and senior notes at stated value |
|
|
|
|
|
|
|
|
|
|
|
|
|
Unamortized debt issuance costs |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Term loans and senior notes, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credit facilities, net (2) |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
Weighted-average interest rate (3) |
|
|
|
|
|
|
|
% |
|
|
|
% |
|
(1) |
|
|
(2) |
|
|
(3) |
|
|
(4) |
|
Credit Facilities Covenants and Amendments
The credit agreements governing the unsecured credit facilities (collectively, the “credit agreements”), contain mandatory prepayment requirements, customary affirmative and negative covenants, restrictions on certain investments and events of default. The credit agreements, not giving effect to the debt refinancing in July 2022, contained the following financial and restrictive covenants (capitalized terms not defined below are defined in the credit agreements):
|
|
● |
A ratio of Consolidated Total Indebtedness to Consolidated EBITDA (“Maximum Consolidated Leverage Ratio”) of not more than |
|
|
● |
A ratio of Consolidated Secured Indebtedness to Consolidated Total Assets (“Maximum Secured Leverage Ratio”) of not more than |
|
|
● |
A minimum Consolidated Tangible Net Worth of approximately $ |
|
|
● |
A ratio of Adjusted Consolidated EBITDA to Consolidated Fixed Charges ("Minimum Fixed Charge Coverage Ratio") of not less than |
|
|
● |
A ratio of Unencumbered Adjusted NOI to Consolidated Implied Interest Expense for Consolidated Unsecured Indebtedness ("Minimum Unsecured Interest Coverage Ratio") of not less than |
13
|
|
● |
A ratio of Consolidated Unsecured Indebtedness to Unencumbered Asset Value (“Maximum Unsecured Leverage Ratio”) of not more than |
|
|
● |
A ratio of Consolidated Secured Recourse Indebtedness to Consolidated Total Assets (“Maximum Secured Recourse Indebtedness”) of not more than |
As a result of COVID-19 and the associated disruption to the Company’s operating results, the Company entered into amendments in June 2020 that suspended the testing of the Company’s existing financial maintenance covenants under the unsecured credit facilities. These amendments imposed certain restrictions regarding the Company’s investing and financing activities that were applicable during a specified waiver period. On March 1, 2021, as a result of the continued disruption from COVID-19 and the related uncertainty with respect to the Company’s future operating results, the Company entered into further amendments to each of the unsecured credit facilities (the “March 2021 amendments”) to extend the covenant waiver period for all but two of the Company’s existing financial maintenance covenants until the date that the compliance certificate was required to be delivered for the fiscal quarter ended June 30, 2022, and extending to March 31, 2022 for the remaining two covenants (unless, in each case, the Company elected an earlier date) (the “Extended Covenant Waiver Period”). The March 2021 amendments provided for continued restrictions on the Company’s ability to make cash distributions, except for the payment of cash dividends of $
In addition to the modifications and restrictions imposed during the Extended Covenant Waiver Period, the March 2021 amendments modified the calculation of the existing financial covenants for the first three quarterly calculations subsequent to the end of the Extended Covenant Waiver Period to annualize calculated amounts based on the period beginning with the first fiscal quarter upon exiting the Extended Covenant Waiver Period through the most recently ended fiscal quarter, and provided for an increase in the LIBOR floor under the Revolving Credit Facility from
The March 2021 amendments also modified certain of the existing financial maintenance covenants to less restrictive levels upon exiting the Extended Covenant Waiver Period as follows:
|
|
● |
Maximum Consolidated Leverage Ratio of |
|
|
● |
Minimum Fixed Charge Coverage Ratio of |
|
|
● |
Minimum Unsecured Interest Coverage Ratio of no less than |
|
|
● |
Maximum Unsecured Leverage Ratio of |
Except as otherwise set forth in the amendments described above, the terms of the credit agreements remained in effect.
In July 2021, the Company notified its lenders under its unsecured credit facilities that it had elected to exit the Extended Covenant Waiver Period effective on July 29, 2021 pursuant to the terms of each of its unsecured credit facilities. Upon exiting the Extended Covenant Waiver Period, the Company is no longer subject to the restrictions regarding its investing and financing activities that were applicable during the Extended Covenant Waiver Period, including, but not limited to, limitations on the acquisition of property, payment of distributions to shareholders (except to the extent required to maintain REIT status), capital expenditures and use of proceeds from the sale of property or common shares of the Company. Those restrictions, including the restriction on payment of distributions to shareholders, were still in place throughout the second quarter of 2021.
As of June 30, 2022, the Company met the applicable financial maintenance covenants based on the results of the twelve months ended June 30, 2022 at the levels required for the fifth fiscal quarter tested upon exiting the Extended Covenant Waiver Period. The unsecured credit facilities do not provide the Company the ability to re-enter the Extended Covenant Waiver Period once it has elected to exit.
14
2022 Debt Refinancing
On July 25, 2022, the Company entered into an amendment and restatement of its $
The credit agreement for the $
|
|
• |
Maximum Consolidated Leverage Ratio of not more than |
|
|
• |
Maximum Secured Leverage Ratio of not more than |
|
|
• |
A minimum Consolidated Tangible Net Worth of approximately $ |
|
|
• |
Minimum Fixed Charge Coverage Ratio of not less than |
|
|
• |
Minimum Unsecured Interest Coverage Ratio of not less than |
|
|
• |
Maximum Unsecured Leverage Ratio of not more than |
|
|
• |
Maximum Secured Recourse Indebtedness of not more than |
In addition, in July 2022, the Company amended all of the other unsecured credit facilities to align the financial covenants with the amended $
A summary of the 2022 debt refinancing is set forth below. All dollar amounts are in thousands.
|
|
2022 Refinancing |
|
Prior to Refinancing |
||||||||||||
|
|
Capacity |
|
|
Maturity Date |
|
Interest Rate |
|
Capacity |
|
|
Maturity Date |
|
Interest Rate |
||
|
Revolving credit facility |
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
Term loan |
|
275,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Term loan |
|
300,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
$ |
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
15
Mortgage Debt
As of June 30, 2022, the Company had approximately $
|
Location |
|
Brand |
|
Interest Rate (1) |
|
|
Loan Assumption or Origination Date |
|
Maturity Date |
|
Principal Assumed or Originated |
|
|
Outstanding balance as of June 30, 2022 |
|
|
Outstanding balance as of December 31, 2021 |
|
||||
|
Seattle, WA |
|
(2) |
|
|
|
% |
|
|
|
(4) |
|
$ |
|
|
|
$ |
- |
|
|
$ |
|
|
|
Grapevine, TX |
|
Hilton Garden Inn |
|
|
|
% |
|
|
|
(5) |
|
|
|
|
|
|
- |
|
|
|
|
|
|
Collegeville/Philadelphia, PA |
|
Courtyard |
|
|
|
% |
|
|
|
(5) |
|
|
|
|
|
|
- |
|
|
|
|
|
|
Hattiesburg, MS |
|
Courtyard |
|
|
|
% |
|
|
|
(5) |
|
|
|
|
|
|
- |
|
|
|
|
|
|
Kirkland, WA |
|
Courtyard |
|
|
|
% |
|
|
|
(5) |
|
|
|
|
|
|
- |
|
|
|
|
|
|
Rancho Bernardo/San Diego, CA |
|
Courtyard |
|
|
|
% |
|
|
|
(5) |
|
|
|
|
|
|
- |
|
|
|
|
|
|
Seattle, WA |
|
Residence Inn |
|
|
|
% |
|
|
|
(5) |
|
|
|
|
|
|
- |
|
|
|
|
|
|
Anchorage, AK |
|
Embassy Suites |
|
|
|
% |
|
|
|
(6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Somerset, NJ |
|
Courtyard |
|
|
|
% |
|
|
|
(6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Tukwila, WA |
|
Homewood Suites |
|
|
|
% |
|
|
|
(6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Huntsville, AL |
|
Homewood Suites |
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prattville, AL |
|
Courtyard |
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
San Diego, CA |
|
Residence Inn |
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Miami, FL |
|
Homewood Suites |
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
New Orleans, LA |
|
Homewood Suites |
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Westford, MA |
|
Residence Inn |
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denver, CO |
|
Hilton Garden Inn |
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oceanside, CA |
|
Courtyard |
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Omaha, NE |
|
Hilton Garden Inn |
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Boise, ID |
|
Hampton |
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Burbank, CA |
|
Courtyard |
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
San Diego, CA |
|
Courtyard |
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
San Diego, CA |
|
Hampton |
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Burbank, CA |
|
SpringHill Suites |
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Santa Ana, CA |
|
Courtyard |
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richmond, VA |
|
Courtyard |
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Richmond, VA |
|
Residence Inn |
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portland, ME (3) |
|
Residence Inn |
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
San Jose, CA |
|
Homewood Suites |
|
|
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
Unamortized fair value adjustment of assumed debt |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unamortized debt issuance costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
(1) |
|
|
(2) |
|
|
(3) |
|
|
(4) |
|
|
(5) |
Loans were repaid in full on June 30, 2022. |
|
(6) |
Loans were repaid in full on August 1, 2022. |
16
5. Fair Value of Financial Instruments
Except as described below, the carrying value of the Company’s financial instruments approximates fair value due to the short-term nature of these financial instruments.
Debt
The Company estimates the fair value of its debt by discounting the future cash flows of each instrument at estimated market rates consistent with the maturity of a debt obligation with similar credit terms and credit characteristics, which are Level 3 inputs under the fair value hierarchy. Market rates take into consideration general market conditions and maturity. As of June 30, 2022, the carrying value and estimated fair value of the Company’s debt were approximately $
Derivative Instruments
Currently, the Company uses interest rate swaps to manage its interest rate risk on variable-rate debt. Throughout the terms of these interest rate swaps, the Company pays a fixed rate of interest and receives a floating rate of interest equal to the one-month LIBOR. The swaps are designed to effectively fix the interest payments on variable-rate debt instruments. As discussed in Note 1, the Company entered into amendments of its swap agreements during July 2022, to replace LIBOR with SOFR. These swap instruments are recorded at fair value and, if in an asset position, are included in other assets, net, and, if in a liability position, are included in accounts payable and other liabilities in the Company’s consolidated balance sheets. The fair values of the Company’s interest rate swap agreements are determined using the market standard methodology of netting the discounted future fixed cash payments and the discounted expected variable cash receipts, which is considered a Level 2 measurement under the fair value hierarchy. The variable cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Asset (Liability) |
|
|||||
|
Notional Amount at June 30, 2022 |
|
|
Origination Date |
|
Effective Date |
|
Maturity Date |
|
Swap Fixed Interest Rate |
|
|
June 30, 2022 |
|
|
December 31, 2021 |
|
||||
|
Active interest rate swaps designated as cash flow hedges at June 30, 2022: |
|
|
|
|
|
|
|
|
|
|||||||||||
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
( |
) |
The Company assesses, both at inception and on an ongoing basis, the effectiveness of its qualifying cash flow hedges. As of June 30, 2022, all of the
Amounts reported in accumulated other comprehensive income will be reclassified to interest and other expense, net as interest payments are made or received on the Company’s variable-rate derivatives. The Company estimates that approximately $
17
The following table presents the effect of derivative instruments in cash flow hedging relationships in the Company’s consolidated statements of operations and comprehensive income (loss) for the three and six months ended June 30, 2022 and 2021 (in thousands):
|
|
|
Net Unrealized Gain (Loss) Recognized in Other Comprehensive Income (Loss) |
|
|
Net Unrealized Loss Reclassified from Accumulated Other Comprehensive Income (Loss) to Interest and Other Expense, net |
|
||||||||||
|
|
|
Three Months Ended June 30, |
|
|
Three Months Ended June 30, |
|
||||||||||
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
|
Interest rate derivatives in cash flow hedging relationships |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Unrealized Gain Recognized in Other Comprehensive Income (Loss) |
|
|
Net Unrealized Loss Reclassified from Accumulated Other Comprehensive Income (Loss) to Interest and Other Expense, net |
|
||||||||||
|
|
|
Six Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
|
Interest rate derivatives in cash flow hedging relationships |
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
6. Related Parties
The Company has, and is expected to continue to engage in, transactions with related parties. These transactions cannot be construed to be at arm’s length, and the results of the Company’s operations may be different if these transactions were conducted with non-related parties. There have been no changes to the contracts and relationships discussed in the 2021 Form 10-K. Below is a summary of the significant related party relationships in effect during the six months ended June 30, 2022 and 2021.
Glade M. Knight, Executive Chairman of the Company, owns Apple Realty Group, Inc. (“ARG”), which receives support services from the Company and reimburses the Company for the cost of these services as discussed below. Mr. Knight is also currently a partner and Chief Executive Officer of Energy 11 GP, LLC and Energy Resources 12 GP, LLC, which are the respective general partners of Energy 11, L.P. and Energy Resources 12, L.P., each of which receives support services from ARG.
The Company provides support services, including the use of the Company’s employees and corporate office, to ARG and is reimbursed by ARG for the cost of these services. Under this cost sharing structure, amounts reimbursed to the Company include both compensation for personnel and office related costs (including office rent, utilities, office supplies, etc.) used by ARG. The amounts reimbursed to the Company are based on the actual costs of the services and a good faith estimate of the proportionate amount of time incurred by the Company’s employees on behalf of ARG. Total reimbursed costs allocated by the Company to ARG for the six months ended June 30, 2022 and 2021 totaled approximately $
As part of the cost sharing arrangement, certain day-to-day transactions may result in amounts due to or from the Company and ARG.
The Company, through its wholly-owned subsidiary, Apple Air Holding, LLC, owns a Learjet used primarily for acquisition, asset management, renovation and investor and public relations purposes. The aircraft is also leased to affiliates of the Company based on third-party rates. Lease activity was not significant during the reporting periods.
From time to time, the Company utilizes aircraft, owned by an entity which is owned by the Company’s Executive Chairman, for acquisition, asset management, renovation and investor and public relations purposes, and reimburses this entity at third party rates. Total costs incurred for the use of these aircraft during the six months ended June 30, 2022 and 2021 were less than $
18
7. Shareholders’ Equity
Distributions
For the three and six months ended June 30, 2022, the Company paid distributions of $
Issuance of Shares
The Company has entered into an equity distribution agreement pursuant to which the Company may sell, from time to time, up to an aggregate of $
Share Repurchases
In May 2022, the Company’s Board of Directors approved a extension of its existing share repurchase program, authorizing share repurchases up to an aggregate of $
8. Compensation Plans
The Company annually establishes an incentive plan for its executive management team. Under the incentive plan for 2022 (the “2022 Incentive Plan”), participants are eligible to receive incentive compensation based on the achievement of certain 2022 performance measures, with
19
million for the three and six months ended June 30, 2022. Approximately
Under the incentive plan for 2021 (the “2021 Incentive Plan”), the Company recorded approximately $
Share-Based Compensation Awards
The following table sets forth information pertaining to the share-based compensation issued under the 2021 Incentive Plan and the incentive plan for 2020 (the “2020 Incentive Plan”).
|
|
|
2021 Incentive Plan |
|
|
|
2020 Incentive Plan |
|
|
||
|
Period common shares issued |
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares earned under each incentive plan |
|
|
|
|
|
|
|
|
|
|
|
Common shares surrendered on issuance date to satisfy tax withholding obligations |
|
|
|
|
|
|
|
|
|
|
|
Common shares earned and issued under each incentive plan, net of common shares surrendered on issuance date to satisfy tax withholding obligations |
|
|
|
|
|
|
|
|
|
|
|
Closing stock price on issuance date |
|
$ |
|
|
|
|
$ |
|
|
|
|
Total share-based compensation earned, including the surrendered shares (in millions) |
|
$ |
|
|
(1) |
|
$ |
|
|
(2) |
|
Of the total common shares earned and issued, total common shares unrestricted at time of issuance |
|
|
|
|
|
|
|
|
|
|
|
Of the total common shares earned and issued, total common shares restricted at time of issuance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted common shares vesting date |
|
|
|
|
|
|
|
|
||
|
Common shares surrendered on vesting date to satisfy tax withholding requirements resulting from vesting of restricted common shares |
|
n/a |
|
|
|
|
|
|
|
|
|
(1) |
|
|
(2) |
|
9. Subsequent Events
On July 15, 2022, the Company paid approximately $
In , the Company declared a monthly cash distribution of $
In July 2022, the Company refinanced its $
On August 1, 2022, the Company repaid in full
20
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Exchange Act. 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.
Currently, one of the most significant factors that could cause actual outcomes to differ materially from the Company’s forward-looking statements continues to be the adverse effect of COVID-19, including resurgences and variants, on the Company’s business, financial performance and condition, operating results and cash flows, the real estate market and the hospitality industry specifically, and the global economy and financial markets generally. The significance, extent and duration of the continued impacts caused by the COVID-19 pandemic on the Company will depend on future developments, which are highly uncertain and cannot be predicted with confidence at this time, including the scope, severity and duration of the pandemic, the extent and effectiveness of the actions taken to contain the pandemic or mitigate its impact, the efficacy, acceptance and availability of vaccines, the duration of associated immunity and efficacy of the vaccines against variants of COVID-19, the potential for additional hotel closures/consolidations that may be mandated or advisable, whether based on increased COVID-19 cases, new variants or other factors, the slowing or potential rollback of “reopenings” in certain states, and the direct and indirect economic effects of the pandemic and containment measures, among others. Moreover, investors are cautioned to interpret many of the risks identified under the section titled “Risk Factors” in the Company’s 2021 Form 10-K as being heightened as a result of the ongoing and numerous adverse impacts of COVID-19. Additional 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; reduced business and leisure travel due to travel-related health concerns, including the COVID-19 pandemic or an increase in COVID-19 cases or any other infectious or contagious diseases in the U.S. or abroad; 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 Quarterly Report 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 (the “Code”). Readers should carefully review the risk factors described in the Company’s filings with the Securities and Exchange Commission (“SEC”), including but not limited to those discussed in the section titled “Risk Factors” in the 2021 Form 10-K. Any forward-looking statement that the Company makes speaks only as of the date of this Quarterly Report. 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.
The following discussion and analysis should be read in conjunction with the Company’s Unaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q, as well as the information contained in the 2021 Form 10-K.
Overview
The Company is a Virginia corporation that has elected to be treated as a REIT for federal income tax purposes. The Company is self-advised and invests in income-producing real estate, primarily in the lodging sector, in the U.S. As of June 30, 2022, the Company owned 219 hotels with an aggregate of 28,748 rooms located in urban, high-end suburban and developing markets throughout 36 states. Substantially all of the Company’s hotels operate under Marriott or Hilton brands. The hotels are operated and managed under separate management agreements with 17 hotel management companies, none of which are affiliated with the Company. The Company’s common shares are listed on the NYSE under the ticker symbol “APLE.”
21
The Impact of COVID-19 on the Company and Hospitality Industry
The COVID-19 pandemic has negatively impacted the U.S. and global economies and financial markets. The effect of COVID-19 on the hotel industry has been unprecedented and has dramatically reduced business and impacted leisure travel, which adversely impacted the Company’s business, financial performance, operating results and cash flows, beginning in March 2020.
Since the beginning of the pandemic and through the first six months of 2022, the Company, with the support of its management companies and brands, has taken steps to minimize costs and cash outflow to operate efficiently and maximize performance. The Company has implemented cost elimination and efficiency initiatives at each of its hotels by adjusting operations to manage total labor costs, reducing or eliminating certain amenities and reducing rates under various service contracts; enhanced its sales efforts by strategically targeting available demand; reduced capital improvement projects in 2020 and 2021; and entered into amendments to its unsecured credit facilities that provided for the temporary waiver of financial covenant testing for the majority of its financial maintenance covenants until June 30, 2022 (the Company exited the waiver period in July 2021 due to improved financial performance). Cost reduction initiatives, including those discussed above have not, and are not expected to, materially offset revenue losses from COVID-19.
The extent and duration of the COVID-19 effects remain unknown, and these uncertainties continue to make it difficult to project operating results. The Company has experienced significant improvement in its business during the twelve months ended December 31, 2021 and through the first six months of 2022 driven by strength in leisure, small group and local negotiated business demand. While the Company has seen continued improvement in overall business demand, it anticipates that some larger corporate demand drivers may take longer to fully recover.
Hotel Operations
As of June 30, 2022, the Company owned 219 hotels with a total of 28,748 rooms as compared to 232 hotels with a total of 29,753 rooms as of June 30, 2021. Results of operations are included only for the period of ownership for hotels acquired or disposed of during the current reporting period and prior year. During the six months ended June 30, 2022, the Company did not acquire or dispose of any properties. During the same period of 2021, the Company acquired one newly constructed hotel on February 18, 2021 and sold three properties in three separate transactions.
In evaluating financial condition and operating performance, the most important indicators on which the Company focuses are revenue measurements, such as average occupancy, average daily rate (“ADR”) and revenue per available room (“RevPAR”), and expenses, such as hotel operating expenses, general and administrative expenses and other expenses described below. RevPAR and operating results may be impacted by regional and local economies as well as changes in lodging demands due to macroeconomic factors including inflationary pressures, higher energy prices or a recessionary environment.
The following is a summary of the results from operations of the Company’s hotels for their respective periods of ownership by the Company:
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||||||||||||||||||||||||||
|
(in thousands, except statistical data) |
|
2022 |
|
|
Percent of Revenue |
|
|
2021 |
|
|
Percent of Revenue |
|
|
Percent Change |
|
|
2022 |
|
|
Percent of Revenue |
|
|
2021 |
|
|
Percent of Revenue |
|
|
Percent Change |
|
||||||||||
|
Total revenue |
|
$ |
337,668 |
|
|
|
100.0 |
% |
|
$ |
247,404 |
|
|
|
100.0 |
% |
|
|
36.5 |
% |
|
$ |
598,146 |
|
|
|
100.0 |
% |
|
$ |
406,117 |
|
|
|
100.0 |
% |
|
|
47.3 |
% |
|
Hotel operating expense |
|
|
182,515 |
|
|
|
54.1 |
% |
|
|
135,410 |
|
|
|
54.7 |
% |
|
|
34.8 |
% |
|
|
336,517 |
|
|
|
56.3 |
% |
|
|
239,150 |
|
|
|
58.9 |
% |
|
|
40.7 |
% |
|
Property taxes, insurance and other expense |
|
|
18,779 |
|
|
|
5.6 |
% |
|
|
17,321 |
|
|
|
7.0 |
% |
|
|
8.4 |
% |
|
|
37,458 |
|
|
|
6.3 |
% |
|
|
37,009 |
|
|
|
9.1 |
% |
|
|
1.2 |
% |
|
General and administrative expense |
|
|
10,307 |
|
|
|
3.1 |
% |
|
|
8,435 |
|
|
|
3.4 |
% |
|
|
22.2 |
% |
|
|
19,945 |
|
|
|
3.3 |
% |
|
|
16,554 |
|
|
|
4.1 |
% |
|
|
20.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on impairment of depreciable real estate assets |
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
|
|
|
n/a |
|
|
|
- |
|
|
|
|
|
|
|
10,754 |
|
|
|
|
|
|
n/a |
|
||
|
Depreciation and amortization expense |
|
|
45,322 |
|
|
|
|
|
|
|
46,386 |
|
|
|
|
|
|
|
-2.3 |
% |
|
|
90,646 |
|
|
|
|
|
|
|
95,096 |
|
|
|
|
|
|
|
-4.7 |
% |
|
Gain (loss) on sale of real estate |
|
|
- |
|
|
|
|
|
|
|
(864 |
) |
|
|
|
|
|
n/a |
|
|
|
- |
|
|
|
|
|
|
|
3,620 |
|
|
|
|
|
|
n/a |
|
||
|
Interest and other expense, net |
|
|
15,198 |
|
|
|
|
|
|
|
18,618 |
|
|
|
|
|
|
|
-18.4 |
% |
|
|
29,852 |
|
|
|
|
|
|
|
37,131 |
|
|
|
|
|
|
|
-19.6 |
% |
|
Income tax expense |
|
|
202 |
|
|
|
|
|
|
|
87 |
|
|
|
|
|
|
|
132.2 |
% |
|
|
381 |
|
|
|
|
|
|
|
195 |
|
|
|
|
|
|
|
95.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
|
65,345 |
|
|
|
|
|
|
|
20,283 |
|
|
|
|
|
|
|
222.2 |
% |
|
|
83,347 |
|
|
|
|
|
|
|
(26,152 |
) |
|
|
|
|
|
n/a |
|
|
|
Adjusted Hotel EBITDA (1) |
|
|
136,515 |
|
|
|
|
|
|
|
94,814 |
|
|
|
|
|
|
|
44.0 |
% |
|
|
224,451 |
|
|
|
|
|
|
|
130,241 |
|
|
|
|
|
|
|
72.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of hotels owned at end of period |
|
|
219 |
|
|
|
|
|
|
|
232 |
|
|
|
|
|
|
|
-5.6 |
% |
|
|
219 |
|
|
|
|
|
|
|
232 |
|
|
|
|
|
|
|
-5.6 |
% |
|
ADR |
|
$ |
153.35 |
|
|
|
|
|
|
$ |
120.56 |
|
|
|
|
|
|
|
27.2 |
% |
|
$ |
145.84 |
|
|
|
|
|
|
$ |
111.19 |
|
|
|
|
|
|
|
31.2 |
% |
|
Occupancy |
|
|
77.9 |
% |
|
|
|
|
|
|
70.7 |
% |
|
|
|
|
|
|
10.2 |
% |
|
|
72.5 |
% |
|
|
|
|
|
|
63.2 |
% |
|
|
|
|
|
|
14.7 |
% |
|
RevPAR |
|
$ |
119.41 |
|
|
|
|
|
|
$ |
85.28 |
|
|
|
|
|
|
|
40.0 |
% |
|
$ |
105.77 |
|
|
|
|
|
|
$ |
70.23 |
|
|
|
|
|
|
|
50.6 |
% |
22
|
(1) |
See reconciliation of Adjusted Hotel EBITDA to net income (loss) in “Non-GAAP Financial Measures” below. |
The following table highlights the Company’s quarterly ADR, Occupancy, RevPAR, net income and adjusted hotel earnings before interest, income taxes, depreciation and amortization for real estate (“Adjusted Hotel EBITDA”), all of which have been impacted by COVID-19, during the last five quarters (in thousands except statistical data):
|
|
|
2nd Quarter |
|
|
3rd Quarter |
|
|
4th Quarter |
|
|
1st Quarter |
|
|
2nd Quarter |
|
|||||
|
|
|
2021 |
|
|
2021 |
|
|
2021 |
|
|
2022 |
|
|
2022 |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADR |
|
$ |
120.56 |
|
|
$ |
140.02 |
|
|
$ |
131.04 |
|
|
$ |
137.03 |
|
|
$ |
153.35 |
|
|
Occupancy |
|
|
70.7 |
% |
|
|
71.5 |
% |
|
|
67.5 |
% |
|
|
67.1 |
% |
|
|
77.9 |
% |
|
RevPAR |
|
$ |
85.28 |
|
|
$ |
100.14 |
|
|
$ |
88.43 |
|
|
$ |
91.98 |
|
|
$ |
119.41 |
|
|
Net income |
|
$ |
20,283 |
|
|
$ |
31,759 |
|
|
$ |
13,221 |
|
|
$ |
18,002 |
|
|
$ |
65,345 |
|
|
Adjusted Hotel EBITDA (1) |
|
$ |
94,814 |
|
|
$ |
105,423 |
|
|
$ |
84,609 |
|
|
$ |
87,936 |
|
|
$ |
136,515 |
|
|
(1) |
See reconciliation of Adjusted Hotel EBITDA to net income (loss) in “Non-GAAP Financial Measures” below. |
While the Company experienced its most significant decline in operating results (driven by the impact of COVID-19) during 2020 and the first quarter of 2021, occupancy and RevPAR have since shown improvement with a RevPAR increase of 40.0% and 50.6% for the three and six months ended June 30, 2022, compared to the same periods in 2021. Although the Company expects continued recovery in rate and occupancy, it is difficult to project the pace at which the Company will experience a full recovery to pre-pandemic levels and future revenues and operating results could be negatively impacted by, among other things, historical seasonal trends, new COVID-19 variants, state and local governments and businesses reverting to tighter COVID-19 mitigation restrictions, deterioration of consumer sentiment, labor shortages, supply chain disruptions, a recessionary macroeconomic environment or inflationary pressures.
Comparable Hotels Operating Results
The following tables reflect certain operating statistics for the Company’s 219 hotels owned as of June 30, 2022 (“Comparable Hotels”). The Company defines metrics from Comparable Hotels as results generated by the 219 hotels owned as of the end of the reporting period. For the hotels acquired during the reporting periods shown, the Company has included, as applicable, results of those hotels for periods prior to the Company’s ownership using information provided by the properties’ prior owners at the time of acquisition and not adjusted by the Company. This information has not been audited, either for the periods owned or prior to ownership by the Company. For dispositions, results have been excluded for the Company’s period of ownership.
|
|
|
Three Months Ended June 30, |
|
|||||||||||||||||
|
|
|
2022 |
|
|
2021 |
|
|
Percent Change 2021 |
|
|
2019 |
|
|
Percent Change 2019 |
|
|||||
|
ADR |
|
$ |
153.35 |
|
|
$ |
122.69 |
|
|
|
25.0 |
% |
|
$ |
145.14 |
|
|
|
5.7 |
% |
|
Occupancy |
|
|
77.9 |
% |
|
|
70.7 |
% |
|
|
10.2 |
% |
|
|
81.6 |
% |
|
|
-4.5 |
% |
|
RevPAR |
|
$ |
119.41 |
|
|
$ |
86.71 |
|
|
|
37.7 |
% |
|
$ |
118.41 |
|
|
|
0.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
|||||||||||||||||
|
|
|
2022 |
|
|
2021 |
|
|
Percent Change 2021 |
|
|
2019 |
|
|
Percent Change 2019 |
|
|||||
|
ADR |
|
$ |
145.84 |
|
|
$ |
112.79 |
|
|
|
29.3 |
% |
|
$ |
142.64 |
|
|
|
2.2 |
% |
|
Occupancy |
|
|
72.5 |
% |
|
|
63.1 |
% |
|
|
14.9 |
% |
|
|
77.7 |
% |
|
|
-6.7 |
% |
|
RevPAR |
|
$ |
105.77 |
|
|
$ |
71.14 |
|
|
|
48.7 |
% |
|
$ |
110.90 |
|
|
|
-4.6 |
% |
23
Same Store Operating Results
The following tables reflect certain operating statistics for the 204 hotels owned by the Company as of January 1, 2019 and during the entirety of the reporting periods being compared (“Same Store Hotels”). Comparisons to 2019 operating results are included to provide a better understanding of the Company’s recovery from the impact of COVID-19 on hotel operations. This information has not been audited.
|
|
|
Three Months Ended June 30, |
|
|||||||||||||||||
|
|
|
2022 |
|
|
2021 |
|
|
Percent Change 2021 |
|
|
2019 |
|
|
Percent Change 2019 |
|
|||||
|
ADR |
|
$ |
152.07 |
|
|
$ |
121.99 |
|
|
|
24.7 |
% |
|
$ |
144.35 |
|
|
|
5.3 |
% |
|
Occupancy |
|
|
78.0 |
% |
|
|
71.4 |
% |
|
|
9.2 |
% |
|
|
81.8 |
% |
|
|
-4.6 |
% |
|
RevPAR |
|
$ |
118.64 |
|
|
$ |
87.07 |
|
|
|
36.3 |
% |
|
$ |
118.07 |
|
|
|
0.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
|
|||||||||||||||||
|
|
|
2022 |
|
|
2021 |
|
|
Percent Change 2021 |
|
|
2019 |
|
|
Percent Change 2019 |
|
|||||
|
ADR |
|
$ |
144.52 |
|
|
$ |
112.29 |
|
|
|
28.7 |
% |
|
$ |
141.99 |
|
|
|
1.8 |
% |
|
Occupancy |
|
|
72.8 |
% |
|
|
63.7 |
% |
|
|
14.3 |
% |
|
|
78.0 |
% |
|
|
-6.7 |
% |
|
RevPAR |
|
$ |
105.23 |
|
|
$ |
71.56 |
|
|
|
47.1 |
% |
|
$ |
110.76 |
|
|
|
-5.0 |
% |
As discussed above, hotel performance is impacted by many factors, including the economic conditions in the U.S. as well as each individual locality. COVID-19 has been negatively affecting the U.S. hotel industry since March 2020. The Company’s Same Store Hotels revenue and operating results improved during the three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021, which is consistent with the overall lodging industry. While the Company’s Same Store Hotels RevPAR was down approximately 5.0% for the six months ended June 30, 2022, compared to the same period in 2019 (the last year prior to the COVID-19 pandemic), RevPAR was approximately 0.5% higher for the three months ended June 30, 2022 compared to the same period in 2019. Though the Company anticipates further improvement to RevPAR compared to 2021, the Company can give no assurances as to the amount or period of improvement due to the uncertainty regarding the duration and long-term impact of COVID-19.
Revenues
The Company’s principal source of revenue is hotel revenue consisting of room, food and beverage, and other related revenue. For the three months ended June 30, 2022 and 2021, the Company had total revenue of $337.7 million and $247.4 million, respectively. For the six months ended June 30, 2022 and 2021, the Company had total revenue of $598.1 million and $406.1 million, respectively. For the three months ended June 30, 2022 and 2021, respectively, Comparable Hotels achieved combined average occupancy of 77.9% and 70.7%, ADR of $153.35 and $122.69 and RevPAR of $119.41 and $86.71. For the six months ended June 30, 2022 and 2021, respectively, Comparable Hotels achieved combined average occupancy of 72.5% and 63.1%, ADR of $145.84 and $112.79 and RevPAR of $105.77 and $71.14. ADR is calculated as room revenue divided by the number of rooms sold, and RevPAR is calculated as occupancy multiplied by ADR.
Compared to the same periods in 2021, during the three and six months ended June 30, 2022, the Company experienced increases in ADR and occupancy, resulting in increases of 37.7% and 48.7%, respectively, in RevPAR for Comparable Hotels. Compared to the same periods of 2019 (pre-COVID-19), Comparable Hotels RevPAR for the second quarter of 2022 increased by 0.8% and for the first half of 2022 decreased by 4.6% primarily as a result of increases in ADR, offset by reductions in occupancy. Revenue recovery in the three and six months ended June 30, 2022, as compared to the same periods of 2021 was led by leisure transient and small group demand, with increased demand from small corporate business. Suburban markets continued to see stronger demand than urban markets and the Sun Belt generally outperformed other regions of the U.S. throughout the hospitality industry. The Company expects improvement to continue, however, future revenues could be negatively impacted by, among other things, historical seasonal trends, an increase in COVID-19 cases, new COVID-19 variants, state and local governments and businesses reverting to tighter mitigation restrictions, or deterioration of consumer sentiment.
Hotel Operating Expense
Hotel operating expense consists of direct room operating expense, hotel administrative expense, sales and marketing expense, utilities expense, repair and maintenance expense, franchise fees and management fees. Hotel operating expense for the three months ended June 30, 2022 and 2021 totaled $182.5 million and $135.4 million, respectively, or 54.1% and 54.7% of total revenue for the respective periods. Hotel operating expense for the six months ended June 30, 2022 and 2021 totaled $336.5 million and $239.2 million, respectively, or 56.3% and 58.9% of total revenue for the respective periods. Comparatively, prior to COVID-19, hotel operating expense was 54.9% and 56.2% of total revenue for the three and six months ended June 30, 2019.
24
The impact of the pandemic has varied and will continue to vary by market and hotel. With the support of its brands and third-party management companies, the Company worked to reduce costs associated with operating hotels in a lower occupancy environment than that experienced prior to COVID-19. As occupancy has increased, adding staff to meet increased demand has been challenging, and while the Company’s hotels made progress in filling open positions through the first two quarters of 2022, they have often done so at higher wage rates as compared to 2021 or with more expensive contract labor. Likewise, supply chain disruptions and broader inflationary pressures throughout the overall economy and global tensions have driven shortages and cost increases for materials and supplies such as food and equipment. The Company continues to work with its management companies to realize operational efficiencies and mitigate the impact of cost pressures resulting from supply chain shortages, inflation and staffing challenges. The Company will continue to evaluate and work with its management companies to implement adjustments to the hotel operating model in response to continued changes in the operating environment and guest preferences including evaluating staffing levels at its hotels to maximize efficiency.
Property Taxes, Insurance and Other Expense
Property taxes, insurance, and other expense for the three months ended June 30, 2022 and 2021 was $18.8 million and $17.3 million, respectively, or 5.6% and 7.0% of total revenue for the respective periods. The increase was primarily due to increases in property taxes in certain locations due to the reassessment of property values by localities related to the improved economy, partially offset by decreases at other locations due to successful appeals of tax assessments. For the six months ended June 30, 2022 and 2021, property taxes, insurance and other expense totaled $37.5 million and $37.0 million, or 6.3% and 9.1% of total revenue for the respective periods. The Company will continue to aggressively appeal tax assessments in certain jurisdictions in an attempt to minimize tax increases, as warranted, and will continue to monitor locality guidance as a result of COVID-19.
General and Administrative Expense
General and administrative expense for the three months ended June 30, 2022 and 2021 was $10.3 million and $8.4 million, respectively, or 3.1% and 3.4% of total revenue for the respective periods. For the six months ended June 30, 2022 and 2021, general and administrative expense was $19.9 million and $16.6 million, respectively, or 3.3% and 4.1% of total revenue for the respective periods. The principal components of general and administrative expense are payroll and related benefit costs, legal fees, accounting fees and reporting expenses. The increase in general and administrative expense for the three and six months ended June 30, 2022 compared to the same periods in 2021, was primarily due to increased accruals of $1.2 million and $2.0 million, respectively, related to executive incentive compensation, based on operational and shareholder return performance through June 30, 2022 and estimated for the remainder of the year.
Loss on Impairment of Depreciable Real Estate Assets
The Company did not recognize any loss on the impairment of depreciable real estate assets for the six months ended June 30, 2022. Loss on impairment of depreciable real estate assets was $10.8 million for the six months ended June 30, 2021, consisting of impairment losses of $1.3 million for the Overland Park, Kansas SpringHill Suites and $9.4 million for four hotel properties identified by the Company in the first quarter of 2021 for potential sale. See Note 3 titled “Dispositions” in the Company’s Unaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q, for additional information concerning these impairment losses.
Depreciation and Amortization Expense
Depreciation and amortization expense for the three months ended June 30, 2022 and 2021 was $45.3 million and $46.4 million, respectively. For the six months ended June 30, 2022 and 2021, depreciation and amortization expense was $90.6 million and $95.1 million, respectively. Depreciation and amortization expense primarily represents expense of the Company’s hotel buildings and related improvements, and associated personal property (furniture, fixtures, and equipment) for the respective periods owned. The decreases of approximately $1.1 million and $4.5 million, respectively, for the three and six months ended June 30, 2022 were primarily due to the hotel dispositions completed throughout 2021, partially offset by acquisitions completed throughout 2021 and renovations completed throughout 2022.
Interest and Other Expense, net
Interest and other expense, net for the three months ended June 30, 2022 and 2021 was
25
$15.2 million and $18.6 million, respectively. For the six months ended June 30, 2022 and 2021, interest and other expense, net was $29.9 million and $37.1 million, respectively. Interest and other expense, net for the six months ended June 30, 2022 is net of approximately $0.3 million of interest capitalized associated with renovation projects. Additionally, interest and other expense, net for the three months ended June 30, 2022 and 2021 includes approximately $1.5 million and $2.9 million, respectively, of interest recorded on the Company’s finance lease liabilities. For the six months ended June 30, 2022 and 2021, interest and other expense, net includes approximately $2.9 million and $5.8 million, respectively, of interest recorded on the Company’s finance lease liabilities.
Interest expense related to the Company’s debt instruments for the six months ended June 30, 2022 decreased compared to the six months ended June 30, 2021 as a result of both lower average borrowings and lower average interest rates as the Company paid higher rates due to its covenant waiver status during the first six months of 2021. The Company anticipates interest expense for the second half of 2022 to be similar to the second half of 2021 due to reduced average borrowings offset by higher interest rates. See Note 4 titled “Debt” in the Company’s Unaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q, for additional discussion of the Company’s amended unsecured credit facilities. In addition, interest on the Company’s finance leases decreased $2.9 million for the six months ended June 30, 2022 compared to the same period in 2021, due to the August 16, 2021 purchase of the fee interest in the land at the Company’s Seattle, Washington Residence Inn that was previously under a ground lease.
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 Funds from Operations (“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 EBITDAre”) and 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 and 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 and Adjusted Hotel EBITDA, as calculated by the Company, may not be comparable to FFO, MFFO, EBITDA, EBITDAre, Adjusted EBITDAre and 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.
FFO and MFFO
The Company calculates and presents FFO in accordance with standards established by the National Association of Real Estate Investment Trusts (“Nareit”), which defines FFO as net income (loss) (computed in accordance with GAAP), excluding gains and losses from the sale of certain real estate assets (including gains and losses from change in control), extraordinary items as defined by GAAP, and the cumulative effect of changes in accounting principles, plus real estate related depreciation, amortization and impairments, and adjustments for unconsolidated affiliates. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, most real estate industry investors consider FFO to be helpful in evaluating a real estate company’s operations. The Company further believes that by excluding the effects of these items, FFO is useful to investors in comparing its operating performance between periods and between REITs that report FFO using the Nareit definition. FFO as presented by the Company is applicable only to its common shareholders, but does not represent an amount that accrues directly to common shareholders.
The Company calculates MFFO by further adjusting FFO for the exclusion of amortization of finance ground lease assets, amortization of favorable and unfavorable operating leases, net and non-cash straight-line operating ground lease expense, as these expenses do not reflect the underlying performance of the related hotels. The Company presents MFFO when evaluating its performance because it believes that it provides further useful supplemental information to investors regarding its ongoing operating performance.
The following table reconciles the Company’s GAAP net income (loss) to FFO and MFFO for the three and six months ended June 30, 2022 and 2021 (in thousands):
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
|
Net income (loss) |
|
$ |
65,345 |
|
|
$ |
20,283 |
|
|
$ |
83,347 |
|
|
$ |
(26,152 |
) |
|
Depreciation of real estate owned |
|
|
44,557 |
|
|
|
44,764 |
|
|
|
89,117 |
|
|
|
91,852 |
|
|
(Gain) loss on sale of real estate |
|
|
- |
|
|
|
864 |
|
|
|
- |
|
|
|
(3,620 |
) |
|
Loss on impairment of depreciable real estate assets |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
10,754 |
|
|
Funds from operations |
|
|
109,902 |
|
|
|
65,911 |
|
|
|
172,464 |
|
|
|
72,834 |
|
|
Amortization of finance ground lease assets |
|
|
760 |
|
|
|
1,618 |
|
|
|
1,519 |
|
|
|
3,235 |
|
|
Amortization of favorable and unfavorable operating leases, net |
|
|
103 |
|
|
|
98 |
|
|
|
202 |
|
|
|
196 |
|
|
Non-cash straight-line operating ground lease expense |
|
|
38 |
|
|
|
43 |
|
|
|
78 |
|
|
|
87 |
|
|
Modified funds from operations |
|
$ |
110,803 |
|
|
$ |
67,670 |
|
|
$ |
174,263 |
|
|
$ |
76,352 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26
EBITDA, EBITDAre, Adjusted EBITDAre and Adjusted Hotel EBITDA
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 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 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 is used by management to measure the performance of the Company’s hotels and effectiveness of the operators of the hotels.
The following table reconciles the Company’s GAAP net income (loss) to EBITDA, EBITDAre, Adjusted EBITDAre and Adjusted Hotel EBITDA for the three and six months ended June 30, 2022 and 2021 (in thousands):
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
||||||||||
|
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
||||
|
Net income (loss) |
|
$ |
65,345 |
|
|
$ |
20,283 |
|
|
$ |
83,347 |
|
|
$ |
(26,152 |
) |
|
Depreciation and amortization |
|
|
45,322 |
|
|
|
46,386 |
|
|
|
90,646 |
|
|
|
95,096 |
|
|
Amortization of favorable and unfavorable operating leases, net |
|
|
103 |
|
|
|
98 |
|
|
|
202 |
|
|
|
196 |
|
|
Interest and other expense, net |
|
|
15,198 |
|
|
|
18,618 |
|
|
|
29,852 |
|
|
|
37,131 |
|
|
Income tax expense |
|
|
202 |
|
|
|
87 |
|
|
|
381 |
|
|
|
195 |
|
|
EBITDA |
|
|
126,170 |
|
|
|
85,472 |
|
|
|
204,428 |
|
|
|
106,466 |
|
|
(Gain) loss on sale of real estate |
|
|
- |
|
|
|
864 |
|
|
|
- |
|
|
|
(3,620 |
) |
|
Loss on impairment of depreciable real estate assets |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
10,754 |
|
|
EBITDAre |
|
|
126,170 |
|
|
|
86,336 |
|
|
|
204,428 |
|
|
|
113,600 |
|
|
Non-cash straight-line operating ground lease expense |
|
|
38 |
|
|
|
43 |
|
|
|
78 |
|
|
|
87 |
|
|
Adjusted EBITDAre |
|
|
126,208 |
|
|
|
86,379 |
|
|
|
204,506 |
|
|
|
113,687 |
|
|
General and administrative expense |
|
|
10,307 |
|
|
|
8,435 |
|
|
|
19,945 |
|
|
|
16,554 |
|
|
Adjusted Hotel EBITDA |
|
$ |
136,515 |
|
|
$ |
94,814 |
|
|
$ |
224,451 |
|
|
$ |
130,241 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27
The following table reconciles the Company’s GAAP net income to EBITDA, EBITDAre, Adjusted EBITDAre and Adjusted Hotel EBITDA by quarter for the last five quarters (in thousands):
|
|
|
2nd Quarter |
|
|
3rd Quarter |
|
|
4th Quarter |
|
|
1st Quarter |
|
|
2nd Quarter |
|
|||||
|
|
|
2021 |
|
|
2021 |
|
|
2021 |
|
|
2022 |
|
|
2022 |
|
|||||
|
Net income |
|
$ |
20,283 |
|
|
$ |
31,759 |
|
|
$ |
13,221 |
|
|
$ |
18,002 |
|
|
$ |
65,345 |
|
|
Depreciation and amortization |
|
|
46,386 |
|
|
|
44,217 |
|
|
|
45,158 |
|
|
|
45,324 |
|
|
|
45,322 |
|
|
Amortization of favorable and unfavorable operating leases, net |
|
|
98 |
|
|
|
98 |
|
|
|
99 |
|
|
|
99 |
|
|
|
103 |
|
|
Interest and other expense, net |
|
|
18,618 |
|
|
|
15,977 |
|
|
|
14,640 |
|
|
|
14,654 |
|
|
|
15,198 |
|
|
Income tax expense |
|
|
87 |
|
|
|
114 |
|
|
|
159 |
|
|
|
179 |
|
|
|
202 |
|
|
EBITDA |
|
|
85,472 |
|
|
|
92,165 |
|
|
|
73,277 |
|
|
|
78,258 |
|
|
|
126,170 |
|
|
(Gain) loss on sale of real estate |
|
|
864 |
|
|
|
(44 |
) |
|
|
68 |
|
|
|
- |
|
|
|
- |
|
|
EBITDAre |
|
|
86,336 |
|
|
|
92,121 |
|
|
|
73,345 |
|
|
|
78,258 |
|
|
|
126,170 |
|
|
Non-cash straight-line operating ground lease expense |
|
|
43 |
|
|
|
41 |
|
|
|
41 |
|
|
|
40 |
|
|
|
38 |
|
|
Adjusted EBITDAre |
|
|
86,379 |
|
|
|
92,162 |
|
|
|
73,386 |
|
|
|
78,298 |
|
|
|
126,208 |
|
|
General and administrative expense |
|
|
8,435 |
|
|
|
13,261 |
|
|
|
11,223 |
|
|
|
9,638 |
|
|
|
10,307 |
|
|
Adjusted Hotel EBITDA |
|
$ |
94,814 |
|
|
$ |
105,423 |
|
|
$ |
84,609 |
|
|
$ |
87,936 |
|
|
$ |
136,515 |
|
Hotels Owned
As of June 30, 2022, the Company owned 219 hotels with an aggregate of 28,748 rooms located in 36 states. The following tables summarize the number of hotels and rooms by brand and by state:
|
Number of Hotels and Guest Rooms by Brand |
|
|||||
|
|
|
Number of |
|
Number of |
|
|
|
Brand |
|
Hotels |
|
Rooms |
|
|
|
Hilton Garden Inn |
|
40 |
|
|
5,593 |
|
|
Hampton |
|
37 |
|
|
4,953 |
|
|
Courtyard |
|
33 |
|
|
4,653 |
|
|
Homewood Suites |
|
30 |
|
|
3,417 |
|
|
Residence Inn |
|
29 |
|
|
3,548 |
|
|
Fairfield |
|
10 |
|
|
1,213 |
|
|
Home2 Suites |
|
10 |
|
|
1,146 |
|
|
SpringHill Suites |
|
9 |
|
|
1,245 |
|
|
TownePlace Suites |
|
9 |
|
|
931 |
|
|
Hyatt Place |
|
3 |
|
|
411 |
|
|
Marriott |
|
2 |
|
|
619 |
|
|
Embassy Suites |
|
2 |
|
|
316 |
|
|
Independent |
|
2 |
|
|
263 |
|
|
AC Hotels |
|
1 |
|
|
178 |
|
|
Aloft |
|
1 |
|
|
157 |
|
|
Hyatt House |
|
1 |
|
|
105 |
|
|
Total |
|
219 |
|
|
28,748 |
|
28
|
Number of Hotels and Guest Rooms by State |
|
|||||||
|
|
|
Number of |
|
|
Number of |
|
||
|
State |
|
Hotels |
|
|
Rooms |
|
||
|
Alabama |
|
|
13 |
|
|
|
1,246 |
|
|
Alaska |
|
|
2 |
|
|
|
304 |
|
|
Arizona |
|
|
13 |
|
|
|
1,776 |
|
|
Arkansas |
|
|
2 |
|
|
|
248 |
|
|
California |
|
|
26 |
|
|
|
3,721 |
|
|
Colorado |
|
|
4 |
|
|
|
567 |
|
|
Florida |
|
|
22 |
|
|
|
2,844 |
|
|
Georgia |
|
|
5 |
|
|
|
585 |
|
|
Idaho |
|
|
1 |
|
|
|
186 |
|
|
Illinois |
|
|
7 |
|
|
|
1,255 |
|
|
Indiana |
|
|
4 |
|
|
|
479 |
|
|
Iowa |
|
|
3 |
|
|
|
301 |
|
|
Kansas |
|
|
3 |
|
|
|
320 |
|
|
Louisiana |
|
|
3 |
|
|
|
422 |
|
|
Maine |
|
|
3 |
|
|
|
514 |
|
|
Maryland |
|
|
2 |
|
|
|
233 |
|
|
Massachusetts |
|
|
3 |
|
|
|
330 |
|
|
Michigan |
|
|
1 |
|
|
|
148 |
|
|
Minnesota |
|
|
3 |
|
|
|
405 |
|
|
Mississippi |
|
|
2 |
|
|
|
168 |
|
|
Missouri |
|
|
4 |
|
|
|
544 |
|
|
Nebraska |
|
|
4 |
|
|
|
621 |
|
|
New Jersey |
|
|
5 |
|
|
|
629 |
|
|
New York |
|
|
4 |
|
|
|
554 |
|
|
North Carolina |
|
|
8 |
|
|
|
881 |
|
|
Ohio |
|
|
2 |
|
|
|
252 |
|
|
Oklahoma |
|
|
4 |
|
|
|
545 |
|
|
Oregon |
|
|
1 |
|
|
|
243 |
|
|
Pennsylvania |
|
|
3 |
|
|
|
391 |
|
|
South Carolina |
|
|
5 |
|
|
|
590 |
|
|
Tennessee |
|
|
11 |
|
|
|
1,337 |
|
|
Texas |
|
|
27 |
|
|
|
3,328 |
|
|
Utah |
|
|
3 |
|
|
|
393 |
|
|
Virginia |
|
|
12 |
|
|
|
1,722 |
|
|
Washington |
|
|
3 |
|
|
|
490 |
|
|
Wisconsin |
|
|
1 |
|
|
|
176 |
|
|
Total |
|
|
219 |
|
|
|
28,748 |
|
|
|
|
|
|
|
|
|
|
|
29
The following table summarizes the location, brand, manager, date acquired or completed and number of rooms for each of the 219 hotels the Company owned as of June 30, 2022:
|
City |
|
State |
|
Brand |
|
Manager |
|
Date Acquired or Completed |
|
Rooms |
|
|
|
Anchorage |
|
AK |
|
Embassy Suites |
|
Stonebridge |
|
4/30/2010 |
|
|
169 |
|
|
Anchorage |
|
AK |
|
Home2 Suites |
|
Stonebridge |
|
12/1/2017 |
|
|
135 |
|
|
Auburn |
|
AL |
|
Hilton Garden Inn |
|
LBA |
|
3/1/2014 |
|
|
101 |
|
|
Birmingham |
|
AL |
|
Courtyard |
|
LBA |
|
3/1/2014 |
|
|
84 |
|
|
Birmingham |
|
AL |
|
Hilton Garden Inn |
|
LBA |
|
9/12/2017 |
|
|
104 |
|
|
Birmingham |
|
AL |
|
Home2 Suites |
|
LBA |
|
9/12/2017 |
|
|
106 |
|
|
Birmingham |
|
AL |
|
Homewood Suites |
|
McKibbon |
|
3/1/2014 |
|
|
95 |
|
|
Dothan |
|
AL |
|
Hilton Garden Inn |
|
LBA |
|
6/1/2009 |
|
|
104 |
|
|
Dothan |
|
AL |
|
Residence Inn |
|
LBA |
|
3/1/2014 |
|
|
84 |
|
|
Huntsville |
|
AL |
|
Hampton |
|
LBA |
|
9/1/2016 |
|
|
98 |
|
|
Huntsville |
|
AL |
|
Hilton Garden Inn |
|
LBA |
|
3/1/2014 |
|
|
101 |
|
|
Huntsville |
|
AL |
|
Home2 Suites |
|
LBA |
|
9/1/2016 |
|
|
77 |
|
|
Huntsville |
|
AL |
|
Homewood Suites |
|
LBA |
|
3/1/2014 |
|
|
107 |
|
|
Mobile |
|
AL |
|
Hampton |
|
McKibbon |
|
9/1/2016 |
|
|
101 |
|
|
Prattville |
|
AL |
|
Courtyard |
|
LBA |
|
3/1/2014 |
|
|
84 |
|
|
Rogers |
|
AR |
|
Hampton |
|
Raymond |
|
8/31/2010 |
|
|
122 |
|
|
Rogers |
|
AR |
|
Homewood Suites |
|
Raymond |
|
4/30/2010 |
|
|
126 |
|
|
Chandler |
|
AZ |
|
Courtyard |
|
North Central |
|
11/2/2010 |
|
|
150 |
|
|
Chandler |
|
AZ |
|
Fairfield |
|
North Central |
|
11/2/2010 |
|
|
110 |
|
|
Phoenix |
|
AZ |
|
Courtyard |
|
North Central |
|
11/2/2010 |
|
|
164 |
|
|
Phoenix |
|
AZ |
|
Hampton |
|
North Central |
|
9/1/2016 |
|
|
125 |
|
|
Phoenix |
|
AZ |
|
Hampton |
|
North Central |
|
5/2/2018 |
|
|
210 |
|
|
Phoenix |
|
AZ |
|
Homewood Suites |
|
North Central |
|
9/1/2016 |
|
|
134 |
|
|
Phoenix |
|
AZ |
|
Residence Inn |
|
North Central |
|
11/2/2010 |
|
|
129 |
|
|
Scottsdale |
|
AZ |
|
Hilton Garden Inn |
|
North Central |
|
9/1/2016 |
|
|
122 |
|
|
Tempe |
|
AZ |
|
Hyatt House |
|
Crestline |
|
8/13/2020 |
|
|
105 |
|
|
Tempe |
|
AZ |
|
Hyatt Place |
|
Crestline |
|
8/13/2020 |
|
|
154 |
|
|
Tucson |
|
AZ |
|
Hilton Garden Inn |
|
Western |
|
7/31/2008 |
|
|
125 |
|
|
Tucson |
|
AZ |
|
Residence Inn |
|
Western |
|
3/1/2014 |
|
|
124 |
|
|
Tucson |
|
AZ |
|
TownePlace Suites |
|
Western |
|
10/6/2011 |
|
|
124 |
|
|
Agoura Hills |
|
CA |
|
Homewood Suites |
|
Dimension |
|
3/1/2014 |
|
|
125 |
|
|
Burbank |
|
CA |
|
Courtyard |
|
Huntington |
|
8/11/2015 |
|
|
190 |
|
|
Burbank |
|
CA |
|
Residence Inn |
|
Marriott |
|
3/1/2014 |
|
|
166 |
|
|
Burbank |
|
CA |
|
SpringHill Suites |
|
Marriott |
|
7/13/2015 |
|
|
170 |
|
|
Clovis |
|
CA |
|
Hampton |
|
Dimension |
|
7/31/2009 |
|
|
86 |
|
|
Clovis |
|
CA |
|
Homewood Suites |
|
Dimension |
|
2/2/2010 |
|
|
83 |
|
|
Cypress |
|
CA |
|
Courtyard |
|
Dimension |
|
3/1/2014 |
|
|
180 |
|
|
Cypress |
|
CA |
|
Hampton |
|
Dimension |
|
6/29/2015 |
|
|
110 |
|
|
Oceanside |
|
CA |
|
Courtyard |
|
Marriott |
|
9/1/2016 |
|
|
142 |
|
|
Oceanside |
|
CA |
|
Residence Inn |
|
Marriott |
|
3/1/2014 |
|
|
125 |
|
|
Rancho Bernardo/San Diego |
|
CA |
|
Courtyard |
|
InnVentures |
|
3/1/2014 |
|
|
210 |
|
|
Sacramento |
|
CA |
|
Hilton Garden Inn |
|
Dimension |
|
3/1/2014 |
|
|
153 |
|
|
San Bernardino |
|
CA |
|
Residence Inn |
|
InnVentures |
|
2/16/2011 |
|
|
95 |
|
|
San Diego |
|
CA |
|
Courtyard |
|
Huntington |
|
9/1/2015 |
|
|
245 |
|
|
San Diego |
|
CA |
|
Hampton |
|
Dimension |
|
3/1/2014 |
|
|
177 |
|
|
San Diego |
|
CA |
|
Hilton Garden Inn |
|
InnVentures |
|
3/1/2014 |
|
|
200 |
|
|
San Diego |
|
CA |
|
Residence Inn |
|
Dimension |
|
3/1/2014 |
|
|
121 |
|
|
San Jose |
|
CA |
|
Homewood Suites |
|
Dimension |
|
3/1/2014 |
|
|
140 |
|
30
|
City |
|
State |
|
Brand |
|
Manager |
|
Date Acquired or Completed |
|
Rooms |
|
|
|
San Juan Capistrano |
|
CA |
|
Residence Inn |
|
Marriott |
|
9/1/2016 |
|
|
130 |
|
|
Santa Ana |
|
CA |
|
Courtyard |
|
Dimension |
|
5/23/2011 |
|
|
155 |
|
|
Santa Clarita |
|
CA |
|
Courtyard |
|
Dimension |
|
9/24/2008 |
|
|
140 |
|
|
Santa Clarita |
|
CA |
|
Fairfield |
|
Dimension |
|
10/29/2008 |
|
|
66 |
|
|
Santa Clarita |
|
CA |
|
Hampton |
|
Dimension |
|
10/29/2008 |
|
|
128 |
|
|
Santa Clarita |
|
CA |
|
Residence Inn |
|
Dimension |
|
10/29/2008 |
|
|
90 |
|
|
Tustin |
|
CA |
|
Fairfield |
|
Marriott |
|
9/1/2016 |
|
|
145 |
|
|
Tustin |
|
CA |
|
Residence Inn |
|
Marriott |
|
9/1/2016 |
|
|
149 |
|
|
Colorado Springs |
|
CO |
|
Hampton |
|
Chartwell |
|
9/1/2016 |
|
|
101 |
|
|
Denver |
|
CO |
|
Hilton Garden Inn |
|
Stonebridge |
|
9/1/2016 |
|
|
221 |
|
|
Highlands Ranch |
|
CO |
|
Hilton Garden Inn |
|
Dimension |
|
3/1/2014 |
|
|
128 |
|
|
Highlands Ranch |
|
CO |
|
Residence Inn |
|
Dimension |
|
3/1/2014 |
|
|
117 |
|
|
Boca Raton |
|
FL |
|
Hilton Garden Inn |
|
Dimension |
|
9/1/2016 |
|
|
149 |
|
|
Cape Canaveral |
|
FL |
|
Hampton |
|
LBA |
|
4/30/2020 |
|
|
116 |
|
|
Cape Canaveral |
|
FL |
|
Homewood Suites |
|
LBA |
|
9/1/2016 |
|
|
153 |
|
|
Cape Canaveral |
|
FL |
|
Home2 Suites |
|
LBA |
|
4/30/2020 |
|
|
108 |
|
|
Fort Lauderdale |
|
FL |
|
Hampton |
|
Dimension |
|
6/23/2015 |
|
|
156 |
|
|
Fort Lauderdale |
|
FL |
|
Residence Inn |
|
LBA |
|
9/1/2016 |
|
|
156 |
|
|
Gainesville |
|
FL |
|
Hilton Garden Inn |
|
McKibbon |
|
9/1/2016 |
|
|
104 |
|
|
Gainesville |
|
FL |
|
Homewood Suites |
|
McKibbon |
|
9/1/2016 |
|
|
103 |
|
|
Jacksonville |
|
FL |
|
Homewood Suites |
|
McKibbon |
|
3/1/2014 |
|
|
119 |
|
|
Jacksonville |
|
FL |
|
Hyatt Place |
|
Crestline |
|
12/7/2018 |
|
|
127 |
|
|
Miami |
|
FL |
|
Courtyard |
|
Dimension |
|
3/1/2014 |
|
|
118 |
|
|
Miami |
|
FL |
|
Hampton |
|
HHM |
|
4/9/2010 |
|
|
121 |
|
|
Miami |
|
FL |
|
Homewood Suites |
|
Dimension |
|
3/1/2014 |
|
|
162 |
|
|
Orlando |
|
FL |
|
Fairfield |
|
Marriott |
|
7/1/2009 |
|
|
200 |
|
|
Orlando |
|
FL |
|
Home2 Suites |
|
LBA |
|
3/19/2019 |
|
|
128 |
|
|
Orlando |
|
FL |
|
SpringHill Suites |
|
Marriott |
|
7/1/2009 |
|
|
200 |
|
|
Panama City |
|
FL |
|
Hampton |
|
LBA |
|
3/12/2009 |
|
|
95 |
|
|
Panama City |
|
FL |
|
TownePlace Suites |
|
LBA |
|
1/19/2010 |
|
|
103 |
|
|
Pensacola |
|
FL |
|
TownePlace Suites |
|
McKibbon |
|
9/1/2016 |
|
|
97 |
|
|
Tallahassee |
|
FL |
|
Fairfield |
|
LBA |
|
9/1/2016 |
|
|
97 |
|
|
Tallahassee |
|
FL |
|
Hilton Garden Inn |
|
LBA |
|
3/1/2014 |
|
|
85 |
|
|
Tampa |
|
FL |
|
Embassy Suites |
|
HHM |
|
11/2/2010 |
|
|
147 |
|
|
Atlanta/Downtown |
|
GA |
|
Hampton |
|
McKibbon |
|
2/5/2018 |
|
|
119 |
|
|
Atlanta/Perimeter Dunwoody |
|
GA |
|
Hampton |
|
LBA |
|
6/28/2018 |
|
|
132 |
|
|
Atlanta |
|
GA |
|
Home2 Suites |
|
McKibbon |
|
7/1/2016 |
|
|
128 |
|
|
Macon |
|
GA |
|
Hilton Garden Inn |
|
LBA |
|
3/1/2014 |
|
|
101 |
|
|
Savannah |
|
GA |
|
Hilton Garden Inn |
|
Newport |
|
3/1/2014 |
|
|
105 |
|
|
Cedar Rapids |
|
IA |
|
Hampton |
|
Aimbridge |
|
9/1/2016 |
|
|
103 |
|
|
Cedar Rapids |
|
IA |
|
Homewood Suites |
|
Aimbridge |
|
9/1/2016 |
|
|
95 |
|
|
Davenport |
|
IA |
|
Hampton |
|
Aimbridge |
|
9/1/2016 |
|
|
103 |
|
|
Boise |
|
ID |
|
Hampton |
|
Raymond |
|
4/30/2010 |
|
|
186 |
|
|
Des Plaines |
|
IL |
|
Hilton Garden Inn |
|
Raymond |
|
9/1/2016 |
|
|
253 |
|
|
Hoffman Estates |
|
IL |
|
Hilton Garden Inn |
|
HHM |
|
9/1/2016 |
|
|
184 |
|
|
Mettawa |
|
IL |
|
Hilton Garden Inn |
|
HHM |
|
11/2/2010 |
|
|
170 |
|
|
Mettawa |
|
IL |
|
Residence Inn |
|
HHM |
|
11/2/2010 |
|
|
130 |
|
|
Rosemont |
|
IL |
|
Hampton |
|
Raymond |
|
9/1/2016 |
|
|
158 |
|
|
Skokie |
|
IL |
|
Hampton |
|
Raymond |
|
9/1/2016 |
|
|
225 |
|
|
Warrenville |
|
IL |
|
Hilton Garden Inn |
|
HHM |
|
11/2/2010 |
|
|
135 |
|
31
|
City |
|
State |
|
Brand |
|
Manager |
|
Date Acquired or Completed |
|
Rooms |
|
|
|
Indianapolis |
|
IN |
|
SpringHill Suites |
|
HHM |
|
11/2/2010 |
|
|
130 |
|
|
Merrillville |
|
IN |
|
Hilton Garden Inn |
|
HHM |
|
9/1/2016 |
|
|
124 |
|
|
Mishawaka |
|
IN |
|
Residence Inn |
|
HHM |
|
11/2/2010 |
|
|
106 |
|
|
South Bend |
|
IN |
|
Fairfield |
|
HHM |
|
9/1/2016 |
|
|
119 |
|
|
Overland Park |
|
KS |
|
Fairfield |
|
Raymond |
|
3/1/2014 |
|
|
110 |
|
|
Overland Park |
|
KS |
|
Residence Inn |
|
Raymond |
|
3/1/2014 |
|
|
120 |
|
|
Wichita |
|
KS |
|
Courtyard |
|
Aimbridge |
|
3/1/2014 |
|
|
90 |
|
|
Lafayette |
|
LA |
|
Hilton Garden Inn |
|
LBA |
|
7/30/2010 |
|
|
153 |
|
|
Lafayette |
|
LA |
|
SpringHill Suites |
|
LBA |
|
6/23/2011 |
|
|
103 |
|
|
New Orleans |
|
LA |
|
Homewood Suites |
|
Dimension |
|
3/1/2014 |
|
|
166 |
|
|
Marlborough |
|
MA |
|
Residence Inn |
|
Crestline |
|
3/1/2014 |
|
|
112 |
|
|
Westford |
|
MA |
|
Hampton |
|
Crestline |
|
3/1/2014 |
|
|
110 |
|
|
Westford |
|
MA |
|
Residence Inn |
|
Crestline |
|
3/1/2014 |
|
|
108 |
|
|
Annapolis |
|
MD |
|
Hilton Garden Inn |
|
Crestline |
|
3/1/2014 |
|
|
126 |
|
|
Silver Spring |
|
MD |
|
Hilton Garden Inn |
|
Crestline |
|
7/30/2010 |
|
|
107 |
|
|
Portland |
|
ME |
|
AC Hotels |
|
Crestline |
|
8/20/2021 |
|
|
178 |
|
|
Portland |
|
ME |
|
Aloft |
|
Crestline |
|
9/10/2021 |
|
|
157 |
|
|
Portland |
|
ME |
|
Residence Inn |
|
Crestline |
|
10/13/2017 |
|
|
179 |
|
|
Novi |
|
MI |
|
Hilton Garden Inn |
|
HHM |
|
11/2/2010 |
|
|
148 |
|
|
Maple Grove |
|
MN |
|
Hilton Garden Inn |
|
North Central |
|
9/1/2016 |
|
|
121 |
|
|
Rochester |
|
MN |
|
Hampton |
|
Raymond |
|
8/3/2009 |
|
|
124 |
|
|
St. Paul |
|
MN |
|
Hampton |
|
Raymond |
|
3/4/2019 |
|
|
160 |
|
|
Kansas City |
|
MO |
|
Hampton |
|
Raymond |
|
8/31/2010 |
|
|
122 |
|
|
Kansas City |
|
MO |
|
Residence Inn |
|
Raymond |
|
3/1/2014 |
|
|
106 |
|
|
St. Louis |
|
MO |
|
Hampton |
|
Raymond |
|
8/31/2010 |
|
|
190 |
|
|
St. Louis |
|
MO |
|
Hampton |
|
Raymond |
|
4/30/2010 |
|
|
126 |
|
|
Hattiesburg |
|
MS |
|
Courtyard |
|
LBA |
|
3/1/2014 |
|
|
84 |
|
|
Hattiesburg |
|
MS |
|
Residence Inn |
|
LBA |
|
12/11/2008 |
|
|
84 |
|
|
Carolina Beach |
|
NC |
|
Courtyard |
|
Crestline |
|
3/1/2014 |
|
|
144 |
|
|
Charlotte |
|
NC |
|
Fairfield |
|
Newport |
|
9/1/2016 |
|
|
94 |
|
|
Durham |
|
NC |
|
Homewood Suites |
|
McKibbon |
|
12/4/2008 |
|
|
122 |
|
|
Fayetteville |
|
NC |
|
Home2 Suites |
|
LBA |
|
2/3/2011 |
|
|
118 |
|
|
Greensboro |
|
NC |
|
SpringHill Suites |
|
Newport |
|
3/1/2014 |
|
|
82 |
|
|
Jacksonville |
|
NC |
|
Home2 Suites |
|
LBA |
|
9/1/2016 |
|
|
105 |
|
|
Wilmington |
|
NC |
|
Fairfield |
|
Crestline |
|
3/1/2014 |
|
|
122 |
|
|
Winston-Salem |
|
NC |
|
Hampton |
|
McKibbon |
|
9/1/2016 |
|
|
94 |
|
|
Omaha |
|
NE |
|
Courtyard |
|
Marriott |
|
3/1/2014 |
|
|
181 |
|
|
Omaha |
|
NE |
|
Hampton |
|
HHM |
|
9/1/2016 |
|
|
139 |
|
|
Omaha |
|
NE |
|
Hilton Garden Inn |
|
HHM |
|
9/1/2016 |
|
|
178 |
|
|
Omaha |
|
NE |
|
Homewood Suites |
|
HHM |
|
9/1/2016 |
|
|
123 |
|
|
Cranford |
|
NJ |
|
Homewood Suites |
|
Dimension |
|
3/1/2014 |
|
|
108 |
|
|
Mahwah |
|
NJ |
|
Homewood Suites |
|
Dimension |
|
3/1/2014 |
|
|
110 |
|
|
Mount Laurel |
|
NJ |
|
Homewood Suites |
|
Newport |
|
1/11/2011 |
|
|
118 |
|
|
Somerset |
|
NJ |
|
Courtyard |
|
Newport |
|
3/1/2014 |
|
|
162 |
|
|
West Orange |
|
NJ |
|
Courtyard |
|
Newport |
|
1/11/2011 |
|
|
131 |
|
|
Islip/Ronkonkoma |
|
NY |
|
Hilton Garden Inn |
|
Crestline |
|
3/1/2014 |
|
|
166 |
|
|
New York |
|
NY |
|
Independent |
|
Highgate |
|
3/1/2014 |
|
|
208 |
|
|
Syracuse |
|
NY |
|
Courtyard |
|
Crestline |
|
10/16/2015 |
|
|
102 |
|
|
Syracuse |
|
NY |
|
Residence Inn |
|
Crestline |
|
10/16/2015 |
|
|
78 |
|
|
Mason |
|
OH |
|
Hilton Garden Inn |
|
Raymond |
|
9/1/2016 |
|
|
110 |
|
32
|
City |
|
State |
|
Brand |
|
Manager |
|
Date Acquired or Completed |
|
Rooms |
|
|
|
Twinsburg |
|
OH |
|
Hilton Garden Inn |
|
Aimbridge |
|
10/7/2008 |
|
|
142 |
|
|
Oklahoma City |
|
OK |
|
Hampton |
|
Raymond |
|
5/28/2010 |
|
|
200 |
|
|
Oklahoma City |
|
OK |
|
Hilton Garden Inn |
|
Raymond |
|
9/1/2016 |
|
|
155 |
|
|
Oklahoma City |
|
OK |
|
Homewood Suites |
|
Raymond |
|
9/1/2016 |
|
|
100 |
|
|
Oklahoma City (West) |
|
OK |
|
Homewood Suites |
|
Chartwell |
|
9/1/2016 |
|
|
90 |
|
|
Portland |
|
OR |
|
Hampton |
|
Raymond |
|
11/17/2021 |
|
|
243 |
|
|
Collegeville/Philadelphia |
|
PA |
|
Courtyard |
|
Newport |
|
11/15/2010 |
|
|
132 |
|
|
Malvern/Philadelphia |
|
PA |
|
Courtyard |
|
Newport |
|
11/30/2010 |
|
|
127 |
|
|
Pittsburgh |
|
PA |
|
Hampton |
|
Newport |
|
12/31/2008 |
|
|
132 |
|
|
Charleston |
|
SC |
|
Home2 Suites |
|
LBA |
|
9/1/2016 |
|
|
122 |
|
|
Columbia |
|
SC |
|
Hilton Garden Inn |
|
Newport |
|
3/1/2014 |
|
|
143 |
|
|
Columbia |
|
SC |
|
TownePlace Suites |
|
Newport |
|
9/1/2016 |
|
|
91 |
|
|
Greenville |
|
SC |
|
Hyatt Place |
|
Crestline |
|
9/1/2021 |
|
|
130 |
|
|
Hilton Head |
|
SC |
|
Hilton Garden Inn |
|
McKibbon |
|
3/1/2014 |
|
|
104 |
|
|
Chattanooga |
|
TN |
|
Homewood Suites |
|
LBA |
|
3/1/2014 |
|
|
76 |
|
|
Franklin |
|
TN |
|
Courtyard |
|
Chartwell |
|
9/1/2016 |
|
|
126 |
|
|
Franklin |
|
TN |
|
Residence Inn |
|
Chartwell |
|
9/1/2016 |
|
|
124 |
|
|
Knoxville |
|
TN |
|
Homewood Suites |
|
McKibbon |
|
9/1/2016 |
|
|
103 |
|
|
Knoxville |
|
TN |
|
SpringHill Suites |
|
McKibbon |
|
9/1/2016 |
|
|
103 |
|
|
Knoxville |
|
TN |
|
TownePlace Suites |
|
McKibbon |
|
9/1/2016 |
|
|
97 |
|
|
Memphis |
|
TN |
|
Hampton |
|
Crestline |
|
2/5/2018 |
|
|
144 |
|
|
Memphis |
|
TN |
|
Hilton Garden Inn |
|
Crestline |
|
10/28/2021 |
|
|
150 |
|
|
Nashville |
|
TN |
|
Hilton Garden Inn |
|
Dimension |
|
9/30/2010 |
|
|
194 |
|
|
Nashville |
|
TN |
|
Home2 Suites |
|
Dimension |
|
5/31/2012 |
|
|
119 |
|
|
Nashville |
|
TN |
|
TownePlace Suites |
|
LBA |
|
9/1/2016 |
|
|
101 |
|
|
Addison |
|
TX |
|
SpringHill Suites |
|
Marriott |
|
3/1/2014 |
|
|
159 |
|
|
Arlington |
|
TX |
|
Hampton |
|
Western |
|
12/1/2010 |
|
|
98 |
|
|
Austin |
|
TX |
|
Courtyard |
|
HHM |
|
11/2/2010 |
|
|
145 |
|
|
Austin |
|
TX |
|
Fairfield |
|
HHM |
|
11/2/2010 |
|
|
150 |
|
|
Austin |
|
TX |
|
Hampton |
|
Dimension |
|
4/14/2009 |
|
|
124 |
|
|
Austin |
|
TX |
|
Hilton Garden Inn |
|
HHM |
|
11/2/2010 |
|
|
117 |
|
|
Austin |
|
TX |
|
Homewood Suites |
|
Dimension |
|
4/14/2009 |
|
|
97 |
|
|
Austin/Round Rock |
|
TX |
|
Hampton |
|
Dimension |
|
3/6/2009 |
|
|
94 |
|
|
Austin/Round Rock |
|
TX |
|
Homewood Suites |
|
Dimension |
|
9/1/2016 |
|
|
115 |
|
|
Dallas |
|
TX |
|
Homewood Suites |
|
Western |
|
9/1/2016 |
|
|
130 |
|
|
Denton |
|
TX |
|
Homewood Suites |
|
Chartwell |
|
9/1/2016 |
|
|
107 |
|
|
El Paso |
|
TX |
|
Homewood Suites |
|
Western |
|
3/1/2014 |
|
|
114 |
|
|
Fort Worth |
|
TX |
|
Courtyard |
|
LBA |
|
2/2/2017 |
|
|
124 |
|
|
Fort Worth |
|
TX |
|
Hilton Garden Inn |
|
Raymond |
|
11/17/2021 |
|
|
157 |
|
|
Fort Worth |
|
TX |
|
Homewood Suites |
|
Raymond |
|
11/17/2021 |
|
|
112 |
|
|
Fort Worth |
|
TX |
|
TownePlace Suites |
|
Western |
|
7/19/2010 |
|
|
140 |
|
|
Frisco |
|
TX |
|
Hilton Garden Inn |
|
Western |
|
12/31/2008 |
|
|
102 |
|
|
Grapevine |
|
TX |
|
Hilton Garden Inn |
|
Western |
|
9/24/2010 |
|
|
110 |
|
|
Houston |
|
TX |
|
Courtyard |
|
LBA |
|
9/1/2016 |
|
|
124 |
|
|
Houston |
|
TX |
|
Marriott |
|
Western |
|
1/8/2010 |
|
|
206 |
|
|
Houston |
|
TX |
|
Residence Inn |
|
Western |
|
3/1/2014 |
|
|
129 |
|
|
Houston |
|
TX |
|
Residence Inn |
|
Western |
|
9/1/2016 |
|
|
120 |
|
|
Lewisville |
|
TX |
|
Hilton Garden Inn |
|
Aimbridge |
|
10/16/2008 |
|
|
165 |
|
|
San Antonio |
|
TX |
|
TownePlace Suites |
|
Western |
|
3/1/2014 |
|
|
106 |
|
|
Shenandoah |
|
TX |
|
Courtyard |
|
LBA |
|
9/1/2016 |
|
|
124 |
|
33
|
City |
|
State |
|
Brand |
|
Manager |
|
Date Acquired or Completed |
|
Rooms |
|
|
|
Stafford |
|
TX |
|
Homewood Suites |
|
Western |
|
3/1/2014 |
|
|
78 |
|
|
Texarkana |
|
TX |
|
Hampton |
|
Aimbridge |
|
1/31/2011 |
|
|
81 |
|
|
Provo |
|
UT |
|
Residence Inn |
|
Dimension |
|
3/1/2014 |
|
|
114 |
|
|
Salt Lake City |
|
UT |
|
Residence Inn |
|
Huntington |
|
10/20/2017 |
|
|
136 |
|
|
Salt Lake City |
|
UT |
|
SpringHill Suites |
|
HHM |
|
11/2/2010 |
|
|
143 |
|
|
Alexandria |
|
VA |
|
Courtyard |
|
Marriott |
|
3/1/2014 |
|
|
178 |
|
|
Alexandria |
|
VA |
|
SpringHill Suites |
|
Marriott |
|
3/28/2011 |
|
|
155 |
|
|
Charlottesville |
|
VA |
|
Courtyard |
|
Crestline |
|
3/1/2014 |
|
|
139 |
|
|
Manassas |
|
VA |
|
Residence Inn |
|
Crestline |
|
2/16/2011 |
|
|
107 |
|
|
Richmond |
|
VA |
|
Independent |
|
Crestline |
|
10/9/2019 |
|
|
55 |
|
|
Richmond |
|
VA |
|
Courtyard |
|
White Lodging |
|
12/8/2014 |
|
|
135 |
|
|
Richmond |
|
VA |
|
Marriott |
|
White Lodging |
|
3/1/2014 |
|
|
413 |
|
|
Richmond |
|
VA |
|
Residence Inn |
|
White Lodging |
|
12/8/2014 |
|
|
75 |
|
|
Suffolk |
|
VA |
|
Courtyard |
|
Crestline |
|
3/1/2014 |
|
|
92 |
|
|
Suffolk |
|
VA |
|
TownePlace Suites |
|
Crestline |
|
3/1/2014 |
|
|
72 |
|
|
Virginia Beach |
|
VA |
|
Courtyard |
|
Crestline |
|
3/1/2014 |
|
|
141 |
|
|
Virginia Beach |
|
VA |
|
Courtyard |
|
Crestline |
|
3/1/2014 |
|
|
160 |
|
|
Kirkland |
|
WA |
|
Courtyard |
|
InnVentures |
|
3/1/2014 |
|
|
150 |
|
|
Seattle |
|
WA |
|
Residence Inn |
|
InnVentures |
|
3/1/2014 |
|
|
234 |
|
|
Tukwila |
|
WA |
|
Homewood Suites |
|
Dimension |
|
3/1/2014 |
|
|
106 |
|
|
Madison |
|
WI |
|
Hilton Garden Inn |
|
Raymond |
|
2/18/2021 |
|
|
176 |
|
|
Total |
|
|
|
|
|
|
|
|
|
|
28,748 |
|
Related Parties
The Company has, and is expected to continue to engage in, transactions with related parties. These transactions cannot be construed to be at arm’s length and the results of the Company’s operations may be different if these transactions were conducted with non-related parties. See Note 6 titled “Related Parties” in the Company’s Unaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q, for additional information concerning the Company’s related party transactions.
Liquidity and Capital Resources
Capital Resources
The Company’s principal short term sources of liquidity are the operating cash flows generated from the Company’s properties and availability under its Revolving Credit Facility. Over the long term, the Company may receive proceeds from strategic additional secured and unsecured debt financing, dispositions of its hotel properties and offerings of the Company’s common shares, including pursuant to the ATM Program. Macroeconomic pressures including inflation, increases in interest rates and general market uncertainty could impact the Company’s ability to raise debt or equity capital to fund long-term liquidity requirements in a cost-effective manner.
As of June 30, 2022, the Company had $1.4 billion of total outstanding debt consisting of $366.0 million of mortgage debt and $1.0 billion outstanding under its unsecured credit facilities, excluding unamortized debt issuance costs and fair value adjustments. As of June 30, 2022, the Company had available corporate cash on hand of approximately $1.6 million as well as unused borrowing capacity under its Revolving Credit Facility of approximately $359 million.
The credit agreements governing the unsecured credit facilities contain mandatory prepayment requirements, customary affirmative and negative covenants and events of default. The credit agreements require that the Company comply with various covenants, which include, among others, a minimum tangible net worth, maximum debt limits, minimum interest and fixed charge coverage ratios, and restrictions on certain investments. The Company was in compliance with the applicable covenants as of June 30, 2022.
As a result of COVID-19 and the associated disruption to the Company’s operating results, the Company entered into amendments in June 2020 that suspended the testing of the Company’s existing financial maintenance covenants under the unsecured credit facilities. These amendments imposed certain restrictions regarding the Company’s investing and financing activities that were applicable during a specified waiver period. On March 1, 2021, as a result of the continued disruption from COVID-19 and the related uncertainty with respect to the Company’s future operating results, the Company entered into the March 2021 amendments to extend
34
the covenant waiver period for all but two of the Company’s existing financial maintenance covenants until the date that the compliance certificate was required to be delivered for the fiscal quarter ended June 30, 2022, and extending to March 31, 2022 for the remaining two covenants (unless, in each case, the Company elected an earlier date) (the “Extended Covenant Waiver Period”). The March 2021 amendments provided for continued restrictions on the Company’s ability to make cash distributions, except for the payment of cash dividends of $0.01 per common share per quarter or to the extent required to maintain REIT status.
The March 2021 amendments also modified certain of the existing financial maintenance covenants to less restrictive levels upon exiting the Extended Covenant Waiver Period as follows (capitalized terms are defined in the amended credit agreements):
|
|
● |
Maximum Consolidated Leverage Ratio of 8.50 to 1.00 for the first two fiscal quarters, 8.00 to 1.00 for two fiscal quarters, 7.50 to 1.00 for one fiscal quarter and then a ratio of 6.50 to 1.00 thereafter; |
|
|
● |
Minimum Fixed Charge Coverage Ratio of 1.05 to 1.00 for the first fiscal quarter, 1.25 to 1.00 for one fiscal quarter and then a ratio of 1.50 to 1.00 thereafter; |
|
|
● |
Minimum Unsecured Interest Coverage Ratio of no less than 1.25 to 1.00 for one fiscal quarter, 1.50 to 1.00 for one fiscal quarter, 1.75 to 1.00 for one fiscal quarter and a ratio of 2.00 to 1.00 thereafter; and |
|
|
● |
Maximum Unsecured Leverage Ratio of 65% for two fiscal quarters and 60% thereafter. |
Except as otherwise set forth in the amendments described above, the terms of the credit agreements remain in effect.
In July 2021, the Company notified its lenders under its unsecured credit facilities that it had elected to exit the Extended Covenant Waiver Period effective on July 29, 2021. Upon exiting the Extended Covenant Waiver Period, the Company is no longer subject to the restrictions described above regarding its investing and financing activities that were applicable during the Extended Covenant Waiver Period, including, but not limited to, limitations on the acquisition of property, payment of distributions to shareholders (except to the extent required to maintain REIT status), capital expenditures and use of proceeds from the sale of property or common shares of the Company. Those restrictions, including the restriction on payment of distributions to shareholders, were still in place throughout the second quarter of 2021.
On June 2, 2022, the Company entered into an unsecured $75 million senior notes facility with a maturity date of June 2, 2029. The Company used the net proceeds from the $75 million senior notes facility for general corporate purposes, including the repayment of borrowings under the Company’s Revolving Credit Facility and repayment of mortgage debt.
In July 2022, the Company entered into an amendment and restatement of its $850 million credit facility, increasing the borrowing capacity to $1.2 billion. The amendment and restatement effectively extended the maturity date of the facility and changed the reference rate of the facility from LIBOR to SOFR plus 10 basis points plus a margin ranging from 1.35% to 2.25% depending on the Company’s leverage ratio.
See Note 4 titled “Debt” in the Company’s Unaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q, for a description of the Company’s debt agreements as of June 30, 2022 and amendments to those agreements subsequent to that date.
The Company has a universal shelf registration statement on Form S-3 (No. 333-262915) that was automatically effective upon filing on February 23, 2022. The Company may offer an indeterminate number or amount, as the case may be, of (1) common shares, no par value per share; (2) preferred shares, no par value per share; (3) depository shares representing the Company’s preferred shares; (4) warrants exercisable for the Company’s common shares, preferred shares or depository shares representing preferred shares; (5) rights to purchase common shares; and (6) unsecured senior or subordinate debt securities, all of which may be issued from time to time on a delayed or continuous basis pursuant to Rule 415 under the Securities Act. Future offerings will depend on a variety of factors to be determined by the Company, including market conditions, the trading price of the Company’s common shares and opportunities for uses of any proceeds.
The Company has entered into an equity distribution agreement pursuant to which the Company may sell, from time to time, up to an aggregate of $300 million of its common shares under the ATM Program under the Company’s prior shelf registration statement and the current shelf registration statement described above. Since inception of the ATM Program in August 2020 through June 30, 2022, the Company has sold approximately 4.7 million common shares at a weighted-average market sales price of approximately $16.26 per common share and received aggregate gross proceeds of approximately $76.0 million and proceeds net of offering costs, which included $0.9 million of commissions, of approximately $75.1 million. The Company used the net proceeds from the sale of these shares primarily to pay down borrowings under its Revolving Credit Facility and for general corporate purposes, including acquisitions of hotel properties. As of June 30, 2022, approximately $224.0 million remained available for issuance under the ATM Program. No shares were sold under the Company’s ATM Program in the first two quarters of 2022. The Company plans to use future net proceeds from the sale of shares under the ATM Program to continue to pay down borrowings under its Revolving Credit Facility (if any). The Company plans to use the corresponding increased availability under the Revolving Credit Facility for general corporate
35
purposes which may include, among other things, acquisitions of additional properties, the repayment of other outstanding indebtedness, capital expenditures, improvement of properties in its portfolio and working capital. The Company may also use the net proceeds to acquire another REIT or other company that invests in income producing properties.
Capital Uses
The Company anticipates that cash flow from operations, availability under its credit facilities, additional borrowings and proceeds from hotel dispositions and equity offerings will be adequate to meet its anticipated liquidity requirements, including required distributions to shareholders, share repurchases, capital improvements, debt service, hotel acquisitions, lease commitments, and cash management activities.
Distributions
The Company generally must distribute annually at least 90% of its REIT taxable income, subject to certain adjustments and excluding any net capital gain, in order to maintain its REIT status. During the Extended Covenant Waiver Period, as a requirement under the amendments to its unsecured credit facilities, the Company was restricted in its ability to make distributions except for the payment of cash distributions of $0.01 per common share per quarter or to the extent required to maintain REIT status. As discussed above, in July 2021, the Company notified its lenders under its unsecured credit facilities that it had elected to exit the Extended Covenant Waiver Period effective on July 29, 2021. As a result, upon exiting the Extended Covenant Waiver Period, the Company is no longer subject to the restrictions on distributions that were applicable during the Extended Covenant Waiver Period. On February 22, 2022, the Company announced that its Board of Directors reinstated its policy of distributions on a monthly basis, with the first monthly cash distribution paid on March 15, 2022. On June 20, 2022, the Company declared a monthly cash distribution of $0.05 per common share for the month of July, paid on July 15, 2022, to shareholders of record as of July 5, 2022. For the three and six months ended June 30, 2022, the Company paid distributions of $0.15 and $0.21, respectively, per common share for a total of $34.3 million and $48.0 million, respectively.
The Company, as it has done historically due to seasonality, may use its Revolving Credit Facility to maintain the consistency of distributions, taking into consideration any acquisitions, dispositions, capital improvements and economic cycles. Any distribution will be subject to approval of the Company’s Board of Directors and there can be no assurance of the classification or duration of distributions at any particular distribution rate. The Board of Directors monitors the Company’s distribution rate relative to the performance of its hotels on an ongoing basis and may make adjustments to the distribution rate as determined to be prudent in relation to other cash requirements of the Company or to the extent required to maintain REIT status. If cash flow from operations and the Revolving Credit Facility are not adequate to meet liquidity requirements, the Company may utilize additional financing sources to make distributions. Although the Company has relatively low levels of debt, there can be no assurance it will be successful with this strategy, and it may need to reduce its distributions to minimum levels required to maintain its qualification as a real estate investment trust. If the Company were unable to extend its maturing debt in future periods or if it were to default on its debt, it may be unable to make distributions.
Share Repurchases
In May 2022, the Company’s Board of Directors approved a one-year extension of its existing share repurchase program, authorizing share repurchases up to an aggregate of $345 million (the “Share Repurchase Program”). The Share Repurchase Program may be suspended or terminated at any time by the Company and will end in July 2023 if not terminated or extended earlier. During the six months ended June 30, 2022, the Company purchased, under its Share Repurchase Program, less than 0.1 million of its common shares at a weighted-average market purchase price of approximately $14.42 per common share for an aggregate purchase price, including commissions, of approximately $0.1 million. The shares were repurchased under a written trading plan as part of the Share Repurchase Program that provided for share repurchases in open market transactions and that was intended to comply with Rule 10b5-1 under the Exchange Act. Repurchases under the Share Repurchase Program have been funded, and the Company intends to fund future repurchases, with cash on hand or availability under its unsecured credit facilities, subject to applicable restrictions under the Company’s unsecured credit facilities (if any). The timing of share repurchases and the number of common shares to be repurchased under the Share Repurchase Program will also depend upon prevailing market conditions, regulatory requirements and other factors. As of June 30, 2022, approximately $344.9 million remained available for purchase under the Share Repurchase Program.
Capital Improvements
Management routinely monitors the condition and operations of its hotels and plans renovations and other improvements as it deems prudent. The Company is committed to maintaining and enhancing each property’s competitive position in its market. The Company has invested in and plans to continue to reinvest in its hotels. Under certain loan and management agreements, the Company is required to place in escrow funds for the repair, replacement and refurbishing of furniture, fixtures, and equipment, based on a percentage of gross revenues, provided that such amount may be used for the Company’s capital expenditures with respect to the hotels. As of June 30, 2022, the Company held approximately $34.1 million in reserve related to these properties. During the six months ended June 30, 2022, the Company invested approximately $16.6 million in capital expenditures. The Company anticipates spending approximately $55 to $65 million during 2022, which includes various renovation projects for approximately 20 to 25 properties, however, inflationary pressures or supply chain shortages, among other issues, may result in increased costs and delays for anticipated projects. The Company does not currently have any existing or planned projects for new property development.
36
Upcoming Debt Maturities and Debt Service Payments
The Company has approximately $191.5 million of principal and interest payments due on its debt over the next 12 months. Included in this total is $66.0 million due under the Company’s Revolving Credit Facility, which was scheduled to mature on July 27, 2022, but was amended and restated on July 25, 2022, extending the initial maturity date to July 25, 2026. Also included in the total above is approximately $69.9 million of mortgage loans maturing in the second half of 2022 and first half of 2023, of which the Company paid off $31.7 million on August 1, 2022 using borrowings under its unsecured credit facilities, and the remainder of which the Company plans to pay off using borrowings under its Revolving Credit Facility and/or new financing. See Note 4 titled “Debt” in the Company’s Unaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q.
Hotel Purchase Contract Commitments
As of June 30, 2022, the Company had one outstanding contract, which was entered into during 2021, for the potential purchase of a hotel in Madison, Wisconsin for an expected purchase price of approximately $78.6 million. The hotel is currently under development and is expected to be completed and opened for business in early 2024, as a 260-room Embassy Suites. Although the Company is working towards acquiring this hotel, there are many conditions to closing that have not yet been satisfied and there can be no assurance that closing on this hotel will occur under the outstanding purchase contract. The Company plans to utilize its available cash or borrowings under its unsecured credit facilities available at closing to purchase the hotel.
Cash Management Activities
As part of the cost sharing arrangements discussed in Note 6, titled “Related Parties” in the Company’s Unaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q, certain day-to-day transactions may result in amounts due to or from the Company and ARG. To efficiently manage cash disbursements, the Company or ARG may make payments for the other company. Under the cash management process, each company may advance or defer up to $1 million at any time. Each quarter, any outstanding amounts are settled between the companies. This process allows each company to minimize its cash on hand and reduces the cost for each company. The amounts outstanding at any point in time are not significant to either of the companies.
Business Interruption
Being in the real estate industry, the Company is exposed to natural disasters on both a local and national scale. Although management believes the Company has adequate insurance to cover this exposure, there can be no assurance that such events will not have a material adverse effect on the Company’s financial position or results of operations.
Seasonality
The hotel industry historically has been seasonal in nature. Seasonal variations in occupancy at the Company’s hotels may cause quarterly fluctuations in its revenues. Generally, occupancy rates and hotel revenues for the Company’s hotels are greater in the second and third quarters than in the first and fourth quarters. However, due to the effects of COVID-19, these typical seasonal patterns have been disrupted since the first quarter of 2020, although the Company experienced some seasonal decrease in demand in the first and fourth quarters of each year. To the extent that cash flow from operations is insufficient during any quarter due to temporary or seasonal fluctuations in revenue, the Company expects to utilize cash on hand or available financing sources to meet cash requirements.
Critical Accounting Policies and Estimates
The preparation of the Company’s financial statements in accordance with U.S. GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the Company’s financial statements, the reported amounts of revenues and expenses during the reporting periods and the related disclosures in the Company’s Unaudited Consolidated Financial Statements and Notes thereto. The Company has discussed those policies and estimates that it believes are critical and require the use of complex judgment in their application in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission on February 22, 2022. There have been no material changes to the Company’s critical accounting policies or the methods or assumptions we apply.
37
New Accounting Standards
See Note 1 titled “Organization and Summary of Significant Accounting Policies” in the Company’s Unaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q, for information on the adoption of recently issued accounting standards in the six months ended June 30, 2022.
Subsequent Events
On July 15, 2022, the Company paid approximately $11.4 million, or $0.05 per common share, in distributions to shareholders of record as of July 5, 2022.
In July 2022, the Company declared a monthly cash distribution of $0.05 per common share for the month of August 2022. The distribution is payable on August 15, 2022, to shareholders of record as of August 2, 2022.
In July 2022, the Company refinanced its $850 million credit facility and amended all other unsecured credit facilities to align the financial covenants with the amended $1.2 billion credit facility and to replace the reference rate used (LIBOR) with SOFR plus 0.10% as applicable. See Note 4 titled “Debt” in the Company’s Unaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Quarterly Report on Form 10Q, for additional information on the Company’s debt refinancing.
On August 1, 2022, the Company repaid in full three secured mortgage loans for a total of $31.7 million. See Note 4 titled “Debt” in the Company’s Unaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q, for additional information concerning these transactions.
38
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As of June 30, 2022, the Company’s financial instruments were not exposed to significant market risk due to foreign currency exchange risk, commodity price risk or equity price risk. However, the Company is exposed to interest rate risk due to possible changes in short term interest rates as it invests its cash or borrows on its Revolving Credit Facility and due to the portion of its variable-rate term debt that is not fixed by interest rate swaps. As of June 30, 2022, after giving effect to interest rate swaps, as described below, approximately $116.0 million, or approximately 8% of the Company’s total debt outstanding, was subject to variable interest rates. Based on the Company’s variable-rate debt outstanding as of June 30, 2022, every 100 basis points change in interest rates will impact the Company’s annual net income by approximately $1.2 million, all other factors remaining the same. With the exception of interest rate swap transactions, the Company has not engaged in transactions in derivative financial instruments or derivative commodity instruments.
As of June 30, 2022, the Company’s variable-rate debt consisted of its unsecured credit facilities, including borrowings outstanding under its Revolving Credit Facility and $820 million of term loans. Currently, the Company uses interest rate swaps to manage its interest rate risk on a portion of its variable-rate debt. As of June 30, 2022, the Company had 13 interest rate swap agreements that effectively fix the interest payments on approximately $770.0 million of the Company’s variable-rate debt outstanding with swap maturity dates ranging from August 2022 to December 2029. Under the terms of all of the Company’s interest rate swaps, the Company pays a fixed rate of interest and receives a floating rate of interest equal to the one-month LIBOR. See Note 5 titled “Fair Value of Financial Instruments” in the Company’s Unaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q, for a description of the Company’s interest rate swaps as of June 30, 2022.
In addition to its variable-rate debt and interest rate swaps discussed above, the Company has assumed or originated fixed interest rate mortgages payable to lenders under permanent financing arrangements as well as two fixed-rate senior notes facilities totaling $125 million. The following table summarizes the annual maturities and average interest rates of the Company’s mortgage debt and borrowings outstanding under its unsecured credit facilities at June 30, 2022, and does not give effect to the debt refinancing in July 2022. All dollar amounts are in thousands.
|
|
|
July 1 - December 31, 2022 |
|
|
2023 |
|
|
2024 |
|
|
2025 |
|
|
2026 |
|
|
Thereafter |
|
|
Total |
|
|
Fair Market Value |
|
||||||||
|
Total debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maturities |
|
$ |
102,770 |
|
|
$ |
296,214 |
|
|
$ |
338,597 |
|
|
$ |
245,140 |
|
|
$ |
74,649 |
|
|
$ |
319,616 |
|
|
$ |
1,376,986 |
|
|
$ |
1,338,908 |
|
|
Average interest rates (1) |
|
|
3.6 |
% |
|
|
3.7 |
% |
|
|
3.8 |
% |
|
|
3.9 |
% |
|
|
3.9 |
% |
|
|
4.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Variable-rate debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maturities |
|
$ |
66,000 |
|
|
$ |
250,000 |
|
|
$ |
310,000 |
|
|
$ |
175,000 |
|
|
$ |
- |
|
|
$ |
85,000 |
|
|
$ |
886,000 |
|
|
$ |
888,650 |
|
|
Average interest rates (1) |
|
|
3.3 |
% |
|
|
3.4 |
% |
|
|
3.6 |
% |
|
|
3.6 |
% |
|
|
3.5 |
% |
|
|
3.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed-rate debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maturities |
|
$ |
36,770 |
|
|
$ |
46,214 |
|
|
$ |
28,597 |
|
|
$ |
70,140 |
|
|
$ |
74,649 |
|
|
$ |
234,616 |
|
|
$ |
490,986 |
|
|
$ |
450,258 |
|
|
Average interest rates |
|
|
4.1 |
% |
|
|
4.1 |
% |
|
|
4.1 |
% |
|
|
4.0 |
% |
|
|
4.0 |
% |
|
|
4.1 |
% |
|
|
|
|
|
|
|
|
|
(1) |
The average interest rate gives effect to interest rate swaps, as applicable. |
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Senior management, including the Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based on this evaluation process, the Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer have concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2022.
Changes in Internal Control over Financial Reporting
During the second quarter of 2022, the Company completed the implementation of a new accounting system which replaced its prior accounting system. The new system enhances the flow of financial information and improves certain accounting processes and procedures. Management has taken the necessary steps to ensure that appropriate controls were designed and implemented where necessary as the new accounting system was implemented.
Except as described above, there have been no changes in the Company’s internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
39
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is or may be a party to various legal proceedings that arise in the ordinary course of business. The Company is not currently involved in any litigation nor, to management’s knowledge, is any litigation threatened against the Company where the outcome would, in management’s judgment based on information currently available to the Company, have a material adverse effect on the Company’s consolidated financial position or results of operations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following is a summary of all share repurchases during the second quarter of 2022.
|
Issuer Purchases of Equity Securities |
|
|||||||||||||||
|
|
|
(a) |
|
|
(b) |
|
|
(c) |
|
|
(d) |
|
||||
|
Period |
|
Total Number of Shares Purchased |
|
|
Average Price Paid per Share |
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |
|
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands) (1) |
|
||||
|
April 1 - April 30, 2022 |
|
|
- |
|
|
- |
|
|
|
- |
|
|
$ |
345,000 |
|
|
|
May 1 - May 31, 2022 |
|
|
- |
|
|
- |
|
|
|
- |
|
|
$ |
345,000 |
|
|
|
June 1 - June 30, 2022 |
|
|
10,033 |
|
|
$ |
14.42 |
|
|
|
10,033 |
|
|
$ |
344,855 |
|
|
Total |
|
|
10,033 |
|
|
|
|
|
|
|
10,033 |
|
|
|
|
|
|
(1) |
Represents amount outstanding under the Company's authorized $345 million Share Repurchase Program. This program, which was announced in 2015 and most recently extended in May 2022, may be suspended or terminated at any time by the Company and will end in July 2023 if not terminated earlier or further extended. |
40
Item 6. Exhibits
|
Exhibit Number |
|
Description of Documents |
|
3.1 |
|
|
|
|
|
|
|
3.2 |
|
|
|
|
|
|
|
10.1 |
|
|
|
|
|
|
|
31.1 |
|
|
|
|
|
|
|
31.2 |
|
|
|
|
|
|
|
31.3 |
|
|
|
|
|
|
|
32.1 |
|
|
|
|
|
|
|
101 |
|
The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations and Comprehensive Income (Loss), (iii) the Consolidated Statements of Shareholders’ Equity, (iv) the Consolidated Statements of Cash Flows, and (v) related notes to these financial statements, tagged as blocks of text and in detail (FILED HEREWITH)
|
|
104 |
|
The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, formatted as Inline XBRL and contained in Exhibit 101. |
41
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
Apple Hospitality REIT, Inc. |
|
||
|
|
|
|
|
|
By: |
/s/ Justin G. Knight |
|
Date: August 4, 2022 |
|
|
Justin G. Knight, |
|
|
|
|
Chief Executive Officer (Principal Executive Officer) |
|
|
|
|
|
|
|
|
By: |
/s/ Elizabeth S. Perkins |
|
Date: August 4, 2022 |
|
|
Elizabeth S. Perkins, |
|
|
|
|
Chief Financial Officer (Principal Financial Officer) |
|
|
|
|
|
|
|
|
By: |
/s/ Rachel S. Labrecque |
|
Date: August 4, 2022 |
|
|
Rachel S. Labrecque, |
|
|
|
|
Chief Accounting Officer (Principal Accounting Officer) |
|
|
42