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What changed in Apple Hospitality REIT, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Apple Hospitality REIT, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+287 added−294 removedSource: 10-K (2024-02-22) vs 10-K (2023-02-21)

Top changes in Apple Hospitality REIT, Inc.'s 2023 10-K

287 paragraphs added · 294 removed · 220 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

53 edited+19 added−18 removed47 unchanged
Biggest changeBy maintaining a flexible balance sheet, with a total debt, net of cash, to total capitalization (total debt outstanding, net of cash, plus equity market capitalization based on the Company’s December 31, 2022 closing share price) ratio at December 31, 2022 of 27.5%, the Company is not only positioned to opportunistically consider investments that further improve shareholder value, but management believes it is equipped to address developments caused by adverse economic environments.
Biggest changeBy maintaining a flexible balance sheet, with a total debt, net of cash, to total capitalization (total debt outstanding, net of cash, plus equity market capitalization based on the Company’s December 29, 2023 closing share price) ratio at December 31, 2023 of 25.4%, the Company is not only positioned to opportunistically consider investments that further improve shareholder value, but management believes it is equipped to address developments caused by adverse economic environments. 4 Hotel Operating Performance As of December 31, 2023, the Company owned 225 hotels, including two properties classified as held for sale, with a total of 29,900 rooms as compared to 220 hotels with a total of 28,983 rooms as of December 31, 2022.
Item 1. Business The Company, formed in November 2007 as a Virginia corporation, is a self-advised REIT that invests in income-producing real estate, primarily in the lodging sector, in the U.S. The Company has elected to be treated as a REIT for federal income tax purposes.
Item 1. Business The Company, formed in November 2007 as a Virginia corporation, is a self-advised REIT that invests in income-producing real estate, primarily in the lodging sector, in the U.S. The Company has elected to be treated as a REIT for U.S. federal income tax purposes.
Although the Company has relatively low levels of debt, there can be no assurance it will be successful with this strategy and may need to reduce its distributions to required 8 levels to maintain its REIT status.
Although the Company has relatively low levels of debt, there can be no assurance it will be successful with this strategy and may need to reduce its distributions to required levels to maintain its REIT status.
The management agreements generally provide for initial terms of one to 30 years and are terminable by the Company for either failure to achieve performance thresholds, sale of the property, or without cause.
The management agreements generally provide for initial terms of one to 30 years and are terminable by the Company for either failure to achieve performance thresholds, upon sale of the property, or without cause.
More specifically, Apple Gives organizes company-wide community events with charitable organizations, deploys aid to markets and associates affected by natural disasters, and allocates funds and other resources to a variety of causes. Human Capital The Company believes that each of its 63 team members (as of December 31, 2022) plays a vital role in the success of the organization.
More specifically, Apple Gives organizes company-wide community events with charitable organizations, deploys aid to markets and associates affected by natural disasters, and allocates funds and other resources to a variety of causes. Human Capital The Company believes that each of its 63 team members (as of December 31, 2023) plays a vital role in the success of the organization.
See Note 4 title “Debt” of the Consolidated Financial Statements and Notes thereto in Part II, Item 8, appearing elsewhere in this Annual Report on Form 10-K, for a description of the Company's debt instruments as of December 31, 2022 and a summary of the financial and restrictive covenants as defined in the credit agreements.
See Note 4 title “Debt” of the Consolidated Financial Statements and Notes thereto in Part II, Item 8, appearing elsewhere in this Annual Report on Form 10-K, for a description of the Company’s debt instruments as of December 31, 2023 and a summary of the financial and restrictive covenants as defined in the credit agreements.
The Company’s unused borrowing capacity under its Revolving Credit Facility as of December 31, 2022 was $650 million, which is available for acquisitions, hotel renovations, share repurchases, working capital and other general corporate funding purposes, including the payment of distributions to shareholders.
The Company’s unused borrowing capacity under its Revolving Credit Facility as of December 31, 2023 was $650 million, which is available for acquisitions, hotel renovations, share repurchases, working capital and other general corporate funding purposes, including the payment of distributions to shareholders.
Thirteen of the Company’s hotels are managed by affiliates of Marriott. The remainder of the Company’s hotels are managed by companies that are not affiliated with either Marriott, Hilton or Hyatt, and, as a result, the branded hotels they manage were required to obtain separate franchise agreements with each respective franchisor.
The remainder of the Company’s hotels are managed by companies that are not affiliated with either Marriott, Hilton or Hyatt, and as a result, the branded hotels they manage were required to obtain separate franchise agreements with each respective franchisor.
The Company’s Board of Directors, in consultation with management, will continue to monitor hotel operations and the timing and level of distributions in relation to the Company’s other cash requirements or in order to maintain its REIT status for federal income tax purposes.
The Company’s Board of Directors, in consultation with management, will continue to monitor hotel operations and the timing and level of distributions in relation to the Company’s other cash requirements or in order to maintain its REIT status for U.S. federal income tax purposes.
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. Certain employees of the Company also provide support services to Apple Realty Group, Inc. (“ARG”), which is wholly owned by Glade M. Knight, Executive Chairman of the Company.
These transactions cannot be construed to be at arm’s length, and the results of the Company’s operations may have been different if these transactions were conducted with non-related parties. Certain employees of the Company also provide support services to Apple Realty Group, 10 Inc. (“ARG”), which is wholly owned by Glade M. Knight, Executive Chairman of the Company.
As of December 31, 2022, approximately 85% of the Company’s hotels operate under a variable management fee agreement, with an average initial term of approximately one to two years, which the Company believes better aligns incentives for each hotel manager to maximize each property’s performance than a base-plus-incentive management fee structure, as described below, which is more common throughout the industry.
As of December 31, 2023, approximately 85% of the Company’s hotels operated under a variable management fee agreement, with an average initial term of approximately one to two years, which the Company believes better aligns incentives for each hotel manager to maximize each property’s performance than a base-plus-incentive management fee structure, as described below, which is more common throughout the industry.
As discussed above, the Company has historically maintained and plans in the future to maintain relatively low leverage as compared to the real estate industry as a whole and the lodging sector in particular.
The Company has historically maintained and plans in the future to maintain relatively low leverage as compared to the real estate industry as a whole and the lodging sector in particular.
The Company targets specific environmental efficiency enhancements, including equipment upgrades and replacements, that reduce energy and water consumption and improve waste management. As part of its acquisition due diligence, the Company performs sustainability assessments to identify areas of opportunity that will improve the property's environmental performance.
The Company targets specific environmental efficiency enhancements, including equipment upgrades and replacements, that reduce energy and water usage and 9 improve waste management. As part of its acquisition due diligence, the Company performs sustainability assessments to identify areas of opportunity that will improve the property’s environmental performance.
The Company believes the physical and mental health, safety and well-being of its employees, the associates at its hotels and its hotel guests is critical to the continued success of its business.
The Company believes the physical and mental health, safety and well-being of its employees, the associates at its hotels and its hotel guests are critical to the continued success of its business.
During 2022, all employees involved in the day-to-day operation of the Company’s hotels were employed by one of 17 third-party management companies engaged pursuant to the hotel management agreements. 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.
During 2023, all employees involved in the day-to-day operation of the Company’s hotels were employed by one of 16 third-party management companies engaged pursuant to the hotel management agreements. 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.
See Note 2 titled “Investment in Real Estate” and Note 3 titled “Dispositions” in Part II, Item 8, of the Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Annual Report on Form 10-K for additional information concerning these transactions.
See Note 2 titled “Investment in Real Estate” and Note 3 titled “Assets Held for Sale and Dispositions” in Part II, Item 8, of the Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Annual Report on Form 10-K for additional information concerning these transactions.
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.
This information has not been audited, either for the periods owned or prior to ownership by the Company. For dispositions and assets held for sale, results have been excluded for the Company’s period of ownership.
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.
In May 2023, 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 $338.7 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 2024 if not terminated or extended earlier.
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 December 31, 2022, approximately $342.3 million remained available for purchase under the Share Repurchase Program. Hotel Industry and Competition The hotel industry is highly competitive.
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 December 31, 2023, approximately $335.4 million remained available for purchase under the Share Repurchase Program. 6 Hotel Industry and Competition The hotel industry is highly competitive.
In addition to the above, management fees for all of the Company’s hotels generally include accounting fees and other fees for centralized services, which are allocated among all of the hotels that receive the benefit of such services.
In addition to the above, management fees for all of the Company’s hotels generally include accounting fees and other fees for centralized services, which are allocated among all of the hotels that receive the benefit of such services. Thirteen of the Company’s hotels are managed by affiliates of Marriott.
As of December 31, 2022, the Company had approximately $1.4 billion of total outstanding debt with a combined weighted-average interest rate, including the effect of interest rate swaps, of approximately 3.93%, consisting of approximately $329.2 million in outstanding mortgage debt secured by 19 properties, with maturity dates ranging from February 2023 to May 2038 and stated 7 interest rates ranging from 3.40% to 4.46%, and approximately $1.0 billion in outstanding debt under its unsecured credit facilities with maturity dates ranging from August 2023 to March 2030 and effective interest rates, including the effect of interest rate swaps, ranging from 2.61% to 5.81%.
As of December 31, 2023, the Company had approximately $1.4 billion of total outstanding debt with a combined weighted-average interest rate, including the effect of interest rate swaps, of approximately 4.26%, consisting of approximately $283.0 million in outstanding mortgage debt secured by 15 properties, with maturity dates ranging from August 2024 to May 2038 and stated interest rates ranging from 3.40% to 4.46%, and approximately $1.1 billion in outstanding debt under its unsecured credit facilities with maturity dates ranging from July 2024 to March 2030 and effective interest rates, including the effect of interest rate swaps, ranging from 2.61% to 7.15%.
If cash flows from operations and the Revolving Credit Facility are not adequate to meet liquidity requirements, the Company may utilize additional financing sources to make distributions.
If cash flows from operations and the Revolving Credit Facility are not adequate to meet liquidity requirements, the Company may utilize additional financing sources to make distributions as necessary to maintain its REIT status.
In addition to the regular monthly cash distribution of $0.08 per common share approved by the Board of Directors in December 2022, the Board of Directors approved a special cash distribution of $0.08 per common share for a combined distribution of $0.16 per common share, paid in January 2023, to shareholders of record as of December 30, 2022.
In addition to the regular monthly cash distribution of $0.08 per common share approved by the Board of Directors in December 2023, the Board of Directors approved a special cash distribution of $0.05 per common share for a combined distribution of $0.13 per common share, paid in January 2024, to shareholders of record as of December 29, 2023.
During the year ended December 31, 2022, the Company purchased approximately 0.2 million of its common shares under its Share Repurchase Program at a weighted-average market purchase price of approximately $14.21 per common share for an aggregate purchase price, including commissions, of approximately $2.7 million.
During the year ended December 31, 2023, the Company purchased approximately 0.5 million of its common shares under its Share Repurchase Program at a weighted-average market purchase price of approximately $14.34 per common share for an aggregate purchase price, including commissions, of approximately $6.9 million.
Management and Franchise Agreements Substantially all of the Company’s hotels operate under Marriott or Hilton brands, and as of December 31, 2022, consisted of the following: 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 AC Hotels 3 468 Hyatt Place 3 411 Marriott 2 619 Embassy Suites 2 316 Independent 1 208 Aloft 1 157 Hyatt House 1 105 Total 220 28,983 6 Each of the Company’s 220 hotels owned as of December 31, 2022 is operated and managed under separate management agreements with 17 hotel management companies, none of which are affiliated with the Company.
Management and Franchise Agreements Substantially all of the Company’s hotels operate under Marriott or Hilton brands, and as of December 31, 2023, consisted of the following: 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 35 4,982 Residence Inn 30 3,694 Homewood Suites 30 3,417 SpringHill Suites 10 1,544 Fairfield 10 1,213 Home2 Suites 10 1,146 TownePlace Suites 9 931 Embassy Suites 3 508 AC Hotels 3 468 Hyatt Place 3 411 Marriott 2 619 Hyatt House 2 264 Aloft 1 157 Total 225 29,900 Each of the Company’s 225 hotels owned as of December 31, 2023 is operated and managed under separate management agreements with 16 hotel management companies, none of which are affiliated with the Company.
The Company’s ratio of total debt, net of cash, to total capitalization (total debt outstanding, net of cash, plus equity market capitalization based on the Company's December 31, 2022 closing share price) ratio as of December 31, 2022 was 27.5%.
The Company’s ratio of total debt, net of cash, to total capitalization (total debt outstanding, net of cash, plus equity market capitalization based on the Company's December 29, 2023 closing share price) ratio as of December 31, 2023 was 25.4%.
Environmental Stewardship and Sustainability The environment is a key consideration in the operations of the Company's hotels. The Company actively monitors key performance indicators of energy, water and waste at its properties, utilizing historical, market and industry data to identify properties where improvements can be made, and works with its management companies to address the opportunities.
The Company actively monitors key performance indicators of energy, water and waste at its properties, utilizing historical, market and industry data to identify properties where improvements can be made, and works with its management companies to address the opportunities.
The Company defines metrics from Comparable Hotels as results generated by the 220 hotels owned as of the end of the reporting period.
The Company defines metrics from Comparable Hotels as results generated by the 223 hotels owned and held for use as of the end of the reporting period.
The Company is committed to diversity, equity and inclusion and does not tolerate discrimination or harassment in the workplace. 9 The Company offers competitive compensation and benefits, a flexible leave policy, fully paid parental leave for up to 12 weeks for primary caregivers and three weeks for secondary caregivers for the birth or adoption of a new child, financial assistance for adoption of a new child, an education reimbursement program, and a culture that encourages balance of work and personal life.
The Company offers competitive compensation and benefits, a flexible leave policy, fully paid parental leave for up to 12 weeks for primary caregivers and three weeks for secondary caregivers for the birth or adoption of a new child, financial assistance for adoption of a new child, a tuition reimbursement program, and a culture that encourages balance of work and personal life.
The franchise and/or management agreements provide a variety of benefits for the Company, which include national advertising, publicity, and other marketing programs designed to increase brand awareness, training of personnel, continuous review of quality standards, centralized reservation systems and best practices within the industry.
The franchise and/or management agreements provide a variety of benefits for the Company, which include national advertising, publicity, and other marketing programs designed to increase brand awareness, training of personnel, continuous review of quality standards, centralized reservation systems and best practices within the industry. 7 Hotel Maintenance and Renovation Management routinely monitors the condition and operations of its hotels and plans renovations and other improvements as it deems prudent.
The Company plans to use future net proceeds from the sale of shares under the ATM Program for general corporate purposes which may include, among other things, acquisitions of additional properties, the repayment of outstanding indebtedness, capital expenditures, improvement of properties in its portfolio and working capital.
As of December 31, 2023, approximately $5.3 million remained available for issuance under the ATM Program. 8 The Company plans to use future net proceeds from the sale of shares under the ATM Program, or under a similar successor program, for general corporate purposes which may include, among other things, acquisitions of hotel properties, the repayment of outstanding indebtedness, capital expenditures, improvement of properties in its portfolio and working capital.
The Company anticipates that funds from these sources 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. 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 anticipates that funds from these sources 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.
The Company plans to utilize its available cash or borrowings under its unsecured credit facilities for any additional acquisitions.
The Company plans to utilize its available cash, net proceeds from sale of shares under the ATM program or borrowings under its unsecured credit facilities for any future hotel acquisitions.
The Company’s Corporate Responsibility Report, issued in December 2022, provides further detail of the Company’s environmental, social and governance progress, and can be found on the Company’s website at www.applehospitalityreit.com. The contents of the Company’s Corporate Responsibility Report are not incorporated by reference into this Annual Report on Form 10-K and do not form a part of this Form 10-K.
The Company’s Corporate Responsibility Report, issued in December 2023, provides further detail of the Company’s environmental, social and governance progress, and can be found on the Company’s website at www.applehospitalityreit.com .
Years Ended December 31, 2022 2021 Percent Change ADR $ 149.36 $ 123.78 20.7 % Occupancy 72.6 % 66.3 % 9.5 % RevPAR $ 108.45 $ 82.03 32.2 % Comparable Hotels Operating Performance The following table reflects certain operating statistics for the Company’s 220 hotels owned as of December 31, 2022 (“Comparable Hotels”).
Years Ended December 31, 2023 2022 Percent Change ADR $ 155.76 $ 149.36 4.3 % Occupancy 74.2 % 72.6 % 2.2 % RevPAR $ 115.60 $ 108.45 6.6 % Comparable Hotels Operating Performance The following table reflects certain operating statistics for the Company’s 223 hotels owned and held for use as of December 31, 2023 (“Comparable Hotels”).
Years Ended December 31, 2022 2021 Percent Change ADR $ 149.56 $ 125.52 19.2 % Occupancy 72.6 % 66.1 % 9.8 % RevPAR $ 108.60 $ 82.99 30.9 % Hotel performance is impacted by many factors, including the economic conditions in the U.S. and in each individual locality.
Years Ended December 31, 2023 2022 Percent Change ADR $ 156.55 $ 149.62 4.6 % Occupancy 74.2 % 72.6 % 2.2 % RevPAR $ 116.23 $ 108.67 7.0 % Hotel performance is impacted by many factors, including the economic conditions in the U.S. and in each individual locality.
Since inception of the ATM Program in August 2020 through December 31, 2022, the Company sold approximately 4.7 million common shares under its ATM Program 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.
During the year ended December 31, 2023, the Company sold approximately 12.8 million shares under its ATM Program at a weighted-average market sales price of approximately $17.05 per common share and received aggregate gross proceeds of approximately $218.6 million and proceeds net of offering costs, which included $2.6 million of commissions, of approximately $216.0 million.
Operating performance is included only for the period of ownership for hotels acquired or disposed of during 2022 and 2021. During 2022, the Company acquired two hotels and sold one hotel. During 2021, the Company acquired eight hotels and sold 23 hotels.
Operating performance is included only for the period of ownership for hotels acquired or disposed of during 2023 and 2022. During 2023, the Company acquired six hotels and did not dispose of any properties.
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.
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 were disrupted until 2023.
Although the Company is working towards acquiring this hotel, there are a number of 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. 5 Dispositions For its existing portfolio, the Company monitors each property’s profitability, market conditions and capital requirements and attempts to maximize shareholder value by disposing of properties when it believes that superior value can be provided from the sale of the property.
Dispositions and Contracts for Potential Dispositions For its existing portfolio, the Company monitors each property’s profitability, market conditions and capital requirements and attempts to maximize shareholder value by disposing of properties when it believes that superior value can be provided from the sale of the property.
The Company used the net proceeds from the sale of these shares primarily to pay down borrowings under its then-existing $425 million revolving credit facility and used the corresponding increased availability under the $425 million revolving credit facility for general corporate purposes, including acquisitions of hotel properties.
The Company used the net proceeds from the sale of these shares to pay down borrowings under the Revolving Credit Facility, acquisitions of hotel properties and for general corporate purposes. No shares were sold under the Company’s ATM Program during the year ended December 31, 2022.
The Company’s primary business objective is to maximize shareholder value by achieving long-term growth in cash available for distributions to its shareholders.
Business Objectives The Company is one of the largest hospitality REITs in the U.S., in both the number of hotels and guest rooms, with significant geographic and brand diversity. The Company’s primary business objective is to maximize shareholder value by achieving long-term growth in cash available for distributions to its shareholders.
Hotel Maintenance and Renovation Management routinely monitors the condition and operations of its hotels and plans renovations and other improvements as it deems prudent. The Company’s hotels have an ongoing need for renovation and refurbishment. To maintain and enhance each property’s competitive position in its market, the Company has invested in and plans to continue to reinvest in its hotels.
The Company’s hotels have an ongoing need for renovation and refurbishment. To maintain and enhance each property’s competitive position in its market, the Company has invested in and plans to continue to reinvest in its hotels. During 2023, 2022 and 2021, the Company’s capital improvements for its hotels were approximately $76.8 million, $61.7 million and $25.8 million, respectively.
Distribution Policy The Company has historically paid distributions on a monthly basis, with distributions based on anticipated cash generated from operations. The Company attempts to set a rate that can be consistent over a period of time as it forecasts its cash available from operations.
The Company attempts to set a rate that can be consistent over a period of time as it forecasts its cash available from operations. The Company’s annualized distribution rate was $0.96 per common share at December 31, 2023.
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 New York Stock Exchange (“NYSE”) under the ticker symbol “APLE.” The Company has no foreign operations or assets and its operating structure includes only one reportable segment.
The Company’s common shares are listed on the New York Stock Exchange (“NYSE”) under the ticker symbol “APLE.” The Company has no foreign operations or assets and its operating structure includes only one reportable segment. Refer to Part II, Item 8, for the Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Annual Report on Form 10-K.
Financing The Company’s principal short term sources of liquidity are the operating cash flows generated from the Company’s properties and availability under its $650 million revolving credit facility with an initial maturity date of July 25, 2026 (the "Revolving Credit Facility").
During 2024, the Company anticipates investing approximately $75 million to $85 million in capital improvements, which includes comprehensive renovation projects for approximately 20 properties. Financing 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.
During 2022, 2021 and 2020, the Company’s capital improvements for its hotels were approximately $61.7 million, $25.8 million and $37.6 million, respectively. Expenditures for 2022 were higher than 2021 and 2020 as the Company reduced non-essential capital improvement projects in 2021 and 2020 as a result of COVID-19.
Expenditures for 2023 were higher than 2022 and 2021 due to an increased number of capital improvement projects in 2023 compared to 2022 and 2021, as the number of projects in 2022 and 2021 were limited as a result of COVID-19.
Refer to Part II, Item 8, for the Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Annual Report on Form 10-K. Business Objectives The Company is one of the largest hospitality REITs in the U.S., in both the number of hotels and guest rooms, with significant geographic and brand diversity.
See Note 4 title “Debt” of the Consolidated Financial Statements and Notes thereto in Part II, Item 8, appearing elsewhere in this Annual Report on Form 10-K, for a description of the Company’s unsecured credit facilities.
As a result, in 2022, the Company sold one hotel for a gross sales price of approximately $8.5 million. The net proceeds from the sale were used for general corporate purposes.
The net proceeds from the sale of both hotels were used for general corporate purposes.
As of December 31, 2022, the Company owned 220 hotels with an aggregate of 28,983 rooms located in urban, high-end suburban and developing markets throughout 37 states. As of December 31, 2022, substantially all of the Company’s hotels operate under Marriott or Hilton brands.
As of December 31, 2023, the Company owned 225 hotels with an aggregate of 29,900 rooms located in urban, high-end suburban and developing markets throughout 38 states, including two hotels with a total of 248 rooms classified as held for sale, which were both sold to an unrelated party in February 2024.
COVID-19 has been negatively affecting the U.S. hotel industry since March 2020 with the Company experiencing its most significant decline in operating results (driven by the impact of COVID-19) during 2020 and early 2021. The Company’s revenue and operating results improved during 2022 as compared to 2021, which is consistent with the overall lodging industry.
The Company’s revenue and operating results improved during the year ended December 31, 2023 compared to the year ended December 31, 2022, which is consistent with the overall lodging industry.
The Company may also use the net proceeds to acquire another REIT or other company that invests in income producing properties. 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 may also use the net proceeds to acquire another REIT or other company that invests in income producing properties. Distribution Policy The Company plans to continue to pay distributions on a monthly basis, with distributions based on anticipated cash generated from operations.
As of December 31, 2022, the Company had an outstanding contract for the potential purchase of a hotel under development in Madison, Wisconsin for a purchase price of $78.6 million, which is expected to be completed as a 260-room Embassy Suites and opened for business in early 2024, at which time the Company expects to complete the purchase of this hotel.
Both hotels are under development, with the hotel in Madison, Wisconsin currently planned to be completed and opened for business in mid-2024 and the Nashville, Tennessee hotel currently planned to be completed and opened for business in late 2025, at which respective times the Company expects to complete the purchases of these hotels.
Removed
The Impact of COVID-19 on the Company and the Hospitality Industry The COVID-19 pandemic has negatively impacted the U.S. and global economies and financial markets.
Added
The Company also owns one property leased to third parties. As of December 31, 2023, substantially all of the Company’s hotels operate under Marriott or Hilton brands. The hotels are operated and managed under separate management agreements with 16 hotel management companies, none of which are affiliated with the Company.
Removed
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.
Added
In May 2023, the Company entered into an operating lease for an initial 15-year term with a third-party hotel operator at its independent boutique hotel in New York, New York for all hotel operations of the hotel’s 210 hotel rooms (“non-hotel property”).
Removed
While operations in 2022 returned to 2019 pre-pandemic levels in many markets, some markets, while showing continued improvement, may take time to recover to 2019 pre-pandemic levels. The Company experienced significant improvement in its business during 2021 and 2022 driven primarily by increased strength in leisure, small group and local negotiated business demand.
Added
Lease revenue from this property is recorded in other revenue in the Company’s consolidated statements of operations and comprehensive income. As a result of the lease agreement, this property is excluded from the Company’s hotel and room counts effective May 2023 through the end of the lease term.
Removed
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.
Added
Results of the hotel operations for the Company’s independent boutique hotel in New York, New York are included only for the period prior to the lease agreement becoming effective in May 2023. During 2022, the Company acquired two hotels and sold one hotel.
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See “The Impact of COVID-19 on the Company and the Hospitality Industry” in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, appearing elsewhere in this Annual Report on Form 10-K, for more information about the Company’s response to the effects of COVID-19. 4 Hotel Operating Performance As of December 31, 2022, the Company owned 220 hotels with a total of 28,983 rooms as compared to 219 hotels with a total of 28,747 rooms as of December 31, 2021.
Added
Hotel occupancy was negatively impacted in many markets by the Omicron variant of COVID-19 during the first quarter of 2022, contributing to an increase of the Company’s Comparable Hotels RevPAR of approximately 7.0% for the year ended December 31, 2023, compared to the year ended December 31, 2022.
Removed
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, an increase in COVID-19 cases, 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.
Added
There is no way to predict future economic conditions, and there continue to be additional factors that could negatively affect the lodging industry and the Company, including but not limited to, historical seasonal trends, travel-related health concerns, deterioration of consumer sentiment, labor shortages, supply chain disruptions, a recessionary macroeconomic environment or inflationary pressures.
Removed
Consistent with this strategy and the Company’s focus on investing in rooms-focused hotels, in 2022, the Company acquired two existing hotels for an aggregate purchase price of approximately $85.0 million: a 156-room AC Hotel in Louisville, Kentucky and a 134-room AC Hotel in Pittsburgh, Pennsylvania.
Added
The Company is forecasting low-to-mid single digit RevPAR growth and a slight increase in operating results for its Comparable Hotels for 2024 as compared to 2023, which is comparable to broader industry expectations.
Removed
The Company utilized its available cash on hand and a $50 million draw on its $575 million term loan facility, which consists of a $275 million term loan and a $300 million term loan (together, the "$575 million term loan facility") to fund the acquisitions.
Added
Consistent with this strategy and the Company’s focus on investing in rooms-focused hotels, in 2023, the Company acquired six existing hotels and one free-standing parking garage for an aggregate 5 purchase price of approximately $289.8 million: a 154-room Courtyard in Cleveland, Ohio, a 175-room Courtyard in Salt Lake City, Utah, a 159-room Hyatt House in Salt Lake City, Utah, a free-standing parking garage which serves both of the Salt Lake City, Utah hotels and the surrounding area, a 146-room Residence Inn in Renton, Washington, a 192-room Embassy Suites in South Jordan, Utah and a 299-room SpringHill Suites in Las Vegas, Nevada.
Removed
For the year ended December 31, 2022, the management fee under all variable management fee agreements was set to 3% of gross revenues in response to continued uncertainties related to the COVID-19 pandemic and its impact on hotel performance. The Company intends to reinstate the variable management fee rates in 2023.
Added
To fund the acquisitions, the Company utilized its available cash on hand, net proceeds from sale of shares under the ATM program (as defined below) and borrowings under its $650 million revolving credit facility with an initial maturity date of July 25, 2026 (the “Revolving Credit Facility”).
Removed
During 2023, the Company anticipates investing approximately $70 million to $80 million in capital improvements, which includes comprehensive renovation projects for approximately 20 to 25 properties.
Added
As of December 31, 2023, the Company had separate outstanding contracts for the potential purchase of two hotels, consisting of one hotel in Madison, Wisconsin and one hotel in Nashville, Tennessee, for a total combined purchase price of approximately $177.5 million.
Removed
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 then-existing $425 million revolving credit facility and repayment of mortgage debt.
Added
Although the Company is working towards acquiring these hotels, in each case there are a number of conditions to closing that have not yet been satisfied, and there can be no assurance that closings on these hotels will occur under the outstanding purchase contracts.
Removed
On July 25, 2022, the Company entered into an amendment and restatement of its $850 million credit facility, increasing the borrowing capacity to $1.2 billion.
Added
If the sellers meet all of the conditions to closing, the Company is obligated to specifically perform under the applicable purchase contracts and acquire these hotels. The Company plans to utilize its available cash or borrowings under its unsecured credit facilities available at closing to purchase the properties under contract if closings occur.
Removed
The amendment and restatement extended the maturity date of the facility and changed the reference rate of the facility from the London Inter-Bank Offered Rate ("LIBOR") to the Secured Overnight Financing Rate ("SOFR") plus 10 basis points plus a margin ranging from 1.35% to 2.25% depending on the Company’s leverage ratio.
Added
The Company did not dispose of any properties in the year ended December 31, 2023. As of December 31, 2023, the Company had an outstanding contract to sell two of its hotels, which were both sold to an unrelated third party, for a gross sales price of approximately $33.5 million in February 2024.
Removed
As of December 31, 2022, approximately $224.0 million remained available for issuance under the ATM Program. No shares were sold under the Company's ATM Program during the year ended December 31, 2022.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

41 edited+12 added−10 removed187 unchanged
Biggest changeIf the Company defaults under a loan, it is possible that it could become involved in litigation related to matters concerning the loan, and such litigation could result in significant costs for the Company. Additionally, defaulting under a loan may damage the Company’s reputation as a borrower and may limit its ability to secure financing in the future.
Biggest changeIf a loan is secured by a mortgage on a single property, the Company could lose that property through foreclosure if it defaults on that loan. If the Company defaults under a loan, it is possible that it could become involved in litigation related to matters concerning the loan, and such litigation could result in significant costs for the Company.
The Company’s common shares are listed on the NYSE under the ticker symbol “APLE.” The market price and trading volume of the Company’s common shares may fluctuate widely, depending on many factors, some of which may be beyond the Company’s control, including: • actual versus anticipated differences in the Company’s operating results, liquidity, or financial condition; • publication of research reports about the Company and the accuracy of information published in these reports, regarding its hotels or the lodging or overall real estate industry; • changes in and/or failure to meet analysts’ revenue or earnings estimates; • the reputation of REITs and real estate investments generally, and the attractiveness of REIT equity securities in comparison to other equity securities, including securities issued by other real estate companies, and fixed income instruments; • changes in accounting principles or other laws and regulations that may adversely affect the Company or its industry; 22 • strategic actions by the Company or its competitors, such as acquisitions or dispositions, and announcements by franchisors, operators or REITs and other owners in the hospitality industry; • fluctuations in the stock price and operating results of the Company’s competitors; and • the realization of any of the other risk factors presented in this Annual Report on Form 10-K.
The Company’s common shares are listed on the NYSE under the ticker symbol “APLE.” The market price and trading volume of the Company’s common shares may fluctuate widely, depending on many factors, some of which may be beyond the Company’s control, including: • actual versus anticipated differences in the Company’s operating results, liquidity, or financial condition; • publication of research reports about the Company and the accuracy of information published in these reports, regarding its hotels or the lodging or overall real estate industry; • changes in and/or failure to meet analysts’ revenue or earnings estimates; • the reputation of REITs and real estate investments generally, and the attractiveness of REIT equity securities in comparison to other equity securities, including securities issued by other real estate companies, and fixed income instruments; • changes in accounting principles or other laws and regulations that may adversely affect the Company or its industry; 23 • strategic actions by the Company or its competitors, such as acquisitions or dispositions, and announcements by franchisors, operators or REITs and other owners in the hospitality industry; • fluctuations in the stock price and operating results of the Company’s competitors; and • the realization of any of the other risk factors presented in this Annual Report on Form 10-K.
Even if the Company qualifies for taxation as a REIT, it may be subject to certain U.S. federal, state and local taxes, including payroll taxes, taxes on any undistributed income, taxes on income from some activities conducted as a result of a foreclosure, a 100% excise tax on any transactions with a TRS that are not conducted on an arm’s-length basis, and state or local income, franchise, property and transfer taxes.
Even if the Company qualifies for taxation as a REIT, it may be subject to certain U.S. federal, state and local taxes, including payroll taxes, taxes on any undistributed income, taxes on income from some activities conducted as a result of a foreclosure, a 100% 20 excise tax on any transactions with a TRS that are not conducted on an arm’s-length basis, and state or local income, franchise, property and transfer taxes.
In addition, the Company’s hotels are subject to various U.S. federal, state, and local environmental, health and safety laws and regulations that address a wide variety of issues, including, but not limited to, storage tanks, air emissions from emergency generators, 17 storm water and wastewater discharges, lead-based paint, mold and mildew, and waste management.
In addition, the Company’s hotels are subject to various U.S. federal, state, and local environmental, health and safety laws and regulations that address a wide variety of issues, including, but not limited to, storage tanks, air emissions from emergency generators, storm water and wastewater discharges, lead-based paint, mold and mildew, and waste management.
The Company’s wholly-owned taxable REIT subsidiaries (“TRSs”) (or subsidiaries thereof) operate substantially all of its hotels pursuant to franchise or license agreements with nationally recognized hotel brands. These franchise and license agreements contain specific standards for, and restrictions and limitations on, the operation and maintenance of the Company’s hotels in order to maintain uniformity within the franchisor system.
The Company’s wholly-owned taxable REIT subsidiaries (“TRSs”) (or subsidiaries thereof) operate substantially all of its hotels pursuant to franchise or license agreements with nationally recognized hotel brands. These franchise and license agreements contain specific standards for, and restrictions and limitations on, the operation and maintenance of the Company’s hotels in order to maintain 12 uniformity within the franchisor system.
In addition, the issuance of blank check preferred shares could have the effect of discouraging, delaying or preventing a change of control of the Company. Additionally, the Company may issue debt securities which would have distribution rights that are senior to common shares and liquidation rights that are senior 18 to the liquidation preference applicable to common shares.
In addition, the issuance of blank check preferred shares could have the effect of discouraging, delaying or preventing a change of control of the Company. Additionally, the Company may issue debt securities which would have distribution rights that are senior to common shares and liquidation rights that are senior to the liquidation preference applicable to common shares.
Although substantially all of the Company’s hotels operate under the brands noted above, the Company owns and may from time to time acquire independent hotels or hotels affiliated with other brands, and/or may choose to operate hotels independently of a brand if the Company believes that these properties will operate most effectively as independent hotels.
Although substantially all of the Company’s hotels operate under the brands noted above, the Company may from time to time acquire independent hotels or hotels affiliated with other brands, and/or may choose to operate hotels independently of a brand if the Company believes that these properties will operate most effectively as independent hotels.
If the Company were to lose the right to use a hotel due to a breach or non-renewal of a ground lease, it would be unable to derive income from such hotel. Finally, the Company may not be permitted to sell or finance a hotel subject to a ground lease without the consent of the lessor.
If the Company were to lose the right to use a hotel due to a breach or non-renewal of a ground lease, it would be 14 unable to derive income from such hotel. Finally, the Company may not be permitted to sell or finance a hotel subject to a ground lease without the consent of the lessor.
The Company’s failure to qualify as a REIT also could cause an event of default under loan documents governing its debt. 19 Even if the Company qualifies as a REIT, it may face other tax liabilities that reduce its cash flow.
The Company’s failure to qualify as a REIT also could cause an event of default under loan documents governing its debt. Even if the Company qualifies as a REIT, it may face other tax liabilities that reduce its cash flow.
Any of these factors, among others, may reduce the Company’s operating results, the value of the properties that the Company owns, and the availability of capital to the Company. 11 Economic conditions in the U.S. and individual markets may adversely affect the Company’s business operations and financial performance.
Any of these factors, among others, may reduce the Company’s operating results, the value of the properties that the Company owns, and the availability of capital to the Company. Economic conditions in the U.S. and individual markets may adversely affect the Company’s business operations and financial performance.
Climate change also may have indirect effects on the Company’s business by increasing the cost of (or making unavailable) property insurance on terms the Company finds acceptable, as well as increasing the cost of renovations, energy and water at its properties.
Climate change also may have indirect effects on the Company’s business by increasing the cost of (or making unavailable) property insurance on terms the Company finds acceptable, as well as increasing the cost of renovations, energy and water at its 17 properties.
Common shareholders bear the risk that the Company’s future issuances of preferred shares or debt securities will negatively affect the market price of the Company’s common shares. Provisions of the Company’s third amended and restated bylaws could inhibit changes in control.
Common shareholders bear the risk that the Company’s future issuances of preferred shares or debt securities will negatively affect the market price of the Company’s common shares. 19 Provisions of the Company’s third amended and restated bylaws could inhibit changes in control.
Also, if the Company does not reinvest proceeds received from hotel dispositions into new properties 14 in a timely manner, the Company’s profitability could be negatively impacted.
Also, if the Company does not reinvest proceeds received from hotel dispositions into new properties in a timely manner, the Company’s profitability could be negatively impacted.
If this happens, the Company’s business and profitability may be materially and adversely affected. 13 Renovations and capital improvements at the Company’s existing hotels or new hotel developments may reduce the Company’s profitability.
If this happens, the Company’s business and profitability may be materially and adversely affected. Renovations and capital improvements at the Company’s existing hotels or new hotel developments may reduce the Company’s profitability.
For the rent paid pursuant to the hotel leases with the Company’s 20 TRSs, which the Company currently expects will continue to constitute substantially all of the REIT’s gross income, to qualify for purposes of the gross income tests, the leases must be respected as true leases for U.S. federal income tax purposes and must not be treated as service contracts, joint ventures or some other type of arrangement.
For the rent paid pursuant to the hotel leases with the Company’s TRSs, which the Company currently expects will continue to constitute substantially all of the REIT’s gross income, to qualify for purposes of the gross income tests, the leases must be respected as true leases for U.S. federal income tax purposes and must not be 21 treated as service contracts, joint ventures or some other type of arrangement.
In order to 21 meet these tests, the Company may be required to liquidate from its portfolio, or contribute to a TRS, otherwise attractive investments in order to maintain its qualification as a REIT. These actions could have the effect of reducing the Company’s income and amounts available for distribution to its shareholders.
In order to 22 meet these tests, the Company may be required to liquidate from its portfolio, or contribute to a TRS, otherwise attractive investments in order to maintain its qualification as a REIT. These actions could have the effect of reducing the Company’s income and amounts available for distribution to its shareholders.
Security breaches, whether through physical or electronic break-ins, cyber-attacks or cyber intrusions over the Internet, malware, computer viruses, attachments to emails, social engineering or phishing schemes, can create system disruptions, shutdowns, deployment of ransomware, theft of our data, or unauthorized disclosure of confidential information.
Security breaches, whether through physical or electronic break-ins, cyber-attacks or cyber intrusions over the Internet, malware, computer viruses, attachments to emails, social engineering or phishing schemes, can create system disruptions, shutdowns, deployment of ransomware, theft of the Company’s data, or unauthorized disclosure of confidential information.
Certain hotels are subject to ground leases that may affect the Company’s ability to use the hotel or restrict its ability to sell the hotel. As of December 31, 2022, 14 of the Company’s hotels were subject to ground leases. Accordingly, the Company effectively only owns a long-term leasehold interest in these hotels.
Certain hotels are subject to ground leases that may affect the Company’s ability to use the hotel or restrict its ability to sell the hotel. As of December 31, 2023, 14 of the Company’s hotels were subject to ground leases. Accordingly, the Company effectively only owns a long-term leasehold interest in these hotels.
Under these laws, governmental entities have the authority to require the Company, as the current owner of a hotel, to perform or pay for the clean-up of contamination (including hazardous substances, asbestos and asbestos-containing materials, waste, petroleum products or mold) at, on, under or emanating from the hotel and to pay for natural resource damages arising from such contamination.
Under these laws, governmental entities have the authority to require the Company, as the current owner of a hotel, to perform or pay for the cleanup of contamination (including hazardous substances, asbestos and asbestos-containing materials, waste, petroleum products or mold) at, on, under or emanating from the hotel and to pay for natural resource damages arising from such contamination.
Therefore, the Company’s shareholders bear the risk of the Company’s future offerings reducing the market price of its common shares and diluting shareholders equity interests in the Company. Item 1B. Unresolve d Staff Comments None. 23
Therefore, the Company’s shareholders bear the risk of the Company’s future offerings reducing the market price of its common shares and diluting shareholders’ equity interests in the Company. Item 1B. Unresolve d Staff Comments None.
If the Company failed to qualify as a REIT in any taxable year and any available relief provisions did not apply, the Company would be subject to U.S. federal and state corporate income tax on its taxable income at the regular corporate rate, and dividends paid to its shareholders would not be deductible by the Company in computing its taxable income.
If the Company failed to qualify as a REIT in any taxable year and any available relief provisions did not apply, the Company would be subject to U.S. federal and state corporate income tax on its taxable income at the regular corporate rate (including any applicable corporate minimum tax), and dividends paid to its shareholders would not be deductible by the Company in computing its taxable income.
Declines in government and corporate budgets and consumer demand due to adverse general economic conditions, risks affecting or reducing travel patterns, lower consumer confidence or adverse political conditions have lowered and may continue to lower the revenue and profitability of the Company’s hotels and therefore the net operating profits of its investments.
Declines in government and corporate budgets and consumer demand due to adverse general economic conditions, risks affecting or reducing travel patterns, lower consumer confidence or adverse political conditions may lower the revenue and profitability of the Company’s hotels and therefore the net operating profits of its investments.
These hotel operating expenses may not decrease when hotel revenues decrease, and some expenses, such as wages and insurance, may also increase due to factors unrelated to hotel operating performance, such as rising inflation rates.
These hotel operating expenses may not decrease when hotel revenues decrease, and some expenses, such as wages, utilities and insurance, may also increase due to factors unrelated to hotel operating performance, such as inflation rates.
The following is a summary of risks that may affect the hotel industry in general and as a result may affect the Company: • over-building of hotels in the markets in which the Company operates, resulting in an increase in supply of hotel rooms that exceeds increases in demand; • competition from other hotels and lodging alternatives in the markets in which the Company operates; • a downturn in the hospitality industry; • dependence on business and leisure travel; • increases in energy costs and other travel expenses, which may affect travel patterns and reduce business and leisure travel; • reduced business and leisure travel due to geo-political uncertainty, including terrorism, travel-related health concerns, including COVID-19 or other widespread outbreaks of infectious or contagious diseases in the U.S., inclement weather conditions, including natural disasters such as hurricanes, earthquakes and wildfires, and government shutdowns, airline strikes or other disruptions; • reduced travel due to adverse national, regional or local economic and market conditions; • seasonality of the hotel industry may cause quarterly fluctuations in operating results; • changes in marketing and distribution for the hospitality industry including the cost and the ability of third-party internet and other travel intermediaries to attract and retain customers; • changes in hotel room demand generators in a local market; • ability of a hotel franchise to fulfill its obligations to franchisees; • brand expansion; • the performance of third-party managers of the Company’s hotels; • increases in operating costs, including ground lease payments, renovation projects, property and casualty insurance, utilities and real estate and personal property taxes, due to inflation, climate change and other factors that may not be offset by increased room rates; • inflation due to the possibility of future increases in interest rates which could adversely affect consumer confidence thereby reducing consumer purchasing power and demand for lodging; • labor shortages and other increases in the cost of labor due to low unemployment rates or to government regulations surrounding work rules, government-issued vaccination requirements or prohibitions, wage rates, health care coverage and other benefits; • supply chain disruptions and broader inflationary pressures throughout the overall economy and global tensions driving shortages and cost increases for materials and supplies such as food and equipment; • changes in governmental laws and regulations, fiscal policies and zoning ordinances and the related costs of compliance with applicable laws and regulations; • claims, litigation and threatened litigation from guests, visitors to our hotel properties, contractors, sub-contractors and others; • business interruptions due to cyber-attacks and other technological events; • requirements for periodic capital reinvestment to repair and upgrade hotels; • limited alternative uses for hotel buildings; and • condemnation or uninsured losses.
The following is a summary of risks that may affect the hotel industry in general and as a result may affect the Company: • over-building of hotels in the markets in which the Company operates, resulting in an increase in supply of hotel rooms that exceeds increases in demand; • competition from other hotels and lodging alternatives in the markets in which the Company operates; • a downturn in the hospitality industry; • dependence on business and leisure travel; • increases in energy costs and other travel expenses, which may affect travel patterns and reduce business and leisure travel; • reduced business and leisure travel due to geo-political uncertainty, including terrorism and acts of war, travel-related health concerns, including widespread outbreaks of infectious or contagious diseases in the U.S., inclement weather conditions, including natural disasters such as hurricanes, earthquakes and wildfires, and government shutdowns, airline strikes or equipment failures, or other disruptions; • reduced travel due to adverse national, regional or local economic and market conditions; • seasonality of the hotel industry may cause quarterly fluctuations in operating results; • changes in marketing and distribution for the hospitality industry, including the cost and the ability of third-party internet and other travel intermediaries to attract and retain customers; • changes in hotel room demand generators in a local market; 11 • ability of a hotel franchise to fulfill its obligations to franchisees; • brand expansion; • the performance of third-party managers of the Company’s hotels; • increases in operating costs, including ground lease payments, renovation projects, property and casualty insurance, utilities and real estate and personal property taxes, due to inflation, climate change and other factors that may not be offset by increases in room rates or room revenue; • inflation which could adversely affect consumer confidence thereby reducing consumer purchasing power and demand for lodging; • labor shortages and other increases in the cost of labor due to low unemployment rates or to government regulations surrounding work rules, wage rates, health care coverage, immigration policies and other benefits; • supply chain disruptions and broader inflationary pressures throughout the overall economy and global tensions driving shortages and cost increases for materials and supplies such as food and equipment; • changes in governmental laws and regulations, fiscal policies and zoning ordinances and the related costs of compliance with applicable laws and regulations; • claims, litigation and threatened litigation from guests, visitors to the Company’s hotel properties, contractors, sub-contractors, government agencies and others; • business interruptions, regulatory costs and equipment loss due to cyber-attacks and other technological events; • requirements for periodic capital reinvestment to repair and upgrade hotels; • limited alternative uses for hotel buildings; and • condemnation or uninsured losses.
Labor costs can increase due to many factors, including but not limited to, a shortage of hospitality workers, increased dependence on contract workers, increased wages and employee benefit costs, increased labor turnover and increases in a unionized labor force.
Labor costs can increase due to many factors, including but not limited to, a shortage of hospitality workers, increased dependence on contract workers, increased wages and employee benefit costs, changes in laws and regulations, increased labor turnover and increases in a unionized labor force.
Pandemics, including the ongoing COVID-19 pandemic, as well as both future widespread and localized outbreaks of infectious diseases and other health concerns, and the measures taken to prevent the spread or lessen the impact, could cause a material disruption to the hotel industry or the economy as a whole.
Pandemics, such as COVID-19, as well as both future widespread and localized outbreaks of infectious diseases and other health concerns, and the measures taken to prevent the spread or lessen the impact, could cause a material disruption to the hotel industry or the economy as a whole.
However, without the support and recognition of a large established brand, the capability of these independent or less recognized branded hotels to market the hotel, maintain guest loyalty, attract new guests, and operate in a cost-effective manner may be difficult, which could adversely affect the Company’s overall operating results. 12 Competition in the markets where the Company owns hotels may adversely affect the Company’s results of operations.
However, without the support and recognition of a large established brand, the capability of these independent or less recognized branded hotels to market the hotel, maintain guest loyalty, attract new guests, and operate in a cost-effective manner may be difficult, which could adversely affect the Company’s overall operating results.
Any failure to maintain proper function, security and availability of information systems could interrupt operations, damage the reputations of the Company, the Company’s hotel managers or franchisors, and subject the Company to liability claims or regulatory penalties that may not be fully covered by insurance, all of which could have a material adverse effect on the business, financial condition and results of operations of the Company. 16 Potential losses not covered by insurance may adversely affect the Company’s financial condition.
Any failure to maintain proper function, security and availability of information systems could interrupt operations, interfere with the Company’s ability to comply with financial reporting requirements, damage the reputations of the Company, the Company’s hotel managers or franchisors, and subject the Company to liability claims or regulatory penalties that may not be fully covered by insurance, all of which could have a material adverse effect on the business, financial condition and results of operations of the Company.
Additional factors that may negatively impact the Company's ability to operate successfully as a result of COVID-19 or another pandemic, include, among others: • sustained negative consumer or business sentiment or continued corporate travel policy restrictions, which could further adversely impact demand for lodging; • continued postponement and cancellation of events, including sporting events, conferences and meetings; • hotel closures and the Company’s ability to reopen hotels that are temporarily closed in a timely manner, and its ability to attract customers to its hotels when they are able to reopen; • a severe disruption or instability in the global financial markets or deterioration in credit and financing conditions; • continued increased costs and potential difficulty accessing supplies related to personal protective equipment, increased sanitation, social distancing and other mitigation measures at hotels; and • continued increased labor costs to attract employees due to perceived risk of exposure to COVID-19 or other infectious disease, as well as potential for increased workers’ compensation claims if hotel employees are exposed to COVID-19 through the workplace.
Additional factors that may negatively impact the Company’s ability to operate successfully as a result of a pandemic, include, among others: • sustained negative consumer or business sentiment or corporate travel policy restrictions, which could further adversely impact demand for lodging; • postponement and cancellation of events, including sporting events, conferences and meetings; • hotel closures and the Company’s ability to reopen hotels that are temporarily closed in a timely manner, and its ability to attract customers to its hotels when they are able to reopen; • a severe disruption or instability in the global financial markets or deterioration in credit and financing conditions; • increased costs and potential difficulty accessing supplies related to personal protective equipment, increased sanitation, social distancing and other mitigation measures at hotels; and • increased labor costs to attract employees due to perceived risk of exposure to an infectious disease or virus, as well as potential for increased workers’ compensation claims if hotel employees are exposed to such diseases or viruses in the workplace. 16 Moreover, many risk factors set forth in this Annual Report on Form 10-K would be heightened as a result of another potential pandemic.
Furthermore, if one of the Company’s third-party managers is financially unable or unwilling to perform its obligations pursuant to its management agreements with the Company, the Company’s ability to find a replacement manager or managers for those properties could be costly and time-consuming for the Company and disrupt hotel operations which could materially and adversely affect the Company.
A failure by the Company’s hotel managers to successfully manage its hotels could lead to an increase in its operating expenses, a decrease in its revenues, or both. 13 Furthermore, if one of the Company’s third-party managers is financially unable or unwilling to perform its obligations pursuant to its management agreements with the Company, the Company’s ability to find a replacement manager or managers for those properties could be costly and time-consuming for the Company and disrupt hotel operations which could materially and adversely affect the Company.
The hotel industry is highly competitive. Each of the Company’s hotels competes for guests primarily with other hotels in its immediate vicinity and secondarily with other hotels in its geographic market.
Competition in the markets where the Company owns hotels may adversely affect the Company’s results of operations. The hotel industry is highly competitive. Each of the Company’s hotels competes for guests primarily with other hotels in its immediate vicinity and secondarily with other hotels in its geographic market.
In the event of a substantial loss, the Company’s insurance coverage may not be sufficient to cover the full current market value or replacement cost of its lost investment.
There also can be risks such as certain environmental hazards that may be deemed to fall outside of the coverage. In the event of a substantial loss, the Company’s insurance coverage may not be sufficient to cover the full current market value or replacement cost of its lost investment.
The Company maintains comprehensive insurance coverage for general liability, property, business interruption and other risks with respect to all of its hotels. These policies offer coverage features and insured limits that the Company believes are customary for similar types of properties. There are no assurances that coverage will be available or at reasonable rates in the future.
Potential losses not covered by insurance may adversely affect the Company’s financial condition. The Company maintains comprehensive insurance coverage for general liability, property, business interruption and other risks with respect to all of its hotels. These policies offer coverage features and insured limits that the Company believes are customary for similar types of properties.
You should carefully consider the risks described below and the risks disclosed by the Company in other filings with the SEC, in addition to the other information contained in this Annual Report on Form 10-K. 10 Risks Related to the Company’s Business and Operations The Company is subject to various risks which are common to the hotel industry on a national, regional and local market basis that are beyond its control and could adversely affect its business.
Risks Related to the Company’s Business and Operations The Company is subject to various risks which are common to the hotel industry on a national, regional and local market basis that are beyond its control and could adversely affect its business.
Compliance with financial and other covenants in the Company’s existing or future debt agreements may reduce operational flexibility and create default risk.
Also, the use of SOFR based rates is relatively new, and there could be unanticipated difficulties or disruptions with the calculation and publication of SOFR based rates. Compliance with financial and other covenants in the Company’s existing or future debt agreements may reduce operational flexibility and create default risk.
The ability of the Company to access capital markets, including commercial debt markets, could also be negatively impacted by unfavorable, or the possibility of unfavorable, outcomes from adverse regulatory actions or lawsuits. Risks Related to the Company’s Organization and Structure The Company’s ownership limitations may restrict or prevent certain acquisitions and transfers of its shares.
The ability of the Company to access capital markets, including commercial debt markets, could also be negatively impacted by unfavorable, or the possibility of unfavorable, outcomes from adverse regulatory actions or lawsuits. 18 Heightened focus on corporate responsibility, specifically related to ESG practices, may impose additional costs and expose the Company to new risks.
Also, various types of catastrophic losses, like earthquakes, hurricanes and other storms, wildfires, or certain types of terrorism, may not be insurable or may not be economically insurable for all or certain locations. Even when insurable, these policies may have high deductibles and/or high premiums.
There are no assurances that coverage will be available or at reasonable rates in the future. Also, various types of catastrophic losses, like earthquakes, hurricanes and other storms, wildfires, or certain types of terrorism, may not be insurable or may not be economically insurable for all or certain locations.
The Company’s actual hedging decisions are determined in light of the facts and circumstances existing at the time of the hedge. There is no assurance that the Company’s hedging strategy will achieve its objectives, and the Company may be subject to costs, such as transaction fees or breakage costs, if it terminates these hedging arrangements.
There is no assurance that the Company’s hedging strategy will achieve its objectives, and the Company may be subject to costs, such as transaction fees or breakage costs, if it terminates these hedging arrangements. 15 Loans under the Company’s Revolving Credit Facility and term loan agreements may bear interest based on SOFR, but experience with SOFR based loans is limited.
Additionally, although the Company may be insured for a particular loss, the Company is not insured against the impact a catastrophic event may have on the hospitality industry as a whole. There also can be risks such as certain environmental hazards that may be deemed to fall outside of the coverage.
Even when insurable, these policies may have high deductibles and/or high premiums. Additionally, although the Company may be insured for a particular loss, the Company is not insured against the impact a catastrophic event may have on the hospitality industry as a whole.
The use of SOFR based rates may result in interest rates and/or payments that are higher or lower than the rates and payments that the Company previously experienced when referenced to LIBOR. SOFR is a relatively new reference rate, has a very limited history and is based on short-term repurchase agreements, backed by Treasury securities.
The use of SOFR based rates may result in interest rates and/or payments that are higher or lower than the rates and payments that the Company experienced under its prior credit facilities or term loan agreements where interest rates were based on LIBOR.
Pandemics and other health crises, including the ongoing outbreak of COVID-19, could negatively impact the Company's business, financial performance and condition, operating results and cash flows.
Additionally, defaulting under a loan may damage the Company’s reputation as a borrower and may limit its ability to secure financing in the future. Pandemics and other health crises could negatively impact the Company’s business, financial performance and condition, operating results and cash flows.
Removed
A failure by the Company’s hotel managers to successfully manage its hotels could lead to an increase in its operating expenses, a decrease in its revenues, or both.
Added
You should carefully consider the risks described below and the risks disclosed by the Company in other filings with the SEC, in addition to the other information contained in this Annual Report on Form 10-K.
Removed
The replacement of LIBOR with SOFR may adversely affect interest expense related to outstanding debt. The Company's debt agreements related to its unsecured credit facilities require the applicable interest rate or payment amount by reference to SOFR.
Added
The Company’s actual hedging decisions are determined in light of the facts and circumstances existing at the time of the hedge.
Removed
The composition and characteristics of SOFR differ from those of LIBOR in material respects: SOFR is a secured rate, LIBOR is an unsecured rate, and while SOFR is an overnight rate, LIBOR represents interbank funding for a specified term.
Added
The Company’s Revolving Credit Facility and term loan agreements currently bear interest at rates based on the Secured Overnight Financing Rate published by the Federal Reserve Bank of New York (“SOFR”) plus prescribed margins.
Removed
Changes in SOFR could be volatile and difficult to predict, and there can be no assurance that SOFR will perform similarly to the way LIBOR would have performed at any time, including as a result of, without limitation, changes in interest and yield rates in the market, bank credit risk, market volatility or global or regional economic, financial, political, regulatory, judicial or other events.
Added
The use of SOFR based rates replaced rates based on the London Interbank Offered Rate (“LIBOR”), and reflects the cessation of the publication of LIBOR rates previously announced by regulators in the United Kingdom and the discontinuation of the use of LIBOR in the financial markets.
Removed
As a result, the amount of interest the Company may pay on its credit facilities is difficult to predict. Prior observed patterns, if any, in the behavior of market variables and their relation to SOFR, such as correlations, may change in the future, and there can be no assurance that SOFR will be positive.
Added
Companies across industries face increasing scrutiny from various stakeholders on how they address a variety of Environmental, Social and Governance (“ESG”) matters. Potential and current employees, hotel brands, hotel management companies and vendors may consider these factors when establishing and extending business relationships and hotel guests may consider these factors when choosing a hotel.
Removed
While some pre-publication historical data for SOFR has been released by the Federal Reserve Bank of New York, production of such historical indicative SOFR data inherently involves assumptions, estimates and approximations. No future performance of SOFR may be inferred from any of the historical actual or historical indicative SOFR data.
Added
With this increased focus, public reporting regarding ESG practices is becoming more broadly expected. The Company summarizes its existing ESG programs in its annual Corporate Responsibility Report, which is available on its website. The focus on and activism around ESG and related matters may constrain business operations or cause the Company to incur additional costs.
Removed
Hypothetical or historical performance data are not indicative of, and have no bearing on, the potential performance of SOFR. Additionally, there can be no assurance that SOFR will continue to maintain market acceptance or that the method by which the reference rate is calculated will continue in its current form.
Added
The Company may face reputational damage in the event the Company’s corporate responsibility initiatives do not meet the standards set by various constituencies, including those of third-party providers of corporate responsibility ratings and reports.
Removed
If a loan is secured by a mortgage on a single property, the Company could lose that property 15 through foreclosure if it defaults on that loan.
Added
Furthermore, if competitors outperform the Company in such metrics, potential or current investors may elect to invest with the Company’s competitors, and employees, hotel brands, hotel management companies, vendors and guests may choose not to do business with the Company, which could have a material and adverse impact on the Company’s financial condition, the market price of its common shares and ability to raise capital.
Removed
While operations at many of the Company’s properties have returned to 2019 levels, some of the Company's properties continue to operate at reduced levels as business travel has not fully returned, and the Company has reduced certain services and amenities.
Added
Moreover, while the Company makes voluntary disclosures in its Corporate Responsibility Report regarding its ESG practices, certain disclosures are based on hypothetical expectations and assumptions that may differ from actual results. In addition, the SEC is currently evaluating potential new ESG disclosure and other requirements that would impact the Company.
Removed
Moreover, many risk factors set forth in this Annual Report on Form 10-K would be heightened as a result of COVID-19 or another potential pandemic.
Added
As the Company continues to invest and focus on ESG practices that the Company believes are appropriate for its business, the Company could also be criticized by ESG detractors for the scope or nature of its initiatives or goals.
Added
The Company could be subjected to negative responses of governmental actors (such as anti-ESG legislation or retaliatory legislative treatment), hotel brands, hotel management companies and hotel guests, that could have a material adverse effect on the Company’s reputation, financial condition and results of operations.
Added
Risks Related to the Company’s Organization and Structure The Company’s ownership limitations may restrict or prevent certain acquisitions and transfers of its shares.

Item 2. Properties

Properties — owned and leased real estate

7 edited+3 added−0 removed2 unchanged
Biggest changeLouis 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 (1) 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 (2) 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 (2) Syracuse NY Courtyard Crestline 10/16/2015 102 Syracuse NY Residence Inn Crestline 10/16/2015 78 27 City State Brand Manager (3) Date Acquired or Completed Rooms Mason OH Hilton Garden Inn Raymond 9/1/2016 110 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 AC Hotels Concord 10/25/2022 134 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 28 City State Brand Manager (3) Date Acquired or Completed Rooms San Antonio TX TownePlace Suites Western 3/1/2014 106 Shenandoah TX Courtyard LBA 9/1/2016 124 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 Courtyard White Lodging 12/8/2014 135 (1) Richmond VA Marriott White Lodging 3/1/2014 413 (2) Richmond VA Residence Inn White Lodging 12/8/2014 75 (1) 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 28,983 (1) Hotel is encumbered by mortgage.
Biggest changeLouis 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 (1) 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 (2) West Orange NJ Courtyard Newport 1/11/2011 131 Las Vegas NV SpringHill Suites Crescent 12/27/2023 299 Islip/Ronkonkoma NY Hilton Garden Inn Crestline 3/1/2014 166 New York NY (non-hotel) N/A 3/1/2014 - (2)(5) Syracuse NY Courtyard Crestline 10/16/2015 102 Syracuse NY Residence Inn Crestline 10/16/2015 78 29 City State Brand Manager (3) Date Acquired or Completed Rooms Cleveland OH Courtyard Concord 6/30/2023 154 Mason OH Hilton Garden Inn Raymond 9/1/2016 110 Twinsburg OH Hilton Garden Inn Concord 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 AC Hotels Concord 10/25/2022 134 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 Chartwell 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 30 City State Brand Manager (3) Date Acquired or Completed Rooms Lewisville TX Hilton Garden Inn Western 10/16/2008 165 San Antonio TX TownePlace Suites Western 3/1/2014 106 Shenandoah TX Courtyard LBA 9/1/2016 124 Stafford TX Homewood Suites Western 3/1/2014 78 Texarkana TX Hampton Western 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 Salt Lake City UT Courtyard North Central 10/11/2023 175 Salt Lake City UT Hyatt House North Central 10/11/2023 159 South Jordan UT Embassy Suites HHM 11/21/2023 192 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 Courtyard White Lodging 12/8/2014 135 (1) Richmond VA Marriott White Lodging 3/1/2014 413 (2) Richmond VA Residence Inn White Lodging 12/8/2014 75 (1) 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 Renton WA Residence Inn InnVentures 10/18/2023 146 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 29,900 (1) Hotel is encumbered by mortgage.
City State Brand Manager (3) Date Acquired or Completed Rooms Anchorage AK Embassy Suites InnVentures 4/30/2010 169 Anchorage AK Home2 Suites InnVentures 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 (1) Mobile AL Hampton McKibbon 9/1/2016 101 (2) Prattville AL Courtyard LBA 3/1/2014 84 (1) 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 (2) Phoenix AZ Hampton North Central 5/2/2018 210 Phoenix AZ Homewood Suites North Central 9/1/2016 134 (2) 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 (2) Tempe AZ Hyatt Place Crestline 8/13/2020 154 (2) 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 (1) Burbank CA Residence Inn Marriott 3/1/2014 166 Burbank CA SpringHill Suites Marriott 7/13/2015 170 (1) 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 (1) 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 (1) San Diego CA Hampton Dimension 3/1/2014 177 (1) San Diego CA Hilton Garden Inn InnVentures 3/1/2014 200 San Diego CA Residence Inn Dimension 3/1/2014 121 (1) San Jose CA Homewood Suites Dimension 3/1/2014 140 (1) 25 City State Brand Manager (3) Date Acquired or Completed Rooms San Juan Capistrano CA Residence Inn Marriott 9/1/2016 130 (2) Santa Ana CA Courtyard Dimension 5/23/2011 155 (1) 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 InnVentures 9/1/2016 221 (1) 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 (2) Miami FL Hampton HHM 4/9/2010 121 Miami FL Homewood Suites Dimension 3/1/2014 162 (1) 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 (2) 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 (2) Savannah GA Hilton Garden Inn Newport 3/1/2014 105 (2) 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 (1) 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 26 City State Brand Manager (3) 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 Louisville KY AC Hotels Concord 10/25/2022 156 Lafayette LA Hilton Garden Inn LBA 7/30/2010 153 (2) Lafayette LA SpringHill Suites LBA 6/23/2011 103 New Orleans LA Homewood Suites Dimension 3/1/2014 166 (1) 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 (1) 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 (1) 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.
City State Brand Manager (3) Date Acquired or Completed Rooms Anchorage AK Embassy Suites InnVentures 4/30/2010 169 Anchorage AK Home2 Suites InnVentures 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 (2) Prattville AL Courtyard LBA 3/1/2014 84 Rogers AR Hampton Raymond 8/31/2010 122 (4) Rogers AR Homewood Suites Raymond 4/30/2010 126 (4) 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 (2) Phoenix AZ Hampton North Central 5/2/2018 210 Phoenix AZ Homewood Suites North Central 9/1/2016 134 (2) 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 (2) Tempe AZ Hyatt Place Crestline 8/13/2020 154 (2) 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 (1) Burbank CA Residence Inn Marriott 3/1/2014 166 Burbank CA SpringHill Suites Marriott 7/13/2015 170 (1) 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 (1) 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 (1) San Diego CA Hampton Dimension 3/1/2014 177 (1) 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 (1) San Juan Capistrano CA Residence Inn Marriott 9/1/2016 130 (2) 27 City State Brand Manager (3) Date Acquired or Completed Rooms Santa Ana CA Courtyard Dimension 5/23/2011 155 (1) 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 InnVentures 9/1/2016 221 (1) 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 (2) 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 (2) 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 (2) Savannah GA Hilton Garden Inn Newport 3/1/2014 105 (2) Cedar Rapids IA Hampton Chartwell 9/1/2016 103 Cedar Rapids IA Homewood Suites Chartwell 9/1/2016 95 Davenport IA Hampton Chartwell 9/1/2016 103 Boise ID Hampton Raymond 4/30/2010 186 (1) 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 Indianapolis IN SpringHill Suites HHM 11/2/2010 130 28 City State Brand Manager (3) Date Acquired or Completed Rooms 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 Chartwell 3/1/2014 90 Louisville KY AC Hotels Concord 10/25/2022 156 Lafayette LA Hilton Garden Inn LBA 7/30/2010 153 (2) Lafayette LA SpringHill Suites LBA 6/23/2011 103 New Orleans LA Homewood Suites Dimension 3/1/2014 166 (1) 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 (1) 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 (1) 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.
As noted below, 14 of the Company’s hotels are subject to ground leases and 19 of its hotels are encumbered by mortgage notes.
As noted below, 14 of the Company’s hotels are subject to ground leases and 15 of its hotels are encumbered by mortgage notes.
The following table summarizes the number of hotels and rooms by state: 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 Kentucky 1 156 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 4 525 South Carolina 5 590 Tennessee 11 1,337 Texas 27 3,328 Utah 3 393 Virginia 11 1,667 Washington 3 490 Wisconsin 1 176 Total 220 28,983 24 The following table is a list of the 220 hotels the Company owned as of December 31, 2022.
The following table summarizes the number of hotels and rooms by state: 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 Kentucky 1 156 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 Nevada 1 299 New Jersey 5 629 New York 3 346 North Carolina 8 881 Ohio 3 406 Oklahoma 4 545 Oregon 1 243 Pennsylvania 4 525 South Carolina 5 590 Tennessee 11 1,337 Texas 27 3,328 Utah 6 919 Virginia 11 1,667 Washington 4 636 Wisconsin 1 176 Total 225 29,900 26 The following table summarizes the location, brand, manager, date acquired or completed and number of rooms for each of the 225 hotels and the non-hotel property that the Company owned as of December 31, 2023.
The Company’s investment in real estate as of December 31, 2022, consisted of the following (in thousands): Land $ 802,625 Building and Improvements 4,656,343 Furniture, Fixtures and Equipment 522,082 Finance Ground Lease Assets 102,084 Franchise Fees 19,925 6,103,059 Less Accumulated Depreciation and Amortization (1,492,097 ) Investment in Real Estate, net $ 4,610,962 For additional information about the Company’s properties, refer to Schedule III – Real Estate and Accumulated Depreciation and Amortization included at the end of Part IV, appearing elsewhere in this Annual Report on Form 10-K. 29
The Company’s investment in real estate as of December 31, 2023, consisted of the following (in thousands): Land $ 828,868 Building and improvements 4,917,105 Furniture, fixtures and equipment 571,026 Finance ground lease assets 102,084 Franchise fees 21,233 6,440,316 Less accumulated depreciation and amortization (1,662,942 ) Investment in real estate, net $ 4,777,374 For additional information about the Company’s properties, refer to Schedule III – Real Estate and Accumulated Depreciation and Amortization included at the end of Part IV, appearing elsewhere in this Annual Report on Form 10-K. 31
(2) Hotel is subject to ground lease. (3) The management companies are defined in Note 9 titled “Management and Franchise Agreements” in Part II, Item 8 in this Annual Report on Form 10-K.
(2) Hotel is subject to ground lease. (3) The management companies are defined in Note 9 titled “Management and Franchise Agreements” in Part II, Item 8 in this Annual Report on Form 10-K. (4) Hotel is classified as held for sale as of December 31, 2023 and was sold to an unrelated party in February 2024.
Item 2. P roperties As of December 31, 2022, the Company owned 220 hotels with an aggregate of 28,983 rooms located in 37 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.
Substantially all of the Company’s hotels operate under Marriott or Hilton brands. The hotels are operated and managed under separate management agreements with 16 hotel management companies, none of which are affiliated with the Company.
Added
Item 2. P roperties As of December 31, 2023, the Company owned 225 hotels with an aggregate of 29,900 rooms located in 38 states, including two hotels with a total of 248 rooms classified as held for sale, which were both sold to an unrelated party in February 2024.
Added
(5) In May 2023, the Company entered into an operating lease for an initial 15-year term with a third-party hotel operator at its independent boutique hotel in New York, New York for all hotel operations of the hotel’s 210 hotel rooms.
Added
Lease revenue from this property is recorded in other revenue in the Company’s consolidated statements of operations and comprehensive income. As a result of the lease agreement, this property is excluded from the Company’s hotel and room counts effective May 2023 and is considered a non-hotel property through the end of the lease term.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed2 unchanged
Biggest changeMine Saf ety Disclosures Not Applicable. 30 PART II
Biggest changeMine Saf ety Disclosures Not Applicable. 32 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

17 edited+2 added−4 removed9 unchanged
Biggest changeAdditionally, during 2022, certain of the Company’s employees surrendered common shares to satisfy their tax withholding obligations associated with the vesting of common shares issued under the 2014 Omnibus Incentive Plan (the “Omnibus Plan”) as described in Note 8 titled “Compensation Plans” in Part II, Item 8, of the Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Annual Report on Form 10-K. 32 The following is a summary of all share repurchases during the fourth 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) October 1 - October 31, 2022 81,100 $ 14.21 81,100 $ 342,325 November 1 - November 30, 2022 - - - $ 342,325 December 1 - December 31, 2022 (2) 114,147 16.81 - $ 342,325 Total 195,247 81,100 (1) Represents amount outstanding under the Company's authorized $345 million Share Repurchase Program.
Biggest changeThe following is a summary of all share repurchases during the fourth quarter of 2023: 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) October 1 - October 31, 2023 - - - $ 335,446 November 1 - November 30, 2023 - - - $ 335,446 December 1 - December 31, 2023 (2) 134,085 $ 16.90 - $ 335,446 Total 134,085 - (1) Represents amount outstanding under the Company’s authorized $338.7 million Share Repurchase Program.
In order to comply with certain requirements related to the Company’s qualification as a REIT, the Company’s Charter provides that, subject to certain exceptions, no person or entity (other than a person or entity who has been granted an exemption) may directly or indirectly, beneficially or constructively, own more than 9.8% of the aggregate of its outstanding common shares or 9.8% of the aggregate of the outstanding preferred shares of any class or series.
In order to comply with certain requirements related to the Company’s qualification as a REIT, the Company’s Charter provides that, subject to certain exceptions, no person or entity (other than a person or entity who has been granted 33 an exemption) may directly or indirectly, beneficially or constructively, own more than 9.8% of the aggregate of its outstanding common shares or 9.8% of the aggregate of the outstanding preferred shares of any class or series.
Because many of the Company’s common shares are held by brokers and 31 other institutions on behalf of shareholders, the Company believes there are substantially more beneficial holders of its common shares than record holders.
Because many of the Company’s common shares are held by brokers and other institutions on behalf of shareholders, the Company believes there are substantially more beneficial holders of its common shares than record holders.
The amount and frequency of future distributions will depend on certain items, including but not limited to, the Company’s results of operations, cash flow from operations, economic conditions, working capital requirements, cash requirements to fund investing and financing activities, and capital expenditure requirements, including improvements to and expansions of properties, as well as the distribution requirements under federal income tax provisions for qualification as a REIT.
The amount and frequency of future distributions will depend on certain items, including but not limited to, the Company’s results of operations, cash flow from operations, economic conditions, working capital requirements, cash requirements to fund investing and financing activities, and capital expenditure requirements, including improvements to and expansions of properties, as well as the distribution requirements under U.S. federal income tax provisions for qualification as a REIT.
(2) Consists of common shares surrendered to the Company to satisfy tax withholding obligations associated with the vesting of restricted common shares. 33 Equity Compensation Plans The Company’s Board of Directors adopted and the Company’s shareholders approved the Omnibus Plan, which provides for the issuance of up to 10 million common shares, subject to adjustments, to employees, officers, and directors of the Company or affiliates of the Company, consultants or advisers currently providing services to the Company or affiliates of the Company, and any other person whose participation in the Omnibus Plan is determined by the Compensation Committee of the Board of Directors (the "Compensation Committee") to be in the best interests of the Company.
(2) Consists of common shares surrendered to the Company to satisfy tax withholding obligations associated with the vesting of restricted common shares. 34 Equity Compensation Plans The Company’s Board of Directors adopted and the Company’s shareholders approved the Omnibus Plan, which provides for the issuance of up to 10 million common shares, subject to adjustments, to employees, officers, and directors of the Company or affiliates of the Company, consultants or advisers currently providing services to the Company or affiliates of the Company, and any other person whose participation in the Omnibus Plan is determined by the Compensation Committee of the Board of Directors (the “Compensation Committee”) to be in the best interests of the Company.
Also includes 85,008 fully vested deferred stock units, including quarterly distributions earned, under the Non-Employee Director Deferral Program under the Omnibus Plan, adopted by the Board of Directors in 2018, effective June 1, 2018, that are not included in the calculation of the weighted-average exercise price of outstanding options.
Also includes 75,829 fully vested deferred stock units, including quarterly distributions earned, under the Non-Employee Director Deferral Program under the Omnibus Plan, adopted by the Board of Directors in 2018, effective June 1, 2018, that are not included in the calculation of the weighted-average exercise price of outstanding options.
(2) The weighted-average exercise price of outstanding options relates solely to stock options, which are the only currently outstanding exercisable security. (3) Does not include remaining shares registered under the Directors' Plan, as no further grants can be made under the Directors' Plan. Item 6. Reserved 34
(2) The weighted-average exercise price of outstanding options relates solely to stock options, which are the only currently outstanding exercisable security. (3) Does not include remaining shares registered under the Directors’ Plan, as no further grants can be made under the Directors’ Plan.
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 may be suspended or terminated at any time by the Company and will end in July 2023 if not terminated or extended earlier.
Share Repurchases In May 2023, 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 $338.7 million. The Share Repurchase Program may be suspended or terminated at any time by the Company and will end in July 2024 if not terminated or extended earlier.
The performance graph is not indicative of future investment performance. The Company does not make or endorse any predictions as to future share price performance. Shareholder Information As of February 13, 2023, the Company had approximately 90 holders of record of its common shares and there were approximately 229 million common shares outstanding.
The performance graph is not indicative of future investment performance. The Company does not make or endorse any predictions as to future share price performance. Shareholder Information As of February 12, 2024, the Company had approximately 100 holders of record of its common shares and there were approximately 242 million common shares outstanding.
In addition to the regular monthly cash distribution of $0.08 per common share approved by the Board of Directors in December 2022, the Board of Directors approved a special cash distribution of $0.08 per common share for a combined distribution of $0.16 per common share, paid in January 2023, to shareholders of record as of December 30, 2022.
In addition to the regular monthly cash distribution of $0.08 per common share approved by the Board of Directors in December 2023, the Board of Directors approved a special cash distribution of $0.05 per common share for a combined distribution of $0.13 per common share, paid in January 2024, to shareholders of record as of December 29, 2023.
During the year ended December 31, 2022, the Company purchased approximately 0.2 million of its common shares under its Share Repurchase Program at a weighted-average market purchase price of approximately $14.21 per common share for an aggregate purchase price, including commissions, of approximately $2.7 million.
During the year ended December 31, 2023, the Company purchased approximately 0.5 million of its common shares under its Share Repurchase Program at a weighted-average market purchase price of approximately $14.34 per common share for an aggregate purchase price, including commissions, of approximately $6.9 million.
The following is a summary of securities issued under the Company’s equity compensation plans as of December 31, 2022: Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (1) Weighted- Average Exercise Price of Outstanding Options, Warrants and Rights (2) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in First Column) (3) Equity compensation plans approved by security holders 142,019 $ 21.48 7,141,024 Equity compensation plans not approved by security holders - - - Total equity compensation plans 142,019 $ 21.48 7,141,024 (1) Includes 57,011 stock options granted to the Company’s current and former directors under the Directors’ Plan.
The following is a summary of securities issued under the Company’s equity compensation plans as of December 31, 2023: Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (1) Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (2) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in First Column) (3) Equity compensation plans approved by security holders 115,961 $ 20.50 6,625,302 Equity compensation plans not approved by security holders - - - Total equity compensation plans 115,961 $ 20.50 6,625,302 (1) Includes 40,132 stock options granted to the Company’s current and former directors under the Directors’ Plan.
This program may be suspended or terminated at any time by the Company. If not terminated or extended earlier, the program will end in July 2023.
This program, which was announced in 2015 and most recently extended in May 2023, may be suspended or terminated at any time by the Company and will end in July 2024 if not terminated or extended earlier.
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.
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 December 31, 2023, approximately $335.4 million remained available for purchase under the Share Repurchase Program.
As of December 31, 2022 and February 13, 2023, the last reported closing price per share for the Company’s common shares as reported on the NYSE was $15.78 and $17.57, respectively.
As of December 31, 2023 and February 12, 2024, the last reported closing price per share for the Company’s common shares as reported on the NYSE was $16.61 and $16.22, respectively.
Real Estate Hotels Index $ 100.00 $ 86.90 $ 100.69 $ 74.20 $ 84.98 $ 71.92 This performance graph shall not be deemed "filed" for the purposes of Section 18 of the Exchange Act, or incorporated by reference into any filing by the Company under the Securities Act, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Real Estate Hotels Index $ 100.00 $ 115.88 $ 85.39 $ 97.80 $ 82.76 $ 94.91 This performance graph shall not be deemed “filed” for the purposes of Section 18 of the Exchange Act, or incorporated by reference into any filing by the Company under the Securities Act, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Value of Initial Investment at Name 12/31/17 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 Apple Hospitality REIT, Inc. $ 100.00 $ 78.36 $ 95.57 $ 77.50 $ 97.20 $ 99.54 S&P 500 Index $ 100.00 $ 95.62 $ 125.72 $ 148.85 $ 191.58 $ 156.88 Dow Jones U.S.
Value of Initial Investment at Name 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 Apple Hospitality REIT, Inc. $ 100.00 $ 121.97 $ 98.91 $ 124.05 $ 127.03 $ 142.67 S&P 500 Index $ 100.00 $ 131.49 $ 155.68 $ 200.37 $ 164.08 $ 207.21 Dow Jones U.S.
Removed
Subsequent to the distribution paid in March 2020, the Company announced the suspension of its monthly distributions due to the impact of COVID-19 on its operating cash flows. Beginning in March 2021, the Board of Directors declared distributions of $0.01 per common share in the last month of each quarter and the distributions were paid out each following month.
Added
For the years ended December 31, 2023 and 2022, the Company paid distributions of $1.04 and $0.61 per common share for a total of approximately $238.3 million and $139.5 million, respectively. The Company’s current annual distribution rate, payable monthly, is $0.96 per common share.
Removed
In February 2022, the Board of Directors of the Company reinstated its policy of distributions on a monthly basis and declared a monthly cash distribution of $0.05 per common share with the first monthly distribution paid in March 2022.
Added
Additionally, during 2023, certain of the Company’s employees surrendered common shares to satisfy their tax withholding obligations associated with the vesting of common shares issued under the 2014 Omnibus Incentive Plan (the “Omnibus Plan”) as described in Note 8 titled “Compensation Plans” in Part II, Item 8, of the Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Annual Report on Form 10-K.
Removed
In August and October 2022, the Board of Directors approved subsequent increases to the monthly cash distribution to $0.07 and $0.08 per common share, respectively.
Removed
The shares were repurchased under a written trading plan as part of the Share Repurchase Program that provides for share repurchases in open market transactions and that is intended to comply with Rule 10b5-1 under the Exchange Act.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

93 edited+31 added−42 removed47 unchanged
Biggest changeYear Ended December 31, (in thousands, except statistical data) 2022 Percent of Revenue 2021 Percent of Revenue Change 2021 to 2022 2020 Percent of Revenue 2019 Percent of Revenue Change 2019 to 2022 Total revenue $ 1,238,417 100.0 % $ 933,869 100.0 % 32.6 % $ 601,879 100.0 % $ 1,266,597 100.0 % -2.2 % Hotel operating expense 710,481 57.4 % 542,178 58.1 % 31.0 % 402,278 66.8 % 724,416 57.2 % -1.9 % Property taxes, insurance and other expense 72,907 5.9 % 71,980 7.7 % 1.3 % 78,238 13.0 % 77,498 6.1 % -5.9 % General and administrative expense 42,464 3.4 % 41,038 4.4 % 3.5 % 29,374 4.9 % 36,210 2.9 % 17.3 % Loss on impairment of depreciable real estate assets 26,175 10,754 143.4 % 5,097 6,467 304.7 % Depreciation and amortization expense 181,697 184,471 -1.5 % 199,786 193,240 -6.0 % Gain on sale of real estate 1,785 3,596 -50.4 % 10,854 5,021 -64.4 % Interest and other expense, net 59,733 67,748 -11.8 % 70,835 61,191 -2.4 % Income tax expense 1,940 468 314.5 % 332 679 185.7 % Net income (loss) 144,805 18,828 669.1 % (173,207 ) 171,917 -15.8 % Adjusted hotel EBITDA (1) 455,579 320,273 42.2 % 121,985 464,995 -2.0 % Number of hotels owned at end of period 220 219 0.5 % 234 233 -5.6 % ADR $ 149.36 $ 123.78 20.7 % $ 111.49 $ 137.30 8.8 % Occupancy 72.6 % 66.3 % 9.5 % 46.1 % 77.0 % -5.7 % RevPAR $ 108.45 $ 82.03 32.2 % $ 51.34 $ 105.72 2.6 % (1) See reconciliation of Adjusted Hotel EBITDA to net income (loss) in "Non-GAAP Financial Measures" below.
Biggest changeYear Ended December 31, (in thousands, except statistical data) 2023 Percent of Revenue 2022 Percent of Revenue Change 2022 to 2023 2021 Percent of Revenue Change 2021 to 2022 Total revenue $ 1,343,800 100.0 % $ 1,238,417 100.0 % 8.5 % $ 933,869 100.0 % 32.6 % Hotel operating expense 780,725 58.1 % 710,481 57.4 % 9.9 % 542,178 58.1 % 31.0 % Property taxes, insurance and other expense 79,307 5.9 % 72,907 5.9 % 8.8 % 71,980 7.7 % 1.3 % General and administrative expense 47,401 3.5 % 42,464 3.4 % 11.6 % 41,038 4.4 % 3.5 % Loss on impairment of depreciable real estate assets 5,644 26,175 -78.4 % 10,754 143.4 % Depreciation and amortization expense 183,242 181,697 0.9 % 184,471 -1.5 % Gain on sale of real estate - 1,785 n/a 3,596 -50.4 % Interest and other expense, net 68,857 59,733 15.3 % 67,748 -11.8 % Income tax expense 1,135 1,940 -41.5 % 468 314.5 % Net income 177,489 144,805 22.6 % 18,828 669.1 % Adjusted Hotel EBITDA (1) 481,892 455,579 5.8 % 320,273 42.2 % Number of hotels owned at end of period 225 220 2.3 % 219 0.5 % ADR $ 155.76 $ 149.36 4.3 % $ 123.78 20.7 % Occupancy 74.2 % 72.6 % 2.2 % 66.3 % 9.5 % RevPAR $ 115.60 $ 108.45 6.6 % $ 82.03 32.2 % (1) See reconciliation of Adjusted Hotel EBITDA to net income in “Non-GAAP Financial Measures” below. 37 Comparable Hotels Operating Results The following table reflects certain operating statistics for the Company’s 223 hotels owned and held for use as of December 31, 2023.
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.
Overview The Company is a Virginia corporation that has elected to be treated as a REIT for U.S. 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.
Loss on Impairment of Depreciable Real Estate Assets Loss on impairment of depreciable real estate assets was $26.2 million for the year ended December 31, 2022, consisting of impairment losses at two hotel properties identified by the Company in the fourth quarter of 2022.
Loss on impairment of depreciable real estate assets was $26.2 million for the year ended December 31, 2022, consisting of impairment losses at two hotel properties identified by the Company in the fourth quarter of 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; 42 (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.
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.
Capitalization Policy The Company considers expenditures to be capital in nature based on the following criteria: (1) for a single asset, the cost must be at least $500, including all normal and necessary costs to place the asset in service, and the useful life must be at least one year; (2) for group purchases of 10 or more identical assets, the unit cost for each asset must be at least $50, including all normal and necessary costs to place the asset in service, and the useful life must be at least one year; and (3) for major repairs to a single asset, the repair must be at least $2,500 and the useful life of the asset must be substantially extended. 45 Impairment Losses Policy The Company records impairment losses on hotel properties used in operations if indicators of impairment are present, and the sum of the undiscounted cash flows estimated to be generated by the respective properties over their estimated remaining useful life, based on historical and industry data, is less than the properties’ carrying amount.
Capitalization Policy The Company considers expenditures to be capital in nature based on the following criteria: (1) for a single asset, the cost must be at least $500, including all normal and necessary costs to place the asset in service, and the useful life must be at least one year; (2) for group purchases of 10 or more identical assets, the unit cost for each asset must be at least $50, including all normal and necessary costs to place the asset in service, and the useful life must be at least one year; and (3) for major repairs to a single asset, the repair must be at least $2,500 and the useful life of the asset must be substantially extended. 46 Impairment Losses Policy The Company records impairment losses on hotel properties used in operations if indicators of impairment are present, and the sum of the undiscounted cash flows estimated to be generated by the respective properties over their estimated remaining useful life, based on historical and industry data, is less than the properties’ carrying amount.
See Note 9, titled “Management and Franchise Agreements” of the Consolidated Financial Statements and Notes thereto in Part II, Item 8, in this Annual Report on Form 10-K, for additional information pertaining to the management and franchise agreements, including a listing of the Company’s hotel management companies.
See Note 9, titled “Management and Franchise Agreements” of the Consolidated Financial Statements 45 and Notes thereto in Part II, Item 8, in this Annual Report on Form 10-K, for additional information pertaining to the management and franchise agreements, including a listing of the Company’s hotel management companies.
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 Company believes Adjusted Hotel EBITDA provides useful supplemental information to investors regarding operating performance and it is used by management to measure the performance of the Company’s hotels and effectiveness of the operators of the hotels.
See Note 4 titled “Debt” of the Consolidated Financial Statements and Notes thereto in Part II, Item 8, in this Annual Report on Form 10-K, for a description of the Company’s debt instruments as of December 31, 2022 and a summary of the financial and restrictive covenants as defined in the credit agreements.
See Note 4 titled “Debt” of the Consolidated Financial Statements and Notes thereto in Part II, Item 8, in this Annual Report on Form 10-K, for a description of the Company’s debt instruments as of December 31, 2023 and a summary of the financial and restrictive covenants as defined in the credit agreements.
See Note 4 titled “Debt” of the Consolidated Financial Statements and Notes thereto in Part II, Item 8, in this Annual Report on Form 10-K, for more detail regarding future maturities of the Company’s debt instruments as of December 31, 2022.
See Note 4 titled “Debt” of the Consolidated Financial Statements and Notes thereto in Part II, Item 8, in this Annual Report on Form 10-K, for more detail regarding future maturities of the Company’s debt instruments as of December 31, 2023.
Thirteen of the Company’s hotels are managed by affiliates of Marriott. The remainder of the Company’s hotels are managed by companies that are not affiliated with either Marriott, Hilton or Hyatt, and, as a result, the branded hotels they manage were required to obtain separate franchise agreements with each respective franchisor.
The remainder of the Company’s hotels are managed by companies that are not affiliated with either Marriott, Hilton or Hyatt, and, as a result, the branded hotels they manage were required to obtain separate franchise agreements with each respective franchisor.
A discussion regarding the results of operations for the year ended December 31, 2021 compared to the year ended December 31, 2020 can be found under the section titled “Results of Operations” in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 22, 2022, which is incorporated herein by reference and which is available free of charge on the SEC’s website at www.sec.gov and in the Investor Information section of the Company’s website at www.applehospitalityreit.com.
A discussion regarding the results of operations for the year ended December 31, 2022 compared to the year ended December 31, 2021 can be found under the section titled “Results of Operations” in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 21, 2023, which is incorporated herein by reference and which is available free of charge on the SEC’s website at www.sec.gov and in the Investor Information section of the Company’s website at www.applehospitalityreit.com .
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.
The Share Repurchase Program may be suspended or terminated at any time by the Company and will end in July 2024 if not terminated or extended earlier.
Capital Uses The Company anticipates that cash flow from operations, availability under its unsecured 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.
Capital Uses The Company anticipates that cash flow from operations, availability under its Revolving Credit Facility, 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.
Related Parties The Company has engaged in, 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.
Related Parties The Company has engaged in, 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 have been different if these transactions 42 were conducted with non-related parties.
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 years ended December 31, 2022, 2021, 2020 and 2019 (in thousands).
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 to FFO and MFFO for the years ended December 31, 2023, 2022 and 2021 (in thousands).
Results of Operations A discussion regarding the Company’s results of operations for the year ended December 31, 2022 compared to the year ended December 31, 2021 is presented below.
Results of Operations A discussion regarding the Company’s results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2022 is presented below.
Refer to Part I, Item 2, of this Annual Report on Form 10-K for tables summarizing the number of hotels and rooms by state, and summarizing the location, brand, manager, date acquired or completed and number of rooms for each of the 220 hotels the Company owned as of December 31, 2022.
Refer to Part I, Item 2, of this Annual Report on Form 10-K for tables summarizing the number of hotels and rooms by state, and summarizing the location, brand, manager, date acquired or completed and number of rooms for each of the 225 hotels the Company owned as of December 31, 2023.
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.
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 2023, 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 $338.7 million.
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.
As it has done historically, due to seasonality, the Company may use its Revolving Credit Facility to maintain the consistency of the monthly distribution rate, taking into consideration any acquisitions, dispositions, capital improvements and economic cycles.
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 further excludes actual corporate-level general and administrative expense for the Company as well as Adjusted EBITDAre from its non-hotel property from Adjusted EBITDAre (Adjusted Hotel EBITDA) to isolate property-level operational performance over which the Company’s hotel operators have direct control.
The Company plans to use future net proceeds from the sale of shares under the ATM Program for general corporate purposes which may include, among other things, acquisitions of additional properties, the repayment of outstanding indebtedness, capital expenditures, improvement of properties in its portfolio and working capital.
The Company plans to use future net proceeds from the sale of shares under the ATM Program, or under a similar successor program, for general corporate purposes which may include, among other things, acquisitions of hotel properties, the repayment of outstanding indebtedness, capital expenditures, improvement of properties in its portfolio and working capital.
As of December 31, 2022, the Company had approximately $1.4 billion of total outstanding debt consisting of $329.2 million of mortgage debt and $1.0 billion outstanding under its credit facilities, excluding unamortized debt issuance costs and fair value adjustments.
As of December 31, 2023, the Company had approximately $1.4 billion of total outstanding debt consisting of $283.0 million of mortgage debt and $1.1 billion outstanding under its credit facilities, excluding unamortized debt issuance costs and fair value adjustments.
The following table reconciles the Company’s GAAP net income (loss) to EBITDA, EBITDAre, Adjusted EBITDAre and Adjusted Hotel EBITDA for the years ended December 31, 2022, 2021, 2020 and 2019 (in thousands).
The following table reconciles the Company’s GAAP net income to EBITDA, EBITDAre, Adjusted EBITDAre and Adjusted Hotel EBITDA for the years ended December 31, 2023, 2022 and 2021 (in thousands).
The Company anticipates spending approximately $70 million to $80 million during 2023, which includes various comprehensive 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.
The Company anticipates spending approximately $75 million to $85 million during 2024, which includes various comprehensive renovation projects for approximately 20 properties, however, inflationary pressures or supply chain shortages, among other issues, may result in increased costs or delays for anticipated projects. The Company does not currently have any existing or planned projects for new property development.
See further discussion in Note 2 titled “Investments in Real Estate” and Note 3 titled “Dispositions” of the Consolidated Financial Statements and Notes thereto in Part II, Item 8, in this Annual Report on Form 10-K.
See further discussion in Note 2 titled “Investments in Real Estate” and Note 3 titled “Assets Held for Sale and Dispositions” of the Consolidated Financial Statements and Notes thereto in Part II, Item 8, in this Annual Report on Form 10-K.
Revenues The Company’s principal source of revenue is hotel revenue consisting of room, food and beverage, and other related revenue. For the years ended December 31, 2022 and 2021, the Company had total revenue of $1.2 billion and $933.9 million, respectively.
Revenues The Company’s principal source of revenue is hotel revenue consisting of room, food and beverage, and other related revenue. For the years ended December 31, 2023 and 2022, the Company had total revenue of $1.3 billion and $1.2 billion, respectively.
Property Taxes, Insurance and Other Expense Property taxes, insurance and other expense for the years ended December 31, 2022 and 2021 totaled $72.9 million and $72.0 million, respectively, or 5.9% and 7.7% of total revenue for each respective year.
Property Taxes, Insurance and Other Expense Property taxes, insurance and other expense for the years ended December 31, 2023 and 2022 totaled $79.3 million and $72.9 million, respectively, or 5.9% of total revenue for each respective year.
The Company’s ongoing analyses and annual recoverability analyses have identified impairment losses on two properties recorded in 2022, five properties recorded in 2021 and one property recorded in 2020 totaling approximately $26.2 million, $10.8 million and $5.1 million, respectively, as discussed in Note 3, titled “Dispositions” of the Consolidated Financial Statements and Notes thereto in Part II, Item 8, in this Annual Report on Form 10-K.
The Company’s ongoing analyses and annual recoverability analyses have identified impairment losses on two properties recorded in 2023, two properties recorded in 2022 and five properties recorded in 2021 totaling approximately $5.6 million, $26.2 million and $10.8 million, respectively, as discussed in Note 2, titled “Investment in Real Estate” of the Consolidated Financial Statements and Notes thereto in Part II, Item 8, in this Annual Report on Form 10-K.
Income tax expense Income tax expense for the years ended December 31, 2022 and 2021 was $1.9 million and $0.5 million, respectively.
Income tax expense Income tax expense for the years ended December 31, 2023 and 2022 was $1.1 million and $1.9 million, respectively.
Interest and Other Expense, net Interest and other expense, net for the years ended December 31, 2022 and 2021 was $59.7 million and $67.7 million, respectively, and is net of approximately $1.3 million and $0.3 million, respectively, of interest capitalized associated with renovation projects.
Interest and Other Expense, net Interest and other expense, net for the years ended December 31, 2023 and 2022 was $68.9 million and $59.7 million, respectively, and is net of approximately $1.5 million and $1.3 million, respectively, of interest capitalized associated with renovation projects.
For its existing portfolio, the Company monitors each property’s profitability, market conditions and capital requirements and attempts to maximize shareholder value by disposing of properties when it believes that superior value can be provided from the sale of the property.
For its existing portfolio, the Company monitors each property’s profitability, market conditions and capital requirements and attempts to maximize shareholder value by disposing of properties when it believes that superior value can be provided from the sale of the property. The Company did not dispose of any properties in the year ended December 31, 2023.
See Note 3, titled “Dispositions” of the Consolidated Financial Statements and Notes thereto in Part II, Item 8, in this Annual Report on Form 10-K, for additional information concerning these impairment losses. 38 Depreciation and Amortization Expense Depreciation and amortization expense for the years ended December 31, 2022 and 2021 was $181.7 million and $184.5 million, respectively.
See Note 2, titled “Investment in Real Estate” of the Consolidated Financial Statements and Notes thereto in Part II, Item 8, in this Annual Report on Form 10-K, for additional information concerning these impairment losses. 39 Depreciation and Amortization Expense Depreciation and amortization expense for the years ended December 31, 2023 and 2022 was $183.2 million and $181.7 million, respectively.
During the year ended December 31, 2022, 43 the Company purchased approximately 0.2 million of its common shares under its Share Repurchase Program at a weighted-average market purchase price of approximately $14.21 per common share for an aggregate purchase price, including commissions, of approximately $2.7 million.
During the year ended December 31, 2023, the Company purchased approximately 0.5 million of its common shares under its Share Repurchase Program at a weighted-average market purchase price of approximately $14.34 per common share for an aggregate purchase price, including commissions, of approximately $6.9 million.
Although the Company is working towards acquiring this hotel, there are a number of 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.
Although the Company is working towards acquiring these hotels, in each case there are a number of conditions to closing that have not yet been satisfied, and there can be no assurance that closings on these hotels will occur under the outstanding purchase contracts.
The increase was primarily due to increases in state income taxes as a result of significant improvement in operating results in 2022 as well as limitations placed by certain states on the application of prior net operating losses. 39 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.
The decrease is primarily due to state income taxes that were higher than normal in several states in 2022 as a result of temporary limitations placed on the application of prior net operating losses. 40 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.
See Note 2 titled “Investment in Real Estate” and Note 3 titled “Dispositions” of the Consolidated Financial Statements and Notes thereto in Part II, Item 8, in this Annual Report on Form 10-K, for additional information concerning these transactions. 35 Hotel Operations As of December 31, 2022, the Company owned 220 hotels with a total of 28,983 rooms as compared to 219 hotels with a total of 28,747 rooms as of December 31, 2021.
See Note 2 titled “Investment in Real Estate” and Note 3 titled “Assets Held for Sale and Dispositions” of the Consolidated Financial Statements and Notes thereto in Part II, Item 8, in this Annual Report on Form 10-K, for additional information concerning these transactions. 36 Hotel Operations As of December 31, 2023, the Company owned 225 hotels, including two properties classified as held for sale, with a total of 29,900 rooms as compared to 220 hotels with a total of 28,983 rooms as of December 31, 2022.
Results of operations are included only for the period of ownership for hotels acquired or disposed of during all periods presented. During 2022, the Company acquired two hotels and sold one hotel. During 2021, the Company acquired eight hotels and sold 23 hotels.
Results of operations are included only for the period of ownership for hotels acquired or disposed of during all periods presented. During 2023, the Company acquired six hotels and did not dispose of any hotels. During 2022, the Company acquired two hotels and sold one hotel.
As a result, in addition to the impacts of COVID-19, the comparability of results for the years ended December 31, 2022 and 2021, as discussed below, is also impacted by these transactions.
As a result, the comparability of results for the years ended December 31, 2023 and 2022, as discussed below, is also impacted by these transactions.
Recent Hotel Portfolio Activities The Company continually monitors market conditions and attempts to maximize shareholder value by investing in properties that it believes provide superior value over the long term.
The Company’s common shares are listed on the NYSE under the ticker symbol “APLE.” Recent Hotel Portfolio Activities The Company continually monitors market conditions and attempts to maximize shareholder value by investing in properties that it believes provide superior value over the long term.
Property taxes in certain locations increased due to the reassessment of property values by localities related to the improved economy but were partially offset by decreases at other locations due to successful appeals of tax assessments.
The increase in property taxes, insurance, and other expense was primarily due to increases in insurance premiums and 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.
Year Ended December 31, 2022 2021 Change 2021 to 2022 2020 2019 Change 2019 to 2022 ADR $ 147.55 $ 124.27 18.7 % $ 112.68 $ 140.04 5.4 % Occupancy 72.7 % 66.8 % 8.8 % 46.1 % 77.3 % -6.0 % RevPAR $ 107.26 $ 83.04 29.2 % $ 51.99 $ 108.20 -0.9 % As discussed above, hotel performance is impacted by many factors, including the economic conditions in the U.S. as well as each individual locality.
Year Ended December 31, 2023 2022 Change 2022 to 2023 2021 Change 2021 to 2022 ADR $ 153.99 $ 147.34 4.5 % $ 124.26 18.6 % Occupancy 74.3 % 72.7 % 2.2 % 66.7 % 9.0 % RevPAR $ 114.47 $ 107.17 6.8 % $ 82.88 29.3 % As discussed above, hotel performance is impacted by many factors, including the economic conditions in the U.S. as well as each individual locality.
Year Ended December 31, 2022 2021 2020 2019 Net income (loss) $ 144,805 $ 18,828 $ (173,207 ) $ 171,917 Depreciation of real estate owned 178,641 179,275 192,346 187,729 Gain on sale of real estate (1,785 ) (3,596 ) (10,854 ) (5,021 ) Loss on impairment of depreciable real estate assets 26,175 10,754 5,097 6,467 Funds from operations 347,836 205,261 13,382 361,092 Amortization of finance ground lease assets 3,038 5,178 6,433 4,517 Amortization of favorable and unfavorable operating leases, net 396 393 442 124 Non-cash straight-line operating ground lease expense 154 169 180 188 Modified funds from operations $ 351,424 $ 211,001 $ 20,437 $ 365,921 40 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.
Year Ended December 31, 2023 2022 2021 Net income $ 177,489 $ 144,805 $ 18,828 Depreciation of real estate owned 180,185 178,641 179,275 Gain on sale of real estate - (1,785 ) (3,596 ) Loss on impairment of depreciable real estate assets 5,644 26,175 10,754 Funds from operations 363,318 347,836 205,261 Amortization of finance ground lease assets 3,038 3,038 5,178 Amortization of favorable and unfavorable operating leases, net 383 396 393 Non-cash straight-line operating ground lease expense 145 154 169 Modified funds from operations $ 366,884 $ 351,424 $ 211,001 41 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.
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.
Although the Company is working towards acquiring these hotels, in each case there are a number of conditions to closing that have not yet been satisfied, and there can be no assurance that closings on these hotels will occur under the outstanding purchase contracts.
See Note 4 titled “Debt” of the Consolidated Financial Statements and Notes thereto in Part II, Item 8, in this Annual Report on Form 10-K, for additional discussion of the Company’s amended unsecured credit facilities. Interest expense is expected to increase in 2023 as a result of increases in market interest rates on the Company’s variable-rate debt.
See Note 4 titled “Debt” of the Consolidated Financial Statements and Notes thereto in Part II, Item 8, in this Annual Report on Form 10-K, for additional discussion of the Company’s amended unsecured credit facilities.
Loss on impairment of depreciable real estate assets was $10.8 million for the year ended December 31, 2021, consisting of impairment losses at five hotel properties identified by the Company in the first quarter of 2021 for potential sale.
Loss on Impairment of Depreciable Real Estate Assets Loss on impairment of depreciable real estate assets was approximately $5.6 million for the year ended December 31, 2023, consisting of impairment losses at two hotel properties identified by the Company in the fourth quarter of 2023.
Over the long term, the Company may receive proceeds from strategic additional secured and unsecured debt financing, dispositions of its hotel properties (such as the sale of one hotel in 2022 for proceeds of approximately $8.5 million discussed above in “Recent Hotel Portfolio Activities”) and offerings of the Company’s common shares, including pursuant to the ATM Program.
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.
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.
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.
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.
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. Subsequent to the distribution paid in March 2020, the Company announced the suspension of its monthly distributions due to the impact of COVID-19 on its operating cash flows.
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 year ended December 31, 2022 compared to the year ended December 31, 2021, which is consistent with the overall lodging industry.
The Company’s Comparable Hotels and Same Store Hotels revenue and operating results improved during the year ended December 31, 2023 compared to the year ended December 31, 2022, which is consistent with the overall lodging industry.
Year Ended December 31, 2022 2021 Change 2021 to 2022 2020 2019 Change 2019 to 2022 ADR $ 149.56 $ 125.52 19.2 % $ 112.73 $ 141.22 5.9 % Occupancy 72.6 % 66.1 % 9.8 % 45.7 % 77.1 % -5.8 % RevPAR $ 108.60 $ 82.99 30.9 % $ 51.48 $ 108.90 -0.3 % Same Store Operating Results The following table reflects 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”).
Year Ended December 31, 2023 2022 Change 2022 to 2023 2021 Change 2021 to 2022 ADR $ 156.55 $ 149.62 4.6 % $ 125.67 19.1 % Occupancy 74.2 % 72.6 % 2.2 % 66.3 % 9.5 % RevPAR $ 116.23 $ 108.67 7.0 % $ 83.26 30.5 % Same Store Operating Results The following table reflects certain operating statistics for the 207 hotels owned and held for use by the Company as of January 1, 2021 and during the entirety of the reporting periods being compared (“Same Store Hotels”).
For the years ended December 31, 2022 and 2021, respectively, Comparable Hotels achieved combined average occupancy of 72.6% and 37 66.1%, ADR of $149.56 and $125.52 and RevPAR of $108.60 and $82.99. ADR is calculated as room revenue divided by the number of rooms sold, and RevPAR is calculated as occupancy multiplied by ADR.
For the years ended December 31, 2023 and 2022, respectively, Comparable Hotels achieved combined average occupancy of 74.2% and 38 72.6%, ADR of $156.55 and $149.62 and RevPAR of $116.23 and $108.67. ADR is calculated as room revenue divided by the number of rooms sold, and RevPAR is calculated as occupancy multiplied by ADR.
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 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 December 31, 2023.
See Note 6, titled “Related Parties” of the Consolidated Financial Statements and Notes thereto in Part II, Item 8, in this Annual Report on Form 10-K, for additional information concerning the Company’s related party transactions. 41 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.
See Note 6, titled “Related Parties” of the Consolidated Financial Statements and Notes thereto in Part II, Item 8, in this Annual Report on Form 10-K, for additional information concerning the Company’s related party transactions.
Distributions paid for the years ended December 31, 2022, 2021 and 2020 were $0.61, $0.03 and $0.30 per common share, respectively, for a total of approximately $139.5 million, $6.8 million and $67.4 million, respectively.
Distributions paid for the years ended December 31, 2023, 2022 and 2021 were $1.04, $0.61 and $0.03 per common share, respectively, for a total of approximately $238.3 million, $139.5 million and $6.8 million, respectively. The Company's current annual distribution rate, payable monthly, is $0.96 per common share.
The acquisitions of real estate subject to this estimate totaled two properties for a combined purchase price of $85.0 million for the year ended December 31, 2022 and eight properties for a combined purchase price of $361.5 million for the year ended December 31, 2021.
The acquisitions of real estate subject to this estimate totaled seven properties, including six hotels and one free-standing parking garage, for a combined purchase price of approximately $289.8 million for the year ended December 31, 2023 and two properties for a combined purchase price of $85.0 million for the year ended December 31, 2022.
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. For the years ended December 31, 2022 and 2021, hotel operating expense totaled $710.5 million and $542.2 million, respectively, or 57.4% and 58.1% of total revenue for each respective year.
For the years ended December 31, 2023 and 2022, hotel operating expense totaled $780.7 million and $710.5 million, respectively, or 58.1% and 57.4% of total revenue for each respective year.
As of December 31, 2022, the Company held approximately $32.5 million in reserve related to these properties. During 2022, the Company invested approximately $61.7 million in capital expenditures.
As of December 31, 2023, the Company held approximately $30.4 million in reserves related to these properties. During 2023, the Company invested approximately $76.8 million in capital expenditures.
As of December 31, 2022, the Company had total remaining minimum lease payments of $290.4 million, including $7.1 million due in the next year. Refer to Note 10, titled “Lease Commitments” of the Consolidated Financial Statements and Notes thereto in Part II, Item 8, in this Annual Report on Form 10-K for additional details.
Refer to Note 10, titled “Lease Commitments” of the Consolidated Financial Statements and Notes thereto in Part II, Item 8, in this Annual Report on Form 10-K for additional details.
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.
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 44 Company has invested in and plans to continue to reinvest in its hotels.
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.
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 were disrupted until 2023.
The decrease was primarily due to the sale of one hotel in 2022 and 23 hotels in 2021, partially offset by the acquisition of two hotels in 2022 and eight hotels in 2021 and renovations completed throughout 2022 and 2021.
The increase was primarily due to the purchase of six hotels in 2023 and two hotels in the fourth quarter of 2022, as well as renovations completed throughout both 2023 and 2022, partially offset by the sale of one hotel in the third quarter of 2022.
Since inception of the ATM Program in August 2020 through December 31, 2022, the Company sold approximately 4.7 million common shares under its ATM Program 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.
During the year ended December 31, 2023, the Company sold approximately 12.8 million shares under its ATM Program at a weighted-average market sales price of approximately $17.05 per common share and received aggregate gross proceeds of approximately $218.6 million and proceeds net of offering costs, which included $2.6 million of commissions, of approximately $216.0 million.
The Company utilized its available cash on hand and a $50 million draw on its $575 million term loan facility to fund the acquisitions and plans to utilize its available cash or borrowings under its unsecured credit facilities for any additional acquisitions.
The Company utilized its available cash on hand, net proceeds from sale of shares under the ATM program and borrowings under its Revolving Credit Facility to fund the acquisitions and plans to utilize its available cash or borrowings under its unsecured credit facilities for any future acquisitions.
On January 20, 2023, the Company declared a monthly cash distribution of $0.08 per common share. The distribution of approximately $18.3 million was paid on February 15, 2023, to shareholders of record as of January 31, 2023. On February 17, 2023, the Company declared a monthly cash distribution of $0.08 per common share.
Subsequent Events On January 16, 2024, the Company paid approximately $31.4 million, or $0.13 per common share, in distributions to shareholders of record as of December 29, 2023. On January 19, 2024, the Company declared a monthly cash distribution of $0.08 per common share.
This process allows each company to minimize its cash on hand and reduces the cost for each company.
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.
As of December 31, 2022, the Company had 14 hotels subject to ground leases and three parking lot ground leases with remaining terms ranging from approximately 16 to 96 years, excluding renewal options. Certain of its ground leases have options to extend beyond the initial lease term by periods ranging from five to 120 years.
Lease Commitments The Company is the lessee on certain ground leases, hotel equipment leases and office space leases. As of December 31, 2023, the Company had 14 hotels subject to ground leases and three parking lot ground leases with remaining terms ranging from approximately 15 to 95 years, excluding renewal options.
The Company used the net proceeds from the sale of these shares primarily to pay down borrowings under its then-existing $425 million revolving credit facility and used the corresponding increased availability under the $425 million revolving credit facility for general corporate purposes, including acquisitions of hotel properties.
The Company used the net proceeds from the sale of these shares to pay down borrowings under the Revolving Credit Facility, acquisitions of hotel properties and for general corporate purposes. No shares were sold under the Company’s ATM Program during the year ended December 31, 2022.
The amounts outstanding at any point in time are not significant to either of the companies. 44 Management and Franchise Agreements Each of the Company’s 220 hotels owned as of December 31, 2022 is operated and managed under separate management agreements with 17 hotel management companies, none of which are affiliated with the Company.
Management and Franchise Agreements Each of the Company’s 225 hotels owned as of December 31, 2023 is operated and managed under separate management agreements with 16 hotel management companies, none of which are affiliated with the Company. Thirteen of the Company’s hotels are managed by affiliates of Marriott.
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. 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, either for the periods owned or prior to ownership by the Company. For dispositions and assets held for sale, results have been excluded for the Company’s period of ownership.
Comparable Hotels Operating Results The following table reflects certain operating statistics for the Company’s 220 hotels owned as of December 31, 2022. The Company defines metrics from Comparable Hotels as results generated by the 220 hotels owned as of the end of the reporting period.
The Company defines metrics from Comparable Hotels as results generated by the 223 hotels owned and held for use as of the end of the reporting period.
The Company plans to pay off the remainder of mortgage loans maturing in 2023 using cash flow from operations or borrowings under its Revolving Credit Facility. Interest expense related to the Company's unsecured credit facilities is expected to increase in 2023 as a result of increases in market interest rates on its variable-rate debt.
Interest expense related to the Company’s unsecured credit facilities is expected to be higher in 2024 than it was during 2023 as a result of increases in market interest rates on its variable-rate debt and increased borrowings on its Revolving Credit Facility.
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. Capital Improvements Management routinely monitors the condition and operations of its hotels and plans renovations and other improvements as it deems prudent.
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 December 31, 2023, approximately $335.4 million remained available for purchase under the Share Repurchase Program.
Likewise, supply chain disruptions, 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 continues to work with its management companies to realize operational efficiencies and mitigate the impact of cost pressures resulting from inflation and staffing challenges.
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 also owns one property leased to third parties. Substantially all of the Company’s hotels operate under Marriott or Hilton brands. The hotels are operated and managed under separate management agreements with 16 hotel management companies, none of which are affiliated with the Company.
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 in 2022, they have often done so at higher wage rates or with more expensive contract labor as compared to 2021 and 2019.
Adding staff to meet increased demand has been challenging, and the Company’s hotels have often done so at higher wage rates or with more expensive contract labor as compared to 2022. Likewise, 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.
Year Ended December 31, 2022 2021 2020 2019 Net income (loss) $ 144,805 $ 18,828 $ (173,207 ) $ 171,917 Depreciation and amortization 181,697 184,471 199,786 193,240 Amortization of favorable and unfavorable operating leases, net 396 393 442 124 Interest and other expense, net 59,733 67,748 70,835 61,191 Income tax expense 1,940 468 332 679 EBITDA 388,571 271,908 98,188 427,151 Gain on sale of real estate (1,785 ) (3,596 ) (10,854 ) (5,021 ) Loss on impairment of depreciable real estate assets 26,175 10,754 5,097 6,467 EBITDAre 412,961 279,066 92,431 428,597 Non-cash straight-line operating ground lease expense 154 169 180 188 Adjusted EBITDAre 413,115 279,235 92,611 428,785 General and administrative expense 42,464 41,038 29,374 36,210 Adjusted Hotel EBITDA $ 455,579 $ 320,273 $ 121,985 $ 464,995 Hotels Owned As of December 31, 2022, the Company owned 220 hotels with an aggregate of 28,983 rooms located in 37 states.
Year Ended December 31, 2023 2022 2021 Net income $ 177,489 $ 144,805 $ 18,828 Depreciation and amortization 183,242 181,697 184,471 Amortization of favorable and unfavorable operating leases, net 383 396 393 Interest and other expense, net 68,857 59,733 67,748 Income tax expense 1,135 1,940 468 EBITDA 431,106 388,571 271,908 Gain on sale of real estate - (1,785 ) (3,596 ) Loss on impairment of depreciable real estate assets 5,644 26,175 10,754 EBITDAre 436,750 412,961 279,066 Non-cash straight-line operating ground lease expense 145 154 169 Adjusted EBITDAre 436,895 413,115 279,235 General and administrative expense 47,401 42,464 41,038 Adjusted EBITDAre from non-hotel property (1) (2,404 ) - - Adjusted Hotel EBITDA $ 481,892 $ 455,579 $ 320,273 (1) Non-hotel property only includes the results of one hotel in New York, New York that is leased to a third-party hotel operator.
As of December 31, 2022, approximately $224.0 million remained available for issuance under the ATM Program. No shares were sold under the Company's ATM Program during the year ended December 31, 2022.
As of December 31, 2023, approximately $5.3 million remained available for issuance under the ATM Program.
As of December 31, 2022, the Company had available corporate cash on hand of approximately $4.1 million, $50 million of available funds under the $575 million term loan facility and unused borrowing capacity under its Revolving Credit Facility of approximately $650 million.
As of December 31, 2023, the Company had available corporate cash on hand of approximately $10.3 million, and unused borrowing capacity under its Revolving Credit Facility of approximately $650 million. The credit agreements governing the unsecured credit facilities contain mandatory prepayment requirements, customary affirmative and negative covenants and events of default.
Upcoming Debt Maturities and Debt Service Payments As of December 31, 2022, the Company had approximately $150.5 million of principal and interest payments due on its debt over the next 12 months.
Upcoming Debt Maturities and Debt Service Payments As of December 31, 2023, the Company had approximately $175.2 million of principal and interest payments due on its debt over the next 12 months. Included in this total is an $85.0 million term loan and a mortgage loan of approximately $20.3 million, both maturing in the third quarter of 2024.
General and Administrative Expense General and administrative expense for the years ended December 31, 2022 and 2021 was $42.5 million and $41.0 million, respectively, or 3.4% and 4.4% of total revenue for each respective year. The principal components of general and administrative expense are payroll and related benefit costs, executive incentive compensation, legal fees, accounting fees and reporting expenses.
The principal components of general and administrative expense are payroll and related benefit costs, executive incentive compensation, legal fees, accounting fees and reporting expenses.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAll dollar amounts are in thousands. 2023 2024 2025 2026 2027 Thereafter Total Fair Market Value Total debt: Maturities $ 96,214 $ 113,597 $ 245,140 $ 74,649 $ 278,602 $ 566,013 $ 1,374,215 $ 1,322,540 Average interest rates (1) 4.0 % 4.3 % 4.7 % 4.9 % 5.0 % 4.8 % Variable-rate debt: Maturities $ 50,000 $ 85,000 $ 175,000 $ - $ 275,000 $ 335,000 $ 920,000 $ 916,375 Average interest rates (1) 4.0 % 4.5 % 5.0 % 5.3 % 5.4 % 5.3 % Fixed-rate debt: Maturities $ 46,214 $ 28,597 $ 70,140 $ 74,649 $ 3,602 $ 231,013 $ 454,215 $ 406,165 Average interest rates 4.1 % 4.1 % 4.0 % 4.0 % 4.1 % 4.1 % (1) The average interest rate gives effect to interest rate swaps, as applicable. 47
Biggest changeAll dollar amounts are in thousands. 2024 2025 2026 2027 2028 Thereafter Total Fair Market Value Total debt: Maturities $ 113,597 $ 295,140 $ 74,649 $ 278,602 $ 334,066 $ 281,948 $ 1,378,002 $ 1,331,522 Average interest rates (1) 4.6 % 4.9 % 5.3 % 5.3 % 4.7 % 3.9 % Variable-rate debt: Maturities $ 85,000 $ 225,000 $ - $ 275,000 $ 300,000 $ 85,000 $ 970,000 $ 967,761 Average interest rates (1) 4.8 % 5.4 % 5.8 % 5.9 % 5.2 % 3.6 % Fixed-rate debt: Maturities $ 28,597 $ 70,140 $ 74,649 $ 3,602 $ 34,066 $ 196,948 $ 408,002 $ 363,761 Average interest rates 4.1 % 4.0 % 4.0 % 4.1 % 4.1 % 4.1 % (1) The average interest rate gives effect to interest rate swaps, as applicable. 48
See Note 5 titled “Fair Value of Financial Instruments” in Part II, Item 8, of the Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Annual Report on Form 10-K, for a description of the Company’s interest rate swaps as of December 31, 2022.
See Note 5 titled “Fair Value of Financial Instruments” in Part II, Item 8, of the Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Annual Report on Form 10-K, for a description of the Company’s interest rate swaps as of December 31, 2023.
Item 7A. Quantitative and Qualitat ive Disclosures About Market Risk As of December 31, 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.
Item 7A. Quantitative and Qualitat ive Disclosures About Market Risk As of December 31, 2023, 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.
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 December 31, 2022.
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 December 31, 2023.
Based on the Company’s variable-rate debt outstanding as of December 31, 2022, every 100 basis points change in interest rates will impact the Company’s annual net income by approximately $2.3 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.
Based on the Company’s variable-rate debt outstanding as of December 31, 2023, every 100 basis points change in interest rates will impact the Company’s annual net income by approximately $1.5 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 December 31, 2022, the Company’s variable-rate debt consisted of its unsecured credit facilities, including $920 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 December 31, 2023, the Company’s variable-rate debt consisted of its unsecured credit facilities, including $970 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 December 31, 2022, after giving effect to interest rate swaps, as described below, approximately $225.0 million, or approximately 16% of the Company’s total debt outstanding, was subject to variable interest rates.
As of December 31, 2023, after giving effect to interest rate swaps, as described below, approximately $150.0 million, or approximately 11% of the Company’s total debt outstanding, was subject to variable interest rates.
As of December 31, 2022, the Company had 12 interest rate swap agreements that effectively fix the interest payments on approximately $695.0 million of the Company’s variable-rate debt outstanding with swap maturity dates ranging from March 2023 to December 2029.
As of December 31, 2023, the Company had 14 interest rate swap agreements that effectively fix the interest payments on approximately $820.0 million of the Company’s variable-rate debt outstanding with swap maturity dates ranging from January 2024 to December 2029.

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