On August 5, 2024, Apple Hospitality REIT Inc (APLE, Financial) released its 8-K filing reporting the results of operations for the second quarter ended June 30, 2024. Apple Hospitality REIT Inc is a real estate investment trust that invests in income-producing real estate, primarily in the lodging sector in the United States. The company focuses on upscale service hotels operating under the Marriott or Hilton brands.
Financial Highlights
Apple Hospitality REIT Inc reported net income of $73.9 million for Q2 2024, a 13.2% increase from $65.3 million in Q2 2023. The net income per share was $0.31, surpassing the analyst estimate of $0.30. The company's revenue for the quarter was $390.1 million, exceeding the estimated $387.51 million. Operating income rose by 12.6% to $93.5 million, and the operating margin improved by 100 basis points to 24.0%.
Key Metrics and Performance
Apple Hospitality REIT Inc's performance metrics showed positive trends. The Average Daily Rate (ADR) increased by 1.2% to $162.98, while occupancy improved by 2.0% to 79.8%. Revenue Per Available Room (RevPAR) grew by 3.3% to $130.07. Comparable Hotels Adjusted Hotel EBITDA was $151.5 million, a 1.5% increase from Q2 2023, although the margin slightly decreased by 50 basis points to 39.1%.
Strategic Acquisitions and Dispositions
During the quarter, Apple Hospitality REIT Inc acquired the newly built Embassy Suites by Hilton Madison Downtown for approximately $79.5 million and sold the SpringHill Suites by Marriott Greensboro for $7.1 million. The company also repurchased 1.1 million common shares for $15.5 million under its Share Repurchase Program.
Balance Sheet and Liquidity
As of June 30, 2024, Apple Hospitality REIT Inc had total debt of $1.54 billion and cash and cash equivalents of $7.2 million. The company's total debt to total capitalization, net of cash, was approximately 30.4%, providing financial flexibility for future investments and capital requirements.
CEO Commentary
Justin Knight, Chief Executive Officer of Apple Hospitality, commented, “The fundamentals of our business remain strong, bolstered by the muted rate of new supply growth relative to historical levels. For the second quarter 2024, Comparable Hotels Occupancy was 80%, an improvement of more than 2% as compared to the second quarter 2023. While we believe our greatest opportunity for continued growth will come from the steady improvement we are seeing in midweek business travel demand, we were able to grow occupancy on both weekdays and weekends during the quarter, demonstrating the resilience of leisure travel demand and the upside we continue to realize as business travel patterns normalize. Comparable Hotels RevPAR for the second quarter improved by 2.5% as compared to the second quarter last year, with a marginal increase in ADR. Our revenue and asset management teams, together with our third-party operators, are intently focused on maximizing the profitability of our assets and optimizing their performance within their respective markets."
Conclusion
Apple Hospitality REIT Inc's strong Q2 2024 performance, driven by increased occupancy and strategic acquisitions, highlights the company's resilience and effective management. The positive financial results and strategic initiatives position the company well for future growth, making it an attractive option for value investors.
Explore the complete 8-K earnings release (here) from Apple Hospitality REIT Inc for further details.
