On November 4, 2024, Apple Hospitality REIT Inc (APLE, Financial) released its 8-K filing detailing the financial results for the third quarter ended September 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, with a focus on upscale service hotels operating under the Marriott or Hilton brands.
Quarterly Financial Performance
Apple Hospitality REIT Inc reported a net income of $56.3 million for the third quarter of 2024, a decrease of 3.8% compared to $58.5 million in the same period last year. The net income per share was $0.23, falling short of the analyst estimate of $0.25. The company's total revenue for the quarter was $378.8 million, slightly below the estimated $380.15 million.
Key Financial Metrics
The company's operating income increased by 1.9% to $77.7 million, while the operating margin decreased by 80 basis points to 20.5%. Adjusted EBITDAre rose by 5.7% to $128.9 million, indicating a solid operational performance despite the challenges. The Comparable Hotels Adjusted Hotel EBITDA was $139.2 million, with a margin of 36.8%, slightly down from the previous year.
| Metric | Q3 2024 | Q3 2023 | % Change |
|---|---|---|---|
| Net Income | $56.3 million | $58.5 million | -3.8% |
| Net Income per Share | $0.23 | $0.26 | -11.5% |
| Total Revenue | $378.8 million | $358.3 million | 5.7% |
| Adjusted EBITDAre | $128.9 million | $121.9 million | 5.7% |
Operational Insights and Challenges
Apple Hospitality REIT Inc's performance was bolstered by a steady improvement in business transient demand and strong leisure travel. The Average Daily Rate (ADR) increased by 2.0% to $162.57, while Revenue Per Available Room (RevPAR) rose by 1.8% to $125.10. However, occupancy slightly declined by 0.1% to 77.0%, reflecting a competitive market environment.
Justin Knight, Chief Executive Officer of Apple Hospitality, commented, “With slow but steady improvement in business transient demand and ongoing strength in leisure travel, operating fundamentals remained strong across our portfolio during the quarter, with Comparable Hotels RevPAR growth of approximately 1% as compared to the third quarter of 2023."
Strategic Transactions and Capital Management
During the quarter, Apple Hospitality REIT Inc engaged in strategic acquisitions and dispositions to optimize its portfolio. The company acquired two hotels for $196 million and sold three hotels for $41 million. Additionally, it repurchased 1.4 million common shares for $19.2 million, reflecting a disciplined approach to capital allocation.
Balance Sheet and Liquidity
As of September 30, 2024, Apple Hospitality REIT Inc reported total assets of $5.02 billion and total liabilities of $1.72 billion. The company's total debt to total capitalization, net of cash and cash equivalents, was approximately 30%, providing financial flexibility for future investments and operations.
Conclusion and Outlook
Apple Hospitality REIT Inc's third-quarter performance highlights its resilience in a challenging market, with strategic asset management and capital allocation playing crucial roles. Despite a slight miss on analyst estimates, the company's focus on maximizing profitability and maintaining a strong balance sheet positions it well for future growth.
Explore the complete 8-K earnings release (here) from Apple Hospitality REIT Inc for further details.
