Combined Enterprise Value $5.7 Billion
Combined Portfolio 236 Hotels
RICHMOND, Va.--(BUSINESS WIRE)--
Apple Hospitality REIT, Inc. (NYSE: APLE) (“Apple Hospitality”)
announced today the completion of its previously announced merger with
Apple REIT Ten, Inc. (“Apple Ten”). The combination with Apple Ten’s
highly complementary portfolio of 56 hotels creates one of the largest
upscale, select service lodging REITs in the industry valued at
approximately $5.7 billion. On August 31, 2016, the shareholders of
Apple Hospitality approved the issuance of common shares to shareholders
of Apple Ten pursuant to the definitive merger agreement dated April 13,
2016, as amended, and the Apple Ten shareholders approved the merger
agreement, the related plan of merger, the merger and the other
transactions contemplated thereby at their respective special meetings.
As a result of the merger, each outstanding unit of Apple Ten
(consisting of one common share of Apple Ten and one Series A preferred
share of Apple Ten) was exchanged for combined consideration of $1.00 in
cash and 0.522 Apple Hospitality common shares, and each Apple Ten
Series B convertible preferred share received the same consideration on
an as-converted basis. Apple Hospitality issued approximately 48.7
million of its common shares and paid approximately $93.4 million as
consideration in the merger. Apple Hospitality also assumed or repaid
all of Apple Ten’s outstanding debt at closing, approximately $257
million.
The common shares of Apple Hospitality will continue to trade under the
ticker symbol “APLE” on the New York Stock Exchange.
Justin G. Knight, Apple Hospitality’s President and Chief Executive
Officer, said, “We are excited to have significantly grown our platform
of leading Hilton and Marriott branded select service hotels, while
preserving our conservative capital structure. The merger further
strengthens our presence in key markets and expands our geographic
footprint to include locations in 96 MSAs throughout 33 states. This
acquisition highlights our team’s disciplined approach to growth and
focus on shareholder value and we welcome Apple Ten shareholders to
Apple Hospitality.”
2016 Outlook
To reflect the acquisition of Apple Ten, the Company is updating its
operational and financial outlook for 2016. This outlook, which is based
on management’s current view of both operating and economic fundamentals
of the Company’s existing portfolio of hotels, does not take into
account any unanticipated developments in its business or changes in its
operating environment, nor does it take into account any unannounced
hotel acquisitions or dispositions.
For the full year 2016, the Company anticipates:
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| | | | 2016 Guidance |
| | | | Low-End |
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| High- End |
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Comparable Hotels RevPAR Growth(1) | | | |
2.0%
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4.0%
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Adjusted EBITDA(2) | | | | $370 Million | | | $390 Million |
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(1)
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| Comparable Hotels currently includes the 236 hotels owned by the
Company as of September 1, 2016 (after giving effect to the
acquisition of Apple Ten). For hotels acquired (including Apple Ten)
during the periods noted, the Company has included, as applicable,
results of those hotels for periods prior to the Company's
ownership, and for dispositions, results have been excluded for the
Company's period of ownership. Results included for periods prior to
the Company's ownership are based on information from the prior
owner of each hotel at the time of acquisition and have not been
audited or adjusted.
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(2)
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Includes anticipated results for Apple Ten for the period September
1, 2016 – December 31, 2016. The Company considers the following
non-GAAP financial measures useful to investors as key supplemental
measures of its operating performance: Earnings before Interest,
Income Taxes, Depreciation and Amortization (“EBITDA”) and Adjusted
EBITDA (“Adjusted EBITDA”). EBITDA is a commonly used measure of
performance in many industries. The Company believes EBITDA is
useful to investors because it helps the Company and its investors
evaluate the ongoing operating performance of the Company by
removing the impact of its capital structure (primarily interest
expense) and its asset base (primarily depreciation and
amortization). In addition, certain covenants included in the
Company’s indebtedness use EBITDA, as defined in the specific credit
agreement, as a measure of financial compliance. The Company
considers the exclusion of certain additional items from EBITDA
(Adjusted EBITDA) useful, including (i) the exclusion of transaction
costs and gains or losses from sales of real estate as these do not
represent ongoing operations and (ii) the exclusion of non-cash
straight-line ground lease expense as this expense does not reflect
the underlying performance of the related hotels. Although EBITDA
and Adjusted EBITDA, as calculated by the Company, may not be
comparable to EBITDA and Adjusted EBITDA, as reported by other
companies that do not define such terms exactly as the Company
defines such terms, the Company believes these supplemental measures
are useful to investors when comparing the Company’s results between
periods and with other REITs.
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About Apple Hospitality REIT, Inc.
Apple Hospitality REIT, Inc. (NYSE: APLE) is a publicly traded real
estate investment trust (REIT) that owns one of the largest portfolios
of upscale, select service hotels in the United States. Apple
Hospitality’s hotels are diversified across the Hilton® and Marriott®
families of brands with locations in urban, high-end suburban and
developing markets. At September 1, 2016 and after giving effect to the
merger transaction with Apple Ten, Apple Hospitality’s portfolio
consists of 236 hotels, with over 30,000 guestrooms in 33 states.
Additional information about Apple Hospitality can be found online at www.applehospitalityreit.com.
Forward-Looking Statements Disclaimer
This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995, Section
27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These forward-looking
statements are predictions and generally can be identified by use of
statements that include phrases such as “may,” “believe,” “expect,”
“anticipate,” “intend,” “estimate,” “project,” “target,” “goal,” “plan,”
“should,” “will,” “predict,” “potential,” “likely,” or other words,
phrases or expressions of similar import. Such statements involve known
and unknown risks, uncertainties, and other factors which may cause the
actual results, performance, or achievements of Apple Hospitality to be
materially different from future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors
include, but are not limited to, the ability of Apple Hospitality to
effectively acquire and dispose of properties; the ability of Apple
Hospitality to successfully integrate pending transactions and implement
its operating strategy; changes in general political, economic and
competitive conditions and specific market conditions; adverse changes
in the real estate and real estate capital markets; financing risks; the
outcome of current and future litigation, including any legal
proceedings that have been or may be instituted against Apple
Hospitality, or others related to the merger; regulatory proceedings or
inquiries; and changes in laws or regulations or interpretations of
current laws and regulations that impact Apple Hospitality’s business,
assets or classification as a real estate investment trust. Although
Apple Hospitality believes that the assumptions underlying the
forward-looking statements contained herein are reasonable, any of the
assumptions could be inaccurate, and therefore there can be no assurance
that such statements included in this press release will prove to be
accurate. In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such
information should not be regarded as a representation by Apple
Hospitality or any other person that the results or conditions described
in such statements or the objectives and plans of Apple Hospitality will
be achieved. In addition, Apple Hospitality’s qualification as a real
estate investment trust involves the application of highly technical and
complex provisions of the Internal Revenue Code. Readers should
carefully review Apple Hospitality’s financial statements and the notes
thereto, as well as the risk factors described in Apple Hospitality’s
filings with the Securities and Exchange Commission (“SEC”), including,
but not limited to, in the section entitled “Item 1A. Risk Factors” in
the Annual Report on Form 10-K filed by Apple Hospitality with the SEC
on February 25, 2016 and the Quarterly Report on Form 10-Q filed by
Apple Hospitality with the SEC on August 8, 2016. Any forward-looking
statement speaks only as of the date of this press release. Apple
Hospitality undertakes no obligation to update or revise any
forward-looking statements, whether as a result of new information or
developments, future events, or otherwise, except as required by law.
For additional information or to receive press releases by email,
visit www.applehospitalityreit.com.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160901006468/en/
Apple Hospitality REIT, Inc.
Kelly Clarke, Vice President, Investor
Relations
804-727-6321
kclarke@applereit.com
Source: Apple Hospitality REIT, Inc.