How Do You Like Them Apples?
- With more than 28,000 select service and extended stay hotel rooms, Apple Hospitality REIT is one of the largest owners of select service and extended stay hotel rooms.
- Apple Hospitality REIT is one of the largest owners of Hilton and Marriott upscale hotels with significant representation on brand advisory boards.
- Apple Hospitality REIT has a tasty dividend yield of 7.1%, and we find that attractive, especially given the scale advantage.
I’m sure you’ve heard the phrase, “how do you like them apples?”, that’s a phrase used to gloat or upset someone. In all senses, this phrase acts as a rhetorical question and, in some cases, could be even be considered arrogant or egotistical.
However, I am using the phrase as my title to this article to suggest something that everyone should consider. It’s my way of telegraphing followers that I’m somewhat bullish, and I want everyone to take a close look at one of my favorite lodging REITs known as Apple Hospitality (APLE).
The Apple Doesn’t Fall Far From The Tree
That’s right, “the apple doesn’t fall from the tree”, especially for me, since APLE is based in Richmond, VA, and I also live on the East Coast, in Upstate, South Carolina.
Back in May 2015, APLE began trading on the New York Stock Exchange and was previously structured as a non-traded REIT. The company was formed in March 2014 with the merger of Apple REIT Seven, Inc., Apple REIT Eight, Inc. and Apple REIT Nine, Inc., and in February 2014, it amended its articles of incorporation to provide for a 50% reverse share split of its common stock.
In September 2016, APLE completed its roughly $1.26 billion merger with Apple REIT Ten, Inc., adding 56 hotels to the portfolio. The combined company has a balanced portfolio with an equity market cap of $4.1 billion. Here’s how APLE compares to the lodging REIT peer group based on equity market capitalization:
Note that APLE’s direct peers include Summit Hotel Properties (INN) and Chatham Lodging Trust (CLDT) – both are upscale/limited services-focused. Also, RLJ Lodging Trust (NYSE:RLJ), Hersha Hospitality Trust (NYSE:HT), and Ashford Hospitality Trust (NYSE:AHT) invest in upscale and upper upscale hotels.
With more than 28,000 select service and extended stay hotel rooms, APLE is one of the largest owners of select service and extended stay hotel rooms in the industry. As you can see, it has a more diversified geographic platform than the direct peers CLDT and INN (as seen below):
APLE has highly concentrated brand ownership: Hilton (NYSE:HLT) (52%) and Marriott (NYSE:MAR) (48%) are the only brands where it flies its banners. APLE is ranked among the top five largest owners for both Hilton and Marriott.
Apple Hospitality’s hotels benefit from industry-leading brand affiliation and exclusive ownership of Hilton and Marriott branded hotels with concentration on efficient, rooms-focused properties. Within these two brands (Hilton and Marriott), the REIT enjoys a diverse product offering that includes select service, extended stay, and full service.