QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2026
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO _______
Commission File Number 001-37389
APPLE HOSPITALITY REIT, INC.
(Exact name of registrant as specified in its charter)
Virginia
26-1379210
(State or other jurisdiction
of incorporation or organization)
(I.R.S. Employer
Identification No.)
814 East Main Street
Richmond, Virginia
23219
(Address of principal executive offices)
(Zip Code)
(804) 344-8121
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Shares, no par value
APLE
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒
Accelerated filer ☐
Non-accelerated filer ☐
Smaller reporting company ☐
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Number of registrant’s common shares outstanding as of April 27, 2026: 236,067,554
This Form 10-Q includes references to certain trademarks or service marks. The AC Hotels by Marriott®, Aloft Hotels®, Courtyard by Marriott®, Fairfield by Marriott®, Marriott® Hotels, Residence Inn by Marriott®, SpringHill Suites by Marriott® and TownePlace Suites by Marriott® trademarks are the property of Marriott International, Inc. or one of its affiliates. The Embassy Suites by Hilton®, Hampton by Hilton®, Hilton Garden Inn®, Home2 Suites by Hilton®, Homewood Suites by Hilton® and Motto by Hilton® trademarks are the property of Hilton Worldwide Holdings Inc. or one of its affiliates. The Hyatt®, Hyatt House® and Hyatt Place® trademarks are the property of Hyatt Hotels Corporation or one of its affiliates. For convenience, the applicable trademark or service mark symbol has been omitted but will be deemed to be included wherever the above referenced terms are used.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Apple Hospitality REIT, Inc.
Consolidated Balance Sheets
(in thousands, except share data)
March 31,
December 31,
2026
2025
(unaudited)
Assets
Investment in real estate, net of accumulated depreciation and amortization of $2,012,971 and $1,972,264, respectively
$
4,757,452
$
4,787,864
Assets held for sale
8,346
-
Cash and cash equivalents
7,837
8,515
Restricted cash-furniture, fixtures and other escrows
12,944
30,903
Due from third-party managers, net
64,622
32,952
Other assets, net
43,024
41,944
Total Assets
$
4,894,225
$
4,902,178
Liabilities
Debt, net
$
1,565,680
$
1,538,584
Finance lease liabilities
110,944
111,094
Accounts payable and other liabilities
91,091
103,905
Total Liabilities
1,767,715
1,753,583
Shareholders’ Equity
Preferred stock, authorized 30,000,000 shares; none issued and outstanding
-
-
Common stock, no par value, authorized 800,000,000 shares; issued and outstanding 236,067,554 and 235,635,813 shares, respectively
4,723,977
4,719,900
Accumulated other comprehensive income
5,082
2,251
Accumulated distributions greater than net income
(1,602,549
)
(1,573,556
)
Total Shareholders’ Equity
3,126,510
3,148,595
Total Liabilities and Shareholders’ Equity
$
4,894,225
$
4,902,178
See notes to consolidated financial statements.
3
Apple Hospitality REIT, Inc.
Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
(in thousands, except per share data)
Three Months Ended
March 31,
2026
2025
Revenues:
Room
$
304,657
$
296,864
Food and beverage
16,300
15,511
Other
16,784
15,327
Total revenue
337,741
327,702
Expenses:
Hotel operating expense:
Operating
88,665
84,510
Hotel administrative
30,970
29,673
Sales and marketing
29,823
30,286
Utilities
13,232
12,479
Repair and maintenance
17,840
17,142
Franchise fees
16,039
14,553
Management fees
10,368
11,227
Total hotel operating expense
206,937
199,870
Property taxes, insurance and other
22,458
23,361
General and administrative
10,796
9,228
Depreciation and amortization
49,537
47,941
Total expense
289,728
280,400
Gain on sale of real estate
-
3,557
Operating income
48,013
50,859
Interest and other expense, net
(20,072
)
(19,397
)
Income before income taxes
27,941
31,462
Income tax expense
(242
)
(241
)
Net income
$
27,699
$
31,221
Other comprehensive income (loss):
Interest rate derivatives
2,831
(7,034
)
Comprehensive income
$
30,530
$
24,187
Basic and diluted net income per common share
$
0.12
$
0.13
Weighted average common shares outstanding - basic and diluted
236,112
240,067
See notes to consolidated financial statements.
4
Apple Hospitality REIT, Inc.
Consolidated Statements of Shareholders' Equity
(Unaudited)
(in thousands, except per share data)
Common Stock
Accumulated Other
Accumulated Distributions
Number of Shares
Amount
Comprehensive Income (Loss)
Greater Than Net Income
Total
Balance at December 31, 2025
235,636
$
4,719,900
$
2,251
$
(1,573,556
)
$
3,148,595
Share-based compensation, net of common shares surrendered to satisfy employee tax withholding requirements
410
3,930
-
-
3,930
Issuance of common shares, net
22
147
-
-
147
Interest rate derivatives
-
-
2,831
-
2,831
Net income
-
-
-
27,699
27,699
Distributions declared to shareholders ($0.24 per share)
-
-
-
(56,692
)
(56,692
)
Balance at March 31, 2026
236,068
$
4,723,977
$
5,082
$
(1,602,549
)
$
3,126,510
Balance at December 31, 2024
239,766
$
4,771,005
$
15,587
$
(1,520,733
)
$
3,265,859
Share-based compensation, net of common shares surrendered to satisfy employee tax withholding requirements
573
6,931
-
-
6,931
Equity issuance costs
-
(272
)
-
-
(272
)
Common shares repurchased
(1,931
)
(26,306
)
-
-
(26,306
)
Interest rate derivatives
-
-
(7,034
)
-
(7,034
)
Net income
-
-
-
31,221
31,221
Distributions declared to shareholders ($0.24 per share)
-
-
-
(57,579
)
(57,579
)
Balance at March 31, 2025
238,408
$
4,751,358
$
8,553
$
(1,547,091
)
$
3,212,820
See notes to consolidated financial statements.
5
Apple Hospitality REIT, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
Three Months Ended
March 31,
2026
2025
Cash flows from operating activities:
Net income
$
27,699
$
31,221
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
49,537
47,941
Gain on sale of real estate
-
(3,557
)
Other non-cash expenses, net
1,704
1,707
Changes in operating assets and liabilities:
Increase in due from third-party managers, net
(31,670
)
(24,458
)
(Increase) decrease in other assets, net
(551
)
670
Increase (decrease) in accounts payable and other liabilities
2,138
(4,385
)
Net cash provided by operating activities
48,857
49,139
Cash flows from investing activities:
Disbursements for potential acquisitions, net
-
(432
)
Capital improvements
(35,775
)
(27,289
)
Net proceeds from sale of real estate
-
20,645
Net cash used in investing activities
(35,775
)
(7,076
)
Cash flows from financing activities:
Net proceeds (disbursements) related to issuance of common shares
211
(142
)
Repurchases of common shares
-
(26,306
)
Common shares surrendered to satisfy employee withholding requirements
(1,615
)
(3,275
)
Distributions paid to common shareholders
(56,608
)
(69,615
)
Proceeds from revolving credit facility
70,100
92,500
Payments on revolving credit facility
(42,000
)
(27,000
)
Payments of mortgage debt and other loans
(1,602
)
(2,034
)
Principal payments on finance leases
(205
)
(156
)
Net cash used in financing activities
(31,719
)
(36,028
)
Net change in cash, cash equivalents and restricted cash
(18,637
)
6,035
Cash, cash equivalents and restricted cash, beginning of period
39,418
44,067
Cash, cash equivalents and restricted cash, end of period
$
20,781
$
50,102
Supplemental cash flow information:
Interest paid, net
$
19,264
$
18,579
Income taxes paid
$
50
$
39
Supplemental disclosure of noncash investing and financing activities:
Accrued distribution to common shareholders
$
18,870
$
19,053
Accrued capital expenditures
$
6,267
$
6,010
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents, beginning of period
$
8,515
$
10,253
Restricted cash-furniture, fixtures and other escrows, beginning of period
30,903
33,814
Cash, cash equivalents and restricted cash, beginning of period
$
39,418
$
44,067
Cash and cash equivalents, end of period
$
7,837
$
14,917
Restricted cash-furniture, fixtures and other escrows, end of period
12,944
35,185
Cash, cash equivalents and restricted cash, end of period
$
20,781
$
50,102
See notes to consolidated financial statements.
6
Apple Hospitality REIT, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
1. Organization and Summary of Significant Accounting Policies
Organization
Apple Hospitality REIT, Inc., formed in November 2007 as a Virginia corporation, together with its wholly-owned subsidiaries (the “Company”), is a self-advised real estate investment trust (“REIT”) that invests in income-producing real estate, primarily in the lodging sector, in the United States (“U.S.”). The Company’s fiscal year end is December 31. The Company has no foreign operations or assets, and its operating structure includes only one reportable segment. The consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany accounts and transactions have been eliminated. Although the Company has interests in potential variable interest entities through its purchase commitments, it is not the primary beneficiary as the Company does not have any elements of power in the decision-making process of these entities; therefore, the Company does not consolidate the entities. As of March 31, 2026, the Company owned 217 hotels with an aggregate of 29,583 guest rooms located in 37 states and the District of Columbia (“D.C.”), including one hotel with 124 guest rooms classified as held for sale, which was sold in April 2026. The Company’s common shares are listed on the New York Stock Exchange (“NYSE”) under the ticker symbol “APLE.”
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with the rules and regulations for reporting on Form 10-Q. Accordingly, they do not include all of the information required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. These unaudited financial statements should be read in conjunction with the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Form 10-K”). Operating results for the three months ended March 31, 2026 are not necessarily indicative of the results that may be expected for the twelve-month period ending December 31, 2026.
Use of Estimates
The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.
Net Income Per Common Share
Basic net income per common share is computed based upon the weighted average number of shares outstanding during the period. Diluted net income per common share is calculated after giving effect to all potential common shares that were dilutive and outstanding for the period. Basic and diluted net income per common share were the same for each of the periods presented.
Accounting Standards Recently Adopted
In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which focuses on income tax disclosures around effective tax rates and cash income taxes paid. This update requires disclosure, on an annual basis, of a tabular rate reconciliation using both percentages and currency amounts, broken out into specified categories with certain reconciling items further broken out by nature and jurisdiction to the extent those items exceed a specified threshold. In addition, all entities are required to disclose income taxes paid, net of refunds received, disaggregated by federal, state/local, and foreign and by jurisdiction if the amount is at least 5% of total income tax payments, net of refunds received. The new standard is effective for annual periods beginning after December 15, 2024, with early adoption permitted. The amendments in this ASU had the option of being applied prospectively by providing the revised disclosures for the period ending December 31, 2025 and continuing to provide the pre-ASU disclosures for the prior periods, or the amendments had the option of being applied retrospectively by providing the revised disclosures for all periods presented. The Company adopted this ASU within the 2025 Form 10-K using the retrospective approach for all periods presented. The adoption of this ASU only impacted disclosures with no impact on the Company’s consolidated financial statements.
Accounting Standards Recently Issued
In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which focuses on improving the disclosures about a public business entity’s amounts and types of expenses. The update mandates that an entity disclose the amounts of specific natural expense categories—such as purchases of inventory, employee compensation, depreciation, intangible asset
7
amortization, and depletion—within relevant expense captions presented on the face of the income statement. Additionally, an entity must disclose qualitative descriptions of the composition of any remaining expense not separately disaggregated and disclose the total amount of selling expenses, and in annual reporting periods, its definition of selling expenses. The new standard is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, with early adoption permitted. The amendments in this ASU may be applied prospectively by providing the revised disclosures for the period ending December 31, 2027 and continuing to provide the pre-ASU disclosures for the prior periods, or the amendments may be applied retrospectively by providing the revised disclosures for all periods presented. As of March 31, 2026, the Company has not adopted this ASU and is currently evaluating the impact of this ASU on the Company’s consolidated financial statements and related disclosures.
2. Investment in Real Estate
The Company’s investment in real estate consisted of the following (in thousands):
March 31,
December 31,
2026
2025
Land
$
840,101
$
841,027
Building and improvements
5,142,663
5,137,909
Furniture, fixtures and equipment
650,945
649,910
Finance ground lease assets
102,084
102,084
Franchise fees
34,630
29,198
6,770,423
6,760,128
Less accumulated depreciation and amortization
(2,012,971
)
(1,972,264
)
Investment in real estate, net
$
4,757,452
$
4,787,864
As of March 31, 2026, the Company owned 217 hotels with an aggregate of 29,583 guest rooms located in 37 states and the District of Columbia, including one hotel with 124 guest rooms classified as held for sale, which was sold in April 2026.
As of March 31, 2026, the Company leases all of its 217 hotels to its wholly-owned taxable REIT subsidiary (or a subsidiary thereof) under a master hotel lease agreement.
Acquisitions
The Company did not acquire any hotels during the three months ended March 31, 2026. During the year ended December 31, 2025, the Company acquired two hotels. The following table sets forth the location, brand, manager, date acquired, number of guest rooms and gross purchase price, excluding transaction costs, for each property. All dollar amounts are in thousands.
City
State
Brand
Manager
Date Acquired
Guest Rooms
Gross Purchase Price
Tampa
FL
Homewood Suites
HHM
6/10/2025
126
$
18,800
Nashville
TN
Motto
Chartwell
12/19/2025
260
98,183
386
$
116,983
During 2025, the Company utilized available cash, proceeds from the sales of properties, which included proceeds from two separate like-kind exchanges, in accordance with Section 1031 of the Internal Revenue Code of 1986, as amended (“1031 Exchange”), and borrowings under its unsecured credit facilities to purchase the Tampa, Florida and Nashville, Tennessee hotels. The acquisitions of these properties were accounted for as acquisitions of asset groups, whereby costs incurred to effect the acquisitions (which were not significant) were capitalized as part of the cost of the assets acquired.
3. Assets Held for Sale and Dispositions
Assets Held for Sale
During the first quarter of 2026, the Company entered into a purchase and sale agreement with an unrelated party for the sale of one hotel for a gross sales price of $8.7 million. Since the buyer under the contract completed its due diligence and made a non-refundable deposit, as of March 31, 2026, the Company classified this hotel as assets held for sale on its consolidated balance sheet at its carrying value (which is less than the contract price, net of costs to sell). The Company completed the sale of the hotel in April 2026.
8
Dispositions
There were no dispositions during the three months ended March 31, 2026. During the year ended December 31, 2025, the Company sold seven hotels to five unrelated parties for a combined gross sales price of approximately $73.3 million, resulting in a combined gain on the sales of approximately $13.1 million, net of transaction costs, which was included in the Company’s consolidated statement of operations for the year ended December 31, 2025. The seven hotels had a total carrying value of approximately $58.9 million at their respective times of sale. The following table lists the seven hotels sold in 2025:
City
State
Brand
Date Sold
Guest Rooms
Chattanooga
TN
Homewood Suites
2/12/2025
76
Indianapolis
IN
SpringHill Suites
3/19/2025
130
Houston
TX
Marriott
8/18/2025
206
Clovis
CA
Hampton
11/5/2025
86
Clovis
CA
Homewood Suites
11/5/2025
83
Cedar Rapids
IA
Hampton
11/25/2025
103
Cedar Rapids
IA
Homewood Suites
11/25/2025
95
Total
779
Excluding gains on sale of real estate, the Company’s consolidated statements of operations include operating income (loss) of approximately $(0.1) million and $0.2 million for the three months ended March 31, 2026 and 2025, respectively, relating to the results of operations of the eight hotels noted above (the one hotel classified as held for sale at March 31, 2026 and the seven hotels sold in 2025) for the period of ownership. The sale of these properties does not represent a strategic shift that has, or will have, a major effect on the Company’s operations and financial results; therefore, the operating results for the period of ownership of these properties are included in income from continuing operations for the three months ended March 31, 2026 and 2025, as applicable. A portion of the proceeds from the sale of the hotel in March 2025 was used to complete a 1031 Exchange for the acquisition of the Homewood Suites in Tampa, Florida, as discussed above in Note 2, which resulted in the deferral of taxable gains of approximately $2.4 million. Similarly, a portion of the proceeds from the sale of two hotels in the fourth quarter was used to complete a 1031 Exchange for the acquisition of the Motto in Nashville, Tennessee, as discussed above in Note 2, which resulted in the deferral of taxable gains of approximately $4.0 million.The net proceeds from the sales of the remaining four hotels in 2025 were used for share repurchases and other general corporate purposes.
4. Debt
Summary
As of March 31, 2026 and December 31, 2025, the Company’s debt consisted of the following (in thousands):
March 31, 2026
December 31, 2025
Revolving credit facility
$
89,100
$
61,000
Term loans and senior notes, net
1,294,394
1,293,841
Mortgage debt, net
182,186
183,743
Debt, net
$
1,565,680
$
1,538,584
The aggregate amounts of principal payable under the Company’s total debt obligations as of March 31, 2026 (including the Revolving Credit Facility (if any) (as defined below), term loans, senior notes and mortgage debt), for the remainder of this fiscal year, each of the next four fiscal years and thereafter are as follows (in thousands):
2026 (April - December)
$
292,147
2027
278,602
2028
334,066
2029
162,294
2030
460,016
Thereafter
44,638
1,571,763
Unamortized debt issuance costs
(6,083
)
Total
$
1,565,680
9
The Company uses interest rate swaps to manage its interest rate risk on a portion of its variable-rate debt. Throughout the terms of these interest rate swaps, the Company pays a fixed rate of interest and receives a floating rate of interest equal to the annual Secured Overnight Financing Rate (“SOFR”) for a one-month term (“one-month SOFR”). Prior to March 2026, nine out of the eleven swaps also included an additional 0.10% SOFR spread adjustment. In March 2026, the Company amended the nine interest rate swaps to remove the 0.10% SOFR spread adjustment. Therefore, as of March 31, 2026, all eleven interest rate swaps receive a floating rate of interest equal to the one-month SOFR with no additional spread adjustment. The swaps are designed to effectively fix the interest payments on variable-rate debt instruments. See Note 5 for more information on the interest rate swap agreements. The Company’s total fixed-rate and variable-rate debt, after giving effect to its interest rate swaps in effect as of March 31, 2026 and December 31, 2025, is set forth below. All dollar amounts are in thousands.
March 31, 2026
Percentage
December 31, 2025
Percentage
Fixed-rate debt (1)
$
992,663
63
%
$
994,265
64
%
Variable-rate debt
579,100
37
%
551,000
36
%
Total
$
1,571,763
$
1,545,265
Weighted-average interest rate of debt
4.65
%
4.70
%
(1)
Fixed-rate debt includes the portion of variable-rate debt where the interest payments have been effectively fixed by interest rate swaps as of the respective balance sheet date. See Note 5 for more information on the interest rate swap agreements.
Credit Facilities
As of March 31, 2026 and December 31, 2025, the details of the Company’s unsecured credit facilities were as set forth in the table below. All dollar amounts are in thousands.
Outstanding Balance
Interest Rate
Maturity Date
March 31, 2026
December 31, 2025
Revolving credit facility (1)
SOFR + 1.40% to 2.25%
(2)
7/25/2026
(3)
$
89,100
$
61,000
Term loans and senior notes
$275 million term loan
SOFR + 1.35% to 2.20%
(2)
7/25/2027
275,000
275,000
$300 million term loan
SOFR + 1.35% to 2.20%
(2)
1/31/2028
300,000
300,000
$385 million term loan
SOFR + 1.35% to 2.20%
7/31/2030
385,000
385,000
$130 million term loan
SOFR + 1.35% to 2.20%
(2)
7/25/2026
(4)
130,000
130,000
$85 million term loan
SOFR + 1.70% to 2.55%
(2)
12/31/2029
85,000
85,000
$50 million senior notes
3.60% to 4.35%
3/31/2030
50,000
50,000
$75 million senior notes
4.88% to 5.63%
6/2/2029
75,000
75,000
Term loans and senior notes at stated value
1,300,000
1,300,000
Unamortized debt issuance costs
(5,606
)
(6,159
)
Term loans and senior notes, net
1,294,394
1,293,841
Credit facilities, net (1)
$
1,383,494
$
1,354,841
Weighted-average interest rate (5)
4.77
%
4.83
%
(1)
Excludes unamortized debt issuance costs related to the Revolving Credit Facility (as defined below) totaling approximately $0.5 million and $0.8 million as of March 31, 2026 and December 31, 2025, respectively, which are included in other assets, net in the Company’s consolidated balance sheets.
(2)
In March 2026, the Company amended the terms of the Revolving Credit Facility and each unsecured term loan, as applicable, to remove the 0.10% SOFR spread adjustment.
(3)
The Revolving Credit Facilitymatures on July 25, 2026, but it can be extended up to one year, subject to certain conditions including covenant compliance and payment of additional fees. The Company presently has the ability to exercise this extension; however, it plans to pursue refinancing of the maturing debt.
(4)
This loan matures on July 25, 2026, but it can be extended up to one year, subject to certain conditions including covenant compliance and payment of additional fees. The Company presently has the ability to exercise this extension; however, it plans to pursue refinancing of the maturing debt.
(5)
Interest rate represents the weighted-average effective annual interest rate at the balance sheet date which includes the effect of interest rate swaps in effect on $685.0 million of the outstanding variable-rate debt as of March 31, 2026 and December 31, 2025. See Note 5 for more information on the interest rate swap agreements. The one-month SOFR on March 31, 2026 and December 31, 2025 was 3.66% and 3.69%, respectively.
10
For the unsecured credit facilities noted in the table above, the Company may make voluntary prepayments, in whole or in part, at any time, subject to certain conditions. The revolving credit facility has a maximum borrowing capacity of $650 million (the “Revolving Credit Facility”). Subject to certain conditions, including covenant compliance and payment of additional fees, the Revolving Credit Facility maturity date may be extended up to one year. As of March 31, 2026, the Company had availability of approximately $558.8 million under the Revolving Credit Facility after taking into account a $2.1 million letter of credit. The Company is also required to pay quarterly an unused facility fee at an annual rate of 0.20% or 0.25% on the unused portion of the Revolving Credit Facility, based on the amount of borrowings outstanding during the quarter. Interest on the Revolving Credit Facility and the unsecured term loans, subject to certain exceptions, is generally payable monthly, with interest rates that have historically been equal to the one-month SOFR plus a 0.10% SOFR spread adjustment plus a margin (margin ranges shown in the table above), based upon the Company’s leverage ratio, as calculated under the terms of each respective credit agreement. In March 2026, the Company amended the terms of the Revolving Credit Facility and each unsecured term loan to remove the 0.10% SOFR spread adjustment, with the exception of the $385 million term loan facility, which did not include the 0.10% SOFR spread adjustment. Interest payments on the senior notes are due quarterly, and the interest rates, subject to certain exceptions, have a range of annual rates (shown in the table above) based on the Company’s leverage ratio, as calculated under the terms of each respective note agreement.
Credit Facilities Covenants
The credit agreements governing the unsecured credit facilities contain customary affirmative and negative covenants, restrictions on certain investments 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. Refer to Note 4 of the Company’s 2025 Form 10-K for additional details. The Company was in compliance with the applicable covenants as of March 31, 2026.
Mortgage Debt
As of March 31, 2026, the Company had approximately $182.7 million in outstanding mortgage debt secured by 10 properties with maturity dates ranging from June 2026 to May 2038, and both stated interest rates and effective interest rates ranging from 3.40% to 4.37%. The loans generally provide for monthly payments of principal and interest on an amortized basis and defeasance or prepayment penalties if prepaid. The following table sets forth the hotel properties securing each loan, the interest rate, loan assumption or origination date, maturity date, the principal amount assumed or originated, and the outstanding balance prior to any debt issuance costs as of March 31, 2026 and December 31, 2025 for each of the Company’s mortgage debt obligations. All dollar amounts are in thousands.
Location
Brand
Interest Rate
Loan Assumption or Origination Date
Maturity Date
Principal Assumed or Originated
Outstanding balance as of March 31, 2026
Outstanding balance as of December 31, 2025
Boise, ID
Hampton
4.37
%
5/26/2016
6/11/2026
(1)
24,000
19,455
19,601
Burbank, CA
Courtyard
3.55
%
11/3/2016
12/1/2026
(1)
25,564
18,620
18,839
San Diego, CA
Courtyard
3.55
%
11/3/2016
12/1/2026
(1)
25,473
18,553
18,772
San Diego, CA
Hampton
3.55
%
11/3/2016
12/1/2026
(1)
18,963
13,812
13,975
Burbank, CA
SpringHill Suites
3.94
%
3/9/2018
4/1/2028
28,470
22,271
22,498
Santa Ana, CA
Courtyard
3.94
%
3/9/2018
4/1/2028
15,530
12,148
12,272
Richmond, VA
Courtyard
3.40
%
2/12/2020
3/11/2030
14,950
13,087
13,174
Richmond, VA
Residence Inn
3.40
%
2/12/2020
3/11/2030
14,950
13,087
13,174
Portland, ME
Residence Inn
3.43
%
3/2/2020
3/1/2032
33,500
30,500
30,500
San Jose, CA
Homewood Suites
4.22
%
12/22/2017
5/1/2038
30,000
21,130
21,460
$
231,400
182,663
184,265
Unamortized debt issuance costs
(477
)
(522
)
Total
$
182,186
$
183,743
(1)
The Company plans to pay the outstanding amount and service payments due upon the upcoming debt maturity date using funds from operations, borrowings under its Revolving Credit Facility and/or proceeds from new financing.
11
5. Fair Value of Financial Instruments
Except as described below, the carrying value of the Company’s financial instruments approximates fair value due to the short-term nature of these financial instruments.
Debt
The Company estimates the fair value of its debt by discounting the future cash flows of each instrument at estimated market rates consistent with the maturity of a debt obligation with similar credit terms and credit characteristics, which are Level 3 inputs under the fair value hierarchy. Market rates take into consideration general market conditions and maturity. As of March 31, 2026, both the carrying value and the estimated fair value of the Company’s debt were approximately $1.6 billion. As of December 31, 2025, both the carrying value and estimated fair value of the Company’s debt were approximately $1.5 billion. Both the carrying value and the estimated fair value of the Company’s debt (as discussed above) are net of unamortized debt issuance costs related to term loans, senior notes and mortgage debt for each specific year.
Derivative Instruments
Currently, the Company uses interest rate swaps to manage its interest rate risk on variable-rate debt. Throughout the terms of these interest rate swaps, the Company pays a fixed rate of interest and receives a floating rate of interest equal to the one-month SOFR. Prior to March 2026, nine out of the eleven swaps also included an additional 0.10% SOFR spread adjustment. In March 2026, the Company amended the nine interest rate swaps to remove the 0.10% SOFR spread adjustment. Therefore, as of March 31, 2026, all eleven interest rate swaps receive a floating rate of interest equal to the one-month SOFR with no additional spread adjustment. The swaps are designed to effectively fix the interest payments on variable-rate debt instruments. These swap instruments are recorded at fair value and, if in an asset position, are included in other assets, net, and, if in a liability position, are included in accounts payable and other liabilities in the Company’s consolidated balance sheets. The fair values of the Company’s interest rate swap agreements are determined using the market standard methodology of netting the discounted future fixed cash payments and the discounted expected variable cash receipts, which is considered a Level 2 measurement under the fair value hierarchy. The variable cash receipts are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. The following table sets forth information for each of the Company’s interest rate swap agreements outstanding as of March 31, 2026 and December 31, 2025. All dollar amounts are in thousands.
Fair Value Asset (Liability)
Notional Amount at March 31, 2026
Origination Date
Effective Date
Maturity Date
Swap Fixed Interest Rate
March 31, 2026
December 31, 2025
Active interest rate swaps designated as cash flow hedges at March 31, 2026:
$
75,000
8/21/2019
5/18/2021
5/18/2026
1.19%
$
242
$
688
125,000
11/3/2023
11/3/2023
11/18/2026
4.41%
(586
)
(1,061
)
50,000
8/2/2024
8/2/2024
8/18/2027
3.53%
64
(196
)
50,000
8/1/2024
8/5/2024
8/31/2027
3.74%
(73
)
(373
)
50,000
3/17/2023
3/20/2023
3/18/2028
3.40%
173
(133
)
50,000
3/17/2023
3/20/2023
3/20/2028
3.39%
175
(144
)
50,000
8/1/2024
8/5/2024
8/18/2028
3.65%
(124
)
(491
)
50,000
8/1/2025
8/1/2025
8/31/2028
3.38%
203
(114
)
50,000
8/1/2025
8/1/2025
8/31/2028
3.38%
212
(117
)
50,000
7/11/2024
7/18/2024
7/18/2029
3.86%
(513
)
(890
)
85,000
12/31/2019
12/31/2019
12/31/2029
1.77%
5,309
5,082
$
685,000
$
5,082
$
2,251
The Company assesses, both at inception and on an ongoing basis, the effectiveness of its qualifying cash flow hedges. As of March 31, 2026, all 11 active interest rate swap agreements listed above were designated as cash flow hedges. The change in the fair value of the Company’s designated cash flow hedges is recorded to accumulated other comprehensive income, a component of shareholders’ equity in the Company’s consolidated balance sheets.
Amounts reported in accumulated other comprehensive income will be reclassified to interest and other expense, net as interest payments are made or received on the Company’s variable-rate derivatives. The Company estimates that approximately $1.7 million of net unrealized gains included in accumulated other comprehensive income at March 31, 2026 will be reclassified as a decrease to interest and other expense, net within the next 12 months.
12
The following table presents the effect of derivative instruments in cash flow hedging relationships in the Company’s consolidated statements of operations and comprehensive income for the three months ended March 31, 2026 and 2025 (in thousands):
Net Unrealized Gain (Loss) Recognized in Other Comprehensive Income (Loss)
Net Unrealized Gain Reclassified from Accumulated Other Comprehensive Income to Interest and Other Expense, net
Three Months Ended March 31,
Three Months Ended March 31,
2026
2025
2026
2025
Interest rate derivatives in cash flow hedging relationships
$
3,625
$
(4,490
)
$
794
$
2,544
6. Related Parties
The Company has engaged in, and is expected to continue to engage in, transactions with related parties. These transactions cannot be construed as being 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. There have been no changes to the contracts and relationships discussed in the 2025 Form 10-K. Below is a summary of the significant related party relationships in effect during the three months ended March 31, 2026 and 2025.
Glade M. Knight, Executive Chairman of the Company, owns Apple Realty Group, Inc. (“ARG”), which receives support services from the Company and reimburses the Company for the cost of these services as discussed below. Mr. Knight is also currently a partner and Chief Executive Officer of Energy 11 GP, LLC and Energy Resources 12 GP, LLC, which are the respective general partners of Energy 11, L.P. and Energy Resources 12, L.P., each of which receives support services from ARG.
The Company provides support services, including the use of the Company’s employees and corporate office, to ARG and is reimbursed by ARG for the cost of these services. Under this cost sharing structure, amounts reimbursed to the Company include both compensation for personnel and office related costs (including office rent, utilities, office supplies, etc.) used by ARG. The amounts reimbursed to the Company are based on the actual costs of the services and a good faith estimate of the proportionate amount of time incurred by the Company’s employees on behalf of ARG. Total reimbursed costs allocated by the Company to ARG for the three months ended March 31, 2026 and 2025 totaled approximately $0.3 million for each respective period, and are recorded as a reduction to general and administrative expenses in the Company’s consolidated statements of operations.
As part of the cost sharing arrangement, certain day-to-day transactions may result in amounts due to or from the Company and ARG. To efficiently manage cash disbursements, the Company or ARG may make payments for the other company. Under this cash management process, each company may advance or defer up to $1 million at any time. Each quarter, any outstanding amounts are settled between the companies. 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 March 31, 2026 and December 31, 2025, total amounts due from ARG for reimbursements under the cost sharing structure totaled approximately $0.3 million and $0.5 million, respectively, and are included in other assets, net in the Company’s consolidated balance sheets.
The Company, through its wholly-owned subsidiary, Apple Air Holding, LLC, owns an aircraft used primarily for acquisition, asset management, renovation, investor, corporate and public relations and other business purposes. The aircraft may from time to time be leased to affiliates of the Company based on third-party rates. Lease activity was not significant during the reporting periods.
From time to time, the Company utilizes aircraft, owned by an entity that is owned by the Company’s Executive Chairman, for acquisition, asset management, renovation, investor, corporate and public relations and other business purposes, and reimburses this entity at third-party rates. Total costs incurred for the use of the aircraft during the three months ended March 31, 2026 were less than $0.1 million and are included in general and administrative expenses in the Company’s consolidated statements of operations. The Company did not use these aircraft during the three months ended March 31, 2025.
7. Shareholders’ Equity
Distributions
For the three months ended March 31, 2026, the Company paid distributions of $0.24 per common share for a total of $56.6 million. During the three months ended March 31, 2025, the Company paid distributions of $0.29 per common share, for a total of $69.6 million. Additionally, in March 2026, the Company declared a monthly cash distribution of $0.08 per common share, totaling $18.9 million, which was recorded as a payable as of March 31, 2026 and paid on April 15, 2026. Distributions declared but not paid at the balance sheet date are included in accounts payable and other liabilities in the Company’s consolidated balance sheets as of March 31, 2026 and December 31, 2025, respectively.
13
Issuance of Shares
On February 23, 2024, the Company entered into an equity distribution agreement pursuant to which the Company may sell, from time to time, up to an aggregate of $500 million of its common shares under an at-the-market offering program (the “ATM Program”) under the Company’s current shelf registration statement. The Company did not sell any common shares under the ATM Program during the three months ended March 31, 2026 or during the year ended December 31, 2025. As of March 31, 2026, $500 million remained available for issuance under the ATM Program. 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 additional properties, the repayment of outstanding indebtedness, capital expenditures, improvement of properties in its portfolio and working capital. The Company may also use the future net proceeds to acquire another REIT or other company that invests in income-producing properties.
Share Repurchases
In May 2025, 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 $262.6 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 2026 if not terminated or extended earlier. The Company previously entered into, and expects to continue to enter into, written trading plans as part of the Share Repurchase Program that provide for share repurchases in open market transactions that are intended to comply with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company did not repurchase any common shares during the three months ended March 31, 2026. During the three months ended March 31, 2025, the Company purchased, under its Share Repurchase Program, approximately 1.9 million of its common shares at a weighted-average market purchase price of approximately $13.61 per common share for an aggregate purchase price, including commissions, of approximately $26.3 million. Purchases under the Share Repurchase Program have been funded, and the Company intends to fund future share repurchases, with cash on hand, proceeds from dispositions or availability under its unsecured credit facilities, subject to applicable restrictions under the Company’s unsecured credit facilities (if any). The timing of share repurchases and the number of common shares to be purchased under the Share Repurchase Program will also depend upon prevailing market conditions, regulatory requirements and other factors. As of March 31, 2026, approximately $242.5 million remained available for purchase under the Share Repurchase Program.
8. Compensation Plans
The Company annually establishes an incentive compensation plan for its executive management team, which is approved by the Compensation Committee. Under the incentive compensation plan for 2026 (the “2026 Incentive Plan”), participants are eligible to receive incentive compensation based on the achievement of certain 2026 performance measures, with one-half (50%) of incentive compensation based on operational metrics and performance goals and one-half (50%) of incentive compensation based on shareholder return metrics. With respect to the shareholder return metrics, 75% of the target will be based on shareholder return relative to a peer group and 25% will be based on total shareholder return metrics over one-year, two-year, and three-year periods. With respect to the operational metrics and performance goals, 75% of the operational performance target will be based on the following metrics: Comparable Hotels RevPAR growth, Comparable Hotels Adjusted Hotel EBITDA margin, Adjusted EBITDAre and Modified Funds from Operations per share, equally weighted at 18.75% (non-GAAP financial measures are defined elsewhere within this Quarterly Report on Form 10-Q). The remaining 25% of the operational performance target will be based on the management of balance sheet maturities and allocation of capital to drive shareholder returns. As of March 31, 2026, the range of potential aggregate payouts under the 2026 Incentive Plan was $0 - $30.3 million. Based on performance through March 31, 2026, the Company has accrued approximately $3.8 million as a liability for potential executive incentive compensation payments under the 2026 Incentive Plan, which is included in accounts payable and other liabilities in the Company’s consolidated balance sheet as of March 31, 2026 and in general and administrative expenses in the Company’s consolidated statement of operations for the three months ended March 31, 2026. Approximately 25% of target awards under the 2026 Incentive Plan, if any, will be paid in cash, and 75% will be issued in common shares under the Company’s 2024 Omnibus Incentive Plan, approximately two-thirds of which will be unrestricted and one-third of which will vest in December 2027.
Under the incentive compensation plan for 2025 (the “2025 Incentive Plan”), the Company recorded approximately $3.4 million for executive incentive compensation in general and administrative expenses in its consolidated statement of operations for the three months ended March 31, 2025.
14
Share-Based Compensation Awards
The following table sets forth information pertaining to the executive share-based compensation issued under the 2025 Incentive Plan and the incentive plan for 2024 (the “2024 Incentive Plan”).
2025 Incentive Plan
2024 Incentive Plan
Period common shares issued
First Quarter 2026
First Quarter 2025
Common shares earned under each incentive plan
496,996
766,601
Common shares surrendered on issuance date to satisfy tax withholding obligations
128,757
221,309
Common shares earned and issued under each incentive plan, net of common shares surrendered on issuance date to satisfy tax withholding obligations
368,239
545,292
Average of the high and low stock price on issuance date
$12.10
$14.48
Total share-based compensation earned, including the surrendered shares (in millions)
$6.0
(1)
$11.1
(2)
Of the total common shares earned and issued, total common shares unrestricted at time of issuance
175,519
302,438
Of the total common shares earned and issued, total common shares restricted at time of issuance
192,720
242,854
Restricted common shares vesting date
December 11, 2026
December 12, 2025
Common shares surrendered on vesting date to satisfy tax withholding requirements resulting from vesting of restricted common shares
n/a
102,615
(1)
Of the total 2025 executive share-based compensation, approximately $4.8million was recorded as a liability as of December 31, 2025 and is included in accounts payable and other liabilities in the Company’s consolidated balance sheet at December 31, 2025. Another $1.2 million, which is subject to vesting on December 11, 2026 and excludes any restricted shares forfeited or vested prior to that date, will be recognized as share-based compensation expense proportionately throughout 2026. For the three months ended March 31, 2026, the Company recognized approximately $0.3 million of share-based compensation expense related to restricted share awards.
(2)
Of the total 2024 executive share-based compensation, approximately $1.8 million, which vested on December 12, 2025, was recognized as share-based compensation expense proportionately throughout 2025. For the three months ended March 31, 2025, the Company recognized approximately $0.4 million of share-based compensation expense related to restricted share awards.
15
9. Reportable Segments
The Company owns hotel properties throughout the U.S. that generate guest room rental, food and beverage, and other property-related income. There are no foreign operations from which the Company derives revenues and no assets are held in a foreign country. There are no material concentrations of 10% or more of total revenues allocated to a single customer for the reporting periods presented. The Chief Operating Decision Maker (“CODM”) separately evaluates the performance, allocates capital resources and manages the overall operating and investing strategy of each of its hotel properties individually; therefore, the Company considers each hotel to be an operating segment. However, because each hotel is not individually significant, serves a similar class and mix of business and leisure customers, has similar economic characteristics and risks, facilities, and services, utilizes similar methods to distribute their products and services through third-party management companies, and is subject to similar regulatory environments, the properties have been combined into a single operating segment for reporting purposes. The CODM, who is the Chief Executive Officer of the Company, assesses the performance of each operating segment on a monthly basis using adjusted hotel earnings (loss) before interest expense, income taxes and depreciation and amortization (“Adjusted Hotel EBITDA”), the measure by which the CODM makes day-to-day operating decisions, compares actual results with budgeted and prior year results, invests in capital improvements, and performs competitive analysis of the Company’s operating performance against industry peers.
Adjusted Hotel EBITDA, presented herein, is calculated as EBITDA from hotel operations with further exclusions as noted below. 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. 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 agreements governing the Company’s indebtedness use EBITDA, as defined in the specific credit agreement, as a measure of financial compliance. The Company further excludes the following items that are not reflective of its ongoing operating performance or incurred in the normal course of business, and thus not utilized in the CODM’s analysis to allocate resources and assess operating performance of the Company’s business:
•
gains and losses from the sale of certain real estate assets (including gains and losses from change in control);
actual corporate-level general and administrative expense for the Company, including share-based compensation expense; and
•
operating results from the non-hotel property, prior to recovering possession on April 4, 2025.
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 the effectiveness of the operators of the hotels.
16
The following table reconciles the Company’s single reportable segment Adjusted Hotel EBITDA to GAAP net income for the three months ended March 31, 2026 and 2025:
Three Months Ended March 31,
2026
2025
Total revenue
$
337,741
$
327,702
Less:
Significant hotel operating expenses
Operating
88,665
84,510
Hotel administrative
30,970
29,673
Sales and marketing
29,823
30,286
Utilities
13,232
12,479
Repair and maintenance
17,840
17,142
Franchise fees
16,039
14,553
Management fees
10,368
11,227
Total significant hotel operating expenses
206,937
199,870
Property taxes, insurance & other
22,458
23,361
Other segment items (1)
(133
)
(794
)
Adjusted Hotel EBITDA
108,479
105,265
General and administrative
(10,796
)
(9,228
)
Depreciation and amortization
(49,537
)
(47,941
)
Gain on sale of real estate
-
3,557
Other segment items (1)
(133
)
(794
)
Interest expense, net
(20,072
)
(19,397
)
Income tax expense
(242
)
(241
)
Net income
$
27,699
$
31,221
(1)
Includes operating results of the New York Property when classified as a non-hotel property through March 2025. On April 4, 2025, the Company recovered possession of the New York Property and reinstated operations of the hotel’s 209 guest rooms through a third-party manager engaged by the Company. Additionally, for the three months ended March 31, 2026 and 2025, expenses relating to amortization of favorable and unfavorable operating leases and non-cash straight-line operating ground lease expense are included. These items have been included for the purpose of ensuring their exclusion from Adjusted Hotel EBITDA, as they do not reflect the underlying operating performance of the Company's hotels.
Disclosure of the reportable segment’s revenue and profit or loss is included in the Company’s consolidated statements of operations and comprehensive income; its assets are presented in the consolidated balance sheets; and its significant noncash items are provided in its consolidated statements of cash flows, all within this Quarterly Report on Form 10-Q. For the three months ended March 31, 2026 and 2025, the Company invested approximately $27.5 million and $19.6 million in capital expenditures, respectively.
10. Contract Commitments
Purchase Contract Commitments
As of March 31, 2026, the Company had one outstanding contract, which was entered into during the third quarter of 2025, for the potential purchase of a hotel in Anchorage, Alaska for an expected fixed purchase price of approximately $65.5 million. The hotel is under development as a 160-guest-room AC Hotel and is currently planned to be completed and opened for business in the fourth quarter of 2027. As of March 31, 2026, a $2.0 million contract deposit (refundable if the seller does not meet its obligations under the contract) had been paid. If the closing occurs, the Company plans to utilize its available cash or borrowings, including borrowings under its unsecured credit facilities available at closing, to purchase the hotel under contract. 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. If the seller meets all of the conditions to closing, the Company is obligated to specifically perform under the purchase contract and acquire this hotel. As this hotel is under development, at this time, the seller has not met all of the conditions to closing.
17
Development Project
During the third quarter of 2025, the Company entered into a fixed-price contract with a third party to develop a dual-branded property, consisting of an AC Hotel and a Residence Inn, on Company-owned land in Las Vegas, Nevada, adjacent to its existing SpringHill Suites. The Company expects to spend a total of approximately $143.7 million to develop the hotels, which are currently planned to be completed and opened for business in the second quarter of 2028. Upon completion, the AC Hotel and Residence Inn are expected to contain approximately 237 and 160 guest rooms, respectively. As of March 31, 2026, the Company has paid $1.6 million in refundable (if the contracted developer does not meet its obligation under the contract) deposits.
11. Subsequent Events
On April 15, 2026, the Company paid approximately $18.9 million, or $0.08 per common share, in distributions to shareholders of record as of March 31, 2026.
On April 15, 2026, the Company completed the sale of its 124-room Hampton located in Rochester, Minnesota, for a gross sales price of approximately $8.7 million.
On April 20, 2026, the Company declared a monthly cash distribution of $0.08 per common share. The distribution is payable on May 15, 2026, to shareholders of record as of April 30, 2026.
18
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are typically identified by use of statements that include phrases such as “may,” “believe,” “expect,” “anticipate,” “intend,” “estimate,” “project,” “target,” “goal,” “plan,” “should,” “will,” “predict,” “potential,” “outlook,” “strategy,” and similar expressions that convey the uncertainty of future events or outcomes. Such statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of Apple Hospitality REIT, Inc. and its wholly-owned subsidiaries (the “Company”) 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 the Company to effectively acquire and dispose of properties and redeploy proceeds; the anticipated timing and frequency of shareholder distributions; the ability of the Company to fund capital obligations; the ability of the Company to successfully integrate pending transactions and implement its operating strategy; changes in general political, economic and competitive conditions and specific market conditions (including the potential effects of tariffs, inflation or a recessionary environment); reduced business and leisure travel due to geopolitical 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; government shutdowns, airline strikes or equipment failures, or other disruptions; adverse changes in the real estate and real estate capital markets; financing risks; changes in interest rates; litigation risks; regulatory proceedings or inquiries; and changes in laws or regulations or interpretations of current laws and regulations that impact the Company’s business, assets or classification as a real estate investment trust (“REIT”). Although the Company 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 Quarterly Report 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 the Company or any other person that the results or conditions described in such statements or the objectives and plans of the Company will be achieved. In addition, the Company’s qualification as a REIT involves the application of highly technical and complex provisions of the Internal Revenue Code of 1986, as amended (the “Code”). Readers should carefully review the risk factors described in the Company’s filings with the Securities and Exchange Commission (“SEC”), including but not limited to those discussed in the section titled “Risk Factors” in the 2025 Form 10-K. Any forward-looking statement that the Company makes speaks only as of the date of this Quarterly Report. The Company undertakes no obligation to publicly update or revise any forward-looking statements or cautionary factors, as a result of new information, future events, or otherwise, except as required by law.
The following discussion and analysis should be read in conjunction with the Company’s Unaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q, as well as the information contained in the 2025 Form 10-K.
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. As of March 31, 2026, the Company owned 217 hotels with an aggregate of 29,583 guest rooms located in urban, high-end suburban and developing markets throughout 37 states and the District of Columbia, including one hotel with 124 guest rooms classified as held for sale, which was sold in April 2026. Substantially all of the Company’s hotels operate under Marriott or Hilton brands. The hotels are operated and managed under separate management agreements with 15 hotel management companies, none of which are affiliated with the Company. 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. Consistent with this strategy and the Company’s focus on investing in rooms-focused hotels, as of March 31, 2026, the Company had one outstanding contract, which was entered into during the third quarter of 2025, for the potential purchase of a hotel in Anchorage, Alaska for an expected fixed purchase price of approximately $65.5 million. The hotel is under development as a 160-guest-room AC Hotel and is currently planned to be completed and opened for business in the fourth quarter of 2027. As of March 31, 2026, a $2.0 million contract deposit (refundable if the seller does not meet its obligations under the contract) had been paid. If the closing occurs, the Company plans to utilize its available cash or borrowings, including borrowings under its unsecured credit facilities available at closing, to purchase the hotel under contract. 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. If the seller meets all of the
19
conditions to closing, the Company is obligated to specifically perform under the purchase contract and acquire this hotel. As this hotel is under development, at this time, the seller has not met all of the conditions to closing.
During the third quarter of 2025, the Company entered into a fixed-price contract with a third party to develop a dual-branded property, consisting of an AC Hotel and a Residence Inn, on Company-owned land in Las Vegas, Nevada, adjacent to its existing SpringHill Suites. The Company expects to spend a total of approximately $143.7 million to develop the hotels, which are currently planned to be completed and opened for business in the second quarter of 2028. Upon completion, the AC Hotel and Residence Inn are expected to contain approximately 237 and 160 guest rooms, respectively.
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. As a result, during the three months ended March 31, 2026, the Company entered into a purchase and sale agreement with an unrelated party for the sale of one hotel for a gross sales price of $8.7 million. Since the buyer under the contract completed its due diligence and made a non-refundable deposit, as of March 31, 2026, the Company classified this hotel as assets held for sale on its consolidated balance sheet at its carrying value (which is less than the contract price, net of costs to sell). The Company completed the sale of the hotel in April 2026.
See Note 3 titled “Assets Held for Sale and Dispositions” and Note 10 titled “Contract Commitments” in the Company’s Unaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q, for additional information concerning these transactions.
As of March 31, 2026, the Company’s independent boutique hotel in New York, New York (the “New York Property”) was included in the Company’s hotel and guest room counts. On April 4, 2025, the Company recovered possession of this property and reinstated operations of the hotel's 209 guest rooms through a third-party manager engaged by the Company. From May 2023 through March 2025, the Company classified the property as a “non-hotel property” and excluded it from hotel and guest room counts, as it was leased to a third-party hotel operator. Following the third-party hotel operator's failure to make lease payments, the Company commenced legal proceedings in 2024 to remove the third-party hotel operator from possession of the property. In April 2025, the Company and the third-party hotel operator entered into an agreement to mutually release all claims, to terminate the lease and for the third-party hotel operator to voluntarily surrender possession of the property back to the Company.
Hotel Operations
As of March 31, 2026, the Company owned 217 hotels, including one hotel classified as held for sale, with a total of 29,583 guest rooms as compared to 219 hotels with a total of 29,558 guest rooms as of March 31, 2025. Results of operations are included only for the period of ownership for hotels acquired or disposed of during the current reporting period and the prior year. During the three months ended March 31, 2026, the Company did not acquire or dispose of any properties. During the three months ended March 31, 2025, the Company did not acquire any properties, but sold two properties, including one property sold on February 12, 2025 and one property sold on March 19, 2025. On April 4, 2025, the Company recovered possession from a third-party hotel operator and reinstated operations of its 209-guest-room New York Property through a third-party manager engaged by the Company.
Management Company Transitions
The Company continually evaluates the performance of each property and may transfer management responsibilities to a different third-party manager to improve operational efficiency and maximize asset value. In markets or regions where the Company owns multiple properties, it may consolidate hotels under specific third-party managers to leverage regional expertise, gain operating efficiencies, and enhance overall portfolio performance. During the three months ended March 31, 2026, the Company transitioned the remaining nine hotels managed by affiliates of Marriott, as of December 31, 2025, to separate management companies that are not affiliated with Marriott, Hilton or Hyatt. In 2025, the Company transitioned the management responsibilities for nine other hotels to different third-party management companies with which it already had existing management agreements for other properties, a portion of which involved transitions from hotels previously managed by affiliates of Marriott to management companies unaffiliated with Marriott, Hilton, or Hyatt.
Operating Results
In evaluating financial condition and operating performance, the most important indicators on which the Company focuses are revenue measurements, such as average occupancy, average daily rate (“ADR”) and revenue per available room (“RevPAR”), and expenses, such as hotel operating expenses, general and administrative expenses and other expenses described below. RevPAR and operating results may be impacted by regional and local economies and local regulations as well as changes in lodging demand due to macroeconomic factors including inflationary pressures, higher energy prices or a recessionary environment.
20
The following is a summary of the results from operations of the Company’s hotels for their respective periods of ownership by the Company:
Three Months Ended March 31,
(in thousands, except statistical data)
2026
Percent of Revenue
2025
Percent of Revenue
Percent Change
Total revenue
$
337,741
100.0
%
$
327,702
100.0
%
3.1
%
Hotel operating expense
206,937
61.3
%
199,870
61.0
%
3.5
%
Property taxes, insurance and other expense
22,458
6.6
%
23,361
7.1
%
-3.9
%
General and administrative expense
10,796
3.2
%
9,228
2.8
%
17.0
%
Depreciation and amortization expense
49,537
47,941
3.3
%
Gain on sale of real estate
-
3,557
n/a
Interest and other expense, net
20,072
19,397
3.5
%
Income tax expense
242
241
0.4
%
Net income
27,699
31,221
-11.3
%
Adjusted Hotel EBITDA (1)
108,479
105,265
3.1
%
Number of hotels owned at end of period
217
219
-0.9
%
ADR
$
157.19
$
156.24
0.6
%
Occupancy
72.8
%
71.1
%
2.4
%
RevPAR
$
114.43
$
111.04
3.1
%
(1)
See reconciliation of Adjusted Hotel EBITDA to net income in “Non-GAAP Financial Measures” below.
Comparable Hotels Operating Results
The following table reflects certain operating statistics for the Company’s 216 hotels owned and held for use as of March 31, 2026 (“Comparable Hotels”). The Company defines metrics from Comparable Hotels as results generated by the 216 hotels owned and held for use as of the end of the reporting period. For the hotels acquired during the reporting periods shown, the Company has included, as applicable, results of those hotels for periods prior to the Company’s ownership using information provided by the properties’ prior owners at the time of acquisition and not adjusted by the Company. For dispositions and assets held for sale, results have been excluded for the Company’s period of ownership.
Three Months Ended March 31,
2026
2025
Percent Change
ADR
$
157.35
$
157.26
0.1
%
Occupancy
72.8
%
71.3
%
2.1
%
RevPAR
$
114.61
$
112.14
2.2
%
Same Store Operating Results
The following table reflects certain operating statistics for the 213 hotels owned and held for use by the Company as of January 1, 2025 and during the entirety of the reporting periods being compared, excluding the New York Property (“Same Store Hotels”).
Three Months Ended March 31,
2026
2025
Percent Change
ADR
$
157.24
$
157.06
0.1
%
Occupancy
73.2
%
71.3
%
2.7
%
RevPAR
$
115.04
$
111.91
2.8
%
As discussed above, hotel performance is impacted by many factors, including the economic conditions in the U.S. as well as each individual locality. The Company’s Comparable Hotels and Same Store Hotels revenue and operating results increased modestly for the three months ended March 31, 2026, compared to the same period in 2025, reflecting improvement in demand beyond the impact of prior-year headwinds, including reduced government travel following the current administration's efforts to curtail government spending and broader macroeconomic uncertainty in the U.S. The Company expects RevPAR to improve seasonally over the remainder of the year. Prior expectations were for full-year 2026 RevPAR to be in line with 2025, consistent with broader industry
21
chain-scale outlooks; however, based on performance through the first quarter, the Company currently expects full-year 2026 RevPAR to modestly exceed 2025 levels, assuming no material changes in the macroeconomic environment.
Revenues
The Company’s principal source of revenue is hotel revenue consisting of room, food and beverage, and other related revenue. For the three months ended March 31, 2026 and 2025, the Company had total revenue of $337.7 million and $327.7 million, respectively. For the three months ended March 31, 2026 and 2025, respectively, Comparable Hotels achieved combined average occupancy of 72.8% and 71.3%, ADR of $157.35 and $157.26, and RevPAR of $114.61 and $112.14. ADR is calculated as room revenue divided by the number of rooms sold, and RevPAR is calculated as occupancy multiplied by ADR.
Compared to the same period in 2025, during the three months ended March 31, 2026, the Company’s Comparable Hotels ADR generally remained unchanged while occupancy increased by 2.1% resulting in an increase in Comparable Hotels RevPAR of 2.2%. Revenue increased for the three months ended March 31, 2026 compared to the same period in 2025, reflecting improved demand beyond the impact of prior-year headwinds, including reduced government travel and broader U.S. macroeconomic uncertainty in the first quarter of 2025 following the current administration’s efforts to curtail government spending. Markets with significantly above-average growth in the first quarter of 2026, compared to the same period in 2025, for the Company included Anchorage, Chicago, Fort Lauderdale, Las Vegas, Madison, Miami, Oklahoma City and Seattle. For the remainder of 2026, the Company expects RevPAR to be similar for its Comparable Hotels as compared to 2025, which is consistent with broader expectations for applicable industry chain scale averages assuming the current macroeconomic environment continues. Future revenues could be negatively impacted by, among other things, historical seasonal trends, deterioration of consumer sentiment, a recessionary macroeconomic environment, inflationary pressures, a continuation of reduced government travel or continued geopolitical uncertainty.
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 three months ended March 31, 2026 and 2025, hotel operating expense totaled $206.9 million and $199.9 million, respectively, or 61.3% and 61.0% of total revenue for the respective periods. The increase in hotel operating expense for the three months ended March 31, 2026, as compared to the same period in 2025, was primarily driven by higher occupancy levels, which resulted in increased variable operating expenses, including labor, utilities and administrative costs. While these costs naturally increase with improved operating performance, such expenses have been well controlled by the Company relative to the additional occupancy-driven activity. Additionally, ongoing inflationary pressures across the broader economy contributed to the increase in operational costs for the period. While payroll costs remain elevated due to a competitive labor market, wage growth has moderated, and management companies have continued to reduce their use of contract labor. For the remainder of 2026, the Company anticipates a similar operating expense environment. The Company continues to monitor its management companies’ efforts to realize operational efficiencies and mitigate the impact of cost pressures resulting from inflation and a tight labor market. The Company will continue to support its management companies to implement adjustments to the hotel operating model in response to continued changes in the operating environment and guest preferences, including their efforts to maximize operational efficiency.
Property Taxes, Insurance and Other Expense
Property taxes, insurance and other expense for the three months ended March 31, 2026 and 2025 totaled $22.5 million and $23.4 million, respectively, or 6.6% and 7.1% of total revenue for the respective periods. The decrease in property taxes, insurance and other expense for the three months ended March 31, 2026, as compared to the same period in 2025, was primarily due to decreases in property insurance premiums and successful appeals of real estate tax assessments from prior periods in certain jurisdictions. The Company will continue to proactively pursue tax assessment appeals in certain jurisdictions in an attempt to minimize tax increases, as warranted.
General and Administrative Expense
General and administrative expense for the three months ended March 31, 2026 and 2025 was $10.8 million and $9.2 million, respectively, or 3.2% and 2.8% of total revenue for the respective periods. 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 increase in general and administrative expense for the three months ended March 31, 2026, as compared to the same period in 2025, was primarily due to increased accruals for anticipated performance under the Company’s executive incentive compensation plan.
22
Depreciation and Amortization Expense
Depreciation and amortization expense for the three months ended March 31, 2026 and 2025 was $49.5 million and $47.9 million, respectively. Depreciation and amortization expense primarily represents expense of the Company’s hotel buildings and related improvements, and associated personal property (furniture, fixtures, and equipment) for the respective periods owned. For the three months ended March 31, 2026, depreciation and amortization expense slightly increased by approximately $1.6 million as compared to the same period in 2025, primarily due to the acquisitions of two hotels in the second and fourth quarters of 2025, which had higher purchase prices compared to the carrying values of the seven hotels disposed of in 2025, as well as renovations completed throughout 2025 and the first quarter of 2026.
Interest and Other Expense, net
Interest and other expense, net, for the three months ended March 31, 2026 and 2025 was $20.1 million and $19.4 million, respectively. Interest and other expense, net, for the three months ended March 31, 2026 and 2025 is net of approximately $0.8 million, in each respective period, of interest capitalized associated with renovation projects.
Interest expense related to the Company’s debt instruments for the three months ended March 31, 2026 increased slightly compared to the same period of 2025 as a result of higher average borrowings associated with variable-rate debt, partially offset by lower average interest rates on the Company's fixed and variable-rate debt and lower average borrowings associated with fixed-rate debt. The Company anticipates interest expense for the remainder of 2026 will be relatively similar to the interest expense for the same period of 2025 as a result of increased borrowings being offset by lower average interest rates. The proportion of variable-rate debt that is fixed by interest rate swaps was lower over the three months ended March 31, 2026 compared to the same period of 2025, as the Company had three interest rate swaps in effect on $150.0 million of variable-rate debt mature during 2025. However, this was partially offset as the Company entered into two new interest rate swaps in effect on $100.0 million of variable-rate debt during the third quarter of 2025, but at higher fixed rates than the swap agreements that expired. If the Company continues to replace expiring interest rate swaps in the current interest rate environment with new agreements, the Company anticipates those new agreements to be at higher rates than the expiring swap agreements.
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. These non-GAAP financial measures should be considered along with, but not as alternatives to, net income (loss), cash flow from operations or any other operating GAAP measure. FFO, MFFO, EBITDA, EBITDAre, Adjusted EBITDAre and Adjusted Hotel EBITDA are not necessarily indicative of funds available to fund the Company’s cash needs, including its ability to make cash distributions. Although FFO, MFFO, EBITDA, EBITDAre, Adjusted EBITDAre and Adjusted Hotel EBITDA, as calculated by the Company, may not be comparable to FFO, MFFO, EBITDA, EBITDAre, Adjusted EBITDAre and Adjusted Hotel 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.
FFO and MFFO
The Company calculates and presents FFO in accordance with standards established by the National Association of Real Estate Investment Trusts (“Nareit”), which defines FFO as net income (loss) (computed in accordance with GAAP), excluding gains and losses from the sale of certain real estate assets (including gains and losses from change in control), extraordinary items as defined by GAAP, and the cumulative effect of changes in accounting principles, plus real estate related depreciation, amortization and impairments, and adjustments for unconsolidated affiliates. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, most real estate industry investors consider FFO to be helpful in evaluating a real estate company’s operations. The Company further believes that by excluding the effects of these items, FFO is useful to investors in comparing its operating performance between periods and between REITs that report FFO using the Nareit definition. FFO as presented by the Company is applicable only to its common shareholders, but does not represent an amount that accrues directly to common shareholders.
The Company calculates MFFO by further adjusting FFO for the exclusion of amortization of finance ground lease assets, amortization of favorable and unfavorable operating leases, net, non-cash straight-line operating ground lease expense and share-based compensation expense, as these expenses do not reflect the underlying performance of the related hotels. 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. In addition, MFFO is a component of a key compensation measure of operational performance within the 2026 Incentive Plan.
23
The following table reconciles the Company’s GAAP net income to FFO and MFFO for the three months ended March 31, 2026 and 2025 (in thousands):
Three Months Ended March 31,
2026
2025
Net income
$
27,699
$
31,221
Depreciation of real estate owned
48,778
47,181
Gain on sale of real estate
-
(3,557
)
Funds from operations
76,477
74,845
Amortization of finance ground lease assets
759
759
Amortization of favorable and unfavorable operating leases, net
Effective January 1, 2026, in calculating MFFO, the Company began to exclude share-based compensation expense, as it represents a non-cash transaction, consistent with the MFFO presentation of the majority of other public lodging REITs. Prior year results have been updated to conform with the current year presentation.
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. 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 agreements governing the Company’s indebtedness use EBITDA, as defined in the specific credit agreement, as a measure of financial compliance.
In addition to EBITDA, the Company also calculates and presents EBITDAre in accordance with standards established by Nareit, which defines EBITDAre as EBITDA, excluding gains and losses from the sale of certain real estate assets (including gains and losses from change in control), plus real estate related impairments, and adjustments to reflect the entity’s share of EBITDAre of unconsolidated affiliates. The Company presents EBITDAre because it believes that it provides further useful information to investors in comparing its operating performance between periods and between REITs that report EBITDAre using the Nareit definition.
The Company also considers the exclusion of non-cash straight-line operating ground lease expense and share-based compensation expense from EBITDAre useful, as these expenses do not reflect the underlying performance of the related hotels (Adjusted EBITDAre).
The Company further excludes corporate expense, defined as actual corporate-level general and administrative expense, excluding share-based compensation expense, for the Company as well as Adjusted EBITDAre from the non-hotel property (the New York 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 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. In addition, Adjusted EBITDAre and Adjusted Hotel EBITDA are both components of key compensation measures of operational performance within the 2026 Incentive Plan.
24
The following table reconciles the Company’s GAAP net income to EBITDA, EBITDAre, Adjusted EBITDAre and Adjusted Hotel EBITDA for the three months ended March 31, 2026 and 2025 (in thousands):
Three Months Ended March 31,
2026
2025
Net income
$
27,699
$
31,221
Depreciation and amortization
49,537
47,941
Amortization of favorable and unfavorable operating leases, net
Effective January 1, 2026, in calculating Adjusted EBITDAre, the Company began to exclude share-based compensation expense, as it represents a non-cash transaction and the add back to net income is consistent with the calculation of Adjusted EBITDA for the Company’s financial covenant ratios under its credit facilities and consistent with the presentation of Adjusted EBITDA for the majority of other public lodging REITs. Prior year results have been updated to conform with the current year presentation.
(2)
Non-hotel property consists of the results of the New York Property that was leased to a third-party hotel operator before possession was recovered and operations reinstated through a third-party manager on April 4, 2025. This property’s Adjusted EBITDAre results are not included in Adjusted Hotel EBITDA beginning with the second half of 2023 through the first quarter of 2025.
Hotels Owned
As of March 31, 2026, the Company owned 217 hotels with an aggregate of 29,583 guest rooms located in 37 states and the District of Columbia, including one hotel with 124 guest rooms classified as held for sale which was sold in April 2026. The following tables summarize the number of hotels and guest rooms by brand and by state:
Number of Hotels and Guest Rooms by Brand
Number of
Number of
Brand
Hotels
Guest Rooms
Hilton Garden Inn
39
5,476
Courtyard
34
4,892
Hampton
34
4,642
Residence Inn
30
3,695
Homewood Suites
27
3,163
Fairfield
10
1,213
Home2 Suites
10
1,146
SpringHill Suites
8
1,333
TownePlace Suites
8
834
Embassy Suites
4
770
AC Hotels
4
702
Hyatt Place
3
411
Hyatt House
2
264
Marriott
1
413
Motto
1
260
Independent
1
212
Aloft Hotels
1
157
Total
217
29,583
25
Number of Hotels and Guest Rooms by State
Number of
Number of
State
Hotels
Guest Rooms
Alabama
13
1,246
Alaska
2
304
Arizona
13
1,776
California
24
3,553
Colorado
4
567
Florida
23
2,970
Georgia
5
585
Idaho
1
186
Illinois
7
1,255
Indiana
3
349
Iowa
1
103
Kansas
2
230
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
300
New Jersey
5
629
New York
4
558
North Carolina
7
799
Ohio
3
406
Oklahoma
4
545
Oregon
1
243
Pennsylvania
4
525
South Carolina
5
590
Tennessee
10
1,424
Texas
25
3,005
Utah
6
919
Virginia
11
1,667
Washington
4
636
Wisconsin
2
438
Washington, D.C.
1
234
Total
217
29,583
26
The following table summarizes the location, brand, manager, date acquired or completed and number of guest rooms for each of the 217 hotels that the Company owned as of March 31, 2026. As noted below, as of March 31, 2026, 14 of the Company’s properties are subject to ground leases and 10 of its hotels are encumbered by mortgage debt.
City
State
Brand
Manager
Date Acquired or Completed
Guest 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
(1)
Prattville
AL
Courtyard
LBA
3/1/2014
84
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
(1)
Phoenix
AZ
Hampton
North Central
5/2/2018
210
Phoenix
AZ
Homewood Suites
North Central
9/1/2016
134
(1)
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
(1)
Tempe
AZ
Hyatt Place
Crestline
8/13/2020
154
(1)
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
(2)
Burbank
CA
Residence Inn
Huntington
3/1/2014
166
Burbank
CA
SpringHill Suites
Huntington
7/13/2015
170
(2)
Cypress
CA
Courtyard
Dimension
3/1/2014
180
Cypress
CA
Hampton
Dimension
6/29/2015
110
Oceanside
CA
Courtyard
Huntington
9/1/2016
142
Oceanside
CA
Residence Inn
Huntington
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
(2)
San Diego
CA
Hampton
Dimension
3/1/2014
177
(2)
San Diego
CA
Hilton Garden Inn
InnVentures
3/1/2014
200
San Diego
CA
Residence Inn
Dimension
3/1/2014
122
San Jose
CA
Homewood Suites
Dimension
3/1/2014
140
(2)
San Juan Capistrano
CA
Residence Inn
Dimension
9/1/2016
130
(1)
Santa Ana
CA
Courtyard
Dimension
5/23/2011
155
(2)
27
City
State
Brand
Manager
Date Acquired or Completed
Guest Rooms
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
Huntington
9/1/2016
145
Tustin
CA
Residence Inn
Huntington
9/1/2016
149
Colorado Springs
CO
Hampton
Chartwell
9/1/2016
101
Denver
CO
Hilton Garden Inn
InnVentures
9/1/2016
221
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
(1)
Miami
FL
Hampton
HHM
4/9/2010
121
Miami
FL
Homewood Suites
Dimension
3/1/2014
162
Orlando
FL
Fairfield
Crestline
7/1/2009
200
Orlando
FL
Home2 Suites
LBA
3/19/2019
128
Orlando
FL
SpringHill Suites
Crestline
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
(1)
Tampa
FL
Embassy Suites
HHM
11/2/2010
147
Tampa
FL
Homewood Suites
HHM
6/10/2025
126
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
(1)
Savannah
GA
Hilton Garden Inn
Newport
3/1/2014
105
(1)
Davenport
IA
Hampton
Chartwell
9/1/2016
103
Boise
ID
Hampton
Raymond
4/30/2010
186
(2)
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
Merrillville
IN
Hilton Garden Inn
HHM
9/1/2016
124
28
City
State
Brand
Manager
Date Acquired or Completed
Guest Rooms
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
Louisville
KY
AC Hotels
Concord
10/25/2022
156
Lafayette
LA
Hilton Garden Inn
LBA
7/30/2010
153
(1)
Lafayette
LA
SpringHill Suites
LBA
6/23/2011
103
New Orleans
LA
Homewood Suites
Dimension
3/1/2014
166
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
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 Hotels
Crestline
9/10/2021
157
Portland
ME
Residence Inn
Crestline
10/13/2017
179
(2)
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
(3)
St. Paul
MN
Hampton
Raymond
3/4/2019
160
Kansas City
MO
Hampton
Raymond
8/31/2010
122
Kansas City
MO
Residence Inn
Raymond
3/1/2014
106
St. Louis
MO
Hampton
Raymond
8/31/2010
190
St. Louis
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
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
HHM
3/1/2014
181
Omaha
NE
Hampton
HHM
9/1/2016
139
Omaha
NE
Hilton Garden Inn
HHM
9/1/2016
178
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
(1)
West Orange
NJ
Courtyard
Newport
1/11/2011
131
Las Vegas
NV
SpringHill Suites
Highgate
12/27/2023
300
Islip/Ronkonkoma
NY
Hilton Garden Inn
Crestline
3/1/2014
166
New York
NY
Independent
Highgate
3/1/2014
212
(1)
Syracuse
NY
Courtyard
Crestline
10/16/2015
102
Syracuse
NY
Residence Inn
Crestline
10/16/2015
78
Cleveland
OH
Courtyard
Concord
6/30/2023
154
29
City
State
Brand
Manager
Date Acquired or Completed
Guest Rooms
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
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
Memphis
TN
Hampton
Crestline
2/5/2018
144
Memphis
TN
Hilton Garden Inn
Crestline
10/28/2021
150
Nashville
TN
Motto
Chartwell
12/19/2025
260
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
Western
3/1/2014
159
Arlington
TX
Hampton
Western
12/1/2010
98
Austin
TX
Courtyard
Dimension
11/2/2010
145
Austin
TX
Fairfield
Dimension
11/2/2010
150
Austin
TX
Hampton
Dimension
4/14/2009
124
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
Residence Inn
Western
3/1/2014
129
Houston
TX
Residence Inn
Western
9/1/2016
120
Lewisville
TX
Hilton Garden Inn
Western
10/16/2008
165
San Antonio
TX
TownePlace Suites
Western
3/1/2014
106
30
City
State
Brand
Manager
Date Acquired or Completed
Guest Rooms
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
North Central
3/1/2014
114
Salt Lake City
UT
Courtyard
North Central
10/11/2023
175
Salt Lake City
UT
Hyatt House
North Central
10/11/2023
159
Salt Lake City
UT
Residence Inn
North Central
10/20/2017
136
Salt Lake City
UT
SpringHill Suites
North Central
11/2/2010
143
South Jordan
UT
Embassy Suites
HHM
11/21/2023
192
Alexandria
VA
Courtyard
HHM
3/1/2014
178
Alexandria
VA
SpringHill Suites
HHM
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
(2)
Richmond
VA
Marriott
White Lodging
3/1/2014
413
(1)
Richmond
VA
Residence Inn
White Lodging
12/8/2014
75
(2)
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
Madison
WI
Embassy Suites
Raymond
6/20/2024
262
Washington, D.C.
-
AC Hotels
HHM
3/25/2024
234
Total
29,583
(1)
Property is subject to a ground lease.
(2)
Hotel is encumbered by a mortgage.
(3)
Hotel is classified as held for sale as of March 31, 2026, and was sold in April 2026.
Related Parties
The Company has engaged in, and is expected to continue to engage in, transactions with related parties. These transactions cannot be construed as being 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. See Note 6 titled “Related Parties” in the Company’s Unaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q, for additional information concerning the Company’s related party transactions.
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. 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. Macroeconomic pressures, including inflation, increases in interest rates and general market uncertainty, could impact the Company’s ability to raise debt or equity capital to fund long-term liquidity requirements in a cost-effective manner.
31
As of March 31, 2026, the Company had $1.6 billion of total outstanding debt consisting of $182.7 million of mortgage debt and $1.4 billion outstanding under its unsecured credit facilities, excluding unamortized debt issuance costs. As of March 31, 2026, the Company had available corporate cash on hand of approximately $7.8 million, and unused borrowing capacity under its Revolving Credit Facility of approximately $558.8 million after taking into account a $2.1 million letter of credit.
The credit agreements governing the unsecured credit facilities contain customary affirmative and negative covenants and events of default. The covenants 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 March 31, 2026.
See Note 4, titled “Debt” in the Company’s Unaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q, for details regarding the Company’s debt agreements as of March 31, 2026.
The Company has a universal shelf registration statement on Form S-3 (No. 333-285184) that was automatically effective upon filing on February 25, 2025. 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.
On February 23, 2024, the Company entered into an equity distribution agreement pursuant to which the Company may sell, from time to time, up to an aggregate of $500 million of its common shares under the ATM Program. No common shares were sold under the Company’s ATM Program during the three months ended March 31, 2026 or during the year ended December 31, 2025. As of March 31, 2026, $500 million remained available for issuance under the ATM Program. The Company plans to use future net proceeds from the sale of shares under the ATM Program, or a similar successor 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 may also use the future 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.
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.
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. On March 19, 2026, the Company declared a monthly cash distribution of $0.08 per common share, paid on April 15, 2026, to shareholders of record as of March 31, 2026. For the three months ended March 31, 2026, the Company paid distributions of $0.24 per common share for a total of $56.6 million. Subsequent to quarter end, on April 20, 2026, the Company declared a monthly cash distribution of $0.08 per common share, payable on May 15, 2026, to shareholders of record as of April 30, 2026.
The Company’s current annual distribution rate, payable monthly, is $0.96 per common share. 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. While management currently expects monthly cash distributions to continue at $0.08 per common share, any distribution will be subject to approval of the Company’s Board of Directors, and there can be no assurance of the classification, timing or duration of distributions at any particular distribution rate. The Board of Directors monitors the Company’s distribution rate relative to the performance of its hotels on an ongoing basis and may make adjustments to the distribution rate as determined to be prudent in relation to other cash requirements of the Company or to the extent required to maintain the Company’s REIT status. 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. Although the Company has relatively low levels of debt, there can be no assurance it will be successful with this strategy, and it may need to reduce its distributions to minimum levels required to maintain its qualification as a REIT. 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.
32
Share Repurchases
In May 2025, 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 $262.6 million. The Share Repurchase Program may be suspended or terminated at any time by the Company and will end in July 2026 if not terminated or extended earlier. The Company previously entered into, and expects to continue to enter into, written trading plans as part of the Share Repurchase Program that provide for share repurchases in open market transactions that are intended to comply with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Company did not repurchase any common shares during the three months ended March 31, 2026. During the three months ended March 31, 2025, the Company purchased, under its Share Repurchase Program, approximately 1.9 million of its common shares at a weighted-average market purchase price of approximately $13.61 per common share for an aggregate purchase price, including commissions, of approximately $26.3 million. Purchases under the Share Repurchase Program have been funded, and the Company intends to fund future share repurchases, with cash on hand, proceeds from dispositions or availability under its unsecured credit facilities, subject to applicable restrictions under the Company’s unsecured credit facilities (if any). The timing of share repurchases and the number of common shares to be purchased under the Share Repurchase Program will also depend upon prevailing market conditions, regulatory requirements and other factors. As of March 31, 2026, approximately $242.5 million remained available for purchase under the Share Repurchase Program.
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 Company has invested in and plans to continue to reinvest in its hotels. Under certain loan agreements, the Company is required to place in escrow funds for the repair, replacement and refurbishment of furniture, fixtures, and equipment at the applicable hotels, based on a percentage of the hotel’s gross revenues, provided that such amount may be used for the Company’s capital expenditures with respect to those hotels. As of March 31, 2026, the Company held approximately $8.8 million in reserves related to these properties. During the three months ended March 31, 2026, the Company invested approximately $27.5 million in capital expenditures. The Company anticipates spending approximately $80 million to $90 million during 2026, which includes various comprehensive renovation projects for approximately 21 properties, however, inflationary pressures, supply chain shortages or tariffs, among other issues, may result in increased costs and delays for anticipated projects.
During the third quarter of 2025, the Company entered into a fixed-price contract to develop a dual-branded property which will include an AC Hotel and a Residence Inn in Las Vegas, Nevada on land the Company owns that is adjacent to its SpringHill Suites. The Company expects to spend a total of approximately $143.7 million to develop the hotels, which are currently planned to be completed and opened for business in the second quarter of 2028.
Upcoming Debt Maturities and Debt Service Payments
As of March 31, 2026, the Company had approximately $359.7 million of principal and interest payments due on its debt over the next 12 months. Included in this total is a $19.5 million mortgage that matures in the second quarter of 2026, a $51.0 million mortgage covering three properties that matures in the fourth quarter of 2026, an $89.1 million Revolving Credit Facility balance at March 31, 2026, and a $130.0 million unsecured term loan, both of which mature in the third quarter of 2026. The Company plans to pay outstanding amounts and service payments due upon the upcoming debt maturity dates using one or a combination of any of the following: funds from operations, borrowings under its Revolving Credit Facility, proceeds from new financing, available credit extensions under its unsecured credit facilities or by refinancing the maturing debt. The Company may also pursue amendments with its lenders to extend the maturity date of any expiring loans. Both the $130 million term loan facility and the Revolving Credit Facility mature on July 25, 2026, but they can be extended up to one year, subject to certain conditions including covenant compliance and payment of additional fees. The Company presently has the ability to exercise both of these extensions; however, it plans to pursue refinancing of the maturing debt.
Interest expense related to the Company’s unsecured credit facilities over the next 12 months is expected to be similar to the previous 12 months, with similar borrowings and slightly lower average interest rates. The average proportion of variable-rate debt that is fixed by interest rate swaps is expected to be lower over the next 12 months compared to the three months ended March 31, 2026. The Company has two interest rate swaps in effect on $200.0 million of variable-rate debt that will mature in 2026. If the Company replaces expiring interest rate swaps in the current interest rate environment with new agreements, the Company anticipates those new agreements to generally be at higher rates than the expiring swap agreements. See Note 4 titled “Debt” and Note 5 titled “Fair Value of Financial Instruments” in the Company’s Unaudited Consolidated Financial Statements and Notes thereto, appearing
33
elsewhere in this Quarterly Report on Form 10-Q for more detail regarding future maturities of the Company’s debt instruments and interest rate swap agreements as of March 31, 2026.
Purchase Contract Commitments
As of March 31, 2026, the Company had one outstanding contract, which was entered into during the third quarter of 2025, for the potential purchase of a hotel in Anchorage, Alaska for an expected fixed purchase price of approximately $65.5 million. The hotel is under development as a 160-guest-room AC Hotel and is currently planned to be completed and opened for business in the fourth quarter of 2027. As of March 31, 2026, a $2.0 million contract deposit (refundable if the seller does not meet its obligations under the contract) had been paid. If the closing occurs, the Company plans to utilize its available cash or borrowings, including borrowings under its unsecured credit facilities available at closing, to purchase the hotel under contract. 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. If the seller meets all of the conditions to closing, the Company is obligated to specifically perform under the purchase contract and acquire this hotel. As this hotel is under development, at this time, the seller has not met all of the conditions to closing.
As mentioned in the “Capital Improvements” section above, during the third quarter of 2025, the Company entered into a fixed-price contract with a third party to develop a dual-branded property, consisting of an AC Hotel and a Residence Inn, on Company-owned land in Las Vegas, Nevada, adjacent to its existing SpringHill Suites. See Note 10 titled “Contract Commitments” in the Company’s Unaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q for more detail regarding this development project.
Cash Management Activities
As part of the cost sharing arrangements discussed in Note 6, titled “Related Parties” in the Company’s Unaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q, certain day-to-day transactions may result in amounts due to or from the Company and ARG. To efficiently manage cash disbursements, the Company or ARG may make payments for the other company. Under the cash management process, each company may advance or defer up to $1 million at any time. Each quarter, any outstanding amounts are settled between the companies. 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.
Impact of Inflation
The Company relies on the performance of its hotels and the ability of its hotel operators to increase revenue to keep pace with inflation. Hotel operators, in general, possess the ability to adjust room rates daily to reflect the effects of inflation on the Company’s operating expenses. However, competitive pressures and other factors could limit the operators’ ability to raise room rates and, as a result, the Company may not be able to offset such increased operating expenses with increases in revenue. Additionally, tariff-induced inflation could increase certain operating and renovation costs, as some supplies, furniture, fixtures and equipment and construction materials are imported, as well as negatively impact leisure travel by reducing the discretionary income of consumers.
Business Interruption
Being in the real estate industry, the Company is exposed to natural disasters on both a local and regional 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.
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. To the extent that cash flow from operations is insufficient during any quarter due to temporary or seasonal fluctuations in revenue, the Company expects to utilize cash on hand or available financing sources to meet cash requirements.
Critical Accounting Policies and Estimates
The preparation of the Company’s financial statements in accordance with U.S. GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the Company’s financial statements, the reported amounts of revenues and expenses during the reporting periods and the related disclosures in the Company’s Unaudited Consolidated Financial Statements and Notes thereto. The Company has discussed those policies and estimates that it believes are critical and require the use of complex judgment in their application in the Company’s Annual Report on Form 10-K for the year
34
ended December 31, 2025, filed with the Securities and Exchange Commission on February 23, 2026. There have been no material changes to the Company’s critical accounting policies or the methods or assumptions applied.
Subsequent Events
On April 15, 2026, the Company paid approximately $18.9 million, or $0.08 per common share, in distributions to shareholders of record as of March 31, 2026.
On April 15, 2026, the Company completed the sale of its 124-room Hampton located in Rochester, Minnesota, for a gross sales price of approximately $8.7 million.
On April 20, 2026, the Company declared a monthly cash distribution of $0.08 per common share. The distribution is payable on May 15, 2026, to shareholders of record as of April 30, 2026.
35
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As of March 31, 2026, 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. However, the Company is exposed to interest rate risk due to possible changes in short-term interest rates as it invests its cash or borrows on its Revolving Credit Facility and due to the portion of its variable-rate debt that is not fixed by interest rate swaps. As of March 31, 2026, after giving effect to interest rate swaps, as described below, approximately $579.1 million, or approximately 37% of the Company’s total debt outstanding, was subject to variable interest rates. Based on the Company’s variable-rate debt outstanding as of March 31, 2026, every 100 basis point change in interest rates will impact the Company’s annual net income by approximately $5.8 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 March 31, 2026, the Company’s variable-rate debt consisted of its unsecured credit facilities, including $89.1 million in borrowings outstanding under its Revolving Credit Facility and $1.2 billion 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 March 31, 2026, the Company had 11 interest rate swap agreements that effectively fix the interest payments on approximately $685.0 million of the Company’s variable-rate debt outstanding with swap maturity dates ranging from May 2026 to December 2029. Under the terms of the Company’s interest rate swaps, the Company pays a fixed rate of interest and receives a floating rate of interest equal to the annual rate of the one-month SOFR. See Note 5 titled “Fair Value of Financial Instruments” in the Company’s Unaudited Consolidated Financial Statements and Notes thereto, appearing elsewhere in this Quarterly Report on Form 10-Q, for a description of the Company’s interest rate swaps as of March 31, 2026.
In addition to its variable-rate debt and interest rate swaps discussed above, the Company has assumed or originated fixed interest rate mortgages payable to lenders under permanent financing arrangements as well as two fixed-rate senior notes facilities totaling $125 million. 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 March 31, 2026. All dollar amounts are in thousands.
April 1 - December 31, 2026
2027
2028
2029
2030
Thereafter
Total
Fair Market Value
Total debt:
Maturities
$
292,147
$
278,602
$
334,066
$
162,294
$
460,016
$
44,638
$
1,571,763
$
1,552,811
Average interest rates (1)
4.7
%
4.7
%
4.6
%
4.6
%
4.6
%
3.7
%
Variable-rate debt:
Maturities
$
219,100
$
275,000
$
300,000
$
85,000
$
385,000
$
-
$
1,264,100
$
1,265,253
Average interest rates (1)
4.8
%
4.8
%
4.8
%
4.9
%
5.0
%
n/a
Fixed-rate debt:
Maturities
$
73,047
$
3,602
$
34,066
$
77,294
$
75,016
$
44,638
$
307,663
$
287,558
Average interest rates
4.0
%
4.1
%
4.1
%
3.9
%
3.6
%
3.7
%
(1)
The average interest rate gives effect to interest rate swaps, as applicable.
Item 4. Controls and Procedures
The Company’s senior management evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based on this evaluation process, the Company’s senior management has concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2026. There have been no changes in the Company’s internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
36
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is or may be a party to various legal proceedings that arise in the ordinary course of business. The Company is not currently involved in any litigation nor, to management’s knowledge, is any litigation threatened against the Company where the outcome would, in management’s judgment based on information currently available to the Company, have a material adverse effect on the Company’s consolidated financial position or results of operations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
The following is a summary of all share repurchases during the first quarter of 2026.
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)
January 1 - January 31, 2026
-
-
-
$
242,507
February 1 - February 28, 2026
-
-
-
$
242,507
March 1 - March 31, 2026 (2)
133,475
$
12.10
-
$
242,507
Total
133,475
-
(1)
Represents amount outstanding under the Company’s authorized $262.6 million Share Repurchase Program. This program, which was announced in 2015 and most recently extended in May 2025, may be suspended or terminated at any time by the Company and will end in July 2026 if not terminated or extended earlier.
(2)
Includes common shares surrendered to the Company to satisfy tax withholding obligations associated with the issuance of common shares awarded to employees.
Item 5. Other Information.
Trading Arrangements
No director or officer of the Company adopted,terminated or modifieda “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K, during the three months ended March 31, 2026.
The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2026 formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations and Comprehensive Income, (iii) the Consolidated Statements of Shareholders’ Equity, (iv) the Consolidated Statements of Cash Flows, and (v) related notes to these financial statements, tagged as blocks of text and in detail (FILED HEREWITH)
104
The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2026, formatted as Inline XBRL and contained in Exhibit 101
38
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.