UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2025


☐	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 July 28, 2025: 236,989,845

Index

Apple Hospitality REIT, Inc.

Form 10-Q

Index


			Page Number
PART I. FINANCIAL INFORMATION

	Item 1.	Financial Statements	3

		Consolidated Balance Sheets – June 30, 2025 and December 31, 2024	3

		Consolidated Statements of Operations and Comprehensive Income – three and six months ended June 30, 2025 and 2024	4

		Consolidated Statements of Shareholders’ Equity – three and six months ended June 30, 2025 and 2024	5

		Consolidated Statements of Cash Flows – six months ended June 30, 2025 and 2024	6

		Notes to Consolidated Financial Statements	7

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37

	Item 4.	Controls and Procedures	37

PART II. OTHER INFORMATION

	Item 1.	Legal Proceedings	38

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38

	Item 5.	Other Information	38

	Item 6.	Exhibits	39

Signatures			40

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)


	June 30,			December 31,
	2025			2024
	(unaudited)
Assets
Investment in real estate, net of accumulated depreciation and amortization of $1,897,281 and $1,821,344, respectively	$	4,764,731		$	4,820,748
Assets held for sale		11,196			17,015
Cash and cash equivalents		7,896			10,253
Restricted cash-furniture, fixtures and other escrows		33,927			33,814
Due from third-party managers, net		64,445			34,522
Other assets, net		46,897			53,568
Total Assets	$	4,929,092		$	4,969,920

Liabilities
Debt, net	$	1,525,866		$	1,471,452
Finance lease liabilities		111,376			111,585
Accounts payable and other liabilities		93,065			121,024
Total Liabilities		1,730,307			1,704,061

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 236,989,845 and 239,765,905 shares, respectively		4,735,003			4,771,005
Accumulated other comprehensive income		4,230			15,587
Accumulated distributions greater than net income		(1,540,448	)		(1,520,733	)
Total Shareholders’ Equity		3,198,785			3,265,859

Total Liabilities and Shareholders’ Equity	$	4,929,092		$	4,969,920

See notes to consolidated financial statements.

Apple Hospitality REIT, Inc.

Consolidated Statements of Operations and Comprehensive Income

(Unaudited)

(in thousands, except per share data)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2025			2024			2025			2024
Revenues:
Room	$	348,589		$	353,689		$	645,453		$	652,435
Food and beverage		18,174			17,857			33,685			32,919
Other		17,607			18,531			32,934			34,235
Total revenue		384,370			390,077			712,072			719,589

Expenses:
Hotel operating expense:
Operating		94,143			91,523			178,653			175,319
Hotel administrative		32,641			31,453			62,314			61,205
Sales and marketing		33,600			33,649			63,886			63,488
Utilities		11,844			11,665			24,323			23,184
Repair and maintenance		18,306			17,626			35,448			34,468
Franchise fees		17,075			17,527			31,628			32,281
Management fees		12,955			12,848			24,182			23,610
Total hotel operating expense		220,564			216,291			420,434			413,555
Property taxes, insurance and other		22,869			21,940			46,230			42,932
General and administrative		8,064			11,065			17,292			21,649
Depreciation and amortization		48,022			47,715			95,963			94,538
Total expense		299,519			297,011			579,919			572,674

Gain on sale of real estate		-			449			3,557			18,215

Operating income		84,851			93,515			135,710			165,130

Interest and other expense, net		(20,963	)		(19,370	)		(40,360	)		(36,679	)

Income before income taxes		63,888			74,145			95,350			128,451

Income tax expense		(240	)		(214	)		(481	)		(470	)

Net income	$	63,648		$	73,931		$	94,869		$	127,981

Other comprehensive income (loss):
Interest rate derivatives		(4,323	)		(2,732	)		(11,357	)		976

Comprehensive income	$	59,325		$	71,199		$	83,512		$	128,957

Basic and diluted net income per common share	$	0.27		$	0.31		$	0.40		$	0.53

Weighted average common shares outstanding - basic and diluted		237,659			242,174			238,856			242,291

See notes to consolidated financial statements.

Apple Hospitality REIT, Inc.

Consolidated Statements of Shareholders' Equity

(Unaudited)

(in thousands, except per share data)


Three Months Ended June 30, 2025 and 2024
	Common Stock						Accumulated Other			Accumulated Distributions
	Number of Shares			Amount			Comprehensive Income (Loss)			Greater Than Net Income			Total

Balance at March 31, 2025		238,408		$	4,751,358		$	8,553		$	(1,547,091	)	$	3,212,820
Share-based compensation, net of common shares surrendered to satisfy employee tax withholding requirements		14			662			-			-			662
Equity issuance costs		-			(133	)		-			-			(133	)
Common shares repurchased		(1,432	)		(16,884	)		-			-			(16,884	)
Interest rate derivatives		-			-			(4,323	)		-			(4,323	)
Net income		-			-			-			63,648			63,648
Distributions declared to shareholders ($0.24 per share)		-			-			-			(57,005	)		(57,005	)
Balance at June 30, 2025		236,990		$	4,735,003		$	4,230		$	(1,540,448	)	$	3,198,785

Balance at March 31, 2024		242,346		$	4,805,504		$	24,112		$	(1,495,314	)	$	3,334,302
Share-based compensation, net of common shares surrendered to satisfy employee tax withholding requirements		12			1,041			-			-			1,041
Equity issuance costs		-			(120	)		-			-			(120	)
Common shares repurchased		(1,078	)		(15,476	)		-			-			(15,476	)
Interest rate derivatives		-			-			(2,732	)		-			(2,732	)
Net income		-			-			-			73,931			73,931
Distributions declared to shareholders ($0.24 per share)		-			-			-			(57,976	)		(57,976	)
Balance at June 30, 2024		241,280		$	4,790,949		$	21,380		$	(1,479,359	)	$	3,332,970


Six Months Ended June 30, 2025 and 2024
	Common Stock						Accumulated Other			Accumulated Distributions
	Number of Shares			Amount			Comprehensive Income (Loss)			Greater Than Net Income			Total

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		587			7,593			-			-			7,593
Equity issuance costs		-			(405	)		-			-			(405	)
Common shares repurchased		(3,363	)		(43,190	)		-			-			(43,190	)
Interest rate derivatives		-			-			(11,357	)		-			(11,357	)
Net income		-			-			-			94,869			94,869
Distributions declared to shareholders ($0.48 per share)		-			-			-			(114,584	)		(114,584	)
Balance at June 30, 2025		236,990		$	4,735,003		$	4,230		$	(1,540,448	)	$	3,198,785

Balance at December 31, 2023		241,516		$	4,794,804		$	20,404		$	(1,491,227	)	$	3,323,981
Share-based compensation, net of common shares surrendered to satisfy employee tax withholding requirements		842			12,012			-			-			12,012
Equity issuance costs		-			(391	)		-			-			(391	)
Common shares repurchased		(1,078	)		(15,476	)		-			-			(15,476	)
Interest rate derivatives		-			-			976			-			976
Net income		-			-			-			127,981			127,981
Distributions declared to shareholders ($0.48 per share)		-			-			-			(116,113	)		(116,113	)
Balance at June 30, 2024		241,280		$	4,790,949		$	21,380		$	(1,479,359	)	$	3,332,970

See notes to consolidated financial statements.

Apple Hospitality REIT, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)


	Six Months Ended
	June 30,
	2025			2024
Cash flows from operating activities:
Net income	$	94,869		$	127,981
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		95,963			94,538
Gain on sale of real estate		(3,557	)		(18,215	)
Other non-cash expenses, net		3,390			4,230
Changes in operating assets and liabilities:
Increase in due from third-party managers, net		(29,935	)		(27,020	)
Increase in other assets, net		(3,483	)		(1,137	)
Increase in accounts payable and other liabilities		688			1,578
Net cash provided by operating activities		157,935			181,955

Cash flows from investing activities:
Acquisition of hotel properties, net		(18,856	)		(197,285	)
Disbursements for potential acquisitions, net		(35	)		-
Capital improvements		(41,572	)		(44,997	)
Net proceeds from sale of real estate		20,645			40,056
Net cash used in investing activities		(39,818	)		(202,226	)

Cash flows from financing activities:
Repurchases of common shares		(43,190	)		(15,476	)
Common shares surrendered to satisfy employee withholding requirements		(3,275	)		(5,050	)
Distributions paid to common shareholders		(126,657	)		(128,201	)
Equity issuance costs		(373	)		(332	)
Proceeds from revolving credit facility		173,000			322,900
Payments on revolving credit facility		(82,500	)		(153,900	)
Payments of mortgage debt and other loans		(37,052	)		(4,547	)
Principal payments on finance leases		(314	)		(222	)
Net cash (used in) provided by financing activities		(120,361	)		15,172

Net change in cash, cash equivalents and restricted cash		(2,244	)		(5,099	)

Cash, cash equivalents and restricted cash, beginning of period		44,067			43,618

Cash, cash equivalents and restricted cash, end of period	$	41,823		$	38,519

Supplemental cash flow information:
Interest paid	$	39,073		$	36,083
Income taxes paid	$	931		$	745

Supplemental disclosure of noncash investing and financing activities:
Accrued distribution to common shareholders	$	18,940		$	19,270
Accrued capital expenditures	$	4,360		$	3,404

Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents, beginning of period	$	10,253		$	10,287
Restricted cash-furniture, fixtures and other escrows, beginning of period		33,814			33,331
Cash, cash equivalents and restricted cash, beginning of period	$	44,067		$	43,618

Cash and cash equivalents, end of period	$	7,896		$	7,224
Restricted cash-furniture, fixtures and other escrows, end of period		33,927			31,295
Cash, cash equivalents and restricted cash, end of period	$	41,823		$	38,519

See notes to consolidated financial statements.

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 June 30, 2025, the Company owned 221 hotels with an aggregate of 29,893 guest rooms located in 37 states and the District of Columbia (“D.C.”), including one hotel with 206 guest rooms classified as held for sale, which is expected to be sold to an unrelated party in the third quarter of 2025. 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, 2024 (the “2024 Form 10-K”). Operating results for the three and six months ended June 30, 2025 are not necessarily indicative of the results that may be expected for the twelve-month period ending December 31, 2025.

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 November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires disclosure of significant segment expenses and other segment items on an annual and interim basis and disclosure in interim periods about a reportable segment’s profit or loss and assets that were previously only required annually. Additionally, it requires disclosure of the title and position of the Chief Operating Decision Maker (“CODM”) and requires a public entity that has a single reportable segment to provide all disclosures required by the amendments in this ASU and all existing segment disclosures in Topic 280. This ASU does not change how a public entity identifies its operating segments, aggregates them, or applies the quantitative thresholds to determine its reportable segments. The new standard was effective for fiscal years beginning after December 15, 2023; therefore, it was adopted by the Company within its 2024 Form 10-K. The new standard is effective for interim periods within fiscal years beginning after December 15, 2024. Early adoption was permitted. The adoption of this ASU only impacted disclosures in the notes to the Company’s consolidated financial statements but had no impact on the Company’s consolidated financial statements. See Note 9 for the Company’s interim segment disclosures in accordance with the adoption of this ASU.

Accounting Standards Recently Issued

In December 2023, the FASB issued 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 may be 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 may be applied retrospectively by providing the revised disclosures for all periods presented. As of June 30, 2025, the Company has not adopted this ASU. The adoption of this ASU is expected to only impact the notes to the Company’s consolidated financial statements by requiring additional disclosure but will have no impact on the Company’s consolidated financial statements.

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 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 June 30, 2025, 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):


	June 30,			December 31,
	2025			2024
Land	$	839,100		$	839,187
Building and improvements		5,076,672			5,064,866
Furniture, fixtures and equipment		617,664			610,062
Finance ground lease assets		102,084			102,084
Franchise fees		26,492			25,893
		6,662,012			6,642,092
Less accumulated depreciation and amortization		(1,897,281	)		(1,821,344	)
Investment in real estate, net	$	4,764,731		$	4,820,748

As of June 30, 2025, the Company owned 221 hotels with an aggregate of 29,893 guest rooms located in 37 states and the District of Columbia, including one hotel with 206 guest rooms classified as held for sale, which is expected to be sold to an unrelated party in the third quarter of 2025. Also included in the Company’s hotel and guest room counts as of June 30, 2025 is its independent boutique hotel in New York, New York (the “New York Property”). 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.

As of June 30, 2025, the Company leases all of its 221 hotels to its wholly-owned taxable REIT subsidiary (or a subsidiary thereof) under a master hotel lease agreement.

Acquisitions

The Company acquired one hotel during the six months ended June 30, 2025 for a gross purchase price of approximately $18.8 million. The hotel, which was purchased on June 10, 2025, is a Homewood Suites in Tampa, Florida with 126 guest rooms, managed by Hersha Hospitality Management (“HHM”). The Company utilized its available cash on hand and borrowings under its Revolving Credit Facility (as defined below) to purchase the Tampa, Florida hotel. For this hotel, the amount of revenue and operating income included in the Company’s consolidated statement of operations from the date of acquisition through June 30, 2025 was approximately $0.2 million and $0.1 million, respectively.

During the year ended December 31, 2024, the Company acquired two hotels, both acquired during the six months ended June 30, 2024. 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

Washington, D.C.

N/A

AC Hotels

HHM

3/25/2024

234

116,804

Madison

WI

Embassy Suites

Raymond

6/20/2024

262

79,516

496

196,320

During 2024, the Company utilized proceeds from the sale of hotels and borrowings under its Revolving Credit Facility to purchase the Washington, D.C. and Madison, Wisconsin 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

In March 2025, the Company entered into a purchase and sale agreement with an unrelated party for the sale of one of its hotels for a gross sales price of $16.0 million. Since the buyer under the contract made a non-refundable deposit, as of June 30, 2025, the Company classified the hotel as assets held for sale in its consolidated balance sheet at its carrying value (which is less than the contract price, net of costs to sell). The Company expects to complete the sale of the hotel in the third quarter of 2025.

Dispositions

During the six months ended June 30, 2025, the Company sold two hotels to two unrelated parties for a combined gross sales price of approximately $21.0 million, resulting in a combined gain on the sales of approximately $3.6 million, net of transaction costs, which is included in the Company’s consolidated statement of operations for the six months ended June 30, 2025. The two hotels had a total carrying value of approximately $17.0 million at their respective times of sale. The following table lists the two 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
					206

During the year ended December 31, 2024, the Company sold six hotels to five unrelated parties for a combined gross sales price of approximately $63.4 million, resulting in a combined gain on the sales of approximately $19.7 million, net of transaction costs, which was included in the Company’s consolidated statement of operations for the year ended December 31, 2024. The six hotels had a total carrying value of approximately $42.6 million at their respective times of sale. The following table lists the six hotels sold in 2024:


City	State	Brand	Date Sold	Guest Rooms
Rogers	AR	Hampton	2/9/2024		122
Rogers	AR	Homewood Suites	2/9/2024		126
Greensboro	NC	SpringHill Suites	5/21/2024		82
Wichita	KS	Courtyard	11/12/2024		90
Knoxville	TN	TownePlace Suites	12/3/2024		97
Austin	TX	Hilton Garden Inn	12/31/2024		117
					634

Excluding gains on sale of real estate, the Company’s consolidated statements of operations include operating income of approximately $0.5 million and $1.3 million for the six months ended June 30, 2025 and 2024, respectively, relating to the results of operations of the nine hotels noted above (the one hotel classified as held for sale at June 30, 2025, the two hotels sold in the first six months of 2025, and the six hotels sold in 2024) 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 and six months ended June 30, 2025 and 2024, as applicable. The net proceeds from the sale of the one hotel in February 2025 were used for share repurchases and other general corporate purposes, while a portion of the proceeds from the sale of the hotel in March 2025 was used to complete a like-kind exchange, in accordance with Section 1031 of the Internal Revenue Code of 1986, as amended (“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. A portion of the proceeds from the sale of the two hotels in February 2024 was used to complete a 1031 Exchange, for the acquisition of the AC Hotel in Washington, D.C. as discussed above in Note 2, which resulted in the deferral of taxable gains of $15.1 million. The net proceeds from the sale of the remaining four hotels in 2024 were used for share repurchases and other general corporate purposes.

4. Debt

Summary

As of June 30, 2025 and December 31, 2024, the Company’s debt consisted of the following (in thousands):


	June 30, 2025		December 31, 2024
Revolving credit facility	$	173,000	$	82,500
Term loans and senior notes, net		1,136,191		1,135,175
Mortgage debt, net		216,675		253,777
Debt, net	$	1,525,866	$	1,471,452

The aggregate amounts of principal payable under the Company’s total debt obligations as of June 30, 2025 (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):


2025 (July - December)	$	257,983
2026		377,649
2027		278,602
2028		334,066
2029		162,294
Thereafter		119,654
		1,530,248
Unamortized fair value adjustment of assumed debt		40
Unamortized debt issuance costs		(4,422	)
Total	$	1,525,866

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”) plus a 0.10% SOFR 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 June 30, 2025 and December 31, 2024, is set forth below. All dollar amounts are in thousands.


	June 30, 2025			Percentage			December 31, 2024			Percentage
Fixed-rate debt (1)	$	927,248			61	%	$	1,114,300			75	%
Variable-rate debt		603,000			39	%		362,500			25	%
Total	$	1,530,248					$	1,476,800
Weighted-average interest rate of debt		5.02	%					4.71	%

(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

$225 Million Term Loan Facility

Prior to the Company’s full repayment in July 2025 (as discussed below under the “2025 New Term Loan Facility”), the Company utilized an unsecured $225 million term loan facility that was comprised of (i) a $50 million term loan with an initial maturity date of August 2, 2023, which was funded on August 2, 2018, and (ii) a $175 million term loan with a maturity date of August 2, 2025, of which $100 million was funded on August 2, 2018, and the remaining $75 million was funded on January 29, 2019 (the term loans described in clauses (i) and (ii) are referred to together as the “$225 million term loan facility”). On July 19, 2023, the Company entered into an amendment of its $225 million term loan facility, which extended the maturity date of the $50 million term loan by two years to August 2, 2025. The Company was permitted to make voluntary prepayments, in whole or in part, at any time, subject to certain conditions. Interest payments on the $225 million term loan facility were due monthly and the interest rate, subject to certain exceptions, was equal to an annual rate of the one-month SOFR plus a 0.10% SOFR spread adjustment plus a margin ranging from 1.35% to 2.50%, depending upon the Company’s leverage ratio, as calculated under the terms of the credit agreement.

$130 Million Term Loan Facility

On July 17, 2024, the Company amended its existing $85 million term loan facility, that had a maturity date of July 25, 2024, which increased the amount of the term loan facility to $130 million, with the additional $45 million funded at closing (the “$130 million term loan facility”), and extended the maturity date to July 25, 2026. The interest rate under the $130 million term loan facility, subject to certain exceptions, has historically been equal to an annual rate of the one-month SOFR plus a 0.10% SOFR spread adjustment plus a margin ranging from 1.35% to 2.20%, depending on the Company's leverage ratio, as calculated under the terms of the amended credit agreement. Subject to certain conditions, including covenant compliance and additional fees, the maturity date of the $130 million term loan facility may be extended by the Company to July 25, 2027. The Company may make voluntary prepayments, in whole or in part, at any time, subject to certain conditions.

As of June 30, 2025 and December 31, 2024, 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		June 30, 2025			December 31, 2024
Revolving credit facility (1)	SOFR + 0.10% + 1.40% to 2.25%	7/25/2026		$	173,000		$	82,500

Term loans and senior notes
$275 million term loan	SOFR + 0.10% + 1.35% to 2.20%	7/25/2027			275,000			275,000
$300 million term loan	SOFR + 0.10% + 1.35% to 2.20%	1/31/2028			300,000			300,000
$50 million term loan	SOFR + 0.10% + 1.35% to 2.20%	8/2/2025	(3)		50,000			50,000
$175 million term loan	SOFR + 0.10% + 1.65% to 2.50%	8/2/2025	(3)		175,000			175,000
$130 million term loan	SOFR + 0.10% + 1.35% to 2.20%	7/25/2026			130,000			130,000
$85 million term loan	SOFR + 0.10% + 1.70% to 2.55%	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					1,140,000			1,140,000
Unamortized debt issuance costs					(3,809	)		(4,825	)
Term loans and senior notes, net					1,136,191			1,135,175

Credit facilities, net (1)				$	1,309,191		$	1,217,675
Weighted-average interest rate (2)					5.22	%		4.88	%

(1)

Excludes unamortized debt issuance costs related to the Revolving Credit Facility (as defined below) totaling approximately $1.4 million and $2.1 million as of June 30, 2025 and December 31, 2024, respectively, which are included in other assets, net in the Company’s consolidated balance sheets.

(2)

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 $585.0 million and $735.0 million of the outstanding variable-rate debt as of June 30, 2025 and December 31, 2024, respectively. See Note 5 for more information on the interest rate swap agreements. The one-month SOFR on June 30, 2025 and December 31, 2024 was 4.32% and 4.33%, respectively.

(3)

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 additional fees, the Revolving Credit Facility maturity date may be extended up to one year. As of June 30, 2025, the Company had availability of approximately $474.9 million under the Revolving Credit Facility. 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 term loans, subject to certain exceptions, is generally payable monthly, with interest rates typically equal to the one-month SOFR plus a 0.10% SOFR spread adjustment plus a margin (margin ranges shown in the table above), depending upon the Company’s leverage ratio, as calculated under the terms of each respective credit agreement. 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) depending 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 2024 Form 10-K for additional details. The Company was in compliance with the applicable covenants as of June 30, 2025.

2025 New Term Loan Facility

On July 24, 2025, the Company entered into a new term loan facility with a principal amount of $385 million and a maturity date of July 31, 2030 (the “$385 million term loan facility”). At closing, the Company repaid all amounts outstanding under the $225 million term loan facility with proceeds from the $385 million term loan facility, resulting in an additional $160 million funded at closing, which was used to repay a portion of the balance outstanding under the Revolving Credit Facility. The outstanding principal under the $385 million term loan facility bears interest at an annual variable rate equal to a term SOFR, depending on the interest period options elected by the Company, plus a margin ranging from 1.35% to 2.20%, based on the Company's leverage ratio as calculated under the terms of the credit agreement. Historically, the Company has elected to pay interest monthly at an annual rate equal to the one-month SOFR plus the applicable margin. The credit agreement for the $385 million term loan facility contains customary affirmative and negative covenants, restrictions on certain investments and customary events of default, which are the same terms as those under the previous credit agreement for the $225 million term loan facility. The Company may make voluntary prepayments, in whole or in part, at any time, subject to certain conditions.

Mortgage Debt

As of June 30, 2025, the Company had approximately $217.2 million in outstanding mortgage debt secured by 12 properties with maturity dates ranging from October 2025 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 fair value adjustments or debt issuance costs as of June 30, 2025 and December 31, 2024 for each of the Company’s mortgage debt obligations. All dollar amounts are in thousands.


Location	Brand	Interest Rate (1)			Loan Assumption or Origination Date	Maturity Date		Principal Assumed or Originated		Outstanding balance as of June 30, 2025			Outstanding balance as of December 31, 2024
Westford, MA	Residence Inn		4.28	%	3/18/2015		(2)		10,000		-			7,391
Denver, CO	Hilton Garden Inn		4.46	%	9/1/2016		(3)		34,118		-			26,229
Oceanside, CA	Courtyard		4.28	%	9/1/2016	10/1/2025	(4)		13,655		11,213			11,381
Omaha, NE	Hilton Garden Inn		4.28	%	9/1/2016	10/1/2025	(4)		22,681		18,625			18,904
Boise, ID	Hampton		4.37	%	5/26/2016	6/11/2026	(4)		24,000		19,880			20,156
Burbank, CA	Courtyard		3.55	%	11/3/2016	12/1/2026			25,564		19,272			19,698
San Diego, CA	Courtyard		3.55	%	11/3/2016	12/1/2026			25,473		19,203			19,628
San Diego, CA	Hampton		3.55	%	11/3/2016	12/1/2026			18,963		14,296			14,611
Burbank, CA	SpringHill Suites		3.94	%	3/9/2018	4/1/2028			28,470		22,946			23,385
Santa Ana, CA	Courtyard		3.94	%	3/9/2018	4/1/2028			15,530		12,516			12,756
Richmond, VA	Courtyard		3.40	%	2/12/2020	3/11/2030			14,950		13,343			13,509
Richmond, VA	Residence Inn		3.40	%	2/12/2020	3/11/2030			14,950		13,343			13,509
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		22,111			22,643
								$	311,854		217,248			254,300
Unamortized fair value adjustment of assumed debt											40			192
Unamortized debt issuance costs											(613	)		(715	)
Total										$	216,675		$	253,777

(1)

Interest rates are the rates per the loan agreement. For loans assumed, the Company adjusted the interest rates per the loan agreement to market rates and is amortizing the adjustments to interest expense over the life of the loan.

(2)

Loan was repaid in full on April 11, 2025.

(3)

Loan was repaid in full on June 11, 2025.

(4)

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.

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 June 30, 2025, both the carrying value and the estimated fair value of the Company’s debt were approximately $1.5 billion. As of December 31, 2024, the carrying value and estimated fair value of the Company’s debt were approximately $1.5 billion and $1.4 billion, respectively. 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 plus a 0.10% SOFR 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 June 30, 2025 and December 31, 2024. All dollar amounts are in thousands.


						Fair Value Asset (Liability)
Notional Amount at June 30, 2025		Origination Date	Effective Date	Maturity Date	Swap Fixed Interest Rate	June 30, 2025			December 31, 2024
Active interest rate swaps designated as cash flow hedges at June 30, 2025:
$	75,000	8/21/2019	5/18/2021	5/18/2026	1.29%	$	1,768		$	2,924
	125,000	11/3/2023	11/3/2023	11/18/2026	4.51%		(1,321	)		(860	)
	50,000	8/2/2024	8/2/2024	8/18/2027	3.63%		(115	)		590
	50,000	8/1/2024	8/5/2024	8/31/2027	3.84%		(335	)		344
	50,000	3/17/2023	3/20/2023	3/18/2028	3.50%		(34	)		910
	50,000	3/17/2023	3/20/2023	3/20/2028	3.49%		(38	)		900
	50,000	8/1/2024	8/5/2024	8/18/2028	3.75%		(458	)		554
	50,000	7/11/2024	7/18/2024	7/18/2029	3.96%		(952	)		270
	85,000	12/31/2019	12/31/2019	12/31/2029	1.87%		5,715			8,510
	585,000						4,230			14,142

Matured interest rate swaps at June 30, 2025:
	75,000	8/21/2019	5/18/2020	5/18/2025	1.26%		-			887
	50,000	6/1/2018	1/31/2019	6/30/2025	2.88%		-			361
	25,000	12/6/2018	1/31/2020	6/30/2025	2.74%		-			197
	150,000						-			1,445
$	735,000					$	4,230		$	15,587

The Company assesses, both at inception and on an ongoing basis, the effectiveness of its qualifying cash flow hedges. As of June 30, 2025, all nine 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 $3.6 million of net unrealized gains included in accumulated other comprehensive income at June 30, 2025 will be reclassified as a decrease to interest and other expense, net within the next 12 months.

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 and six months ended June 30, 2025 and 2024 (in thousands):


	Net Unrealized Gain (Loss) Recognized in Other Comprehensive Loss					Net Unrealized Gain Reclassified from Accumulated Other Comprehensive Income to Interest and Other Expense, net
	Three Months Ended June 30,					Three Months Ended June 30,
	2025			2024		2025		2024
Interest rate derivatives in cash flow hedging relationships	$	(2,043	)	$	3,126	$	2,280	$	5,858

	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
	Six Months Ended June 30,					Six Months Ended June 30,
	2025			2024		2025		2024
Interest rate derivatives in cash flow hedging relationships	$	(6,533	)	$	12,835	$	4,824	$	11,859

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 2024 Form 10-K. Below is a summary of the significant related party relationships in effect during the six months ended June 30, 2025 and 2024.

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 six months ended June 30, 2025 and 2024 totaled approximately $0.6 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 June 30, 2025 and December 31, 2024, 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 a Learjet 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 six months ended June 30, 2025 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 six months ended June 30, 2024.

7. Shareholders’ Equity

Distributions

For the three and six months ended June 30, 2025, the Company paid distributions of $0.24 and $0.53 per common share, respectively, for a total of $57.1 million and $126.7 million, respectively. During the three and six months ended June 30, 2024, the Company paid distributions of $0.24 and $0.53 per common share, respectively, for a total of $58.0 million and $128.2 million, respectively. Additionally, in June 2025, 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 June 30, 2025 and paid on July 15, 2025. In addition to the regular monthly cash distribution of $0.08 per common share for December 2024, the Board of Directors approved a special one-time distribution of $0.05 per common share for a combined distribution of $0.13 per common share, totaling $31.2 million, which was recorded as a payable as of December 31, 2024 and paid in January 2025. 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 June 30, 2025 and December 31, 2024, respectively.

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 and six months ended June 30, 2025 or during the year ended December 31, 2024. 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”). During the six months ended June 30, 2025, the Company purchased, under its Share Repurchase Program, approximately 3.4 million of its common shares at a weighted-average market purchase price of approximately $12.83 per common share for an aggregate purchase price, including commissions, of approximately $43.2 million. During the six months ended June 30, 2024, the Company purchased, under its Share Repurchase Program, approximately 1.1 million of its common shares at a weighted-average market purchase price of approximately $14.35 per common share for an aggregate purchase price of approximately $15.5 million, including commissions. Repurchases under the Share Repurchase Program have been funded, and the Company intends to fund future 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 repurchased under the Share Repurchase Program will also depend upon prevailing market conditions, regulatory requirements and other factors. As of June 30, 2025, approximately $257.6 million remained available for purchase under the Share Repurchase Program.

8. Compensation Plans

The Company annually establishes an incentive plan for its executive management team. Under the incentive plan for 2025 (the “2025 Incentive Plan”), participants are eligible to receive incentive compensation based on the achievement of certain 2025 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 June 30, 2025, the range of potential aggregate payouts under the 2025 Incentive Plan was $0 - $29.8 million. Based on performance through June 30, 2025, the Company has accrued approximately $4.4 million as a liability for potential executive incentive compensation payments under the 2025 Incentive Plan, which is included in accounts payable and other liabilities in the Company’s consolidated balance sheet as of June 30, 2025. Compensation expense recognized by the Company related to executive incentive compensation under the 2025 Incentive Plan is included in general and administrative expenses in the Company’s consolidated statement of operations and totaled approximately $1.0 million and $4.4 million for the three and six months ended June 30, 2025, respectively. Approximately 25% of target awards under the 2025 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 2026.

Under the incentive plan for 2024 (the “2024 Incentive Plan”), the Company recorded approximately $4.2 million and $8.0 million, respectively, in general and administrative expenses in its consolidated statement of operations for the three and six months ended June 30, 2024.

Share-Based Compensation Awards

The following table sets forth information pertaining to the share-based compensation issued under the 2024 Incentive Plan and the incentive plan for 2023 (the “2023 Incentive Plan”).


	2024 Incentive Plan			2023 Incentive Plan
Period common shares issued	First Quarter 2025			First Quarter 2024

Common shares earned under each incentive plan		766,601			1,110,664
Common shares surrendered on issuance date to satisfy tax withholding obligations		221,309			306,346
Common shares earned and issued under each incentive plan, net of common shares surrendered on issuance date to satisfy tax withholding obligations		545,292			804,318
Average of the high and low stock price on issuance date	$	14.48		$	16.27
Total share-based compensation earned, including the surrendered shares (in millions)	$	11.1	(1)	$	18.1	(2)
Of the total common shares earned and issued, total common shares unrestricted at time of issuance		302,438			399,842
Of the total common shares earned and issued, total common shares restricted at time of issuance		242,854			404,476

Restricted common shares vesting date	December 12, 2025			December 13, 2024
Common shares surrendered on vesting date to satisfy tax withholding requirements resulting from vesting of restricted common shares	n/a				170,970

(1)

Of the total 2024 share-based compensation, approximately $9.3 million was recorded as a liability as of December 31, 2024 and is included in accounts payable and other liabilities in the Company’s consolidated balance sheet at December 31, 2024. Another $1.8 million, which is subject to vesting on December 12, 2025 and excludes any restricted shares forfeited or vested prior to that date, will be recognized as share-based compensation expense proportionately throughout 2025. For the three and six months ended June 30, 2025, the Company recognized approximately $0.5 million and $0.9 million, respectively, of share-based compensation expense related to restricted share awards.

(2)

Of the total 2023 share-based compensation, approximately $3.3 million, which vested on December 13, 2024, was recognized as share-based compensation expense proportionately throughout 2024. For the three and six months ended June 30, 2024, the Company recognized approximately $0.8 and $1.6 million, respectively, of share-based compensation expense related to restricted share awards.

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 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 over 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);

•

real estate related impairments;

•

non-cash straight-line operating ground lease expense;

•

actual corporate-level general and administrative expense for the Company; and

•

operating results from the non-hotel property.

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.

The following table reconciles the Company’s single reportable segment Adjusted Hotel EBITDA to GAAP net income for the three and six months ended June 30, 2025 and 2024:


	Three Months Ended June 30,						Six Months Ended June 30,
	2025			2024			2025			2024
Total revenue	$	384,370		$	390,077		$	712,072		$	719,589

Less:
Significant hotel operating expenses
Operating		94,143			91,523			178,653			175,319
Hotel administrative		32,641			31,453			62,314			61,205
Sales and marketing		33,600			33,649			63,886			63,488
Utilities		11,844			11,665			24,323			23,184
Repair and maintenance		18,306			17,626			35,448			34,468
Franchise fees		17,075			17,527			31,628			32,281
Management fees		12,955			12,848			24,182			23,610
Total significant hotel operating expenses		220,564			216,291			420,434			413,555

Property taxes, insurance & other		22,869			21,940			46,230			42,932
Other segment items (1)		(133	)		166			(927	)		1,629

Adjusted Hotel EBITDA		141,070			151,680			246,335			261,473

General and administrative		(8,064	)		(11,065	)		(17,292	)		(21,649	)
Depreciation and amortization		(48,022	)		(47,715	)		(95,963	)		(94,538	)
Gain on sale of real estate		-			449			3,557			18,215
Other segment items (1)		(133	)		166			(927	)		1,629
Interest expense, net		(20,963	)		(19,370	)		(40,360	)		(36,679	)
Income tax expense		(240	)		(214	)		(481	)		(470	)

Net income	$	63,648		$	73,931		$	94,869		$	127,981

(1)

This amount includes the operating results of the non-hotel property (the New York Property) through April 4, 2025, the date on which the Company recovered possession of the property from a third-party hotel operator and reinstated operations through a third-party manager engaged by the Company. Additionally, for the three and six months ended June 30, 2025 and 2024, 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 six months ended June 30, 2025 and 2024, the Company invested approximately $32.2 million and $32.6 million in capital expenditures, respectively.

10. Commitments and Contingencies

Purchase Contract Commitments

As of June 30, 2025, the Company had one outstanding contract, which was entered into during May 2023, for the potential purchase of a hotel in Nashville, Tennessee for an expected purchase price of approximately $98.2 million. The hotel is under development and is currently planned to be completed and opened for business in late 2025, as a 260-guest-room Motto. As of June 30, 2025, a $1.1 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.

LuxUrban Re Holdings LLC vs. Apple Eight Hospitality Ownership, Inc., et al

In February 2025, the Company was notified of a complaint purportedly filed by LuxUrban Re Holdings LLC, the third-party hotel operator of the non-hotel property (the New York Property), against the Company’s subsidiary and its former third-party hotel manager in the Supreme Court of New York alleging breach of contract and conspiracy to commit fraud. The Company believes the allegations are without merit. On April 4, 2025, this complaint was discontinued, with prejudice, and without any loss recorded or paid by the Company. The Company and the third-party hotel operator entered into an agreement to mutually release all claims, terminate the lease and for the third-party hotel operator to voluntarily surrender possession of the property. In addition, on April 4, 2025, the Company recovered possession of the property and reinstated operations of the hotel’s 209 guest rooms through a third-party manager engaged by the Company.

11. Subsequent Events

On July 15, 2025, the Company paid approximately $18.9 million, or $0.08 per common share, in distributions to shareholders of record as of June 30, 2025.

On July 18, 2025, the Company declared a monthly cash distribution of $0.08 per common share. The distribution is payable on August 15, 2025, to shareholders of record as of July 31, 2025.

In July 2025, the Company entered into separate purchase and sale agreements with the same unrelated party for the sale of two hotels for a combined gross sales price of $20.3 million. The Company expects to complete the sale of these hotels late in the third quarter or early in the fourth quarter of 2025. There are many conditions to closing on the sale of these hotels that have not yet been satisfied, and there can be no assurance that closings on the sale of these hotels will occur under the outstanding purchase and sale agreements.

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 2024 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 2024 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 June 30, 2025, the Company owned 221 hotels with an aggregate of 29,893 guest rooms located in urban, high-end suburban and developing markets throughout 37 states and the District of Columbia, including one hotel with 206 guest rooms classified as held for sale, which is expected to be sold to an unrelated party in the third quarter of 2025. Substantially all of the Company’s hotels operate under Marriott or Hilton brands. The hotels are operated and managed under separate management agreements with 16 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, during the six months ended June 30, 2025, the Company acquired one hotel, an existing 126-guest-room Homewood Suites in Tampa, Florida, for a gross purchase price of approximately $18.8 million. As of June 30, 2025, the Company had one outstanding contract, which was entered into during May 2023, for the potential purchase of a hotel in Nashville, Tennessee for an expected purchase price of approximately $98.2 million. The hotel is under development and is currently planned to be completed and opened for business in late 2025, as a 260-guest-room Motto. As of June 30, 2025, a $1.1 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.

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 six months ended June 30, 2025, the Company sold two hotels to two unrelated parties for a combined gross sales price of approximately $21.0 million, resulting in a combined gain on the sales of approximately $3.6 million, net of transaction costs. The Company used a portion of the net proceeds from the sale of one of the hotels to complete a 1031 Exchange for the acquisition of the Homewood Suites in Tampa, Florida, which was completed in June 2025.

See Note 2 titled “Investment in Real Estate,” Note 3 titled “Assets Held for Sale and Dispositions” and Note 10 titled “Commitments and Contingencies” 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 June 30, 2025, 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 June 30, 2025, the Company owned 221 hotels, including one hotel classified as held for sale, with a total of 29,893 guest rooms as compared to 224 hotels with a total of 30,068 guest rooms as of June 30, 2024. Results of operations are included only for the period of ownership for hotels acquired or disposed of during the current reporting period and prior year. During the six months ended June 30, 2025, the Company acquired one existing hotel on June 10, 2025 and sold two properties, including one property sold on February 12, 2025 and one 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. During the six months ended June 30, 2024, the Company acquired two properties, including one existing hotel acquired on March 25, 2024 and one hotel acquired upon the completion of development on June 20, 2024. During the six months ended June 30, 2024, the Company sold three properties, two on February 9, 2024 and one on May 21, 2024.

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.

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 June 30,															Six Months Ended June 30,
(in thousands, except statistical data)	2025			Percent of Revenue			2024			Percent of Revenue			Percent Change			2025			Percent of Revenue			2024			Percent of Revenue			Percent Change
Total revenue	$	384,370			100.0	%	$	390,077			100.0	%		-1.5	%	$	712,072			100.0	%	$	719,589			100.0	%		-1.0	%
Hotel operating expense		220,564			57.4	%		216,291			55.4	%		2.0	%		420,434			59.0	%		413,555			57.5	%		1.7	%
Property taxes, insurance and other expense		22,869			5.9	%		21,940			5.6	%		4.2	%		46,230			6.5	%		42,932			6.0	%		7.7	%
General and administrative expense		8,064			2.1	%		11,065			2.8	%		-27.1	%		17,292			2.4	%		21,649			3.0	%		-20.1	%

Depreciation and amortization expense		48,022						47,715						0.6	%		95,963						94,538						1.5	%
Gain on sale of real estate		-						449					n/a				3,557						18,215						-80.5	%
Interest and other expense, net		20,963						19,370						8.2	%		40,360						36,679						10.0	%
Income tax expense		240						214						12.1	%		481						470						2.3	%

Net income		63,648						73,931						-13.9	%		94,869						127,981						-25.9	%
Adjusted Hotel EBITDA (1)		141,070						151,680						-7.0	%		246,335						261,473						-5.8	%

Number of hotels owned at end of period		221						224						-1.3	%		221						224						-1.3	%
ADR	$	163.56					$	162.98						0.4	%	$	160.11					$	158.34						1.1	%
Occupancy		78.6	%					79.8	%					-1.5	%		74.9	%					75.9	%					-1.3	%
RevPAR	$	128.59					$	130.07						-1.1	%	$	119.88					$	120.18						-0.2	%

(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 219 hotels owned and held for use as of June 30, 2025, and excludes the New York Property (“Comparable Hotels”). The Company defines metrics from Comparable Hotels as results generated by the 219 hotels owned and held for use as of the end of the reporting period, excluding the New York Property. 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. This information has not been audited, either for the periods owned or prior to ownership by the Company. For dispositions, assets held for sale and the New York Property, results have been excluded for the Company’s period of ownership.


	Three Months Ended June 30,									Six Months Ended June 30,
	2025			2024			Percent Change			2025			2024			Percent Change
ADR	$	163.62		$	163.80			-0.1	%	$	160.38		$	159.70			0.4	%
Occupancy		78.6	%		79.9	%		-1.6	%		74.9	%		76.1	%		-1.6	%
RevPAR	$	128.68		$	130.89			-1.7	%	$	120.18		$	121.49			-1.1	%

Same Store Operating Results

The following table reflects certain operating statistics for the 216 hotels owned and held for use by the Company as of January 1, 2024 and during the entirety of the reporting periods being compared, excluding the New York Property (“Same Store Hotels”). This information has not been audited.


	Three Months Ended June 30,									Six Months Ended June 30,
	2025			2024			Percent Change			2025			2024			Percent Change
ADR	$	162.07		$	162.52			-0.3	%	$	159.05		$	158.53			0.3	%
Occupancy		78.8	%		79.9	%		-1.4	%		75.1	%		76.0	%		-1.2	%
RevPAR	$	127.66		$	129.87			-1.7	%	$	119.41		$	120.52			-0.9	%

As discussed above, hotel performance is impacted by many factors, including the economic conditions in the U.S. as well as each individual locality. During the first six months of 2025, demand was modestly impacted across the portfolio by weather related

travel disruption in January and February, reduced government travel and the impact of heightened macroeconomic uncertainty in the U.S. As a result, the Company’s Comparable Hotels and Same Store Hotels revenue and operating results generally decreased slightly during the three and six months ended June 30, 2025, compared to the three and six months ended June 30, 2024. The Company expects RevPAR for its Comparable Hotels to moderately improve and RevPAR for the full year of 2025 to be slightly lower than 2024, assuming the current macroeconomic environment continues.

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 June 30, 2025 and 2024, the Company had total revenue of $384.4 million and $390.1 million, respectively. For the six months ended June 30, 2025 and 2024, the Company had total revenue of $712.1 million and $719.6 million, respectively. For the three months ended June 30, 2025 and 2024, respectively, Comparable Hotels achieved combined average occupancy of 78.6% and 79.9%, ADR of $163.62 and $163.80 and RevPAR of $128.68 and $130.89. For the six months ended June 30, 2025 and 2024, respectively, Comparable Hotels achieved combined average occupancy of 74.9% and 76.1%, ADR of $160.38 and $159.70 and RevPAR of $120.18 and $121.49. 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 periods in 2024, during the three and six months ended June 30, 2025, the Company’s Comparable Hotels ADR generally remained unchanged while occupancy decreased by 1.6% in both the three and six month periods, resulting in marginal decreases in Comparable Hotels RevPAR of 1.7% and 1.1%, respectively. The decline in revenue for the six months ended June 30, 2025, as compared to the same period of 2024, was primarily due to weather-related travel disruption in January and February, reduced government travel and the additional day of revenues in 2024 from the leap year. Government demand softened late in the first quarter of 2025 following the current administration’s efforts to curtail government spending; it remained soft through the second quarter and is expected to continue to have a modestly negative impact on revenue should current conditions persist. Markets with significantly above-average growth in the second quarter of 2025, compared to the same period in 2024, for the Company included Anchorage, Columbia, Gainesville, Orlando, Pittsburgh and Salt Lake City.

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. Hotel operating expense for the three months ended June 30, 2025 and 2024 totaled $220.6 million and $216.3 million, respectively, or 57.4% and 55.4% of total revenue for the respective periods. For the six months ended June 30, 2025 and 2024, hotel operating expense totaled $420.4 million and $413.6 million, respectively, or 59.0% and 57.5% of total revenue for the respective periods. The increases in hotel operating expense for the three and six months ended June 30, 2025, as compared to the same periods in 2024, were primarily driven by increased labor costs, increased utility costs and general inflationary pressures throughout the overall economy. The Company continues to feel upward pressure on total payroll costs given a competitive labor market where the demand for strong hotel talent remains high. However, the rate of wage growth has slowed, and management companies have made progress in reducing their use of contract labor. For the remainder of 2025, the Company anticipates a similar operating expense environment; however, the Company expects a slight increase in expenses concentrated in the second half of the year related to brand conferences that typically occur biennially, and uncertainties still exist around the potential inflationary impact of tariff policies. 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 June 30, 2025 and 2024 was $22.9 million and $21.9 million, respectively, or 5.9% and 5.6% of total revenue for the respective periods. For the six months ended June 30, 2025 and 2024, property taxes, insurance and other expense totaled $46.2 million and $42.9 million, respectively, or 6.5% and 6.0% of total revenue for the respective periods. The increases in property taxes, insurance and other expense for the three and six months ended June 30, 2025, as compared to the same periods in 2024, were primarily due to increases in property taxes in certain markets and liability insurance premiums, partially offset by decreases in property insurance premiums. 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 June 30, 2025 and 2024 was $8.1 million and $11.1 million, respectively, or 2.1% and 2.8% of total revenue for the respective periods. For the six months ended June 30, 2025 and 2024, general and administrative expense was $17.3 million and $21.6 million, respectively, or 2.4% and 3.0% 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 decreases in general and administrative expense for the three and six months ended June 30, 2025, as compared to the same periods in 2024, were primarily due to decreased accruals for anticipated performance under the Company’s executive incentive compensation plan, partially offset by increased payroll and related benefit costs.

Depreciation and Amortization Expense

Depreciation and amortization expense for the three months ended June 30, 2025 and 2024 was $48.0 million and $47.7 million, respectively. For the six months ended June 30, 2025 and 2024, depreciation and amortization expense was $96.0 million and $94.5 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. The increases of approximately $0.3 million and $1.5 million for the three and six months ended June 30, 2025, respectively, as compared to the same periods in 2024, were primarily due to the acquisitions of two hotels in 2024 and one hotel in the first half of 2025, as well as renovations completed throughout 2024 and the first half of 2025, partially offset by the sale of six hotels in 2024 and two hotels in the first half of 2025.

Interest and Other Expense, net

Interest and other expense, net for the three months ended June 30, 2025 and 2024 was $21.0 million and $19.4 million, respectively. For the six months ended June 30, 2025 and 2024, interest and other expense, net was $40.4 million and $36.7 million, respectively. Interest and other expense, net for the six months ended June 30, 2025 and 2024 is net of approximately $0.8 million and $0.6 million, respectively, of interest capitalized associated with renovation projects.

Interest expense related to the Company’s debt instruments for the three and six months ended June 30, 2025 increased compared to the same periods of 2024 as a result of higher average borrowings associated with variable-rate debt and higher average interest rates on the Company's variable-rate debt. The Company anticipates interest expense for the remainder of 2025 will be greater than the interest expense for the same period of 2024 as a result of a decrease in the amount of variable-rate debt that is fixed by interest rate swaps and higher borrowings. The proportion of fixed-rate debt was less over the six months ended June 30, 2025 compared to the same period of 2024, as the Company had three interest rate swaps in effect on $150.0 million of variable-rate debt that matured during the first six months of 2025 and six interest rate swaps in effect on $285.0 million of variable-rate debt that matured during 2024 while the Company entered into four new swaps in effect on $200.0 million of variable rate debt during 2024, but at a higher fixed rate than the swaps 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 and non-cash straight-line operating ground lease 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 2025 Incentive Plan.

The following table reconciles the Company’s GAAP net income to FFO and MFFO for the three and six months ended June 30, 2025 and 2024 (in thousands):


	Three Months Ended June 30,					Six Months Ended June 30,
	2025		2024			2025			2024
Net income	$	63,648	$	73,931		$	94,869		$	127,981
Depreciation of real estate owned		47,262		46,952			94,443			93,011
Gain on sale of real estate		-		(449	)		(3,557	)		(18,215	)
Funds from operations		110,910		120,434			185,755			202,777
Amortization of finance ground lease assets		760		760			1,519			1,519
Amortization of favorable and unfavorable operating leases, net		102		102			204			204
Non-cash straight-line operating ground lease expense		31		33			64			69
Modified funds from operations	$	111,803	$	121,329		$	187,542		$	204,569

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 from EBITDAre useful, as this expense does not reflect the underlying performance of the related hotels (Adjusted EBITDAre).

The Company further excludes actual corporate-level general and administrative 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 2025 Incentive Plan.

The following table reconciles the Company’s GAAP net income to EBITDA, EBITDAre, Adjusted EBITDAre and Adjusted Hotel EBITDA for the three and six months ended June 30, 2025 and 2024 (in thousands):


	Three Months Ended June 30,					Six Months Ended June 30,
	2025		2024			2025			2024
Net income	$	63,648	$	73,931		$	94,869		$	127,981
Depreciation and amortization		48,022		47,715			95,963			94,538
Amortization of favorable and unfavorable operating leases, net		102		102			204			204
Interest and other expense, net		20,963		19,370			40,360			36,679
Income tax expense		240		214			481			470
EBITDA		132,975		141,332			231,877			259,872
Gain on sale of real estate		-		(449	)		(3,557	)		(18,215	)
EBITDAre		132,975		140,883			228,320			241,657
Non-cash straight-line operating ground lease expense		31		33			64			69
Adjusted EBITDAre		133,006		140,916			228,384			241,726
General and administrative expense		8,064		11,065			17,292			21,649
Adjusted EBITDAre from non-hotel property (1)		-		(301	)		659			(1,902	)
Adjusted Hotel EBITDA	$	141,070	$	151,680		$	246,335		$	261,473

(1)

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


Number of Hotels and Guest Rooms by Brand
	Number of		Number of
Brand	Hotels		Guest Rooms
Hilton Garden Inn		39		5,476
Hampton		36		4,831
Courtyard		34		4,892
Residence Inn		30		3,695
Homewood Suites		29		3,341
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
Marriott		2		619
Hyatt House		2		264
Independent		1		209
Aloft Hotels		1		157
Total		221		29,893


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		26		3,722
Colorado		4		567
Florida		23		2,970
Georgia		5		585
Idaho		1		186
Illinois		7		1,255
Indiana		3		349
Iowa		3		301
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		555
North Carolina		7		799
Ohio		3		406
Oklahoma		4		545
Oregon		1		243
Pennsylvania		4		525
South Carolina		5		590
Tennessee		9		1,164
Texas		26		3,211
Utah		6		919
Virginia		11		1,667
Washington		4		636
Wisconsin		2		438
Washington, D.C.		1		234
Total		221		29,893

The following table summarizes the location, brand, manager, date acquired or completed and number of guest rooms for each of the 221 hotels that the Company owned as of June 30, 2025. As noted below, as of June 30, 2025, 14 of the Company’s properties are subject to ground leases and 12 of its hotels are encumbered by mortgages securing associated loan obligations.

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

Marriott

3/1/2014

166

Burbank

CA

SpringHill Suites

Marriott

7/13/2015

170

(2)

Clovis

CA

Hampton

Dimension

7/31/2009

86

Clovis

CA

Homewood Suites

Dimension

2/2/2010

83

Cypress

CA

Courtyard

Dimension

3/1/2014

180

Cypress

CA

Hampton

Dimension

6/29/2015

110

Oceanside

CA

Courtyard

Marriott

9/1/2016

142

(2)

Oceanside

CA

Residence Inn

Marriott

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)

City

State

Brand

Manager

Date
Acquired or
Completed

Guest Rooms

San Juan Capistrano

CA

Residence Inn

Marriott

9/1/2016

130

(1)

Santa Ana

CA

Courtyard

Dimension

5/23/2011

155

(2)

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

Marriott

9/1/2016

145

Tustin

CA

Residence Inn

Marriott

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

Marriott

7/1/2009

200

Orlando

FL

Home2 Suites

LBA

3/19/2019

128

Orlando

FL

SpringHill Suites

Marriott

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)

Cedar Rapids

IA

Hampton

Chartwell

9/1/2016

103

Cedar Rapids

IA

Homewood Suites

Chartwell

9/1/2016

95

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

City

State

Brand

Manager

Date
Acquired or
Completed

Guest Rooms

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

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

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

Marriott

3/1/2014

181

Omaha

NE

Hampton

HHM

9/1/2016

139

Omaha

NE

Hilton Garden Inn

HHM

9/1/2016

178

(2)

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

City

State

Brand

Manager

Date
Acquired or
Completed

Guest Rooms

New York

NY

Independent

Highgate

3/1/2014

209

(1) (3)

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

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

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

Marriott

3/1/2014

159

Arlington

TX

Hampton

Western

12/1/2010

98

Austin

TX

Courtyard

HHM

11/2/2010

145

Austin

TX

Fairfield

HHM

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

Marriott

Western

1/8/2010

206

(4)

City

State

Brand

Manager

Date
Acquired or
Completed

Guest Rooms

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

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

Dimension

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

Huntington

10/20/2017

136

Salt Lake City

UT

SpringHill Suites

HHM

11/2/2010

143

South Jordan

UT

Embassy Suites

HHM

11/21/2023

192

Alexandria

VA

Courtyard

Marriott

3/1/2014

178

Alexandria

VA

SpringHill Suites

Marriott

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

29,893

(1)

Property is subject to ground lease.

(2)

Hotel is encumbered by mortgage.

(3)

(4)

Hotel is classified as held for sale as of June 30, 2025 and is expected to be sold to an unrelated third party in the third quarter of 2025.

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 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 Company’s current at-the-market offering 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.

As of June 30, 2025, the Company had $1.5 billion of total outstanding debt consisting of $217.2 million of mortgage debt and $1.3 billion outstanding under its unsecured credit facilities, excluding unamortized debt issuance costs and fair value adjustments. As of June 30, 2025, the Company had available corporate cash on hand of approximately $7.9 million, and unused borrowing capacity under its Revolving Credit Facility of approximately $474.9 million. On July 24, 2025, the Company repaid all amounts outstanding under the $225 million term loan facility and entered into a new term loan facility with a principal amount of $385 million and a maturity date of July 31, 2030. Proceeds from the $385 million term loan facility were also used to repay a portion of the balance outstanding under the Revolving Credit Facility.

The credit agreements governing the unsecured credit facilities contain customary affirmative and negative covenants 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. The Company was in compliance with the applicable covenants as of June 30, 2025.

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 June 30, 2025.

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 and six months ended June 30, 2025 or during the year ended December 31, 2024. 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 June 18, 2025, the Company declared a monthly cash distribution of $0.08 per common share, paid on July 15, 2025, to shareholders of record as of June 30, 2025. For the three and six months ended June 30, 2025, the Company paid distributions of $0.24 and $0.53 per common share, respectively, for a total of $57.1 million and $126.7 million, respectively. Subsequent to quarter end, on July 18, 2025, the Company declared a monthly cash distribution of $0.08 per common share, payable on August 15, 2025, to shareholders of record as of July 31, 2025.

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 real estate investment trust. 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.

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 Exchange Act. During the six months ended June 30, 2025, the Company purchased, under its Share Repurchase Program, approximately 3.4 million of its common shares at a weighted-average market purchase price of approximately $12.83 per common share for an aggregate purchase price, including commissions, of approximately $43.2 million. During the six months ended June 30, 2024, the Company purchased, under its Share Repurchase Program, approximately 1.1 million of its common shares at a weighted-average market purchase price of approximately $14.35 per common share for an aggregate purchase price, including commissions, of approximately $15.5 million. Repurchases under the Share Repurchase Program have been funded, and the Company intends to fund future 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 repurchased under the Share Repurchase Program will also depend upon prevailing market conditions, regulatory requirements and other factors. As of June 30, 2025, approximately $257.6 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 and management agreements, the Company is required to place in escrow funds for the repair, replacement and refurbishing 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 June 30, 2025, the Company held approximately $31.4 million in reserves related to these properties. During the six months ended June 30, 2025, the Company invested approximately $32.2 million in capital expenditures. The Company anticipates spending approximately $80 million to $90 million during 2025, which includes various comprehensive renovation projects for approximately 20 properties, however, inflationary pressures, supply chain shortages or tariffs,

among other issues, may result in increased costs and delays for anticipated projects. The Company does not currently have any existing or planned projects for new property development.

Upcoming Debt Maturities and Debt Service Payments

As of June 30, 2025, the Company had approximately $344.8 million of principal and interest payments due on its debt over the next 12 months. Included in this total are two unsecured term loans totaling $225.0 million which were scheduled to mature on August 2, 2025, but were repaid on July 24, 2025 using proceeds from the new $385 million term loan facility with a principal amount of $385 million and a maturity date of July 31, 2030, resulting in an additional $160 million funded at closing. Proceeds from the $385 million term loan facility were also used to repay a portion of the balance outstanding under the Revolving Credit Facility. The amount due over the next twelve months also includes one mortgage, covering two properties, totaling $29.8 million that matures in the third quarter of 2025 and a $19.9 million mortgage that matures in the second 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. Interest expense related to the Company’s unsecured credit facilities is expected to be higher over the next 12 months than it was during the previous 12 months as a result of increased borrowings and a decrease in the amount of the Company’s variable-rate debt that is fixed by interest rate swaps partially offset by lower expected SOFR rates. The proportion of variable-rate debt that is fixed by interest rate swaps was lower over the six months ended June 30, 2025 compared to the same period of 2024, as the Company had three interest rate swaps in effect on $150.0 million of variable-rate debt mature during the first six months of 2025 and six interest rate swaps in effect on $285.0 million of variable-rate debt that matured during 2024 while the Company entered into four new interest rate swaps in effect on $200.0 million of variable-rate debt during 2024, but at higher 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. 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 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 June 30, 2025.

Purchase Contract Commitments

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 increased operating expenses with increases in revenue. Additionally, tariff-induced inflation could increase certain operating and renovation costs, as some supplies 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 national 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 ended December 31, 2024, filed with the Securities and Exchange Commission on February 24, 2025. There have been no material changes to the Company’s critical accounting policies or the methods or assumptions applied.

Subsequent Events

On July 15, 2025, the Company paid approximately $18.9 million, or $0.08 per common share, in distributions to shareholders of record as of June 30, 2025.

On July 18, 2025, the Company declared a monthly cash distribution of $0.08 per common share. The distribution is payable on August 15, 2025, to shareholders of record as of July 31, 2025.

On July 24, 2025, the Company repaid all amounts outstanding under the $225 million term loan facility and entered into a new term loan facility with a principal amount of $385 million and a maturity date of July 31, 2030. 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 additional information.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As of June 30, 2025, 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 June 30, 2025, after giving effect to interest rate swaps, as described below, approximately $603.0 million, or approximately 39% of the Company’s total debt outstanding, was subject to variable interest rates. Based on the Company’s variable-rate debt outstanding as of June 30, 2025, every 100 basis point change in interest rates will impact the Company’s annual net income by approximately $6.0 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 June 30, 2025, the Company’s variable-rate debt consisted of its unsecured credit facilities, including $173.0 million in borrowings outstanding under its Revolving Credit Facility and $1.0 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 June 30, 2025, the Company had nine interest rate swap agreements that effectively fix the interest payments on approximately $585.0 million of the Company’s variable-rate debt outstanding with swap maturity dates ranging from May 2026 to December 2029. Under the terms of all 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 plus a 0.10% SOFR spread adjustment. 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 June 30, 2025.

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 June 30, 2025. All dollar amounts are in thousands.


	July 1 - December 31, 2025			2026			2027			2028			2029			Thereafter			Total		Fair Market Value
Total debt:
Maturities	$	257,983		$	377,649		$	278,602		$	334,066		$	162,294		$	119,654		$	1,530,248	$	1,505,837
Average interest rates (1)		4.9	%		4.9	%		4.8	%		4.4	%		3.8	%		3.6	%

Variable-rate debt:
Maturities	$	225,000		$	303,000		$	275,000		$	300,000		$	85,000		$	-		$	1,188,000	$	1,189,756
Average interest rates (1)		5.2	%		5.1	%		5.1	%		4.6	%		3.3	%	n/a

Fixed-rate debt:
Maturities	$	32,983		$	74,649		$	3,602		$	34,066		$	77,294		$	119,654		$	342,248	$	316,081
Average interest rates		4.0	%		4.0	%		4.1	%		4.1	%		3.9	%		3.6	%

(1)

The average interest rate gives effect to interest rate swaps, as applicable.

Item 4. Controls and Procedures

Senior management, including the Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer, 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 Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer have concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2025. 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.

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 second quarter of 2025.


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)
April 1 - April 30, 2025		493,988	$	12.18		493,988	$	268,468
May 1 - May 31, 2025		505,964	$	11.57		505,964	$	262,608
June 1 - June 30, 2025		432,175	$	11.57		432,175	$	257,604
Total		1,432,127				1,432,127

(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.

Item 5. Other Information.

Trading Arrangements

No director or officer of the Company adopted or terminated a “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 June 30, 2025.

New Tax Legislation

Effective July 4, 2025, certain changes to U.S. tax law were approved that impact the Company and its shareholders. Among other changes, this legislation (i) permanently extended the 20% deduction for “qualified REIT dividends” for individuals and other non-corporate taxpayers under Section 199A of the Code; (ii) increased the percentage limit under the REIT asset test applicable to taxable REIT subsidiaries (“TRSs”) from 20% to 25% for taxable years beginning after December 31, 2025; and (iii) increased the base on which the 30% interest deduction limit under Section 163(j) of the Code applies by excluding depreciation, amortization and depletion from the definition of “adjusted taxable income” (i.e. based on EBITDA rather than EBIT) for taxable years beginning after December 31, 2024.

Item 6. Exhibits


Exhibit Number		Description of Documents
3.1		Amended and Restated Articles of Incorporation of the Company, as amended (Incorporated by reference to Exhibit 3.1 to the Company’s quarterly report on Form 10-Q (SEC File No. 001-37389) filed August 6, 2018)

3.2		Third Amended and Restated Bylaws of the Company (Incorporated by reference to Exhibit 3.2 to the Company’s quarterly report on Form 10-Q (SEC File No. 001-37389) filed May 18, 2020)

10.1		The Company’s Employee Stock Purchase Plan (Incorporated by reference to Exhibit 10.1 to the Company’s current report on Form 8-K (SEC File No. 001-37389) filed May 21, 2025)

31.1		Certification of the Company’s Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (FILED HEREWITH)

31.2		Certification of the Company’s Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (FILED HEREWITH)

31.3		Certification of the Company’s Chief Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (FILED HEREWITH)

32.1		Certification of the Company’s Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (FURNISHED HEREWITH)

101		The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2025 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 June 30, 2025, formatted as Inline XBRL and contained in Exhibit 101

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.


Apple Hospitality REIT, Inc.

By:	/s/ Justin G. Knight	Date: August 6, 2025
	Justin G. Knight,
	Chief Executive Officer (Principal Executive Officer)

By:	/s/ Elizabeth S. Perkins	Date: August 6, 2025
	Elizabeth S. Perkins,
	Chief Financial Officer (Principal Financial Officer)

By:	/s/ Rachel S. Labrecque	Date: August 6, 2025
	Rachel S. Labrecque,
	Chief Accounting Officer (Principal Accounting Officer)