Breaking Down Apple Hospitality REIT, Inc. (APLE) Financial Health: Key Insights for Investors

You're looking at Apple Hospitality REIT, Inc. (APLE) for income, but the near-term picture is getting murky, so we need to cut through the noise to see if that yield is sustainable. Honestly, the biggest update is the recent guidance revision, which now projects full-year 2025 Net Income in the range of $162 million to $175 million, down from earlier forecasts, mainly due to prolonged economic uncertainty. Still, management is defintely focused on what they can control, pushing the Comparable Hotels Adjusted Hotel EBITDA Margin up by 20 basis points through strong cost control measures. Here's the quick math: that attractive annualized dividend of $1.01 per share, which gives you an 8.67% yield, is what's keeping income investors interested, but with the RevPAR (Revenue Per Available Room) change guidance being lowered, you need to understand the underlying cash flow dynamics, specifically Modified Funds From Operations (MFFO), to gauge the true risk.

Revenue Analysis

You're looking at Apple Hospitality REIT, Inc. (APLE) because you want to know if the income stream is stable, and honestly, the latest numbers show a slight cooling trend that demands attention. The direct takeaway is that while the portfolio remains a cash-flow machine, the near-term year-over-year revenue growth has stalled, reflecting broader economic and market-specific pressures.

As a Real Estate Investment Trust (REIT) focused on the lodging sector, Apple Hospitality REIT, Inc.'s primary revenue source is, simply put, hotel revenue. This is a single business segment, but it breaks down into three key components: room revenue, food and beverage sales, and other related services. For the latest available annual data, the vast majority of their income comes from guests paying for a room.

Here's the quick math on where the money comes from, based on the latest available annual segment data:

• Occupancy (Room Revenue): Contributes approximately 90.71%.
• Hotel, Other (Services): Contributes approximately 4.69%.
• Food and Beverage: Contributes approximately 4.60%.

This breakdown confirms APLE's focus on the upscale, rooms-focused hotel model, which is less reliant on volatile food and beverage operations. You'll defintely want to keep an eye on how they manage this core asset base, which is detailed further in their Mission Statement, Vision, & Core Values of Apple Hospitality REIT, Inc. (APLE).

Near-Term Revenue Growth and Contraction

The year-over-year revenue growth rate has turned negative in the second half of 2025, a clear signal of deceleration. For the nine months ended September 30, 2025, the company reported total revenue of $1,085.95 million. This represents a modest decline of approximately -1.14% compared to the $1,098.43 million reported for the same period in 2024.

The third quarter of 2025 was particularly soft, with revenue dropping to $373.88 million, a year-over-year decrease of -1.31% from the prior year's third quarter revenue of $378.84 million. This is a critical trend to monitor because Q3 is typically a strong travel season. The trailing twelve-month (TTM) revenue as of September 30, 2025, stood at $1.42 billion.

What this estimate hides is the impact of portfolio adjustments and external shocks. Management had guided for Comparable Hotels Revenue Per Available Room (RevPAR) growth between 1% to 3% for the full year 2025, but the October 2025 preliminary data showed a RevPAR decline of approximately 3% compared to October 2024, largely attributed to the government shutdown. That's a real-world risk hitting the top line immediately.

The table below summarizes the recent revenue performance:

Significant Shifts in the Revenue Base

The revenue base is also seeing a shift through asset recycling. Apple Hospitality REIT, Inc. is actively selling off non-core assets. In the first quarter of 2025 alone, they sold two hotels for a combined gross sales price of approximately $21.0 million. Plus, in August 2025, they sold another property for a gross sales price of $16 million. Selling assets reduces the total revenue base, but it also cleans up the portfolio, which can boost margins and cash flow (Modified Funds From Operations, or MFFO).

Another notable change is the New York Property. Beginning in the second quarter of 2025, the company regained possession and included the hotel's operations in its Adjusted Hotel EBITDA. This move shifts the property from a lease arrangement to direct hotel operations, which will alter the revenue and expense profile going forward. It's a strategic move to capture more of the upside, but it also takes on more operational risk.

Profitability Metrics

When you look at Apple Hospitality REIT, Inc. (APLE), you need to move beyond top-line revenue and focus on the margins. Profitability in the hotel Real Estate Investment Trust (REIT) sector is under pressure in 2025, and APLE is defintely feeling the pinch, though their operational efficiency remains strong.

For the third quarter of 2025, APLE's Comparable Hotels Adjusted Hotel EBITDA Margin-which is the best proxy for a gross profit margin in this business-stood at 35.2%. This is a critical metric because it shows how well the company manages property-level expenses like labor and utilities. The bad news is that this margin was down 200 basis points (2.0%) compared to the same period last year, a clear sign of persistent inflationary pressure on operating costs.

Moving down the income statement, the overall GAAP margins reflect this pressure but still show solid performance relative to the sector's challenges:

• Operating Profit Margin: The latest reported margin is approximately 17.94%.
• Net Profit Margin: The trailing twelve months (TTM) net profit margin is around 12.37%.

This net margin has contracted from roughly 14.5% in the prior year, illustrating the difficulty in passing on all cost increases to the consumer, especially as occupancy rates moderate. For context, the company reported a net income of $63.648 million in the second quarter of 2025. This is a business focused on cash flow, so we also watch Adjusted EBITDAre, which management guides to be between $447 million and $471 million for the full fiscal year 2025.

Here's the quick math on operational efficiency compared to the broader industry. The general U.S. hotel industry's Gross Operating Profit (GOP) margin-a similar metric to APLE's Adjusted Hotel EBITDA Margin-held steady at about 37.7% year-to-date through Q3 2025. APLE's 35.2% is slightly below this industry average, but it's crucial to remember that APLE's focus is on select-service, upscale hotels, which have a different cost structure than full-service luxury peers. For example, a peer like Summit Hotel Properties reported a comparable Hotel EBITDA margin of 35.5% in a similar period. APLE's operational discipline is keeping them in line with their peer set, but the cost fight is real.

The trend is the key takeaway: margins are contracting. Your action item here is to monitor the quarterly reports for a stabilization in the Comparable Hotels Adjusted Hotel EBITDA Margin. If it drops below 34.0%, it signals that cost management is failing to keep pace with inflation and potential demand softness. You can find more on the company's long-term strategy and values here: Mission Statement, Vision, & Core Values of Apple Hospitality REIT, Inc. (APLE).

Debt vs. Equity Structure

You're looking at Apple Hospitality REIT, Inc. (APLE)'s balance sheet to understand how they fund their growth, and honestly, the picture is one of disciplined, conservative leverage. For a Real Estate Investment Trust (REIT), especially in the hotel sector, debt is a core tool, but APLE uses it sparingly compared to peers.

As of the third quarter of 2025, APLE had approximately $1.5 billion in total outstanding debt. This debt is offset by a strong equity base, with total shareholder equity sitting around $3.2 billion. This balance is crucial because it keeps their financial flexibility high, which is exactly what you want to see in a cyclical industry like lodging.

The most telling metric here is the Debt-to-Equity (D/E) ratio, which shows how much debt a company uses to finance its assets relative to the value of its shareholders' equity. APLE's D/E ratio is a low 47.4% (or 0.474) as of Q3 2025. Here's the quick math on why that's a good sign:

• APLE's D/E Ratio: 0.474
• Hotel & Resort REIT Industry Average (Nov 2025): 0.94

In simple terms, the industry average carries almost double the debt relative to equity that APLE does. This low leverage is a deliberate strategy, translating into a total debt to total capitalization (net of cash) of just 34% as of September 30, 2025. That's a very clean balance sheet for a REIT.

The company is active in managing its debt profile. In July 2025, for instance, they entered into a new term loan facility for $385 million, which matures in July 2030. This issuance, along with others, brought their total debt issuance for the trailing twelve months ending September 2025 to $605 million. Still, they are keeping their weighted average interest rate manageable at 4.8% and their weighted average debt maturities at a relatively short approximately three years as of Q3 2025.

They balance this debt financing with equity funding, not just by issuing new shares but also by returning capital to you, the shareholder. They've been using a Share Repurchase Program, buying back common shares, like the approximate 1.9 million shares purchased in Q1 2025 for an aggregate price of about $26.3 million. This move reduces the share count, which helps boost earnings per share. It shows they see their stock as a good investment. You can read more about their long-term capital focus in their Mission Statement, Vision, & Core Values of Apple Hospitality REIT, Inc. (APLE).

What this conservative approach hides is the opportunity cost: lower leverage means less risk, but it can also mean missing out on some higher-return, debt-fueled acquisitions. Still, in a rising rate environment, having that low debt-to-capitalization ratio is defintely a source of strength, giving them a significant cushion against market volatility.

Liquidity and Solvency

You're looking at Apple Hospitality REIT, Inc. (APLE)'s balance sheet to see if the company can cover its near-term obligations, and that's defintely the right place to start. For a hotel Real Estate Investment Trust (REIT), liquidity is less about a massive cash pile and more about predictable cash flow and manageable debt. The good news is that APLE maintains a stable, albeit tight, liquidity position, which is common for this asset-heavy sector.

As of the most recent trailing twelve months (TTM) data, Apple Hospitality REIT, Inc.'s liquidity ratios show a typical REIT profile. The Exploring Apple Hospitality REIT, Inc. (APLE) Investor Profile: Who's Buying and Why? will give you more context on the shareholder base, but here's the quick math on their current position:

• The Current Ratio sits at approximately 1.33.
• The Quick Ratio is slightly lower at around 0.83.

A current ratio above 1.0 is generally good, meaning current assets exceed current liabilities. The quick ratio, which strips out less-liquid assets like inventory, is below 1.0, which suggests a reliance on converting all current assets to cover immediate debts. This is not a major red flag for a REIT, as their primary assets (hotels) are long-term, not inventory, but it means they operate with minimal working capital (current assets minus current liabilities).

Working capital trends for a REIT like Apple Hospitality REIT, Inc. are less volatile than for a manufacturing company. Their working capital is structurally low because their current liabilities often include accrued expenses and dividends payable, while current assets are mainly cash, receivables, and prepaid expenses. The trend shows consistent management of this tight balance, but any unexpected drop in hotel revenue per available room (RevPAR) could quickly pressure this position.

The real story for Apple Hospitality REIT, Inc.'s financial health is in the cash flow statement, and it looks solid. Funds from Operations (FFO) or Modified Funds from Operations (MFFO) is the key metric here, not net income. For the third quarter of 2025, the company reported MFFO of approximately $100 million. This is the engine that drives everything else.

Here's a snapshot of the cash flow components based on Q3 and 2025 guidance:

The operating cash flow (MFFO) comfortably covers the Q3 2025 distributions of $57 million, which is the most important near-term liquidity strength. Plus, the company has financial flexibility, evidenced by the new $385 million term loan facility secured in July 2025, and a low total debt to total capitalization, net of cash, of approximately 34% as of September 30, 2025. So, while the quick ratio is low, the consistent, predictable cash generation from its hotel portfolio and manageable debt load mitigate any serious liquidity concerns.

Valuation Analysis

You're looking at Apple Hospitality REIT, Inc. (APLE) and trying to figure out if the recent stock dip makes it a bargain or a value trap. The short answer is that, based on key 2025 fiscal year metrics, APLE appears to be trading at a slight discount relative to its assets, but the market is clearly cautious on its earnings and near-term growth.

The stock has seen a significant pullback, dropping $\mathbf{24.85\%}$ over the last $\mathbf{12}$ months, trading near $\mathbf{\$11.74}$ as of mid-November 2025. This downturn is what drives the current mixed valuation picture. The market is pricing in the headwinds from higher operating costs and interest rates, but the company's underlying real estate value still offers a cushion.

Is Apple Hospitality REIT, Inc. (APLE) Overvalued or Undervalued?

From a book value perspective, Apple Hospitality REIT, Inc. looks undervalued. The Price-to-Book (P/B) ratio sits at just $\mathbf{0.87}$ for the current fiscal year, meaning you are paying only $\mathbf{87}$ cents for every dollar of the company's net assets. That's defintely a green flag for a real estate investment trust (REIT) with a portfolio of $\mathbf{219}$ upscale, select-service hotels, primarily branded Marriott and Hilton. A P/B below $\mathbf{1.0}$ suggests a potential undervaluation.

However, the earnings and cash flow multiples tell a more complex story. The Price-to-Earnings (P/E) ratio is $\mathbf{15.43}$, which is a reasonable multiple for a REIT, but the Enterprise Value-to-EBITDA (EV/EBITDA) ratio is $\mathbf{9.68}$. This EV/EBITDA is on the lower end for the sector, which often signals that the market views the near-term earnings growth as moderate or has concerns about debt, even though the total debt to total capitalization was approximately $\mathbf{36\%}$ as of June 30, 2025. Here's the quick math on the core ratios:

• Price-to-Earnings (P/E): $\mathbf{15.43}$
• Price-to-Book (P/B): $\mathbf{0.87}$
• Enterprise Value-to-EBITDA (EV/EBITDA): $\mathbf{9.68}$

Dividend Health and Analyst Consensus

The dividend is a major draw for APLE. The current annualized regular monthly cash distribution of $\mathbf{\$0.96}$ per common share translates to a high dividend yield of approximately $\mathbf{8.31\%}$ at the current stock price. But you need to look past the yield to the payout ratio (the percentage of earnings or cash flow paid out as dividends). The dividend payout ratio based on trailing earnings is high at $\mathbf{131.51\%}$, which is unsustainable long-term and a common red flag.

Still, for a REIT, the payout ratio based on cash flow is more important. The payout ratio based on cash flow estimates is a much healthier $\mathbf{56.41\%}$, suggesting the dividend is covered by the company's operating cash flow, which is Funds From Operations (FFO) in the REIT world. The analyst community is split, which is why the stock is stuck in a range.

The most recent consensus from a group of $\mathbf{6}$ analysts is a 'Hold' rating, with an average $\mathbf{12}$-month price target of $\mathbf{\$12.70}$. This target suggests a modest upside of about $\mathbf{8.26\%}$ from the current price, but it's not a screaming buy. The ratings are split: $\mathbf{4}$ analysts suggest a 'Hold' and $\mathbf{2}$ recommend a 'Buy,' with no 'Sell' ratings. This indicates that while the stock isn't considered overvalued, the near-term catalysts for a major price move are limited. You can dive deeper into the institutional ownership dynamics by Exploring Apple Hospitality REIT, Inc. (APLE) Investor Profile: Who's Buying and Why?

Next Step: Review the company's Q3 2025 earnings report, which showed Adjusted Hotel EBITDA down $\mathbf{5.4\%}$ year-over-year, to see how the cost inflation is truly impacting the cash flow coverage of that $\mathbf{8.31\%}$ yield.

Risk Factors

You're looking at Apple Hospitality REIT, Inc. (APLE) and wondering where the ice is thinnest. Honestly, the biggest near-term risk is simply that the hospitality sector's recovery is proving a lot bumpier than we all hoped. The company's latest guidance, revised in November 2025, tells the story: they now expect full-year 2025 Comparable Hotels Revenue Per Available Room (RevPAR) change to be between a decline of 2% and a decline of 1%. That's a clear signal of softer booking trends and declining occupancy, not the growth investors were initially banking on.

This is a pure demand problem, amplified by a notable pullback in government travel, which hits their upscale, select-service portfolio. The core business fundamentals are still strong, but the macro environment is a defintely headwind.

The external risks are colliding with internal cost pressures, creating a margin squeeze. Here's the quick math: total hotel expenses are projected to rise by about 3.3% at the midpoint for the full year 2025, mainly due to fixed costs like real estate taxes and general liability insurance. That's a tough combination: declining revenue per room while your fixed costs are increasing.

• RevPAR is falling, meaning less revenue per room.
• Fixed costs are rising, squeezing operating margins.

On the financial side, interest rate volatility remains a serious threat. As of June 30, 2025, Apple Hospitality REIT, Inc. had approximately $1.5 billion in total outstanding debt, carrying a combined weighted-average interest rate of about 5.0%. What this estimate hides is the near-term refinancing risk; the weighted-average debt maturities are only about two years out. If interest rates tick up even a little before they address those maturities, their cost of capital will jump.

To be fair, the company is not sitting still. Their strategic response is multi-pronged, focusing on capital allocation and expense control. They are actively managing their portfolio by executing strategic asset dispositions-selling three hotels for a combined $37 million since the start of 2025-and using those proceeds to fund share repurchases. This is a smart move to take advantage of the disconnect between the public stock price and the private market value of their assets.

They are also doing a great job on the expense side. Despite the inflationary pressures, strong cost control measures led management to increase the Comparable Hotels Adjusted Hotel EBITDA margin guidance by 20 basis points, now expected to be between 33.9% and 34.5% for the full year 2025. That's a testament to good operational discipline. Plus, they've been proactive in managing debt, repaying secured mortgage loans totaling about $33 million in the second quarter of 2025 and entering a new $385 million term loan that matures in 2030. This pushes out some of that maturity wall.

Here's a snapshot of the key financial risks and mitigation efforts:

If you're looking for a deeper dive into the valuation models, check out the full post: Breaking Down Apple Hospitality REIT, Inc. (APLE) Financial Health: Key Insights for Investors. Your next step should be to model the impact of a 100 basis point increase in their average debt rate on their Funds From Operations (FFO) to truly stress-test the balance sheet.

Growth Opportunities

The growth story for Apple Hospitality REIT, Inc. (APLE) right now is less about explosive top-line expansion and more about strategic portfolio refinement and capital efficiency. Honestly, the near-term environment is tough-economic uncertainty and a pullback in government travel have led to a revised 2025 outlook-but management is making smart, actionable moves to position the company for a stronger future.

You need to look past the muted revenue per available room (RevPAR) forecasts and focus on their disciplined capital allocation, which is the real engine for per-share value growth.

Key Growth Drivers and Competitive Edge

Apple Hospitality REIT's competitive advantage lies in its rooms-focused, upscale, select-service model, which is a defintely resilient segment of the lodging market. They stick to what works: high-quality assets under powerhouse brands like Marriott, Hilton, and Hyatt. This brand consistency drives high booking volume through established loyalty programs and gives them a degree of pricing power that smaller, independent hotels lack.

Their portfolio is geographically diverse across 85 U.S. markets, which helps cushion the blow when a single region or local economy slows down. Plus, a significant portion of their properties-about 60%-face no direct competition within a five-mile radius, protecting occupancy rates even when overall demand is softer.

• Focus on upscale, select-service hotels.
• Benefit from strong Marriott, Hilton, and Hyatt brands.
• Geographic diversification mitigates regional risk.
• Low new supply competition in key markets.

2025 Financial Projections and Near-Term Reality

The reality for 2025 is a cautious one, reflecting broader macroeconomic headwinds. The company has revised its full-year guidance, which is a clear signal of the pressure from factors like operating cost inflation and softer business demand. For the full fiscal year 2025, the company expects Comparable Hotels RevPAR change to be between -2% and -1%. Here's the quick math on what analysts are projecting for the full year:

What this estimate hides is the operational strength shown in Q3 2025, where the company reported revenue of $373.88 million and an EPS of $0.42, both beating consensus estimates. They are managing expenses and shifting business mix to offset the industry-wide softness, which is a sign of good management in a difficult environment.

Strategic Initiatives and Capital Allocation

The real growth driver isn't just in hotel performance, but in how Apple Hospitality REIT is managing its capital. Their strategy is a classic capital recycling play: sell lower-growth assets and reinvest the proceeds into higher-growth opportunities or their own undervalued stock.

Since the beginning of the year, they've sold three hotels for a total of $37 million and have four more under contract for sale at $36 million. They are using this cash to repurchase shares-approximately 3.8 million shares for $48 million as of Q3 2025-which immediately boosts earnings per share (EPS) and Funds From Operations (FFO).

For future growth, they are making targeted investments:

• Acquired the Homewood Suites Tampa-Brandon for $18.8 million in June 2025.
• On track to acquire the Motto Nashville Downtown for approximately $98 million in late 2025.
• Committed to future development with forward purchase contracts for two new hotels, totaling $210 million, expected to open in 2027 and 2028.

They are also investing heavily in their existing portfolio, anticipating spending $80 million to $90 million in capital improvements during 2025, including comprehensive renovations for about 20 hotels, which is crucial for maintaining their upscale positioning and driving future rate growth. You can dive deeper into the full financial picture in our detailed post on Breaking Down Apple Hospitality REIT, Inc. (APLE) Financial Health: Key Insights for Investors.

Next Step: Your team should model the impact of the $48 million in share repurchases against the $162 million to $175 million net income guidance to see the precise accretion to your estimated 2025 EPS.