Apple Hospitality REIT Extends Credit Facility Waiver Period and Enhances Financial Flexibility

3/2/21

RICHMOND, Va.--(BUSINESS WIRE)--Apple Hospitality REIT, Inc. (NYSE: APLE) (the “Company” or “Apple Hospitality”) today announced that it has successfully amended its unsecured debt agreements to extend the waiver period of all existing financial covenants through the end of the fourth quarter of 2021 with all but two existing financial covenants waived through the end of the first quarter of 2022 (the “Extended Covenant Waiver Period”), unless the Company elects an earlier date. The Company’s unsecured credit facilities consist of a $425 million revolving credit facility, $820 million of funded term loans and a $50 million senior notes facility. As of March 1, 2021, the revolving credit facility had an outstanding balance of approximately $161 million with availability of approximately $264 million.

“With the strength of our balance sheet, our track record of disciplined capital allocation and our current operational outperformance, we secured an extension of our covenant waiver period and enhanced flexibility without raising additional capital or further encumbering our portfolio as we continue our efforts to preserve equity value for our shareholders,” commented Liz Perkins, Chief Financial Officer of Apple Hospitality. “We successfully achieved our key objective of enhancing our ability to exit the waiver period while increasing our near-term flexibility to capitalize on potential acquisition opportunities. These adjustments better position us to maximize long-term value for our shareholders as our business continues to recover. We are incredibly grateful for our longstanding relationships with our lenders and their continued support.”

The amendments provide for, among other things, the following modifications to the Company’s original covenant waiver period restrictions during the Extended Covenant Waiver Period:

  • Suspend testing of the Minimum Fixed Charge Coverage Ratio and the Minimum Unsecured Interest Coverage Ratio until the compliance certificate is required to be delivered for the fiscal quarter ending March 31, 2022.
  • Suspend testing for all other of the Company’s existing financial maintenance covenants until the date the compliance certificate is required to be delivered for the fiscal quarter ending June 30, 2022.
  • Provide allowance of $300 million for acquiring unencumbered assets with proceeds from asset sales.
  • Provide allowance of $300 million for acquiring unencumbered assets funded by common equity.
  • Maintain the fully unsecured status of the Company's unencumbered assets. A requirement to pledge the equity interests of each direct or indirect owner of certain unencumbered property in favor of the administrative agent if average liquidity for any month is less than $200 million, a reduction from the $275 million per the prior amendment, or if the total amount outstanding under the revolving credit facility exceeds $275 million.
  • Maintain covenants measured on an annualized basis following the Extended Covenant Waiver Period until the calculation is based on a trailing four quarter period. Modify certain of the existing financial maintenance covenants to less restrictive levels following the Extended Covenant Waiver Period as follows:
    • Maximum Consolidated Leverage Ratio of 8.50x for the first two fiscal quarters, 8.00x for two fiscal quarters, 7.50x for one fiscal quarter and then a ratio of 6.50x thereafter;
    • Minimum Fixed Charge Coverage Ratio of 1.05x for the first fiscal quarter, 1.25x for one fiscal quarter and then a ratio of 1.5x thereafter;
    • Minimum Unsecured Interest Coverage Ratio of no less than 1.25x for the first fiscal quarter, 1.50x for one fiscal quarter, 1.75x for one fiscal quarter and then a ratio of 2.0x thereafter; and
    • Maximum Unsecured Leverage Ratio of 65% for two fiscal quarters and 60% thereafter.

About Apple Hospitality REIT, Inc.

Apple Hospitality REIT, Inc. (NYSE: APLE) is a publicly traded real estate investment trust (“REIT”) that owns one of the largest and most diverse portfolios of upscale, rooms-focused hotels in the United States. Apple Hospitality’s portfolio consists of 234 hotels with approximately 30,000 guest rooms located in 88 markets throughout 35 states. Concentrated with industry-leading brands, the Company’s portfolio consists of 104 Marriott-branded hotels, 125 Hilton-branded hotels, three Hyatt-branded hotels and two independent hotels. For more information, please visit www.applehospitalityreit.com.

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