Apple Hospitality REIT Q3 Net Income Dips 9.6% Amid Revenue Decline

TL;DR

**APLE's Q3 results are a red flag, with declining profits and revenue suggesting a challenging market for hotel REITs; proceed with caution.**

AI Summary

Apple Hospitality REIT, Inc. (APLE) reported a decline in net income and revenue for the three and nine months ended September 30, 2025, compared to the same periods in 2024. For the three months, net income decreased by 9.58% to $50.88 million from $56.27 million, and total revenue fell by 1.31% to $373.88 million from $378.84 million. Over the nine-month period, net income dropped significantly by 20.89% to $145.75 million from $184.25 million, with total revenue decreasing by 1.14% to $1.086 billion from $1.098 billion. The company's investment in real estate, net, decreased to $4.698 billion as of September 30, 2025, from $4.821 billion at December 31, 2024. A key business change was the recovery and reinstatement of operations for the New York Property's 209 guest rooms in April 2025, after legal proceedings against a defaulting third-party hotel operator. Risks include increased impairment of depreciable real estate, which rose to $5.72 million for the nine months ended September 30, 2025, from $2.90 million in the prior year, and higher interest and other expenses, net, which increased to $61.74 million from $57.90 million. The company also saw a decrease in common shares outstanding due to repurchases, from 239,765,905 at December 31, 2024, to 236,831,958 at September 30, 2025.

Why It Matters

APLE's declining net income and revenue signal potential headwinds for investors, suggesting a tougher operating environment or increased costs. The recovery of the New York Property could be a positive catalyst, but its impact is yet to fully materialize. For employees, stable operations are crucial, and the company's continued hotel management structure provides some consistency. Customers might see continued investment in properties, as evidenced by $58.81 million in capital improvements. In a competitive lodging market, APLE's ability to manage expenses and drive revenue per available room (RevPAR) will be critical, especially with increased impairment charges and interest expenses impacting profitability.

Risk Assessment

Risk Level: medium — The risk level is medium due to a 20.89% decrease in net income for the nine months ended September 30, 2025, to $145.75 million, and a 1.14% decline in total revenue to $1.086 billion. Additionally, impairment of depreciable real estate more than doubled to $5.72 million from $2.90 million, indicating potential asset value erosion.

Analyst Insight

Investors should closely monitor APLE's upcoming earnings calls for management's outlook on revenue growth and expense control, particularly regarding interest costs and property impairments. Consider holding existing positions but deferring new investments until there's clear evidence of a turnaround in net income and revenue trends, especially given the competitive hotel REIT landscape.

Financial Highlights

revenue

$1.086B

total Assets

$4.698B

net Income

$145.75M

eps

$0.61

revenue Growth

-1.14%

Revenue Breakdown

Key Numbers

• $50.88M — Net income for Q3 2025 (Decreased by 9.58% from $56.27 million in Q3 2024)
• $373.88M — Total revenue for Q3 2025 (Decreased by 1.31% from $378.84 million in Q3 2024)
• $145.75M — Net income for nine months ended Sept 30, 2025 (Decreased by 20.89% from $184.25 million in the same period of 2024)
• $1.086B — Total revenue for nine months ended Sept 30, 2025 (Decreased by 1.14% from $1.098 billion in the same period of 2024)
• $5.72M — Impairment of depreciable real estate for nine months ended Sept 30, 2025 (Increased from $2.90 million in the same period of 2024)
• $61.74M — Interest and other expense, net, for nine months ended Sept 30, 2025 (Increased from $57.90 million in the same period of 2024)
• 236,831,958 — Common shares outstanding as of Sept 30, 2025 (Decreased from 239,765,905 at Dec 31, 2024, due to repurchases)
• $0.21 — Basic and diluted net income per common share for Q3 2025 (Decreased from $0.23 in Q3 2024)
• $0.61 — Basic and diluted net income per common share for nine months ended Sept 30, 2025 (Decreased from $0.76 in the same period of 2024)
• $18.8M — Gross purchase price of one hotel acquired (Homewood Suites in Tampa, Florida, acquired on June 10, 2025)

Key Players & Entities

• Apple Hospitality REIT, Inc. (company) — registrant
• Marriott International, Inc. (company) — trademark owner
• Hilton Worldwide Holdings Inc. (company) — trademark owner
• Hyatt Hotels Corporation (company) — trademark owner
• Hersha Hospitality Management (company) — manager of Homewood Suites in Tampa, Florida
• New York Property (company) — independent boutique hotel in New York, New York
• FASB (regulator) — Financial Accounting Standards Board
• SEC (regulator) — Securities and Exchange Commission
• New York Stock Exchange (regulator) — exchange where APLE common shares are listed

FAQ

Risk Factors

• Increased Impairment Charges [medium — financial]: Impairment of depreciable real estate increased significantly to $5.72 million for the nine months ended September 30, 2025, up from $2.90 million in the prior year. This indicates a potential decline in the value of the company's real estate assets.
• Rising Interest and Other Expenses [medium — financial]: Interest and other expenses, net, increased to $61.74 million for the nine months ended September 30, 2025, from $57.90 million in the same period of 2024. This rise in expenses negatively impacts profitability.
• Legal Proceedings Impacting Operations [low — legal]: The company experienced a recovery and reinstatement of operations for 209 guest rooms at its New York Property in April 2025, following legal proceedings against a defaulting third-party hotel operator. Such legal entanglements can disrupt operations and create uncertainty.
• Hotel Operations and Occupancy [high — operational]: The company's performance is directly tied to the operational success of its 220 hotels. Fluctuations in occupancy rates, RevPAR, and operational costs can significantly impact revenue and net income.

Industry Context

The lodging sector, APLE's primary focus, is sensitive to economic conditions and travel trends. While the industry has seen recovery post-pandemic, rising operational costs and interest rates present ongoing challenges. Competition remains high, with REITs like APLE needing to strategically manage their portfolios through acquisitions and dispositions to maintain profitability and asset value.

Regulatory Implications

As a publicly traded REIT, APLE is subject to SEC regulations and reporting requirements. Changes in tax laws affecting REITs or real estate investments could impact its financial performance. Compliance with environmental, social, and governance (ESG) standards is also becoming increasingly important for investor relations.

What Investors Should Do

1. Monitor impairment charges and interest expense trends.
2. Analyze the performance of newly acquired and divested properties.
3. Evaluate the impact of operational recovery at the New York Property.

Key Dates

• 2025-04-01: Reinstatement of operations for 209 guest rooms at New York Property — Indicates resolution of legal proceedings and return of revenue-generating capacity for a portion of the hotel.
• 2025-06-10: Acquisition of Homewood Suites in Tampa, Florida — Represents strategic investment and expansion of the hotel portfolio.
• 2025-09-30: End of third quarter and nine-month period — Reporting period for the financial results discussed in the 10-Q.
• 2025-12-31: Expected sale of four hotels (367 guest rooms) — Indicates portfolio management and potential capital recycling.

Glossary

REIT

Real Estate Investment Trust. A company that owns, operates, or finances income-producing real estate. (APLE is structured as a REIT, which has specific tax and operational implications.)

Depreciable real estate

The portion of a real estate asset's value that can be expensed over its useful life for tax and accounting purposes. (An increase in impairment charges on this indicates a potential decrease in the carrying value of APLE's hotel properties.)

Held for sale

Assets that meet specific criteria to be classified as held for sale, indicating management's intent to sell them in the near future. (APLE has classified four hotels as held for sale, suggesting a strategic decision to divest these assets.)

RevPAR

Revenue Per Available Room. A key performance indicator in the hotel industry that measures a hotel's performance over a given period. (While not explicitly stated with numbers, RevPAR is a critical metric for APLE's hotel operations and profitability.)

Year-Over-Year Comparison

Compared to the prior year, APLE reported a decline in both net income and total revenue for the nine months ended September 30, 2025. Net income fell by 20.89% and revenue by 1.14%. Key risks have emerged or intensified, notably a significant increase in impairment of depreciable real estate (from $2.90M to $5.72M) and higher interest and other expenses (from $57.90M to $61.74M), contributing to the bearish financial performance.

Filing Documents

• aple-20250930.htm (10-Q) — 4342KB
• aple-ex31_1.htm (EX-31.1) — 13KB
• aple-ex31_2.htm (EX-31.2) — 12KB
• aple-ex31_3.htm (EX-31.3) — 12KB
• aple-ex32_1.htm (EX-32.1) — 10KB
• 0001193125-25-262579.txt ( ) — 13605KB
• aple-20250930.xsd (EX-101.SCH) — 1594KB
• aple-20250930_htm.xml (XML) — 2572KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Item 1.

Financial Statements

Financial Statements 3 Consolidated Balance Sheets – September 30, 2025 and December 31, 2024 3 Consolidated Statements of Operations and Comprehensive Income – three and nine months ended September 30, 2025 and 2024 4 Consolidated Statements of Shareholders' Equity – three and nine months ended September 30, 2025 and 2024 5 Consolidated Statements of Cash Flows – nine months ended September 30, 2025 and 2024 6

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 7 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 21 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 39 Item 4.

Controls and Procedures

Controls and Procedures 39

OTHER INFORMATION

PART II. OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 40 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 40 Item 5. Other Information 40 Item 6. Exhibits 41

Signatures

Signatures 42 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.

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Financi al Statements

Item 1. Financi al Statements Apple Hospitality REIT, Inc. Consolidated B alance Sheets (in thousands, except share data) September 30, December 31, 2025 2024 (unaudited) Assets Investment in real estate, net of accumulated depreciation and amortization of $ 1,923,741 and $ 1,821,344 , respectively $ 4,697,767 $ 4,820,748 Assets held for sale 30,584 17,015 Cash and cash equivalents 50,290 10,253 Restricted cash-furniture, fixtures and other escrows 35,065 33,814 Due from third-party managers, net 52,830 34,522 Other assets, net 46,984 53,568 Total Assets $ 4,913,520 $ 4,969,920 Liabilities Debt, net $ 1,507,948 $ 1,471,452 Finance lease liabilities 111,243 111,585 Accounts payable and other liabilities 104,388 121,024 Total Liabilities 1,723,579 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 236,831,958 and 239,765,905 shares, respectively 4,733,550 4,771,005 Accumulated other comprehensive income 2,844 15,587 Accumulated distributions greater than net income ( 1,546,453 ) ( 1,520,733 ) Total Shareholders' Equity 3,189,941 3,265,859 Total Liabilities and Shareholders' Equity $ 4,913,520 $ 4,969,920 See notes to consolidated financial statements. 3 Apple Hospitality REIT, Inc. Consolidated Statements of Operatio ns and Comprehensive Income (Unaudited) (in thousands, except per share data) Three Months Ended Nine Months Ended September 30, September 30, 2025 2024 2025 2024 Revenues: Room $ 339,986 $ 346,058 $ 985,439 $ 998,493 Food and beverage 15,734 15,841 49,419 48,760 Other 18,158 16,944 51,092 51,179 Total revenue 373,878 378,843 1,085,950 1,098,432 Expenses: Hotel operating expense: Operating 9

Notes to Consolidated Financial Statements

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 September 30, 2025 , the Company owned 220 hotels with an aggregate of 29,687 guest rooms located in 37 states and the District of Columbi a ("D.C."), including four hotels with 367 guest rooms classified as held for sale which are expected to be sold in the fourth 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 sh

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