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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 September 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 October 27, 2025: 236,575,692

Index

Apple Hospitality REIT, Inc.

Form 10-Q

Index


			Page Number
PART I. FINANCIAL INFORMATION

	Item 1.	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	7

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39

	Item 4.	Controls and Procedures	39

PART II. OTHER INFORMATION

	Item 1.	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			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.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Apple Hospitality REIT, Inc.

Consolidated Balance 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.

Apple Hospitality REIT, Inc.

Consolidated Statements of Operations 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		93,958			93,350			272,611			268,669
Hotel administrative		32,742			31,433			95,056			92,638
Sales and marketing		32,994			33,000			96,880			96,488
Utilities		14,928			14,787			39,251			37,971
Repair and maintenance		18,210			17,863			53,658			52,331
Franchise fees		16,659			16,963			48,287			49,244
Management fees		12,469			12,546			36,651			36,156
Total hotel operating expense		221,960			219,942			642,394			633,497
Property taxes, insurance and other		22,449			20,946			68,679			63,878
General and administrative		7,528			9,190			24,820			30,839
Impairment of depreciable real estate		5,724			2,896			5,724			2,896
Depreciation and amortization		48,100			48,143			144,063			142,681
Total expense		305,761			301,117			885,680			873,791

Gain on sale of real estate		4,380			-			7,937			18,215

Operating income		72,497			77,726			208,207			242,856

Interest and other expense, net		(21,375	)		(21,217	)		(61,735	)		(57,896	)

Income before income taxes		51,122			56,509			146,472			184,960

Income tax expense		(242	)		(243	)		(723	)		(713	)

Net income	$	50,880		$	56,266		$	145,749		$	184,247

Other comprehensive loss:
Interest rate derivatives		(1,386	)		(16,588	)		(12,743	)		(15,612	)

Comprehensive income	$	49,494		$	39,678		$	133,006		$	168,635

Basic and diluted net income per common share	$	0.21		$	0.23		$	0.61		$	0.76

Weighted average common shares outstanding - basic and diluted		237,072			240,500			238,255			241,690

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

Balance at June 30, 2025		236,990		$	4,735,003		$	4,230		$	(1,540,448	)	$	3,198,785
Share-based compensation, net of common shares surrendered to satisfy employee tax withholding requirements		12			663			-			-			663
Equity issuance costs		-			(77	)		-			-			(77	)
Common shares repurchased		(170	)		(2,039	)		-			-			(2,039	)
Interest rate derivatives		-			-			(1,386	)		-			(1,386	)
Net income		-			-			-			50,880			50,880
Distributions declared to shareholders ($0.24 per share)		-			-			-			(56,885	)		(56,885	)
Balance at September 30, 2025		236,832		$	4,733,550		$	2,844		$	(1,546,453	)	$	3,189,941

Balance at June 30, 2024		241,280		$	4,790,949		$	21,380		$	(1,479,359	)	$	3,332,970
Share-based compensation, net of common shares surrendered to satisfy employee tax withholding requirements		12			1,042			-			-			1,042
Equity issuance costs		-			(56	)		-			-			(56	)
Common shares repurchased		(1,367	)		(19,176	)		-			-			(19,176	)
Interest rate derivatives		-			-			(16,588	)		-			(16,588	)
Net income		-			-			-			56,266			56,266
Distributions declared to shareholders ($0.24 per share)		-			-			-			(57,589	)		(57,589	)
Balance at September 30, 2024		239,925		$	4,772,759		$	4,792		$	(1,480,682	)	$	3,296,869


Nine Months Ended September 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		599			8,256			-			-			8,256
Equity issuance costs		-			(482	)		-			-			(482	)
Common shares repurchased		(3,533	)		(45,229	)		-			-			(45,229	)
Interest rate derivatives		-			-			(12,743	)		-			(12,743	)
Net income		-			-			-			145,749			145,749
Distributions declared to shareholders ($0.72 per share)		-			-			-			(171,469	)		(171,469	)
Balance at September 30, 2025		236,832		$	4,733,550		$	2,844		$	(1,546,453	)	$	3,189,941

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		854			13,054			-			-			13,054
Equity issuance costs		-			(447	)		-			-			(447	)
Common shares repurchased		(2,445	)		(34,652	)		-			-			(34,652	)
Interest rate derivatives		-			-			(15,612	)		-			(15,612	)
Net income		-			-			-			184,247			184,247
Distributions declared to shareholders ($0.72 per share)		-			-			-			(173,702	)		(173,702	)
Balance at September 30, 2024		239,925		$	4,772,759		$	4,792		$	(1,480,682	)	$	3,296,869

See notes to consolidated financial statements.

Apple Hospitality REIT, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)


	Nine Months Ended
	September 30,
	2025			2024
Cash flows from operating activities:
Net income	$	145,749		$	184,247
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		144,063			142,681
Impairment of depreciable real estate		5,724			2,896
Gain on sale of real estate		(7,937	)		(18,215	)
Other non-cash expenses, net		5,132			6,290
Changes in operating assets and liabilities:
Increase in due from third-party managers, net		(18,320	)		(21,521	)
(Decrease) increase in other assets, net		(1,513	)		320
Increase in accounts payable and other liabilities		11,481			13,447
Net cash provided by operating activities		284,379			310,145

Cash flows from investing activities:
Acquisition of hotel properties, net		(18,871	)		(197,349	)
Disbursements for potential acquisitions, net		(3,661	)		-
Capital improvements		(58,809	)		(59,577	)
Net proceeds from sale of real estate		36,242			40,056
Net cash used in investing activities		(45,099	)		(216,870	)

Cash flows from financing activities:
Repurchases of common shares		(45,229	)		(34,652	)
Common shares surrendered to satisfy employee withholding requirements		(3,275	)		(5,050	)
Distributions paid to common shareholders		(183,477	)		(185,881	)
Equity issuance costs		(422	)		(422	)
Proceeds from revolving credit facility		173,000			360,900
Payments on revolving credit facility		(255,500	)		(250,400	)
Proceeds from term loans and senior notes		385,000			45,000
Payments on term loans and senior notes		(225,000	)		-
Payments of mortgage debt and other loans		(39,071	)		(26,488	)
Principal payments on finance leases		(501	)		(360	)
Financing costs		(3,517	)		(823	)
Net cash used in financing activities		(197,992	)		(98,176	)

Net change in cash, cash equivalents and restricted cash		41,288			(4,901	)

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

Cash, cash equivalents and restricted cash, end of period	$	85,355		$	38,717

Supplemental cash flow information:
Interest paid, net	$	59,895		$	56,233
Income taxes paid	$	1,009		$	780

Supplemental disclosure of noncash investing and financing activities:
Accrued distribution to common shareholders	$	18,927		$	19,162
Accrued capital expenditures	$	4,576		$	3,954

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	$	50,290		$	6,147
Restricted cash-furniture, fixtures and other escrows, end of period		35,065			32,570
Cash, cash equivalents and restricted cash, end of period	$	85,355		$	38,717

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 September 30, 2025, the Company owned 220 hotels with an aggregate of 29,687 guest rooms located in 37 states and the District of Columbia (“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 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 nine months ended September 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 September 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 September 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):


	September 30,			December 31,
	2025			2024
Land	$	832,955		$	839,187
Building and improvements		5,039,143			5,064,866
Furniture, fixtures and equipment		620,980			610,062
Finance ground lease assets		102,084			102,084
Franchise fees		26,346			25,893
		6,621,508			6,642,092
Less accumulated depreciation and amortization		(1,923,741	)		(1,821,344	)
Investment in real estate, net	$	4,697,767		$	4,820,748

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 Columbia, including four hotels with 367 guest rooms classified as held for sale which are expected to be sold in the fourth quarter of 2025. Also included in the Company’s hotel and guest room counts as of September 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 September 30, 2025, the Company leases all of its 220 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 nine months ended September 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 proceeds from a 1031 Exchange (as defined below) 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 September 30, 2025 was approximately $1.4 million and $0.1 million, respectively.

During the year ended December 31, 2024, the Company acquired two hotels, both acquired during the nine months ended September 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

During the third quarter of 2025, the Company entered into three purchase and sale agreements with two unrelated parties for the sale of four hotels for a combined gross sales price of $36.4 million. Since the buyer under each contract completed its due diligence and made a non-refundable deposit, as of September 30, 2025, the Company classified these four hotels as assets held for sale on its consolidated balance sheet. As of September 30, 2025, two of these hotels were recorded at their respective carrying values, each of which was less than its contract price, net of costs to sell. The other two hotels held for sale were recorded at their respective estimated fair values less costs to sell, based on the contracted sales prices as described below, resulting in an impairment loss recognized during the third quarter of 2025. All four hotels are expected to be sold in the fourth quarter of 2025.

Dispositions

During the nine months ended September 30, 2025, the Company sold three hotels to three unrelated parties for a combined gross sales price of approximately $37.0 million, resulting in a combined gain on the sales of approximately $7.9 million, net of transaction costs, which is included in the Company’s consolidated statement of operations for the nine months ended September 30, 2025. The three hotels had a total carrying value of approximately $28.2 million at their respective times of sale. The following table lists the three hotels sold in 2025:


City	State	Brand	Date Sold	Guest Rooms
Chattanooga	TN	Homewood Suites	2/12/2025		76
Indianapolis	IN	SpringHill Suites	3/19/2025		130
Houston	TX	Marriott	8/18/2025		206
					412

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 losses of approximately $(3.8) million and $(0.1) million for the nine months ended September 30, 2025 and 2024, respectively, relating to the results of operations of the 13 hotels noted above (the four hotels classified as held for sale at September 30, 2025, the three hotels

sold in the first nine 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 nine months ended September 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. Similarly, a portion of the proceeds from the anticipated fourth quarter sales of two of the four hotels held for sale at September 30, 2025, is expected to be used to complete a 1031 Exchange for the future acquisition of the Motto in Nashville, Tennessee, which is currently under development and anticipated to be completed in December 2025, as discussed below in Note 10. This 1031 Exchange will result in the deferral of taxable gains of approximately $3.3 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.

Impairment of Depreciable Real Estate

During the third quarter of 2025, the Company identified indicators of impairment at two properties. The properties, which were held for sale as of September 30, 2025, were identified for potential sale in August 2025, and the Company entered into a purchase and sale agreement with an unrelated party for the sale of the hotels for an aggregate gross sales price of $16.1 million. As a result, the Company recognized a total impairment loss of approximately $5.7 million for these properties in the third quarter of 2025, to adjust the carrying values of the hotels to their respective estimated fair values less costs to sell, which were based on the contracted sales prices, Level 2 inputs under the fair value hierarchy. The Company plans to complete the sale of the hotels in the fourth quarter of 2025.

During the third quarter of 2024, the Company identified indicators of impairment at two properties. The two properties were separately identified for potential sale in August and October 2024, and the Company entered into purchase and sale agreements with unrelated parties for the sale of the hotels for a combined gross sales price of $13.5 million. As a result, the Company recognized a total impairment loss of approximately $2.9 million for these properties in the third quarter of 2024, to adjust the carrying value of the hotels to their estimated fair values less costs to sell, which were based on the contracted sales prices, Level 2 inputs under the fair value hierarchy. The Company completed the sale of one of these hotels in November 2024 and the other in December 2024.

4. Debt

Summary

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


	September 30, 2025		December 31, 2024
Revolving credit facility	$	-	$	82,500
Term loans and senior notes, net		1,293,287		1,135,175
Mortgage debt, net		214,661		253,777
Debt, net	$	1,507,948	$	1,471,452

The aggregate amounts of principal payable under the Company’s total debt obligations as of September 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 (October - December)	$	30,963
2026		204,649
2027		278,602
2028		334,066
2029		162,294
Thereafter		504,654
		1,515,228
Unamortized debt issuance costs		(7,280	)
Total	$	1,507,948

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”) with nine out of the eleven swaps also including an additional 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 September 30, 2025 and December 31, 2024, is set forth below. All dollar amounts are in thousands.


	September 30, 2025			Percentage			December 31, 2024			Percentage
Fixed-rate debt (1)	$	1,025,228			68	%	$	1,114,300			75	%
Variable-rate debt		490,000			32	%		362,500			25	%
Total	$	1,515,228					$	1,476,800
Weighted-average interest rate of debt		4.82	%					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 “$385 Million Term Loan Facility”), the Company utilized an unsecured $225 million term loan facility that was comprised of (i) a $50 million term loan with a maturity date of August 2, 2025 and (ii) a $175 million term loan with a maturity date of August 2, 2025 (the term loans described in clauses (i) and (ii) are referred to together as the “$225 million term loan facility”). 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%, based upon the Company’s leverage ratio, as calculated under the terms of the credit agreement.

$385 Million 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 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, based 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.

$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%, based on the Company's leverage ratio, as calculated under the terms of the amended credit agreement. Subject to certain conditions, including covenant compliance and payment of additional fees, the maturity date of the $130 million term loan facility may be extended by the Company to July 25, 2027.

As of September 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		September 30, 2025			December 31, 2024
Revolving credit facility (1)	SOFR + 0.10% + 1.40% to 2.25%	7/25/2026	(2)	$	-		$	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
$175 million term loan	SOFR + 0.10% + 1.65% to 2.50%	8/2/2025	(3)		-			175,000
$385 million term loan	SOFR + 1.35% to 2.20%	7/31/2030			385,000			-
$130 million term loan	SOFR + 0.10% + 1.35% to 2.20%	7/25/2026	(4)		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					1,300,000			1,140,000
Unamortized debt issuance costs					(6,713	)		(4,825	)
Term loans and senior notes, net					1,293,287			1,135,175

Credit facilities, net (1)				$	1,293,287		$	1,217,675
Weighted-average interest rate (5)					4.98	%		4.88	%

(1)

Excludes unamortized debt issuance costs related to the Revolving Credit Facility (as defined below) totaling approximately $1.2 million and $2.1 million as of September 30, 2025 and December 31, 2024, respectively, which are included in other assets, net in the Company’s consolidated balance sheets.

(2)

The Revolving Credit Facility matures on July 25, 2026, but it can be extended up to one year, subject to certain conditions including covenant compliance and payment of additional fees. The Company presently has the ability to exercise this extension, however, it plans to pursue refinancing of the maturing debt.

(3)

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 the “$385 Million Term Loan Facility” section above for details.

(4)

This loan matures on July 25, 2026, but it can be extended up to one year, subject to certain conditions including covenant compliance and payment of additional fees. The Company presently has the ability to exercise this extension, however, it plans to pursue refinancing of the maturing debt.

(5)

Interest rate represents the weighted-average effective annual interest rate at the balance sheet date which includes the effect of interest rate swaps in effect on $685.0 million and $735.0 million of the outstanding variable-rate debt as of September 30, 2025 and December 31, 2024, respectively. See Note 5 for more information on the interest rate swap agreements. The one-month SOFR on September 30, 2025 and December 31, 2024 was 4.13% and 4.33%, respectively.

For the unsecured credit facilities noted in the table above, the Company may make voluntary prepayments, in whole or in part, at any time, subject to certain conditions. The revolving credit facility has a maximum borrowing capacity of $650 million (the “Revolving Credit Facility”). Subject to certain conditions, including covenant compliance and payment of additional fees, the Revolving Credit Facility maturity date may be extended up to one year. As of September 30, 2025, the Company had availability of approximately $647.9 million under the Revolving Credit Facility after taking a $2.1 million letter of credit into account. The Company is also required to pay quarterly an unused facility fee at an annual rate of 0.20% or 0.25% on the unused portion of the Revolving Credit Facility, based on the amount of borrowings outstanding during the quarter. Interest on the Revolving Credit Facility and the unsecured term loans, subject to certain exceptions, is generally payable monthly, with interest rates typically equal to the one-month SOFR plus a 0.10% SOFR spread adjustment plus a margin (margin ranges shown in the table above), based upon the Company’s leverage ratio, as calculated under the terms of each respective credit agreement, with the exception of the $385 million term loan facility, which is determined in the same manner as all other unsecured term loans but without a 0.10% SOFR spread adjustment. Interest payments on the senior notes are due quarterly, and the interest rates, subject to certain exceptions, have a range of annual rates (shown in the table above) based on the Company’s leverage ratio, as calculated under the terms of each respective note agreement.

Credit Facilities Covenants

The credit agreements governing the unsecured credit facilities contain customary affirmative and negative covenants, restrictions on certain investments and events of default. The credit agreements require that the Company comply with various covenants, which include, among others, a minimum tangible net worth, maximum debt limits, minimum interest and fixed charge coverage ratios, and restrictions on certain investments. Refer to Note 4 of the Company’s 2024 Form 10-K for additional details. The Company was in compliance with the applicable covenants as of September 30, 2025.

Mortgage Debt

As of September 30, 2025, the Company had approximately $215.2 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 September 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 September 30, 2025			Outstanding balance as of December 31, 2024
Westford, MA	Residence Inn		4.28	%	3/18/2015	4/11/2025	(2)		10,000		-			7,391
Denver, CO	Hilton Garden Inn		4.46	%	9/1/2016	6/11/2025	(2)		34,118		-			26,229
Oceanside, CA	Courtyard		4.28	%	9/1/2016	10/1/2025	(2)		13,655		11,041			11,381
Omaha, NE	Hilton Garden Inn		4.28	%	9/1/2016	10/1/2025	(2)		22,681		18,340			18,904
Boise, ID	Hampton		4.37	%	5/26/2016	6/11/2026	(3)		24,000		19,743			20,156
Burbank, CA	Courtyard		3.55	%	11/3/2016	12/1/2026			25,564		19,056			19,698
San Diego, CA	Courtyard		3.55	%	11/3/2016	12/1/2026			25,473		18,989			19,628
San Diego, CA	Hampton		3.55	%	11/3/2016	12/1/2026			18,963		14,136			14,611
Burbank, CA	SpringHill Suites		3.94	%	3/9/2018	4/1/2028			28,470		22,723			23,385
Santa Ana, CA	Courtyard		3.94	%	3/9/2018	4/1/2028			15,530		12,395			12,756
Richmond, VA	Courtyard		3.40	%	2/12/2020	3/11/2030			14,950		13,259			13,509
Richmond, VA	Residence Inn		3.40	%	2/12/2020	3/11/2030			14,950		13,259			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		21,787			22,643
								$	311,854		215,228			254,300
Unamortized fair value adjustment of assumed debt											-			192
Unamortized debt issuance costs											(567	)		(715	)
Total										$	214,661		$	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 amortized the adjustments to interest expense over the life of the loan.

(2)

Represents date loan was repaid in full.

(3)

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 September 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 with nine out of the eleven swaps also including an additional 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 September 30, 2025 and December 31, 2024. All dollar amounts are in thousands.


						Fair Value Asset (Liability)
Notional Amount at September 30, 2025		Origination Date	Effective Date	Maturity Date	Swap Fixed Interest Rate	September 30, 2025			December 31, 2024
Active interest rate swaps designated as cash flow hedges at September 30, 2025:
$	75,000	8/21/2019	5/18/2021	5/18/2026	1.29%	$	1,204		$	2,924
	125,000	11/3/2023	11/3/2023	11/18/2026	4.51%		(1,215	)		(860	)
	50,000	8/2/2024	8/2/2024	8/18/2027	3.63%		(162	)		590
	50,000	8/1/2024	8/5/2024	8/31/2027	3.84%		(357	)		344
	50,000	3/17/2023	3/20/2023	3/18/2028	3.50%		(101	)		910
	50,000	3/17/2023	3/20/2023	3/20/2028	3.49%		(104	)		900
	50,000	8/1/2024	8/5/2024	8/18/2028	3.75%		(499	)		554
	50,000	8/1/2025	8/1/2025	8/31/2028	3.38%		(90	)		-
	50,000	8/1/2025	8/1/2025	8/31/2028	3.38%		(98	)		-
	50,000	7/11/2024	7/18/2024

Apple Hospitality REIT, Inc. 10-Q