Attached files
file | filename |
---|---|
8-K - Apple REIT Ten, Inc. | c70730_8-k.htm |
Exhibit 99.1
DEAR SHAREHOLDER, Key indicators of hotel performance including occupancy, average daily rate and revenue per available room have improved across the U.S. hotel industry in 2012 and according to industry analysts the outlook for the remainder of the year is positive. Apple REIT Ten is committed to maximizing shareholder value through the acquisition, ownership and operation of income-producing real estate. At July 31, 2012, total gross proceeds raised for the Company totaled $650.1 million and our portfolio included 31 Marriott®- and Hilton®-branded hotels with 3,882 guestrooms, strategically diversified across 15 states that were acquired primarily
on an all-cash
basis. I believe the Company is entering the lodging marketplace at an opportune time and I look forward to continued progress in the
coming months.
On July 16, 2012, Apple REIT Ten acquired a 149-room Hilton
Garden Inn® in Boca Raton, FL, located in the heart of the city and near
Delray beaches. Then, on July 17, 2012, the Company acquired a new 124-room Courtyard® by Marriott® in
Houston, TX, conveniently located near Nassau Bay, NASA and the Houston Aquarium. The Company currently has five additional hotels under contract for purchase
and our acquisition team continues to work to identify additional strategic real estate opportunities that we believe will grow the
value of your investment over the long term.
For the three-month period ending June 30, 2012, our hotels reported an average occupancy of 75 percent, an average daily rate (ADR) of $116 and revenue per available room (RevPAR) of $87 for the period owned by the Company. Modified funds from operations (MFFO) for the second quarter of this year totaled $10.0 million, or $0.19 per share, and for the six-month period ending June 30, 2012, MFFO was $16.3 million, or $0.33 per share. As our period of ownership lengthens, year-over-year comparables will become more meaningful. Thus far, we are pleased with the performance of our hotels during this stage of ownership and anticipate operations will improve as our hotels continue to ramp up and economic conditions strengthen across our markets.
Apple REIT Ten paid distributions of $0.21 per share during the second quarter of this year. The current annualized distribution rate is $0.825 per share. The Company closely monitors our annualized distribution rate, taking into account varying economic cycles and capital improvements, as well as, current and projected hotel performance, and may make adjustments as needed, based on available cash resources. Due to the timing of acquisitions and fundraising, a portion of your 2012 distribution will be treated as return of capital for tax purposes.
As an Apple REIT Ten shareholder, we encourage you to stay informed, ask questions and know your investment. In addition to our correspondences, there are a number of resources available to you including our Prospectus and our filings with the Securities and Exchange Commission which can be found at www.applereitten.com or www.sec.gov.
I remain confident that our steady and conservative approach to hotel ownership and capital management will enable us to meet our goals over the long term. I look forward to sharing our continued progress with you in upcoming shareholder communications.
|
Sincerely, |
|
|
Glade M. Knight |
|
Chairman and Chief Executive Officer |
Statements of Operations (Unaudited)
|
|
|
|
|
|
|
|
(In thousands except statistical data) |
|
Three months ended |
|
Six months ended |
|
||
REVENUES |
|
|
|
|
|
|
|
Room revenue |
|
$ |
28,258 |
|
$ |
50,795 |
|
Other revenue |
|
|
2,864 |
|
|
5,149 |
|
|
|
|
|
|
|
||
Total revenue |
|
$ |
31,122 |
|
$ |
55,944 |
|
|
|||||||
EXPENSES |
|
|
|
|
|
|
|
Direct operating expense |
|
$ |
7,358 |
|
$ |
13,694 |
|
Other hotel operating expenses |
|
|
11,320 |
|
|
21,310 |
|
General and administrative |
|
|
1,229 |
|
|
2,322 |
|
Depreciation |
|
|
3,803 |
|
|
7,488 |
|
Acquisition related costs |
|
|
290 |
|
|
934 |
|
Interest expense, net |
|
|
1,222 |
|
|
2,322 |
|
|
|
|
|
|
|
||
Total expenses |
|
$ |
25,222 |
|
$ |
48,070 |
|
|
|||||||
NET INCOME |
|
|
|
|
|
|
|
Net income |
|
$ |
5,900 |
|
$ |
7,874 |
|
|
|
|
|
|
|
||
Net income per share |
|
$ |
0.11 |
|
$ |
0.16 |
|
|
|||||||
MODIFIED FUNDS FROM OPERATIONS (A) |
|
|
|
|
|
|
|
Net income |
|
$ |
5,900 |
|
$ |
7,874 |
|
Depreciation of real estate owned |
|
|
3,803 |
|
|
7,488 |
|
|
|
|
|
|
|
||
Funds from operations (FFO) |
|
$ |
9,703 |
|
$ |
15,362 |
|
Acquisition-related costs |
|
|
290 |
|
|
934 |
|
|
|
|
|
|
|
||
Modified funds from operations (MFFO) |
|
$ |
9,993 |
|
$ |
16,296 |
|
|
|
|
|
|
|
||
FFO per share |
|
$ |
0.19 |
|
$ |
0.32 |
|
MFFO per share |
|
$ |
0.19 |
|
$ |
0.33 |
|
|
|||||||
WEIGHTED-AVERAGE SHARES OUTSTANDING |
|
|
51,832 |
|
|
48,713 |
|
|
|||||||
OPERATING STATISTICS |
|
|
|
|
|
|
|
Occupancy |
|
|
75% |
|
|
70% |
|
Average daily rate |
|
$ |
116 |
|
$ |
114 |
|
RevPAR |
|
$ |
87 |
|
$ |
80 |
|
Number of hotels |
|
|
29 |
|
|
29 |
|
Distributions per share |
|
$ |
0.21 |
|
$ |
0.41 |
|
|
|
|
|
|
|
|
|
Balance Sheet Highlights (Unaudited) |
|||||||
|
|
|
|
|
|
|
|
(In thousands) |
|
June 30, 2012 |
|
December 31, 2011 |
|
||
ASSETS |
|
|
|
|
|
|
|
Investment in real estate, net |
|
$ |
484,234 |
|
$ |
452,205 |
|
Cash and cash equivalents |
|
|
101,645 |
|
|
7,079 |
|
Other assets |
|
|
19,982 |
|
|
11,938 |
|
|
|
|
|
|
|
||
Total assets |
|
$ |
605,861 |
|
$ |
471,222 |
|
|
|
|
|
|
|
||
|
|||||||
LIABILITIES AND SHAREHOLDERS EQUITY |
|
|
|
|
|
|
|
Notes payable |
|
$ |
81,963 |
|
$ |
69,636 |
|
Other liabilities |
|
|
6,168 |
|
|
5,671 |
|
|
|
|
|
|
|
||
Total liabilities |
|
|
88,131 |
|
|
75,307 |
|
Total shareholders equity |
|
|
517,730 |
|
|
395,915 |
|
|
|
|
|
|
|
||
Total liabilities & shareholders equity |
|
$ |
605,861 |
|
$ |
471,222 |
|
|
|
|
|
|
|
(A) Funds from operations (FFO) is defined as net income (computed in accordance with generally accepted accounting principles GAAP) excluding gains and losses from sales of depreciable property, plus depreciation and amortization. Modified FFO (MFFO) excludes the costs associated with the acquisition of real estate. The Company considers FFO and MFFO in evaluating property acquisitions and its operating performance and believes that FFO and MFFO should be considered along with, but not as an alternative to, net income and cash flows as a measure of the Companys activities in accordance with GAAP. FFO and MFFO are not necessarily indicative of cash available to fund cash needs.
The financial information furnished reflects all adjustments necessary for a fair presentation of financial position at June 30, 2012, and the results of operations for the interim period ended June 30, 2012. Such interim results are not necessarily indicative of the results that can be expected for a full year. The accompanying financial statements should be read in conjunction with the audited financial statements and related notes appearing in the Apple REIT Ten, Inc. 2011 Annual Report.
|
|
|
|
|
|
|
|
|
|
CORPORATE PROFILE Apple REIT Ten, Inc. is a real estate investment trust (REIT) focused on the acquisition and ownership of income-producing real estate that generates attractive returns for our shareholders. Our hotels operate under the Courtyard® by Marriott®, Fairfield Inn & Suites® by Marriott®, SpringHill Suites® by Marriott®, TownePlace Suites® by Marriott®, Hilton Garden Inn®, Homewood Suites by Hilton®, Home2 Suites by Hilton®, and Hampton Inn & Suites® brands. As of July 31, 2012, the Apple REIT Ten portfolio consisted of 31 hotels with 3,882 guestrooms in 15 states. MISSION Apple REIT Ten, Inc. is a premier real estate investment company committed to providing maximum value for our shareholders. |
|
|
|
|
|
Cover images from left to right, top to bottom: HILTON GARDEN INN, DENVER, CO; TOWNEPLACE SUITES, NASHVILLE, TN; TOWNEPLACE SUITES, COLUMBIA, SC; FAIRFIELD INN & SUITES, CHARLOTTE, NC; HOME2 SUITES, CHARLESTON, SC; HOME2 SUITES, JACKSONVILLE, NC |
|
|
|
|
|
This quarterly report contains forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. Such statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of the company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include: the availability and terms of financing; changes in national, regional and local economies and business conditions; competitors within the hotel industry; the outcome of current and future litigation and regulatory proceedings or inquiries; and the ability of the company to implement its acquisition strategy and operating strategy and to manage planned growth. |
|
|
|
|
|
In addition, the timing and amounts of distributions to common shareholders are within the discretion of the companys board of directors. Although the company believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate; therefore, there can be no assurance that such statements included in this quarterly report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the company or any other person that the results or conditions described in such statements or the objectives and plans of the company will be achieved. |
|
|
|
|
|
Courtyard® by Marriott®, Fairfield Inn & Suites® by Marriott®, SpringHill Suites® by Marriott®, and TownePlace Suites® by Marriott® are each a registered trademark of Marriott International, Inc. or one of its affiliates. All references to Marriott mean Marriott International and all of its affiliates and subsidiaries, and their respective officers, directors, agents, employees, accountants and attorneys. Marriott is not responsible for the content of this correspondence, whether relating to the hotel information, operating information, financial information, Marriotts relationship with Apple REIT Ten, Inc. or otherwise. Marriott is not involved in any way whether as an issuer or underwriter or otherwise in the Apple REIT Ten offering and receives no proceeds from the offering. Marriott has not expressed any approval or disapproval regarding this correspondence, and the grant by Marriott of any franchise or other rights to Apple REIT Ten shall not be construed as any expression of approval or disapproval. Marriott has not assumed and shall not have any liability in connection with this report. |
|
|
|
|
|
Hampton Inn & Suites®, Hilton Garden Inn®, Home2 Suites by Hilton®, and Homewood Suites by Hilton® are each a registered trademark of Hilton Worldwide or one of its affiliates. All references to Hilton mean Hilton Worldwide and all of its affiliates and subsidiaries, and their respective officers, directors, agents, employees, accountants and attorneys. Hilton is not responsible for the content of this correspondence, whether relating to hotel information, operating information, financial information, Hiltons relationship with Apple REIT Ten, Inc., or otherwise. Hilton is not involved in any way, whether as an issuer or underwriter or otherwise, in the Apple REIT Ten offering and receives no proceeds from the offering. Hilton has not expressed any approval or disapproval regarding this correspondence, and the grant by Hilton of any franchise or other rights to Apple REIT Ten shall not be construed as any expression of approval or disapproval. Hilton has not assumed and shall not have any liability in connection with this report. |
|
|
|
|
|
|
|
|
|
Market Diversity |
|
|
|
STATE/CITY |
Portfolio of hotels |
|
|
ALABAMA |
|
Mobile |
|
ARIZONA |
|
Scottsdale |
|
CALIFORNIA |
|
San Diego |
|
COLORADO |
|
Denver |
|
FLORIDA |
|
Boca Raton, Gainesville (2), Pensacola, Tallahassee |
|
ILLINOIS |
|
Des Plaines, Hoffman Estates, Skokie |
|
INDIANA |
|
Merrillville, South Bend |
|
IOWA |
|
Cedar Rapids (2), Davenport |
|
NORTH CAROLINA |
|
Charlotte, Jacksonville, Winston-Salem |
|
NEBRASKA |
|
Omaha |
|
OHIO |
|
Mason |
|
SOUTH CAROLINA |
|
Charleston, Columbia |
|
TENNESSEE |
|
Knoxville (3), Nashville |
|
TEXAS |
|
Houston, Round Rock |
|
VIRGINIA |
|
Richmond |
|
|
|
CORPORATE HEADQUARTERS |
814 East Main Street |
Richmond, Virginia 23219 |
(804) 344-8121 |
(804) 344-8129 FAX |
www.applereitten.com |
|
INVESTOR INFORMATION |
For additional information about the |
Company, please contact: Kelly Clarke, |
Director of Investor Services |
(804) 727-6321 or |
kclarke@applereit.com |