Apple Hospitality remains active as it closes two more deals

RICHMOND, Virginia — Apple Hospitality REIT, which continues to be one of the most acquisitive REITs in the market today, closed on a previously disclosed acquisition in Wisconsin while disposing of another asset in North Carolina. 

Richmond, Virginia-based Apple Hospitality announced the deal close (and opening) for the 262-key Embassy Suites by Hilton Madison Downtown for approximately $79.5 million (or $303,000 per key). 

The REIT also announced the recent disposition of the 82-key SpringHill Suites by Marriott Greensboro in Greensboro, North Carolina, for approximately $7.1 million. According to a report in the Triad Business Journal, the hotel was acquired by Lakshmi MAA Inc., which is associated with Southern Pines, North Carolina-based PK Hospitality LLC, which also owns the La Quinta Inn & Suites in Greensboro.

“We are pleased to expand our portfolio with the acquisition of the newly constructed, custom Embassy Suites Madison Downtown and increase our presence within the dynamic and business-friendly Madison market,” Nelson Knight, president, real estate and investments of Apple Hospitality, said in a news release. 

Nelson Knight said the REIT was able to secure a fixed-price, take-out contract ahead of development, “enabling us to acquire this hotel at an attractive price despite rising construction costs over the course of development.”

Apple Hospitality said RevPAR in the Madison submarket has improved 7% year-over-year for the 12 months ending on May 31, according to data from STR. 

The REIT still has one more previously announced hotel under contract for purchase to close: the approximately 260-key Motto by Hilton, which is under development in downtown Nashville, Tennessee. The anticipated total purchase price is approximately $98.2 million. The company said it anticipates acquiring the hotel in late 2025 after construction is completed. 

Following this acquisition and disposition, Apple Hospitality has a portfolio of 224 hotels and 30,066 rooms in 37 states and the District of Columbia. 

Apple’s moves in 2024

Apple Hospitality has made a new number of moves so far in 2024. In March, the REIT acquired the 234-key AC Hotel by Marriott Washington DC for approximately $116.8 million. It was the highest price Apple has ever paid for an asset and was the REIT’s first property in the market.  

CEO Justin Knight, speaking during Apple’s first-quarter earnings call, pointed to the purchase in DC and the acquisition of the 299-key SpringHill Suites by Marriott Las Vegas Convention Center for approximately $75 million as prime examples of the space where the REIT continues to be competitive. 

“We find ourselves in a position to be very competitive around larger assets in some of these urban markets, where ordinarily we would have seen very stiff competition, mainly from private equity, but from a variety of potential buyers,” Knight said at the time. “Given our ready access to capital and ability to bid on assets without financing contingencies, we’ve been more successful." 

Justin Knight previously told Hotel Investment Today that Apple is competitive in the deal space because of the consistency of the type of hotel it is buying (upscale select-service hotels in the Marriott, Hilton and Hyatt families), its familiarity with the products and relationships with buyers and the REIT’s current financial position.

“[Our] access to capital puts us in a great position to transact, especially around individual assets where often we have direct market experience with similar branded hotels,” Knight said.

Knight said having low leverage and, as a result, low overhead for interest payments helped Apple establish a “bit of a war chest” it utilizes when needed. This gives the REIT a lot more deal flexibility than its competitors. 

“Our ready access to capital, having the availability of our line of credit, and not having to pursue deal-specific financing has put us in a position to move quickly on transactions,” he said.