{"id":1004151742,"date":"2016-09-06T01:30:39","date_gmt":"2016-09-06T09:30:39","guid":{"rendered":"https:\/\/www.commercialsearch.com\/news\/?p=1004151742"},"modified":"2020-04-24T05:10:33","modified_gmt":"2020-04-24T13:10:33","slug":"apple-hospitality-merger-highlights-investor-interest-in-select-service-properties","status":"publish","type":"post","link":"https:\/\/www.commercialsearch.com\/news\/apple-hospitality-merger-highlights-investor-interest-in-select-service-properties\/","title":{"rendered":"Apple Hospitality Merger Highlights Investor Interest in Select-Service Properties"},"content":{"rendered":"

By Scott Baltic, Contributing Editor<\/em><\/p>\n

\"Anne<\/a>

Anne Lloyd-Jones, HVS<\/p><\/div>\n

Richmond, Va.<\/strong>\u2014Creating one of the largest upscale, select-service lodging REITs in the industry, with a value of about $5.7 billion, the merger of Apple Hospitality REIT Inc.<\/a> with Apple REIT Ten Inc. has been completed. The transaction had been announced back in April.<\/a><\/p>\n

\u201cWe are excited to have significantly grown our platform of leading Hilton and Marriott branded select-service hotels, while preserving our conservative capital structure,\u201d Justin Knight, Apple Hospitality\u2019s president & CEO, said in a prepared statement. \u201cThe merger further strengthens our presence in key markets and expands our geographic footprint to include locations in 96 MSAs throughout 33 states.\u201d<\/p>\n

The common shares of Apple Hospitality will continue to trade on the NYSE under the APLE symbol.<\/p>\n

An analysis of 16 hotel REITs tracked by Hotel Appraisers & Advisors<\/a>, of Chicago, ranked APLE third in profitability, Hans Detlefsen, president of HA&A, told Commercial Property Executive<\/a><\/em>. He attributes this to the REIT portfolio\u2019s being made up largely of select-service hotels.<\/p>\n

Detlefsen added that his firm found that APLE ranked first in terms of overhead efficiency, meaning its combined expenses associated with corporate overhead and third-party hotel managers was the lowest among the 16 REITs, as a percentage of hotel portfolio revenue.<\/p>\n

Further, he predicted, the merger \u201cshould augment this overhead efficiency advantage,\u201d because APLE\u2019s overhead expenses are unlikely to increase nearly as much as its revenues, as a result of having acquired 55 hotels.<\/p>\n

One question many investors are concerned about, according to Detlefsen, is whether these 55 hotels are worth the nearly $1.3 billion cost. (For the sake of full disclosure, Detlefsen notes that he currently owns shares of APLE.)<\/p>\n

In recent years the select-service sector \u201chas been the darling of the hotel investment groups,\u201d and \u201cApple can be credited as the first of the major investment entities\u201d to focus on this sector, Anne Lloyd-Jones, senior managing director\/consulting and valuation\u2028 at HVS, told CPE<\/em>.<\/p>\n

The relative simplicity of operation and lack of public spaces make these properties more profitable than typical full-service hotels, she said, adding that a select-service hotel is \u201cjust a more efficient investment vehicle.\u201d<\/p>\n

\u201cThe [select-service] sector has performed strongly\u201d and has recovered well from the recession, Lloyd-Jones said. One potential caveat is the low barriers to entry, though, except for a few markets, there\u2019s no concern yet about overbuilding, she said.<\/p>\n

Based on HA&A\u2019s research over the past two decades, the select-service segment in the United States has generally proven to be the most profitable hotel segment, Detlefsen agreed.<\/p>\n","protected":false},"excerpt":{"rendered":"

Why is this sector the darling of hospitality investment groups?<\/p>\n","protected":false},"author":882,"featured_media":1004151744,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21743,21808,21825,21751,21783,11,23891,21742,36153],"tags":[],"class_list":["post-1004151742","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-deals","category-featured","category-finance","category-hotel","category-investment","category-midatlantic","category-national","category-latest","category-richmond-hampton-roads"],"acf":[],"yoast_head":"\nApple Hospitality Merger Highlights Investor Interest in Select-Service Properties - Commercial Property Executive<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.commercialsearch.com\/news\/apple-hospitality-merger-highlights-investor-interest-in-select-service-properties\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Apple Hospitality Merger Highlights Investor Interest in Select-Service Properties\" \/>\n<meta property=\"og:description\" content=\"Why is this sector the darling of hospitality investment groups?\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.commercialsearch.com\/news\/apple-hospitality-merger-highlights-investor-interest-in-select-service-properties\/\" \/>\n<meta property=\"og:site_name\" content=\"Commercial Property Executive\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/CPExecutive\" \/>\n<meta property=\"article:published_time\" content=\"2016-09-06T09:30:39+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2020-04-24T13:10:33+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.commercialsearch.com\/news\/wp-content\/uploads\/sites\/46\/2016\/09\/Anne-Lloyd-Jones-HVS-e1473153811288.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"397\" \/>\n\t<meta property=\"og:image:height\" content=\"376\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Scott Baltic\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@cpexecutive\" \/>\n<meta name=\"twitter:site\" content=\"@cpexecutive\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.commercialsearch.com\/news\/apple-hospitality-merger-highlights-investor-interest-in-select-service-properties\/\",\"url\":\"https:\/\/www.commercialsearch.com\/news\/apple-hospitality-merger-highlights-investor-interest-in-select-service-properties\/\",\"name\":\"Apple Hospitality Merger Highlights Investor Interest in Select-Service Properties - 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