2. Executive Summary
Main Features:
● One of the largest hospitality REITs in the country
● Highly diversified portfolio with consistent reinvestment
● Recently went public after the merger of APLE 7 and APLE 8
to become the current APLE Hospitality REIT
Company
Overview
Industry &
Competitive
Positioning
Financial
Analysis
Valuation Risk Analysis Conclusion
5. The Real Estate Investment Trust (REIT)
● No corporate tax on REIT status companies
● Required disbursement of 90% of taxable earnings to
shareholders by dividends
● Low liquidity associated with REIT assets
Company
Overview
Industry &
Competitive
Positioning
Financial
Analysis
Valuation Risk Analysis Conclusion
6. Porter’s 5 Forces
Company
Overview
Financial
Analysis
Valuation Risk Analysis Conclusion
Industry &
Competitive
Positioning
Threat of New Entrants: MODERATE
Buyer Power: SIGNIFICANT
Supplier Power: LOW
Threat of Substitute: MODERATE
Intensity of Rivalry: MODERATE
0 No Threat
1 Insignificant Threat
2 Low Threat
3 Moderate Threat
4 Significant Threat
5 High Threat
9. Revenue & Cost Analysis
Company
Overview
Industry &
Competitive
Positioning
Financial
Analysis
Valuation Risk Analysis Conclusion
● Seasonality effects to revenue
● Revenue generating hotels: 177
● Revenue generating rooms: 22,782
● 91% of Revenue from hotel rooms
E
Transaction Currency = US Dollar only
11. Debt Analysis
● Reliance on revolving credit facility (945 million) for liquidity
● (Current Terms:1 month LIBOR + 2.3%)
● Covenants pertaining to credit facility
● Interest rate swaps as a hedge
Company
Overview
Industry &
Competitive
Positioning
Financial
Analysis
Valuation Risk Analysis Conclusion
12. Methods of Valuation
Company
Overview
Industry &
Competitive
Positioning
Financial
Analysis
Valuation Risk Analysis Conclusion
DCF
45%
Relative
Valuation
10%
NAV
45%
● DCF Valuation
●NAV Valuation
● Relative Valuation
● Average of P/FFO, P/AFFO, P/S
●Monte Carlo Simulation
13. DCF Assumptions - Revenue
Company
Overview
Industry &
Competitive
Positioning
Financial
Analysis
Valuation Risk Analysis Conclusion
14. DCF Assumptions - WACC
Company
Overview
Industry &
Competitive
Positioning
Financial
Analysis
Valuation Risk Analysis Conclusion
15. Net Asset Value (NAV)
● Using forecasted financial statements
data
● Total Gross Real Estate Assets = Land
+ Buildings & Improvements +
Furniture, Fixtures & Equipment.
● Cap rates based on the location of
hotels, from Integra Realty
Resources(IRR)
● It is trading at a 4.6% premium
Company
Overview
Industry &
Competitive
Positioning
Financial
Analysis
Valuation Risk Analysis Conclusion
16. Relative Valuation
● Comparables based on hotel portfolio
● FFO defined as NAREIT
● AFFO is FFO- Maintenance Capital
Expenditure
● APLE is trading at a premium
compared to competitors
Company
Overview
Industry &
Competitive
Positioning
Financial
Analysis
Valuation Risk Analysis Conclusion
17. VIX Index and S&P 500
Company
Overview
Industry &
Competitive
Positioning
Financial
Analysis
Valuation Risk Analysis Conclusion
● VIX Index indicated market
was very volatile in the
beginning of 2016
● From Dec 15 to Jan 15,
S&P 500 dropped 7.89%;
VIX increased by 28.97%
● Comparable Companies’
price was highly affected
by the market
Source: Yahoo
Finance
