Attached files
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| 8-K - APPLE REIT SIX INC | c65878_8-k.htm |
Exhibit 99.1
DEAR SHAREHOLDER
The Apple REIT Six, Inc. strategy—evident in our portfolio of 66 Marriott®- and Hilton®-branded hotels, with a combined total of 7,658 rooms, virtually unencumbered by debt and diversified across 18 states—has always been conservative. Through this simple ownership strategy, I believe we successfully managed the recent economic downturn and are well-poised for improved operations as positive economic conditions continue to become more prevalent across our markets.
The Apple REIT Six portfolio of hotels reported improvements across key performance indicators during the first quarter of 2011 as compared to the same three-month period last year. During the first three months of this year, the average occupancy rate was 69 percent, average daily rate (ADR) $107 and revenue per available room (RevPAR) $74. As compared to results from the same period of 2010, occupancy was up approximately three percent, ADR was up approximately five percent and RevPAR was up by nine percent. As we enter the typically busier summer travel season, with additional opportunities for revenue growth, we will strive towards an optimal balance of occupancy and ADR that will further maximize RevPAR. The Apple REIT Six portfolio includes hotels in Alabama, near areas affected by the devastating tornados that struck in late April. I am pleased to report that our hotels did not suffer any significant damage and are currently accommodating a variety of response workers and insurance teams.
The Company achieved funds from operations (FFO) during the first quarter of 2011 that totaled $17.3 million, or $0.19 per share, up approximately 12 percent as compared to FFO for the same period last year. Over the first three months of the year, the Company paid distributions of $0.19 per share, representative of an annualized distribution rate of seven percent based on an $11 share price. From the time of the first Apple REIT Six distribution payment through March 31, 2011, the Company has paid total distributions of approximately $5.98 per share. The Company sets an annualized distribution rate to provide shareholders consistency over the life of our program. We closely monitor 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.
The Company continues to review our various strategic alternatives with our financial advisors. Although we cannot provide assurance that we will complete any strategic alternatives, our goal is, as always, to maximize shareholder value and we believe conditions within the hotel industry and lending markets make now an advantageous time to pursue our options. A transaction of this magnitude is complex and could take a substantial period of time to accomplish. Details regarding this process will be made public if our Board of Directors approves a specific alternative or has other reason to comment.
With hotel performance trending upward across our portfolio I am optimistic that 2011 will be a good year for Apple REIT Six. Industry analysts anticipate the increase in demand together with limited new lodging supply will continue to drive improvements in RevPAR across the hotel industry throughout 2011 and 2012. Our team is committed to maximizing shareholder value and confident our steady and conservative approach to hotel ownership and capital management will enable us to meet our goals over the long term. Future shareholder reports will continue to outline our performance in detail. As always, thank you for your investment.
Chairman and Chief Executive Officer
STATEMENTS OF OPERATIONS (Unaudited)
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(In thousands except statistical data) |
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Three months |
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Three months |
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REVENUES |
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Room revenue |
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$ |
50,769 |
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$ |
46,966 |
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Other revenue |
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3,758 |
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3,465 |
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Reimbursed expenses |
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1,824 |
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1,632 |
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Total revenue |
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$ |
56,351 |
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$ |
52,063 |
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EXPENSES |
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Direct operating expense |
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$ |
14,368 |
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$ |
13,398 |
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Other hotel operating expenses |
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21,227 |
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20,188 |
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Reimbursed expenses |
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1,824 |
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1,632 |
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General and administrative |
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1,245 |
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1,037 |
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Depreciation |
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7,857 |
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7,631 |
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Interest expense, net |
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889 |
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909 |
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Total expenses |
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$ |
47,410 |
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$ |
44,795 |
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NET INCOME |
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Income from continuing operations |
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$ |
8,941 |
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$ |
7,268 |
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Income from discontinued operations |
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515 |
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389 |
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Net income |
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$ |
9,456 |
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$ |
7,657 |
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Income from continuing operations per share |
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$ |
0.10 |
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$ |
0.08 |
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Income from discontinued operations per share |
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- |
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- |
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Net Income per share |
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$ |
0.10 |
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$ |
0.08 |
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FUNDS FROM OPERATIONS (A) |
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Net income |
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$ |
9,456 |
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$ |
7,657 |
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Depreciation of real estate owned |
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7,857 |
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7,762 |
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Funds from operations |
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$ |
17,313 |
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$ |
15,419 |
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FFO per share |
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$ |
0.19 |
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$ |
0.17 |
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WEIGHTED-AVERAGE SHARES OUTSTANDING |
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91,356 |
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91,363 |
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OPERATING STATISTICS |
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Occupancy from continuing operations |
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69 |
% |
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67 |
% |
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Average daily rate from continuing operations |
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$ |
107 |
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$ |
102 |
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RevPAR from continuing operations |
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$ |
74 |
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$ |
68 |
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Number of continuing hotels |
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66 |
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66 |
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Dividends per share |
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$ |
0.19 |
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$ |
0.21 |
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BALANCE SHEET HIGHLIGHTS (Unaudited) |
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(In thousands) |
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March 31, 2011 |
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December 31, 2010 |
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ASSETS |
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Investment in real estate, net |
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$ |
760,130 |
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$ |
764,557 |
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Hotels held for sale |
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10,755 |
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10,755 |
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Other assets |
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18,475 |
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12,901 |
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Total assets |
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$ |
789,360 |
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$ |
788,213 |
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Notes payable |
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$ |
72,720 |
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$ |
63,736 |
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Other liabilities |
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4,299 |
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4,706 |
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Total liabilities |
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77,019 |
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68,442 |
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Total shareholders’ equity |
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712,341 |
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719,771 |
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Total liabilities & shareholders’ equity |
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$ |
789,360 |
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$ |
788,213 |
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(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. The company considers FFO in evaluating property acquisitions and its operating performance and believes that FFO should be considered along with, but not as an alternative to, net income and cash flows as a measure of the company’s activities in accordance with GAAP. FFO is 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 March 31, 2011 and the results of operations for the interim periods ended March 31, 2011. Such interim results are not necessarily indicative of the results that can be expected for the full year. The accompanying financial statements should be read in conjunction with the audited financial statements and related notes appearing in the Apple REIT Six, Inc. 2010 Annual Report.
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STATE / CITY |
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ALABAMA |
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Birmingham, Dothan (2),
Huntsville (2), |
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ALASKA |
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Anchorage (3) |
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ARIZONA |
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Phoenix |
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CALIFORNIA |
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Arcadia (2), Bakersfield,
Folsom, Foothill Ranch, |
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COLORADO |
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Boulder, Denver (2) |
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CONNECTICUT |
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Farmington, Rocky Hill, Wallingford |
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FLORIDA |
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Clearwater, Lakeland, Lake
Mary, Orange Park, |
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GEORGIA |
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Albany, Columbus, Savannah, Valdosta |
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NEW JERSEY |
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Mt. Olive, Somerset |
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NEW YORK |
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Saratoga Springs |
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NORTH CAROLINA |
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Roanoke Rapids |
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OREGON |
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Hillsboro (3), Portland |
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PENNSYLVANIA |
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Pittsburgh |
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SOUTH CAROLINA |
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Myrtle Beach |
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TENNESSEE |
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Nashville |
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TEXAS |
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Arlington (2), Dallas, Fort
Worth (3), Laredo (2), |
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VIRGINIA |
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Fredericksburg |
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WASHINGTON |
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Kent, Mukilteo, Redmond, Renton |
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CORPORATE HEADQUARTERS |
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814 East Main Street |
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INVESTOR INFORMATION |
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For
additional information about the |
CORPORATE PROFILE
Apple REIT Six, Inc. is a real estate investment trust (REIT) focused on the ownership of hotels that generate attractive returns for our shareholders. Our hotels operate under the Courtyard® by Marriott®, Fairfield Inn® by Marriott®, Residence Inn® by Marriott®, SpringHill Suites® by Marriott®, TownePlace Suites® by Marriott®, Marriott® Hotels & Resorts, Homewood Suites by Hilton®, Hilton Garden Inn®, Hampton Inn® and Hampton Inn & Suites® brands. Our portfolio consists of 66 hotels, containing a total of 7,658 guestrooms in 18 states.
MISSION
Apple REIT Six is a premier real estate investment company committed to providing maximum value for our shareholders.
COVER: RESIDENCE INN, PORTLAND, OR
All references to the Apple REIT Six, Inc. portfolio of hotels throughout this document exclude two hotels that are currently held for sale with an anticipated closing date of early June 2011. The two hotels held for sale—a TownePlace Suites® by Marriott® and a SpringHill Suites® by Marriott®—are located in Tempe, AZ.
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; and the ability of the company to implement its operating strategy and to manage planned growth.
In addition, the timing and amounts of distributions to common shareholders are within the discretion of the company’s 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.
“Marriott®,” “Courtyard® by Marriott®,” “SpringHill Suites® by Marriott®,” “Fairfield Inn® by Marriott®,” “TownePlace Suites® by Marriott®” and “Residence Inn® by Marriott®” are each a registered trademark of Marriott International, Inc. or one of its affiliates. All references to “Marriott” mean Marriott International, Inc. 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 report, whether relating to the hotel information, operating information, financial information, Marriott’s relationship with Apple REIT Six or otherwise. Marriott was not involved in any way whether as an “issuer” or “underwriter” or otherwise in the Apple REIT Six offering and received no proceeds from the offering. Marriott has not expressed any approval or disapproval regarding this report, and the grant by Marriott of any franchise or other rights to Apple REIT Six 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®,” “Hampton Inn & Suites®,” “Hilton Garden Inn®” 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 report, whether relating to hotel information, operating information, financial information, Hilton’s relationship with Apple REIT Six, or otherwise. Hilton was not involved in any way, whether as an “issuer” or “underwriter” or otherwise, in the Apple REIT Six offering and received no proceeds from the offering. Hilton has not expressed any approval or disapproval regarding this report, and the grant by Hilton of any franchise or other rights to Apple REIT Six 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.
