Attached files
| file | filename |
|---|---|
| 8-K - APPLE REIT SIX INC | c71725_8k.htm |
Exhibit 99.1
DEAR SHAREHOLDER, Beginning in 2011 and continuing through the first nine months of this year, performance of the Apple REIT Six, Inc. portfolio of hotels has steadily improved from the challenging economic conditions that negatively affected the hotel industry in 2009 and 2010. Based on Company and industry trends, we anticipate a high single-digit percentage increase in modified funds from operations for the year 2012 as compared to 2011. Although multiple factors within the hotel industry and the general economy will contribute to the pace at which our hotels continue to improve, I am optimistic that the future of Apple REIT Six is positive.
The 66 Marriott® - and Hilton® - branded hotels of the Apple REIT Six portfolio are diversified across 18 states and continue to be leaders within their respective markets. For the three-month periods ending September 30, 2012 and 2011, our properties achieved an average occupancy rate of 78 percent and 77 percent, an average daily rate (ADR) of $120 and $114, and revenue per available room (RevPAR) of $94 and $88, respectively. For the nine-month periods ending September 30, 2012 and 2011, our hotels achieved an average occupancy rate of 75 percent and 74 percent, ADR of $115 and $111, and RevPAR of $87 and $81, respectively. Primarily driven by steady increases in ADR, RevPAR at our hotels increased by approximately seven percent this year as compared to the same three- and nine-month periods of 2011.
Modified funds from operations (MFFO) for the third quarter of this year totaled $25.8 million, or $0.28 per share, a ten percent increase as compared to MFFO for the third quarter of 2011. For the nine-month period ending September 30, 2012, MFFO was $67.5 million, or $0.74 per share, an increase of approximately eight percent as compared to the same period last year. Over the first nine months of the year, the Company paid distributions of approximately $0.59 per share. Since the time of the Company’s first distribution payment through October 31, 2012, the Company has paid
approximately $7.23 per share, or $583 million, in shareholder distributions. Additionally, the Company has maintained a balance sheet among the strongest in our industry, with a debt level of approximately six percent as compared to our total initial capitalization. Our annualized distribution rate is closely monitored, taking into account varying economic cycles and capital improvements, as well as current and projected hotel performance, and we may make adjustments as needed, based on available cash resources.
Our team at Apple REIT Six remains committed to maximizing shareholder value through our conservative approach to the ownership of high-quality, well-branded hotels. We continue to evaluate strategic alternatives that would provide an option of liquidity and preserve shareholder value. As hotel industry fundamentals continue to strengthen, I am confident that our Company is well-positioned for the future. 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 |
|
Three months ended |
|
Nine months ended |
|
Nine months ended |
|
||||
|
REVENUES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Room revenue |
|
$ |
66,513 |
|
$ |
61,646 |
|
$ |
182,620 |
|
$ |
170,235 |
|
|
Other revenue |
|
|
4,121 |
|
|
4,160 |
|
|
12,341 |
|
|
12,058 |
|
|
Reimbursed expenses |
|
|
1,899 |
|
|
1,824 |
|
|
5,698 |
|
|
5,472 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Total revenue |
|
$ |
72,533 |
|
$ |
67,630 |
|
$ |
200,659 |
|
$ |
187,765 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct operating expense |
|
$ |
16,931 |
|
$ |
16,343 |
|
$ |
48,409 |
|
$ |
46,232 |
|
|
Other hotel operating expenses |
|
|
25,257 |
|
|
23,779 |
|
|
71,374 |
|
|
67,584 |
|
|
Reimbursed expenses |
|
|
1,899 |
|
|
1,824 |
|
|
5,698 |
|
|
5,472 |
|
|
General and administrative |
|
|
1,806 |
|
|
1,275 |
|
|
6,052 |
|
|
3,975 |
|
|
Depreciation |
|
|
7,654 |
|
|
8,008 |
|
|
23,523 |
|
|
24,465 |
|
|
Interest, net |
|
|
780 |
|
|
937 |
|
|
2,448 |
|
|
2,894 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Total expenses |
|
$ |
54,327 |
|
$ |
52,166 |
|
$ |
157,504 |
|
$ |
150,622 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET INCOME |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations |
|
$ |
18,206 |
|
$ |
15,464 |
|
$ |
43,155 |
|
$ |
37,143 |
|
|
Income (loss) from discontinued operations |
|
|
- |
|
|
26 |
|
|
- |
|
|
697 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Net income |
|
$ |
18,206 |
|
$ |
15,490 |
|
$ |
43,155 |
|
$ |
37,840 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Income from continuing operations per share |
|
$ |
0.20 |
|
$ |
0.17 |
|
$ |
0.47 |
|
$ |
0.40 |
|
|
Income from discontinued operations per share |
|
|
- |
|
|
- |
|
|
- |
|
|
0.01 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Net income per share |
|
$ |
0.20 |
|
$ |
0.17 |
|
$ |
0.47 |
|
$ |
0.41 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MODIFIED FUNDS FROM OPERATIONS (A) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
18,206 |
|
$ |
15,490 |
|
$ |
43,155 |
|
$ |
37,840 |
|
|
Depreciation of real estate owned |
|
|
7,654 |
|
|
8,008 |
|
|
23,523 |
|
|
24,465 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Funds from operations (FFO) |
|
$ |
25,860 |
|
$ |
23,498 |
|
$ |
66,678 |
|
$ |
62,305 |
|
|
Costs related to potential merger |
|
|
(13) |
|
|
- |
|
|
810 |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Modified funds from operations (MFFO) |
|
$ |
25,847 |
|
$ |
23,498 |
|
$ |
67,488 |
|
$ |
62,305 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
FFO per share |
|
$ |
0.28 |
|
$ |
0.26 |
|
$ |
0.73 |
|
$ |
0.68 |
|
|
MFFO per share |
|
$ |
0.28 |
|
$ |
0.26 |
|
$ |
0.74 |
|
$ |
0.68 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED-AVERAGE SHARES OUTSTANDING |
|
|
91,167 |
|
|
91,250 |
|
|
91,117 |
|
|
91,314 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING STATISTICS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Occupancy from continuing operations |
|
|
78% |
|
|
77% |
|
|
75% |
|
|
74% |
|
|
Average daily rate from continuing operations |
|
$ |
120 |
|
$ |
114 |
|
$ |
115 |
|
$ |
111 |
|
|
RevPAR from continuing operations |
|
$ |
94 |
|
$ |
88 |
|
$ |
87 |
|
$ |
81 |
|
|
Number of continuing hotels |
|
|
66 |
|
|
66 |
|
|
|
|
|
|
|
|
Distributions per share |
|
$ |
0.20 |
|
$ |
0.20 |
|
$ |
0.59 |
|
$ |
0.58 |
|
Balance Sheet Highlights (Unaudited)
|
|
|
|
|
|
|
|
|
|
(In thousands) |
|
September 30, 2012 |
|
December 31, 2011 |
|
||
|
ASSETS |
|
|
|
|
|
|
|
|
Investment in real estate, net |
|
$ |
730,833 |
|
$ |
746,354 |
|
|
Other assets |
|
|
16,925 |
|
|
13,011 |
|
|
|
|
|
|
|
|
||
|
Total assets |
|
$ |
747,758 |
|
$ |
759,365 |
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
Notes payable |
|
$ |
58,636 |
|
$ |
63,067 |
|
|
Other liabilities |
|
|
8,008 |
|
|
5,670 |
|
|
|
|
|
|
|
|
||
|
Total liabilities |
|
|
66,644 |
|
|
68,737 |
|
|
Total shareholders’ equity |
|
|
681,114 |
|
|
690,628 |
|
|
|
|
|
|
|
|
||
|
Total liabilities & shareholders’ equity |
|
$ |
747,758 |
|
$ |
759,365 |
|
|
|
|
|
|
|
|
||
(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 funds from operations (MFFO) excludes costs associated with the evaluation of the potential consolidation transaction and potential public listing. 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 company’s 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 September 30, 2012 and the results of operations for the interim period ended September 30, 2012. 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. 2011 Annual Report.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cover images from left to right, top to bottom: RESIDENCE INN, PORTLAND, OR; MARRIOTT, REDMOND, WA; COURTYARD, PENSACOLA, FL; HILTON GARDEN INN, TALLAHASSEE, FL; HAMPTON INN, PHOENIX, AZ; COURTYARD, ALBANY, GA |
|
|
|
|
|
|
|
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 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. |
|
|
|
|
|
|
|
|
|
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. |
|
|
|
Market Diversity |
|
|
|
|
|
STATE/CITY |
Portfolio of hotels |
|
ALABAMA |
|
|
Birmingham, Dothan (2), Huntsville (2), |
|
|
Montgomery, Tuscaloosa (2) |
|
|
ALASKA |
|
|
Anchorage (3) |
|
|
ARIZONA |
|
|
Phoenix |
|
|
CALIFORNIA |
|
|
Arcadia (2), Bakersfield, Folsom, Foothill Ranch,
|
|
|
COLORADO |
|
|
Boulder, Denver/Glendale, Denver/Lakewood |
|
|
CONNECTICUT |
|
|
Farmington, Rocky Hill, Wallingford |
|
|
FLORIDA |
|
|
Clearwater, Lakeland, Orange Park, Orlando/Lake
|
|
|
GEORGIA |
|
|
Albany, Columbus, Savannah, Valdosta |
|
|
NEW JERSEY |
|
|
Mt. Olive, Somerset |
|
|
NEW YORK |
|
|
Saratoga Springs |
|
|
NORTH CAROLINA |
|
|
Roanoke Rapids |
|
|
OREGON |
|
|
Hillsboro (3), Portland |
|
|
PENNSYLVANIA |
|
|
Pittsburgh |
|
|
SOUTH CAROLINA |
|
|
Myrtle Beach |
|
|
TENNESSEE |
|
|
Nashville |
|
|
TEXAS |
|
|
Arlington (2), Dallas, Fort Worth (3), Laredo (2), |
|
|
VIRGINIA |
|
|
Fredericksburg |
|
|
WASHINGTON |
|
|
Kent, Mukilteo, Redmond, Renton |
|
|
|
|
|
|
|
|
CORPORATE HEADQUARTERS |
|
814 East Main Street |
|
Richmond, Virginia 23219 |
|
(804) 344-8121 |
|
(804) 344-8129 FAX |
|
www.applereitsix.com |
|
|
|
|
|
INVESTOR INFORMATION |
|
For additional information about the |
|
Company, please contact: Kelly Clarke, |
|
Director of Investor Services |
|
(804) 727-6321 or |
|
kclarke@applereit.com |
