APPLE HOSPITALITY REIT, INC. (APLE): what the price requires

At today's price, APPLE HOSPITALITY REIT, INC. (APLE) is priced for -0.4% FFO growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-19 · Source: https://boothcheck.com/report/APLE

Headline

FieldValue
TickerAPLE
CompanyAPPLE HOSPITALITY REIT, INC.
Current price$16.29/sh

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basisreit
Implied FFO growth-0.4%
Price-to-FFO10.3x
FFO yield9.7%

Solve inputs: computed at a 10.4% cost of equity with 4% terminal growth over a 5-year stage; each 1pp of cost of equity moves the implied growth ~3.5pp.

Reconcile: at the x-ray's 9.3% required return this reads ~-4.6%/yr; the models below use their own rates.

How unusual the bet is: within-range

ReferenceValue
vs own history-0.54σ
cohort percentile (of 88 peers)26
implied end-window share0%

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset2.81x5expensive
Earnings1.83x4expensive
Relative0.62x6justifies
Growth1.02x5expensive

Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.0%); the inversion above states its own rate.

Per-Model Detail (n=20)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$8.951.82xyesFCF base $0.3B, growth -0% (input: historical growth), terminal g 0.5%, WACC 8.0%, 5yr projection
DCF Exit MultipleGrowth$16.011.02xyesExit EV/EBITDA: 10.0x / 12.0x / 14.0x (bear / base = today's held flat / bull), 5yr
Relative ValuationRelative$35.570.46xyesP/E 25.12x (blended: static sector reference 35x + trailing (TTM) 10x), scenarios: 21.2x / 25.1x / 29.0x (bear / base = reference held flat / bull), EV/EBITDA 20x
Simple DDMGrowth$26.950.60xyesDPS $0.96, g=5.5% (sustainable: ROE (TTM) × retention; not the terminal-growth assumption), ke=9.3%
Two-Stage DDMGrowth$19.050.86xyesStage 1: 6% for 5yr, Stage 2: 3.5% perpetual
Simple Excess ReturnAsset$7.872.07xyesBV/sh $13.24, ROE (TTM) 5.5%, ke 9.3%
Two-Stage Excess ReturnAsset$5.802.81xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$11.001.48xyesRev $1.4B, growth -0% (input: historical growth; tapered), Terminal P/S: 2.3x / 2.7x / 3.1x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$18.960.86xyesFFO/share $1.58, growth 6% (input: historical FFO/share growth, 5y median), PEG=3.87 (Overvalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$6.032.70xyesNormalized EBIT (5y avg op income, one-time charges added back) $0.23B × (1−1%) / WACC 8.0% → EPV (no growth)
Residual IncomeAsset$5.552.94xyesBV $13.24 + 5yr PV of (ROE (TTM) 5.5% − Kₑ 9.3%) × BV; BV grows 3.6%/yr
Graham NumberAsset$21.700.75xyes√(22.5 × FFO/share $1.58 × BVPS $13.24) — Graham's conservative floor
EV/EBITDA RelativeRelative$31.450.52xyesEBITDA $0.45B × sector EV/EBITDA 20.0x
FCF YieldEarnings$5.942.74xyesFCF $273.8M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings$26.570.61xyesFFO/share $1.58 × (8.5 + 2×5.8%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset$1.689.70xyesBV $13.24 × (ROIC 1.0% / WACC 8.0%)
P/Sales SectorRelative$36.150.45xyesRevenue $1.42B × sector P/S 6.0x
PEG Fair ValueRelative$13.711.19xyesFFO/share $1.58 × (PEG 1.5 × growth 5.8% (input: historical FFO/share growth, 5y median)) → PE 8.7x
Earnings YieldEarnings$17.080.95xyesFFO/share $1.58 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative$22.440.73xyesFFO/share $1.58 × 14.2x P/FFO (route cohort median, n=85); FFO $0.37B (FFO incl. D&A + impairments, FY2025, companyfacts), shares 236M
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt (REIT basis)$1.6b
Net debt / FFO4.17x
Funds from operations (trailing)$373.7m
Share count CAGR (dilution)0.8%
Burning cashno

REIT basis: leverage is read against funds from operations (FFO), not depreciation-gutted operating income. The header's implied growth runs on ADJUSTED FFO — FFO minus recurring maintenance capex — so the header's multiple and this leverage ratio use bases that differ by that capex; neither substitutes for the other. Interest expense is not separately reported in the cached statements, so fixed-charge coverage cannot be computed.

Bullet Takeaways

Bull Case

Lead with the bear's real concern, because the bull case for a hotel REIT has to answer it head on: hotel rooms reprice every night, so unlike a long-lease office or industrial REIT, Apple Hospitality carries no contractual revenue floor and feels a demand slowdown immediately. The pivot is that the recent data shows demand holding rather than cracking. First-quarter 2026 RevPAR rose 2.2% to $114.61 on 72.8% occupancy, comparable hotel revenue grew 4.3%, and adjusted hotel EBITDA increased to $108.5 million from $105.3 million. Management then raised the full-year RevPAR outlook by 100 basis points to a 1% midpoint, citing resilient demand and event tailwinds including the FIFA World Cup. A portfolio that grows RevPAR while travel headlines stay nervous is doing exactly what the bull case asks.

The portfolio design is the durable edge. Apple Hospitality owns 217 select-service hotels, the rooms-focused Marriott and Hilton properties that carry lower operating costs and steadier margins than full-service convention hotels, spread across many markets so no single city or demand driver dominates. The 10-K lays out the operating mechanics plainly, with "RevPAR ... calculated as occupancy multiplied by ADR," and the model's strength is that select-service economics protect margin even when rate growth is flat. The first-quarter result, with RevPAR up on higher occupancy and essentially flat average daily rate, is that model working: filling rooms drove the gain without needing pricing power the current market may not offer.

The capital-return story is the reason to own it, and it is well covered. The company pays a monthly distribution; the 10-K notes a payment of about $18.9 million, or $0.08 per share, in January 2026, supporting an annualized dividend of $0.96 and a yield near 7%. Modified funds from operations of $80.3 million, or $0.34 per share for the quarter, covers the distribution with room to spare. Against a lodging-REIT cohort that includes Host Hotels and DiamondRock, Apple Hospitality combines a conservatively financed balance sheet with a covered, monthly-paid yield, which is the package income investors are buying.

Bear Case

The bear case is a balance-sheet-and-cycle argument, and the cycle is the part the price underweights. Hotels are the most economically sensitive real estate there is: a recession or a pullback in corporate travel shows up in occupancy within weeks, and the recent past proves the portfolio is not immune. The 10-K reports that for full-year 2025, comparable-hotel ADR "generally remained unchanged while occupancy decreased by 1.6%, resulting in a decrease in Comparable Hotels RevPAR of 1.6%." That is a portfolio that went backwards as recently as last year, and the guidance for 2026 is only 0% to 2% RevPAR growth. The price assumes steady, if slow, funds-from-operations growth; the demand line has shown it can turn negative without much warning.

On the balance sheet, the leverage is moderate but the structure has refinancing exposure in a higher-rate world. Net debt is about $1.57 billion, roughly 3.4 times trailing EBITDA, at a weighted-average rate of 4.65%. That rate reflects debt struck in a lower-rate era; the 10-K's debt schedule runs through a stack of term loans and unsecured facilities with staggered maturities, and refinancing any of it at today's rates lifts interest expense and pressures the funds from operations that fund the dividend. A REIT distributes most of its cash, so it has little retained capital to absorb a rate step-up, which is the quiet vulnerability behind a comfortable-looking coverage ratio.

The valuation tension is specific to the REIT structure. The price sits at about 14 times adjusted funds from operations, which the relative-multiple lens reads as reasonable and even toward the lower half of the REIT group. But the asset-value and earnings-power methods flag the price as expensive, because hotel real estate carries heavy depreciation that depresses GAAP earnings and the replacement value of 217 hotels does not obviously support the equity at this level once the $1.57 billion of debt sits ahead of it. The bear does not argue Apple Hospitality is mismanaged; it argues the stock is a leveraged, cyclically exposed claim on nightly room demand, priced for the demand to keep growing, with a 7% yield that looks generous precisely because the market is demanding compensation for that cyclicality.

Valuation

A hotel REIT is valued on the cash its properties throw off after the maintenance capital needed to keep them competitive, its adjusted funds from operations, not on an earnings multiple that depreciation distorts. Apple Hospitality trades at about 14 times adjusted funds from operations, and inverted, that price embeds adjusted funds from operations growing only about 0.4% a year. The market is not asking for growth; it is asking the portfolio to roughly hold its cash generation. With 2026 RevPAR guided to 0% to 2%, that modest assumption sits within what the trust has delivered, and the whole question is whether even flat-to-slightly-up is achievable through a lodging cycle that bit into RevPAR in 2025.

The methods split along the lines the REIT structure dictates. The relative-multiple lens, the right one for a property trust, reaches the price and reads it toward the cheaper half of the REIT group. The asset-value and earnings-power lenses sit well above the price, calling it expensive, but that is largely the artifact of GAAP depreciation crushing reported earnings and of debt sitting ahead of the equity claim on the real estate. The honest read is that on the cash metric that governs a REIT, the price is undemanding; on the accounting-earnings metric that does not fit the structure, it looks rich. The funds-from-operations lens is the one to weight, and it says the price is paying for stability rather than growth.

Solvency is the bear's pressure point and the bull's reassurance at once. Net debt of about $1.57 billion is a moderate 3.4 times EBITDA, with roughly $559 million available on the revolver and a 4.65% weighted-average rate, and the share count has been essentially flat. The dividend is covered by modified funds from operations, so the immediate risk is not a cut. The longer risk is the combination of refinancing at higher rates and a demand downturn arriving together, which would squeeze the coverage from both ends. Against the lodging-REIT cohort, Apple Hospitality is among the more conservatively levered, and the price reflects a covered yield on a cyclical asset rather than a bet on rising room rates.

Catalysts

The first-quarter 2026 print beat modestly and set a steady tone. Apple Hospitality reported revenue of $337.7 million, up from $327.7 million a year earlier, with EPS of $0.12 against an $0.11 forecast. Comparable hotel RevPAR rose 2.2% to $114.61 on 72.8% occupancy and roughly flat ADR, adjusted hotel EBITDA increased to $108.5 million, and modified funds from operations were $80.3 million, or $0.34 per share. The quality of the beat was occupancy-led rather than rate-led, a useful signal about where pricing power sits.

Guidance and the dividend were the forward signals. Management raised the full-year RevPAR outlook by 100 basis points to a 1% midpoint, pointing to resilient demand and event tailwinds including the FIFA World Cup, and guided full-year adjusted hotel EBITDA margin to 32.9% to 33.9%. The company confirmed an annualized dividend of $0.96, a yield near 7%, paid monthly. A raised RevPAR outlook in a cautious travel environment is the catalyst supporting the stock.

The forward watch items are RevPAR trajectory and rate exposure. Because hotel revenue resets nightly, the monthly and quarterly RevPAR prints are the leading indicator for funds from operations and dividend coverage, and the FIFA World Cup is a concrete near-term demand event to track. On the balance sheet, the pace and cost of any debt refinancing against the 4.65% weighted-average rate will determine how much interest expense pressures funds from operations in the quarters ahead. Sustained low-single-digit RevPAR growth would validate the modest assumption the price embeds; a return to the negative RevPAR of 2025 is the scenario the yield is compensating for.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Apple Hospitality Q1 2026 results, 2026 · Apple Hospitality FY2025 10-K

View the full interactive APLE report on boothcheck