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Apple Hospitality (APLE) Boosts Portfolio With $31M Buyout
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Bolstering its overall portfolio quality, Apple Hospitality REIT, Inc. (APLE - Free Report) recently concluded the buyout of the newly renovated Courtyard by Marriott Cleveland University Circle in Cleveland, OH, for $31 million or around $201,000 per key.
The 154-room property is advantageously located within University Circle, a premier educational, medical and social district on the east side of Cleveland, offering several demand drivers. The region is home to Case Western Reserve University, University Hospitals Cleveland Medical Center and many cultural attractions and performing arts venues.
Moreover, Cleveland is a popular choice among several corporations across various industries, including aerospace and aviation, health care and bio health, manufacturing, automotive, information technology, and polymers and materials, driving additional demand to the area.
Being a business-friendly city with a favorable cost of living, ample amenities, beautiful outdoor spaces, robust leisure activities and premier healthcare facilities, Cleveland is poised for a solid growth trajectory. Hence, Apple Hospitality’s expansion into this region is likely to help attract traffic to its recently acquired property, making the move a strategic fit.
In addition, the revenue per available room (RevPAR) for the Willoughby/Beachwood, OH, submarket improved more than 14% per STR’s data for the trailing three months ended May 31, 2023. This is expected to provide APLE ample scope for growth.
With the acquisition of the Courtyard by Marriott Cleveland University Circle, Apple Hospitality’s portfolio now includes 221 hotels comprising 29,138 guest rooms across 37 states.
The continued momentum in leisure travel demand and rebound in business transient and group demand have driven the recovery in the lodging industry in the wake of the pandemic. Given this backdrop, APLE’s well-located, geographically diverse portfolios of upscale, rooms-focused hotels in the United States are likely to benefit.
Also, this hotel real estate investment trust (REIT) focuses on acquiring young assets in strong RevPAR markets, having attractive cost structures aimed at enhancing operating margins and long-term return on investment.
Further, its capital-reinvestment program and healthy balance sheet position with ample liquidity position the company to be acquisitive and optimize its portfolio through opportunistic transactions.
Nonetheless, persistent macroeconomic uncertainty and a high interest rate environment pose concerns for the company.
APLE currently carries a Zacks Rank #4 (Sell).
Its shares have lost 2.9% in the year-to-date period against the industry’s growth of 0.6%.
The Zacks Consensus Estimate for Ventas’ ongoing year’s funds from operations (FFO) per share has been raised marginally over the past two months to $2.98.
The Zacks Consensus Estimate for W.P. Carey’s current-year FFO per share has moved marginally northward over the past week to $5.36.
The Zacks Consensus Estimate for Innovative Industrial Properties’ 2023 FFO per share has moved 3.6% upward in the past two months to $8.66.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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Apple Hospitality (APLE) Boosts Portfolio With $31M Buyout
Bolstering its overall portfolio quality, Apple Hospitality REIT, Inc. (APLE - Free Report) recently concluded the buyout of the newly renovated Courtyard by Marriott Cleveland University Circle in Cleveland, OH, for $31 million or around $201,000 per key.
The 154-room property is advantageously located within University Circle, a premier educational, medical and social district on the east side of Cleveland, offering several demand drivers. The region is home to Case Western Reserve University, University Hospitals Cleveland Medical Center and many cultural attractions and performing arts venues.
Moreover, Cleveland is a popular choice among several corporations across various industries, including aerospace and aviation, health care and bio health, manufacturing, automotive, information technology, and polymers and materials, driving additional demand to the area.
Being a business-friendly city with a favorable cost of living, ample amenities, beautiful outdoor spaces, robust leisure activities and premier healthcare facilities, Cleveland is poised for a solid growth trajectory. Hence, Apple Hospitality’s expansion into this region is likely to help attract traffic to its recently acquired property, making the move a strategic fit.
In addition, the revenue per available room (RevPAR) for the Willoughby/Beachwood, OH, submarket improved more than 14% per STR’s data for the trailing three months ended May 31, 2023. This is expected to provide APLE ample scope for growth.
With the acquisition of the Courtyard by Marriott Cleveland University Circle, Apple Hospitality’s portfolio now includes 221 hotels comprising 29,138 guest rooms across 37 states.
The continued momentum in leisure travel demand and rebound in business transient and group demand have driven the recovery in the lodging industry in the wake of the pandemic. Given this backdrop, APLE’s well-located, geographically diverse portfolios of upscale, rooms-focused hotels in the United States are likely to benefit.
Also, this hotel real estate investment trust (REIT) focuses on acquiring young assets in strong RevPAR markets, having attractive cost structures aimed at enhancing operating margins and long-term return on investment.
Further, its capital-reinvestment program and healthy balance sheet position with ample liquidity position the company to be acquisitive and optimize its portfolio through opportunistic transactions.
Nonetheless, persistent macroeconomic uncertainty and a high interest rate environment pose concerns for the company.
APLE currently carries a Zacks Rank #4 (Sell).
Its shares have lost 2.9% in the year-to-date period against the industry’s growth of 0.6%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the REIT sector are Ventas (VTR - Free Report) , W.P. Carey (WPC - Free Report) and Innovative Industrial Properties (IIPR - Free Report) . Each company presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Ventas’ ongoing year’s funds from operations (FFO) per share has been raised marginally over the past two months to $2.98.
The Zacks Consensus Estimate for W.P. Carey’s current-year FFO per share has moved marginally northward over the past week to $5.36.
The Zacks Consensus Estimate for Innovative Industrial Properties’ 2023 FFO per share has moved 3.6% upward in the past two months to $8.66.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs.