Why Apple Hospitality REIT Inc (NYSE: APLE) stock is under pressure

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Apple Hospitality REIT Inc (NYSE: APLE) stock lost over 1.4% on 19th May, 2020 (as of  9:51 am GMT-4; Source: Google finance) as the company posted lower than expected results for the first quarter of FY 20. During the quarter, the company had sold its SpringHill Suites by Marriott in Sanford, Florida, and SpringHill Suites by Marriott in Boise, Idaho, for an aggregate gross sales price of about $45 million and recognized a gain on sale of approximately $9 million in the first quarter of 2020. Further, in April 2020, the company had closed on the purchase of the newly developed Hampton Inn & Suites by Hilton and Home Suites by Hilton in Cape Canaveral, Florida. The purchase price was about $47 million, which was funded by $25 million of cash on hand and a one-year note payable with the developer for approximately $22 million. The Company has outstanding contracts, all of which were signed into prior to 2020, for the potential purchase of three additional hotels for an aggregate expected purchase price of about $113 million. At the end of March, 2020, the company had about $1.8 billion of total outstanding indebtedness with a current combined weighted-average interest rate of about 3.3 percent and unrestricted cash and cash equivalents of $0.4 billion. Further, the company has withdrawn its full year 2020 outlook previously given on the back of cancellations and corporate travel policy restrictions related to concerns surrounding COVID-19.

Meanwhile, the company has taken various steps to steps to reduce the operational and financial impact of COVID-19. The company expects to continue for some more time.

APLE in the first quarter of FY 20 has reported the adjusted earnings per funds from operations (FFO) of 17 cents, missing the analysts’ estimates for the adjusted earnings per FFO of 26 cents, according to the Zacks Consensus Estimate. The company had reported the adjusted revenue growth of 35.9 percent to $238.01 million in the first quarter of FY 20, missing the analysts’ estimates for revenue by 3.01%.

Additionally, during the first quarter of FY 20, the Company under its Share Repurchase Program, had purchased about 1.5 million of its common shares at a weighted-average market purchase price of approximately $9.42 per common share, for the total purchase price of about $14.3 million. The company has paid distributions of $0.30 per common share during the period & has currently suspended its monthly distributions due to COVID-19 and the impact on its business.

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