Doman Building Materials Group Ltd.

and welcome to the Apple Hospitality REIT second quarter earnings call. All participants will be in the tsunami mode. Should you need assistance, please sit through a conference schedule and start pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you can press the star and then one on your telephone keypad. To start your question, please press the star and two. Please note, this keypad is being recorded. For now, let's take a look over to Kelly Clark, Vice President of Investor Relations. Please go ahead.

Thank you and good morning. Welcome to Apple Hospitality Reap's second quarter 2025 earnings call. Today's call will be based on the earnings release in Form 10-Q, which we distributed and filed yesterday afternoon. Before we begin, please note that today's call may include forward-looking statements as defined by federal securities laws. These forward-looking statements are based on current views and assumptions and, as a result, are subject to numerous risks, uncertainties, and the outcome of future events that could cause actual results, performance, or achievements to materially differ from those expressed, projected, or implied. Any such forward-looking statements are qualified by the risk factors described in our filings with the SEC, including in our 2024 Annual Report on Form 10-K, and speak only as of today. The company undertakes no obligation to publicly update or revise any forward-looking statements except as required by law. In addition, non-GAAP measures of performance will be discussed during this call. Reconciliations of those measures to GAAP measures and definitions of certain items referred to in our remarks are included in yesterday's earnings release and other filings with the SEC. For a copy of the earnings release or additional information about the company, please visit AppleHospitalityReit.com. This morning, Justin Knight, our Chief Executive Officer, and Liz Perkins, our Chief Financial Officer, will provide an overview of our results for the second quarter of 2025 and an operational outlook for the rest of the year. Following the overview, we will open the call for Q&A. At this time, it is my pleasure to turn the call over to Justin.

Good morning, and thank you for joining us today for our second quarter 2025 earnings call. Fundamentals for our portfolio improved sequentially as we moved through the quarter, with rent part declines moderating each month and preliminary results for July showing rent part growth year over year. As anticipated, April was the most challenging month, as heightened economic uncertainty, a pullback in government travel, the shift in timing of the Easter holiday, and the elongated spring break period all weighed on overall performance. During the quarter, we worked with our management companies to further optimize the mix of business at our hotels. And we're able to strengthen market share broadly across our portfolio, as well as in those markets more heavily impacted by demand shifts related to government travel. Our teams have demonstrated an exceptional ability to swiftly adapt to changing demand trends within our markets. In many cases, layering on additional group business at attractive rates. Although variable expense growth is generally moderated, higher fixed costs and lower than expected top-line growth impacts our bottom-line performance during the quarter. Though down slightly, our portfolio continues to produce industry-leading margins, with comparable hotels EBITDA margin of 37.4% for the quarter. Our hotels operate efficiently and produce strong cash flow, while simultaneously providing guests traveling for both business and leisure with a compelling value proposition. While broad economic uncertainty weighed on year-over-year growth and fueled capital market volatility during the quarter, travel demand for our portfolio remained resilient, further reinforcing the merits of our underlying strategy. The fundamentals of our business are strong, with growth in our group business largely offsetting slightly softer performance than other segments. Although the booking window for our hotels remains short, we are encouraged by recent airline and hotel brand commentary related to improvements they are seeing in demand and view these comments as potentially positive indicators for performance in the back half of the year. Our portfolio of rooms focused hotels, broadly diversified across markets and demand generators, has historically outperformed during extended periods of economic uncertainty and is well positioned for upside should we see a reacceleration in broader economic growth. Supply and demand dynamics remain favorable across our markets. At the end of the second quarter, nearly 60% of our hotels did not have any new upper upscale, upscale, or upper mid-scale product under construction within a five-mile radius. This historically low rate of supply growth is unique to this cycle, and we believe it materially improves the overall risk profile of our portfolio by reducing potential downside while enhancing potential upside as lodging demand strengthens. Supported by the strong cash flow from our portfolio of hotels, we continue to pay an attractive dividend, which is meaningfully additive to total returns for our investors. During the second quarter, we paid distributions totaling approximately $57 million, or 24 cents per common share. Based on Tuesday's closing stock price, our annualized regular monthly cash distribution of 96 cents per share represents an annual yield of approximately 8.2%. Together with our board of directors, we will continue to monitor our distribution rate and timing relative to the performance of our hotels and other potential uses of capital. We remain disciplined in our approach to capital allocation, seeking opportunities to refine and enhance our existing portfolio, drive earnings per share, and maximize long-term value for our shareholders. Since the beginning of this year, we have completed the sale of two hotels for a total combined sales price of approximately $21 million. entered into agreements for the sale of our full-service Houston Marriott for $16 million, and the sale of our Hampton and Homewood Streets in Clovis, California, for a combined sales price of approximately $20 million, acquired the Homewood Streets Tampa Brandon for approximately $19 million, repurchased approximately $43 million of our common shares, and paid distributions of nearly $146 million, all while maintaining the strength and flexibility of our balance sheet. We completed the previously announced acquisition of the 126-room Homewood Suites AMPA branded in June. The hotel is located adjacent to our Embassy Suites and represents a unique opportunity to expand our ownership in a sub-market that continues to perform well for us, with a strong going-in yield and operational upside at a price below replacement costs. The hotel was offered for sale by the loan servicer. and the $18.8 million purchase price represents a 12% cap rate on trailing 12-month results through June of this year, and a high single-digit cap rate on trailing numbers after all anticipated capital expenditures. The anticipated additional upside from operational synergies as we go to clustering this hotel with our embassy suite and improved market positioning following our planned renovation will further enhance returns on our investments. Our execution of this transaction in the current environment illustrates the underlying strength of our platform and our ability to effectively and efficiently deploy capital to maximize total shareholder returns over the long term. While the overall transaction market continues to be challenging, we have successfully executed on select asset sales and ways to continue to optimize our portfolio concentration and free capital, which we have been able to effectively redeploy at a meaningful spread. Pricing for the individual hotels varies. However, as a group, the two hotels we sold earlier in the year, together with the Houston Marriott and the two Clovis hotels, will trade at a sub-6% blended cap rate, or 13.6 times even though multiple before CapEx, and a 4.3% cap rate, or 18.2 times even though multiple, after taking into consideration the estimated $19 million in required capital improvements. Proceeds from the sales have been used primarily to fund share repurchases. Since the beginning of the year through June, we have repurchased approximately 3.4 million of our shares at a weighted average market purchase price of approximately $12.83 per share, for an aggregate purchase price of approximately $43 million. Shares repurchased year-to-date have been priced at around a three-and-a-half-turn spread to recent dispositions and over an eight-turn EBITDA multiple spread after taking into consideration required capital investments. We continue to have one hotel under contract for purchase, the Motto by Hilton, which is under construction in downtown Nashville. This asset is being developed under a fixed price contract, and we anticipate acquiring the hotel for approximately $98 million upon completion of construction later this year. Since the onset of the pandemic, we have completed approximately $338 million of hotel sales, with an additional $36 million under contract and expected to close in the coming months. These sales have allowed us to forego over $100 million in capital investments and represent a blended cap rate prior to taking into consideration necessary CapEx of approximately 5% and a sub-4% cap rate after CapEx. Over the same period, we have invested more than $1 billion in acquisitions and purchased 6.5 million shares of our own stock while maintaining the strength of our balance sheet. These transactions have further enhanced our already well-positioned portfolios by lowering the average age, lifting overall portfolio performance, helping to manage near-term CapEx needs, increasing exposure to high-growth markets, and positioning us to continue to benefit from near-term economic and demographic trends. We have consistently demonstrated our ability to adjust tactical capital allocation strategy to account for changing market conditions and to act on opportunities at optimal times in the cycle to maximize total returns for our shareholders. Since May of last year, we had purchased nearly $78 million of our own shares. While our long-term goal is to grow our portfolio, when our stock trades at an implied discount to values we can achieve in private market transactions, as it has for the past several months, we will opportunistically sell assets and redeploy proceeds primarily into additional share repurchases, preserving our balance sheet so that at the appropriate time in the cycle, we can act quickly on attractive acquisitions opportunities. Consistent reinvestment in our portfolio is a key component of our strategy and ensures that our hotels maintain their strong value proposition for our customers and remain competitive in their respective markets while further driving EBITDA growth. Our experienced team is focused on leveraging our scale ownership to control costs, maximize impact on reinvested dollars, and schedule projects during periods of seasonally lower demand to minimize revenue displacement. Our ability to effectively renovate and maintain our assets is a meaningful differentiator that helps us to achieve strong returns for our investors over long periods of time. During the six months ended June 30th, capital expenditures were approximately $32 million. For the year, we expect to reinvest between $80 and $90 million in our hotels, with major renovations at approximately 20 of our hotels. We entered the quarter at a time of heightened macroeconomic uncertainty, and were prepared to adjust operational and capital allocation priorities accordingly. Although we did see a pullback in government travel beginning in March, demand trends have stabilized, and overall travel demand remains strong. Our booking window remains short, but as we look ahead to the second half of the year, we are encouraged by modest improvements in consumer sentiment and some easing of uncertainty related to policy changes, though economic uncertainty remains elevated and these improvements are not yet fully reflected in current booking data, which is pulled back slightly year-over-year for August and September. The adjustments we have made to full-year guidance reflect current booking trends and could prove conservative if improvements in the macro environment drive better in-the-month, for-the-month pickup like we saw in the first half of the year. The historically low exposure to new supplier portfolio is particularly well-positioned to benefit from incremental improvements in overall travel demand. This year, we are celebrating 25 years in the hospitality industry and 10 years since our listing on the New York Stock Exchange. Throughout our history, we have worked to refine our strategy, intentionally choosing to invest in high-quality hotels that appeal to a broad set of business and leisure customers, diversifying our portfolio across markets and demand generators, maintaining a strong and flexible balance sheet with low leverage, reinvesting in our hotels, developing our corporate team, and closely aligning efforts with the associates and management teams who operate our hotels. Our differentiated strategy has been tested and proven across multiple economic cycles. With the strength of our broadly diversified portfolio, the overall stability of our business, our low leverage, and the depth of our team, I am confident that we are well positioned to drive profitability and maximize long-term value for our shareholders in any macroeconomic environment. It is now my pleasure to turn the call over to Liz for additional details on our balance sheet, financial performance during the quarter, and outlook for the remainder of the year.