APLE Stock Plunges 0.95% as Q2 RevPAR Declines, Debt Rises Spark Concerns

Apple Hospitality REIT (APLE) fell 0.95% on October 10, marking its fifth consecutive day of declines and a 4.97% drop over the past five trading days. The stock hit an intraday low of 1.55% below its previous close, reaching its lowest level since June 2025 amid persistent downward momentum.

The selloff reflects deteriorating operational metrics, particularly a 1.7% year-over-year decline in Comparable Hotels RevPAR for Q2 2025. This followed a 0.5% drop in Q1, signaling softening demand and margin compression. Rising operating expenses—outpacing revenue growth—pushed the Comparable Hotels Adjusted Hotel EBITDA margin down 200 basis points to 37.4%, raising concerns about cost management and profitability amid economic uncertainty.

Aggressive capital return strategies have compounded financial risks. APLE spent $16.9 million repurchasing 1.4 million shares in Q2 2025, leveraging asset sales and increased leverage. While management cited a discount to private market values, the company’s debt-to-capital ratio climbed to 35.5% by June 30, up from 28.5% in 2024. Refinancing efforts, including a $385 million term loan maturing in 2030, increased exposure to variable-rate debt to 39% of total debt, raising interest expenses by 10% year-to-date.

Revised earnings guidance underscored macroeconomic headwinds. APLE now projects a 1.5% to 0.5% decline in Comparable Hotels RevPAR for 2025, down from earlier forecasts. Management cited weaker government travel, weather disruptions, and inflationary pressures as key challenges. Despite a 0.2% sequential RevPAR improvement in June and 1% growth in July, booking trends for August and September remain fragile, deepening investor skepticism about near-term recovery.

Strategic moves to stabilize liquidity, such as the $385 million refinancing and portfolio recycling, face execution risks. The $98.2 million Nashville Motto hotel acquisition, pending completion in late 2025, introduces potential delays or cost overruns. Meanwhile, the accumulated distributions deficit grew to $1.54 billion, as distributions outpaced net income, casting doubt on the sustainability of the $0.96 annualized dividend without further asset sales or debt financing.

Investor sentiment remains divided. While buybacks and proactive portfolio management aim to protect shareholder value, rising debt, margin erosion, and revised guidance have fueled bearish concerns. The stock’s recent 1.13% overnight gain contrasts with a 20.92% year-to-date decline, highlighting the market’s struggle to balance optimism over capital returns against operational and financial risks.