Apple Hospitality Expands Portfolio With Acquisition in Tampa

Apple Hospitality REIT, Inc. APLE recently announced the acquisition of Homewood Suites by Hilton Tampa-Brandon for $18.8 million, highlighting a strategic move to capitalize on the robust economic growth in Tampa, FL.

This 126-room hotel, located at 10240 Palm River Road, Tampa, FL, gains from various business and leisure demand generators spanning conventions, sporting events, life sciences and health care, academics, manufacturing and logistics, insurance, financial and professional services, technology and more.

Nelson Knight, the president of Real Estate and Investments of Apple Hospitality, expressed optimism about the acquisition, ideally located next to its Embassy Suites in Tampa. The city's growth, marked by the presence of major corporate offices, positions it strategically to benefit from the high demand generated by large-scale events and conventions.

Additionally, the hotel's proximity to the Florida State Fairgrounds, Busch Gardens Tampa Bay, The Florida Aquarium, ZooTampa at Lowry Park, the Tampa Riverwalk, Amalie Arena, Raymond James Stadium, George M. Steinbrenner Field and Tropicana Field will drive leisure attractions and sports tourism. Moreover, the hotel is easily accessible to HCA Florida Brandon Hospital, Tampa General Hospital’s Brandon Healthplex, the recently renovated Tampa Convention Center, the University of South Florida and the University of Tampa.

The purchase price of $18.8 million at approximately $149,000 per key reflects an attractive valuation — at a purchase price below replacement cost, a 12% cap rate on trailing 12-month results through April of this year and a high single-digit cap rate after all anticipated capital expenditures. Operational synergies and improved market positioning with the planned renovation are likely to enhance returns on this investment. The acquisition aligns with Apple Hospitality's strategy of investing efficiently and effectively in properties with strong growth potential, maximizing shareholders’ wealth creation.

According to data provided by STR for the trailing 12 months ended April 30, 2025, the Tampa East, FL, submarket witnessed a notable improvement of around 15% in revenue per available room (RevPAR) compared to the same period in 2024. This data reflects the resilience and recovery of the hospitality industry in the region.

APLE’s Strategic Restructuring Activities

Apple Hospitality's portfolio expansion doesn't stop with the Homewood Suites acquisition. The company has one additional hotel under contract for purchase, a Motto by Hilton in downtown Nashville, with an expected 260 rooms. The hotel is under development with an expected total purchase price of approximately $98.2 million, to be acquired in late 2025, post the completion of construction. Apple Hospitality also has one hotel under contract for sale, the 206-room Houston Marriott Energy Corridor, for a gross sales price of around $16 million, expected to be completed in the third quarter of 2025. Both the purchase and sale are subject to the completion of conditions.

With the Homewood Suites Tampa-Brandon acquisition, Apple Hospitality's portfolio now includes 221 hotels with 29,893 guest rooms spread across 37 states and the District of Columbia, showcasing the company's commitment to geographic diversification. The portfolio is concentrated on industry-leading brands, including 97 Marriott-branded hotels, 118 Hilton-branded hotels, five Hyatt-branded hotels and one independent hotel.

Conclusion

Apple Hospitality REIT's strategic acquisition in Tampa positions the company to capitalize on the city's vibrant hospitality market and reflects its commitment to expanding a diverse portfolio in key markets across the United States.

However, macroeconomic uncertainty and a cautious approach by many businesses are likely to hurt demand for its properties in the near term. The competitive landscape and elevated interest expenses are concerns.

Shares of Apple Hospitality, currently carrying a Zacks Rank #4 (Sell), have fallen 5.2% in the past month against the industry’s rise of 2.7%.

Stocks to Consider

Some better-ranked stocks from the broader REIT sector are VICI Properties VICI and W.P. Carey WPC, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for VICI Properties’ 2025 FFO per share has been revised marginally over the past two months to $2.34.

The consensus estimate for W.P. Carey’s current-year FFO per share has moved northward 1.2% in the past two months to $4.88.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO), a widely used metric to gauge the performance of REITs

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This article originally published on Zacks Investment Research (zacks.com).

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