Business Context and Reporting Period
This Form 8-K was filed by Apple REIT Nine, Inc. on July 24, 2008, reporting the entry into a material definitive agreement. The registrant is a Virginia corporation focused on hotel real estate investments.
Key Financial Metrics and Transaction Details
- Target Asset: Courtyard by Marriott hotel in Santa Clarita, California (140 guest rooms).
- Purchase Price: $22,700,000.
- Initial Deposit: $200,000 (refundable during the review period).
- Additional Deposit: $200,000 (due after the review period if the contract is not terminated).
- Funding Source: Ongoing offering of Units (one common share and one Series A preferred share).
- Financial Performance: The filing text does not provide revenue, profit, cash flow, margins, debt, or liquidity metrics for the company.
Material Changes and Transaction Status
The primary material change is the execution of a purchase contract for the Santa Clarita hotel. The transaction is contingent and not yet closed. The seller, Ocean Park Hotels-MMM, L.L.C., has no material relationship with the registrant other than this contract.
Outlook, Risks, and Contingencies
- Closing Uncertainty: There is no assurance the purchase will close. The subsidiary may terminate the contract at any time during the review period (ending August 23, 2008) for any reason.
- Deposit Risk: If the contract is terminated after the review period but before closing (and not due to seller failure), deposits will be forfeited to the seller.
- Closing Conditions: Closing is subject to several conditions, including seller compliance with covenants, obtaining third-party consents, transfer of the franchise agreement, and execution of a new management agreement.
- Due Diligence: The subsidiary is currently evaluating legal, title, physical, environmental, and financial documents related to the hotel.
Investor Verification Checklist
- Verify the status of the review period ending August 23, 2008, and whether the contract was terminated or proceeded.
- Confirm if the additional $200,000 deposit was paid and if the closing occurred.
- Check subsequent filings for the execution of the new management agreement and transfer of the franchise.
- Review the company's ongoing Unit offering status to confirm funding availability for the purchase price.