Business Context and Reporting Period
Company: Apple REIT Nine, Inc. (a subsidiary of Apple Hospitality REIT, Inc.)
Filing Type: Form 8-K (Current Report)
Date of Report: August 12, 2008
Event: Entry into a Material Definitive Agreement (Item 1.01) for the potential acquisition of a hotel property.
Key Financial Metrics
This filing does not report revenue, profit, cash flow, margins, or aggregate debt levels. It details specific transactional financial terms:
- Target Asset: Hampton Inn & Suites hotel in Pueblo, Colorado (81 guest rooms).
- Purchase Price: $8,550,000.
- Initial Deposit: $100,000 (funded by proceeds from the Company's ongoing offering of Units).
- Additional Deposit: $100,000 (due within 3 business days after the review period if the contract is not terminated).
- Review Period End Date: September 11, 2008.
Material Changes and Transaction Status
The Company has entered a purchase contract with Brothers Hospitality Development, LLC. The transaction is contingent and not yet closed. Key conditions include:
- Completion of a "review period" for legal, title, physical, environmental, and financial due diligence.
- Termination of the existing franchise agreement by the seller and execution of a new agreement by a Company subsidiary.
- Obtaining all necessary third-party consents.
- Compliance with all covenants by the seller.
The Company may terminate the contract at any time during the review period for any reason with a full refund of the initial deposit. If terminated after the review period without seller default, deposits may be forfeited to the seller.
Outlook, Risks, and Contingencies
Management Commentary: The Company explicitly states there can be no assurance that the purchasing subsidiary will acquire the hotel as of the date of this report.
Risks:
- Failure to satisfy closing conditions (e.g., franchise agreement transfer, third-party consents).
- Discovery of adverse facts during the due diligence review period.
- Reliance on the ongoing offering of Units to fund the additional deposit and final purchase price.
Investor Verification Checklist
- Confirm whether the review period ended on September 11, 2008, without termination.
- Verify if the existing franchise agreement was successfully terminated and a new one executed.
- Check for subsequent filings confirming the closing of the transaction or its termination.
- Review the status of the Company's ongoing offering of Units to ensure funding availability for the $8.55 million purchase price.