Business Context and Reporting Period
This Form 8-K is filed by Apple REIT Nine, Inc. (a subsidiary of Apple Hospitality REIT, Inc.) on August 29, 2012, reporting events occurring between August 29 and September 13, 2012. The filing details the execution of new secured loan agreements to refinance existing debt and fund general corporate purposes.
Key Financial Metrics
The Company secured a total of $47.7 million in new debt through three separate loan agreements with Wells Fargo Bank, National Association. The loans are secured by three specific hotel properties and feature interest rates ranging from 4.89% to 4.97%. The terms include monthly principal and interest payments based on a 25-year amortization schedule with balloon payments due at maturity.
| Hotel Location | Brand | Interest Rate | Principal Amount | Maturity Date |
|---|---|---|---|---|
| Grapevine, TX | Hilton Garden Inn | 4.89% | $11,810,000 | 9/1/2022 |
| Collegeville, PA | Courtyard | 4.89% | $12,650,000 | 9/1/2022 |
| Anchorage, AK | Embassy Suites | 4.97% | $23,230,000 | 10/1/2022 |
| Total | - | - | $47,690,000 | - |
The filing text does not provide specific values for revenue, profit, cash flow, or operating margins as this is a current report regarding a specific financing event rather than a periodic financial statement.
Material Changes and Use of Proceeds
Upon closing, the Company utilized a portion of the $47.7 million proceeds to extinguish and pay off a $30 million non-revolving line of credit. Additional proceeds were used to cover transaction costs. The remaining funds are designated for general corporate purposes, including capital expenditures, share redemptions, and distributions.
Outlook, Risks, and Covenants
The Loan Agreements include standard representations, financial covenants, affirmative and negative covenants, events of default, and remedies typical for secured hotel loans. The filing does not provide specific forward-looking guidance, management commentary on future performance, or details on specific risks beyond the standard covenants inherent in the loan agreements.
Investor Verification Checklist
- Verify the impact of the new debt on the Company's overall leverage ratios and debt service coverage.
- Confirm the specific terms of the financial covenants within the Loan Agreements to assess compliance risks.
- Monitor the allocation of remaining proceeds to ensure alignment with stated capital expenditure and distribution plans.
- Review the status of the extinguished $30 million line of credit to confirm no remaining obligations exist.