Business Context and Reporting Period
This Form 8-K was filed by Apple REIT Nine, Inc. on June 5, 2008, reporting the entry into a material definitive agreement. The company is a real estate investment trust focused on hotel acquisitions.
Key Financial Metrics and Transaction Details
- Target Asset: Hilton Garden Inn in Tucson, Arizona (125 guest rooms).
- Purchase Price: $18,375,000.
- Initial Deposit: $150,000 (refundable during the review period).
- Additional Deposit: $150,000 (due within three business days after the review period expires if the contract is not terminated).
- Funding Source: Ongoing offering of Units (one common share and one Series A preferred share).
- Review Period End Date: July 20, 2008.
Material Changes and Transaction Status
The filing discloses a potential acquisition rather than a completed transaction. As of the filing date, there is no assurance the purchase will close. The company has entered a purchase contract with Valencia Tucson, L.L.C., subject to a review period during which the subsidiary may terminate the agreement for any reason.
Conditions, Risks, and Management Commentary
- Closing Conditions: The transaction is contingent on the seller complying with covenants, obtaining third-party consents, and terminating existing management and franchise agreements to allow for new agreements with the Company's subsidiaries.
- Termination Rights: The purchasing subsidiary may terminate the contract at any time during the review period (ending July 20, 2008) and receive a full refund of the initial deposit. Termination after the review period but before closing may result in forfeiture of deposits unless the seller failed to satisfy a required condition.
- Due Diligence: The review period allows for evaluation of legal, title, physical, environmental, financial, and franchise status documents.
- Relationship: The seller has no material relationship with the Company other than this purchase contract.
Investor Verification Checklist
- Confirm whether the review period ended on July 20, 2008, without termination.
- Verify if the additional $150,000 deposit was paid.
- Check for subsequent filings confirming the execution of new management and franchise agreements.
- Monitor the status of the ongoing Unit offering to ensure sufficient capital for the $18.375 million purchase price.
- Review any future 8-K filings for confirmation of the closing or termination of the agreement.