Business Context and Reporting Period
This Form 8-K filing by Apple Hospitality REIT, Inc. (the "Company") is dated June 6, 2016. The report addresses the status of the previously announced Agreement and Plan of Merger with Apple REIT Ten, Inc. ("Apple Ten"). The filing specifically details the conclusion of the "Go Shop Period," a timeframe during which Apple Ten was permitted to solicit alternative acquisition proposals.
Key Financial Metrics
This filing is a current report regarding a corporate event and does not contain financial statements, revenue, profit, cash flow, margin, debt, or liquidity metrics. The filing text does not provide a clear value for any financial performance indicators.
Material Changes and Transaction Status
- Go Shop Period Conclusion: The Go Shop Period ended on May 28, 2016. During this period, Apple Ten's special committee, advised by Citigroup Global Markets Inc., contacted 54 third parties (17 strategic buyers and 37 financial buyers).
- Alternative Proposals: Ten of the contacted parties executed confidentiality agreements. However, none of the third parties provided a proposal or offer regarding an alternative acquisition.
- No-Shop Provisions: Effective May 29, 2016, Apple Ten is subject to customary "no shop" provisions, limiting its ability to solicit alternative proposals, though it may still receive unsolicited offers subject to fiduciary out provisions.
- Closing Timeline: The transaction is expected to close in the third quarter of 2016, subject to shareholder approval, third-party consents, and other customary closing conditions.
Guidance, Outlook, and Risks
Outlook and Management Commentary: Management anticipates the merger will proceed to closing in Q3 2016 pending regulatory and shareholder approvals. The Company filed a Registration Statement on Form S-4 on May 24, 2016, which includes the preliminary joint proxy statement/prospectus. This document has not yet been declared effective by the SEC.
Risks and Contingencies: The filing includes standard forward-looking statement disclaimers. Key risks identified include:
- Failure to obtain required shareholder approvals.
- Failure to satisfy or waive other conditions in the Merger Agreement.
- Risk that the merger may not be completed in the expected timeframe or at all.
- Challenges in acquiring/disposing of properties and integrating operations.
- Adverse changes in real estate markets, financing risks, and regulatory changes.
- Legal proceedings related to the Merger Agreement.
Investor Verification Checklist
- Verify the effectiveness of the Registration Statement on Form S-4 (File No. 333-211564) and review the definitive joint proxy statement/prospectus when available.
- Confirm the status of shareholder approval votes for both Apple Hospitality REIT, Inc. and Apple REIT Ten, Inc.
- Monitor for any unsolicited alternative acquisition proposals that may trigger fiduciary out provisions.
- Review the "Risk Factors" sections in the most recent 10-K and 10-Q filings for both companies for detailed risk disclosures.
- Check for updates on third-party consents and regulatory approvals required for the closing.