Business Context and Reporting Period
This Form 8-K is filed by Apple REIT Nine, Inc. (a subsidiary of Apple Hospitality REIT, Inc.) on November 16, 2011. The report discloses a material legal proceeding initiated against the Company and its management.
Key Financial Metrics
The filing text does not provide specific values for revenue, profit, cash flow, margins, debt, or liquidity. This report focuses exclusively on a legal event rather than financial performance data.
Material Changes
The material change reported is the initiation of a putative class action lawsuit on November 16, 2011, in the Supreme Court of the State of New York (Case No. 653186/2011). The suit is captioned Barbara Blazer v. Apple REIT Nine, Inc., et al.
Legal Proceedings, Risks, and Management Commentary
- Plaintiffs and Defendants: The lawsuit is brought by a shareholder on behalf of all unit purchasers and a subclass of shareholders who reinvested. Defendants include the Company, CEO Glade M. Knight, David Lerner Associates, Inc., and David Lerner.
- Allegations: The complaint asserts claims under Sections 11, 12(a)(2), and 15 of the Securities Act of 1933. It alleges failure to disclose material information regarding the value of prior Apple REIT Companies' units and claims false advertising and breach of fiduciary duty regarding distributions paid by prior entities.
- Relief Sought: Plaintiffs seek class certification, monetary damages, rescission of share purchases, elimination of redemption restrictions, and costs.
- Management Response: The Company believes the claims are without merit and intends to defend vigorously.
- Financial Impact: The Company states it cannot reasonably predict the outcome, estimate damages, or provide a range of possible loss at this time.
Investor Verification Checklist
- Verify the current status of Case No. 653186/2011 in the Supreme Court of the State of New York.
- Review the specific allegations regarding the valuation of prior Apple REIT Companies (Six, Seven, Eight, and Ten).
- Monitor future filings for any updates on the litigation's progression or potential settlement discussions.
- Assess the potential impact of "rescission of share purchases" on the Company's capital structure if the claims were to succeed.