Business Context and Reporting Period
This Form 8-K was filed by Apple REIT Nine, Inc. on January 21, 2009. The report discloses the entry into a material definitive agreement regarding a potential land acquisition for natural gas production.
Key Financial Metrics
- Total Purchase Price: Approximately $150 million.
- Initial Deposit: $500,000.
- Asset Scope: Approximately 500 acres of land across 115 sites in Texas.
- Funding Source: Proceeds from the Company's ongoing offering of Units (one common share and one Series A preferred share).
- Revenue/Profit/Cash Flow: The filing text does not provide a clear value for these metrics as this is a transactional disclosure, not a financial results report.
Material Changes and Transaction Details
On January 21, 2009, an indirect wholly-owned subsidiary of the Company entered into a purchase contract with a subsidiary of Chesapeake Energy Corporation. The agreement includes the following terms:
- Review Period: Ends on February 21, 2009, with an option to extend for up to 90 days.
- Termination Rights: The purchasing subsidiary may terminate the contract at any time during the review period for any or no reason, resulting in a refund of the deposit.
- Lease Arrangement: At closing, the subsidiary intends to enter into a long-term lease with a lessee for natural gas production.
- Closing Conditions: Certain conditions, including seller compliance with covenants and representations, remain unsatisfied. If these are not met, the Company may terminate the contract and receive a deposit refund.
Outlook, Risks, and Contingencies
Management notes that there can be no assurance that the land acquisition will close. The transaction is contingent upon the satisfaction of closing conditions and the Company's evaluation of legal, title, environmental, and economic factors during the review period. If the contract is terminated after the review period (and not due to seller default), the deposit will be forfeited to the seller.
Investor Verification Checklist
- Verify the status of the review period and whether the extension option was exercised.
- Confirm whether the closing conditions regarding seller covenants and representations have been satisfied.
- Monitor the Company's ongoing Unit offering to ensure sufficient capital is raised for the $150 million purchase price.
- Check for any subsequent filings indicating termination of the contract or forfeiture of the $500,000 deposit.