Business Context and Reporting Period
This Form 8-K is filed by Apple REIT Nine, Inc. (the "Company") for the reporting period ending December 12, 2008. The Company is a real estate investment trust focused on acquiring and operating hotels. The filing details two significant transactions: the entry into a material definitive agreement for a potential acquisition and the completion of an asset acquisition.
Key Financial Metrics and Transactions
The filing does not provide consolidated revenue, profit, cash flow, or margin data for the Company. It focuses on specific transaction values:
- Potential Acquisition (Frisco, TX): A purchase contract was entered for a Hilton Garden Inn (102 rooms) for $15,050,000. A $5,000 deposit was paid.
- Completed Acquisition (Jackson, TN): The Company closed on the purchase of a Courtyard by Marriott (94 rooms) for $15,200,000.
- Liquidity and Funding: Both the deposit and the completed purchase price were funded by proceeds from the Company's ongoing offering of Units (consisting of one common share and one Series A preferred share).
Material Changes and Transaction Status
Potential Acquisition (Frisco, TX):
- The hotel is currently under construction.
- The transaction is subject to a "review period" ending December 27, 2008, during which the Company may terminate the contract for any reason with a full refund of the deposit.
- Closing conditions remain unsatisfied, including completion of construction, obtaining third-party consents, and executing new franchise and management agreements.
- There is no assurance that the acquisition will close.
- Closed on December 16, 2008.
- This represents one of eight potential hotel purchases under contracts executed on November 12, 2008.
- There is no assurance that the remaining seven contracts will result in closings.
Guidance, Risks, and Contingencies
Risks and Contingencies:
- Acquisition Uncertainty: The Frisco, TX acquisition is contingent on the satisfaction of closing conditions and the Company's decision not to terminate during the review period.
- Portfolio Expansion Risk: The Company has entered contracts for eight hotels but has only closed one; future closings are not guaranteed.
- Construction Risk: The Frisco property is under construction, introducing risks related to completion timelines and costs.
Management notes that financial statements and pro forma information for the Jackson, TN acquisition will be filed as necessary by amendment within the required time period.
Investor Verification Checklist
- Verify the status of the Frisco, TX acquisition after the December 27, 2008 review period.
- Monitor the progress of the remaining seven hotel purchase contracts executed on November 12, 2008.
- Review the upcoming amended filings for financial statements and pro forma information regarding the Jackson, TN acquisition.
- Confirm the execution of new franchise and management agreements required for the Frisco property closing.