Apple Hospitality REIT, Inc. - Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed on September 1, 2016, by Apple Hospitality REIT, Inc. (the "Company"). The filing reports the completion of a previously announced merger with Apple REIT Ten, Inc. ("Apple Ten"), a real estate investment trust. The transaction was executed via a merger of Apple Ten into 34 Consolidated, Inc., a wholly owned subsidiary of the Company.
Key Financial Metrics and Transaction Details
- Assets Acquired: 56 hotels located in 17 states with an aggregate of 7,209 rooms.
- Consideration Value: Approximately $1.0 billion, based on the Company's closing share price on August 31, 2016.
- Equity Issuance: Approximately 48.7 million Company Common Shares were issued as consideration.
- Exchange Ratio: Apple Ten unit holders received 0.522 Company Common Shares plus $1.00 cash per unit.
- Preferred Shares: Apple Ten Series B convertible preferred shares were converted into Company Common Shares (multiplied by 12.11423 times the Exchange Ratio) plus cash (multiplied by 12.11423 times $1.00).
- Options: All outstanding Apple Ten options were assumed by the Company under existing terms.
Material Changes
The primary material change is the consolidation of Apple Ten's hotel portfolio into the Company, significantly expanding its asset base. The filing notes that prior to the merger, the Company and Apple Ten shared overlapping directors and executive officers, including Glade M. Knight (Executive Chairman), Justin G. Knight (President and CEO), and other key executives who held dual roles.
Guidance, Outlook, and Risks
- Updated Outlook: On September 1, 2016, the Company announced an update to its 2016 operational and financial outlook to reflect the acquisition. Specific numerical guidance is contained in the press release attached as Exhibit 99.1 and is not detailed in the body of this 8-K.
- Financial Statements: The filing states that financial statements of the acquired business and pro forma financial information will be filed by amendment no later than 71 calendar days after the filing date. Consequently, specific post-merger revenue, profit, or debt metrics are not available in this document.
- Regulatory Disclosure: The outlook information is provided under Regulation FD and is explicitly not deemed "filed" for purposes of Section 18 of the Exchange Act.
Investor Verification Checklist
- Verify the specific 2016 operational and financial outlook figures in the press release (Exhibit 99.1) referenced in Item 7.01.
- Monitor the upcoming amendment to this 8-K (due within 71 days) for the required financial statements of Apple Ten and pro forma financial information.
- Review the full text of the Merger Agreement (Exhibits 2.1 and 2.2) for details on dissenters' rights and specific terms of the assumed options.
- Confirm the impact of the 48.7 million share issuance on existing shareholder dilution.