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UNITED STATES |
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SECURITIES AND EXCHANGE COMMISSION |
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Washington, D.C. 20549 |
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FORM 8-K/A |
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AMENDMENT NO. 1 TO |
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Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
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Date of Report (Date of earliest event reported): November 1, 2011 |
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APPLE REIT TEN, INC. |
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(Exact name of registrant as specified in its charter) |
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Virginia |
333-168971 |
27-3218228 |
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(State or other jurisdiction |
(Commission File Number) |
(I.R.S. Employer |
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of incorporation) |
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Identification Number) |
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814 East Main Street, Richmond, Virginia |
23219 |
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(Address of principal executive offices) |
(Zip Code) |
(804) 344-8121
(Registrant’s
telephone number, including area code)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Apple REIT Ten, Inc. hereby amends Item 9.01 of its Current Report on Form 8-K dated November 1, 2011 and filed (by the required date) on November 7, 2011 for the purpose of filing certain financial statements and information. In accordance with Rule 12b-15 under the Securities and Exchange Act of 1934, as amended, this Amendment No. 1 sets forth the complete text of the item as amended.
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Item 9.01. |
Financial Statements and Exhibits. |
2
REPORT OF INDEPENDENT AUDITORS
Members of the Board of Directors
Apple REIT Ten, Inc.
Richmond, Virginia
We have audited the accompanying combined balance sheet of KRG/White LS Hotel, LLC and Kite Realty/White LS Hotel Operators, LLC (the “Company”) as of December 31, 2010, and the related combined statements of operations and members’ equity and cash flows for the year then ended. These combined financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these combined financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present fairly, in all material respects, the financial position of KRG/White LS Hotel, LLC and Kite Realty/White LS Hotel Operators, LLC as of December 31, 2010, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
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Crowe Horwath LLP |
Oak Brook, Illinois
October 31, 2011
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3 |
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KRG/WHITE LS HOTEL, LLC and KITE REALTY/WHITE LS HOTEL OPERATORS, LLC |
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December 31, 2010 |
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ASSETS |
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Current assets |
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Cash and cash equivalents |
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$ |
836,710 |
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Escrow – tax and insurance |
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60,000 |
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Accounts receivable |
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30,553 |
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Prepaid expenses |
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8,179 |
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Due from affiliated company (Note 5) |
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147,654 |
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Total current assets |
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1,083,096 |
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Property and equipment (Note 3) |
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Property and equipment |
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9,438,205 |
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Accumulated depreciation |
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(610,294 |
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8,827,911 |
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Other assets |
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Restricted cash - escrow |
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29,945 |
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Deferred loan costs, net of amortization |
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86,153 |
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Operating supplies |
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13,697 |
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Deposits |
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16,176 |
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145,971 |
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$ |
10,056,978 |
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LIABILITIES AND MEMBERS’ EQUITY |
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Current liabilities |
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Accounts payable |
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$ |
22,618 |
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Accrued payroll and payroll taxes |
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41,793 |
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Accrued property taxes |
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114,500 |
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Other accrued expenses |
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160,378 |
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Total current liabilities |
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339,289 |
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Long-term debt (Note 6) |
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9,414,141 |
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Members’ equity |
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303,548 |
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$ |
10,056,978 |
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See accompanying notes to combined financial statements. |
4
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KRG/WHITE LS HOTEL, LLC and KITE REALTY/WHITE LS HOTEL OPERATORS, LLC |
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Year ended December 31, 2010 |
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Revenue |
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Rooms |
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$ |
1,567,624 |
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Telephone |
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1,677 |
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Vending, rent, and other |
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17,321 |
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Total revenue |
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1,586,622 |
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Department expense |
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Rooms |
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266,911 |
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Telephone |
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19,603 |
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Vending, rent, and other |
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7,471 |
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Total department expense |
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293,985 |
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Department profit |
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1,292,637 |
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Undistributed expenses |
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Administrative and general |
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195,101 |
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Sales and promotion |
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139,709 |
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Utilities |
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54,588 |
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Repairs and maintenance |
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38,073 |
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Total undistributed expenses |
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427,471 |
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House profit |
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865,166 |
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Other expenses |
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Property tax |
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114,500 |
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Property insurance |
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13,126 |
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Income before management fees and other expense |
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737,540 |
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Management fees |
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55,532 |
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Income before other expense |
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682,008 |
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Other expense |
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Depreciation and amortization |
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624,000 |
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Interest expense |
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175,662 |
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Preopening expenses |
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224,454 |
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Other |
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37,667 |
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Total other expense |
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1,061,783 |
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Net loss |
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(379,775 |
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Members’ equity at beginning of year |
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683,323 |
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Members’ equity at end of year |
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$ |
303,548 |
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See accompanying notes to combined financial statements. |
5
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KRG/WHITE LS HOTEL, LLC and KITE
REALTY/WHITE LS HOTEL OPERATORS, LLC |
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Cash flows from operating activities |
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Net loss |
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$ |
(379,775 |
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Adjustments to reconcile net loss to net cash provided by operating activities |
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Depreciation |
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610,294 |
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Amortization |
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13,706 |
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(Increase)/decrease in assets |
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Escrow – tax and insurance |
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(60,000 |
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Accounts receivable |
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(30,553 |
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Prepaid expenses |
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109,637 |
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Due from affiliated company |
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(147,654 |
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Increase/(decrease) in liabilities |
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Accounts payable |
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(71,387 |
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Accrued payroll and payroll taxes |
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41,793 |
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Accrued property taxes |
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114,500 |
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Other accrued expenses |
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160,378 |
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Net cash provided by operating activities |
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360,939 |
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Cash flows from investing activities |
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Capital expenditures for property and equipment |
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(6,698,723 |
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Restricted cash |
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(29,945 |
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Operating supplies |
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(13,697 |
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Deposits |
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(1,176 |
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Net cash used in investing activities |
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(6,743,541 |
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Cash flows from financing activities |
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Proceeds from the issuance of debt |
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7,450,955 |
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Deferred loan costs |
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(6,359 |
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Due to affiliated company |
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(225,724 |
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Net cash provided by financing activities |
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7,218,872 |
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Net change in cash and cash equivalents |
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836,270 |
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Cash and cash equivalents at beginning of year |
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440 |
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Cash and cash equivalents at end of year |
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$ |
836,710 |
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Supplemental disclosure of cash flow information |
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Cash paid during the year for interest, net of interest capitalized |
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$ |
175,662 |
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See accompanying notes to combined financial statements. |
6
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KRG/WHITE LS HOTEL, LLC and KITE
REALTY/WHITE LS HOTEL OPERATORS, LLC |
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NOTE 1 - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Nature of Business: KRG/White LS Hotel, LLC and Kite Realty/White LS Hotel Operators, LLC (the “Company”) own and operate a Fairfield Inn and Suites by Marriott located in South Bend, Indiana. The hotel opened for operations on June 15, 2010.
Principles of Combination: The combined financial statements include the accounts of KRG/White LS Hotel, LLC (owner of real property) and Kite Realty/White LS Hotel Operators, LLC (lessee of real property). All significant accounts and transactions between the above entities have been eliminated.
Use of Estimates in the Preparation of Financial Statements: The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents: Cash and cash equivalents include deposits in financial institutions and certificates of deposit with maturities of 90 days or less when acquired.
Property and Equipment: Property and equipment are carried at cost less accumulated depreciation. Depreciation is provided on the property and equipment over their estimated useful lives. The Company computes depreciation using the straight-line and accelerated depreciation methods.
Impairment of Long-Lived Assets: Long-lived assets are reviewed for impairment when events indicate their carrying amount may not be recoverable from future undiscounted cash flows. If impaired, the assets are recorded at fair value. There was no impairment of long-lived assets for the year ended December 31, 2010.
Deferred Loan Costs: Costs incurred to obtain debt financing are amortized over the term of the loan. At December 31, 2010, accumulated amortization was $13,706.
Expected future amortization of deferred loan costs for the years subsequent to December 31, 2010 are as follows:
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2011 |
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$ |
23,496 |
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2012 |
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23,496 |
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2013 |
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23,496 |
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2014 |
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15,665 |
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Revenue Recognition: Revenue is recognized as services are provided.
Uncertainty of Income Taxes: The Company adheres to guidance issued by the FASB with respect to accounting for uncertainty of income taxes. A tax position is recognized as a benefit only if it is more likely than not that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions not meeting the “more likely than not” test, no tax benefit is recorded.
The Company recognizes interest and penalties related to unrecognized tax benefits in interest and income tax expense, respectively. The Company has no amounts accrued for interest or penalties as of December 31, 2010. The Company is subject to examination by taxing authorities for the year ending December 31, 2010. The Company does not expect the total amount of unrecognized tax benefits to significantly change in the next 12 months.
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(Continued) |
7
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KRG/WHITE LS HOTEL, LLC and KITE
REALTY/WHITE LS HOTEL OPERATORS, LLC |
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NOTE 1 - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (Continued)
Preopening Expenses: Preopening expenses consist of wages and other period expenses incurred prior to the opening of the hotel.
NOTE 2 - INCOME TAXES
Under Section 7701A.2 of the Internal Revenue Code and a similar section of the state income tax law, these limited liability companies will be treated as partnerships for tax purposes. A partnership is not subject to income taxes. Each member reports their distributive share of the Company’s profit or loss on their personal income tax return.
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment at December 31, 2010 consisted of the following:
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Building and building improvements |
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$ |
6,751,021 |
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Land improvements |
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463,503 |
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Furniture, fixtures, and equipment |
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2,223,681 |
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9,438,205 |
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Accumulated depreciation |
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(610,294 |
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$ |
8,827,911 |
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NOTE 4 - FRANCHISE AGREEMENT
Franchise fees are computed in accordance with the terms of the franchise agreement dated September 1, 2009 between the Company and Marriott International, Inc. The agreement is for a 20-year period from the opening date of the hotel. As an incentive to open additional hotels, the Company entered into a Development Incentive Program with Marriott International, Inc. whereby the Company would not be required to pay franchise fees if the conditions of the Development Agreement were met. The Company met the conditions and as a result will not be required to pay franchise fees from the opening of the hotel through December 31, 2011.
Franchise fees will be computed at 4% of the gross room revenues, as defined in the agreement. Additionally, the agreement requires marketing fees to be paid based upon 2.5% (with possible escalation to 3.5%) of the gross room revenues, as defined. During the year ended December 31, 2010, there was no franchise fee expense and marketing fee expense was $39,191.
NOTE 5 - RELATED-PARTY TRANSACTIONS
The Company has a management agreement with White Lodging Services Corp., an entity related through common ownership. The agreement expires December 31, 2030 and has two 10-year renewal options. The agreement provides for base and incentive management fees. Base management fees are calculated at 3.5% of gross revenue, as defined, and incentive management fees are based upon achieving certain performance levels, as defined. Base management fees for 2010 were $55,532. There were no incentive management fees incurred in 2010.
Due from affiliated company at December 31, 2010 represents the balance arising from construction related costs and intercompany transactions with White Lodging Services Corp.
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(Continued) |
8
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KRG/WHITE LS HOTEL, LLC and KITE REALTY/WHITE LS HOTEL OPERATORS, LLC |
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NOTES TO COMBINED FINANCIAL STATEMENTS |
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December 31, 2010 |
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NOTE 5 - RELATED-PARTY TRANSACTIONS (Continued)
Included in capitalized costs during 2010 is $117,816 in development fees for White Lodging Services Corp.
Under the terms of the management agreement, the Company is required to deposit into a furniture, fixtures and equipment reserve a percentage of the gross revenues. The percentage through December 31, 2011 is 2%; 3% in 2012; 4% in 2013 and 5% thereafter.
NOTE 6 - LONG-TERM DEBT
The Company had the following long-term debt obligation at December 31, 2010:
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Construction loan dated August 19, 2009 with a total commitment amount of $10,875,000 with interest-only payments at the greater of the 30-day LIBOR plus 3.15%, or 4.0% (4.0% at December 31, 2010) until August 1, 2012, at which time the construction loan converts to a 24-month term loan. The term loan has interest rate options of a variable rate as defined above or a fixed rate established using the Lender’s then current pricing matrix. The term loan will require monthly principal and/or interest payments until August 18, 2014, at which time a balloon payment is due. The loan is secured by property, furniture, fixtures, and equipment. In addition, the loan is guaranteed by related parties of the members. |
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$ |
9,414,141 |
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$ |
9,414,141 |
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Long-term debt maturities for the years subsequent to December 31, 2010 are as follows:
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2011 |
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$ |
— |
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2012 |
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80,139 |
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2013 |
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192,334 |
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2014 |
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9,141,668 |
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$ |
9,414,141 |
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During 2010, the Company capitalized interest of $74,215 relating to the construction of the hotel.
NOTE 7 - REVENUE INTEREST
In May 2008, the Company obtained a Limited Warranty Deed for the land on which the hotel operates with the University of Notre Dame du Lac (the University). Under the terms of the deed, the Company will pay a revenue interest to the University equaling 2% of room revenues, as defined, for a 2-year period commencing on the opening date of the hotel and 3.25% thereafter. Payments are due quarterly, in arrears, on or before the 30th day of the calendar month following each calendar quarter. For the year ended December 31, 2010, total revenue interest paid to the University is as follows:
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Room revenue for the year ended December 31, 2010 |
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$ |
1,567,624 |
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Applicable percentage rate per the agreement |
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2 |
% |
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Total revenue interest for the year ended December 31, 2010 |
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$ |
31,352 |
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(Continued) |
9
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KRG/WHITE LS HOTEL, LLC and KITE REALTY/WHITE LS HOTEL OPERATORS, LLC |
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NOTES TO COMBINED FINANCIAL STATEMENTS |
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December 31, 2010 |
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NOTE 8 - SUBSEQUENT EVENT
On March 1, 2011, the Company entered into an agreement to sell substantially all its assets for an amount in excess of their carrying values and sufficient to repay all remaining liabilities. The agreement is contingent upon the purchaser being able to satisfy certain closing conditions. If these conditions are met, the sale is expected to close in the fourth quarter of 2011. If the sale is closed, the Company will discharge the remaining assets and liabilities in accordance with existing contractual provisions. Once contractual provisions are satisfied, any remaining net assets will be distributed to the members in accordance with the operating agreement.
Upon closing of the sale transaction, the new owners of the Hotel will enter into a new franchise agreement with Marriott International, Inc. and management agreement with White Lodging Services Corp. (Note 4).
The Company has evaluated subsequent events through October 31, 2011, the date the financial statements were available to be issued.
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10 |
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KRG/WHITE LS HOTEL, LLC and KITE REALTY/WHITE LS HOTEL OPERATORS, LLC |
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June 30, 2011 and 2010 |
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2011 |
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2010 |
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ASSETS |
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Current assets |
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Cash and cash equivalents |
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$ |
990,267 |
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$ |
93,190 |
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Escrow – tax and insurance |
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260,998 |
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— |
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Accounts receivable |
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28,263 |
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5,461 |
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Prepaid expenses |
|
|
21,575 |
|
|
10,866 |
|
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
1,301,103 |
|
|
109,517 |
|
|
|
|
|
|
|
|
|
|
|
Property and equipment |
|
|
|
|
|
|
|
|
Property and equipment |
|
|
9,542,054 |
|
|
9,349,599 |
|
|
Accumulated depreciation |
|
|
(1,056,075 |
) |
|
(47,790 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
8,485,979 |
|
|
9,301,809 |
|
|
|
|
|
|
|
|
|
|
|
Other assets |
|
|
|
|
|
|
|
|
Restricted cash – escrow |
|
|
53,635 |
|
|
— |
|
|
Deferred loan costs, net of amortization |
|
|
74,405 |
|
|
97,901 |
|
|
Operating supplies |
|
|
13,697 |
|
|
— |
|
|
Deposits |
|
|
16,176 |
|
|
127,024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
157,913 |
|
|
224,925 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
9,944,995 |
|
$ |
9,636,251 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND MEMBERS’ EQUITY |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
115,004 |
|
$ |
51,587 |
|
|
Due to affiliated company |
|
|
80,746 |
|
|
1,090,469 |
|
|
Accrued payroll and payroll taxes |
|
|
57,171 |
|
|
31,741 |
|
|
Accrued property taxes |
|
|
184,998 |
|
|
12,000 |
|
|
Other accrued expenses |
|
|
300,846 |
|
|
966,587 |
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
738,765 |
|
|
2,152,384 |
|
|
|
|
|
|
|
|
|
|
|
Long-term debt |
|
|
9,515,066 |
|
|
6,963,502 |
|
|
|
|
|
|
|
|
|
|
|
Members’ equity |
|
|
(308,836 |
) |
|
520,365 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
9,944,995 |
|
$ |
9,636,251 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11 |
|
|
|
KRG/WHITE LS HOTEL, LLC AND KITE REALTY/WHITE LS HOTEL OPERATORS, LLC |
|
For the six months ended June 30, 2011 and 2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011 |
|
2010 |
|
||
|
|
|
|
|
|
|
||
|
Revenue |
|
|
|
|
|
|
|
|
Rooms |
|
$ |
1,380,533 |
|
$ |
77,724 |
|
|
Telephone |
|
|
2,131 |
|
|
130 |
|
|
Vending, rent, and other |
|
|
18,917 |
|
|
1,119 |
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
1,401,581 |
|
|
78,973 |
|
|
|
|
|
|
|
|
|
|
|
Department expense |
|
|
|
|
|
|
|
|
Rooms |
|
|
245,399 |
|
|
26,745 |
|
|
Food and beverage |
|
|
390 |
|
|
— |
|
|
Telephone |
|
|
19,242 |
|
|
997 |
|
|
Vending, rent, and other |
|
|
6,668 |
|
|
248 |
|
|
|
|
|
|
|
|
|
|
|
Total department expense |
|
|
271,699 |
|
|
27,990 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Department profit |
|
|
1,129,882 |
|
|
50,983 |
|
|
|
|
|
|
|
|
|
|
|
Undistributed expenses |
|
|
|
|
|
|
|
|
Administrative and general |
|
|
148,222 |
|
|
14,920 |
|
|
Sales and promotion |
|
|
123,608 |
|
|
7,441 |
|
|
Utilities |
|
|
63,770 |
|
|
3,055 |
|
|
Repairs and maintenance |
|
|
36,501 |
|
|
2,982 |
|
|
|
|
|
|
|
|
|
|
|
Total undistributed expenses |
|
|
372,101 |
|
|
28,398 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
House profit |
|
|
757,781 |
|
|
22,585 |
|
|
|
|
|
|
|
|
|
|
|
Other expenses |
|
|
|
|
|
|
|
|
Property tax |
|
|
186,529 |
|
|
12,000 |
|
|
Property insurance |
|
|
11,397 |
|
|
3,666 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before management fees and other expense |
|
|
559,855 |
|
|
6,919 |
|
|
|
|
|
|
|
|
|
|
|
Management fees |
|
|
49,055 |
|
|
2,764 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before other expense |
|
|
510,800 |
|
|
4,155 |
|
|
|
|
|
|
|
|
|
|
|
Other expense |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
457,530 |
|
|
49,748 |
|
|
Interest expense |
|
|
190,481 |
|
|
12,113 |
|
|
Preopening expenses |
|
|
929 |
|
|
103,698 |
|
|
Other |
|
|
49,244 |
|
|
1,554 |
|
|
|
|
|
|
|
|
|
|
|
Total other expense |
|
|
698,184 |
|
|
167,113 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(187,384 |
) |
$ |
(162,958 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 |
|
|
|
KRG/WHITE LS HOTEL, LLC and KITE
REALTY/WHITE LS HOTEL OPERATORS, LLC |
|
For the six months ended June 30, 2011 and 2010 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2011 |
|
2010 |
|
||
|
|
|
|
|
|
|
||
|
Cash flows from operating activities |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(187,384 |
) |
$ |
(162,958 |
) |
|
Adjustments to
reconcile net loss to net cash |
|
|
|
|
|
|
|
|
Depreciation |
|
|
445,782 |
|
|
47,790 |
|
|
Amortization |
|
|
11,748 |
|
|
1,958 |
|
|
Increase in assets |
|
|
|
|
|
|
|
|
Escrow – tax and insurance |
|
|
(200,998 |
) |
|
— |
|
|
Accounts receivable |
|
|
2,290 |
|
|
(5,461 |
) |
|
Prepaid expenses |
|
|
(13,396 |
) |
|
106,950 |
|
|
Decrease in liabilities |
|
|
|
|
|
|
|
|
Accounts payable |
|
|
92,386 |
|
|
(42,418 |
) |
|
Due to affiliated company |
|
|
228,400 |
|
|
864,745 |
|
|
Accrued payroll and payroll taxes |
|
|
15,378 |
|
|
31,741 |
|
|
Accrued property taxes |
|
|
70,498 |
|
|
12,000 |
|
|
Other accrued expenses |
|
|
140,468 |
|
|
966,587 |
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
605,172 |
|
|
1,820,934 |
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
Capital expenditures for property and equipment |
|
|
(103,850 |
) |
|
(6,610,117 |
) |
|
Restricted cash |
|
|
(23,690 |
) |
|
— |
|
|
Deposits |
|
|
— |
|
|
(112,024 |
) |
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(127,540 |
) |
|
(6,722,141 |
) |
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
Proceeds from issuance of debt |
|
|
100,925 |
|
|
5,000,316 |
|
|
Distributions to members |
|
|
(425,000 |
) |
|
— |
|
|
Deferred loan costs |
|
|
— |
|
|
(6,359 |
) |
|
|
|
|
|
|
|
|
|
|
Net cash (used in) provided by financing activities |
|
|
(324,075 |
) |
|
4,993,957 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in cash and cash equivalents |
|
|
153,557 |
|
|
92,750 |
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of year |
|
|
836,710 |
|
|
440 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of year |
|
$ |
990,267 |
|
$ |
93,190 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information |
|
|
|
|
|
|
|
|
Cash paid during the year for interest, net of interest capitalized |
|
$ |
190,481 |
|
$ |
12,113 |
|
|
|
|
|
|
|
|
13 |
Apple
REIT Ten, Inc.
Pro Forma Condensed Consolidated Balance Sheet as
of June 30, 2011 (unaudited)
(in thousands, except share data)
The following unaudited Pro Forma Condensed Consolidated Balance Sheet of Apple REIT Ten, Inc. gives effect to the following hotel acquisitions:
|
|
|
|
|
|
|
|
|
|
|
|
|
Franchise |
|
Location |
|
Gross Purchase |
|
Actual Acquisition Date |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|
||||||||||
|
CN Hotel Portfolio (1 Hotel): |
|
|
|
|
|
|
|
|
|
|
|
Home2 Suites |
|
|
Jacksonville, NC |
|
$ |
12.0 |
|
|
Pending |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hawkeye Hotel Portfolio (1 Hotel): |
|
|
|
|
|
|
|
|
|
|
|
Hampton Inn & Suites |
|
|
Davenport, IA |
|
|
13.0 |
|
|
July 19, 2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
McKibbon Hotel Portfolio (3 Hotels): |
|
|
|
|
|
|
|
|
|
|
|
Homewood Suites |
|
|
Knoxville, TN |
|
|
15.0 |
|
|
July 19, 2011 |
|
|
TownePlace Suites |
|
|
Knoxville, TN |
|
|
9.0 |
|
|
August 9, 2011 |
|
|
Homewood Suites |
|
|
Gainesville, FL |
|
|
14.6 |
|
|
Pending |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Omaha and Scottsdale Hotel Portfolio (2 Hotels): |
|
|
|
|
|
|
|
|
|
|
|
Hilton Garden Inn |
|
|
Omaha, NE |
|
|
30.0 |
|
|
September 1, 2011 |
|
|
Hilton Garden Inn |
|
|
Scottsdale, AZ |
|
|
16.3 |
|
|
October 3, 2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chicago Hotel Portfolio (2 Hotels): |
|
|
|
|
|
|
|
|
|
|
|
Hilton Garden Inn |
|
|
Des Plaines, IL |
|
|
38.0 |
|
|
September 20, 2011 |
|
|
Hampton Inn & Suites |
|
|
Skokie, IL |
|
|
32.0 |
|
|
Pending |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hilton Garden Inn |
|
|
Mason, OH |
|
|
14.8 |
|
|
September 1, 2011 |
|
|
Hilton Garden Inn |
|
|
Merrillville, IN |
|
|
14.8 |
|
|
September 30, 2011 |
|
|
Homewood Suites |
|
|
Austin/Round Rock, TX |
|
|
15.5 |
|
|
October 3, 2011 |
|
|
Fairfield Inn & Suites |
|
|
South Bend, IN |
|
|
17.5 |
|
|
November 1, 2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
242.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
This Pro Forma Condensed Consolidated Balance Sheet also assumes all of the hotels had been leased to our wholly-owned taxable REIT subsidiaries pursuant to master hotel lease arrangements. The hotels acquired will be managed by affiliates of LBAM Investor Group, L.L.C., MHH Management, LLC, Raymond Management Company, Inc., Schulte Hospitality Group, Inc., Vista Host, Inc. and White Lodging Services Corporation under separate management agreements.
Such pro forma information is based in part upon the historical Consolidated Balance Sheet of Apple REIT Ten, Inc. and the historical balance sheets of the hotel properties.
The following unaudited Pro Forma Condensed Consolidated Balance Sheet of Apple REIT Ten, Inc. is not necessarily indicative of what the actual financial position would have been assuming such transactions had been completed as of June 30, 2011 nor does it purport to represent the future financial position of Apple REIT Ten, Inc.
The unaudited Pro Forma Condensed Consolidated Balance Sheet should be read in conjunction with, and is qualified in its entirety by, the historical balance sheets of the acquired hotels.
14
Balance
Sheet as of June 30, 2011 (unaudited)
(In thousands, except share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company |
|
Pro
forma |
|
Total |
|
|||
|
|
|
|
|
|
|
|
|
|||
|
|
||||||||||
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
Investment in hotel properties, net |
|
$ |
186,522 |
|
$ |
241,998 |
(A) |
$ |
428,520 |
|
|
Cash and cash equivalents |
|
|
142,838 |
|
|
(141,838 |
) (D) |
|
1,000 |
|
|
Other assets |
|
|
6,025 |
|
|
6,691 |
(C) |
|
12,716 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
335,385 |
|
$ |
106,851 |
|
$ |
442,236 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
Notes payable |
|
$ |
— |
|
|
83,121 |
(C) |
$ |
83,121 |
|
|
Accounts payable and accrued expenses |
|
|
1,584 |
|
|
2,013 |
(C) |
|
3,597 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities |
|
|
1,584 |
|
|
85,134 |
|
|
86,718 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock, authorized 30,000,000 shares |
|
|
— |
|
|
— |
|
|
— |
|
|
Series A preferred stock, no par value, authorized 400,000,000 shares |
|
|
— |
|
|
— |
|
|
— |
|
|
Series B convertible preferred stock, no par value, authorized 480,000 shares |
|
|
48 |
|
|
— |
|
|
48 |
|
|
Common stock, no par value, authorized 400,000,000 shares |
|
|
344,961 |
|
|
27,560 |
(E) |
|
372,521 |
|
|
Accumulated deficit |
|
|
(3,600 |
) |
|
(5,843 |
) (B) |
|
(9,443 |
) |
|
Cumulative distributions paid |
|
|
(7,608 |
) |
|
— |
|
|
(7,608 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Shareholders’ Equity |
|
|
333,801 |
|
|
21,717 |
|
|
355,518 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Shareholders’ Equity |
|
$ |
335,385 |
|
$ |
106,851 |
|
$ |
442,236 |
|
|
|
|
|
|
|
|
|
|
|
|
|
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
|
Jacksonville, NC |
|
Davenport, IA |
|
Knoxville, TN |
|
Knoxville, TN |
|
Gainesville, FL |
|
Omaha, NE |
|
Scottsdale, AZ |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase price per contract |
|
$ |
12,000 |
|
$ |
13,000 |
|
$ |
15,000 |
|
$ |
9,000 |
|
$ |
14,550 |
|
$ |
30,018 |
|
$ |
16,300 |
|
|
Other capitalized costs (credits) incurred |
|
|
25 |
|
|
71 |
|
|
1,017 |
|
|
(219 |
) |
|
65 |
|
|
93 |
|
|
80 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in hotel properties |
|
|
12,025 |
|
|
13,071 |
|
|
16,017 |
|
|
8,781 |
|
|
14,615 |
|
|
30,111 |
|
|
16,380 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition fee payable to Apple Suites Realty Group (2% of purchase price per contract) |
|
|
240 |
|
|
260 |
|
|
300 |
|
|
180 |
|
|
291 |
|
|
600 |
|
|
326 |
|
|
Other acquisition related costs |
|
|
30 |
|
|
50 |
|
|
60 |
|
|
54 |
|
|
36 |
|
|
344 |
|
|
41 |
|
|
Net other assets/(liabilities) assumed |
|
|
(24 |
) |
|
(199 |
) |
|
(11,182 |
) |
|
(6,790 |
) |
|
(13,113 |
) |
|
(199 |
) |
|
(8,900 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total purchase price |
|
$ |
12,271 |
|
$ |
13,182 |
|
$ |
5,195 |
|
$ |
2,225 |
|
$ |
1,829 |
|
$ |
30,856 |
|
$ |
7,847 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands) |
|
Des Plaines, IL |
|
Skokie, IL |
|
Mason, OH |
|
Merrillville, IN |
|
Austin/Round |
|
South Bend |
|
Total |
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase price per contract |
|
$ |
38,000 |
|
$ |
32,000 |
|
$ |
14,825 |
|
$ |
14,825 |
|
$ |
15,500 |
|
$ |
17,500 |
|
$ |
242,518 |
|
|
|
Other capitalized costs (credits) incurred |
|
|
(2,043 |
) |
|
121 |
|
|
80 |
|
|
80 |
|
|
60 |
|
|
50 |
|
|
(520 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in hotel properties |
|
|
35,957 |
|
|
32,121 |
|
|
14,905 |
|
|
14,905 |
|
|
15,560 |
|
|
17,550 |
|
|
241,998 |
|
(A) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition fee payable to Apple Suites Realty Group (2% of purchase price per contract) |
|
|
760 |
|
|
640 |
|
|
297 |
|
|
297 |
|
|
310 |
|
|
350 |
|
|
4,851 |
|
(B) |
|
Other acquisition related costs |
|
|
106 |
|
|
80 |
|
|
69 |
|
|
39 |
|
|
39 |
|
|
44 |
|
|
992 |
|
(B) |
|
Net other assets/(liabilities) assumed |
|
|
(18,169 |
) |
|
(19,143 |
) |
|
(79 |
) |
|
(168 |
) |
|
(99 |
) |
|
(378 |
) |
|
(78,443 |
) |
(C) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total purchase price |
|
$ |
18,654 |
|
$ |
13,698 |
|
$ |
15,192 |
|
$ |
15,073 |
|
$ |
15,810 |
|
$ |
17,566 |
|
$ |
169,398 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Cash on hand at June 30, 2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(142,838 |
) |
|
|
Plus: Working capital requirements |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(141,838 |
) |
(D) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity proceeds needed for acquisitions and working capital |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27,560 |
|
(E) |
|
|
|
|
(B) |
Represents costs incurred to complete the acquisition, including, title, legal, accounting and other related costs, as well as the commission paid to Apple Suites Realty Group totaling 2% of purchase price per contract. |
|
|
|
|
(C) |
Represents other assets and liabilities assumed in the acquisition of the hotel including, mortgage payable, debt service escrows, operational charges and credits and accrued property taxes. |
|
|
|
|
(D) |
Represents the reduction of cash and cash equivalents by the amount utilized to fund the acquisitions. |
|
|
|
|
(E) |
Represents the issuance of additional shares required to fund acquisitions. |
16
Apple REIT Ten, Inc.
Pro Forma Condensed Consolidated Statements of Operations (unaudited)
For the year ended December 31, 2010 and six months ended June 30, 2011
(in thousands, except per share data)
The following unaudited Pro Forma Condensed Consolidated Statements of Operations of Apple REIT Ten, Inc. gives effect to the following hotel acquisition:
|
|
|
|
|
|
|
|
|
|
|
Franchise |
|
Location |
|
Gross Purchase |
|
Actual Acquisition Date |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hilton Garden Inn |
|
Denver, CO |
|
$ |
58.5 |
|
March 4, 2011 |
|
|
|
|
|
|
|
|
|
|
|
|
CN Hotel Portfolio (4 Hotels): |
|
|
|
|
|
|
|
|
|
Hampton Inn & Suites |
|
Winston-Salem, NC |
|
|
11.0 |
|
March 15, 2011 |
|
|
Fairfield Inn & Suites |
|
Matthews, NC |
|
|
10.0 |
|
March 25, 2011 |
|
|
TownePlace Suites |
|
Columbia, SC |
|
|
10.5 |
|
March 25, 2011 |
|
|
Home2 Suites |
|
Jacksonville, NC |
|
|
12.0 |
|
Pending |
|
|
|
|
|
|
|
|
|
|
|
|
McKibbon Hotel Portfolio (8 Hotels): |
|
|
|
|
|
|
|
|
|
SpringHill Suites |
|
Knoxville, TN |
|
|
14.5 |
|
June 2, 2011 |
|
|
Hilton Garden Inn |
|
Gainesville, FL |
|
|
12.5 |
|
June 2, 2011 |
|
|
SpringHill Suites |
|
Richmond, VA |
|
|
11.0 |
|
June 2, 2011 |
|
|
TownePlace Suites |
|
Pensacola, FL |
|
|
11.5 |
|
June 2, 2011 |
|
|
Hampton Inn & Suites |
|
Mobile, AL |
|
|
13.0 |
|
June 2, 2011 |
|
|
Homewood Suites |
|
Knoxville, TN |
|
|
15.0 |
|
July 19, 2011 |
|
|
TownePlace Suites |
|
Knoxville, TN |
|
|
9.0 |
|
August 9, 2011 |
|
|
Homewood Suites |
|
Gainesville, FL |
|
|
14.6 |
|
Pending |
|
|
|
|
|
|
|
|
|
|
|
|
Hawkeye Hotel Portfolio (3 Hotels): |
|
|
|
|
|
|
|
|
|
Homewood Suites |
|
Cedar Rapids, IA |
|
|
13.0 |
|
June 8, 2011 |
|
|
Hampton Inn & Suites |
|
Cedar Rapids, IA |
|
|
13.0 |
|
June 8, 2011 |
|
|
Hampton Inn & Suites |
|
Davenport, IA |
|
|
13.0 |
|
July 19, 2011 |
|
|
|
|
|
|
|
|
|
|
|
|
Omaha and Scottsdale Hotel Portfolio (2 Hotels): |
|
|
|
|
|
|
|
|
|
Hilton Garden Inn |
|
Omaha, NE |
|
|
30.0 |
|
September 1, 2011 |
|
|
Hilton Garden Inn |
|
Scottsdale, AZ |
|
|
16.3 |
|
October 3, 2011 |
|
|
|
|
|
|
|
|
|
|
|
|
Chicago Hotel Portfolio (2 Hotels): |
|
|
|
|
|
|
|
|
|
Hilton Garden Inn |
|
Des Plaines, IL |
|
|
38.0 |
|
September 20, 2011 |
|
|
Hampton Inn & Suites |
|
Skokie, IL |
|
|
32.0 |
|
Pending |
|
|
|
|
|
|
|
|
|
|
|
|
Hilton Garden Inn |
|
Mason, OH |
|
|
14.8 |
|
September 1, 2011 |
|
|
Hilton Garden Inn |
|
Merrillville, IN |
|
|
14.8 |
|
September 30, 2011 |
|
|
Homewood Suites |
|
Austin/Round Rock, TX |
|
|
15.5 |
|
October 3, 2011 |
|
|
Fairfield Inn & Suites |
|
South Bend, IN |
|
|
17.5 |
|
November 1, 2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
421.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
These Pro Forma Condensed Consolidated Statements of Operations also assume all of the hotels had been leased to our wholly-owned taxable REIT subsidiaries pursuant to master hotel lease arrangements. The hotels acquired will be managed by affiliates of LBAM Investor Group, L.L.C., MHH Management, LLC, Newport Hospitality Group, Inc., Raymond Management Company, Inc., Schulte Hospitality Group, Inc., Stonebridge Realty Advisors, Inc., Vista Host, Inc. and White Lodging Services Corporation under separate management agreements.
Such pro forma information is based in part upon the historical Consolidated Statements of Operations of Apple REIT Ten, Inc. and the historical Statements of Operations of the hotel properties.
The following unaudited Pro Forma Condensed Consolidated Statements of Operations of Apple REIT Ten, Inc. are not necessarily indicative of what the actual financial results would have been assuming such transactions had been completed on the latter of January 1, 2010, or the date the hotel began operations nor do they purport to represent the future financial results of Apple REIT Ten, Inc.
The unaudited Pro Forma Condensed Consolidated Statements of Operations should be read in conjunction with, and is qualified in its entirety by the historical Statements of Operations of the acquired hotels.
17
|
|
|
Pro Forma Condensed Consolidated Statement of Operations (unaudited) |
|
For the year ended December 31, 2010 |
|
(In thousands, except per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company |
|
Denver, CO |
|
CN Hotel |
|
McKibbon Hotel |
|
Hawkeye Hotel |
|
Omaha Downtown |
|
Chicago |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Room revenue |
|
$ |
— |
|
$ |
8,978 |
|
$ |
3,339 |
|
$ |
21,903 |
|
$ |
6,644 |
|
$ |
8,905 |
|
$ |
14,490 |
|
|
Other revenue |
|
|
— |
|
|
2,372 |
|
|
59 |
|
|
510 |
|
|
67 |
|
|
2,333 |
|
|
2,399 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
— |
|
|
11,350 |
|
|
3,398 |
|
|
22,413 |
|
|
6,711 |
|
|
11,238 |
|
|
16,889 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
— |
|
|
3,798 |
|
|
1,097 |
|
|
7,925 |
|
|
1,946 |
|
|
3,792 |
|
|
7,161 |
|
|
General and administrative |
|
|
28 |
|
|
1,635 |
|
|
34 |
|
|
2,369 |
|
|
387 |
|
|
2,367 |
|
|
2,947 |
|
|
Management and franchise fees |
|
|
— |
|
|
1,003 |
|
|
494 |
|
|
1,935 |
|
|
950 |
|
|
899 |
|
|
1,229 |
|
|
Taxes, insurance and other |
|
|
— |
|
|
374 |
|
|
234 |
|
|
1,336 |
|
|
451 |
|
|
587 |
|
|
1,699 |
|
|
Acquisition related costs |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
Depreciation of real estate owned |
|
|
— |
|
|
1,325 |
|
|
463 |
|
|
4,083 |
|
|
720 |
|
|
1,193 |
|
|
2,300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest, net |
|
|
3 |
|
|
753 |
|
|
324 |
|
|
3,227 |
|
|
1,365 |
|
|
1,244 |
|
|
2,839 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
|
31 |
|
|
8,888 |
|
|
2,646 |
|
|
20,875 |
|
|
5,819 |
|
|
10,082 |
|
|
18,175 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(31 |
) |
$ |
2,462 |
|
$ |
752 |
|
$ |
1,538 |
|
$ |
892 |
|
$ |
1,156 |
|
$ |
(1,286 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings per common share |
|
$ |
(3,083.50 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding - basic and diluted |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18
Pro Forma Condensed Consolidated Statement of
Operations (unaudited)
For the year ended December 31, 2010
(In thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SASI, LLC |
|
Ascent |
|
VHRMR |
|
KRG/White LS |
|
Pro forma |
|
|
Total |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Room revenue |
|
$ |
2,190 |
|
$ |
3,203 |
|
$ |
459 |
|
$ |
1,568 |
|
$ |
— |
|
|
$ |
71,679 |
|
|
Other revenue |
|
|
304 |
|
|
343 |
|
|
10 |
|
|
19 |
|
|
— |
|
|
|
8,416 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
2,494 |
|
|
3,546 |
|
|
469 |
|
|
1,587 |
|
|
— |
|
|
|
80,095 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
846 |
|
|
1,236 |
|
|
297 |
|
|
526 |
|
|
— |
|
|
|
28,624 |
|
|
General and administrative |
|
|
363 |
|
|
631 |
|
|
64 |
|
|
195 |
|
|
1,000 |
|
(B) |
|
12,020 |
|
|
Management and franchise fees |
|
|
189 |
|
|
261 |
|
|
32 |
|
|
56 |
|
|
— |
|
|
|
7,048 |
|
|
Taxes, insurance and other |
|
|
154 |
|
|
290 |
|
|
244 |
|
|
352 |
|
|
(434 |
) |
(I) |
|
5,287 |
|
|
Acquisition related costs |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
9,821 |
|
(H) |
|
9,821 |
|
|
Depreciation of real estate owned |
|
|
570 |
|
|
679 |
|
|
171 |
|
|
624 |
|
|
(12,128 |
) |
(C) |
|
10,737 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,737 |
|
(D) |
|
|
|
|
Interest, net |
|
|
349 |
|
|
344 |
|
|
94 |
|
|
214 |
|
|
(5,835 |
) |
(E) |
|
4,921 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
|
2,471 |
|
|
3,441 |
|
|
902 |
|
|
1,967 |
|
|
3,161 |
|
|
|
78,458 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
(G) |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
23 |
|
$ |
105 |
|
$ |
(433 |
) |
$ |
(380 |
) |
$ |
(3,161 |
) |
|
$ |
1,637 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings per common share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
0.05 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding - basic and diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31,423 |
|
(F) |
|
31,423 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19
Pro Forma Condensed Consolidated Statement of Operations (unaudited)
For the six months ended June 30, 2011
(In thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company |
|
Denver, CO |
|
CN Hotel |
|
McKibbon Hotel |
|
Hawkeye Hotel |
|
Omaha Downtown |
|
Chicago |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
|
||||||||||||||||||||||
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Room revenue |
|
$ |
6,711 |
|
$ |
1,273 |
|
$ |
1,061 |
|
$ |
10,135 |
|
$ |
3,170 |
|
$ |
5,205 |
|
$ |
7,113 |
|
|
Other revenue |
|
|
813 |
|
|
381 |
|
|
19 |
|
|
220 |
|
|
42 |
|
|
1,422 |
|
|
1,418 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
7,524 |
|
|
1,654 |
|
|
1,080 |
|
|
10,355 |
|
|
3,212 |
|
|
6,627 |
|
|
8,531 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
3,279 |
|
|
736 |
|
|
334 |
|
|
3,678 |
|
|
1,136 |
|
|
2,101 |
|
|
3,339 |
|
|
General and administrative |
|
|
1,374 |
|
|
142 |
|
|
68 |
|
|
1,140 |
|
|
227 |
|
|
1,349 |
|
|
1,493 |
|
|
Management and franchise fees |
|
|
576 |
|
|
224 |
|
|
96 |
|
|
915 |
|
|
426 |
|
|
532 |
|
|
610 |
|
|
Taxes, insurance and other |
|
|
465 |
|
|
66 |
|
|
84 |
|
|
605 |
|
|
349 |
|
|
296 |
|
|
803 |
|
|
Acquisition related costs |
|
|
4,548 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
Depreciation of real estate owned |
|
|
1,098 |
|
|
225 |
|
|
135 |
|
|
1,277 |
|
|
457 |
|
|
525 |
|
|
741 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest, net |
|
|
(247 |
) |
|
128 |
|
|
137 |
|
|
1,732 |
|
|
638 |
|
|
600 |
|
|
1,226 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
|
11,093 |
|
|
1,521 |
|
|
854 |
|
|
9,347 |
|
|
3,233 |
|
|
5,403 |
|
|
8,212 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(3,569 |
) |
$ |
133 |
|
$ |
226 |
|
$ |
1,008 |
|
$ |
(21 |
) |
$ |
1,224 |
|
$ |
319 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings per common share |
|
$ |
(0.18 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding - basic and diluted |
|
|
19,547 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20
Pro Forma Condensed Consolidated
Statement of Operations (unaudited)
For the six months ended June 30, 2011
(In thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SASI, LLC |
|
Ascent |
|
VHRMR |
|
KRG/White LS |
|
Pro forma |
|
|
|
Total |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|||||||||||||||||||||
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Room revenue |
|
$ |
1,371 |
|
$ |
1,635 |
|
$ |
1,902 |
|
$ |
1,381 |
|
$ |
— |
|
|
|
$ |
40,957 |
|
|
Other revenue |
|
|
238 |
|
|
180 |
|
|
36 |
|
|
21 |
|
|
— |
|
|
|
|
4,790 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
1,609 |
|
|
1,815 |
|
|
1,938 |
|
|
1,402 |
|
|
— |
|
|
|
|
45,747 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
419 |
|
|
521 |
|
|
682 |
|
|
496 |
|
|
— |
|
|
|
|
16,721 |
|
|
General and administrative |
|
|
304 |
|
|
401 |
|
|
136 |
|
|
148 |
|
|
250 |
|
(B) |
|
|
7,032 |
|
|
Management and franchise fees |
|
|
122 |
|
|
160 |
|
|
173 |
|
|
49 |
|
|
— |
|
|
|
|
3,883 |
|
|
Taxes, insurance and other |
|
|
71 |
|
|
110 |
|
|
80 |
|
|
198 |
|
|
— |
|
|
|
|
3,127 |
|
|
Acquisition related costs |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(4,259 |
) |
(H) |
|
|
289 |
|
|
Depreciation of real estate owned |
|
|
311 |
|
|
340 |
|
|
338 |
|
|
458 |
|
|
(4,807 |
) |
(C) |
|
|
5,997 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,899 |
|
(D) |
|
|
|
|
|
Interest, net |
|
|
222 |
|
|
203 |
|
|
159 |
|
|
240 |
|
|
(2,597 |
) |
(E) |
|
|
2,441 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
|
1,449 |
|
|
1,735 |
|
|
1,568 |
|
|
1,589 |
|
|
(6,514 |
) |
|
|
|
39,490 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
(G) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
160 |
|
$ |
80 |
|
$ |
370 |
|
$ |
(187 |
) |
$ |
6,514 |
|
|
|
$ |
6,257 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted earnings per common share |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
0.18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding - basic and diluted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,154 |
|
(F) |
|
|
35,701 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21
Notes to Pro Forma Condensed Consolidated Statements of Operations (unaudited):
(A) Represents results of operations for the hotels on a pro forma basis as if the hotels were owned by the Company at January 1, 2010 for the respective period prior to acquisition by the Company. The Company was initially formed on August 13, 2010, and had no operations prior to that date. Additionally, six properties began operations subsequent to January 1, 2010, and one property remained under construction as of June 30, 2011. Therefore, these hotels had limited historical operational activity prior to their opening. The properties and their applicable status are as follows: Mason, OH Hilton Garden Inn, opened February 2010, Winston-Salem, NC Hampton Inn & Suites, opened April 2010, South Bend, IN Fairfield Inn & Suites, opened June 2010, Cedar Rapids, IA Homewood Suites, opened August 2010, Austin/Round Rock, TX Homewood Suites, opened September 2010, Matthews, NC Fairfield Inn & Suites, opened November 2010 and Jacksonville, NC Home2 Suites is under construction.
(B) Represents adjustments to level of administrative and other costs associated with being a public company and owning additional properties, including the advisory fee, accounting and legal expenses, net of cost savings derived from owning multiple operating properties.
(C) Represents elimination of historical depreciation and amortization expense of the acquired properties.
(D) Represents the depreciation on the hotels acquired based on the purchase price allocation to depreciable property and the dates the hotels began operation. The weighted average lives of the depreciable assets are 39 years for building and seven years for furniture, fixtures and equipment (FF&E). These estimated useful lives are based on management’s knowledge of the properties and the hotel industry in general.
(E) Interest expense related to prior owner’s debt which was not assumed has been eliminated.
(F) Represents the weighted average number of shares required to be issued to generate the purchase price of each hotel, net of any debt assumed. The calculation assumes all properties were acquired on the latter of January 1, 2010, or the dates the hotels began operations.
(G) Estimated income tax expense of our wholly owned taxable REIT subsidiaries is zero based on the contractual agreement put in place between the Company and our lessees, based on a combined tax rate of 40% of taxable income. Based on the terms of the lease agreements, our taxable subsidiaries would have incurred a loss during these periods. No operating loss benefit has been recorded as realization is not certain.
(H) Represents costs incurred to complete acquisitions, including, title, legal, accounting and other related costs, as well as the commission paid to Apple Suites Realty Group totaling 2% of purchase price per contract. These costs have been adjusted for hotel acquisitions on the latter of January 1, 2010 or the dates the hotels began operations.
(I) Represents preopening expenses which are the Seller’s responsibility and therefore have been eliminated.
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SIGNATURES |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Apple REIT Ten, Inc. |
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By: |
/s/ Glade M. Knight |
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Glade M. Knight, |
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Chief Executive Officer |
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November 9, 2011 |
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