x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the quarterly period ended June 30, 2013
|
o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO _______
|
Virginia | 26-1379210 | |
(State or other jurisdiction
of incorporation or organization)
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(IRS Employer
Identification No.)
|
|
814 East Main Street
Richmond, Virginia
|
23219 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer ¨
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Accelerated filer ¨
|
Non-accelerated filer x
|
Smaller reporting company ¨
|
|||
(Do not check if a smaller
reporting company)
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Page Number
|
||||
PART I. FINANCIAL INFORMATION
|
||||
Item 1.
|
||||
3
|
||||
4
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||||
5
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||||
6
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||||
Item 2.
|
14
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|||
Item 3.
|
29
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|||
Item 4.
|
29
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|||
PART II. OTHER INFORMATION
|
||||
Item 1.
|
30
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|||
Item 2.
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31
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|||
Item 6.
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32
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|||
33
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June 30,
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December 31,
|
|||||||
2013
|
2012
|
|||||||
(unaudited)
|
||||||||
Assets
|
||||||||
Investment in real estate, net of accumulated depreciation
of $173,060 and $145,927, respectively |
$ | 1,451,132 | $ | 1,463,894 | ||||
Cash and cash equivalents
|
0 | 9,027 | ||||||
Restricted cash-furniture, fixtures and other escrows
|
9,806 | 9,922 | ||||||
Note receivable, net
|
19,250 | 22,375 | ||||||
Due from third party managers, net
|
18,607 | 10,751 | ||||||
Other assets, net
|
10,369 | 10,048 | ||||||
Total Assets
|
$ | 1,509,164 | $ | 1,526,017 | ||||
Liabilities
|
||||||||
Credit facility
|
$ | 17,800 | $ | 0 | ||||
Notes payable
|
164,682 | 166,783 | ||||||
Accounts payable and accrued expenses
|
13,763 | 13,101 | ||||||
Total Liabilities
|
196,245 | 179,884 | ||||||
Shareholders' Equity
|
||||||||
Preferred stock, authorized 30,000,000 shares; none issued
and outstanding |
0 | 0 | ||||||
Series A preferred stock, no par value, authorized 400,000,000 shares;
issued and outstanding 182,784,131 and 182,619,400 shares, respectively |
0 | 0 | ||||||
Series B convertible preferred stock, no par value, authorized 480,000 shares;
issued and outstanding 480,000 shares |
48 | 48 | ||||||
Common stock, no par value, authorized 400,000,000 shares;
issued and outstanding 182,784,131 and 182,619,400 shares, respectively
|
1,807,387 | 1,805,335 | ||||||
Distributions greater than net income
|
(494,516 | ) | (459,250 | ) | ||||
Total Shareholders' Equity
|
1,312,919 | 1,346,133 | ||||||
Total Liabilities and Shareholders' Equity
|
$ | 1,509,164 | $ | 1,526,017 |
Three Months Ended
|
Six Months Ended
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|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2013
|
2012
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2013
|
2012
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|||||||||||||
Revenues:
|
||||||||||||||||
Room revenue
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$ | 95,115 | $ | 88,047 | $ | 179,388 | $ | 167,600 | ||||||||
Other revenue
|
9,457 | 9,063 | 17,587 | 17,601 | ||||||||||||
Total revenue
|
104,572 | 97,110 | 196,975 | 185,201 | ||||||||||||
Expenses:
|
||||||||||||||||
Operating expense
|
25,821 | 24,239 | 49,518 | 46,651 | ||||||||||||
Hotel administrative expense
|
7,220 | 6,956 | 14,069 | 13,581 | ||||||||||||
Sales and marketing
|
8,648 | 8,211 | 16,599 | 15,582 | ||||||||||||
Utilities
|
3,535 | 3,417 | 6,940 | 6,704 | ||||||||||||
Repair and maintenance
|
3,771 | 3,293 | 7,329 | 6,518 | ||||||||||||
Franchise fees
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4,301 | 3,916 | 8,063 | 7,395 | ||||||||||||
Management fees
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3,560 | 3,173 | 6,762 | 6,246 | ||||||||||||
Property taxes, insurance and other
|
5,657 | 4,979 | 10,789 | 9,954 | ||||||||||||
General and administrative
|
2,239 | 2,327 | 4,099 | 4,931 | ||||||||||||
Acquisition related costs
|
74 | 430 | 74 | 461 | ||||||||||||
Depreciation expense
|
13,633 | 13,166 | 27,133 | 26,009 | ||||||||||||
Total expenses
|
78,459 | 74,107 | 151,375 | 144,032 | ||||||||||||
Operating income
|
26,113 | 23,003 | 45,600 | 41,169 | ||||||||||||
Interest expense, net
|
(2,229 | ) | (1,579 | ) | (4,414 | ) | (2,955 | ) | ||||||||
Income before income taxes
|
23,884 | 21,424 | 41,186 | 38,214 | ||||||||||||
Income tax expense
|
(349 | ) | (391 | ) | (745 | ) | (589 | ) | ||||||||
Income from continuing operations
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23,535 | 21,033 | 40,441 | 37,625 | ||||||||||||
Income from discontinued operations
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0 | 1,525 | 0 | 6,792 | ||||||||||||
Net income
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$ | 23,535 | $ | 22,558 | $ | 40,441 | $ | 44,417 | ||||||||
Basic and diluted net income per common share
|
||||||||||||||||
From continuing operations
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$ | 0.13 | $ | 0.11 | $ | 0.22 | $ | 0.20 | ||||||||
From discontinued operations
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0.00 | 0.01 | 0.00 | 0.04 | ||||||||||||
Total basic and diluted net income per common share
|
$ | 0.13 | $ | 0.12 | $ | 0.22 | $ | 0.24 | ||||||||
Weighted average common shares outstanding - basic and diluted
|
182,496 | 182,110 | 182,446 | 182,236 |
Six Months Ended
|
||||||||
June 30,
|
||||||||
2013
|
2012
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income
|
$ | 40,441 | $ | 44,417 | ||||
Adjustments to reconcile net income to cash provided by
operating activities: |
||||||||
Depreciation
|
27,133 | 26,009 | ||||||
Amortization of deferred financing costs, fair value
adjustments and other non-cash expenses, net |
215 | 247 | ||||||
Straight-line rental income
|
0 | (1,975 | ) | |||||
Changes in operating assets and liabilities:
|
||||||||
Increase in due from third party managers, net
|
(7,856 | ) | (8,110 | ) | ||||
Increase in other assets, net
|
(434 | ) | (839 | ) | ||||
Decrease (increase) in accounts payable and accrued expenses
|
662 | (1,658 | ) | |||||
Net cash provided by operating activities
|
60,161 | 58,091 | ||||||
Cash flows from investing activities:
|
||||||||
Cash paid for acquisitions, net
|
(7,220 | ) | (14,832 | ) | ||||
Net proceeds (costs) from sale of assets
|
(353 | ) | 135,416 | |||||
Capital improvements and development costs
|
(6,824 | ) | (9,204 | ) | ||||
Increase in capital improvement reserves
|
(129 | ) | (941 | ) | ||||
Payments received on note receivable
|
3,150 | 840 | ||||||
Net cash provided by (used in) investing activities
|
(11,376 | ) | 111,279 | |||||
Cash flows from financing activities:
|
||||||||
Net proceeds related to issuance of Units
|
21,929 | 26,210 | ||||||
Redemptions of Units
|
(19,992 | ) | (31,990 | ) | ||||
Special distribution paid to common shareholders
|
0 | (136,113 | ) | |||||
Monthly distributions paid to common shareholders
|
(75,707 | ) | (79,386 | ) | ||||
Net proceeds from credit facility
|
17,800 | 0 | ||||||
Proceeds from notes payable
|
0 | 30,000 | ||||||
Payments of notes payable
|
(1,842 | ) | (1,262 | ) | ||||
Deferred financing costs
|
0 | (174 | ) | |||||
Net cash used in financing activities
|
(57,812 | ) | (192,715 | ) | ||||
Decrease in cash and cash equivalents
|
(9,027 | ) | (23,345 | ) | ||||
Cash and cash equivalents, beginning of period
|
9,027 | 30,733 | ||||||
Cash and cash equivalents, end of period
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$ | 0 | $ | 7,388 | ||||
Non-cash transactions:
|
||||||||
Note receivable issued from sale of assets
|
$ | 0 | $ | 60,000 |
Three Months
|
Six Months
|
|||||||
Ended
|
Ended
|
|||||||
June 30, 2012
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June 30, 2012
|
|||||||
Rental revenue
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$ | 1,532 | $ | 6,826 | ||||
Operating expenses
|
7 | 34 | ||||||
Depreciation expense
|
0 | 0 | ||||||
Income from discontinued operations
|
$ | 1,525 | $ | 6,792 |
Redemption Date
|
Total Requested Unit Redemptions at Redemption Date
|
Units Redeemed
|
Total Redemption
Requests Not
Redeemed at
Redemption Date
|
|||||||||
January 2012
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10,689,219 | 1,507,187 | 9,182,032 | |||||||||
April 2012
|
11,229,890 | 1,509,922 | 9,719,968 | |||||||||
July 2012
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10,730,084 | 1,004,365 | 9,725,719 | |||||||||
October 2012
|
11,155,269 | 1,003,267 | 10,152,002 | |||||||||
January 2013
|
12,135,251 | 990,324 | 11,144,927 | |||||||||
April 2013
|
13,039,019 | 988,095 | 12,050,924 |
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||||||||||||||||||||||||||
(in thousands, except statistical data)
|
2013
|
Percent of Revenue
|
2012
|
Percent of Revenue
|
Percent Change
|
2013
|
Percent of Revenue
|
2012
|
Percent of Revenue
|
Percent Change
|
||||||||||||||||||||||||||||||
Total revenue
|
$ | 104,572 | 100 | % | $ | 97,110 | 100 | % | 8 | % | $ | 196,975 | 100 | % | $ | 185,201 | 100 | % | 6 | % | ||||||||||||||||||||
Hotel operating expenses
|
56,856 | 54 | % | 53,205 | 55 | % | 7 | % | 109,280 | 55 | % | 102,677 | 55 | % | 6 | % | ||||||||||||||||||||||||
Property taxes, insurance and other expense
|
5,657 | 5 | % | 4,979 | 5 | % | 14 | % | 10,789 | 5 | % | 9,954 | 5 | % | 8 | % | ||||||||||||||||||||||||
General and administrative expense
|
2,239 | 2 | % | 2,327 | 2 | % | -4 | % | 4,099 | 2 | % | 4,931 | 3 | % | -17 | % | ||||||||||||||||||||||||
Acquisition related costs
|
74 | 430 | -83 | % | 74 | 461 | -84 | % | ||||||||||||||||||||||||||||||||
Depreciation
|
13,633 | 13,166 | 4 | % | 27,133 | 26,009 | 4 | % | ||||||||||||||||||||||||||||||||
Interest expense, net
|
2,229 | 1,579 | 41 | % | 4,414 | 2,955 | 49 | % | ||||||||||||||||||||||||||||||||
Income tax expense
|
349 | 391 | -11 | % | 745 | 589 | 26 | % | ||||||||||||||||||||||||||||||||
Number of hotels
|
89 | 89 | 0 | % | 89 | 89 | 0 | % | ||||||||||||||||||||||||||||||||
Average Market Yield(1)
|
123 | 121 | 2 | % | 123 | 122 | 1 | % | ||||||||||||||||||||||||||||||||
ADR
|
$ | 115 | $ | 112 | 3 | % | $ | 115 | $ | 112 | 3 | % | ||||||||||||||||||||||||||||
Occupancy
|
80 | % | 77 | % | 4 | % | 76 | % | 73 | % | 4 | % | ||||||||||||||||||||||||||||
RevPAR
|
$ | 92 | $ | 86 | 7 | % | $ | 87 | $ | 82 | 6 | % | ||||||||||||||||||||||||||||
Total rooms sold(2)
|
823,519 | 783,545 | 5 | % | 1,556,537 | 1,492,334 | 4 | % | ||||||||||||||||||||||||||||||||
Total rooms available(3)
|
1,034,761 | 1,022,903 | 1 | % | 2,061,270 | 2,041,998 | 1 | % |
|
|
(1) Calculated from data provided by Smith Travel Research, Inc.® Excludes hotels under renovation or opened less than two years during the applicable periods.
|
|
(2) Represents the number of room nights sold during the period.
|
|
(3) Represents the number of rooms owned by the Company multiplied by the number of nights in the period.
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City
|
State
|
Brand
|
Manager
|
Date Acquired
|
Rooms
|
Gross Purchase Price
|
||||||||||
Tucson
|
AZ
|
Hilton Garden Inn
|
Western
|
7/31/2008
|
125 | $ | 18,375 | |||||||||
Santa Clarita
|
CA
|
Courtyard
|
Dimension
|
9/24/2008
|
140 | 22,700 | ||||||||||
Charlotte
|
NC
|
Homewood Suites
|
McKibbon
|
9/24/2008
|
112 | 5,750 | ||||||||||
Allen
|
TX
|
Hampton Inn & Suites
|
Gateway
|
9/26/2008
|
103 | 12,500 | ||||||||||
Twinsburg
|
OH
|
Hilton Garden Inn
|
Gateway
|
10/7/2008
|
142 | 17,792 | ||||||||||
Lewisville
|
TX
|
Hilton Garden Inn
|
Gateway
|
10/16/2008
|
165 | 28,000 | ||||||||||
Duncanville
|
TX
|
Hilton Garden Inn
|
Gateway
|
10/21/2008
|
142 | 19,500 | ||||||||||
Santa Clarita
|
CA
|
Hampton Inn
|
Dimension
|
10/29/2008
|
128 | 17,129 | ||||||||||
Santa Clarita
|
CA
|
Residence Inn
|
Dimension
|
10/29/2008
|
90 | 16,600 | ||||||||||
Santa Clarita
|
CA
|
Fairfield Inn
|
Dimension
|
10/29/2008
|
66 | 9,337 | ||||||||||
Beaumont
|
TX
|
Residence Inn
|
Western
|
10/29/2008
|
133 | 16,900 | ||||||||||
Pueblo
|
CO
|
Hampton Inn & Suites
|
Dimension
|
10/31/2008
|
81 | 8,025 | ||||||||||
Allen
|
TX
|
Hilton Garden Inn
|
Gateway
|
10/31/2008
|
150 | 18,500 | ||||||||||
Bristol
|
VA
|
Courtyard
|
LBA
|
11/7/2008
|
175 | 18,650 | ||||||||||
Durham
|
NC
|
Homewood Suites
|
McKibbon
|
12/4/2008
|
122 | 19,050 | ||||||||||
Hattiesburg
|
MS
|
Residence Inn
|
LBA
|
12/11/2008
|
84 | 9,793 | ||||||||||
Jackson
|
TN
|
Courtyard
|
Vista
|
12/16/2008
|
94 | 15,200 | ||||||||||
Jackson
|
TN
|
Hampton Inn & Suites
|
Vista
|
12/30/2008
|
83 | 12,600 | ||||||||||
Pittsburgh
|
PA
|
Hampton Inn
|
Vista
|
12/31/2008
|
132 | 20,458 | ||||||||||
Fort Lauderdale
|
FL
|
Hampton Inn
|
Vista
|
12/31/2008
|
109 | 19,290 | ||||||||||
Frisco
|
TX
|
Hilton Garden Inn
|
Western
|
12/31/2008
|
102 | 15,050 | ||||||||||
Round Rock
|
TX
|
Hampton Inn
|
Vista
|
3/6/2009
|
94 | 11,500 | ||||||||||
Panama City
|
FL
|
Hampton Inn & Suites
|
LBA
|
3/12/2009
|
95 | 11,600 | ||||||||||
Austin
|
TX
|
Homewood Suites
|
Vista
|
4/14/2009
|
97 | 17,700 | ||||||||||
Austin
|
TX
|
Hampton Inn
|
Vista
|
4/14/2009
|
124 | 18,000 | ||||||||||
Dothan
|
AL
|
Hilton Garden Inn
|
LBA
|
6/1/2009
|
104 | 11,601 | ||||||||||
Troy
|
AL
|
Courtyard
|
LBA
|
6/18/2009
|
90 | 8,696 | ||||||||||
Orlando
|
FL
|
Fairfield Inn & Suites
|
Marriott
|
7/1/2009
|
200 | 25,800 | ||||||||||
Orlando
|
FL
|
SpringHill Suites
|
Marriott
|
7/1/2009
|
200 | 29,000 | ||||||||||
Clovis
|
CA
|
Hampton Inn & Suites
|
Dimension
|
7/31/2009
|
86 | 11,150 | ||||||||||
Rochester
|
MN
|
Hampton Inn & Suites
|
Raymond
|
8/3/2009
|
124 | 14,136 | ||||||||||
Johnson City
|
TN
|
Courtyard
|
LBA
|
9/25/2009
|
90 | 9,880 | ||||||||||
Baton Rouge
|
LA
|
SpringHill Suites
|
Dimension
|
9/25/2009
|
119 | 15,100 | ||||||||||
Houston
|
TX
|
Marriott
|
Western
|
1/8/2010
|
206 | 50,750 | ||||||||||
Albany
|
GA
|
Fairfield Inn & Suites
|
LBA
|
1/14/2010
|
87 | 7,920 | ||||||||||
Panama City
|
FL
|
TownePlace Suites
|
LBA
|
1/19/2010
|
103 | 10,640 | ||||||||||
Clovis
|
CA
|
Homewood Suites
|
Dimension
|
2/2/2010
|
83 | 12,435 | ||||||||||
Jacksonville
|
NC
|
TownePlace Suites
|
LBA
|
2/16/2010
|
86 | 9,200 | ||||||||||
Miami
|
FL
|
Hampton Inn & Suites
|
Dimension
|
4/9/2010
|
121 | 11,900 | ||||||||||
Anchorage
|
AK
|
Embassy Suites
|
Stonebridge
|
4/30/2010
|
169 | 42,000 | ||||||||||
Boise
|
ID
|
Hampton Inn & Suites
|
Raymond
|
4/30/2010
|
186 | 22,370 | ||||||||||
Rogers
|
AR
|
Homewood Suites
|
Raymond
|
4/30/2010
|
126 | 10,900 | ||||||||||
St. Louis
|
MO
|
Hampton Inn & Suites
|
Raymond
|
4/30/2010
|
126 | 16,000 | ||||||||||
Oklahoma City
|
OK
|
Hampton Inn & Suites
|
Raymond
|
5/28/2010
|
200 | 32,657 | ||||||||||
Ft. Worth
|
TX
|
TownePlace Suites
|
Western
|
7/19/2010
|
140 | 18,435 |
City
|
State
|
Brand
|
Manager
|
Date Acquired
|
Rooms
|
Gross Purchase Price
|
||||||||||
Lafayette
|
LA
|
Hilton Garden Inn
|
LBA
|
7/30/2010
|
153 | $ | 17,261 | |||||||||
West Monroe
|
LA
|
Hilton Garden Inn
|
InterMountain
|
7/30/2010
|
134 | 15,639 | ||||||||||
Silver Spring
|
MD
|
Hilton Garden Inn
|
White
|
7/30/2010
|
107 | 17,400 | ||||||||||
Rogers
|
AR
|
Hampton Inn
|
Raymond
|
8/31/2010
|
122 | 9,600 | ||||||||||
St. Louis
|
MO
|
Hampton Inn
|
Raymond
|
8/31/2010
|
190 | 23,000 | ||||||||||
Kansas City
|
MO
|
Hampton Inn
|
Raymond
|
8/31/2010
|
122 | 10,130 | ||||||||||
Alexandria
|
LA
|
Courtyard
|
LBA
|
9/15/2010
|
96 | 9,915 | ||||||||||
Grapevine
|
TX
|
Hilton Garden Inn
|
Western
|
9/24/2010
|
110 | 17,000 | ||||||||||
Nashville
|
TN
|
Hilton Garden Inn
|
Vista
|
9/30/2010
|
194 | 42,667 | ||||||||||
Indianapolis
|
IN
|
SpringHill Suites
|
White
|
11/2/2010
|
130 | 12,800 | ||||||||||
Mishawaka
|
IN
|
Residence Inn
|
White
|
11/2/2010
|
106 | 13,700 | ||||||||||
Phoenix
|
AZ
|
Courtyard
|
White
|
11/2/2010
|
164 | 16,000 | ||||||||||
Phoenix
|
AZ
|
Residence Inn
|
White
|
11/2/2010
|
129 | 14,000 | ||||||||||
Mettawa
|
IL
|
Residence Inn
|
White
|
11/2/2010
|
130 | 23,500 | ||||||||||
Mettawa
|
IL
|
Hilton Garden Inn
|
White
|
11/2/2010
|
170 | 30,500 | ||||||||||
Austin
|
TX
|
Hilton Garden Inn
|
White
|
11/2/2010
|
117 | 16,000 | ||||||||||
Novi
|
MI
|
Hilton Garden Inn
|
White
|
11/2/2010
|
148 | 16,200 | ||||||||||
Warrenville
|
IL
|
Hilton Garden Inn
|
White
|
11/2/2010
|
135 | 22,000 | ||||||||||
Schaumburg
|
IL
|
Hilton Garden Inn
|
White
|
11/2/2010
|
166 | 20,500 | ||||||||||
Salt Lake City
|
UT
|
SpringHill Suites
|
White
|
11/2/2010
|
143 | 17,500 | ||||||||||
Austin
|
TX
|
Fairfield Inn & Suites
|
White
|
11/2/2010
|
150 | 17,750 | ||||||||||
Austin
|
TX
|
Courtyard
|
White
|
11/2/2010
|
145 | 20,000 | ||||||||||
Chandler
|
AZ
|
Courtyard
|
White
|
11/2/2010
|
150 | 17,000 | ||||||||||
Chandler
|
AZ
|
Fairfield Inn & Suites
|
White
|
11/2/2010
|
110 | 12,000 | ||||||||||
Tampa
|
FL
|
Embassy Suites
|
White
|
11/2/2010
|
147 | 21,800 | ||||||||||
Andover
|
MA
|
SpringHill Suites
|
Marriott
|
11/5/2010
|
136 | 6,500 | ||||||||||
Philadelphia (Collegeville)
|
PA
|
Courtyard
|
White
|
11/15/2010
|
132 | 20,000 | ||||||||||
Holly Springs
|
NC
|
Hampton Inn & Suites
|
LBA
|
11/30/2010
|
124 | 14,880 | ||||||||||
Philadelphia (Malvern)
|
PA
|
Courtyard
|
White
|
11/30/2010
|
127 | 21,000 | ||||||||||
Arlington
|
TX
|
Hampton Inn & Suites
|
Western
|
12/1/2010
|
98 | 9,900 | ||||||||||
Irving
|
TX
|
Homewood Suites
|
Western
|
12/29/2010
|
77 | 10,250 | ||||||||||
Mount Laurel
|
NJ
|
Homewood Suites
|
Tharaldson
|
1/11/2011
|
118 | 15,000 | ||||||||||
West Orange
|
NJ
|
Courtyard
|
Tharaldson
|
1/11/2011
|
131 | 21,500 | ||||||||||
Texarkana
|
TX
|
Hampton Inn & Suites
|
InterMountain
|
1/31/2011
|
81 | 9,100 | ||||||||||
Fayetteville
|
NC
|
Home2 Suites
|
LBA
|
2/3/2011
|
118 | 11,397 | ||||||||||
Manassas
|
VA
|
Residence Inn
|
Tharaldson
|
2/16/2011
|
107 | 14,900 | ||||||||||
San Bernardino
|
CA
|
Residence Inn
|
Tharaldson
|
2/16/2011
|
95 | 13,600 | ||||||||||
Alexandria (1)
|
VA
|
SpringHill Suites
|
Marriott
|
3/28/2011
|
155 | 24,863 | ||||||||||
Dallas
|
TX
|
Hilton
|
Hilton
|
5/17/2011
|
224 | 42,000 | ||||||||||
Santa Ana
|
CA
|
Courtyard
|
Dimension
|
5/23/2011
|
155 | 24,800 | ||||||||||
Lafayette
|
LA
|
SpringHill Suites
|
LBA
|
6/23/2011
|
103 | 10,232 | ||||||||||
Tucson
|
AZ
|
TownePlace Suites
|
Western
|
10/6/2011
|
124 | 15,852 | ||||||||||
El Paso
|
TX
|
Hilton Garden Inn
|
Western
|
12/19/2011
|
145 | 19,974 | ||||||||||
Nashville
|
TN
|
Home2 Suites
|
Vista
|
5/31/2012
|
119 | 16,660 | ||||||||||
Total
|
11,371 | $ | 1,546,839 |
|
|
(1) Hotel construction was completed by the Company and the hotel opened for business on March 28, 2011. The gross purchase price includes the acquisition of land during 2009 and construction costs.
|
Three Months
|
Six Months
|
|||||||
Ended
|
Ended
|
|||||||
June 30, 2012
|
June 30, 2012
|
|||||||
Rental revenue
|
$ | 1,532 | $ | 6,826 | ||||
Operating expenses
|
7 | 34 | ||||||
Depreciation expense
|
0 | 0 | ||||||
Income from discontinued operations
|
$ | 1,525 | $ | 6,792 |
·
|
A maximum Consolidated Total Indebtedness limit of 45% of the aggregate Real Estate Values for all Eligible Real Estate that is or qualifies as an Unencumbered Borrowing Base Property;
|
·
|
A maximum Consolidated Total Indebtedness limit of 50% of the Consolidated Total Asset Value;
|
·
|
A minimum Adjusted Consolidated EBITDA to Consolidated Fixed Charges covenant of 1.75 to 1.00 for the total of the four trailing quarterly periods;
|
·
|
A minimum Consolidated Tangible Net Worth of $1.0 billion;
|
·
|
A maximum Consolidated Secured Debt limit of 40% of Consolidated Total Asset Value;
|
·
|
A minimum Adjusted NOI for all Eligible Real Estate that is or qualifies as an Unencumbered Borrowing Base Property to Implied Debt Service covenant of 2.25 to 1.00;
|
·
|
A maximum Consolidated Secured Recourse Indebtedness of $10 million; and
|
·
|
Restricted Payments (including Distributions and Unit Redemptions), net of proceeds from the Company’s Dividend Reinvestment Plan, cannot exceed $38 million during any calendar quarter and quarterly Distributions cannot exceed $0.21 per share through June 30, 2013, and thereafter must not exceed $152 million in any cumulative 12 month period and Distributions cannot exceed $0.83025 per share for any calendar year, unless such Restricted Payments are less than the Company’s Funds From Operations for any cumulative four calendar quarters.
|
Redemption Date
|
Total Requested Unit Redemptions at Redemption Date
|
Units Redeemed
|
Total Redemption Requests Not Redeemed at Redemption Date
|
|||||||||
January 2012
|
10,689,219 | 1,507,187 | 9,182,032 | |||||||||
April 2012
|
11,229,890 | 1,509,922 | 9,719,968 | |||||||||
July 2012
|
10,730,084 | 1,004,365 | 9,725,719 | |||||||||
October 2012
|
11,155,269 | 1,003,267 | 10,152,002 | |||||||||
January 2013
|
12,135,251 | 990,324 | 11,144,927 | |||||||||
April 2013
|
13,039,019 | 988,095 | 12,050,924 |
Redemption Date
|
Total Requested Unit Redemptions at Redemption Date
|
Units Redeemed
|
Total Redemption Requests Not Redeemed at Redemption Date
|
|||||||||
January 2012
|
10,689,219 | 1,507,187 | 9,182,032 | |||||||||
April 2012
|
11,229,890 | 1,509,922 | 9,719,968 | |||||||||
July 2012
|
10,730,084 | 1,004,365 | 9,725,719 | |||||||||
October 2012
|
11,155,269 | 1,003,267 | 10,152,002 | |||||||||
January 2013
|
12,135,251 | 990,324 | 11,144,927 | |||||||||
April 2013
|
13,039,019 | 988,095 | 12,050,924 |
Issuer Purchases of Equity Securities
|
||||||||||||||||
(a)
|
(b)
|
(c)
|
(d)
|
|||||||||||||
Period
|
Total Number of Units Purchased
|
Average Price Paid per Unit
|
Total Number of Units Purchased as Part of Publicly Announced Plans or Programs
|
Maximum Number of Units that May Yet Be Purchased Under the Plans or Programs
|
||||||||||||
April 2013
|
988,095 | $ | 10.11 | 988,095 | (1) |
Exhibit Number
|
Description of Documents
|
3.1
|
Articles of Incorporation of the Registrant. (Incorporated by reference to Exhibit 3.1 to the registrant’s registration statement on Form S-11 (SEC File No. 333-147414) filed November 15, 2007 and effective April 25, 2008)
|
3.2
|
Bylaws of the Registrant, as amended. (Incorporated by reference to Exhibit 3.2 to the registrant’s registration statement on Form S-11 (SEC File No. 333-147414) filed November 15, 2007 and effective April 25, 2008)
|
31.1
|
|
31.2
|
|
32.1
|
|
101 | The following materials from Apple REIT Nine, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Cash Flows, and (iv) related notes to these financial statements, tagged as blocks of text and in detail (FURNISHED HEREWITH) |
APPLE REIT NINE, INC.
|
|||
By:
|
/s/ GLADE M. KNIGHT
|
Date: August 8, 2013
|
|
Glade M. Knight,
|
|||
Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)
|
|||
By:
|
/s/ BRYAN PEERY
|
Date: August 8, 2013
|
|
Bryan Peery,
|
|||
Chief Financial Officer
(Principal Financial and Principal Accounting Officer)
|
Date: August 8, 2013
|
/s/ GLADE M. KNIGHT
|
|
Glade M. Knight
Chief Executive Officer
|
||
APPLE REIT NINE, Inc.
|
Date: August 8, 2013
|
/s/ BRYAN PEERY
|
|
Bryan Peery
Chief Financial Officer
APPLE REIT NINE, Inc.
|
/s/ GLADE M. KNIGHT
|
Glade M. Knight
|
Chief Executive Officer
|
/s/ BRYAN PEERY
|
Bryan Peery
|
Chief Financial Officer
|
August 8, 2013
|
Organization and Summary of Significant Accounting Policies (Details)
|
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Organization and Summary of Significant Accounting Policies (Details) [Line Items] | ||||
Unit description | one common share and one Series A preferred share | |||
Number of Reportable Segments | 1 | |||
Percentage of Revenue Reserved for Replacements | up to 5% | |||
Weighted Average Number Diluted Shares Outstanding Adjustment (in Shares) | 0 | 0 | 0 | 0 |
Hotels [Member]
|
||||
Organization and Summary of Significant Accounting Policies (Details) [Line Items] | ||||
Number of Real Estate Properties | 89 | 89 | ||
Number of States in which Entity Operates | 27 | 27 | ||
Aggregate Hotel Rooms [Member]
|
||||
Organization and Summary of Significant Accounting Policies (Details) [Line Items] | ||||
Number of Units in Real Estate Property | 11,371 | 11,371 |
Consolidated Statements of Operations (USD $)
In Thousands, except Per Share data, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Revenues: | ||||
Room revenue | $ 95,115 | $ 88,047 | $ 179,388 | $ 167,600 |
Other revenue | 9,457 | 9,063 | 17,587 | 17,601 |
Total revenue | 104,572 | 97,110 | 196,975 | 185,201 |
Expenses: | ||||
Operating expense | 25,821 | 24,239 | 49,518 | 46,651 |
Hotel administrative expense | 7,220 | 6,956 | 14,069 | 13,581 |
Sales and marketing | 8,648 | 8,211 | 16,599 | 15,582 |
Utilities | 3,535 | 3,417 | 6,940 | 6,704 |
Repair and maintenance | 3,771 | 3,293 | 7,329 | 6,518 |
Franchise fees | 4,301 | 3,916 | 8,063 | 7,395 |
Management fees | 3,560 | 3,173 | 6,762 | 6,246 |
Property taxes, insurance and other | 5,657 | 4,979 | 10,789 | 9,954 |
General and administrative | 2,239 | 2,327 | 4,099 | 4,931 |
Acquisition related costs | 74 | 430 | 74 | 461 |
Depreciation expense | 13,633 | 13,166 | 27,133 | 26,009 |
Total expenses | 78,459 | 74,107 | 151,375 | 144,032 |
Operating income | 26,113 | 23,003 | 45,600 | 41,169 |
Interest expense, net | (2,229) | (1,579) | (4,414) | (2,955) |
Income before income taxes | 23,884 | 21,424 | 41,186 | 38,214 |
Income tax expense | (349) | (391) | (745) | (589) |
Income from continuing operations | 23,535 | 21,033 | 40,441 | 37,625 |
Income from discontinued operations | 0 | 1,525 | 0 | 6,792 |
Net income | $ 23,535 | $ 22,558 | $ 40,441 | $ 44,417 |
Basic and diluted net income per common share | ||||
From continuing operations (in Dollars per share) | $ 0.13 | $ 0.11 | $ 0.22 | $ 0.20 |
From discontinued operations (in Dollars per share) | $ 0.00 | $ 0.01 | $ 0.00 | $ 0.04 |
Total basic and diluted net income per common share (in Dollars per share) | $ 0.13 | $ 0.12 | $ 0.22 | $ 0.24 |
Weighted average common shares outstanding - basic and diluted (in Shares) | 182,496 | 182,110 | 182,446 | 182,236 |
Related Parties
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Related Party Transactions [Abstract] | |
Related Party Transactions Disclosure [Text Block] |
5. Related
Parties
The
Company has, and is expected to continue to engage in,
significant transactions with related
parties. These transactions cannot be construed to
be at arm’s length and the results of the
Company’s operations may be different if these
transactions were conducted with non-related
parties. The Company’s independent members
of the Board of Directors oversee and annually review the
Company’s related party relationships (which include
the relationships discussed in this section) and are required
to approve any significant modifications to the contracts, as
well as any new significant related party
transactions. There were no changes to the
contracts discussed in this section and no new significant
related party transactions during the six months ended June
30, 2013 (other than the transactions related to the
completion of Apple REIT Six, Inc.’s merger with a
third party discussed below). The Board of
Directors is not required to approve each individual
transaction that falls under the related party
relationships. However, under the direction of the
Board of Directors, at least one member of the
Company’s senior management team approves each related
party transaction.
The
term the “Apple REIT Entities” means Apple REIT
Six, Inc., Apple REIT Seven, Inc., Apple REIT Eight, Inc.,
Apple REIT Nine, Inc. and Apple REIT Ten, Inc. The
term the “Advisors” means Apple Six Advisors,
Inc., Apple Seven Advisors, Inc., Apple Eight Advisors, Inc.,
Apple Nine Advisors, Inc. (“A9A”), Apple Ten
Advisors, Inc., Apple Suites Realty Group, Inc.
(“ASRG”) and Apple Six Realty Group,
Inc. The Advisors are wholly owned by Glade M.
Knight, Chairman and Chief Executive Officer of the
Company. Mr. Knight is also Chairman and
Chief Executive Officer of Apple REIT Seven, Inc., Apple REIT
Eight, Inc. and Apple REIT Ten, Inc. Members of
the Company’s Board of Directors are also on the Board
of Directors of Apple REIT Seven, Inc. and Apple REIT Eight,
Inc.
On
May 14, 2013, Apple REIT Six, Inc. merged with and into an
entity that is not affiliated with the Apple REIT Entities or
its Advisors. Pursuant to the terms and conditions
of the merger agreement, dated as of November 29, 2012, upon
completion of the merger, the separate corporate existence of
Apple REIT Six, Inc. ceased (the
“Merger”). Prior to the Merger, Glade
M. Knight was Chairman and Chief Executive Office of Apple
REIT Six, Inc. and members of the Company’s Board of
Directors were also on the Board of Directors of Apple REIT
Six, Inc.
ASRG
Agreement
The
Company has a contract with ASRG, to acquire and dispose of
real estate assets for the Company. A fee of 2% of
the gross purchase price or gross sale price in addition to
certain reimbursable expenses is paid to ASRG for these
services. As of June 30, 2013, payments to ASRG
for fees under the terms of this contract related to the
acquisition of assets have totaled approximately $33.6
million since inception. Of this amount, the
Company incurred approximately $0.1 million and $0.3 million
during the six months ended June 30, 2013 and 2012, which is
included in acquisition related costs in the Company’s
consolidated statements of operations. During the
second quarter of 2013, the Company paid fees to ASRG for the
purchase of two land parcels located at the Residence Inn
hotels in Manassas, Virginia and San Bernardino, California,
both which had previously been leased from a third
party. In addition, the Company incurred a
brokerage commission to ASRG totaling approximately $4.0
million related to the sale of the Company’s 110
parcels in April 2012, which has been recorded as a reduction
to the deferred gain on sale. Of this amount,
approximately $2.8 million was paid to ASRG during the second
quarter of 2012 and the remaining $1.2 million will be paid
upon repayment of the $60 million note.
A9A
Agreement
The
Company is party to an advisory agreement with A9A, pursuant
to which A9A provides management services to the
Company. A9A provides these management services
through Apple Fund Management, LLC (“AFM”), which
immediately after the Merger became a wholly-owned subsidiary
of A9A. This transaction between A9A and Apple
REIT Six, Inc. was made with no cash consideration exchanged
between the entities. Prior to May 14, 2013, AFM
was a wholly-owned subsidiary of Apple REIT Six,
Inc. An annual advisory fee ranging from 0.1% to
0.25% of total equity proceeds received by the Company, in
addition to certain reimbursable expenses as described below,
are payable to A9A for these management
services. Total advisory fees incurred by the
Company under the advisory agreement are included in general
and administrative expenses and totaled approximately $1.4
million and $1.5 million for the six months ended June 30,
2013 and 2012.
Apple
REIT Entities and Advisors Cost Sharing Structure
In
addition to the fees payable to ASRG or A9A, the Company
reimbursed to ASRG or A9A, or paid directly to AFM on behalf
of ASRG or A9A, approximately $1.0 million for both the six
months ended June 30, 2013 and 2012. The expenses
reimbursed were approximately $0 and $0.1 million,
respectively, for costs reimbursed under the contract with
ASRG and approximately $1.0 million and $0.9 million,
respectively, for costs reimbursed under the contract with
A9A. The costs are included in general and
administrative expenses and are for the Company’s
allocated share of the staffing and related costs provided by
AFM at the direction of A9A.
AFM
is an affiliate of each of the Advisors. Each of
the Advisors provides management services through the use of
AFM to, respectively, Apple REIT Six, Inc. (prior to the
Merger), Apple REIT Seven, Inc., Apple REIT Eight, Inc.,
Apple REIT Nine, Inc. and Apple REIT Ten. In
connection with the Merger, effective May 14, 2013, the
entire membership interest of Apple REIT Six, Inc. in AFM was
transferred and assigned to A9A, which then became the sole
member of AFM. As part of the assignment, A9A and
the other Advisors agreed to indemnify the buyer of Apple
REIT Six, Inc. for liabilities related to AFM. The
assignment of AFM’s interest to A9A had no impact on
the Company’s advisory agreement with A9A or the
process of allocating costs from AFM to the Apple REIT
Entities or Advisors as described below, except Apple REIT
Six, Inc. and its advisors, Apple Six Advisors, Inc. and
Apple Six Realty Group, Inc. (collectively “A6
Advisors”), no longer participate in the cost sharing
arrangement, thereby increasing the remaining
companies’ share of the allocated costs.
Also,
in connection with the Merger, on May 13, 2013, the Company
acquired from Apple REIT Six, Inc. the Apple REIT
Entities’ and Advisors’ headquarters in Richmond,
Virginia (“Headquarters”) and assumed the Fort
Worth, Texas office lease agreement for approximately $4.5
million, which approximated fair value at the time of
acquisition based on third party market
comparisons. As part of the purchase, the Company
agreed to release Apple REIT Six, Inc. from any liabilities
related to the Headquarters or office lease. As
described below, any costs associated with the Headquarters
and office lease, including office rent, utilities, office
supplies, etc. (“Office Related Costs”) will
continue to be allocated to the Apple REIT Entities and
Advisors, excluding Apple REIT Six, Inc. and A6
Advisors.
Prior
to the Merger, amounts reimbursed to AFM included both
compensation for personnel and Office Related Costs used by
the companies. As discussed above, as a result of
the Merger, beginning on May 14, 2013, Office Related Costs
are now allocated from the Company to the other Apple REIT
Entities and Advisors, excluding Apple REIT Six, Inc. and A6
Advisors. Each of these companies has agreed to
reimburse the Company for its share of these
costs. From the period May 14, 2013 through June
30, 2013, the Company received reimbursement of its costs
totaling approximately $85,000 from the participating
entities. The Company’s net allocated Office
Related Costs were approximately $58,000 and is included in
general and administrative costs in the Company’s
consolidated statements of operations.
All
of the Office Related Costs and costs of AFM are allocated
among the Apple REIT Entities and the Advisors, excluding
Apple REIT Six, Inc. and A6 Advisors after the
Merger. The allocation of costs is reviewed at
least annually by the Compensation Committees of the Apple
REIT Entities. In making the allocation,
management of each of the entities and their Compensation
Committee consider all relevant facts related to each
company’s level of business activity and the extent to
which each company requires the services of particular
personnel of AFM. Such payments are based on the
actual costs of the services and are not based on formal
record keeping regarding the time these personnel devote to
the Company, but are based on a good faith estimate by the
employee and/or his or her supervisor of the time devoted by
the employee to the Company. Although there is a
potential conflict on time allocation of employees due to the
fact that a senior manager, officer or staff member will
provide services to more than one company, the Company
believes that the executives and staff compensation sharing
arrangement described above allows the companies to share
costs yet attract and retain superior executives and
staff. The cost sharing structure also allows each
entity to maintain a much more cost effective structure than
having separate staffing arrangements. Since the
employees of AFM perform services for the Apple REIT Entities
and Advisors at the direction of the Advisors, individuals,
including executive officers, receive their compensation at
the direction of the Advisors and may receive consideration
directly from the Advisors.
As
part of the cost sharing arrangements, the day-to-day
transactions may result in amounts due to or from the Apple
REIT Entities and Advisors (excluding Apple REIT Six, Inc.
and A6 Advisors after the Merger). To efficiently
manage cash disbursements, an individual Apple REIT Entity or
Advisor (excluding Apple REIT Six, Inc. and A6 Advisors after
the Merger) may make payments for any or all of the related
companies. The amounts due to or from the related
Apple REIT Entity or Advisor (excluding Apple REIT Six, Inc.
and A6 Advisors after the Merger) are reimbursed or collected
and are not significant in amount.
The
Company has incurred legal fees associated with the Legal
Proceedings and Related Matters discussed herein. The
Company also incurs other professional fees such as
accounting, auditing and reporting. These fees are
included in general and administrative expense in the
Company’s consolidated statements of operations.
To be cost effective, these services received by the Company
are shared as applicable across the other Apple REIT
Entities. The professionals cannot always specifically
identify their fees for one company; therefore management
allocates these costs across the companies that benefit from
the services. The total costs for the Legal
Proceedings and Related Matters discussed herein for all of
the Apple REIT Entities was approximately $1.7 million for
the six months ended June 30, 2013, of which approximately
$0.4 million was allocated to the Company. Total
costs for the six months ended June 30, 2012 for all of the
Apple REIT Entities was approximately $3.2 million, of which
approximately $0.7 million was allocated to the
Company.
Apple
Air Holding, LLC (“Apple Air”) Membership
Interest
Included
in other assets, net on the Company’s consolidated
balance sheet is a 24% equity investment in Apple
Air. The other current members of Apple Air are
Apple REIT Seven, Inc., Apple REIT Eight, Inc. and Apple REIT
Ten, Inc. In connection with the Merger, on May
13, 2013, Apple REIT Ten, Inc. acquired its membership
interest in Apple Air from Apple REIT Six,
Inc. Through its equity investment, the Company
has access to Apple Air’s aircraft for acquisition,
asset management and renovation purposes. The
Company’s equity investment was approximately $1.8
million and $1.9 million as of June 30, 2013 and December 31,
2012. The Company has recorded its share of income
and losses of the entity under the equity method of
accounting and adjusted its investment in Apple Air
accordingly. For the six months ended June 30,
2013 and 2012, the Company recorded a loss of approximately
$102,000 and $95,000 respectively, as its share of the net
loss of Apple Air, which primarily relates to the
depreciation of the aircraft, and is included in general and
administrative expense in the Company’s consolidated
statements of operations.
|
Shareholder's Equity (Details) - Schedule of Unit Redemption (Redemptions [Member])
|
1 Months Ended | |||||
---|---|---|---|---|---|---|
Apr. 30, 2013
|
Jan. 31, 2013
|
Oct. 31, 2012
|
Jul. 31, 2012
|
Apr. 30, 2012
|
Jan. 31, 2012
|
|
Redemptions [Member]
|
||||||
Shareholder's Equity (Details) - Schedule of Unit Redemption [Line Items] | ||||||
Total Requested Unit Redemptions at Redemption Date | 13,039,019 | 12,135,251 | 11,155,269 | 10,730,084 | 11,229,890 | 10,689,219 |
Units Redeemed (in Shares) | 988,095 | 990,324 | 1,003,267 | 1,004,365 | 1,509,922 | 1,507,187 |
Total Redemption Requests Not Redeemed at Redemption Date | 12,050,924 | 11,144,927 | 10,152,002 | 9,725,719 | 9,719,968 | 9,182,032 |
Disposition and Discontinued Operations (Details) (USD $)
|
3 Months Ended | 6 Months Ended | 12 Months Ended | 1 Months Ended | ||||
---|---|---|---|---|---|---|---|---|
Mar. 31, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
Dec. 31, 2012
|
Dec. 31, 2012
Sale of 110 Sites Leased to Third Party [Member]
acre
|
Jun. 30, 2013
Sale of 110 Sites Leased to Third Party [Member]
|
Apr. 27, 2012
Sale of 110 Sites Leased to Third Party [Member]
|
Apr. 30, 2009
Acquisition of 110 Sites Leased to Third Party [Member]
|
|
Disposition and Discontinued Operations (Details) [Line Items] | ||||||||
Disposal Date | Apr. 27, 2012 | |||||||
Area of Land (in Acres) | 406 | |||||||
Land Sites Sold | 110 | |||||||
Total Sales Price of Real Estate Sold | $ 198,400,000 | |||||||
Land Parcels Sold | 110 | |||||||
Payments to Acquire Real Estate | 147,300,000 | |||||||
Proceeds from Sale of Real Estate Held-for-investment | 138,400,000 | |||||||
Note Receivable Issued | 60,000,000 | |||||||
Note Receivable, Collateral | junior lien on the land and land improvements owned by the purchaser | |||||||
Interest Rate on Note Receivable | 10.50% | |||||||
Gains (Losses) on Sales of Investment Real Estate | 33,300,000 | |||||||
Assets Held-for-sale, at Carrying Value | 160,500,000 | |||||||
Closing Costs on Sale of Real Estate | 300,000 | |||||||
Franchise Taxes on Sale of Real Estate | 300,000 | |||||||
Note Receivable, Net | 19,250,000 | 22,375,000 | 22,400,000 | 19,300,000 | ||||
Notes, Loans and Financing Receivable, Gross, Noncurrent | 60,000,000 | 60,000,000 | 60,000,000 | 60,000,000 | ||||
Deferred Gain on Sale of Real Estate Assets | 33,400,000 | 33,300,000 | ||||||
Deferred Interest Earned on Note Receivable | 4,300,000 | 7,400,000 | ||||||
Straight Line Rent | $ 400,000 | $ 0 | $ 1,975,000 |
Subsequent Events (Details) (USD $)
In Thousands, except Per Share data, unless otherwise specified |
6 Months Ended | 0 Months Ended | 1 Months Ended | |
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Aug. 07, 2013
Subsequent Event [Member]
|
Jul. 31, 2013
Subsequent Event [Member]
|
|
Subsequent Events (Details) [Line Items] | ||||
Payments of Ordinary Dividends, Common Stock (in Dollars) | $ 75,707 | $ 79,386 | $ 12,600 | |
Common Stock, Dividends, Per Share, Cash Paid (in Dollars per share) | $ 0.0691875 | |||
Subsequent Event, Description | On August 7, 2013, after the approval by its Board of Directors, the Company entered into an Agreement and Plan of Merger with Apple REIT Seven, Inc. and Apple REIT Eight, Inc., where Apple REIT Seven, Inc. and Apple REIT Eight, Inc. would merge into the Company.Under the Agreement and Plan of Merger, each outstanding Unit of Apple REIT Seven, Inc. would be exchanged for one common share of the Company and each outstanding Unit of Apple REIT Eight, Inc. would be exchanged for 0.85 common shares of the Company.The transaction is subject to shareholder approval by each of the companies and to customary closing conditions.As a result, there is no assurance that the merger will occur. |
Organization and Summary of Significant Accounting Policies
|
6 Months Ended |
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Jun. 30, 2013
|
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Accounting Policies [Abstract] | |
Organization, Consolidation, Basis of Presentation, Business Description and Accounting Policies [Text Block] |
1. Organization
and Summary of Significant Accounting Policies
Organization
Apple
REIT Nine, Inc., together with its wholly owned subsidiaries
(the “Company”), is a Virginia corporation that
has elected to be treated as a real estate investment trust
(“REIT”) for federal income tax
purposes. The Company was formed to invest in
income-producing real estate in the United
States. Initial capitalization occurred on
November 9, 2007 and operations began on July 31, 2008
when the Company acquired its first hotel. The
Company concluded its best-efforts offering of Units (each
Unit consists of one common share and one Series A preferred
share) in December 2010. The Company’s
fiscal year end is December 31. The Company
has no foreign operations or assets and its operating
structure includes only one segment. The
consolidated financial statements include the accounts of the
Company and its subsidiaries. All intercompany
accounts and transactions have been
eliminated. Although the Company has an interest
in a variable interest entity through its note receivable, it
is not the primary beneficiary as the Company does not have
any elements of power in the decision making process of the
entity and does not share in any of the benefits, and
therefore does not consolidate the entity. As of June
30, 2013, the Company owned 89 hotels located in 27 states
with an aggregate of 11,371 rooms.
Basis
of Presentation
The
accompanying unaudited consolidated financial statements have
been prepared in accordance with the rules and regulations
for reporting on Form 10-Q. Accordingly, they do
not include all of the information required by accounting
principles generally accepted in the United States for
complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have
been included. These unaudited financial
statements should be read in conjunction with the
Company’s audited consolidated financial statements
included in its 2012 Annual Report on Form
10-K. Operating results for the three and six
months ended June 30, 2013 are not necessarily indicative of
the results that may be expected for the twelve month period
ending December 31, 2013.
Use
of Estimates
The
preparation of the financial statements in conformity with
United States generally accepted accounting principles
requires management to make estimates and assumptions that
affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results could
differ from those estimates.
Reclassifications
Certain
amounts in the 2012 consolidated financial statements have
been reclassified to conform with the 2013 presentation with
no effect on previously reported net income or
shareholders’ equity.
Restricted
Cash
Restricted
cash includes reserves for debt service, real estate taxes,
and insurance, and reserves for furniture, fixtures, and
equipment replacements of up to 5% of property revenue for
certain hotels, as required by certain management or mortgage
debt agreement restrictions and provisions.
Earnings
Per Common Share
Basic
earnings per common share is computed based upon the weighted
average number of shares outstanding during the
period. Diluted earnings per common share is
calculated after giving effect to all potential common shares
that were dilutive and outstanding for the
period. There were no potential common shares with
a dilutive effect for the three and six months ended June 30,
2013 or 2012. As a result, basic and dilutive
outstanding shares were the same. Series B
convertible preferred shares are not included in earnings per
common share calculations until such time that such shares
are eligible to be converted to common shares.
|
Credit Facility
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Debt Disclosure [Abstract] | |
Debt Disclosure [Text Block] |
3. Credit
Facility
In
November 2012, the Company entered into a $50 million credit
facility with a commercial bank that is utilized for working
capital, hotel renovations and development, and other general
corporate funding purposes, including the payment of
redemptions and distributions. The credit facility
may be increased to $100 million, subject to certain
conditions. Under the terms of the credit
agreement, the Company may make voluntary prepayments in
whole or in part at any time. The credit facility
matures in November 2014; however, the Company has the right,
upon satisfaction of certain conditions, including covenant
compliance and payment of an extension fee, to extend the
maturity date to November 2015. Interest payments
are due monthly and the interest rate, subject to certain
exceptions, is equal to the one-month LIBOR (the London
Inter-Bank Offered Rate for a one-month term) plus a margin
ranging from 2.25% to 2.75%, depending upon the
Company’s leverage ratio, as calculated under the terms
of the credit agreement. The
Company is also required to pay an unused facility fee of
0.30% or 0.40% on the unused portion of the revolving credit
facility, based on the amount of borrowings outstanding
during the quarter. As of June 30, 2013, the
credit facility had an outstanding principal balance of $17.8
million and an annual interest rate of approximately
2.44%. As of December 31, 2012, there were
no borrowings outstanding under the credit facility.
The
credit agreement requires the Company to maintain a specific
pool of Unencumbered Borrowing Base Properties (must be a
minimum of ten properties and must satisfy conditions as
defined in the credit agreement). The obligations
of the lender to make any advances under the credit facility
are subject to certain conditions, including that the
outstanding borrowings do not exceed the Borrowing Base
Availability, as defined in the credit
agreement. The credit facility contains customary
affirmative covenants and negative covenants and events of
defaults. It also contains quarterly financial
covenants, which include, among others, a minimum tangible
net worth, maximum debt limits, and minimum debt service and
fixed charge coverage ratios. The Company was in
compliance with each of these covenants at June 30,
2013.
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Shareholder's Equity
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity Note Disclosure [Text Block] |
6. Shareholders’
Equity
Special
Distribution
As
a result of the sale of its 110 parcels, the Board of
Directors approved a special distribution of $0.75 per Unit,
totaling $136.1 million on May 17, 2012 to shareholders of
record on May 11, 2012 (the “Special
Distribution”).
Monthly
Distributions
For
the three months ended June 30, 2013 and 2012, the Company
made distributions (excluding the Special Distribution
discussed above) of $0.2076 and $0.2158 per common share for
a total of $37.9 million and $39.3 million. For
the six months ended June 30, 2013 and 2012, the Company made
distributions (excluding the Special Distribution discussed
above) of $0.4151 and $0.4358 per common share for a total of
$75.7 million and $79.4 million. In conjunction
with the Special Distribution, in May 2012 the
Company’s Board of Directors reduced the annual
distribution rate from $0.88 per common share to $0.83 per
common share. The reduction was effective with the
June 2012 distribution. In August 2012, the Board of
Directors increased the annualized distribution rate from
$0.83 per common share to $0.83025 per common
share. The distribution will continue to be paid
monthly. Total distributions (including the
Special Distribution) for the three months ended June 30,
2013 and 2012 totaled $37.9 million and $175.4 million, and
$75.7 million and $215.5 million for the six months ended
June 30, 2013 and 2012.
Unit
Redemption Program
In
July 2009, the Company instituted a Unit Redemption Program
to provide limited interim liquidity to its shareholders who
have held their Units for at least one year. Since
the inception of the program through April 2012, shareholders
were permitted to request redemption of Units for a purchase
price equal to 92% of the price paid per Unit if the Units
have been owned for less than three years, or 100% of the
price paid per Unit if the Units have been owned more than
three years. In May 2012, as a result of the
Special Distribution, the purchase price per Unit under the
Company’s Unit Redemption Program was adjusted by the
amount of the Special Distribution (from $11.00 to $10.25 for
the maximum purchase price, based on the original purchase
price and length of time such Units have been held by the
shareholder). The maximum number of Units that may
be redeemed in any given year is five percent of the weighted
average number of Units outstanding during the 12-month
period immediately prior to the date of redemption. The
Company reserves the right to change the purchase price of
redemptions, reject any request for redemption, or otherwise
amend the terms of, suspend, or terminate the Unit Redemption
Program. As noted below, since July 2011, the
total redemption requests have exceeded the authorized amount
of redemptions and, as a result, the Board of Directors has
limited the amount of redemptions as deemed
prudent. Effective June 19, 2013, the Board of
Directors suspended the Company’s Unit Redemption
Program, as it evaluates a potential consolidation
transaction in which the Company, Apple REIT Seven, Inc. and
Apple REIT Eight, Inc. would be combined (the
“Consolidation Transaction”).
Since
inception of the program through June 30, 2013, the Company
has redeemed approximately 11.7 million Units representing
$121.2 million, including 2.0 million Units in the amount of
$20.0 million and 3.0 million Units in the amount of $32.0
million redeemed during the six months ended June 30, 2013
and 2012, respectively. As contemplated in the
program, beginning with the July 2011 redemption, the
scheduled redemption date for the third quarter of 2011, the
Company redeemed Units on a pro-rata basis. Prior
to July 2011, the Company redeemed 100% of redemption
requests. The following is a summary of the Unit
redemptions during 2012 and the first six month of
2013:
Dividend
Reinvestment Plan
In
December 2010, the Company instituted a Dividend Reinvestment
Plan for its shareholders. The plan provides a way to
increase shareholder investment in the Company by reinvesting
dividends to purchase additional Units of the Company. The
uses of the proceeds from this plan may include purchasing
Units under the Company’s Unit Redemption Program,
enhancing properties, satisfying financing obligations and
other expenses, increasing working capital, funding various
corporate operations, and acquiring hotels. As a
result of the Special Distribution, beginning in May 2012,
the offering price per Unit under the Company’s
Dividend Reinvestment Plan was adjusted by the amount of the
Special Distribution (from $11.00 to $10.25). The
Company has registered 20.0 million Units for potential
issuance under the plan. During the six months
ended June 30, 2013 and 2012, approximately 2.1 million
Units, representing $22.0 million in proceeds to the Company,
and 2.4 million Units, representing $26.2 million in proceeds
to the Company, were issued under the plan. Since
inception of the plan through June 30, 2013, approximately
12.3 million Units, representing $131.0 million in proceeds
to the Company, were issued under the
plan. Effective June 19, 2013, the Board of
Directors suspended the Company’s Dividend Reinvestment
Plan, as it assesses the Consolidation Transaction.
|
Fair Value of Financial Instruments
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Fair Value Disclosures [Abstract] | |
Fair Value Disclosures [Text Block] |
4. Fair
Value of Financial Instruments
The
Company estimates the fair value of its debt and note
receivable by discounting the future cash flows of each
instrument at estimated market rates consistent with the
maturity of an instrument with similar credit terms and
credit characteristics which are Level 3
inputs. Market rates take into consideration
general market conditions and maturity. As of June
30, 2013, the carrying value and estimated fair value of the
Company’s debt was approximately $182.5 million and
$182.7 million. As of December 31, 2012, the
carrying value and estimated fair value of the
Company’s debt was approximately $166.8 million and
$173.3 million. As of June 30, 2013 and December
31, 2012, the carrying value of the $60 million note
receivable as discussed in note 2 approximates fair market
value. The carrying value of the Company’s
other financial instruments approximates fair value due to
the short-term nature of these financial instruments.
|