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Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.
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(a)
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Solicitation or Recommendation.
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(b)
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Reasons for the Recommendation.
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● | The Board of Directors believes that the Offer Price represents an opportunistic attempt by the Bidder to purchase Units at an unreasonably low price and make a profit and, as a result, deprive the Shareholders who tender Units of the potential opportunity to realize the long-term value of their investment in the Company. However, the Board of Directors notes that because the Company is a non-exchange traded REIT, there is a limited market for the Units and there can be no certainty regarding the long-term value of the Units because the value is dependent on a number of factors including general economic conditions and the other factors referenced in Item 8 – “Additional Information.” |
● | On April 14, 2016, the Company announced its entry into the Merger Agreement to be acquired by Apple Hospitality. |
§
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Pursuant to the terms of the Merger Agreement, each issued and outstanding Unit of the Company (other than those (x) with respect to which statutory dissenters’ rights of appraisal have been properly exercised, perfected and not subsequently withdrawn under Virginia law or (y) owned by Apple Hospitality, Ten Acquisition Sub or any of their respective subsidiaries) will be converted into the right to receive (i) 0.522 common shares of Apple Hospitality (“Apple Hospitality Common Shares”) and (ii) $1.00 in cash.
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§
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Based on the 20 Day VWAP (volume weighted average price) of Apple Hospitality Common Shares ending April 12, 2016 of $19.49 per share, the total per Unit consideration equates to an implied offer price of $11.17 per Unit, including the $1.00 cash per Unit consideration. Apple Hospitality Common Shares are listed for trading on the New York Stock Exchange under the ticker symbol “APLE”.
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§
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Based on the closing price of Apple Hospitality Common Shares on May 11, 2016 of $19.11 per share, the total per Unit consideration equates to an implied offer price of $10.98 per Unit, including the $1.00 cash per Unit consideration.
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§
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The Merger Agreement contains various closing conditions, including Shareholder approval. As a result, there can be no assurance that the Merger will close. If the closing conditions are satisfied, including Shareholder approval, it is anticipated that the Merger would close in the third quarter of 2016.
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§
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The Board of Directors, based on the unanimous recommendation of the Special Committee of the Board of Directors, approved the Merger Agreement and approved submitting the Merger Agreement to Company shareholders with the Board’s recommendation that Company shareholders vote in favor of the merger and related transactions.
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Solely for purposes of assisting trustees and custodians of individual retirement accounts (“IRAs”) containing an investment in the common shares and assisting broker-dealers in meeting their customer account statement reporting obligations under Financial Industry Regulatory Authority (“FINRA”) rules for investments in the Company, the Company announced an estimated per share value of the Company’s common shares as of December 31, 2015 of $11.10 per share, as more fully described in the section entitled “Common Shares” of Item 5 of the Annual Report, which is incorporated herein by reference. The fair value estimate of the Company’s common shares was based upon a third party valuation of the per share value of its common shares on a fully diluted basis as of December 31, 2015. The third party developed a per share value range of $10.60 - $11.60 and the estimated value provided above is the mid-point of that range. As with any methodology used to estimate value, the methodology employed by the Company was based upon a number of estimates and assumptions that may not be accurate or complete and may not accurately reflect future conditions. The estimated per share value does not represent: (i) the amount at which the Company’s shares would trade on a national securities exchange, (ii) the amount a shareholder would obtain if he or she tried to sell his or her shares or (iii) the amount shareholders would receive if the Company liquidated its assets and distributed the proceeds after paying all expenses and liabilities. This value was not based on an appraisal of the Company’s assets.
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·
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By accepting the Offer Price, Shareholders would also be foregoing potential future distributions. The Company currently pays monthly distributions that, if annualized, amount to $0.825 per Unit per year. Although the timing and amount of distributions are within the discretion of the Board of Directors and the Board of Directors cannot provide any guarantee that the Company will maintain this rate of distributions in the future, or that, if the Merger is consummated, that Apple Hospitality will continue to make distributions itself, Shareholders that choose to participate in the Tender Offer by selling their Shares to the Bidder will lose the right to receive all future distributions, including any distributions made or declared after the expiration date of the Tender Offer.
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·
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The Bidder states that the Tender Offer is being made “for investment purposes and with the intention of making a profit from the ownership of the Shares” and admits that it was “motivated to establish the lowest price which might be acceptable” to the Shareholders. Therefore, the Bidder acknowledges that the Offer Price was established based on the Bidder’s objectives and not based on what is in the best financial interest of Shareholders.
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The Bidder acknowledges that it has “not made an independent appraisal of the Shares” or the Company’s properties, and that it is “not qualified to appraise real estate.”
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The Bidder has engaged a depositary for the Tender Offer, MacKenzie Capital Management, LP (the “Depositary”), that is an affiliate of the Bidder. As a result, there is no independent third party holding funds of the Bidder for payment of the Offer Price that can independently verify that such funds are available for payment, and the Bidder may have access to the Shares tendered by Shareholders before all conditions to the Tender Offer have been satisfied and tendering holders have been paid.
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·
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The Tender Offer requires each Shareholder submit to the personal jurisdiction of the State of California and to arbitrate any disputes that may arise between any Shareholder and the Bidder or the Depositary. For most Shareholders and their counsel, the use of California law and a mandatory California arbitration would impose unfamiliar law and an inconvenient forum. Additionally, in any dispute between a Shareholder and the Bidder or the Depositary, the prevailing party will be entitled to recover attorney fees and costs.
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● | There is no guarantee that the Tender Offer will be completed in the time frame that the Tender Offer implies. The Tender Offer does not expire until June 14, 2016 and it may be extended by the Bidder in its sole discretion. |
(c)
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Intent to Tender.
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Exhibit
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Description
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(a)(1)
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(a)(2)
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(a)(3)
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Excerpt from the Definitive Proxy Statement on Schedule 14A dated April 1, 2016 filed by Apple REIT Ten, Inc. with the SEC on April 1, 2016*
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(a)(4)
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Excerpt from the Annual Report on Form 10-K filed by Apple REIT Ten, Inc. with the SEC on March 4, 2016*
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(a)(5)
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Agreement and Plan of Merger, dated as of April 13, 2016, among Apple REIT Ten, Inc., Apple Hospitality REIT, Inc. and 34 Consolidated, Inc. (Incorporated by reference to Exhibit 2.1 to the Company’s current report on Form 8-K (SEC File No. 000-54651) filed April 14, 2016).
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*
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Incorporated by reference as provided in Items 3, 4 and 8 hereto.
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Date: May 13, 2016
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By:
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/s/ David P. Buckley
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Name: David P. Buckley
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Title: Executive Vice President and Chief Legal Counsel
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·
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The Board of Directors believes that the Offer Price represents an opportunistic attempt by the Bidder to purchase Units at an unreasonably low price and make a profit and, as a result, deprive the Shareholders who tender Units of the potential opportunity to realize the long-term value of their investment in the Company. However, the Board of Directors notes that because the Company is a non-exchange traded REIT, there is a limited market for the Units and there can be no certainty regarding the long-term value of the Units because the value is dependent on a number of factors including general economic conditions and the other factors referenced in Item 8 – “Additional Information” of the enclosed Schedule 14D-9.
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·
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On April 14, 2016, the Company announced its entry into a merger agreement (the “Merger Agreement”) to be acquired by Apple Hospitality REIT, Inc. (“Apple Hospitality”).
§ Pursuant to the terms of the Merger Agreement, each issued and outstanding Unit of the Company (other than those (x) with respect to which statutory dissenters’ rights of appraisal have been properly exercised, perfected and not subsequently withdrawn under Virginia law or (y) owned by Apple Hospitality, its merger subsidiary or any of their respective subsidiaries) will be converted into the right to receive (i) 0.522 common shares of Apple Hospitality (“Apple Hospitality Common Shares”) and (ii) $1.00 in cash.
§ Based on the 20 Day VWAP (volume weighted average price) of Apple Hospitality Common Shares ending April 12, 2016 of $19.49 per share, the total per Unit consideration equates to an implied offer price of $11.17 per Unit, including the $1.00 cash per Unit consideration. Apple Hospitality Common Shares are listed for trading on the New York Stock Exchange under the ticker symbol “APLE”.
§ Based on the closing price of Apple Hospitality Common Shares on May 11, 2016 of $19.11 per share, the total per Unit consideration equates to an implied offer price of $10.98 per Unit, including the $1.00 cash per Unit consideration.
§ The Merger Agreement contains various closing conditions, including shareholder approval. As a result, there can be no assurance that the merger will close. If the closing conditions are satisfied, including shareholder approval, it is anticipated that the merger would close in the third quarter of 2016.
§ The Board of Directors, based on the unanimous recommendation of the Special Committee of the Board of Directors, approved the Merger Agreement and approved submitting the Merger Agreement to Company shareholders with the Board’s recommendation that Company shareholders vote in favor of the merger and related transactions.
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·
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Solely for purposes of assisting trustees and custodians of individual retirement accounts (“IRAs”) containing an investment in Apple Ten common shares and assisting broker-dealers in meeting their customer account statement reporting obligations under Financial Industry Regulatory Authority (“FINRA”) rules for investments in the Company, the Company announced an estimated per share value of the Company’s common shares as of December 31, 2015 of $11.10 per share, as more fully described in the section entitled “Common Shares” of Item 5 of the Annual Report, which is incorporated by reference in the enclosed Schedule 14D-9. The fair value estimate of the Company’s common shares was based upon a third party valuation of the per share value of its common shares on a fully diluted basis as of December 31, 2015. The third party developed a per share value range of $10.60 - $11.60 and the estimated value provided above is the mid-point of that range. As with any methodology used to estimate value, the methodology employed by the Company was based upon a number of estimates and assumptions that may not be accurate or complete and may not accurately reflect future conditions. The estimated per share value does not represent: (i) the amount at which the Company’s shares would trade on a national securities exchange, (ii) the amount a shareholder would obtain if he or she tried to sell his or her shares or (iii) the amount shareholders would receive if the Company liquidated its assets and distributed the proceeds after paying all expenses and liabilities. This value was not based on an appraisal of the Company’s assets.
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·
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By accepting the Offer Price, you would also be foregoing potential future distributions. The Company currently pays monthly distributions that, if annualized, amount to $0.825 per Unit per year. Although the timing and amount of distributions are within the discretion of the Board of Directors and the Board of Directors cannot provide any guarantee that the Company will maintain this rate of distributions in the future, or that, if the merger is consummated, that Apple Hospitality will continue to make distributions itself, Shareholders that choose to participate in the Tender Offer by selling their Shares to the Bidder will lose the right to receive all future distributions, including any distributions made or declared after the expiration date of the Tender Offer.
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·
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The Bidder states that the Tender Offer is being made “for investment purposes and with the intention of making a profit from the ownership of the Shares” and admits that it was “motivated to establish the lowest price which might be acceptable” to the Shareholders. Therefore, the Bidder acknowledges that the Offer Price was established based on the Bidder’s objectives and not based on what is in the best financial interest of you and the other Shareholders.
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·
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The Bidder acknowledges that it has “not made an independent appraisal of the Shares” or the Company’s properties, and that it is “not qualified to appraise real estate.”
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·
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The Bidder has engaged a depositary for the Tender Offer, MacKenzie Capital Management, LP (the “Depositary”), that is an affiliate of the Bidder. As a result, there is no independent third party holding funds of the Bidder for payment of the Offer Price that can independently verify that such funds are available for payment, and the Bidder may have access to the Shares tendered by Shareholders before all conditions to the Tender Offer have been satisfied and tendering holders have been paid.
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·
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The Tender Offer requires each Shareholder submit to the personal jurisdiction of the State of California and to arbitrate any disputes that may arise between any Shareholder and the Bidder or the Depositary. For most Shareholders and their counsel, the use of California law and a mandatory California arbitration would impose unfamiliar law and an inconvenient forum. Additionally, in any dispute between a Shareholder and the Bidder or the Depositary, the prevailing party will be entitled to recover attorney fees and costs.
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·
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There is no guarantee that the Tender Offer will be completed in the time frame that the Tender Offer implies. The Tender Offer does not expire until June 14, 2016 and it may be extended by the Bidder in its sole discretion.
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FOR IMMEDIATE RELEASE
May 13, 2016
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For information contact:
Kelly C. Clarke
(804) 727-6321
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·
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The Board of Directors believes that the Offer Price represents an opportunistic attempt by the Bidder to purchase Units at an unreasonably low price and make a profit and, as a result, deprive the Shareholders who tender Units of the potential opportunity to realize the long-term value of their investment in the Company. However, the Board of Directors notes that because the Company is a non-exchange traded REIT, there is a limited market for the Units and there can be no certainty regarding the long-term value of the Units because the value is dependent on a number of factors including general economic conditions and the other factors referenced in Item 8 – “Additional Information” of the Schedule 14D-9.
|
·
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On April 14, 2016, the Company announced its entry into a merger agreement (the “Merger Agreement”) to be acquired by Apple Hospitality REIT, Inc. (“Apple Hospitality”).
§ Pursuant to the terms of the Merger Agreement, each issued and outstanding Unit of the Company (other than those (x) with respect to which statutory dissenters’ rights of appraisal have been properly exercised, perfected and not subsequently withdrawn under Virginia law or (y) owned by Apple Hospitality, its merger subsidiary or any of their respective subsidiaries) will be converted into the right to receive (i) 0.522 common shares of Apple Hospitality (“Apple Hospitality Common Shares”) and (ii) $1.00 in cash.
§ Based on the 20 Day VWAP (volume weighted average price) of Apple Hospitality Common Shares ending April 12, 2016 of $19.49 per share, the total per Unit consideration equates to an implied offer price of $11.17 per Unit, including the $1.00 cash per Unit consideration. Apple Hospitality Common Shares are listed for trading on the New York Stock Exchange under the ticker symbol “APLE”.
§ Based on the closing price of Apple Hospitality Common Shares on May 11, 2016 of $19.11 per share, the total per Unit consideration equates to an implied offer price of $10.98 per Unit, including the $1.00 cash per Unit consideration.
§ The Merger Agreement contains various closing conditions, including shareholder approval. As a result, there can be no assurance that the merger will close. If the closing conditions are satisfied, including shareholder approval, it is anticipated that the merger would close in the third quarter of 2016.
§ The Board of Directors, based on the unanimous recommendation of the Special Committee of the Board of Directors, approved the Merger Agreement and approved submitting the Merger Agreement to Company shareholders with the Board’s recommendation that Company shareholders vote in favor of the merger and related transactions.
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·
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Solely for purposes of assisting trustees and custodians of individual retirement accounts (“IRAs”) containing an investment in Apple Ten common shares and assisting broker-dealers in meeting their customer account statement reporting obligations under Financial Industry Regulatory Authority (“FINRA”) rules for investments in the Company, the Company announced an estimated per share value of the Company’s common shares as of December 31, 2015 of $11.10 per share, as more fully described in the section entitled “Common Shares” of Item 5 of the Annual Report, which was filed with the SEC on March 4, 2016. The fair value estimate of the Company’s common shares was based upon a third party valuation of the per share value of its common shares on a fully diluted basis as of December 31, 2015. The third party developed a per share value range of $10.60 - $11.60 and the estimated value provided above is the mid-point of that range. As with any methodology used to estimate value, the methodology employed by the Company was based upon a number of estimates and assumptions that may not be accurate or complete and may not accurately reflect future conditions. The estimated per share value does not represent: (i) the amount at which the Company’s shares would trade on a national securities exchange, (ii) the amount a shareholder would obtain if he or she tried to sell his or her shares or (iii) the amount shareholders would receive if the Company liquidated its assets and distributed the proceeds after paying all expenses and liabilities. This value was not based on an appraisal of the Company’s assets.
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·
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By accepting the Offer Price, shareholders would also be foregoing potential future distributions. The Company currently pays monthly distributions that, if annualized, amount to $0.825 per Unit per year. Although the timing and amount of distributions are within the discretion of the Board of Directors and the Board of Directors cannot provide any guarantee that the Company will maintain this rate of distributions in the future, or that, if the merger is consummated, that Apple Hospitality will continue to make distributions itself, shareholders that choose to participate in the Tender Offer by selling their Shares to the Bidder will lose the right to receive all future distributions, including any distributions made or declared after the expiration date of the Tender Offer.
|
·
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The Bidder states that the Tender Offer is being made “for investment purposes and with the intention of making a profit from the ownership of the Shares” and admits that it was “motivated to establish the lowest price which might be acceptable” to the shareholders. Therefore, the Bidder acknowledges that the Offer Price was established based on the Bidder’s objectives and not based on what is in the best financial interest of shareholders.
|
·
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The Bidder acknowledges that it has “not made an independent appraisal of the Shares” or the Company’s properties, and that it is “not qualified to appraise real estate.”
|
·
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The Bidder has engaged a depositary for the Tender Offer, MacKenzie Capital Management, LP (the “Depositary”), that is an affiliate of the Bidder. As a result, there is no independent third party holding funds of the Bidder for payment of the Offer Price that can independently verify that such funds are available for payment, and the Bidder may have access to the Shares tendered by shareholders before all conditions to the Tender Offer have been satisfied and tendering holders have been paid.
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·
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The Tender Offer requires each shareholder submit to the personal jurisdiction of the State of California and to arbitrate any disputes that may arise between any shareholder and the Bidder or the Depositary. For most shareholders and their counsel, the use of California law and a mandatory California arbitration would impose unfamiliar law and an inconvenient forum. Additionally, in any dispute between a shareholder and the Bidder or the Depositary, the prevailing party will be entitled to recover attorney fees and costs.
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·
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There is no guarantee that the Tender Offer will be completed in the time frame that the Tender Offer implies. The Tender Offer does not expire until June 14, 2016 and it may be extended by the Bidder in its sole discretion.
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