FILED PURSUANT TO RULE 424(B)(3);
FILE NO. 333-64029; STICKER
SUPPLEMENT TO SUPPLEMENT NO.1 DATED
NOVEMBER 10, 1998 AND SUPPLEMENT
NO. 2 DATED DECEMBER 2, 1998;
SUPPLEMENT NO. 2 DATED DECEMBER 2,
1998 TO BE USED WITH PROSPECTUS
DATED OCTOBER 16, 1998 AND
SUPPLEMENT NO.1 DATED NOVEMBER 10,
1998
SUMMARY OF SUPPLEMENTS NO. 1 AND NO. 2 TO PROSPECTUS
(SEE THE SUPPLEMENTS FOR ADDITIONAL INFORMATION):
Supplement No. 1 dated November 10, 1998:
(1) Reports on the acquisition by the Company of two additional apartment
complexes.
(2) Contains unaudited financial statements of the Company for the nine
months ended September 30, 1998 and the related management's
discussion and analysis of financial condition and results of
operations.
Supplement No. 2 dated December 2, 1998:
(1) Reports on the acquisition by the Company of one additional apartment
complex.
(2) Contains certain other updated information on the Company.
As of December 2, 1998, the Company had closed the sale to investors under
the Prospectus of 2,220,466 Shares at $10 per Share, representing aggregate
gross proceeds to the Company of $22,204,668 and proceeds net of selling
commissions and marketing expenses of $19,984,201. The Company endeavors
continually to invest proceeds in the acquisition of additional suitable
apartment communities as promptly as practicable after the receipt of such
proceeds. As of December 2, 1998, approximately $36 million of the proceeds of
all Common Share offerings available for investment in properties had not been
so invested.
Apple Residential Management Group, Inc. and its affiliates have received
and are expected to continue to receive fees and expense reimbursements in
connection with the Company's acquisitions and the management of the properties
and the Company. In connection with the three property acquisitions described
in the Supplements, Apple Residential Management Group, Inc. received property
acquisition fees totaling $578,000.
<PAGE>
FILED PURSUANT TO RULE 424(B)(3);
FILE NO. 333-64029; SUPPLEMENT NO.
2 DATED DECEMBER 2, 1998 TO BE USED
WITH PROSPECTUS DATED OCTOBER 16,
1998 AND SUPPLEMENT NO.1 DATED
NOVEMBER 10, 1998
SUPPLEMENT NO. 2 DATED DECEMBER 2, 1998
TO PROSPECTUS DATED OCTOBER 16, 1998
APPLE RESIDENTIAL INCOME TRUST, INC.
The following information supplements the Prospectus of Apple Residential
Income Trust, Inc. dated October 16, 1998 (the "Prospectus"), as previously
supplemented by Supplement No. 1 dated November 10, 1998, and should be
considered part of such Prospectus. Prospective investors should carefully
review the Prospectus and the Supplements. Capitalized terms that are used but
not defined in this Supplement have the meanings given to them in the
Prospectus.
STATUS OF THE OFFERING
As of December 2, 1998, the Company had closed the sale to investors under
the Prospectus of 2,220,466 Shares, representing gross proceeds to the Company
of $22,204,668, and proceeds net of selling commissions and marketing expenses
of $19,984,201.
THE COURTS ON PEAR RIDGE APARTMENTS
DALLAS, TEXAS
On November 17, 1998, Apple REIT Limited Partnership purchased The Courts
on Pear Ridge Apartments located at 5050 Pear Ridge Drive in Dallas, Texas (the
"Property").
The Property comprises 242 apartment units. The purchase price for the
Property was $11,500,000. The seller was PS II Real Estate Limited Partnership,
a Delaware limited partnership which was not affiliated with the Company, Apple
Residential Management Group, Inc. (the "Advisor") or their affiliates. The
purchase price was paid entirely in cash using proceeds from the sale of common
shares of the Company. Title to the Property was conveyed to the Company by
limited warranty deed.
LOCATION. The Property is located on Pear Ridge Drive just north of its
intersection with Haverwood Lane and one block east of North Dallas Tollway in
north Dallas, Texas, in Collin County, which is part of the greater Dallas/Fort
Worth Consolidated Metropolitan Statistical Area, or as it is called locally,
"The Metroplex." For information on The Metroplex, see under "Brookfield
Apartments" on page 39 of the Prospectus.
The immediate area surrounding the Property consists of other multifamily,
residential, commercial and retail development. The Property is readily
accessible from Interstate 635 and North Dallas Tollway. The Property is an
approximately 25-minute drive from the Dallas/Fort Worth International Airport
and within 15 minutes of the Dallas Central Business District.
DESCRIPTION OF THE PROPERTY. The Property consists of 242 apartment units
in 16 two-story buildings on approximately 9.4 acres of land. The Property was
constructed in 1988.
The Property offers 16 different unit types. The unit mix and rents being
charged new tenants as of November 1998 are as follows:
<TABLE>
<CAPTION>
APPROXIMATE
INTERIOR
SQUARE MONTHLY
QUANTITY TYPE FOOTAGE RENTAL
- ---------- ------------------------------------------------------- ------------ --------
<S> <C> <C> <C>
36 One Bedroom/One Bathroom w/Drybar 639 $585
18 One Bedroom/One Bathroom w/Fireplace 639 595
18 One Bedroom/One Bathroom w/Fireplace/Vaulted Ceilings 639 605
34 One Bedroom/One Bathroom w/Drybar 721 625
26 One Bedroom/One Bathroom w/Fireplace 721 650
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
APPROXIMATE
INTERIOR
SQUARE MONTHLY
QUANTITY TYPE FOOTAGE RENTAL
- ---------- -------------------------------------------------------- ------------ --------
<S> <C> <C> <C>
12 One Bedroom/One Bathroom w/Fireplace/Vaulted Ceilings 721 660
10 One Bedroom/One Bathroom/Sunroom w/Drybar 812 680
2 One Bedroom/One Bathroom/Sunroom w/Fireplace 812 690
12 One Bedroom/One Bathroom/Sunroom w/Fireplace/Vaulted 812 700
Ceilings
10 One Bedroom/One Bathroom/Den w/Drybar 875 740
20 One Bedroom/One Bathroom/Den w/Fireplace 875 745
10 One Bedroom/One Bathroom/Den/Sunroom w/Fireplace 963 785
8 Two Bedrooms/Two Bathrooms w/Drybar 967 815
16 Two Bedrooms/Two Bathrooms w/Fireplace 967 825
8 Two Bedrooms/Two Bathrooms/Sunroom w/Fireplace/Vaulted 1053 875
Ceilings
2 Two Bedrooms/Two Bathrooms TH w/Fireplace 1141 $955
</TABLE>
The apartments provide a total of approximately 187,000 square feet of net
rentable area.
The Company believes that the Property has generally been well maintained
and is in good condition. However, the Company has budgeted approximately
$181,500 for repairs and capital improvements to the Property. These repairs and
improvements will include clubhouse renovations, exterior painting and interior
upgrades.
The following information is provided by the seller. Physical occupancy at
the Property averaged approximately 95% in 1995, 92% in 1996, 93% in 1997, and
93% during the first nine months of 1998. Occupancy averages for earlier time
periods are not available. Leases at the property are generally for terms of one
year or less. Average rental rates for the past five years have generally
increased. As an example, a one-bedroom, one-bathroom apartment with a fireplace
and vaulted ceilings (639 square feet) rented for $475 in 1993, $485 in 1994,
$504 in 1995, $514 in 1996 and $524 in 1997. The average effective annual rental
per square foot at the Property for 1993, 1994, 1995, 1996 and 1997 was $8.25,
$8.43, $8.76, $8.93, and $9.10, respectively.
The Property has an outdoor swimming pool, deck and cabana, heated spa,
fitness center with men's and women's locker rooms with showers and dry saunas,
two picnic areas, a laundry facility, gazebos, covered parking and a controlled
access gate with fountains. There is also a clubhouse with a leasing office.
The buildings are wood-frame construction with a combination of brick
veneer, painted wood siding and stucco on concrete slab foundations. Roofs are
pitched and covered with asphalt shingles on plywood sheathing.
Each apartment unit has wall-to-wall carpeting in the living areas and
vinyl floors in the kitchen and bath. Each apartment unit has a cable television
hook-up and an individually controlled heating and air-conditioning unit. Each
kitchen has a refrigerator/freezer with icemaker, electric range and oven,
dishwasher and garbage disposal. All of the units include nine foot ceilings,
miniblinds, vertical blinds, ceiling fans and washer/dryer connections. The
owner of the property pays for cold water, sewer charges, gas (for hot water)
and trash removal. The tenants pay for electricity service, which includes
cooking, lighting, heating and air-conditioning.
There are at least four apartment properties that compete with the
Property. All offer similar amenities and generally have rents that are
comparable to those of the Property. Based on a recent telephone survey, the
Advisor estimates that occupancy at nearby competing properties averaged
approximately 93% on November 1, 1998.
S-2
<PAGE>
As of November 17, 1998, the Property was approximately 96% occupied.
The following table sets forth the 1998 real estate tax information on the
Property:
<TABLE>
<CAPTION>
ASSESSED
JURISDICTION VALUE RATE TAX
- -------------------------- ------------------ ------------- ----------------
<S> <C> <C> <C>
County of Collin ......... $ 9,203,807.00 $ 1.88805 $ 173,772.48
City of Dallas ........... 9,169,400.00 0.64910 59,518.58
-------------
Total ................... $ 233,291.06
</TABLE>
The basis of the depreciable residential real property portion of the
Property (currently estimated at about $9,207,124) will be depreciated over 27.5
years on a straight-line basis. The basis of the personal property portion will
be depreciated in accordance with the modified accelerated cost recovery system
of the Code. Amounts to be spent by the Company on repairs and improvements will
be treated for tax purposes as permitted by the Code based on the nature of the
expenditures.
The Advisor and the Company believe that the Property is and will continue
to be adequately covered by property and liability insurance.
ACQUISITION AND MANAGEMENT SERVICES AND FEES. In consideration of services
rendered to the Company in connection with the selection and acquisition of the
Property, the Company paid Apple Residential Management Group, Inc. a property
acquisition fee equal to 2% of the purchase price of the property, or $230,000.
Apple Residential Management Group, Inc. will serve as property manager for the
Property and for its services will be paid by the Company a monthly management
fee equal to 5% of the gross revenues of the Property plus reimbursement of
certain expenses.
S-3
