FILED PURSUANT TO RULE 424(B)(3)
REGISTRATION NUMBER 333-77055
SUPPLEMENT NO. 1 DATED AUGUST
17, 1999 TO BE USED WITH
PROSPECTUS DATED AUGUST 3, 1999
APPLE SUITES, INC.
The following information supplements the prospectus of Apple Suites, Inc.
dated August 3, 1999 and is part of the prospectus. PROSPECTIVE INVESTORS
SHOULD CAREFULLY REVIEW BOTH THE PROSPECTUS AND THIS SUPPLEMENT.
TABLE OF CONTENTS TO SUPPLEMENT NO. 1
PAGE
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Status of the Offering .................. S-2
Recent Developments ..................... S-2
Proposed Property Acquisitions .......... S-2
The prospectus and this supplement contain forward-looking statements
within the meaning of the federal securities laws which are intended to be
covered by the safe harbors created by those laws. These statements include our
plans and objectives for future operations, including plans and objectives
relating to future growth and availability of funds. These forward-looking
statements are based on current expectations that involve numerous risks and
uncertainties. Assumptions relating to these statements involve judgments with
respect to, among other things, future economic, competitive and market
conditions and future business decisions, all of which are difficult or
impossible accurately to predict and many of which are beyond our control.
Although we believe the assumptions underlying the forward-looking statements,
and the forward-looking statements themselves, are reasonable, any of the
assumptions could be inaccurate and, therefore, there can be no assurance that
these forward-looking statements will prove to be accurate. In light of the
significant uncertainties inherent in these forward-looking statements, the
inclusion of this information should not be regarded as a representation by us
or any other person that our objectives and plans will be achieved.
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STATUS OF THE OFFERING
As of August 17, 1999, the Company had not closed the sale to investors
under the prospectus of any common shares, although the Company currently
intends to close at least the minimum offering of common shares on or before the
closing of the proposed property acquisitions described below.
RECENT DEVELOPMENTS
In anticipation of the initial closing of the sale of common shares, Lisa
B. Kern, Bruce H. Matson, Michael S. Waters and Robert M. Wily (all of whom are
described in the prospectus) became directors of the Company on August 16, 1999.
On the same date, Glade M. Knight, Chairman, Chief Executive Officer and
President of the Company, was authorized by the board of directors (1) to close
the purchase of any Homewood Suites(Reg. TM) properties on behalf of the Company
as he deems in the best interests of the Company, and (2) to cause the Company
to borrow, on either a secured or an unsecured basis, an amount up to 75% of the
purchase price of Homewood Suites(Reg. TM) properties on such terms as he
determines to be in the best interests of the Company. This borrowing would be
"bridge" financing, which would allow the Company to purchase properties in an
orderly, scheduled manner, and then to repay the borrowing as additional common
shares are sold in the offering. Thus, despite the use of "bridge" financing,
the Company would seek to hold its properties on an "all-cash" basis, as
indicated in the prospectus.
The Company has also elected C. Douglas Schepker to serve as its Senior
Vice President and Chief Operating Officer. From August 1996 to August 1999, Mr.
Schepker (age 50) was a Senior Manager in the Real Estate Group of Ernst & Young
Kenneth Leventhal. From September 1988 until August 1996, he was a Senior
Manager/Director with KPMG, Pricewaterhouse Coopers and Arthur Andersen. Mr.
Schepker's expertise includes management and financial consulting pertaining to
corporate investments, financings, acquisitions, dispositions, real estate
development, REIT structures and joint ventures. For over three years, he was
Director of Real Estate for Choice Hotels, Inc.
PROPOSED PROPERTY ACQUISITIONS
The Company proposes to purchase on or shortly after the initial closing of
the sale of common shares five Homewood Suites(Reg. TM) Hotels in Atlanta,
Georgia, Addison, Texas, Irving, Texas, Plano, Texas and Glen Allen, Virginia.
The five hotels will be purchased from Hampton Inns, Inc., Promus Hotels
Florida, Inc. and Promus Hotels, Inc. once the minimum offering of $15 million
is achieved. The total purchase price for the five hotels will be $45,800,000.
Although it is expected that these purchases will be closed on or about
September 1, 1999, there can be no complete assurance that the purchases will
occur at that time, or necessarily will occur at all. Additional information on
these properties is provided below.
The five hotel properties will be purchased, in part, with financing to be
provided by Promus Hotels, Inc. in a total amount not to exceed $34,350,000.
Each hotel property will be encumbered by a mortgage and/or deed of trust and/or
deed to secure debt. The Company will execute and deliver a promissory note to
Promus Hotels, Inc. which will provide, among other things, for a interest rate
of eight and one-half percent (8-1/2%) per annum and a maturity date one year
from the date of closing of the purchase of the properties. As indicated above,
this borrowing would be "bridge" financing, allowing the Company to purchase the
properties in an orderly, scheduled manner, and then to repay the borrowing from
the sale of additional common shares in the offering. Thus, despite the use of
"bridge" financing, the Company would seek to hold its properties on an
"all-cash" basis, as indicated in the prospectus. Although the Promus Hotels
financing has a maturity date of one year, it can be prepaid at any time and
from time to time without penalty.
The five Homewood Suites(Reg. TM) hotel properties are:
<TABLE>
<CAPTION>
NUMBER
PROPERTY LOCATION OF SUITES PURCHASE PRICE
- -------------------------------- ---------------- ------------ ---------------
<S> <C> <C> <C>
1. Atlanta-Galleria/Cumberland Atlanta, GA 124 suites $10,300,000
2. Dallas-Addison Addison, TX 120 suites 9,500,000
3. Dallas-Las Colinas Irving, TX 136 suites 11,200,000
4. North Dallas-Plano Plano, TX 99 suites 5,400,000
5. Richmond-West End Glen Allen, VA 123 suites 9,400,000
</TABLE>
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<PAGE>
ATLANTA-GALLERIA/CUMBERLAND
ATLANTA, GEORGIA
The Homewood Suites(Reg. TM) Atlanta-Cumberland is located on a 3.23 acre
site along US Highway 41 (Cobb Parkway) in the northwest sector of Atlanta,
Georgia. The hotel contains 124 suites consisting of 96 king bed suites, 24
double bed suites and 4 two-bedroom suites.
Each suite contains separate living and sleeping areas as well as a full
bathroom, closet and kitchen facilities. Some suites have fireplaces. Wheelchair
accessible and smoking suites are also available. The hotel also contains a
40-seat breakfast/lounge area, a meeting room that accommodates 15-20 people,
and a business center that offers guests the use of a personal computer, a
photocopier, and an electric typewriter. Recreational facilities include an
outdoor pool and whirlpool, an exercise room, and two barbecue grills. The hotel
also contains a guest convenience store and laundry. The hotel was opened in
July 1990.
We believe that the hotel has been generally well maintained and is
generally in very good condition. Over the next 12 months, renovations and
improvements in the amount of $397,000 are expected.
Occupancy rates for the period July 1998 through July 1999 were 77.4%. For
the last year, average daily rates were $90.83 and revenue per available suite
was $70.86. There are at least seven extended-stay hotel properties that compete
with the hotel.
We expect to adequately cover the hotel with property and liability
insurance.
DALLAS-ADDISON
ADDISON, TEXAS
The Homewood Suites(Reg. TM) Addison is located on a 3.5 acre site along
the north side of Beltline Road in Addison, Texas. The hotel contains 120 suites
consisting of 96 king bed suites, 16 double bed suites and 8 two-bedroom suites.
Each suite contains separate living and sleeping areas as well as a full
bathroom, closet and kitchen facilities. Some suites have fireplaces. The hotel
also contains a 40-seat breakfast/lounge area, a meeting room that accommodates
25-30 people, and a business center that offers guests the use of a personal
computer, a photocopier, and an electric typewriter. Recreational facilities
include an outdoor pool and whirlpool, an exercise room, and a barbecue grill.
The hotel also contains a guest convenience store and laundry. The hotel was
opened in July 1990.
We believe that the hotel has been generally well maintained and is
generally in very good condition. Over the next 12 months, renovations and
improvements in the amount of $360,000 are expected.
Occupancy rates for the period July 1998 through July 1999 were 76.9%. For
the last year, average daily rates were $99.29 and revenue per available suite
was $80.01. There are at least four extended-stay hotel properties that compete
with the hotel.
We expect to adequately cover the hotel with property and liability
insurance.
DALLAS-LAS COLINAS
IRVING, TEXAS
The Homewood Suites(Reg. TM) Dallas - Las Colinas is located on a 3.4 acre
site in northwest Irving, Texas in the Las Colinas Urban Center. The hotel
contains 136 suites consisting of 116 king bed suites, 12 double bed suites and
8 two-bedroom suites.
Each suite contains separate living and sleeping areas as well as a full
bathroom, closet and kitchen facilities. Some suites have fireplaces. Wheelchair
accessible and smoking suites are also available. The hotel also contains a
40-seat breakfast/lounge area, a meeting room that accommodates 25-30 people,
and
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a business center that offers guests the use of a personal computer, a
photocopier, and an electric typewriter. Recreational facilities include an
outdoor pool and whirlpool, an exercise room, and two barbecue grills. The hotel
also contains a guest convenience store and laundry. The hotel was opened in
January 1990.
We believe that the hotel has been generally well maintained and is
generally in very good condition. Over the next 12 months, renovations and
improvements in the amount of $440,000 are expected.
Occupancy rates for the period July 1998 through July 1999 were 77.5%. For
the last year, average daily rates were $99.08 and revenue per available suite
was $79.94. There are at least five extended-stay hotel properties that compete
with the hotel.
We expect to adequately cover the hotel with property and liability
insurance.
NORTH DALLAS-PLANO
PLANO, TEXAS
The Homewood Suites(Reg. TM) Plano is located on a 2.667 acre site in the
Preston Park Business Center in southern Collin County, Texas. The hotel
contains 99 suites consisting of 55 king bed suites, 37 double bed suites and 7
two-bedroom suites.
Each suite contains separate living and sleeping areas as well as a full
bathroom, closet and kitchen facilities. The hotel also contains a
breakfast/lounge area, a meeting room that accommodates 20-25 people, and a
business center that offers guests the use of a personal computer, a
photocopier, and an electric typewriter. Recreational facilities include an
outdoor pool and whirlpool, an exercise room, and a sports court. The hotel also
contains a guest convenience store and laundry. The hotel was opened in April
1997.
We believe that the hotel has been generally well maintained and is
generally in very good condition. No additional renovations or improvements are
expected at the moment.
Occupancy rates for the period July 1998 through July 1999 were 71.1%. For
the last year, average daily rates were $88.07 and revenue per available suite
was $65.33. There are at least seven extended-stay hotel properties that compete
with the hotel.
We expect to adequately cover the hotel with property and liability
insurance.
RICHMOND-WEST END
GLEN ALLEN, VIRGINIA
The Homewood Suites(Reg. TM) Richmond-West End is located on a 3.745 acre
site on Innslake Drive in Richmond's Innsbrook Corporate Center. The hotel
contains 123 suites consisting of 98 king bed suites, 18 double bed suites and 7
two-bedroom suites. Each suite contains separate living and sleeping areas as
well as a full bathroom, closet and kitchen facilities. Wheelchair accessible
and smoking suites are also available. The hotel also contains a 40-seat
breakfast/lounge area, a meeting room that accommodates up to 80 people, and a
business center that offers guests the use of a personal computer, a
photocopier, and an electric typewriter. Recreational facilities include an
outdoor pool and whirlpool, an exercise room, and two barbecue grills. The hotel
also contains a guest convenience store and laundry. The hotel was opened in May
1998.
We believe that the hotel has been generally well maintained and is
generally in very good condition. No additional renovations or improvements are
expected at the moment.
Occupancy rates for the period July 1998 through July 1999 were 72%. For
the last year, average daily rates were $92.34 and revenue per available suite
was $66.48. There are at least four extended-stay hotel properties that compete
with the hotel.
We expect to adequately cover the hotel with property and liability
insurance.
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