SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): September 8, 2000
APPLE SUITES, INC.
(Exact name of registrant as specified in its charter)
VIRGINIA 000-30491 54-1933472
(State of (Commission (IRS Employer
incorporation) File Number) Identification No.)
306 EAST MAIN STREET
RICHMOND, VIRGINIA 23219
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code:
(804) 643-1761
<PAGE>
APPLE SUITES, INC.
FORM 8-K
Index
Page No.
Item 2. Acquisition or Disposition of Assets .................................3
Item 7. Pro Forma Financial Statements and Exhibits
a. Pro Forma Financial Statements (Unaudited)
Apple Suites, Inc.
Pro Forma Condensed Consolidated Balance Sheet as
of June 30, 2000 ....................................................13
Notes to Pro Forma Condensed Consolidated Balance
Sheet ...............................................................14
Pro Forma Condensed Consolidated Statements of
Operations for the year ended December 31, 1999 and
the six months ended June 30, 2000 ..................................15
Notes to Pro Forma Condensed Consolidated
Statements of Operations ............................................17
Apple Suites Management, Inc.
Pro Forma Condensed Consolidated Statements of
Operations for the year ended December 31, 1999 and
the six months ended June 30, 2000 ..................................19
Notes to Pro Forma Condensed Consolidated
Statements of Operations ............................................22
b. Exhibits..........................................................23
<PAGE>
Item 2. Acquisition or Disposition of Assets
Apple Suites, Inc. ("we") makes this report pursuant to Item 2 of Form
8-K to describe a financing transaction involving the mortgaging of certain of
its assets. This mortgaging constitutes a "disposition of a significant amount
of assets" within the meaning of the General Instructions to such form. Certain
related matters are also reported herein.
REFINANCING TRANSACTION - GENERAL
On September 8, 2000, we refinanced much of our short-term debt with loans
from First Union National Bank in the aggregate amount of $60 million. These
loans are described below in other sections. We used these loans to repay the
four promissory notes we executed in 1999 when acquiring 11 hotels.
On September 8, 2000, in connection with these loans, we formed two new
wholly-owned subsidiaries, and transferred a total of eight of our hotels to
the new subsidiaries. Those eight hotels, together with our three hotels in
Texas, serve as collateral for the lender. In addition, three of our existing
subsidiaries have amended their organizational documents to achieve conformity
with the organizational documents for our new subsidiaries. These matters are
discussed in another section below.
Of the $60 million total we borrowed, $50 million is repayable over 10
years. Thus, the refinancing constitutes a change to our borrowing policy, as
originally described in our filings with the Securities and Exchange Commission,
because we will not hold our properties on an "all cash" basis over the
long-term.
When we acquired our first 13 hotels, we elected to finance a portion of
the purchase price of each hotel by delivering short-term notes to the seller.
The use of this short-term debt was consistent with our original borrowing
policy, which was to purchase our properties either on an all-cash basis or
using interim borrowings. The short-term seller financing was available on
attractive terms and allowed us to purchase a greater number of hotels at what
we believed to be more attractive prices than we could have purchased without
the use of interim financing. The intent, as expressed in previous filings with
the Securities and Exchange Commission, was to repay the short-term seller
financing with proceeds from the offering of common shares.
As indicated in previous filings with the Securities and Exchange
Commission, when proceeds from our offering of common shares were raised more
slowly than was sufficient for repayment of the short-term seller financing, we
needed to refinance the short-term seller debt. Our loans through First Union
National Bank in the aggregate amount of $60 million are designed to refinance
the short-term seller debt that we perceived as difficult to repay when due with
proceeds from the sale of our common shares. Since $50 million of the new debt,
as described in this Report, has a term of 10 years, it is not interim
financing, but is longer-term financing which may stay in place for the full
10-year period. This financing is permitted by our organizational documents and
on terms and conditions deemed by management to be favorable and in our best
interests and those of our shareholders.
3
<PAGE>
While our receipt of the loans from First Union National Bank, as described
in this Report, represents a departure from the objective of purchasing all our
properties on an all-cash basis or using interim borrowings, we intend to
pursue, on a going-forward basis, our objective of purchasing properties either
on an all-cash basis or using interim borrowings, but only to the extent we can
do so in accordance with the perceived best interests of our company and its
shareholders, the rate at which attractive acquisitions become available, the
rate at which we receive funds from the offering of our common shares and other
relevant factors. For the purpose of flexibility in operations, we may borrow on
such terms as we deem prudent, subject to the approval of the Board of Directors
and certain limitations imposed by our bylaws.
Debts secured by mortgages and other security interests involve certain
risks, including the possible loss of equity in properties or assets through
foreclosure following default on a loan. Management believes both (1) that the
rent we are receiving as a result of the operations of the hotels is sufficient
to make regularly-scheduled payments on our existing debt, and (2) that our
remaining short-term debt (including the $10 million portion of the refinancing
from First Union National Bank and the remaining $23 million in the short-term
seller financing) will either be repaid from proceeds of our on-going offering
of common shares or refinanced on terms acceptable to us. However, there can be
no complete assurance that either expectation will prove true. If either proves
untrue, we could lose some or all of our properties or assets through
foreclosure.
It is our objective ultimately to own assets with a cost basis of at least
$200 million and with permanent debt not exceeding approximately $50 million.
Management would characterize this debt level as "conservative," based upon
industry standards. There is no assurance that we will be able to acquire
assets at the indicated level or will be able to, or elect to, maintain
permanent debt at the indicated level. Thus, this should be viewed merely as an
investment objective and not a prediction or assurance as to the future course
of events concerning our operations.
4
<PAGE>
CERTAIN NEW SUBSIDIARIES
In connection with the refinancing provided by First Union National Bank,
and at its request, we formed two new wholly-owned subsidiaries that will
operate as "special purpose entities." These new subsidiaries were formed as
Virginia corporations under the following names: Apple Suites SPE I, Inc. and
Apple Suites SPE II, Inc.
The new subsidiaries were formed to receive loans from First Union
National Bank and to hold certain hotels, which will serve as collateral for
the lender. To qualify as special purpose entities, the new subsidiaries have
organizational documents that impose certain requirements on the subsidiaries
while the loans are outstanding. The organizational documents for three of our
existing subsidiaries were amended to include the same requirements. Those
subsidiaries are Apple Suites REIT Limited Partnership (which holds three
hotels in Texas), Apple Suites General, Inc. (the sole general partner) and
Apple Suites LP, Inc. (the sole limited partner).
In connection with these lender requirements, we are conducting an active
search for independent directors with respect to our four corporate
subsidiaries. Because these requirements only apply to our subsidiaries, no
changes were made to our organizational documents as a result of the
refinancing.
We transferred a total of eight of our hotels to our newly formed
subsidiaries in connection with the refinancing. Those transfers are summarized
below:
<TABLE>
<CAPTION>
NAME OF NEW SUBSIDIARY NAME OF HOTEL TRANSFERRED TO SUBSIDIARY
<S> <C>
Apple Suites SPE I, Inc. Atlanta - Galleria/Cumberland
Jackson - Ridgeland
Salt Lake City - Midvale
Apple Suites SPE II, Inc. Atlanta - Peachtree
Baltimore - BWI Airport
Clearwater
Detroit - Warren
Richmond - West End
</TABLE>
5
<PAGE>
In connection with these transfers and at the request of the lender, a
separate hotel lease agreement for each hotel was executed by the appropriate
subsidiary, as lessor, and Apple Suites Management, Inc., as lessee. Our chief
executive officer, Glade M. Knight, is the sole shareholder of Apple Suites
Management, Inc., as well as its president and sole director. Each hotel lease
agreement is substantially similar to the master hotel lease agreement that
applied to all eight hotels prior to their transfer.
The following chart summarizes the ownership of our hotels as the result
of our refinancing and the related hotel transfers:
[Remainder of Page is Intentionally Blank]
6
<PAGE>
<TABLE>
APPLE SUITES, INC.
| 100% Ownership
<S> <C> <C> <C> <C>
_________________________________________________________________________________________________________
Apple Suites Apple Suites Apple Suites Apple Suites | Apple Suites
General, Inc. LP, Inc. SPE I, Inc. SPE II, Inc. | Pennsylvania
| | | | | Business Trust
| | | | | |
1% interest as 99% interest as | | | |
general partner limited partner | | | |
| | | | | |
| | | | | |
Apple Suites REIT | | | |
Limited Partnership | | | |
| | | | |
| | | | |
| | | | |
Holds 3 Hotels Holds 3 Hotels | Holds 1 Hotel |
Dallas-Addison (Texas) Atlanta-Galleria (Georgia) | Boulder |
Dallas-Irving/Las Colinas (Texas) Jackson-Ridgeland (Mississippi) | (Colorado) |
North Dallas-Plano (Texas) Salt Lake City-Midvale (Utah) | |
| |
Holds 5 Hotels Holds 1 Hotel
Atlanta-Peachtree (Georgia) Philadelphia/Great Valley
Baltimore-BWI Airport (Maryland) (Pennsylvania)
Clearwater (Florida)
Detroit-Warren (Michigan)
Richmond-West End (Virginia)
</TABLE>
7
<PAGE>
OVERVIEW OF LOAN AMOUNTS
The refinancing provided by First Union National Bank consists of
long-term loans made to three of our subsidiaries and a short-term loan made
directly to us. The long-terms loans are evidenced by 11 promissory notes in
the aggregate principal amount of $50 million. These notes are secured by our
hotels, as described in another section below. The short-term loan is evidenced
by a single promissory note in the principal amount of $10 million, which is
secured by our ownership interests in all of our direct subsidiaries.
The following table provides an overview of the promissory notes for the
$60 million refinancing:
<TABLE>
<CAPTION>
AGGREGATE PRINCIPAL ANNUAL
NAME OF LOANS TO AMOUNT RATE OF SUMMARY OF DATE OF
BORROWER BORROWER OF NOTES INTEREST SECURITY/COLLATERAL* MATURITY
--------------------------- -------------- ------------- ---------------- ------------------------------- ----------------
<S> <C> <C> <C> <C> <C>
Apple Suites SPE I, Inc. $10,500,000 $ 5,000,000 9.00% Atlanta - Galleria/Cumberland October 1, 2010
3,000,000 9.00% Jackson-Ridgeland October 1, 2010
2,500,000 9.00% Salt Lake City - Midvale October 1, 2010
Apple Suites SPE II, Inc. 25,800,000 2,800,000 9.00% Atlanta - Peachtree October 1, 2010
9,000,000 9.00% Baltimore - BWI Airport October 1, 2010
6,000,000 9.00% Clearwater October 1, 2010
2,500,000 9.00% Detroit - Warren October 1, 2010
5,500,000 9.00% Richmond - West End October 1, 2010
Apple Suites REIT 13,700,000 5,500,000 9.00% Dallas - Addison October 1, 2010
Limited Partnership
5,700,000 9.00% Dallas - Irving/Las Colinas October 1, 2010
2,500,000 9.00% North Dallas - Plano October 1, 2010
Apple Suites, Inc. 10,000,000 10,000,000 Adjusted Prime Ownership Interests March 8, 2001
----------- or LIBOR in All Direct Subsidiaries
TOTAL $60,000,000
===========
</TABLE>
* The face amounts of the promissory notes were based on a single hotel, but the
notes are subject to certain cross-collateral and cross-default provisions, as
explained in another section below.
LONG-TERM REFINANCING NOTES
The 11 long-term promissory notes for the $50 million portion of the
refinancing are substantially similar. Each of these promissory notes provides
for the following:
o payment of principal and interest on an amortized basis (calculated over
a 25-year period) in equal monthly installments, with a balloon payment
at maturity
o acceleration, at the option of the lender, of all amounts due under the
note if any payment of principal or interest is not made within seven
days of its due date or if there is any other event of default
o a late charge of five percent on any payment that is not made within
seven days of its due date
o an increase of four percent in the applicable interest rate upon any
default
o a restriction on voluntary prepayment, which is not permitted without
penalty until the final three months of the note
o after two years we may cause hotels to be released as collateral by
following certain procedures described below
The sum of the fixed monthly installments for the 11 long-term promissory
notes equals $419,598. At maturity on October 1, 2010, the balloon payments for
the notes will equal a total of $42,778,255.
8
<PAGE>
Revenue from the hotels will be used to make payments due under the
long-term promissory notes. This revenue will include lease payments made to us
by Apple Suites Management, Inc. (or a subsidiary) under hotel lease
agreements. There can be no assurance that hotel revenue will be sufficient for
this purpose.
Additional payments will apply if a long-term promissory note is
accelerated upon an event of default. The sum of these payments will be higher
if the acceleration occurs in the first two years and will equal at least 5% of
the outstanding principal balance if acceleration occurs in the first year.
Each long-term promissory note contains substantial limitations on release
and substitution of collateral. The hotel that serves as collateral under a
long-term promissory note cannot be released during the first two years of the
note. After that date a release of the collateral can be obtained by
substituting as collateral direct, non-callable obligations of the United States
that are structured to pay a series of amounts which match, as closely as
possible, the remainder of the installments required under the promissory note.
This mechanism provides us a limited opportunity to cause properties to be
released from the liens of the mortgages. This could be helpful, for example, if
we receive an attractive offer from a prospective purchaser of our hotels. This
requirement as to the purchase of substitute collateral may make this mechanism
economically less attractive when compared with an unrestricted right to prepay
the obligation, and its usefulness to us will depend upon future economic
factors and opportunities.
The 11 hotels that serve as collateral for the long-term promissory notes
are subject to cross-default and cross-collateral provisions under various
deeds of trust and security instruments, which are among the material contracts
described in another section below. These hotels have been divided into two
groups for purposes of the cross-collateral and cross-default provisions.
In general, any default under one promissory note will constitute a
default under all other promissory notes in the same group and will enable the
lender to exercise its rights against all of the hotels that serve as
collateral for that group. The two groups themselves, however, are not
connected by cross-default or cross-collateral provisions. One group consists
of the six hotels owned by two of our subsidiaries, and the other group
consists of five hotels owned by a single subsidiary, as indicated below:
<TABLE>
<CAPTION>
GROUP I GROUP II
-------------------------------------- --------------------------
<S> <C> <C>
SUBSIDIARIES INVOLVED Apple Suites SPE I, Inc. Apple Suites SPE II, Inc.
Apple Suites REIT Limited Partnership
HOTELS IN GROUP Atlanta - Galleria/Cumberland Atlanta - Peachtree
Jackson-Ridgeland Baltimore - BWI Airport
Salt Lake City - Midvale Clearwater
Dallas - Addison Detroit - Warren
Dallas - Irving/Las Colinas Richmond - West End
North Dallas - Plano
</TABLE>
We are required, as the parent company of these subsidiaries, to indemnify
the lender against defaults under the long-term promissory notes and to
guaranty the collection of all amounts due thereunder. These requirements
appear in an Indemnity and Guaranty Agreement, which is among the material
contracts described in another section below.
SHORT-TERM REFINANCING NOTE
The $10 million portion of the refinancing is evidenced by a short-term
promissory note made payable by us to First Union National Bank. The maturity
date for this promissory note is March 8, 2001.
Interest will be based on the lender's "prime rate" unless we make an
election to convert to a LIBOR rate (which is determined by banks in the London
interbank market). Any such election would remain in effect for the period we
specify in a written conversion notice, but
9
<PAGE>
cannot exceed three months. We may continue a LIBOR election, if made, by
delivering a written continuation notice to the lender at least three business
days before the election expires. The following table summarizes the available
interest terms:
<TABLE>
<CAPTION>
NO LIBOR CONVERSION WITH LIBOR CONVERSION
----------------------------------- -------------------------------
<S> <C> <C>
INTEREST RATE Lender's prime rate, increased by LIBOR rate, increased by
0.25% during the first 90 days 2% during the first 90 days
and 1% thereafter and 3.5% thereafter
INTEREST PAYMENTS Monthly At the end of interest period
specified in the conversion or
continuation notice
INTEREST RATE ON 4% above the applicable interest 4% above the applicable
OVERDUE AMOUNTS rate (see above) interest rate (see above)
</TABLE>
As of the date of this Report, we have not elected a LIBOR conversion, but
we may consider doing so in the future, based on our review of economic and
market conditions.
We are required to make principal payments consisting of 75% of any equity
proceeds we receive from our ongoing "best efforts" offering. Such principal
payments are considered mandatory prepayments and are due within one business
day after we receive the equity proceeds. Any prepayment of principal must be
accompanied by payment of accrued interest. Revenue from the hotels will be
used to pay interest under the promissory notes. This revenue will include
lease payments made to us by Apple Suites Management, Inc. (or a subsidiary)
under hotel lease agreements. There can be no assurance that the equity
proceeds or the hotel revenues will be sufficient for these purposes. Our
obligation to use 75% of our equity proceeds from the ongoing offering for
repayment of the $10 million loan takes precedence over our obligation to apply
our "net equity proceeds" to repayment of the remaining obligations to Promus
Hotels, Inc., which are described in another section below.
We may make voluntary prepayments of the short-term refinancing note in
whole or in part at any time. If a LIBOR conversion is in effect, we will incur
a prepayment fee, regardless of whether the prepayment is voluntary or
mandatory. The prepayment fee is based on a formula that measures the
difference between the interest that would have accrued in the absence of the
prepayment and certain bids in the London interbank market.
We pledged 100% of our ownership interests in our direct subsidiaries as
security for the short-term promissory note. These pledges consist of common
shares in our four corporate subsidiaries and our sole beneficial interest in
Apple Suites Pennsylvania Business Trust.
10
<PAGE>
EXISTING FINANCING FOR HOTELS
Our existing financing remains in place for two hotels, which are located
in Pennsylvania and Colorado and which were purchased from Promus Hotels, Inc.
in 2000. This financing is being provided by Promus Hotels, Inc., based on 75%
of the purchase price for the hotels, and is evidenced by the following
promissory notes:
<TABLE>
<CAPTION>
ORIGINAL
MONTH OF PRINCIPAL ANNUAL RATE DATE OF
PROMISSORY NOTE AMOUNT OF INTEREST MATURITY
----------------- -------------- ------------- ---------------
<S> <C> <C> <C>
May 2000 $11,616,750 8.5% April 28, 2001
June 2000 $11,163,750 8.5% April 28, 2001
-----------
TOTAL $22,780,500
===========
</TABLE>
These promissory notes are substantially similar, and each provides for
the following:
o monthly interest payments, based on the actual number of days per month
o our delivery of monthly notices to specify the net equity proceeds from
our offering, which will be the intended source of principal payments, as
explained below
o our right to prepay the notes, in whole or in part, without premium or
penalty
o a late payment premium of four percent for any payment not made within 10
days of its due date
Revenue from the hotels will be used to pay interest under the promissory
notes. This revenue will include lease payments made to us by Apple Suites
Management, Inc. (or a subsidiary) under the separate hotel lease agreements
for the two hotels.
The promissory notes contemplate that the "net equity proceeds" from our
offering of common shares will be the source of our principal payments, subject
to our obligation to First Union National Bank under the short-term refinancing
note, as discussed above. There can be no assurance that the net equity
proceeds will be sufficient for this purpose. The phrase "net equity proceeds"
means the total proceeds from our offering of common shares, as reduced by
selling commissions, a marketing expense allowance, closing costs, various fees
and charges (legal, accounting, and so forth), a working capital reserve and a
reserve for renovations, repairs and replacements of capital improvements.
11
<PAGE>
SUMMARY OF MATERIAL REFINANCING CONTRACTS
Security Documents
In connection with the $50 million long-term refinancing provided by First
Union National Bank, the lender placed a mortgage and other encumbrances on 11
of our hotels. The other encumbrances include a security interest in the
personal property at the hotels and assignments of hotel rents, revenues,
contracts and permits, all in favor of the lender. These encumbrances are
created by multiple agreements and instruments, dated as of September 8, 2000,
which will be referred to as "security documents" for simplicity. The security
documents are related to the long-term promissory notes, which are discussed
above.
The security documents impose a number of requirements on three of our
subsidiaries, as the owners of the hotels, including obligations to maintain
adequate insurance and the hotel franchises. The security documents prohibit
any further encumbrances or any further assignments of rents or leases with
respect to the hotels.
Upon any default that occurs under a long-term promissory note or related
security document, various remedies are available to the lender with respect to
the hotels in the same cross-default and cross-collateral group, as discussed
above. Those remedies include, for example (1) declaring the entire principal
balance under the promissory notes in the group, together with all accrued and
unpaid interest, to be due and payable immediately; (2) taking possession of
the secured property, including the hotels in the group; and (3) collecting
rents and revenues, or foreclosing on the hotels in the group, to satisfy
unpaid amounts under the promissory notes. Our subsidiaries, as the makers of
the long-term promissory notes, would be required to pay any costs that may be
incurred in exercising such remedies.
Furthermore, upon a payment default by one of our subsidiaries under a
long-term promissory note, the lender would be entitled to seek payment
directly from us as the indemnitor under corresponding Indemnity and Guaranty
Agreements dated as of September 8, 2000.
Credit and Pledge Agreements
In connection with the $10 million short-term refinancing provided by
First Union National Bank, we executed a credit agreement and a pledge
agreement, both dated as of September 8, 2000. The primary terms of these
documents are discussed above with respect to the short-term financing note.
Other Agreements
With respect to each hotel that serves as collateral for the $50 million
refinancing provided by First Union National Bank, the lender received separate
and substantially similar environmental indemnity agreements, dated as of
September 8, 2000 from us and the subsidiary that owns the hotel, as the
indemnitors. In general, these agreements provide that the hotels will be
operated in compliance with all environmental laws, and that the lender must
receive immediate notice of any non-compliance. These environmental indemnity
agreements will survive full payment of the long-term promissory notes.
In addition to the new hotel lease agreements for the eight hotels
transferred to our new subsidiaries, as discussed in another section above, the
lender received subordination and attornment agreements dated as of September
8, 2000. These agreements provide that the lessee of the hotels, Apple Suites
Management, Inc. or a subsidiary, will recognize the lender as the lessor under
the hotel lease agreements in the event that the lender exercises its default
rights under the security documents to foreclose on the hotels.
12
<PAGE>
Item 7. a.
APPLE SUITES, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 2000 (UNAUDITED)
The following unaudited Pro Forma Condensed Consolidated Balance Sheet of
Apple Suites, Inc. (the "Company") is presented as if proceeds from the
refinancing loans had been used as of June 30, 2000 to pay the 4 promissory
notes executed by the Company in 1999. Such information is based in part upon
the consolidated balance sheet of the Company. In management's opinion, all
adjustments necessary to reflect the effect of these transactions have been
made.
The following unaudited Pro Forma Condensed Consolidated Balance Sheet is
not necessarily indicative of what the actual financial position would have
been assuming such transactions had been completed as of June 30, 2000, nor
does it purport to represent the future financial position of the Company.
<TABLE>
<CAPTION>
HISTORICAL
BALANCE PRO FORMA TOTAL
SHEET ADJUSTMENTS PRO FORMA
--------------- --------------------- ---------------
<S> <C> <C> <C>
ASSETS
Investment in hotel properties ..................... $125,100,974 $125,100,974
Cash and cash equivalents .......................... 3,445,125 $ 3,430,500 (A)
1,245,000 (B)
(355,722)(C)
(1,327,833)(D) 6,437,070
Restricted cash .................................... 544,469 -- 544,469
Rent receivable from Apple Suites
Management, Inc. .................................. 1,996,479 -- 1,996,479
Notes and other receivable from Apple Suites
Management, Inc. .................................. 1,771,124 -- 1,771,124
Capital improvement reserve ........................ 653,149 -- 653,149
Prepaid expenses ................................... 194,185 355,722 (C) 549,907
Other assets ....................................... 1,556,769 (1,245,000)(B) 1,639,602
------------ -------------- ------------
1,327,833 (D)
Total Assets ....................................... $135,262,274 $ 3,430,500 $138,692,774
============ ============== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Notes payable ...................................... $ 91,350,000 (56,569,500)(A)
50,000,000 (A)
10,000,000 (A) $ 94,780,500
Accounts payable ................................... 355,750 -- 355,750
Accounts payable-affiliate ......................... 111,639 -- 111,639
Distributions payable .............................. 576,173 -- 576,173
Accrued expenses ................................... 1,185,836 -- 1,185,836
------------ -------------- ------------
Total Liabilities .................................. 93,579,398 3,430,500 97,009,898
Shareholders' equity
Common stock, no par value, authorized
200,000,000 shares; issued and outstanding
4,945,552 shares .................................. 41,885,295 -- 41,885,295
Class B convertible stock, no par value,
authorized 240,000 shares; issued and
outstanding 240,000 shares ........................ 24,000 -- 24,000
Distributions greater than new income .............. (226,419) -- (226,419)
------------ -------------- ------------
Total Shareholders' Equity ......................... 41,682,876 -- 41,682,876
------------ -------------- ------------
Total Liabilities and Shareholders' Equity ......... $135,262,274 $ 3,430,500 $138,692,774
============ ============== ============
</TABLE>
13
<PAGE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(A) Proceeds from the refinancing loans in the aggregate amount of $60 million
were used to pay 4 promissory notes executed in 1999 in the total amount
of $56,569,500. Of the total refinancing, $50 million is evidenced by 11
promissory notes executed by a total of three subsidiaries of the Company.
Each such note bears interest at the annual rate of 9%, is payable in
equal and consecutive monthly installments and has a maturity date of
October 1, 2010. This portion of the refinancing is secured by 11 hotels
of the Company. The $10 million loan is evidenced by a single promissory
note executed by the Company. This note bears interest at a rate described
elsewhere in this Supplement and has a maturity date of March 8, 2001.
This portion of the refinancing is secured by the Company's ownership
interests in all of its direct subsidiaries.
(B) Represents refund of loan deposit paid in connection with a rate lock
agreement with the lender.
(C) Represents prepaid interest and insurance escrow occurring in connection
with the refinancing transaction.
(D) Represents deferred financing costs incurred in connection with the
refinancing transaction.
14
<PAGE>
APPLE SUITES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999 AND THE SIX MONTHS ENDED JUNE 30, 2000
(UNAUDITED)
The following unaudited Pro Forma Condensed Consolidated Statements of
Operations of Apple Suites, Inc. (the "Company") are presented as if the
acquisitions of the Homewood Suites hotels from Promus Hotels, Inc. or its
affiliates ("Promus") (now a wholly-owned subsidiary of Hilton Hotels
Corporation), and the recent refinancing in the aggregate amount of $60 million
(used to pay 4 promissory notes executed by the Company in 1999), and the
leasing of the hotels to Apple Suites Management, Inc. or a subsidiary (the
"Lessee"), had occurred at the beginning of the periods presented for the
respective periods prior to acquisition by the Company. Such pro forma
information is based in part upon the Consolidated Statements of Operations of
the Company, the Pro Forma Statements of Operations of the Lessee and the
historical Statements of Operations of the acquired hotels. In management's
opinion, all adjustments necessary to reflect the effects of these transactions
have been made.
The following unaudited Pro Forma Condensed Consolidated Statements of
Operations for the periods presented are not necessarily indicative of what
actual results of operations of the Company would have been assuming such
transactions had been completed as of the beginning of the periods presented,
nor does it purport to represent the results of operations for future periods.
The lease agreements between the Company and the Lessee were based on economic
conditions at the time of acquisition. Application of these agreements to
periods prior to the acquisition may not be meaningful. The most significant
assumption which may not be indicative of future operations is the amount of
financial leverage employed.
FOR THE YEAR ENDED DECEMBER 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL
STATEMENT OF
OPERATIONS
--------------
<S> <C>
Revenue:
Lease revenue ...................... $ 2,518,031
Interest income and other
revenue ........................... 169,086
Expenses:
Taxes, insurance and other ......... 426,592
General and administrative ......... 153,807
Depreciation of real estate
owned ............................. 496,209
Interest ........................... 1,245,044
Rent expense ....................... --
-----------
Total expenses ...................... 2,321,652
-----------
Net income .......................... $ 365,465
===========
Earnings per common share:
Basic and Diluted .................. $ 0.14
===========
Basic weighted average common
shares outstanding ................. 2,648,196
===========
Diluted weighted common shares
outstanding ........................ 2,650,396
===========
<CAPTION>
PRO FORMA ADJUSTMENTS
---------------------------------------------------------------------------------------
HOMEWOOD HOMEWOOD HOMEWOOD HOMEWOOD
SUITES SUITES SUITES SUITES
ACQUISITION ACQUISITION ACQUISITION ACQUISITION
(A I) (A II) (A III) (A IV)
--------------------- --------------------- --------------------- ---------------------
<S> <C> <C> <C> <C>
Revenue:
Lease revenue ...................... $ 4,162,371 (B) $ 5,480,272 (B) $ 1,035,841 (B) $ 3,487,608 (B)
Interest income and other
revenue ........................... -- -- -- --
Expenses:
Taxes, insurance and other ......... 822,599 (C) 647,225 (C) 93,884 (C) 444,161 (C)
General and administrative ......... 493,985 (D) 547,542 (D) 96,388 (D) 302,981 (D)
Depreciation of real estate
owned ............................. 656,623 (E) 821,580 (E) 140,664 (E) 688,654 (E)
Interest ........................... -- -- -- 1,936,343 (F)
Rent expense ....................... -- -- -- 100,000 (H)
------------ ------------ ------------ ------------
Total expenses ...................... 1,973,207 2,016,347 330,936 3,472,139
------------ ------------ ------------ ------------
Net income .......................... 2,189,164 3,463,925 704,905 15,469
============ ============ ============ ============
Earnings per common share:
Basic and Diluted ..................
Basic weighted average common
shares outstanding ................. -- (G) 937,271 (G) 331,053 (G) 916,311 (G)
Diluted weighted common shares
outstanding ........................ -- (G) 937,271 (G) 331,053 (G) 916,311 (G)
<CAPTION>
PRO FORMA ADJUSTMENTS
---------------------
TOTAL
PRO FORMA
----------------
<S> <C> <C>
Revenue:
Lease revenue ...................... -- $ 16,684,123
Interest income and other
revenue ........................... -- 169,086
Expenses:
Taxes, insurance and other ......... -- 2,434,461
General and administrative ......... -- 1,594,703
Depreciation of real estate
owned ............................. -- 2,803,730
Interest ........................... (1,245,044)(I) 7,221,202
5,069,576 (J)
215,283 (K)
Rent expense ....................... -- 100,000
---------- ------------
Total expenses ...................... 4,039,815 14,154,096
---------- ------------
Net income .......................... (4,039,815) 2,699,113
========== ============
Earnings per common share:
Basic and Diluted .................. $ 0.56
============
Basic weighted average common
shares outstanding ................. 4,832,831
============
Diluted weighted common shares
outstanding ........................ -- 4,835,031
============
</TABLE>
15
<PAGE>
FOR THE SIX MONTHS ENDED JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
---------------------------------------------
HOMEWOOD
HISTORICAL SUITES
STATEMENT OF ACQUISITION TOTAL
OPERATIONS (A IV) PRO FORMA
-------------- --------------------- ---------------
<S> <C> <C> <C> <C>
Revenue:
Lease revenue ............................. $ 7,242,731 $ 1,648,774 (B) -- $ 8,891,505
Interest income and other revenue ......... 146,689 -- 146,689
Expenses:
Taxes, insurance and other ................ 1,404,441 237,170 (C) -- 1,641,611
General and administrative ................ 510,236 38,727 (D) -- 548,963
Depreciation of real estate owned ......... 1,219,246 344,327 (E) -- 1,563,573
Interest .................................. 3,059,738 968,171 (F) (3,059,738) (I) 3,651,851
2,534,788 (J)
148,892 (K)
Rent expense .............................. -- 50,000 (H) -- 50,000
----------- ------------ ---------- -----------
Total expenses ............................. 6,193,661 1,638,395 (376,058) 7,455,998
Net income ................................. $ 1,195,759 10,379 376,058 1,582,196
=========== ============ ========== ===========
Earnings per common share:
Basic and Diluted ......................... $ 0.31 $ 0.33
=========== ===========
Basic weighted average common shares
outstanding ............................... 3,916,520 916,311 (G) -- (G) 4,832,831
=========== ============ ===========
Diluted weighted average common shares
outstanding ............................... 3,918,720 916,311 (G) -- (G) 4,835,031
=========== ============ ===========
</TABLE>
16
<PAGE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR APPLE
SUITES, INC.
(A) Represents results of operations for the hotels acquired on a pro forma
basis as if the hotels were owned by the Company at the beginning of the
periods presented for the respective periods prior to acquisition by the
Company. See below.
<TABLE>
<CAPTION>
DATE COMMENCED DATE
PROPERTY OPERATIONS ACQUIRED
--------------------------------- ---------------- ------------------
<S> <C> <C> <C>
I Homewood Suites-Dallas, TX 1990 September 1, 1999
I Homewood Suites-Las Colinas, TX 1990 September 1, 1999
I Homewood Suites-Plano, TX 1997 September 1, 1999
I Homewood Suites-Richmond. VA May 1998 September 1, 1999
I Homewood Suites-Atlanta, GA 1990 October 1, 1999
---------------------------------------------------------------------------
II Homewood Suites-Clearwater, FL February 1998 November 24, 1999
II Homewood Suites-Salt Lake, UT 1996 November 24, 1999
II Homewood Suites-Atlanta, GA 1990 November 24, 1999
II Homewood Suites-Detroit, MI 1990 November 24, 1999
II Homewood Suites-Baltimore, MD March 1998 November 24, 1999
---------------------------------------------------------------------------
III Homewood Suites-Jackson, MS February 1997 December 22, 1999
---------------------------------------------------------------------------
IV Homewood Suites-Malvern, PA January 1998 May 8, 2000
IV Homewood Suites-Boulder, CO January 1991 June 30, 2000
</TABLE>
(B) Represents lease payment from the Lessee to the Company calculated on a pro
forma basis by applying the rent provisions in the master hotel lease
agreement to the historical room revenue of the hotels as if the beginning
of the period was the beginning of the lease year. The base rent and the
percentage rent will be calculated and paid based on the terms of the
master hotel lease agreements.
(C) Represents historical real estate and personal property taxes and insurance
which will be paid by the Company pursuant to the master hotel lease
agreements. Such amounts are the historical amounts paid by the respective
hotels.
(D) Represents the advisory fee of 0.25% of accumulated capital contributions
under the "best efforts" offering for the period of time not owned by the
Company (for the year ended December 31, 1999 and the six months ended
June 30, 2000), plus estimated legal and accounting fees, employee costs,
salaries and other costs to operate as a public company (for the year
ended December 31, 1999).
(E) Represents the depreciation on the hotels acquired based on the purchase
price, excluding amounts allocated to land, of $37,450,320 for the first
acquisition group, $34,954,481 for the second acquisition group,
$5,485,886 for the third acquisition group, and $30,500,611 for the fourth
acquisition group for the period of time not owned by the Company. The
weighted average life of the depreciable assets was 39 years. The
estimated useful lives are based on management's knowledge of the
properties and the hotel industry in general.
(F) Represents the interest expense for the hotel acquisitions for the period
in which the hotels were not owned. Interest was computed using the
interest rate of 8.5% on mortgage debt of $22,780,500 for the fourth
acquisition that was incurred at acquisition.
(G) Represents additional common shares, assuming the properties were acquired
at the beginning of the periods presented with the net proceeds from the
ongoing "best efforts" offering of $9 per share (net $8.06 per share) for
the first $15,000,000 and $10 per share (net $8.95 per share) for the
remainder.
(H) Represents rent expense on the ground lease at the Malvern, Pennsylvania
hotel. The Company accounts for the ground lease as an operating lease.
17
<PAGE>
(I) Represents the elimination of the historical interest that was replaced
with the $60 million refinancing discussed in note J below.
(J) Represents the interest expense on the Company's $50 million long-term
refinancing at an interest rate of 9% and a portion of the $10 million
short-term refinancing ($6,569,500) at an interest rate described
elsewhere in this Supplement for the term of the financing (6 months).
(K) Represents amortization of deferred financing costs incurred in connection
with the refinancing transaction.
18
<PAGE>
APPLE SUITES MANAGEMENT, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999 AND THE SIX MONTHS ENDED JUNE 30, 2000
(UNAUDITED)
The following unaudited Pro Forma Condensed Consolidated Statements of
Operations of Apple Suites Management, Inc. (the "Lessee") are presented as if
the hotels purchased or to be purchased from Promus Hotels, Inc. or its
affiliates ("Promus"), which is now a wholly-owned subsidiary of Hilton Hotels
Corporation, had been leased from Apple Suites, Inc. (the "Company") pursuant
to the master hotel lease agreements from the beginning of periods presented
for the respective periods prior to acquisition by the Company. Further, the
results of operations reflect the management agreement and license agreement
entered into between Promus and the Lessee or an affiliate to operate the
acquired hotels. The master hotel lease agreements between the Company and the
Lessee were based on economic conditions at the time of acquisition.
Application of these agreements to periods prior to the acquisition may not be
meaningful. Such pro forma information is based in part upon the Consolidated
Statements of Operations of the Lessee and should be read in conjunction with
such financial statements. In management's opinion, all adjustments necessary
to reflect the effects of these transactions have been made.
The following unaudited Pro Forma Condensed Consolidated Statements of
Operations are not necessarily indicative of what the actual results of
operations of the Lessee would have been assuming such transactions had been
completed as of the beginning of the periods presented, nor do they purport to
represent the results of operations for future periods.
19
<PAGE>
FOR THE YEAR ENDED DECEMBER 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
--------------------------------------------------------------------------
HOMEWOOD HOMEWOOD HOMEWOOD HOMEWOOD
HISTORICAL SUITES SUITES SUITES SUITES
STATEMENT OF ACQUISITIONS ACQUISITIONS ACQUISITION ACQUISITION
OPERATIONS (A I) (A II) (A III) (A IV)
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Suite revenue ................... $5,335,925 $9,818,797 $12,082,374 $2,230,952 $7,419,101 --
Other income .................... 335,150 560,096 709,240 168,438 398,812 --
Expenses:
Operating expenses .............. 1,656,540 3,794,204 4,870,096 954,102 2,491,119 --
General and administrative ...... 494,377 250,317 300,399 77,381 105,719 $ (131,000)
50,000
Advertising and promotion ....... 472,787 438,985 580,564 112,902 328,070 (1,262,049)
1,262,049
Utilities ....................... 199,907 354,113 551,359 75,639 270,079 --
Taxes and insurance ............. -- 822,599 647,225 93,884 444,161 (2,007,869)
Depreciation expense ............ -- 1,783,021 2,217,128 426,986 714,411 (5,141,546)
Franchise fees .................. 213,437 392,757 483,295 89,238 296,764 (1,262,049)
1,262,049
Management fees ................. 226,136 311,275 383,599 71,982 234,000 (1,000,856)
1,467,512
Rent expense-Apple Suites,
Inc. ........................... 2,518,031 -- -- -- -- 14,166,093
Other ........................... 30,964 -- -- -- 100,000 (100,000)
---------- ---------- ----------- ---------- ---------- ------------
Total expenses .................. 5,812,179 8,147,271 10,033,665 1,902,114 4,984,323 7,302,334
Income before income tax ........ (141,104) 2,231,622 2,757,949 497,276 2,833,590 (7,302,334)
Income tax expense .............. -- -- -- -- -- 350,800
---------- ---------- ----------- ---------- ---------- ------------
Net income (loss) ............... $ (141,104) $2,231,622 $ 2,757,949 $ 497,276 $2,833,590 $ (7,653,134)
========== ========== =========== ========== ========== ============
<CAPTION>
TOTAL
PRO FORMA
<S> <C> <C>
Revenues:
Suite revenue ................... $36,887,149
Other income .................... 2,171,736
Expenses:
Operating expenses .............. 13,766,061
General and administrative ...... (B)
(C) 1,147,193
Advertising and promotion ....... (D)
(E) 1,933,308
Utilities ....................... 1,451,097
Taxes and insurance ............. (F) --
Depreciation expense ............ (G) --
Franchise fees .................. (H)
(I) 1,475,491
Management fees ................. (J)
(K) 1,693,648
Rent expense-Apple Suites,
Inc. ........................... (L) 16,684,124
Other ........................... (M) 30,964
-------- -----------
Total expenses .................. 38,181,886
Income before income tax ........ 876,999
Income tax expense .............. (N) 350,800
-------- -----------
Net income (loss) ............... $ 526,199
===========
</TABLE>
20
<PAGE>
FOR THE SIX MONTHS ENDED JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA ADJUSTMENTS
-------------------------------------------
HOMEWOOD
HISTORICAL SUITES
STATEMENT OF ACQUISITION TOTAL
OPERATIONS (A IV) PRO FORMA
-------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Revenues:
Suite revenue ........................... $16,162,186 $3,683,872 -- $19,846,058
Other income ............................ 891,551 186,300 -- 1,077,851
Expenses:
Operating expenses ...................... 4,797,335 1,266,548 -- 6,063,883
General and administrative .............. 1,409,598 66,574 $ (12,000) (B)
25,000 (C) 1,489,172
Advertising and promotion ............... 1,436,043 165,562 (147,354) (D)
147,354 (E) 1,601,605
Utilities ............................... 601,421 130,722 -- 732,143
Taxes and insurance ..................... -- 237,170 (237,170) (F) --
Franchise fees .......................... 645,065 147,354 (147,354) (H)
147,354 (I) 792,419
Management fees ......................... 679,372 116,106 (116,106) (J)
164,807 (K) 844,179
Rent expense-Apple Suites, Inc. ......... 7,242,731 -- 1,648,774 (L) 8,891,505
Interest expense ........................ 45,587 -- -- 45,587
Other ................................... 213,014 50,000 (50,000) (M) 213,014
----------- ---------- ------------ -----------
Total expenses ........................... 17,070,166 2,180,036 1,423,305 20,673,507
Income before income tax ................. (16,429) 1,690,136 (1,423,305) 250,402
Income tax expense ....................... -- -- 100,161 (N) 100,161
----------- ---------- ------------ -----------
Net income (loss) ........................ $ (16,429) $1,690,136 $ (1,523,466) $ 150,241
=========== ========== ============ ===========
</TABLE>
21
<PAGE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(A) Represents results of operations for the eleven Homewood Suites hotel
acquisitions on a pro forma basis as if the hotels acquired were leased
and operated by the Lessee at the beginning of the periods presented for
the respective periods prior to acquisition by the Company, see below. The
hotels acquired are as follows:
<TABLE>
<CAPTION>
DATE COMMENCED DATE
PROPERTY OPERATIONS ACQUIRED
<S> <C> <C>
--------------------------------------------------------------------------------
I Homewood Suites-Dallas, TX 1990 September 1, 1999
I Homewood Suites-Las Colinas, TX 1990 September 1, 1999
I Homewood Suites-Plano, TX 1997 September 1, 1999
I Homewood Suites-Richmond. VA May 1998 September 1, 1999
I Homewood Suites-Atlanta, GA 1990 October 1, 1999
--------------------------------------------------------------------------------
II Homewood Suites-Clearwater, FL February 1998 November 24, 1999
II Homewood Suites-Salt Lake, UT 1996 November 24, 1999
II Homewood Suites-Atlanta, GA 1990 November 24, 1999
II Homewood Suites-Detroit, MI 1990 November 24, 1999
II Homewood Suites-Baltimore, MD March 1998 November 24, 1999
--------------------------------------------------------------------------------
III Homewood Suites-Jackson, MS February 1997 December 22, 1999
--------------------------------------------------------------------------------
IV Homewood Suites-Malvern, PA January 1998 May 8, 2000
IV Homewood Suites-Boulder, CO January 1991 June 30, 2000
</TABLE>
(B) Represents the elimination of the historical accounting fee allocated to
the hotels by the prior owner.
(C) Represents the addition of the anticipated legal and accounting and other
expenses to operate as a stand alone company.
(D) Represents the elimination of the historical advertising, training and
reservation fee allocated to the hotels by the prior owner.
(E) Represents the addition of the marketing fee to be incurred under the new
license agreements. The marketing fee is calculated based on the terms of
the license agreements which is 4% of suite revenue.
(F) Represents the elimination of the taxes and insurance. Under the terms of
the master hotel lease agreements these expenses will be incurred by the
Company and, accordingly, are reflected in the Company's Pro Forma
Condensed Consolidated Statement of Operations.
(G) Represents the elimination of the depreciation expense. This expense will
be reflected in the Company's Pro Forma Condensed Consolidated Statement
of Operations.
(H) Represents the elimination of the historical franchise fee allocated to the
hotels by the prior owner.
(I) Represents the addition of franchise fees to be incurred under the new
license agreements. The franchise fees are calculated based on the terms
of the agreement, which is 4% of suite revenue.
(J) Represents the elimination of the historical management fees allocated to
the hotels by the prior owner.
(K) Represents the addition of the management fees of 4% of suite and other
revenue and the accounting fee of $1,000 per hotel per month to be
incurred under the new management agreements for the period presented.
(L) Represents lease payments from the Lessee to the Company calculated on a
pro forma basis by applying the rent provisions in the master hotel lease
agreements to the historical room revenue of the hotels as if the
beginning of the period was the beginning of the lease year. The base rent
and the percentage rent will be calculated and paid based on the terms of
the master hotel lease agreements.
(M) Represents the elimination of rent expense for the ground lease. The rent
expense related to the ground lease will be reflected on the Company's Pro
Forma Condensed Consolidated Statement of Operations.
(N) Represents the combined state and federal income tax expense estimated on
a combined rate of 40%.
22
<PAGE>
Item 7. b. Exhibits
4.1 Amended and Restated Hotel Lease Agreement dated as of November 24,
1999 between Apple Suites SPE I, Inc. as Lessor, and Apple Suites
Management, Inc. as Lessee, with respect to the hotel in Salt Lake
City, Utah.(Incorporated by reference to Exhibit 4.52 to Post-Effective
Amendment No. 4 to Form S-11 Registration Statement, File No.
333-77055, filed on September 20, 2000 by Apple Suites, Inc.)
4.2 Percentage Lease Subordination and Attornment Agreement dated September
8, 2000, between and Apple Suites Management, Inc. as Lessee, and First
Union National Bank as Lender (with respect to Exhibit 4.53).
(Incorporated by reference to Exhibit 4.53 to Post-Effective Amendment
No. 4 to Form S-11 Registration Statement, File No. 333-77055, filed on
September 20, 2000 by Apple Suites, Inc.)
4.3 Environmental Indemnity Agreement dated September 8, 2000 from Apple
Suites SPE I, Inc. and Apple Suites, Inc. as Indemnitors, in favor of
First Union National Bank as Lender with respect to the hotel in Salt
Lake City, Utah. (Incorporated by reference to Exhibit 4.54 to
Post-Effective Amendment No. 4 to Form S-11 Registration Statement,
File No. 333-77055, filed on September 20, 2000 by Apple Suites, Inc.)
4.4 Schedule setting forth information on 7 substantially identical Amended
and Restated Hotel Lease Agreements (with respect to Exhibit 4.52).
(Incorporated by reference to Exhibit 4.55 to Post-Effective Amendment
No. 4 to Form S-11 Registration Statement, File No. 333-77055, filed on
September 20, 2000 by Apple Suites, Inc.)
4.5 Schedule setting forth information on 10 substantially identical
Percentage Lease Subordination and Attornment Agreements (with respect
to Exhibit 4.53) dated September 8, 2000 with First National Bank as
Lender. (Incorporated by reference to Exhibit 4.56 to Post-Effective
Amendment No. 4 to Form S-11 Registration Statement, File No.
333-77055, filed on September 20, 2000 by Apple Suites, Inc.)
4.6 Schedule setting for the information on 10 substantially identical
Environmental Indemnity Agreements (with respect to Exhibit 4.57) dated
September 8, 2000 in favor of First Union National Bank as Lender.
(Incorporated by reference to Exhibit 4.57 to Post-Effective Amendment
No. 4 to Form S-11 Registration Statement, File No. 333-77055, filed on
September 20, 2000 by Apple Suites, Inc.)
10.1 Apple Suites SPE I, Inc. Articles of Incorporation. (Incorporated by
reference to Exhibit 10.93 to Post-Effective Amendment No. 4 to Form
S-11 Registration Statement, File No. 333-77055, filed on September 20,
2000 by Apple Suites, Inc.)
10.2 Apple Suites SPE I, Inc. Bylaws. (Incorporated by reference to Exhibit
10.94 to Post-Effective Amendment No. 4 to Form S-11 Registration
Statement, File No. 333-77055, filed on September 20, 2000 by Apple
Suites, Inc.)
10.3 Apple Suites SPE II, Inc. Articles of Incorporation. (Incorporated by
reference to Exhibit 10.95 to Post-Effective Amendment No. 4 to Form
S-11 Registration Statement, File No. 333-77055, filed on September 20,
2000 by Apple Suites, Inc.)
10.4 Apple Suites SPE II, Inc. Bylaws. (Incorporated by reference to Exhibit
10.96 to Post-Effective Amendment No. 4 to Form S-11 Registration
Statement, File No. 333-77055, filed on September 20, 2000 by Apple
Suites, Inc.)
10.5 Apple Suites General, Inc. Articles of Amendment and Restatement to the
Articles of Incorporation. (Incorporated by reference to Exhibit 10.97
to Post-Effective Amendment No. 4 to Form S-11 Registration Statement,
File No. 333-77055, filed on September 20, 2000 by Apple Suites, Inc.)
10.6 Apple Suites General, Inc. Amended and Restated Bylaws. (Incorporated
by reference to Exhibit 10.98 to Post-Effective Amendment No. 4 to Form
S-11 Registration Statement, File No. 333-77055, filed on September 20,
2000 by Apple Suites, Inc.)
10.7 Apple Suites LP, Inc. Articles of Amendment and Restatement to the
Articles of Incorporation. (Incorporated by reference to Exhibit 10.99
to Post-Effective Amendment No. 4 to Form S-11 Registration Statement,
File No. 333-77055, filed on September 20, 2000 by Apple Suites, Inc.)
10.8 Apple Suites LP, Inc. Amended and Restated Bylaws. (Incorporated by
reference to Exhibit 10.100 to Post-Effective Amendment No. 4 to Form
S-11 Registration Statement, File No. 333-77055, filed on September 20,
2000 by Apple Suites, Inc.)
23
<PAGE>
10.9 Amended and Restated Limited Partnership Agreement of Apple Suites REIT
Limited Partnership. (Incorporated by reference to Exhibit 10.101 to
Post-Effective Amendment No. 4 to Form S-11 Registration Statement,
File No. 333-77055, filed on September 20, 2000 by Apple Suites, Inc.)
10.10 Promissory Note dated September 8, 2000 in the principal amount of
$2,500,000 made payable by Apple Suites SPE I, Inc. to First Union
National Bank, with respect to the hotel in Salt Lake City, Utah.
(Incorporated by reference to Exhibit 10.102 to Post-Effective
Amendment No. 4 to Form S-11 Registration Statement, File No.
333-77055, filed on September 20, 2000 by Apple Suites, Inc.)
10.11 Indemnity and Guaranty Agreement dated September 8, 2000 by Apple
Suites, Inc., Indemnitor, in favor of First Union National Bank as
Lender, with respect to a $2,500,000 loan to Apple Suites SPE I, Inc.
as Borrower, with respect to the hotel in Salt Lake City, Utah.
(Incorporated by reference to Exhibit 10.103 to Post-Effective
Amendment No. 4 to Form S-11 Registration Statement, File No.
333-77055, filed on September 20, 2000 by Apple Suites, Inc.)
10.12 Deed of Trust, Security Agreement and UCC Fixture Filing dated
September 8, 2000, from Apple Suites SPE I, Inc., Grantor, to Metro
National Title Company, as Trustee for First Union National Bank,
Beneficiary with respect to the hotel in Salt Lake City, Utah.
(Incorporated by reference to Exhibit 10.104 to Post-Effective
Amendment No. 4 to Form S-11 Registration Statement, File No.
333-77055, filed on September 20, 2000 by Apple Suites, Inc.)
10.13 Assignment of Contracts and Permits dated September 8, 2000 from Apple
Suites SPE I, Inc. as Assignor to First Union National Bank as Assignee
with respect to the hotel in Salt Lake City, Utah. (Incorporated by
reference to Exhibit 10.105 to Post-Effective Amendment No. 4 to Form
S-11 Registration Statement, File No. 333-77055, filed on September 20,
2000 by Apple Suites, Inc.)
10.14 Assignment of Leases, Rents and Profits dated September 8, 2000 by
Apple Suites SPE I, Inc. as Assignee in favor of First Union National
Bank as Assignee with respect to the hotel in Salt Lake City, Utah.
(Incorporated by reference to Exhibit 10.106 to Post-Effective
Amendment No. 4 to Form S-11 Registration Statement, File No.
333-77055, filed on September 20, 2000 by Apple Suites, Inc.)
10.15 Security Agreement dated September 8, 2000 by Apple Suites SPE I, Inc.,
Debtor, in favor of First Union National Bank, Secured Party, regarding
a $2,500,000 loan with respect to the hotel in Salt Lake City, Utah.
(Incorporated by reference to Exhibit 10.107 to Post-Effective
Amendment No. 4 to Form S-11 Registration Statement, File No.
333-77055, filed on September 20, 2000 by Apple Suites, Inc.)
10.16 Credit Agreement dated September 8, 2000 between Apple Suites, Inc. and
First Union National Bank as Lender. (Incorporated by reference to
Exhibit 10.108 to Post-Effective Amendment No. 4 to Form S-11
Registration Statement, File No. 333-77055, filed on September 20, 2000
by Apple Suites, Inc.)
10.17 Promissory Note dated September 8, 2000 in the principal amount of
$10,000,000 made payable by Apple Suites, Inc. to the order of First
Union National Bank. (Incorporated by reference to Exhibit 10.109 to
Post-Effective Amendment No. 4 to Form S-11 Registration Statement,
File No. 333-77055, filed on September 20, 2000 by Apple Suites, Inc.)
10.18 Pledge Agreement dated September 8, 2000 between Apple Suites, Inc. as
Pledgor and First Union National Bank as Pledgee. (Incorporated by
reference to Exhibit 10.110 to Post-Effective Amendment No. 4 to Form
S-11 Registration Statement, File No. 333-77055, filed on September 20,
2000 by Apple Suites, Inc.)
10.19 Schedule setting forth information on 10 substantially identical
promissory notes (with respect to Exhibit 10.10) dated September 8,
2000 in various principal amounts made payable to the order of First
Union National Bank. (Incorporated by reference to Exhibit 10.111 to
Post-Effective Amendment No. 4 to Form S-11 Registration Statement,
File No. 333-77055, filed on September 20, 2000 by Apple Suites, Inc.)
10.20 Schedule setting forth information on 10 substantially identical
Indemnity and Guaranty Agreements (with respect to Exhibit 10.11)
dated September 8, 2000 by Apple Suites, Inc. as Indemnitor in favor of
First Union National Bank as Lender. (Incorporated by reference to
Exhibit 10.112 to Post-Effective Amendment No. 4 to Form S-11
Registration Statement, File No. 333-77055, filed on September 20, 2000
by Apple Suites, Inc.)
10.21 Schedule setting forth information on 10 substantially identical Deeds
24
<PAGE>
of Trust (with respect to Exhibit 10.12) dated September 8, 2000 with
First Union National Bank as Beneficiary. (Incorporated by reference to
Exhibit 10.113 to Post-Effective Amendment No. 4 to Form S-11
Registration Statement, File No. 333-77055, filed on September 20, 2000
by Apple Suites, Inc.)
10.22 Schedule setting forth information on 10 substantially identical
Assignments of Contracts and Permits (with respect to Exhibit 10.13)
dated September 8, 2000 to First Union National Bank as Assignee.
(Incorporated by reference to Exhibit 10.114 to Post-Effective
Amendment No. 4 to Form S-11 Registration Statement, File No.
333-77055, filed on September 20, 2000 by Apple Suites, Inc.)
10.23 Schedule setting forth information on 10 substantially identical
Assignments of Leases, Rents and Profits (with respect to Exhibit
10.14) dated September 8, 2000 to First Union National Bank as
Assignee. (Incorporated by reference to Exhibit 10.115 to
Post-Effective Amendment No. 4 to Form S-11 Registration Statement,
File No. 333-77055, filed on September 20, 2000 by Apple Suites, Inc.)
10.24 Schedule setting forth information on 10 substantially identical
Security Agreements (with respect to Exhibit 10.15) dated September 8,
2000 in favor of First Union National Bank. (Incorporated by reference
to Exhibit 10.116 to Post-Effective Amendment No. 4 to Form S-11
Registration Statement, File No. 333-77055, filed on September 20, 2000
by Apple Suites, Inc.)
25
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Apple Suites, Inc.
Date: September 25, 2000 By: /s/ Glade M. Knight
------------------------------
Glade M. Knight,
Chief Executive Officer of
Apple Suites, Inc.
