Apple Forms Hotel REIT at Good Time

RICHMOND—Last week Apple REIT closed on a previously-announced transaction. With its shareholders' approval, the company combined Apple REIT Seven, Eight and Nine into one company that would merge most of the company's hotel assets.

Apple Seven and Apple Eight are combining with Apple Nine in two merger transactions that were set to close on Feb. 28 and made effective on March 1.

The new REIT is now one of the largest hospitality property trusts at 188 hotels consisting of 23,490 rooms in 33 states. One reason the REIT decided upon this course, according to previous statements from the CEO Glade M. Knight is that the increased size and scale of the combined company will better position it to pursue such strategic alternatives "as possibly listing the combined company on an exchange, a sale of the combined company or a merger with a third party company and to have access to more attractive financing."

Certainly the timing is right for any of these strategies as a recent report from SNL Financial makes clear, as well as new statistics from NAREIT.

Last week NAREIT reported that the lodging/resorts sector for REITs produced a 27.18% total return in 2013, the second-highest sector.

Separately, SNL Financial noted in a recent report that the US lodging industry showed year-over-year increases in occupancy, ADR and RevPAR in the 2013 fourth quarter and these improving fundamentals are carrying over into 2014.

The flags in the new REIT will include Courtyard by Marriott, Fairfield Inn by Marriott, Fairfield Inn & Suites by Marriott, Renaissance Hotels, Residence Inn by Marriott, SpringHill Suites by Marriott, TownePlace Suites by Marriott, Marriott Hotels & Resorts, Embassy Suites Hotels, Home2 Suites by Hilton, Homewood Suites by Hilton, Hilton, Hilton Garden Inn, Hampton Inn, and Hampton Inn & Suites.