Apple Hotel REITs to Merge

RICHMOND, VA—The boards of Apple Hospitality REIT Inc. and Apple REIT Ten have approved a definitive merger agreement that will create one of the largest real estate trusts in the select service lodging sector. Valued at $1.3 billion, the merger comes about two years after Apple Hospitality combined Apple Seven, Eight and Nine into one company.

Post-merger, the pro forma combined company will have an enterprise value of about $5.7 billion and a market capitalization of $4.4 billion. Its 234 properties will encompass 30,017 keys.

“The merger further strengthens our presence in key markets and expands our geographic footprint to include locations in 94 MSAs throughout 33 states,” says Justin Knight, Apple Hospitality's president and CEO. “This acquisition highlights our team's disciplined approach to growth and focus on shareholder value and we look forward to welcoming Apple Ten shareholders to Apple Hospitality.”

Along with increasing Apple Hospitality's scale, the combination with Apple Ten preserves the former's conservative capital structure, thanks to Apple Ten's low levels of debt. It will also meld two portfolios that are complementary in terms of geography and average RevPAR.

The merger agreement gives Apple Ten a 45-day go-shop period to solicit alternative proposals from third parties. It calls for Apple Ten to pay a $5-million breakup fee to Apple Hospitality if the union doesn't go through.

Upon completion of the merger, expected to occur in the third quarter, the combined company will retain the Apple Hospitality REIT name and continue to trade under the APLE ticker on the New York Stock Exchange. Apple Hospitality's management team will continue to serve in their current roles for the combined company, including Knight as president and CEO, Krissy Gathright as COO, Bryan Peery as CFO and Glade Knight as executive chairman.

RICHMOND, VA—The boards of Apple Hospitality REIT Inc. and Apple REIT Ten have approved a definitive merger agreement that will create one of the largest real estate trusts in the select service lodging sector. Valued at $1.3 billion, the merger comes about two years after Apple Hospitality combined Apple Seven, Eight and Nine into one company.

Post-merger, the pro forma combined company will have an enterprise value of about $5.7 billion and a market capitalization of $4.4 billion. Its 234 properties will encompass 30,017 keys.

“The merger further strengthens our presence in key markets and expands our geographic footprint to include locations in 94 MSAs throughout 33 states,” says Justin Knight, Apple Hospitality's president and CEO. “This acquisition highlights our team's disciplined approach to growth and focus on shareholder value and we look forward to welcoming Apple Ten shareholders to Apple Hospitality.”

Along with increasing Apple Hospitality's scale, the combination with Apple Ten preserves the former's conservative capital structure, thanks to Apple Ten's low levels of debt. It will also meld two portfolios that are complementary in terms of geography and average RevPAR.

The merger agreement gives Apple Ten a 45-day go-shop period to solicit alternative proposals from third parties. It calls for Apple Ten to pay a $5-million breakup fee to Apple Hospitality if the union doesn't go through.

Upon completion of the merger, expected to occur in the third quarter, the combined company will retain the Apple Hospitality REIT name and continue to trade under the APLE ticker on the New York Stock Exchange. Apple Hospitality's management team will continue to serve in their current roles for the combined company, including Knight as president and CEO, Krissy Gathright as COO, Bryan Peery as CFO and Glade Knight as executive chairman.