Deal closes on $1.2 billion merger of Richmond real estate fund
Apple REIT Six Inc., a real estate investment trust (REIT) based in Richmond, has announced the closing of its merger into BRE Select Hotels Corp. (BRE), an affiliate of Blackstone Real Estate Partners VII. The total transaction value, including costs and the assumption or repayment of the company’s debt, is about $1.2 billion.
Shareholders for Apple REIT Six approved the merger agreement earlier this month, but the deal closed yesterday, according to a news release from the company. Apple REIT Six is one of several funds that its parent company, Apple REIT Cos., runs from its Richmond headquarters. Blackstone, one of commercial real estate’s biggest players, runs a global fund based out of New York.
Under terms of the agreement, BRE picks up a portfolio of 66 hotels with more than 7,000 guestrooms in 18 states.
The value to shareholders for each share of the new company is $11.10 consisting of $9.20 in cash, and a share of BRE Select Hotels’ preferred stock, valued at $1.90 per share. However, this amount will be subject to downward adjustment should net costs and payments relating to certain legacy litigation and regulatory matters exceed $3.5 million.
The U. S. Securities and Exchange Commission is investigating the adequacy of disclosures made by four of the company’s nonlisted, public real estate investment trusts: Apple REIT Six Inc., Apple REIT Seven Inc., Apple REIT Eight Inc. and Apple REIT Nine Inc.
In connection with the merger deal, McGuireWoods LLP in Richmond was the legal advisor to Apple REIT Six. Wells Fargo Securities provided financial advisory services to the company.
Apple REIT Nine has started construction on a $30 million hotel project in downtown Richmond at the corner of 14th and Cary Streets in Shockoe Slip. Construction fences are up for what will be known as First Freedom Center, which will include two hotels: a Courtyard by Marriott and a Marriott Residence Inn. They will add more than 200 hotel rooms to Richmond’s hotel market by late 2014.