Sweetening the offer

A California investment firm is again trying to buy shares of Apple REIT at a steep discount, but it raised its price a smidge.

For the second time since June, California investment firm MacKenzie Patterson Fuller made an uninvited attempt to lure Apple REIT shareholders to sell their shares at deep discounts compared with published price.

And last week, as it did the first time MacKenzie Patterson Fuller made an offer, Apple REIT sent letters to shareholders telling them not to bite.

MPF wants to buy 15 million shares of Apple REITs Six, Seven and Eight – 5 million of each fund – for a total of up to $65 million.

MPF’s first attempt, which launched about the time Apple REIT and its New York broker found themselves in the national spotlight, received little interest.

So the investors upped the ante by raising the share price.

It is offering $4 per share for Apple REITs Seven and Eight, according to the letters sent to shareholders. The offer price for Apple REIT Six is $5 per share.

The offer in June was for $3 per share across the board.

“Good news! Now you can sell your Apple REIT [Eight, Seven, Six] investment and regain control of your money,” MPF said in its offer letters to shareholders.

The firm said in its offer that shareholders should take the money and get their cash out now. They said non-traded securities, like shares of Apple REIT, can be difficult to sell and that taking the funds public, which Apple REIT has said it is evaluating, is not guaranteed to happen.

Apple REIT sent letters in response to shareholders recommending they hold on to the shares.

“We believe that the current tender offers for Apple REIT Six, Apple REIT Seven and Apple REIT Eight represent an opportunistic attempt by MPF to purchase units at an unreasonably low price and make a profit and, as a result, deprive our shareholders who tender their units of the potential opportunity to realize the long-term value of their investments in our REITs,” the letter said.

MPF’s second buyout offer comes in the wake of the Apple REITs taking a few punches this summer after federal regulators accused the funds’ broker, David Lerner Associates of New York, of misleading investors when selling shares of Apple REIT Eight.

The Apple REITs and Lerner have been hit with several class-action lawsuits from disgruntled investors.

Apple REIT would not comment on the latest buyout attempt beyond its statement in the letter to shareholders.

A message left for Chip Patterson, MPF’s general counsel, was not returned by press time.

MPF’s offer is open until Oct. 28.

Michael Schwartz is a BizSense reporter. Please send news tips to [email protected]

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