A downtown real estate investment firm is headed for the Big Board.
Apple Hospitality REIT has announced formal plans to go public and list its shares on the New York Stock Exchange. It expects the market listing to begin around May 18, according to its filings with the Securities and Exchange Commission.
The listing, which remains subject to NYSE approval, would be under the ticker symbol “APLE.”
Apple REIT spokeswoman Kelly Clarke said the company would not comment on the planned listing beyond information included in its SEC filings.
In a letter to shareholders dated April 23, Apple REIT Cos. founder Glade Knight said the listing is intended to provide shareholders with a flexible liquidity option.
Currently, Apple REIT shares are non-traded, meaning they are not bought and sold on any public stock market and are therefore considered largely illiquid.
Apple Hospitality REIT was created last year through the merger of the Apple REIT Seven, Eight and Nine funds. It owns a portfolio of 173 hotels, including the Richmond Marriott on East Broad Street and Courtyard Marriott and Residence Inn in Shockoe Slip.
In late February, the company sold 18 of its hotel properties for a total of $206 million.
Knight’s letter said the timing of the listing is based on current market conditions, which the company said have produced strong total returns in recent years for publicly traded real estate companies. The letter adds that companies similar to Apple Hospitality that own “premium branded upscale, select service” hotels are currently trading at attractive values.
The company has previously disclosed that it was exploring “strategic alternatives,” which in addition to a public listing, included a possible sale or merger. It hired Merrill Lynch to advise it in the process.
Prior to the public listing, the company is planning a 2-for-1 reverse share split of its common stock and a modified “Dutch Auction” tender offer to purchase up to $200 million shares from current shareholders.
The company said in its filings that the tender offer is a way for current shareholders to receive liquidity at a known price, rather than wait until market forces go into effect. The lowest-price offer is anticipated at a range of $19 to $21 per share, the letter states.
It said the reverse split, which would reduce a stockholder’s number of shares by half, would “provide a trading range more consistent with other publicly traded REITs.”
Going public could result in a windfall for Knight, who as of a year ago owned 15.86 million shares of common stock of the combined funds post-merger.
Those shares had an estimated value of between $9 and $11 per share, according to SEC filings at the time. That equates to between about $142 million and $175 million, but the value would fluctuate based on the initial sale price once the shares hit the NYSE.
A lawsuit filed in January last year in Richmond federal court by disgruntled Apple REIT shareholders pegged the value of Knight’s stock at $185 million.
Knight’s potential payout was one of several pieces of the fund merger that resulted in a lawsuit against parts of the firm and its leaders. Knight and others were sued by two shareholders of Apple REIT Nine who argued that the merger was harmful to certain shareholders and alleged conflicts of interest and self-dealing among insiders. The case remains open.
Apple REIT, over the years, employed New York broker David Lerner Associates to sell the shares of its open funds, but none of its funds are currently open to new investors. It recently closed out its Apple REIT Ten fund after selling more than $1 billion worth of shares.
Another fund, Apple REIT Six, was sold to an outside buyer in 2013.