Apple REIT Seven Inc., a non-exchange traded real estate investment trust, is calling on its shareholders to reject a tender offer by MacKenzie Patterson Fuller LP to purchase five million shares of its common stock for $3 per share.
In a press release, Apple REIT Seven calls the MPF offer "an opportunistic attempt...to purchase units at an unreasonably low price and make a profit." But in the same bullet point, the REIT admits there is a limited market for its stock and there is no certainty regarding its long-term value.
In addition, Apple REIT Seven said its book value for the stock as of March 31 was $7.83 per share, although book value may not be representative of the liquidation value. Even so, the offer by MPF, it said, is over 25% below the suitor's own estimate of Apple REIT Seven's liquidation value.
Those who tender might not even get the $3, because MPF will reduce the offer price by the amount of any distributions made to stockholders before the tender expires on July 15. This includes a distribution of $0.064 per unit scheduled for today.
According to its Securities and Exchange Commission filing, MPF did not own any shares of Apple REIT Seven when it made the tender offer on June 1. In a letter to shareholders, MPF said while Apple REIT Seven has a redemption offer for $11, it has been oversubscribed for the past two quarters. Its offer gives shareholders an opportunity for liquidity by cashing out now.
Apple REIT Seven owns 51 Marriott and Hilton branded hotels.
