On April 21, 2011, Apple REIT Eight, Inc. filed a Form 8-K with the SEC disclosing that the company has placed some of the loans secured by five of its properties with a special servicer to renegotiate the terms of such loans. In order to have the loans placed with the special servicer, the Company did not make the scheduled monthly payments for March and April 2011, which triggered the company to receive default notices on these loans.
The total outstanding balance of these loans was approximately $36.7 million on December 31, 2010. Apple REIT Eight disclosed that if it is unable to renegotiate the loans, it may be more cost beneficial for the company to pursue a deed in lieu of foreclosure with the lenders rather than to cure the defaults.
Apple REIT Eight also disclosed that on April 2011, the company entered into a loan agreement with Bank of America for a $20 million revolving credit facility with a maturity date of April 19, 2012. The loan agreement is guaranteed by Glade M. Knight, the company’s Chairman and Chief Executive Officer and is secured by assets of Mr. Knight. Apple REIT Eight disclosed that the loan will be used by the Company for general working capital purposes, including the payment of redemptions and distributions.
These disclosures come in the midst of Eccleston Law's continued investigation of David Lerner Associates and Apple REITs. David Lerner, who is well known in the greater New York City area for his “Take a Tip from Poppy” radio segments, is the president of David Lerner Associates. Upon information and belief, certain David Lerner Associates salespeople may have sold investors securities or investment products carrying high commissions that may have been unsuitable for the investor's needs. These investment products may include real estate investment trusts (“REITs”) such as Apple REIT Eight, collateralized mortgage obligations (“CMOs”) and Real Estate Mortgage Investment Conduits (“REMICs”).
If you have lost money investing with David Lerner Associates in Apple REIT Eight, another Apple REIT, a CMO or, REMIC, or if you are unable to redeem your investment in an Apple REIT, you may be entitled to recovery through securities arbitration. Please contact Jim Eccleston at the Eccleston Law Offices at 312-332-0000 to discuss your recovery options.
FinancialCounsel.com, hosted by James J. Eccleston, is a companion website to this blog, along with EcclestonLaw.com. It contains complementary material of general interest to investors and financial services professionals. Investors will find material on securities arbitration to recover investment losses; industry and financial markets intelligence; and strategies for estate planning. Professionals have access to material on broker/adviser registration, regulation, compliance and disciplinary proceedings; industry and financial markets intelligence; strategies for estate planning; and broker/adviser employment litigation and injunctions, including defamation and non-competition/solicitation issues. 
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