On May 11, 2011, the Board of Directors of Apple REIT Ten amended the Unit redemption policy for the non-traded REIT currently under scrutiny. In part, the new redemption policy reads as follows:
"We may use proceeds received from the sale of Units from the offering and our dividend reinvestment plan which we plan to implement following the conclusion of this offering to redeem your Units. We will not begin our Unit redemption program until the expiration of one year from the initial closing of our offering. After you have held your Units for a minimum of one year, our Unit redemption program will provide an opportunity for you to redeem all or a portion of your Units, subject to certain restrictions and limitations, for a purchase price equal to: (1) for redemptions made during the first five (5) years from the date of your purchase of the Units to be redeemed, 92.5% of the price you paid for your Units to be redeemed, and (2) for redemptions made after the first five (5) years from the date of your purchase of the Units to be redeemed, 100% of the price you paid for your Units to be redeemed. In the case of redemption of Units following the death of all shareholders in one account, the purchase price will equal 100% of the price paid by the deceased shareholders for the Units.”
As amended, the Apple REIT Ten Unit redemption stilllimit the number of Units redeemed pursuant to its Unit redemption program to the lesser of: (1) during any 12-month period, it will not redeem in excess of three percent (3.0%) of the weighted average number of Units outstanding during the 12-month period immediately prior to the date of redemption; and (2) funding for the redemption of Units will come exclusively from the net proceeds it receives from the sale of Units under this offering or its dividend reinvestment.
Investors should pay particular attention to the last part of this program. As it reads, the funding for the Unit redemption program will come from the "net proceeds received from the sale of Units in the offering" (which is the investors own capital) or the dividend reinvestment program (another Apple REIT Ten shareholder purchasing an exiting shareholder's Units using their dividends).
Apple REIT Ten shareholders with questions about this amendment should call the attorneys at Eccleston Law at 312-332-0000 for a further explaination.
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