1Q: What is a REIT?
A: A REIT, or Real Estate Investment Trust, is a company that owns, and usually, operates income-producing real estate such as hotels, apartments, shopping centers, offices and warehouses. Some REITs also engage in financing real estate. To qualify as a REIT, a company must annually distribute at least 90 percent of its taxable income in dividends to its shareholders. However, like other businesses but unlike partnerships, a REIT cannot pass any tax losses through to its investors. Moreover, any company designated as a REIT must invest at least 75 percent of its total assets in and derive its income primarily from real estate held for the long term and from other limited items. Significantly, a REIT is permitted to deduct dividends paid to its shareholders from its corporate tax bill. As a result, REITs have an incentive to remit 100 percent of their taxable income to their shareholders and therefore avoid corporate tax. Shareholders pay taxes on the dividends and capital gains received.
REITs were created by Congress in 1960 to allow average investors the opportunity to invest in large-scale, income-producing real estate. In the same way that shareholders benefit by owning stocks of other corporations, shareholders of REITs earn a pro-rata share of the income produced through ownership of commercial real estate.
For further information about REITs, visit NAREIT, the National Association of Real Estate Investment Trusts. www.nareit.com
As with any investment, there is no assurance that investment in a REIT will be profitable or that it will realize growth in value. For more information on the risks of investing in REITS, please refer to one of the Apple REIT Companies current prospectuses.
2Q: How can I reinvest my dividends in the Company?
A: Apple REIT Companies provide shareholders with the opportunity to purchase additional shares of stock through the reinvestment of distributions. Information regarding this option can be obtained at David Lerner Associates at 1-800-367-3000.
3Q: When is the next dividend payment date?
A: Dividend distributions are scheduled to occur on the 15th day of every month, or on the next business day following the 15th when the 15th falls on the weekend or on a holiday.
For any other questions regarding your dividend payment, contact David Lerner
477 Jericho Turnpike
Syosset, NY 11791
4Q: How can I sell any of my Apple REIT Companies shares?
A: There is currently no public market for Apple REIT Companies shares; therefore, they are considered illiquid and cannot be traded, sold or transferred.
However, shareholders who have held their units for at least one year may receive limited interim liquidity through participation in the Share Redemption Program. Please review the prospectus for further details.