Here is how REIT is friends with Chesapeake….IN A NUTSHELL… In 2009 Apple REIT Nine Ventures (whose Apple REIT Six core business was SUPPOSED to be in the business of building hotels), helped cash strapped Chesapeake (CHK) by investing $145 million in owning over 100 Barnett Shale properties ripe for Urban Drilling. CHK in turn paid REIT from $11-22 million a year for the leases from 2009-2011.Once drilled upon, those Apple Nine shale sites suffered surface property tax devaluations – some as low as as SEVEN CENTS A SQ FT on TAD records.In November of 2011 APPLE REIT made a $53 million profit off of those properties when they sold to Ft Worth Real Estate tycoon, Michael Mallick, for $198 million.Mallick, head of 111 Realty, sold the properties back to Chesapeake for an undisclosed price.Now In 2011 charges were brought against REIT & a broker exclusively selling REIT investments.REIT and affiliates were found innocent in 2013, but the broker, Lerner, was sanctioned & ordered to pay restitution on the selling of Apple REIT Ten “investments”, a non-traded $2 billion real estate investment trust.***Update 2014….Lerner is at it again targeting old people and claims he has better disclosure literature.Targeting old people should be classified as a hate crime….but then again alot of old people like the royalty checks not caring about their grand kids.With that said, it is feasible to attack our royalty loving old people claiming that “they” should be charged with hate crimes against our future generations in being profracking…so whatever.Moral of this story is promises get broken and dreams get fracked…...nothing is for free and we were all swindled here in the Barnett Shale out of the right to enjoy our properties.Now we live in industrial zones facing shale health risks.
Here is the story when Mallick acquired the Apple Nine properties as reported by Sandra Baker of the Star Telegram…
11/14/2011
Fort Worth real estate investment partnership buys 410 acres
“A Fort Worth real estate investment partnership has agreed to pay $198.4 million to an East Coast-based real estate investment trust to buy more than 400 of acres of land in Tarrant, Johnson, Ellis and Dallas counties leased to a Chesapeake Energy subsidiary. The partnership, 111 Realty Investors LP, headed by real estate investor Michael Mallick, is buying 110 natural gas drill sites that range in size from 3-acres to 5-acres and total 410 acres, from Apple REIT Nine Inc., according to a recent Securities and Exchange Commission filing. Mallick declined to comment on the deal that went under contract in August. The deal, which is for surface rights only, is expected to close by the end of the year. The property was land Apple REIT Nine bought from Oklahoma City-based Chesapeake last year. At that time, Apple REIT Nine said it bought 113 properties totaling 417 acres in the Barnett Shale gas field in the four counties. A few of those properties were later repurchased by Chesapeake. The real estate investment trust, part of the Apple real estate investment trust companies based in Richmond, Va., paid $147 million for the land. The land is leased for 40 years to Chesapeake Exploration. A year ago, Chesapeake said it was paying, on average, $21.8 million a year for the lease, according to federal filings. In Tarrant County, the land is in Fort Worth, Arlington, Benbrook, Haltom City, Hurst, Mansfield and North Richland Hills.” _ Sandra Baker
Here are some stories where Mallack sold BACK to Chesapeake… update http://www.star-telegram.com/2013/11/11/5326847/chesapeake-buys-back-ground-leases.html “Two years after buying surface rights to about 400 acres in the Barnett Shale, (see story below) a Fort Worth-based investment group has sold the ground leases to Chesapeake Energy. The ground lease, encumbering 106 urban natural gas drilling sites, was sold by 111 Realty Investors L.P., headed by real estate investor Michael Mallick.”
Apple Nine Selling Land? • REIT Wrecks
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http://www.richmondbizsense.com/2012/05/04/even-the-profits-are-bigger-in-texas/“A local REIT has struck it rich in Texas. Downtown-based Apple REIT Nine last week sold hundreds of acres of natural gas fields in Fort Worth for $198 million. The buyer is 111 Realty Investors LP, an entity tied to Texas real estate investor Michael Mallick. As part of the deal, Apple REIT gets $138.4 million in cash and $60 million in bonds. The land consists of about 400 acres broken into 110 parcels. According to past SEC filings, Apple REIT Nine bought the property in Fort Worth in April 2009. It then leased the land to Chesapeake Energy, the natural gas giant that has made headlines of its own lately. Chesapeake Energy made lease payments on the property to Apple REIT of $15.2 million in 2010 and $11.3 million in 2009. Apple REIT’s gamble on natural gas seems to have paid off, according to filings. It paid $145 million for the land in 2009, leaving it with a $53 million return in a little more than two years……The purchase of the land was the first and only time the REIT ventured outside the domain of buying hotels. Apple REIT Nine is one of the five funds that are part of the Apple REIT Companies. The funds own hundreds of hotels across the country and has raised billions of dollars from investors.”
Kim Triolo Feilhttp://www.flickr.com/photos/cityoffortworth/5580042445/
***Here is the story on how some old people got fracked out of their REIT investments by David Lerner who preyed upon unsavy people…so sad but…”buyer beware”. Funny I have a FB account called “Barnett Shale Breathers Beware”.http://www.virginiabusiness.com/index.php/news/article/323565/?utm_source=email&utm_medium=email&utm_campaign=dailyFederal judge dismisses class action lawsuits against Apple REIT Cos. April 10, 2013 7:51 PM By Paula C. Squires... “A federal judge has dismissed securities litigation against Richmond-based Apple REIT Cos., a real estate investment trust that invests primarily in hotels.U.S. District Judge Kiyo Matsumoto of the Eastern District of New York upheld a motion to dismiss a consolidated class action complaint against Apple REIT Cos. and several of its funds in a court order issued on April 3. She ruled that investors had received sufficient disclosure to understand the risks of investing in the nontraded public companies. Matsumoto said in her order that Apple’s investment objectives “did not constitute actionable misrepresentations or omissions.”The judgment was in favor of Apple REIT Six, Apple REIT Seven, Apple REIT Eight, Apple REIT Nine, Apple REIT Ten, the company’s board of directors and certain officers and advisory companies, including David Lerner Associates Inc.The motion to dismiss was granted with “prejudice,” meaning plaintiffs cannot refile the case. News about the court’s decision was publicized in a press release distributed on Business Wire.Kelly Clarke, director of investor services for Apple REIT Cos., said in an email Wednesday, “We do not have any comments outside of the press release at this time.“The lawsuit was filed in 2011 by six investors who claimed they had been misled about the risks of the investment. It built upon allegations in a complaint filed that same year by the Financial Industry Regulatory Authority (FINRA) against David Lerner Associates Inc. (DLA), based in Syosset, N.Y. — the firm that exclusively sold Apple REITs shares to investors around the country.FINRA’s complaint focused on the marketing of the Apple REITS. In October 2012, FINRA sanctioned Lerner and his company, ordering it to pay $12 million in restitution to affected customers who purchased shares in Apple REIT 10, a non-traded $2 billion real estate investment trust.As the sole distributor of the Apple REITs, FINRA’s statement said DLA “solicited thousands of customers, targeting unsophisticated investors and the elderly and selling the illiquid REIT without performing adequate due diligence to determine whether it was suitable for investors.” The authority said that to sell Apple REIT Ten DLA used “misleading marketing materials that presented performance results for the REITs without disclosing to customers that income from those REITs was insufficient to support the distributions to unit owners.” In addition, FINRA fined David Lerner, DLA’s founder, president and CEO, $250,000 and suspended him for one year from the securities industry, followed by a two-year suspension from acting as a principal. FINRA said in a statement on the case that Lerner “personally made false claims regarding the investment returns, market values, and performance and prospects of the Apple REITs at numerous DLA investment seminars and in letters to customers.”
As of Sept 2014, the TAD records show the old REIT properties…
