The offering price for our shares of common stock in the Offering has been determined by us, and we cannot guarantee that it represents an accurate estimation of our enterprise value.
Our shares of common stock have no public market, no public market is expected to develop, and consequently, it may be difficult for you to sell your shares.
There are restrictions on transferring our shares of common stock, which may make your shares unattractive to prospective purchasers and may prevent you from selling them when you desire.
There is no specified or guaranteed liquidation date for our shares of common stock.
The actual value of shares that we repurchase under our share repurchase plan may be substantially less than what we pay.
Our stockholders have limited redemption rights.
Our shares of common stock are being offered in reliance upon a private offering exemption under the Securities Act. If we should fail to comply with the requirements of such exemption, our stockholders would have the right to rescind their purchase of shares.
Our board of directors may create additional classes of our securities.
We depend on the efforts and expertise of the Advisor and its officers and principals, whose continued service is not guaranteed.
Our Advisor, its executive officers and other key personnel, the Sponsor’s employees and certain of our officers and directors will not devote their time and energies exclusively to us.
There is no assurance that we will satisfy our business objectives, which could limit our ability to make distributions and decrease the value of your investment.
We own only hotel properties, which will limit the diversification of our investments.
Our investment policies are subject to revision from time to time at our board of directors’ discretion, which could diminish stockholder returns below expectations.
If we are unable to successfully manage our growth, our operating results and financial condition could be adversely affected.
Our future growth and success depends on obtaining financing, and if we cannot secure financing on acceptable terms or at all, our growth may be limited.
We may be unable to raise substantial funds in our securities offerings or to invest the proceeds of our securities offerings in a timely manner or on acceptable terms.
We have made, and may from time to time continue to make, distributions to our stockholders in the form of our common stock, which could result in stockholders incurring tax liability without receiving sufficient cash to pay such tax.
We may be subject to various conflicts of interest due to the relationships among the Advisor, the Operating Partnership, NHS, One Rep Construction, LLC (“One Rep”), Legendary A-1 Bonds, LLC (“A-1 Bonds”) and their respective affiliates.
Our current hotel properties include, and our future hotel properties will likely include certain amenities for hotel guests that could increase the potential liabilities at the hotel properties.
The lodging industry has experienced significant declines and failure of the lodging industry to exhibit improvement may adversely affect our ability to execute our business strategy.
Competition for acquisitions may reduce the number of properties we can acquire.
Competition for guests may lower our hotels’ revenues and profitability.
The seasonality of the hotel industry may cause fluctuations in our quarterly revenues which may require us to borrow money to fund distributions to stockholders.
The cyclical nature of the lodging industry may cause the return on our investments to be substantially less than we expect.
The ongoing need for capital expenditures at our hotel properties may adversely affect our financial condition and limit our ability to make distributions to our stockholders.
The increasing use of Internet travel intermediaries by consumers may adversely affect our profitability.
We and our hotel managers and franchisors rely on information technology in our operations, and any material failure, inadequacy, interruption, cyber-attack or security failure of that technology could harm our business.
Future terrorist attacks or changes in terror alert levels could adversely affect travel and hotel demand.
The hotel properties are subject to various risks associated with an investment in real estate.
Illiquidity of real estate investments could significantly impede our ability to liquidate our portfolio on advantageous terms or within any given period of time.
Uninsured and underinsured losses could adversely affect our operating results and our ability to make distributions to our stockholders.
Noncompliance with environmental laws and governmental regulations could adversely affect our operating results and our ability to make distributions to stockholders.
Compliance with the Americans with Disabilities Act of 1990, as amended, and applicable regulations promulgated thereunder (“ADA”) and other changes in governmental rules and regulations could substantially increase our cost of doing business and adversely affect our operating results and our ability to make distributions to our stockholders.
The hotel properties are subject to property taxes that may increase in the future, which could adversely affect our ability to make distributions to our stockholders.
The hotel properties may contain or develop harmful mold, which could lead to liability for adverse health effects and costs of remediating the problem.
Future changes in laws and regulations may adversely affect the resale value of real estate.
Certain sellers of hotel properties have made, and future sellers may only make, limited or no representations and warranties regarding the condition of the properties.
We may acquire hotel properties from affiliates of the Advisor.
We may not obtain audited results of operations for the hotel properties prior to acquiring the hotel properties.
We may not obtain independent third-party appraisals or valuations of a hotel property before acquiring it and our valuation may not be accurate.
We may not have control of hotel properties we acquire through joint ventures.
The presence of construction defects in newly or recently constructed hotel properties could adversely affect the financial performance of a hotel property.
Construction and rehabilitation at the hotel properties entails risks that are beyond our and any general contractor’s control, and the costs may exceed the funds available to us.
We will be required to obtain the approval of various governmental authorities when rehabilitating and improving the hotel properties, which may result in delays and increased costs.
We may not discover defects in the hotel properties prior to acquisition.
The hotel properties could become subject to condemnation actions.
We may sustain losses resulting from litigation that is not completely covered by insurance.
Restrictions on the availability of real estate financing, high interest rates and the cost of loans may make it difficult for us to finance or refinance the hotel properties.
Some of our financing arrangements involve interest only loans and balloon payment obligations and an inability to prepay until shortly before maturity. These may, in the future, adversely affect our ability to make distributions.
We have incurred, and may in the future incur, recourse debt or be liable for nonrecourse carve-outs and springing recourse events under the loans for the hotel properties, which may permit the lenders to proceed against our assets.
If we violate any restrictions on transfer imposed by lenders, the lender could have the right to declare the entire amount of the loan to be immediately due and payable.
If we default on a loan, it could result in foreclosure of the hotel property, which could result the loss of all or a substantial portion of the investment we made in the hotel property.
The derivative financial instruments we use to hedge against interest rate fluctuations may not be successful in mitigating our risks associated with interest rates and could reduce the overall returns on our stockholders’ investment.
Certain of the hotel properties and our other assets are cross-collateralized.
Our TRS Lessee structure subjects us to the risk of increased hotel operating expenses that could adversely affect our operating results and our ability to make distributions to our stockholders.
Our ownership of our TRSs is limited and our transactions with our TRSs will cause us to be subject to a 100% penalty tax on certain income or deductions if those transactions are not conducted on arm’s-length terms.
If our leases with our TRS Lessees are not respected as true leases for federal income tax purposes, we would not qualify as a REIT.
If our hotel operators do not qualify as “eligible independent contractors,” we would not qualify as a REIT.
The lease of the hotel properties to a TRS is subject to special requirements.
The ability of our board of directors to revoke our REIT qualification without stockholder approval may cause adverse consequences to our stockholders.
The ability of our board of directors to change our major policies may not be in your best interest.
We have not established a minimum distribution payment level and we may be unable to generate sufficient cash flows from our operations to make distributions to our stockholders at any time in the future.
If we are deemed to be an investment company under the Investment Company Act of 1940, our stockholders’ investment return may be reduced.
We will be subject to certain risks relating to the Operating Partnership’s acceptance of contributed property in exchange for limited partnership interests.
We may need to modify our investment portfolio in the future in order to qualify as a REIT, which may adversely affect our performance.
Under Maryland law, our directors have limited liability if they perform their duties in good faith, in a manner he or she reasonably believes to be in our best interests, and with the care that an ordinarily prudent person in a like position would use under similar circumstances. We are required to indemnify our directors and officers to the maximum extent permitted under Maryland law.
Maryland law prohibits business combinations with certain interested stockholder and their affiliates unless otherwise approved by our board of directors, which could inhibit a change in control.
Provisions contained in Maryland law that are reflected in our charter and bylaws may have anti-takeover effects, potentially preventing investors from receiving a “control premium” for their shares.
If we sell a built-in gain asset within five years of the effective date of our REIT election, we may be subject to corporate-level tax on the built-in gain component.
Failure to qualify as a REIT would reduce our net earnings available for investment or distribution.
Even if we qualify as a REIT for federal income tax purposes, we may be subject to other tax liabilities that reduce our cash flow and our ability to make distributions to our stockholders.
The ownership limits that apply to REITs, as prescribed by the Code and by the charter, may inhibit market activity in our shares of common stock and restrict our business combination opportunities.
REIT distribution requirements could adversely affect our ability to execute our business plan.
Complying with REIT requirements may cause us to forego otherwise attractive opportunities or liquidate otherwise attractive investments.
The tax on prohibited transactions will limit our ability to engage in transactions that would be treated as sales for federal income tax purposes.
Non-United States investors may be subject to FIRPTA on the sale of its shares if we are unable to qualify as a “domestically controlled” REIT.
Complying with the REIT requirements may limit our ability to hedge effectively.
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