Document_and_Entity_Informatio
Document and Entity Information | 6 Months Ended | |
Jun. 30, 2014 | Aug. 11, 2014 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'Moody National REIT I, Inc. | ' |
Entity Central Index Key | '0001424879 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Jun-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' |
Is Entity a Voluntary Filer? | 'No | ' |
Is Entity's Reporting Status Current? | 'Yes | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 6,443,634 |
Document Fiscal Period Focus | 'Q2 | ' |
Document Fiscal Year Focus | '2014 | ' |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
ASSETS | ' | ' |
Investment in hotel properties, net | $80,109,697 | $49,136,124 |
Cash and cash equivalents | 8,548,658 | 5,324,315 |
Restricted cash | 5,215,321 | 3,295,529 |
Accounts receivable, net of allowance of $15,000 and $12,000, at June 30, 2014 and December 31, 2013, respectively | 494,905 | 124,578 |
Mortgage note receivable | 12,165,202 | 12,269,485 |
Prepaid expenses and other assets | 350,636 | 107,193 |
Deferred costs, net of accumulated amortization of $111,486 and $69,411, at June 30, 2014 and December 31, 2013, respectively | 946,902 | 660,372 |
Total Assets | 107,831,321 | 70,917,596 |
Liabilities: | ' | ' |
Notes payable | 62,309,220 | 44,441,355 |
Accounts payable and accrued expenses | 2,000,897 | 1,194,726 |
Due to related parties | 319,636 | 427,985 |
Dividends payable | 351,117 | 217,877 |
Total Liabilities | 64,980,870 | 46,281,943 |
Special Partnership Units - 100 Special Units of the Operating Partnership | 1,000 | 1,000 |
Commitments and Contingencies | ' | ' |
Stockholders' equity: | ' | ' |
Preferred stock, $0.01 par value per share; 50,000,000 shares authorized, no shares issued and outstanding | ' | ' |
Common stock, $0.01 par value per share; 400,000,000 shares authorized, 5,714,073 and 3,331,439 issued and outstanding at June 30, 2014 and December 31, 2013, respectively | 57,141 | 33,314 |
Additional paid-in capital | 49,153,289 | 28,279,101 |
Distributions in excess of net income | -6,638,147 | -4,164,515 |
Total stockholders' equity | 42,572,283 | 24,147,900 |
Noncontrolling interest- 100 common units of the Operating Partnership | 711 | 753 |
Noncontrolling interest in consolidated joint ventures | 276,457 | 486,000 |
Total Equity | 42,849,451 | 24,634,653 |
TOTAL LIABILITIES AND EQUITY | $107,831,321 | $70,917,596 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (PARENTHETICAL) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
Condensed Consolidated Balance Sheets Parenthetical | ' | ' |
Allowance for doubtful accounts recievable | $15,000 | $12,000 |
Accumulated amortization of deferred loan costs | $111,486 | $69,411 |
Special Units of the Operating Partnership | 100 | 100 |
Common stock, par value | $0.01 | $0.01 |
Common stock, shares authorized | 400,000,000 | 400,000,000 |
Common stock, shares issued | 5,714,073 | 3,331,439 |
Common stock, shares outstanding | 5,714,073 | 3,331,439 |
Preferred stock, par value | $0.01 | $0.01 |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Noncontrolling interest, units of the Operating Partnership | 100 | 100 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (USD $) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | |
Revenue | ' | ' | ' | ' |
Room revenue | $5,278,099 | $1,720,381 | $8,679,734 | $2,609,611 |
Other hotel revenue | 259,251 | 71,997 | 375,627 | 91,742 |
Total hotel revenue | 5,537,350 | 1,792,378 | 9,055,361 | 2,701,353 |
Interest income from note receivable | 158,898 | 163,038 | 316,469 | 323,190 |
Total revenue | 5,696,248 | 1,955,416 | 9,371,830 | 3,024,543 |
Expenses | ' | ' | ' | ' |
Hotel operating expenses | 3,337,185 | 1,033,914 | 5,358,568 | 1,534,041 |
Property taxes, insurance and other | 322,679 | 114,097 | 585,509 | 167,397 |
Depreciation and amortization | 765,329 | 236,612 | 1,363,039 | 350,637 |
Property acquisition | 303,276 | 410,520 | 751,892 | 442,054 |
Corporate general and administrative | 445,974 | 56,827 | 644,811 | 94,872 |
Total Expenses | 5,174,443 | 1,851,970 | 8,703,819 | 2,589,001 |
Operating income | 521,805 | 103,446 | 668,011 | 435,542 |
Interest expense and amortization of deferred loan costs | 722,659 | 272,880 | 1,259,034 | 465,669 |
Loss before income tax expense | -200,854 | -169,434 | -591,023 | -30,127 |
Income tax expense | 93,000 | 42,100 | 145,900 | 63,100 |
Net loss | -293,854 | -211,534 | -736,923 | -93,227 |
Income attributable to noncontrolling interest in consolidated joint ventures | -19,438 | -19,895 | -38,737 | -39,181 |
Loss (income) attributable to noncontrolling interest in common operating partnership units | -3 | 13 | 2 | 4 |
Net loss attributable to common shareholders | ($313,295) | ($231,416) | ($775,658) | ($132,404) |
Per-share information - basic and diluted: | ' | ' | ' | ' |
Net loss attributable to common shareholders | ($0.06) | ($0.11) | ($0.18) | ($0.08) |
Dividends declared | $0.20 | $0.20 | $0.40 | $0.40 |
Weighted average shares outstanding | 4,824,021 | 2,023,290 | 4,276,950 | 1,753,196 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Unaudited) (USD $) | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-In Capital [Member] | Distributions in Excess of Net Income [Member] | Noncontrolling Interest in Operating Partnership [Member] | Noncontrolling Interest in Consolidated Joint Venture [Member] | Total |
Balance, Begining at Dec. 31, 2013 | ' | $33,314 | $28,279,101 | ($4,164,515) | $753 | $486,000 | $24,634,653 |
Balance, beginning, units at Dec. 31, 2013 | ' | ' | ' | ' | 100 | ' | ' |
Balance, beginning, shares at Dec. 31, 2013 | ' | 3,331,439 | ' | ' | ' | ' | ' |
Issuance of common stock and operating partnership units, net of offering costs | ' | 23,351 | 20,380,339 | ' | ' | ' | 20,403,690 |
Issuance of common stock and operating partnership units, net of offering costs, Shares | ' | 2,335,024 | ' | ' | ' | ' | ' |
Issuance of common stock pursuant to dividend reinvestment plan | ' | 476 | 451,821 | ' | ' | ' | 452,297 |
Issuance of common stock pursuant to dividend reinvestment plan, Shares | ' | 47,610 | ' | ' | ' | ' | ' |
Stock/unit-based compensation expense | ' | ' | 42,028 | ' | ' | ' | 42,028 |
Net income (loss) | ' | ' | ' | -775,658 | -2 | 38,737 | -736,923 |
Dividends and distributions declared | ' | ' | ' | -1,697,974 | -40 | -248,280 | -1,946,294 |
Balance, ending at Jun. 30, 2014 | ' | $57,141 | $49,153,289 | ($6,638,147) | $711 | $276,457 | $42,849,451 |
Balance, ending, units at Jun. 30, 2014 | ' | ' | ' | ' | 100 | ' | ' |
Balance, ending, shares at Jun. 30, 2014 | ' | 5,714,073 | ' | ' | ' | ' | ' |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $) | 6 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Cash flows from operating activities | ' | ' |
Net loss | ($736,923) | ($93,227) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ' | ' |
Depreciation and amortization | 1,363,039 | 350,637 |
Amortization of deferred loan costs | 31,674 | 16,409 |
Stock-based compensation | 42,028 | 56,031 |
Changes in operating assets and liabilities - | ' | ' |
Accounts receivable | -370,327 | -9,594 |
Prepaid expenses and other assets | -243,443 | -87,263 |
Accounts payable and accrued expenses | 806,171 | 359,225 |
Due to related parties | -712,063 | ' |
Net cash provided by operating activities | 180,156 | 592,218 |
Cash flows from investing activities | ' | ' |
Increase in restricted cash | -1,919,792 | -102,340 |
Earnest money and deposits | ' | -245,000 |
Repayments of mortgage note receivable | 104,283 | 99,048 |
Improvements and additions to hotel properties | -1,826,211 | ' |
Additions to hotel properties | -25,439,507 | -11,300,000 |
Net cash used in investing activities | -29,081,227 | -11,548,292 |
Cash flows from financing activities | ' | ' |
Proceeds from issuance of common stock | 23,350,238 | 8,135,784 |
Offering costs paid | -2,342,834 | -1,159,606 |
Dividends paid | -1,112,477 | -483,974 |
Proceeds of note payable | 13,250,000 | 7,800,000 |
Repayments of notes payable | -442,628 | -233,307 |
Payments of deferred financing costs | -328,605 | -138,000 |
Distributions to noncontrolling interest in joint venture | -248,280 | -34,477 |
Net cash provided by financing activities | 32,125,414 | 13,886,420 |
Net change in cash and cash equivalents | 3,224,343 | 2,930,346 |
Cash and cash equivalents at beginning of period | 5,324,315 | 2,710,101 |
Cash and cash equivalents at end of period | 8,548,658 | 5,640,447 |
Supplemental Cash Flow Information | ' | ' |
Interest paid | 1,134,782 | 428,471 |
Income taxes paid | 16,003 | ' |
Supplemental Disclosure of Non-Cash Investing and Financing Activity | ' | ' |
Accrued offering costs due to related party | 603,714 | 424,119 |
Assumption of note payable in connection with acquisition of hotel property | 5,060,493 | ' |
Issuance of common stock from dividend reinvestment plan | 452,297 | 162,384 |
Accrued dividend payable | $351,117 | $140,324 |
Organization
Organization | 6 Months Ended |
Jun. 30, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
Organization | ' |
1. Organization | |
Moody National REIT I, Inc. (the “Company”) was formed on January 15, 2008, as a Maryland corporation and has elected to qualify as a real estate investment trust (“REIT”) commencing with the year ended December 31, 2011. The Company was organized to acquire a diverse portfolio of real properties, primarily in the hospitality sector, as well as other commercial properties, real estate securities and debt-related investments. As discussed in Note 6, the Company was initially capitalized with the sale of shares of its common stock to Moody National REIT Sponsor, LLC (“Sponsor”) on February 19, 2008. The Company’s fiscal year end is December 31. | |
On April 15, 2009, the Company commenced its initial public offering pursuant to a registration statement on Form S-11 with the Securities and Exchange Commission (the “SEC”) to offer a maximum of $1,000,000,000 in shares of its common stock to the public in its primary offering and up to $100,000,000 in shares of its common stock to its stockholders pursuant to its distribution reinvestment plan (the “DRIP”). On October 12, 2012, the Company terminated its initial public offering and commenced its follow-on public offering (discussed below). As of October 12, 2012, the Company had accepted subscriptions for, and issued, 1,126,253 shares of its common stock in its initial public offering, including 29,582 shares of common stock pursuant to the DRIP, resulting in offering proceeds of $10,966,713. | |
On February 14, 2012, the Company filed a registration statement on Form S-11 with the SEC to register a following-on public offering of up to $1,000,000,000 in shares of the Company’s common stock. In the follow-on offering the Company is offering up to $900,000,000 in shares of the Company’s common stock to the public and up to $100,000,000 in shares of the Company’s common stock to its stockholders pursuant to the DRIP. As of June 30, 2014, the Company had accepted investors’ subscriptions for, and issued, 4,524,348 shares of its common stock in the follow-on offering, including 97,145 shares of common stock issued pursuant to the DRIP, resulting in aggregate gross offering proceeds of $44,272,027. As of June 30, 2014, the Company had accepted subscriptions for, and issued, 5,650,601 shares of common stock in the Company’s initial public offering and follow-on offering, including 126,727 shares of common stock pursuant to the DRIP, resulting in aggregate offering proceeds of $55,238,740. | |
The Company is offering shares to the public in the follow-on offering at a price of $10.00 per share, with discounts available for certain purchasers, and to its stockholders pursuant to the DRIP at a price of $9.50 per share. The Company’s board of directors may change the price at which the Company offers shares to the public in the follow-on offering from time to time during the follow-on offering, but not more frequently than quarterly, to reflect changes in the Company’s estimated per-share net asset value and other factors the Company’s board of directors deems relevant. | |
The Company’s board of directors has elected to extend the Company’s follow-on public offering of shares of common stock, in accordance with the terms established in the Company’s prospectus. The follow-on public offering, which was schedule to terminate on October 12, 2014, has been extended for up to an additional year. However, the Company currently expects to terminate the follow-on public offering on January 31, 2015. | |
The Company intends to use substantially all of the net proceeds from its public offerings to acquire a diversified portfolio of real properties, real estate securities and debt-related investments. The Company’s real property will consist primarily of hotel properties located in the United States and Canada that it owns exclusively or in joint ventures or other co-ownership arrangements with other persons. The Company may also invest in other property types consisting of multifamily, office, retail and industrial assets located in the United States and Canada as well as securities of real estate companies and debt-related investments. The Company may also make opportunistic investments in properties that may be under-developed or newly constructed and in properties that it believes are undervalued. | |
As of June 30, 2014, the Company’s portfolio consisted of (1) a 74.5% joint venture interest in a mortgage note (the “Hyatt Place Note”) secured by a hotel property located in Grapevine, Texas, commonly known as the Hyatt Place Grapevine hotel (the “Hyatt Place Property”); (2) a 91-suite hotel property located in The Woodlands, Texas, commonly known as the Homewood Suites by Hilton - Woodlands (the “Woodlands Hotel”); (3) a 127-guestroom hotel property located in Germantown, Tennessee, commonly known as the Hyatt Place - Germantown (the “Germantown Hotel”); (4) a 113-guestroom hotel property located in North Charleston, South Carolina, commonly known as the Hyatt Place - North Charleston (the “Charleston Hotel”); (5) a 123-suite hotel property located in Austin, Texas, commonly known as the Hampton Inn – Austin (the “Austin Hotel”); (6) a 133-suite hotel property located in Grapevine, Texas, commonly known as the Residence Inn by Marriott – Grapevine (the “Grapevine Hotel”); and (7) a 127-suite hotel property located in Newark, California, commonly known as the TownePlace Suites by Marriott Newark/Silicon Valley (the “Silicon Valley Hotel”). The Company began operations on May 27, 2010 with the acquisition of a 75% joint venture interest in a hotel property located in Atlanta, Georgia which was subsequently sold to a third-party buyer on August 23, 2012. | |
The Company’s advisor is Moody National Advisor I, LLC (“Advisor”), a Delaware limited liability company and an affiliate of Sponsor. Subject to certain restrictions and limitations, Advisor is responsible for managing the Company’s affairs on a day-to-day basis and for identifying and making acquisitions and investments on behalf of the Company pursuant to an amended and restated advisory agreement (the “Advisory Agreement”) by and among the Company, Moody National Operating Partnership I, L.P., the Company’s operating partnership (the “OP”), and Advisor. | |
The OP’s partnership agreement provides that the OP will be operated in a manner that will enable the Company to (1) satisfy the requirements for being classified as a REIT for tax purposes, (2) avoid any federal income or excise tax liability and (3) ensure that the OP will not be classified as a “publicly traded partnership” for purposes of Section 7704 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), which classification could result in the OP being taxed as a corporation rather than as a partnership. In addition to the administrative and operating costs and expenses incurred by the OP in acquiring and operating real estate assets, the OP will pay all of the Company’s administrative costs and expenses, and such expenses will be treated as expenses of the OP. The common units of the OP may be tendered for redemption once they have been outstanding for at least one year. At such time, the Company has the option to redeem the common units for shares of the Company’s common stock, cash or a combination thereof at the Company’s sole discretion. The Special Units of the OP (the “Special Units”) will be redeemed pursuant to the OP’s partnership agreement upon the termination or nonrenewal of the Advisory Agreement or upon certain other events outside of the control of the Special Unit holder. Upon the termination or nonrenewal of the Advisory Agreement by the Company for “cause” (as defined in the Advisory Agreement) all of the Special Units will be redeemed for $1.00. As described in more detail in Note 9, upon the occurrence of any of the events outside of the control of the Special Unit holder which trigger redemption of the Special Units, the Special Units will be redeemed, at the Advisor’s option, for shares of the Company’s common stock, a non-interest bearing promissory note payable solely from the proceeds of assets sales, or a combination thereof. |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 6 Months Ended | ||||||||||||||
Jun. 30, 2014 | |||||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||||
Summary of Significant Accounting Policies | ' | ||||||||||||||
2. Summary of Significant Accounting Policies | |||||||||||||||
Basis of Presentation and Principles of Consolidation | |||||||||||||||
The Company’s consolidated financial statements include its accounts and the accounts of its subsidiaries over which it has control. All intercompany balances and transactions are eliminated in consolidation. | |||||||||||||||
The Company includes the accounts of its consolidated subsidiaries in its consolidated financial statements when the Company is the primary beneficiary for entities deemed to be variable interest entities (“VIEs”) through which the Company has a controlling interest. Interests in entities acquired are evaluated based on U.S. generally accepted accounting principles (“GAAP”), which requires the consolidation of VIEs in which the Company is deemed to have the controlling financial interest. The Company has the controlling financial interest if the Company has the power to direct the activities of the VIE that most significantly impact its economic performance and the obligation to absorb losses or receive benefits from the VIE that could be significant to the Company. If the interest in the entity is determined not to be a VIE, then the entity is evaluated for consolidation based on legal form, economic substance, and the extent to which the Company has control and/or substantive participating rights under the respective ownership agreement. The Company did not have a VIE interest as of June 30, 2014 or December 31, 2013. | |||||||||||||||
There are judgments and estimates involved in determining if an entity in which the Company has an investment is a VIE. The entity is evaluated to determine if it is a VIE by, among other things, determining if the equity investors as a group have a controlling financial interest in the entity and if the entity has sufficient equity at risk to finance its activities without additional subordinated financial support. | |||||||||||||||
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with GAAP for interim financial statements and the rules and regulations of the SEC. Accordingly, the unaudited condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014. For further information, readers should refer to the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, which was filed with the SEC on March 19, 2014. | |||||||||||||||
Use of Estimates | |||||||||||||||
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the accompanying condensed consolidated financial statements and notes. Actual results could differ from those estimates. | |||||||||||||||
Organization and Offering Costs | |||||||||||||||
Organization and offering costs of the Company are incurred by Advisor on behalf of the Company. Pursuant to the Advisory Agreement, the Company is obligated to reimburse Advisor or its affiliates, as applicable, for organization and offering costs incurred by Advisor associated with each of the Company’s public offerings, provided that within 60 days of the last day of the month in which a public offering ends, Advisor is obligated to reimburse the Company to the extent organization and offering costs incurred by the Company in connection with the completed public offering exceed 15.0% of the gross offering proceeds from the sale of the Company’s shares of common stock in the completed public offering. Such organization and offering costs shall include selling commissions and dealer manager fees paid to the dealer manager, legal, accounting, printing and other offering expenses, including marketing, salaries and direct expenses of Advisor’s employees and employees of Advisor’s affiliates and others. Any reimbursement of Advisor or its affiliates for organization and offering costs will not exceed actual expenses incurred by Advisor. | |||||||||||||||
All offering costs, including selling commissions and dealer manager fees, are recorded as an offset to additional paid-in-capital, and all organization costs are recorded as an expense when the Company has an obligation to reimburse Advisor. | |||||||||||||||
As of June 30, 2014, total offering costs for the follow-on offering were $6,155,405. The Company directly incurred $4,442,041 of offering costs for the follow-on offering and reimbursed Advisor for $1,829,324 in offering costs for the follow-on offering. The Company has a $115,960 receivable from Advisor for offering costs related to the follow-on offering, which is recorded as an offset to other amounts owed to Advisor. As of June 30, 2014, offering costs related to the follow-on offering did not exceed 15.0% of the gross offering proceeds from the sale of the Company’s shares of common stock in the follow-on offering. The Company has not reimbursed Advisor any funds for organization costs for the follow-on offering. | |||||||||||||||
Income Taxes | |||||||||||||||
The Company has made an election to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code commencing with the taxable year ended December 31, 2011. Prior to qualifying to be taxed as a REIT, the Company was subject to normal federal and state corporation income taxes. The Company previously determined not to make an election to qualify as a REIT under the Internal Revenue Code because it had a net operating loss for the years ended December 31, 2009 and 2010 and had fewer than 100 stockholders as of December 31, 2009 and 2010. | |||||||||||||||
As a REIT, the Company generally will not be subject to federal corporate income tax to the extent it distributes its REIT taxable income to its stockholders, so long as it distributes at least 90% of its REIT taxable income (which is computed without regard to the dividends paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP). REITs are subject to a number of other organizational and operations requirements. Even if the Company qualifies for taxation as a REIT, it may be subject to certain state and local taxes on its income and property, and federal income and excise taxes on its undistributed income. | |||||||||||||||
The Company leases the hotels it acquires to wholly-owned taxable REIT subsidiaries that are subject to federal, state and local income taxes. The Company accounts for income taxes using the asset and liability method under which deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. The Company records a valuation allowance for net deferred tax assets that are not expected to be realized. | |||||||||||||||
The Company has reviewed tax positions under GAAP guidance that clarifies the relevant criteria and approach for the recognition and measurement of uncertain tax positions. The guidance prescribes a recognition threshold and measurement attribute for the financial statement recognition of a tax position taken, or expected to be taken, in a tax return. A tax position may only be recognized in the financial statements if it is more likely than not that the tax position will be sustained upon examination. The Company has no material uncertain tax positions as of June 30, 2014. | |||||||||||||||
The preparation of the Company’s various tax returns requires the use of estimates for federal and state income tax purposes. These estimates may be subjected to review by the respective taxing authorities. A revision to an estimate may result in an assessment of additional taxes, penalties and interest. At this time, a range in which the Company’s estimates may change is not expected to be material. The Company will account for interest and penalties relating to uncertain tax provisions in the current period results of operations, if necessary. The Company has tax years 2009, 2010, 2011, 2012 and 2013 remaining subject to examination by various federal and state tax jurisdictions. | |||||||||||||||
Concentration of Credit Risk | |||||||||||||||
As of June 30, 2014, the Company had cash and cash equivalents and restricted cash deposited in certain financial institutions in excess of federally insured levels. The Company diversifies its cash and cash equivalents with several banking institutions in an attempt to minimize exposure to any one of these institutions. The Company regularly monitors the financial stability of these financial institutions and believes that it is not exposed to any significant credit risk in cash and cash equivalents or restricted cash. | |||||||||||||||
The Company is also exposed to credit risk with respect to its joint venture interest in the Hyatt Place Note. As a significant investment of the Company, the failure of the borrower on the Hyatt Place Note to make payments of interest and principal when due, or any other event of default under the Hyatt Place Note, would have an adverse impact on the Company’s results of operations. | |||||||||||||||
Valuation and Allocation of Real Property — Acquisition | |||||||||||||||
Upon acquisition, the purchase price of real property is allocated to the tangible assets acquired, consisting of land, buildings and tenant improvements, any assumed debt, identified intangible assets and asset retirement obligations based on their fair values. Identified intangible assets consist of above-market and below-market leases, in-place leases, in-place contracts, tenant relationships and any goodwill or gain on purchase. Acquisition costs are charged to expense as incurred. Initial valuations are subject to change during the measurement period, but the measurement period ends as soon as the information is available. The measurement period shall not exceed one year from the acquisition date. | |||||||||||||||
The fair value of the tangible assets acquired consists of land, buildings, furniture, fixtures and equipment. Land values are derived from appraisals, and buildings are calculated as replacement cost less depreciation or the Company’s estimates of the relative fair value of these assets using discounted cash flow analyses or similar methods. The value of the building is depreciated over the estimated useful life of thirty-nine years using the straight-line method. The value of furniture, fixtures and equipment is based on their fair value using replacement costs less depreciation. | |||||||||||||||
The Company determines the fair value of assumed debt by calculating the net present value of the scheduled mortgage payments using interest rates for debt with similar terms and remaining maturities that the Company believes it could obtain at the date of acquisition. Any difference between the fair value and stated value of the assumed debt is recorded as a discount or premium and amortized over the remaining life of the loan as interest expense. | |||||||||||||||
In allocating the purchase price of each of the Company’s properties, the Company makes assumptions and uses various estimates, including, but not limited to, the estimated useful lives of the assets, the cost of replacing certain assets, discount rates used to determine present values, market rental rates per square foot and the period required to lease the property up to its occupancy at acquisition as if it were vacant. Many of these estimates are obtained from independent third party appraisals. However, the Company is responsible for the source and use of these estimates. These estimates are judgmental and subject to being imprecise; accordingly, if different estimates and assumptions were derived, the valuation of the various categories of the Company’s real estate assets or related intangibles could in turn result in a difference in the depreciation or amortization expense recorded in the Company’s condensed consolidated financial statements. These variances could be material to the Company’s results of operations and financial condition. | |||||||||||||||
Valuation and Allocation of Real Property — Ownership | |||||||||||||||
Investment in real estate is recorded at historical cost. Major improvements that extend the life of an asset are capitalized and depreciated over a period equal to the shorter of the life of the improvement or the remaining useful life of the asset. The cost of ordinary repairs and maintenance are charged to expense when incurred. | |||||||||||||||
Depreciation or amortization expenses are computed using the straight-line and accelerated methods based upon the following estimated useful lives: | |||||||||||||||
Years | |||||||||||||||
Buildings and improvements | 39 | ||||||||||||||
Exterior improvements | 20-Oct | ||||||||||||||
Furniture, fixtures and equipment | 5-10 | ||||||||||||||
Impairments | |||||||||||||||
For real estate the Company owns, the Company monitors events and changes in circumstances indicating that the carrying amounts of the real estate assets may not be recoverable. When such events or changes in circumstances are present, the Company assesses potential impairment by comparing estimated future undiscounted cash flows expected to be generated over the life of the asset from operating activities and from its eventual disposition, to the carrying amount of the asset. In the event that the carrying amount exceeds the estimated future undiscounted cash flows, the Company recognizes an impairment loss to adjust the carrying amount of the asset to estimated fair value for assets held for use and fair value less costs to sell for assets held for sale. There were no such impairment losses for the three and six months ended June 30, 2014 and 2013. | |||||||||||||||
In evaluating the Company’s investments for impairment, the Company makes several estimates and assumptions, including, but not limited to, the projected date of disposition of the properties, the estimated future cash flows of the properties during the Company’s ownership and the projected sales price of each of the properties. A change in these estimates and assumptions could result in a change in the estimated fair value of the Company’s hotel properties which could then result in different conclusions regarding impairment which could result in material changes to the Company’s consolidated financial statements. | |||||||||||||||
Revenue Recognition | |||||||||||||||
Hotel revenues, including room, food, beverage and other ancillary revenues, are recognized as the related services are delivered. Interest income is recognized when earned. | |||||||||||||||
Cash and Cash Equivalents | |||||||||||||||
Cash and cash equivalents represent cash on hand or held in banks and short-term investments with an initial maturity of three months or less at the date of purchase. | |||||||||||||||
Restricted Cash | |||||||||||||||
Restricted cash includes reserves for debt service and insurance, as well as reserves for property improvements and furniture, fixtures, and equipment, as required by certain management or mortgage debt agreement restrictions and provisions. Restricted cash also includes cash collateral deposited with a bank related to a loan that may be used by the Company toward the payments of principal and interest of the loan and any other amounts due under the loan in the event of default. | |||||||||||||||
Valuation of Accounts Receivable | |||||||||||||||
The Company takes into consideration certain factors that require judgments to be made as to the collectability of receivables. Collectability factors taken into consideration are the amounts outstanding, payment history and financial strength of the customer, which taken as a whole determines the valuation. Ongoing credit evaluations are performed and an allowance for potential credit losses is provided against the portion of accounts receivable that is estimated to be uncollectible. | |||||||||||||||
Mortgage Note Receivable | |||||||||||||||
The Company provides first-mortgage financing in the form of a note receivable. The loan is held for investment and is intended to be held to maturity and, accordingly, is recorded at cost and net of the allowance for losses when the loan is deemed to be impaired. Premiums, discounts, and net origination fees are amortized or accreted as an adjustment to interest income using the effective interest method over the life of the loan. The Company discontinues recording interest and amortizing discounts/premiums when the contractual payment of interest and/or principal is not received. | |||||||||||||||
Impairment of Note Receivable | |||||||||||||||
The Company reviews the note receivable for impairment in each reporting period pursuant to the applicable authoritative accounting guidance. A loan is impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts recorded as assets on the consolidated balance sheet. The Company applies normal loan review and underwriting procedures (as may be implemented or modified from time to time) in making that judgment. | |||||||||||||||
When a loan is impaired, the Company measures impairment based on the present value of expected cash flows discounted at the loan’s effective interest rate against the value of the asset recorded on the consolidated balance sheet. The Company may also measure impairment based on a loan’s observable market price or the fair value of collateral if the loan is collateral dependent. If a loan is deemed to be impaired, the Company records a valuation allowance through a charge to earnings for any shortfall. The Company’s assessment of impairment is based on considerable judgment and estimates. The Company did not record a valuation allowance during the three and six months ended June 30, 2014 or 2013. | |||||||||||||||
Prepaid Expenses and Other Assets | |||||||||||||||
Prepaid expenses include prepaid property insurance and hotel operating expenses. Other assets include accrued interest receivable. | |||||||||||||||
Deferred Costs | |||||||||||||||
Deferred costs consist of deferred financing fees and franchise costs. Deferred loan costs are recorded at cost and are amortized to interest expense using a straight-line method that approximates the effective interest method over the life of the related debt. The deferred franchise costs are recorded at cost and amortized over the term of the franchise contract. Accumulated amortization of deferred costs was $111,486 and $69,411 as of June 30, 2014 and December 31, 2013, respectively. Expected future amortization of deferred financing fees and franchise costs is as follows: | |||||||||||||||
Years Ending | |||||||||||||||
31-Dec | Total | Loan Costs | Franchise Costs | ||||||||||||
2014 | $ | 56,049 | $ | 43,959 | $ | 12,090 | |||||||||
2015 | 111,380 | 87,200 | 24,180 | ||||||||||||
2016 | 110,846 | 86,666 | 24,180 | ||||||||||||
2017 | 92,543 | 68,363 | 24,180 | ||||||||||||
Thereafter | 576,084 | 316,332 | 259,752 | ||||||||||||
Total | $ | 946,902 | $ | 602,520 | $ | 344,382 | |||||||||
Earnings per Share | |||||||||||||||
Earnings per share (“EPS”) is calculated based on the weighted average number of shares outstanding during each period. Basic and diluted EPS are the same for all periods presented. Restricted stock was included in basic earnings per share because the restricted stock participates in dividends. | |||||||||||||||
Comprehensive Income | |||||||||||||||
For the periods presented, there were no differences between reported net loss attributable to common shareholders and comprehensive income. | |||||||||||||||
Recent Accounting Pronouncements | |||||||||||||||
In April 2014, the Financial Accounting Standards Board issued ASU No. 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360) - Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.” ASU 2014-08 changes the threshold for disclosing discontinued operations and the related disclosure requirements. Pursuant to ASU 2014-08, only disposals representing a strategic shift, such as a major line of business, a major geographical area or a major equity investment, should be presented as a discontinued operation. ASU 2014-08 is effective for annual periods beginning on or after December 15, 2014 with early adoption permitted but only for disposals or classifications as held for sale which have not been reported in financial statements previously issued or available for issuance. The Company implemented the provisions of the ASU as of January 1, 2014. The adoption of this guidance did not have a material effect on the Company’s condensed consolidated financial statements. | |||||||||||||||
Investment_in_Hotel_Properties
Investment in Hotel Properties | 6 Months Ended | ||||||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||||||
Real Estate [Abstract] | ' | ||||||||||||||||||||
Investment in Hotel Properties | ' | ||||||||||||||||||||
3. Investment in Hotel Properties | |||||||||||||||||||||
The following table sets forth summary information regarding the hotel properties the Company owned as of June 30, 2014: | |||||||||||||||||||||
Property Name | Date Acquired | Location | Ownership Interest | Purchase Price(1) | Rooms | Mortgage Debt Outstanding(2) | |||||||||||||||
Woodlands Hotel (Homewood Suites by Hilton) | 8-Nov-12 | The Woodlands, Texas | 100 | % | $ | 12,000,000 | 91 | $ | 6,712,789 | ||||||||||||
Germantown Hotel (Hyatt Place) | 9-Apr-13 | Germantown, Tennessee | 100 | % | 11,300,000 | 127 | 7,664,234 | ||||||||||||||
Charleston Hotel (Hyatt Place) | 2-Jul-13 | North Charleston, South Carolina | 100 | % | 11,800,000 | 113 | 7,702,948 | ||||||||||||||
Austin Hotel (Hampton Inn) | 30-Dec-13 | Austin, Texas | 100 | % | 15,350,000 | 123 | 11,437,327 | ||||||||||||||
Grapevine Hotel (Residence Inn) | March 31, 2014 | Grapevine, Texas | 100 | % | 20,500,000 | 133 | 13,221,467 | ||||||||||||||
Silicon Valley Hotel (TownPlace Suites) | June 24, 2014 | Newark, California | 100 | % | 10,000,000 | 127 | 5,060,493 | ||||||||||||||
Totals | $ | 80,950,000 | 714 | $ | 51,799,258 | ||||||||||||||||
-1 | Excludes closing costs. | ||||||||||||||||||||
-2 | As of June 30, 2014. | ||||||||||||||||||||
Investments in hotel properties consisted of the following at June 30, 2014 and December 31, 2013: | |||||||||||||||||||||
30-Jun-14 | 31-Dec-13 | ||||||||||||||||||||
Land | $ | 12,680,000 | $ | 6,760,000 | |||||||||||||||||
Buildings and improvements | 64,787,835 | 39,861,360 | |||||||||||||||||||
Furniture, fixtures and equipment | 5,461,736 | 3,982,000 | |||||||||||||||||||
Total cost | 82,929,571 | 50,603,360 | |||||||||||||||||||
Accumulated depreciation | (2,819,874 | ) | (1,467,236 | ) | |||||||||||||||||
Investment in hotel properties, net | $ | 80,109,697 | $ | 49,136,124 | |||||||||||||||||
First Quarter Acquisition | |||||||||||||||||||||
Grapevine Hotel | |||||||||||||||||||||
On March 31, 2014, Moody National 2020-Grapevine Holding, LLC, a wholly owned subsidiary of the OP (“Moody Grapevine Holding”) acquired fee simple title to the Grapevine Hotel from Moody National RI Grapevine S, LLC, an affiliate of the Company, Moody National RI Grapevine MT, LLC, an affiliate of the Company, and Moody National Management, LP, for an aggregate purchase price of $20,500,000, excluding acquisition costs. The Company financed the acquisition of the Grapevine Hotel with proceeds from its ongoing public offering and approximately $13,250,000 of indebtedness secured by the Grapevine Hotel. The purchase price of the Grapevine Hotel, excluding acquisition expenses, was preliminarily allocated to land, buildings and improvements and furniture, fixtures and equipment in the amounts of $2,600,000, $17,500,000, and $400,000, respectively. Acquisition costs of $443,190 were incurred and expensed in connection with the acquisition of the Grapevine Hotel. The Company has recognized approximately $1,463,000 in revenues and a $294,000 net loss, which includes acquisition costs, for the Grapevine Hotel for the six months ended June 30, 2014. In connection with the acquisition of the Grapevine Hotel, the Company formed a taxable REIT subsidiary (the “Grapevine Hotel TRS”). Upon the closing of the acquisition of the Grapevine Hotel, Moody National RI Grapevine MT, LLC, a wholly owned subsidiary of the Grapevine Hotel TRS (the “Grapevine Master Tenant”), entered into a Hotel Lease Agreement pursuant to which the Grapevine Master Tenant leases the Grapevine Hotel. Moody National Hospitality Management, LLC, an affiliate of the Company, manages the Grapevine Hotel pursuant to a Hotel Management Agreement with the Grapevine Master Tenant. | |||||||||||||||||||||
Second Quarter Acquisition | |||||||||||||||||||||
Silicon Valley Hotel | |||||||||||||||||||||
On June 24, 2014, Moody National Cedar-Newark Holding, LLC, a wholly owned subsidiary of the OP (“Moody Silicon Valley Holding”), acquired fee simple title to the Silicon Valley Hotel from Moody Newark, LLC, an unaffiliated third party, for an aggregate purchase price of $10,000,000, excluding acquisition costs. The Company financed the acquisition of the Silicon Valley Hotel with proceeds from its ongoing public offering and the assumption of the existing mortgage loan secured by the Silicon Valley Hotel with an original principal amount of $5,250,000 and a balance of $5,060,493 assumed on the date of acquisition. The purchase price of the Silicon Valley Hotel, excluding acquisition expenses, was preliminarily allocated to land, buildings and improvements and furniture, fixtures and equipment in the amounts of $3,320,000, $6,302,000 and $378,000, respectively. Acquisition costs of $283,276 were incurred and expensed in connection with the acquisition of the Silicon Valley Hotel. The Company has recognized approximately $84,000 in revenues and a $260,000 net loss, which includes acquisition costs, for the Silicon Valley Hotel for the six months ended June 30, 2014. In connection with the acquisition of the Silicon Valley Hotel, the Company formed a taxable REIT subsidiary (the “Silicon Valley Hotel TRS”). Upon the closing of the acquisition of the Silicon Valley Hotel, Moody National TPS Newark MT, LLC, a wholly owned subsidiary of the Silicon Valley Hotel TRS (the “Silicon Valley Master Tenant”), entered into a Hotel Lease Agreement pursuant to which the Silicon Valley Master Tenant leases the Silicon Valley Hotel. Moody National Hospitality Management, LLC, an affiliate of the Company, manages the Silicon Valley Hotel pursuant to a Hotel Management Agreement with the Silicon Valley Master Tenant. | |||||||||||||||||||||
The following unaudited pro forma consolidated financial information for the three and six months ended June 30, 2014 and 2013 is presented as if the Company acquired the Germantown Hotel, Charleston Hotel, Austin Hotel, Grapevine Hotel and Silicon Valley Hotel on January 1, 2013. This information is not necessarily indicative of what the actual results of operations would have been had the Company completed the acquisition of the Germantown Hotel, the Charleston Hotel, the Austin Hotel, the Grapevine Hotel and the Silicon Valley Hotel on January 1, 2013, nor does it purport to represent the Company’s future operations: | |||||||||||||||||||||
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||
Revenue | $ | 6,517,114 | $ | 5,907,670 | $ | 12,420,084 | $ | 12,527,590 | |||||||||||||
Net income (loss) | (135,435 | ) | (185,701 | ) | (672,523 | ) | 368,122 | ||||||||||||||
Net income (loss) attributable to common shareholders | (154,876 | ) | (205,583 | ) | (711,258 | ) | 328,945 | ||||||||||||||
Net income (loss) per common share attributable to common shareholders, basic and diluted | $ | (0.03 | ) | $ | (0.10 | ) | $ | (0.17 | ) | $ | 0.19 |
Notes_Receivable
Notes Receivable | 6 Months Ended |
Jun. 30, 2014 | |
Receivables [Abstract] | ' |
Notes Receivable | ' |
4. Notes Receivable | |
As of June 30, 2014 and December 31 2013, the note receivable was $12,165,202 and $12,269,485, respectively. | |
Hyatt Place Note | |
On June 3, 2011 (the “Closing Date”), and effective as of May 5, 2011 (the “Effective Date”), the Company acquired a joint venture interest in the Hyatt Place Note pursuant to the transaction described below. The Hyatt Place Note was issued by Moody National HP Grapevine Trust, a Delaware statutory trust (the “Trust”), in favor of Patriot Bank, a Texas banking association (the “Patriot Bank”), and is secured by a lien on the Hyatt Place Property. As of the Closing Date, the Hyatt Place Note had an outstanding principal balance of $12,759,199. | |
On the Closing Date, the OP, Moody National Mortgage Corporation (“Moody National Mortgage”), an affiliate of the Sponsor controlled by Brett C. Moody, and certain of the holders of ownership interests in the Trust (collectively, the “Trust Members,” and, together with the OP and Moody National Mortgage, the “Members”), entered into the limited liability company agreement (the “Note Joint Venture Agreement”) of MNHP Note Holder, LLC, a Delaware limited liability company (the “Note Joint Venture”). On the Closing Date, the Note Joint Venture acquired the Hyatt Place Note from Patriot Bank for an aggregate purchase price of $12,759,199, exclusive of closing costs. The Note Joint Venture financed the payment of the purchase price for the Hyatt Place Note with (1) a capital contribution to the Note Joint Venture from the OP and the Trust Members, and (2) the proceeds of a loan from Patriot Bank evidenced by a promissory note in the aggregate principal amount of $11,483,280 (the “Acquisition Note”). For additional information on the terms of the Acquisition Note, see Note 5. As of June 30, 2014, the OP’s membership interest in the Note Joint Venture was 74.5%, the Trust Members’ membership interest in the Note Joint Venture was 11.5% and Moody National Mortgage’s membership interest in the Note Joint Venture was 14%. | |
On the Closing Date and effective as of the Effective Date, the Note Joint Venture and the Trust entered into a Renewal, Extension and Modification Agreement which extended the maturity date of the Hyatt Place Note and amended the terms of the Hyatt Place Note. The entire unpaid principal balance of the Hyatt Place Note and all accrued and unpaid interest thereon is due and payable in full on February 1, 2018 (the “Maturity Date”). The Hyatt Place Note accrued interest at a fixed rate of 5.15% per annum from the Closing Date through August 21, 2012 (the “First Change Date”). For the period from the First Change Date through August 21, 2015 (the “Second Change Date”), the Hyatt Place Note will accrue interest at 5.15%, which is a fixed rate equal to (a) the variable interest rate per annum published in The Wall Street Journal as the “Prime Rate” for the U.S. (the “Prime Rate”) in effect as of the First Change Date, plus (b) 1.90%. For the period from the Second Change Date through the Maturity Date, the Hyatt Place Note will accrue interest at a fixed rate equal to (a) the Prime Rate in effect as of the Second Change Date, plus (b) 1.90%, provided that in no event will the interest rate exceed the maximum interest rate permitted by applicable law. The Prime Rate at June 30, 2014 was 3.25%. The Trust may prepay the Hyatt Place Note, in whole or in part, at any time without penalty or premium. | |
The estimated fair value of the Company’s note receivable as of June 30, 2014 and December 31 2013 was $12,165,202 and $12,269,485, respectively. The fair value of the note receivable was estimated based on discounted cash flow analyses using the current incremental borrowing rates for similar types of borrowing arrangements as of the respective reporting dates. The discounted cash flow method of assessing fair value results in a general approximation of value, and such value may never actually be realized. |
Debt
Debt | 6 Months Ended | ||||||||||||||
Jun. 30, 2014 | |||||||||||||||
Debt Disclosure [Abstract] | ' | ||||||||||||||
Debt | ' | ||||||||||||||
5. Debt | |||||||||||||||
The Company’s aggregate borrowings, secured and unsecured, are reviewed by the Company’s board of directors at least quarterly. Under the Company’s Second Articles of Amendment and Restatement (as amended, the “Charter”), the Company is prohibited from borrowing in excess of 300% of the value of the Company’s net assets. “Net assets” for purposes of this calculation is defined to be the Company’s total assets (other than intangibles), valued at cost prior to deducting depreciation, reserves for bad debts and other non-cash reserves, less total liabilities. The preceding calculation is generally expected to approximate 75% of the aggregate cost of the Company’s assets before non-cash reserves and depreciation. However, the Company may temporarily borrow in excess of these amounts if such excess is approved by a majority of the Company’s independent directors and disclosed to stockholders in the Company’s next quarterly report, along with an explanation for such excess. As of June 30, 2014, the Company’s debt levels did not exceed 300% of the value of the Company’s net assets. | |||||||||||||||
As of June 30, 2014 and December 31, 2013, the Company’s notes payable consisted of the following: | |||||||||||||||
Principal as of | Principal as of | Interest Rate at | Maturity Date | ||||||||||||
30-Jun-14 | 31-Dec-13 | June 30, 2014 | |||||||||||||
Hyatt Place Note Acquisition Note | $ | 10,509,962 | $ | 10,677,350 | 3 | % | 5-May-18 | ||||||||
Woodlands Hotel Loan | 6,712,789 | 6,777,812 | 6 | % | 6-Dec-16 | ||||||||||
Germantown Hotel Loan | 7,664,234 | 7,728,405 | 4.3 | % | 6-May-23 | ||||||||||
Charleston Hotel Loan | 7,702,948 | 7,757,788 | 5.193 | % | 1-Aug-23 | ||||||||||
Austin Hotel Loan | 11,437,327 | 11,500,000 | 5.426 | % | 6-Jan-24 | ||||||||||
Grapevine Hotel Loan | 13,221,467 | — | 5.25 | % | 6-Apr-24 | ||||||||||
Silicon Valley Hotel Loan | 5,060,493 | — | 5.5 | % | 6-Jul-22 | ||||||||||
Total | $ | 62,309,220 | $ | 44,441,355 | |||||||||||
The estimated fair value of the Company’s notes payable as of June 30, 2014 and December 31, 2013 was $62,309,220 and $44,441,355, respectively. The fair value of notes payable was estimated based on discounted cash flow analyses using the current incremental borrowing rates for similar types of borrowing arrangements as of the respective reporting dates. The discounted cash flow method of assessing fair value results in a general approximation of value, and such value may never actually be realized. |
Equity
Equity | 6 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
Stockholders' Equity Note [Abstract] | ' | ||||||||||||
Equity | ' | ||||||||||||
6. Equity | |||||||||||||
Capitalization | |||||||||||||
Under the Charter, the Company has the authority to issue 400,000,000 shares of common stock and 50,000,000 shares of preferred stock. All shares of common and preferred stock have a par value of $0.01 per share. As of June 30, 2014, the Company had issued 5,650,601 shares of common stock in the Company’s public offerings, including 126,727 shares issued pursuant to the DRIP. As of June 30, 2014, there were a total of 5,714,073 shares of the Company’s common stock issued and outstanding. | |||||||||||||
The Company’s board of directors is authorized to amend the Charter, without the approval of the stockholders, to increase the aggregate number of authorized shares of capital stock or the number of shares of any class or series that the Company has authority to issue. | |||||||||||||
Distributions | |||||||||||||
The Company’s board of directors has authorized and declared a distribution to its stockholders that (1) accrues daily to the Company’s stockholders of record as of the close of business on each day; (2) is payable in cumulative amounts on or before the 15th day of each calendar month; and (3) is calculated at a rate of $0.002192 per share of the Company’s common stock per day, which, if paid each day over a 365-day period, is equivalent to an 8.0% annualized distribution rate based on a purchase price of $10.00 per share of common stock. | |||||||||||||
The following table summarizes distributions paid in cash and pursuant to the DRIP for the six months ended June 30, 2013 and 2014. | |||||||||||||
Period (1) | Cash Distribution (1) | Distribution Paid Pursuant to DRIP (1)(2) | Total Amount of Distribution (1) | ||||||||||
First Quarter 2013 | $ | 200,579 | $ | 72,609 | $ | 273,188 | |||||||
Second Quarter 2013 | 283,395 | 89,775 | 373,170 | ||||||||||
Total | $ | 483,974 | $ | 162,384 | $ | 646,358 | |||||||
First Quarter 2014 | $ | 482,368 | $ | 194,592 | $ | 676,960 | |||||||
Second Quarter 2014 | 630,109 | 257,705 | 887,814 | ||||||||||
Total | $ | 1,112,477 | $ | 452,297 | $ | 1,564,774 | |||||||
-1 | Distributions are paid on a monthly basis. Distributions for all record dates of a given month are paid approximately 15 days following the end of such month. | ||||||||||||
-2 | Amount of distributions paid in shares of common stock pursuant to our distribution reinvestment plan. | ||||||||||||
Noncontrolling Interests in Consolidated Joint Ventures | |||||||||||||
Noncontrolling interest in consolidated joint ventures at June 30, 2014 was $276,457, which represented ownership interests in the Note Joint Venture, and is reported in equity in the consolidated balance sheets. Income from consolidated joint ventures attributable to these noncontrolling interests was $19,438 and $19,895 for the three months ended June 30, 2014 and 2013, respectively, and was $38,737 and $39,181 for the six months ended June 30, 2014 and 2013, respectively. | |||||||||||||
Related_Party_Arrangements
Related Party Arrangements | 6 Months Ended |
Jun. 30, 2014 | |
Related Party Transactions [Abstract] | ' |
Related Party Arrangements | ' |
7. Related Party Arrangements | |
Advisor and certain affiliates of Advisor receive fees and compensation in connection with the Company’s public offering and the acquisition, management and sale of the Company’s real estate investments. | |
Selling Commissions and Dealer Manager Fees | |
Moody Securities, LLC (“Moody Securities”), the dealer manager of the Company’s public offering, receives a selling commission of up to 6.5% of gross offering proceeds raised in the Company’s public offerings. Moody Securities may re-allow all or a portion of such selling commissions earned to participating broker-dealers. In addition, the Company pays Moody Securities a dealer manager fee of up to 3.5% of gross offering proceeds raised in the Company’s public offerings, a portion of which may be reallowed to participating broker-dealers. No selling commissions or dealer manager fee are paid for sales pursuant to the DRIP. As of June 30, 2014, the Company had paid Moody Securities $746,368 and $3,296,362 in selling commissions related to the initial and follow-on offerings, respectively, and $190,626 and $972,030 in dealer manager fees related to the initial and follow-on offerings, respectively, which has been recorded as an offset to additional paid-in capital in the condensed consolidated balance sheets. | |
Organization and Offering Costs | |
Advisor and its affiliates will be reimbursed up to 15.0% of offering proceeds for reimbursement of organization and offering expenses (including selling commissions and the dealer manager fee payable to Moody Securities) not to exceed actual expenses incurred. Advisor will be responsible for the payment of organization and offering expenses, other than selling commissions and dealer manager fees, to the extent they exceed 15% of gross offering proceeds, without recourse against or reimbursement by the Company. As of June 30, 2014, Advisor and its affiliates had incurred organizational and offering expenses of $3,214,000 and $1,713,000 related to the initial and follow-on offerings, respectively. | |
As of June 30, 2014, total offering costs for the follow-on offering were $6,155,405. The Company directly incurred $4,442,041 of offering costs for the follow-on offering and reimbursed Advisor for $1,829,324 in offering costs for the follow-on offering. The Company has an $115,960 receivable from Advisor for offering costs related to the follow-on offering, which is recorded as an offset to other amounts owed to Advisor. As of June 30, 2014, offering costs related to the follow-on offering did not exceed 15.0% of the gross offering proceeds from the sale of the Company’s shares of common stock in the follow-on offering. The Company has not reimbursed Advisor any funds for organization costs for the follow-on offering. | |
Advisory Fees and Expense Reimbursement | |
Advisor, or its affiliates, receives an acquisition fee equal to 1.5% of (1) the cost of investments the Company acquires or (2) the Company’s allocable cost of investments acquired in a joint venture. With respect to investments in and originations of loans, Advisor will receive an origination fee in lieu of an acquisition fee. The origination fee will equal 1.5% of the amount funded by the Company to invest in or originate such loan. For the six months ended June 30, 2014, the Company paid Advisor acquisition fees of $478,500 in connection with the acquisition of the Grapevine Hotel and the Silicon Valley Hotel. For the six months ended June 30, 2013, the Company paid Advisor acquisition fees of $169,500 in connection with the acquisition of the Germantown Hotel. As of June 30, 2014, the Company had not paid any origination fees to Advisor. | |
Advisor will receive a debt financing fee of 1.0% of the amount available under any loan or line of credit made available to the Company. It is anticipated that Advisor will pay some or all of these fees to third parties with whom it subcontracts to coordinate financing for the Company. For the six months ended June 30, 2013, the Company paid $78,000 in debt financing fees to Advisor for financing incurred in connection with the acquisition of the Germantown Hotel. For the six months ended June 30, 2014, the Company paid $183,100 in debt financing fees to Advisor for financing incurred in connection with the acquisition of the Grapevine Hotel and the Silicon Valley Hotel. | |
The Company pays Advisor a monthly asset management fee of one-twelfth of 1.0% of the aggregate cost (before non-cash reserves and depreciation) of all real estate investments held by the Company at month-end. For the three months ended June 30, 2014 and 2013, the Company incurred asset management fees of $210,133 and $0, respectively, and for the six months ended June 30, 2014 and 2013, the Company incurred asset management fees of $366,891 and $0, respectively, payable to Advisor which are recorded in corporate general and administrative expenses in the accompanying condensed consolidated statements of operations. Advisor waived the asset management fee for the months of February 2012 and March 2012 and May 2012 through June 2013. | |
If Advisor provides a substantial amount of services in connection with the sale of a property or other investment, Advisor or its affiliates also will be paid a disposition fee equal to 3.0% of the contract sales price of each property or other investment sold, provided that total real estate commissions, including the disposition fee, do not exceed 6.0% of the contract sales price. As of June 30, 2014, the Company had not paid any disposition fees to Advisor because Advisor waived the disposition fee in connection with the sale of the Residence Inn Property. | |
The Company will reimburse Advisor for all operating expenses paid or incurred by Advisor in connection with the services provided to the Company, subject to the limitation that the Company will not reimburse Advisor for any amount by which its operating expenses (including the asset management fee) at the end of the four preceding fiscal quarters exceeds the greater of: (1) 2% of the Company’s average invested assets, or (2) 25% of the Company’s net income determined without reduction for any additions to reserves for depreciation, bad debts or other similar non-cash reserves and excluding any gain from the sale of the Company’s assets for that period (the “2%/25% Limitation”). Notwithstanding the above, the Company may reimburse Advisor for expenses in excess of this limitation if a majority of the independent directors determines that such excess expenses are justified based on unusual and non-recurring factors. For the four fiscal quarters ended June 30, 2014, total operating expenses of the Company were $1,359,945, which included $771,035 in operating expenses incurred directly by the Company and $588,910 incurred by Advisor on behalf of the Company. Of the $1,359,945 in total operating expenses incurred during the four fiscal quarters ended June 30, 2014, $75,038 exceeded the 2%/25% Limitation and is not an obligation of the Company. The Company reimbursed Advisor $165,000 in operating expenses during the four fiscal quarters ended June 30, 2014. Additionally, Advisor has incurred $3,622,281 in operating expenses on the Company’s behalf prior to the four fiscal quarters ended June 30, 2014. Subject to a future determination by the board of directors, this amount is not reimbursable to Advisor nor an obligation of the Company. | |
Advisor has waived all operating expenses reimbursable to Advisor for each of the 12 prior fiscal quarters ended March 31, 2014 (the “Waiver Period”) to the extent such expenses had not been previously reimbursed to Advisor. Advisor further agreed that all expenses incurred directly by the Company during the waiver period will be paid by Advisor on behalf of the Company. Total reimbursable expenses so waived or assumed by Advisor were $1,967,721 as of June 30, 2014. | |
Property Management Fees | |
The Company has engaged Moody National Hospitality Management, LLC, an affiliate of the Sponsor (the “Property Manager”), as its property manager. The Company pays Property Manager a market-based property management fee in connection with the operation and management of properties pursuant to the terms of hotel management agreements. For the three months ended June 30, 2014 and 2013, the Company paid the Property Manager property management fees of $166,114 and $53,759, respectively, and accounting fees of $37,500 and $15,000. For the six months ended June 30, 2014 and 2013, the Company paid the Property Manager property management fees of $271,654 and $81,028, respectively, and accounting fees of $67,500 and $22,500, respectively, which are included in hotel operating expenses in the accompanying consolidated statements of operations. | |
Note Joint Venture | |
As discussed in Note 4, as of June 30, 2014, the OP owns a 74.5% membership interest in the Note Joint Venture, Moody National Mortgage owns a 14% membership interest in the Note Joint Venture and the Trust Members own the remaining 11.5% membership interests in the Note Joint Venture. Pursuant to the terms of the Note Joint Venture Agreement, Moody National Mortgage is entitled to receive approximately 14% of all distributions of cash from operations of the Note Joint Venture and the OP and the other Members are entitled to receive the remaining approximately 86% of distributions of cash from operations of the Note Joint Venture in proportion to their respective membership interests in the Note Joint Venture. | |
The Note Joint Venture Agreement provides that cash proceeds from a sale, exchange, refinancing or other disposition of the Hyatt Place Note will be distributed as follows: (1) first, to each Member of the Note Joint Venture in proportion to their respective unreturned capital contributions to the Note Joint Venture until each member’s unreturned capital contributions have been reduced to zero; (2) second, to Moody National Mortgage until Moody National Mortgage has been distributed an amount equal to approximately 14% of all distributions made to all Members (inclusive of all prior distributions); and (3) thereafter, approximately 14% to Moody National Mortgage and approximately 86% to the OP and the Trust Members in proportion to their respective membership interests in the Note Joint Venture. In addition, so long as Moody National Mortgage or Moody National Management has any outstanding guaranty of any indebtedness of the Note Joint Venture, (1) the OP will in good faith consult with Moody National Mortgage and consider any proposals or recommendations of Moody National Mortgage regarding any possible refinancing of indebtedness on the Hyatt Place Note or any sale of the Hyatt Place Note and (2) any sale of the Hyatt Place Note will require the consent of Moody National Mortgage, which consent will not be unreasonably withheld. | |
As discussed in Note 3, on March 31, 2014, Moody Grapevine Holding acquired fee simple title to the Grapevine Hotel from Moody National RI Grapevine S, LLC, Moody National RI Grapevine MT, LLC, and Moody National Management, LP, each an affiliate of the Company, for an aggregate purchase price of $20,500,000, excluding acquisition costs. |
Incentive_Award_Plan
Incentive Award Plan | 6 Months Ended | |||||||||
Jun. 30, 2014 | ||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | |||||||||
Incentive Award Plan | ' | |||||||||
8. Incentive Award Plan | ||||||||||
The Company has adopted an incentive plan (the “Incentive Award Plan”) that provides for the grant of equity awards to its employees, directors and consultants and those of the Company’s affiliates. The Incentive Award Plan authorizes the grant of non-qualified and incentive stock options, restricted stock awards, restricted stock units, stock appreciation rights, dividend equivalents and other stock-based awards or cash-based awards. Shares of common stock will be authorized and reserved for issuance under the Incentive Award Plan. The Company has also adopted an independent directors compensation plan (the “Independent Directors Compensation Plan”) pursuant to which each of the Company’s then current independent directors were entitled to receive 5,000 shares of restricted stock when the Company raised the minimum offering amount of $2,000,000 in its initial public offering. Each new independent director that subsequently joins the Company’s board of directors will receive 5,000 shares of restricted stock on the date he or she joins the Company’s board of directors. In addition, on the date of each of the first four annual meetings of the Company’s stockholders at which an independent director is re-elected to the Company’s board of directors, he or she will receive 2,500 restricted shares. Subject to certain conditions, the non-vested shares of restricted stock granted pursuant to the Independent Directors Compensation Plan will vest and become non-forfeitable in four equal quarterly installments beginning on the first day of the first quarter following the date of grant; provided, however, that the restricted stock will become fully vested on the earlier to occur of (1) the termination of the independent director’s service as a director due to his or her death or disability, or (2) a change in control of the Company. As of June 30, 2014, there were 1,958,750 common shares remaining available for future issuance under the Incentive Award Plan and the Independent Directors Compensation Plan. | ||||||||||
No shares of restricted stock were granted pursuant to the Independent Directors Compensation Plan during the three months and six ended June 30, 2014 and 2013. As of June 30, 2014, a total of 41,250 shares of restricted stock have been issued by the Company to the Company’s independent directors pursuant to the Independent Directors Compensation Plan. | ||||||||||
The weighted average grant date fair value of the shares of restricted stock issued by the Company pursuant to the Independent Directors Compensation Plan was $10.00 per share based on observable market transactions occurring near the dates of the grants. The Company recorded compensation related to such shares of restricted stock ratably from the grant date to the date the shares become fully vested based on the fair market value of such shares at the date they were granted. The Company recorded compensation related to such shares of restricted stock based on the fair market value of such shares at the date they became vested of $21,130 and $21,349 for the three months ended June 30, 2014 and 2013, respectively, and $42,028 and $56,031 for the six months ended June 30, 2014 and 2013, respectively. As of June 30, 2014, there were 1,875 non-vested shares of restricted common stock granted pursuant to the Independent Directors Compensation Plan which were granted August 13, 2013. The remaining unrecognized compensation expense of $232 will be recognized during the third quarter of 2014. | ||||||||||
The following is a summary of activity under the Independent Directors Compensation Plan for the six months ended June 30, 2014 and year ended December 31, 2013: | ||||||||||
Number of Shares | Weighted Average Grant Date Fair Value | |||||||||
Balance of non-vested shares as of January 1, 2013 | 8,125 | $ | 10 | |||||||
Shares granted on August 13, 2013 | 7,500 | 10 | ||||||||
Shares vested | (10,000 | ) | 10 | |||||||
Balance of non-vested shares as of December 31, 2013 | 5,625 | 10 | ||||||||
Shares vested | (3,750 | ) | 10 | |||||||
Balance of non-vested shares as of June 30, 2014 | 1,875 | $ | 10 | |||||||
Subordinated_Participation_Int
Subordinated Participation Interest | 6 Months Ended |
Jun. 30, 2014 | |
Subordinated Participation Interest | ' |
Subordinated Participation Interest | ' |
9. Subordinated Participation Interest | |
Pursuant to the limited partnership agreement of the OP, the holders of the Special Units will be entitled to distributions from the OP in an amount equal to 15.0% of net sales proceeds received by the OP on dispositions of its assets and dispositions of real properties by joint ventures or partnerships in which the OP owns a partnership interest, after the other holders of common units, including the Company, have received in the aggregate cumulative distributions from operating income, sales proceeds or other sources equal to their capital contributions plus an 8.0% cumulative non-compounded annual pre-tax return thereon. The Special Units will be redeemed for the above amount upon the earliest of: (1) the occurrence of certain events that result in the termination or non-renewal of the advisory agreement or (2) a listing of the Company’s common stock on a national securities exchange. |
Commitments_and_Contingencies
Commitments and Contingencies | 6 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Commitments and Contingencies Disclosure [Abstract] | ' | ||||||||
Commitments and Contingencies | ' | ||||||||
10. Commitments and Contingencies | |||||||||
Restricted Cash | |||||||||
Under certain management and debt agreements existing at June 30, 2014, the Company escrows payments required for insurance, real estate taxes, capital improvements, hotel furniture and fixtures and debt service. | |||||||||
The composition of the Company’s restricted cash as of June 30, 2014 and December 31, 2013 are as follows: | |||||||||
30-Jun-14 | 31-Dec-13 | ||||||||
Property improvement plan | $ | 3,805,765 | $ | 2,212,866 | |||||
Real estate taxes | 490,043 | 538,263 | |||||||
Insurance | 159,219 | 210,849 | |||||||
Hotel furniture and fixtures | 645,266 | 333,551 | |||||||
Seasonality | 115,028 | — | |||||||
Total restricted cash | $ | 5,215,321 | $ | 3,295,529 |
Income_Taxes
Income Taxes | 6 Months Ended | ||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||||||||||
Income Taxes | ' | ||||||||||||||||
11. Income Taxes | |||||||||||||||||
The Company has formed taxable REIT subsidiaries (each a “TRS”) that are C-Corporations for federal income tax purposes and use the consolidated asset and liability method of accounting for income taxes. Tax return positions are recognized in the consolidated financial statements when they are “more-likely-than-not” to be sustained upon examination by the taxing authority. Deferred income tax assets and liabilities result from temporary differences. Temporary differences are differences between the tax bases of assets and liabilities and their reported amounts in the consolidated financial statements that will result in taxable or deductible amounts in future periods. A valuation allowance may be placed on deferred income tax assets, if it is determined that it is more likely than not that a deferred tax asset may not be realized. | |||||||||||||||||
No provision for income taxes has been made for the Company (other than each TRS) for the three and six months ended June 30, 2014 and 2013 as it made an election to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code commencing with the taxable year ended December 31, 2011. Prior to January 1, 2011, the Company was subject to federal and state income taxes as it had not elected to be taxed as a REIT. | |||||||||||||||||
The TRSs had no deferred tax assets or liabilities as of June 30, 2014 and December 31, 2013. | |||||||||||||||||
As of June, 2014, the Company had operating loss carry-forwards of $335,800. | |||||||||||||||||
The income tax expense for the three months and six months ended June 30, 2014 and 2013 consisted of the following: | |||||||||||||||||
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Current expense | $ | 93,000 | $ | 42,100 | $ | 145,900 | $ | 63,100 | |||||||||
Deferred expense | — | — | — | — | |||||||||||||
Total expense, net | $ | 93,000 | $ | 42,100 | $ | 145,900 | $ | 63,100 | |||||||||
Federal | $ | 84,300 | $ | 35,000 | $ | 136,300 | $ | 56,000 | |||||||||
State | 8,700 | 7,100 | 9,600 | 7,100 | |||||||||||||
Total tax expense | $ | 93,000 | $ | 42,100 | $ | 145,900 | $ | 63,100 | |||||||||
Income tax expense recognized is based on the taxable income of the Company’s taxable REIT subsidiaries and not the taxable income of the Company. |
Subsequent_Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2014 | |
Subsequent Events [Abstract] | ' |
Subsequent Events | ' |
13. Subsequent Events | |
Status of Offering | |
As of August 11, 2014, the Company had accepted investors’ subscriptions for, and issued 6,372,662 shares of the Company’s common stock in the Company’s initial public offering and follow-on offering, including 138,230 shares issued pursuant to the DRIP, resulting in aggregate gross offering proceeds to the Company of $62,344,320. | |
Distributions Declared | |
On June 30, 2014 the Company declared a distribution in the aggregate amount of $351,117, of which $241,796 was paid in cash on July 15, 2014 and $109,321 was paid pursuant to the DRIP in the form of additional shares of the Company’s common stock. On July 31, 2014, the Company declared a distribution in the aggregate amount of $406,474 which is scheduled to be paid in cash and through the DRIP in the form of additional shares of the Company’s common stock on August 15, 2014. | |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 6 Months Ended | ||||||||||||||
Jun. 30, 2014 | |||||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||||
Basis of Presentation and Principles of Consolidation | ' | ||||||||||||||
Basis of Presentation and Principles of Consolidation | |||||||||||||||
The Company’s consolidated financial statements include its accounts and the accounts of its subsidiaries over which it has control. All intercompany balances and transactions are eliminated in consolidation. | |||||||||||||||
The Company includes the accounts of its consolidated subsidiaries in its consolidated financial statements when the Company is the primary beneficiary for entities deemed to be variable interest entities (“VIEs”) through which the Company has a controlling interest. Interests in entities acquired are evaluated based on U.S. generally accepted accounting principles (“GAAP”), which requires the consolidation of VIEs in which the Company is deemed to have the controlling financial interest. The Company has the controlling financial interest if the Company has the power to direct the activities of the VIE that most significantly impact its economic performance and the obligation to absorb losses or receive benefits from the VIE that could be significant to the Company. If the interest in the entity is determined not to be a VIE, then the entity is evaluated for consolidation based on legal form, economic substance, and the extent to which the Company has control and/or substantive participating rights under the respective ownership agreement. The Company did not have a VIE interest as of June 30, 2014 or December 31, 2013. | |||||||||||||||
There are judgments and estimates involved in determining if an entity in which the Company has an investment is a VIE. The entity is evaluated to determine if it is a VIE by, among other things, determining if the equity investors as a group have a controlling financial interest in the entity and if the entity has sufficient equity at risk to finance its activities without additional subordinated financial support. | |||||||||||||||
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with GAAP for interim financial statements and the rules and regulations of the SEC. Accordingly, the unaudited condensed consolidated financial statements do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014. For further information, readers should refer to the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, which was filed with the SEC on March 19, 2014. | |||||||||||||||
Use of Estimates | ' | ||||||||||||||
Use of Estimates | |||||||||||||||
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the accompanying condensed consolidated financial statements and notes. Actual results could differ from those estimates. | |||||||||||||||
Organization and Offering Costs | ' | ||||||||||||||
Organization and Offering Costs | |||||||||||||||
Organization and offering costs of the Company are incurred by Advisor on behalf of the Company. Pursuant to the Advisory Agreement, the Company is obligated to reimburse Advisor or its affiliates, as applicable, for organization and offering costs incurred by Advisor associated with each of the Company’s public offerings, provided that within 60 days of the last day of the month in which a public offering ends, Advisor is obligated to reimburse the Company to the extent organization and offering costs incurred by the Company in connection with the completed public offering exceed 15.0% of the gross offering proceeds from the sale of the Company’s shares of common stock in the completed public offering. Such organization and offering costs shall include selling commissions and dealer manager fees paid to the dealer manager, legal, accounting, printing and other offering expenses, including marketing, salaries and direct expenses of Advisor’s employees and employees of Advisor’s affiliates and others. Any reimbursement of Advisor or its affiliates for organization and offering costs will not exceed actual expenses incurred by Advisor. | |||||||||||||||
All offering costs, including selling commissions and dealer manager fees, are recorded as an offset to additional paid-in-capital, and all organization costs are recorded as an expense when the Company has an obligation to reimburse Advisor. | |||||||||||||||
As of June 30, 2014, total offering costs for the follow-on offering were $6,155,405. The Company directly incurred $4,442,041 of offering costs for the follow-on offering and reimbursed Advisor for $1,829,324 in offering costs for the follow-on offering. The Company has a $115,960 receivable from Advisor for offering costs related to the follow-on offering, which is recorded as an offset to other amounts owed to Advisor. As of June 30, 2014, offering costs related to the follow-on offering did not exceed 15.0% of the gross offering proceeds from the sale of the Company’s shares of common stock in the follow-on offering. The Company has not reimbursed Advisor any funds for organization costs for the follow-on offering. | |||||||||||||||
Income Taxes | ' | ||||||||||||||
Income Taxes | |||||||||||||||
The Company has made an election to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code commencing with the taxable year ended December 31, 2011. Prior to qualifying to be taxed as a REIT, the Company was subject to normal federal and state corporation income taxes. The Company previously determined not to make an election to qualify as a REIT under the Internal Revenue Code because it had a net operating loss for the years ended December 31, 2009 and 2010 and had fewer than 100 stockholders as of December 31, 2009 and 2010. | |||||||||||||||
As a REIT, the Company generally will not be subject to federal corporate income tax to the extent it distributes its REIT taxable income to its stockholders, so long as it distributes at least 90% of its REIT taxable income (which is computed without regard to the dividends paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP). REITs are subject to a number of other organizational and operations requirements. Even if the Company qualifies for taxation as a REIT, it may be subject to certain state and local taxes on its income and property, and federal income and excise taxes on its undistributed income. | |||||||||||||||
The Company leases the hotels it acquires to wholly-owned taxable REIT subsidiaries that are subject to federal, state and local income taxes. The Company accounts for income taxes using the asset and liability method under which deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. The Company records a valuation allowance for net deferred tax assets that are not expected to be realized. | |||||||||||||||
The Company has reviewed tax positions under GAAP guidance that clarifies the relevant criteria and approach for the recognition and measurement of uncertain tax positions. The guidance prescribes a recognition threshold and measurement attribute for the financial statement recognition of a tax position taken, or expected to be taken, in a tax return. A tax position may only be recognized in the financial statements if it is more likely than not that the tax position will be sustained upon examination. The Company has no material uncertain tax positions as of June 30, 2014. | |||||||||||||||
The preparation of the Company’s various tax returns requires the use of estimates for federal and state income tax purposes. These estimates may be subjected to review by the respective taxing authorities. A revision to an estimate may result in an assessment of additional taxes, penalties and interest. At this time, a range in which the Company’s estimates may change is not expected to be material. The Company will account for interest and penalties relating to uncertain tax provisions in the current period results of operations, if necessary. The Company has tax years 2009, 2010, 2011, 2012 and 2013 remaining subject to examination by various federal and state tax jurisdictions. | |||||||||||||||
Concentration of Credit Risk | ' | ||||||||||||||
Concentration of Credit Risk | |||||||||||||||
As of June 30, 2014, the Company had cash and cash equivalents and restricted cash deposited in certain financial institutions in excess of federally insured levels. The Company diversifies its cash and cash equivalents with several banking institutions in an attempt to minimize exposure to any one of these institutions. The Company regularly monitors the financial stability of these financial institutions and believes that it is not exposed to any significant credit risk in cash and cash equivalents or restricted cash. | |||||||||||||||
The Company is also exposed to credit risk with respect to its joint venture interest in the Hyatt Place Note. As a significant investment of the Company, the failure of the borrower on the Hyatt Place Note to make payments of interest and principal when due, or any other event of default under the Hyatt Place Note, would have an adverse impact on the Company’s results of operations. | |||||||||||||||
Valuation and Allocation of Real Property - Acquisition and Ownership | ' | ||||||||||||||
Valuation and Allocation of Real Property — Acquisition | |||||||||||||||
Upon acquisition, the purchase price of real property is allocated to the tangible assets acquired, consisting of land, buildings and tenant improvements, any assumed debt, identified intangible assets and asset retirement obligations based on their fair values. Identified intangible assets consist of above-market and below-market leases, in-place leases, in-place contracts, tenant relationships and any goodwill or gain on purchase. Acquisition costs are charged to expense as incurred. Initial valuations are subject to change during the measurement period, but the measurement period ends as soon as the information is available. The measurement period shall not exceed one year from the acquisition date. | |||||||||||||||
The fair value of the tangible assets acquired consists of land, buildings, furniture, fixtures and equipment. Land values are derived from appraisals, and buildings are calculated as replacement cost less depreciation or the Company’s estimates of the relative fair value of these assets using discounted cash flow analyses or similar methods. The value of the building is depreciated over the estimated useful life of thirty-nine years using the straight-line method. The value of furniture, fixtures and equipment is based on their fair value using replacement costs less depreciation. | |||||||||||||||
The Company determines the fair value of assumed debt by calculating the net present value of the scheduled mortgage payments using interest rates for debt with similar terms and remaining maturities that the Company believes it could obtain at the date of acquisition. Any difference between the fair value and stated value of the assumed debt is recorded as a discount or premium and amortized over the remaining life of the loan as interest expense. | |||||||||||||||
In allocating the purchase price of each of the Company’s properties, the Company makes assumptions and uses various estimates, including, but not limited to, the estimated useful lives of the assets, the cost of replacing certain assets, discount rates used to determine present values, market rental rates per square foot and the period required to lease the property up to its occupancy at acquisition as if it were vacant. Many of these estimates are obtained from independent third party appraisals. However, the Company is responsible for the source and use of these estimates. These estimates are judgmental and subject to being imprecise; accordingly, if different estimates and assumptions were derived, the valuation of the various categories of the Company’s real estate assets or related intangibles could in turn result in a difference in the depreciation or amortization expense recorded in the Company’s condensed consolidated financial statements. These variances could be material to the Company’s results of operations and financial condition. | |||||||||||||||
Valuation and Allocation of Real Property — Ownership | |||||||||||||||
Investment in real estate is recorded at historical cost. Major improvements that extend the life of an asset are capitalized and depreciated over a period equal to the shorter of the life of the improvement or the remaining useful life of the asset. The cost of ordinary repairs and maintenance are charged to expense when incurred. | |||||||||||||||
Depreciation or amortization expenses are computed using the straight-line and accelerated methods based upon the following estimated useful lives: | |||||||||||||||
Years | |||||||||||||||
Buildings and improvements | 39 | ||||||||||||||
Exterior improvements | 20-Oct | ||||||||||||||
Furniture, fixtures and equipment | 5-10 | ||||||||||||||
Impairments | ' | ||||||||||||||
Impairments | |||||||||||||||
For real estate the Company owns, the Company monitors events and changes in circumstances indicating that the carrying amounts of the real estate assets may not be recoverable. When such events or changes in circumstances are present, the Company assesses potential impairment by comparing estimated future undiscounted cash flows expected to be generated over the life of the asset from operating activities and from its eventual disposition, to the carrying amount of the asset. In the event that the carrying amount exceeds the estimated future undiscounted cash flows, the Company recognizes an impairment loss to adjust the carrying amount of the asset to estimated fair value for assets held for use and fair value less costs to sell for assets held for sale. There were no such impairment losses for the three and six months ended June 30, 2014 and 2013. | |||||||||||||||
In evaluating the Company’s investments for impairment, the Company makes several estimates and assumptions, including, but not limited to, the projected date of disposition of the properties, the estimated future cash flows of the properties during the Company’s ownership and the projected sales price of each of the properties. A change in these estimates and assumptions could result in a change in the estimated fair value of the Company’s hotel properties which could then result in different conclusions regarding impairment which could result in material changes to the Company’s consolidated financial statements. | |||||||||||||||
Revenue Recognition | ' | ||||||||||||||
Revenue Recognition | |||||||||||||||
Hotel revenues, including room, food, beverage and other ancillary revenues, are recognized as the related services are delivered. Interest income is recognized when earned. | |||||||||||||||
Cash and Cash Equivalents | ' | ||||||||||||||
Cash and Cash Equivalents | |||||||||||||||
Cash and cash equivalents represent cash on hand or held in banks and short-term investments with an initial maturity of three months or less at the date of purchase. | |||||||||||||||
Restricted Cash | ' | ||||||||||||||
Restricted Cash | |||||||||||||||
Restricted cash includes reserves for debt service and insurance, as well as reserves for property improvements and furniture, fixtures, and equipment, as required by certain management or mortgage debt agreement restrictions and provisions. Restricted cash also includes cash collateral deposited with a bank related to a loan that may be used by the Company toward the payments of principal and interest of the loan and any other amounts due under the loan in the event of default. | |||||||||||||||
Valuation of Accounts Receivable | ' | ||||||||||||||
Valuation of Accounts Receivable | |||||||||||||||
The Company takes into consideration certain factors that require judgments to be made as to the collectability of receivables. Collectability factors taken into consideration are the amounts outstanding, payment history and financial strength of the customer, which taken as a whole determines the valuation. Ongoing credit evaluations are performed and an allowance for potential credit losses is provided against the portion of accounts receivable that is estimated to be uncollectible. | |||||||||||||||
Mortgage Note Receivable and Impairment of Note Receivable | ' | ||||||||||||||
Mortgage Note Receivable | |||||||||||||||
The Company provides first-mortgage financing in the form of a note receivable. The loan is held for investment and is intended to be held to maturity and, accordingly, is recorded at cost and net of the allowance for losses when the loan is deemed to be impaired. Premiums, discounts, and net origination fees are amortized or accreted as an adjustment to interest income using the effective interest method over the life of the loan. The Company discontinues recording interest and amortizing discounts/premiums when the contractual payment of interest and/or principal is not received. | |||||||||||||||
Impairment of Note Receivable | |||||||||||||||
The Company reviews the note receivable for impairment in each reporting period pursuant to the applicable authoritative accounting guidance. A loan is impaired when, based on current information and events, it is probable that the Company will be unable to collect all amounts recorded as assets on the consolidated balance sheet. The Company applies normal loan review and underwriting procedures (as may be implemented or modified from time to time) in making that judgment. | |||||||||||||||
When a loan is impaired, the Company measures impairment based on the present value of expected cash flows discounted at the loan’s effective interest rate against the value of the asset recorded on the consolidated balance sheet. The Company may also measure impairment based on a loan’s observable market price or the fair value of collateral if the loan is collateral dependent. If a loan is deemed to be impaired, the Company records a valuation allowance through a charge to earnings for any shortfall. The Company’s assessment of impairment is based on considerable judgment and estimates. The Company did not record a valuation allowance during the three and six months ended June 30, 2014 or 2013. | |||||||||||||||
Prepaid Expenses and Other Assets | ' | ||||||||||||||
Prepaid Expenses and Other Assets | |||||||||||||||
Prepaid expenses include prepaid property insurance and hotel operating expenses. Other assets include accrued interest receivable. | |||||||||||||||
Deferred Costs | ' | ||||||||||||||
Deferred Costs | |||||||||||||||
Deferred costs consist of deferred financing fees and franchise costs. Deferred loan costs are recorded at cost and are amortized to interest expense using a straight-line method that approximates the effective interest method over the life of the related debt. The deferred franchise costs are recorded at cost and amortized over the term of the franchise contract. Accumulated amortization of deferred costs was $111,486 and $69,411 as of June 30, 2014 and December 31, 2013, respectively. Expected future amortization of deferred financing fees and franchise costs is as follows: | |||||||||||||||
Years Ending | |||||||||||||||
31-Dec | Total | Loan Costs | Franchise Costs | ||||||||||||
2014 | $ | 56,049 | $ | 43,959 | $ | 12,090 | |||||||||
2015 | 111,380 | 87,200 | 24,180 | ||||||||||||
2016 | 110,846 | 86,666 | 24,180 | ||||||||||||
2017 | 92,543 | 68,363 | 24,180 | ||||||||||||
Thereafter | 576,084 | 316,332 | 259,752 | ||||||||||||
Total | $ | 946,902 | $ | 602,520 | $ | 344,382 | |||||||||
Earnings per Share | ' | ||||||||||||||
Earnings per Share | |||||||||||||||
Earnings per share (“EPS”) is calculated based on the weighted average number of shares outstanding during each period. Basic and diluted EPS are the same for all periods presented. Restricted stock was included in basic earnings per share because the restricted stock participates in dividends. | |||||||||||||||
Comprehensive Income | ' | ||||||||||||||
Comprehensive Income | |||||||||||||||
For the periods presented, there were no differences between reported net loss attributable to common shareholders and comprehensive income. | |||||||||||||||
Recent Accounting Pronouncements | ' | ||||||||||||||
Recent Accounting Pronouncements | |||||||||||||||
In April 2014, the Financial Accounting Standards Board issued ASU No. 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360) - Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.” ASU 2014-08 changes the threshold for disclosing discontinued operations and the related disclosure requirements. Pursuant to ASU 2014-08, only disposals representing a strategic shift, such as a major line of business, a major geographical area or a major equity investment, should be presented as a discontinued operation. ASU 2014-08 is effective for annual periods beginning on or after December 15, 2014 with early adoption permitted but only for disposals or classifications as held for sale which have not been reported in financial statements previously issued or available for issuance. The Company implemented the provisions of the ASU as of January 1, 2014. The adoption of this guidance did not have a material effect on the Company’s condensed consolidated financial statements. |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Tables) | 12 Months Ended | ||||||||||||||
Dec. 31, 2013 | |||||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||||
Schedule of estimated useful lives, real property | ' | ||||||||||||||
Depreciation or amortization expenses are computed using the straight-line and accelerated methods based upon the following estimated useful lives: | |||||||||||||||
Years | |||||||||||||||
Buildings and improvements | 39 | ||||||||||||||
Exterior improvements | 20-Oct | ||||||||||||||
Furniture, fixtures and equipment | 5-10 | ||||||||||||||
Schedule of expected future amortization of deferred financing fees | ' | ||||||||||||||
Expected future amortization of deferred financing fees and franchise costs is as follows: | |||||||||||||||
Years Ending | |||||||||||||||
31-Dec | Total | Loan Costs | Franchise Costs | ||||||||||||
2014 | $ | 56,049 | $ | 43,959 | $ | 12,090 | |||||||||
2015 | 111,380 | 87,200 | 24,180 | ||||||||||||
2016 | 110,846 | 86,666 | 24,180 | ||||||||||||
2017 | 92,543 | 68,363 | 24,180 | ||||||||||||
Thereafter | 576,084 | 316,332 | 259,752 | ||||||||||||
Total | $ | 946,902 | $ | 602,520 | $ | 344,382 |
Investment_in_Hotel_Properties1
Investment in Hotel Properties (Tables) | 6 Months Ended | ||||||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||||||
Investment In Hotel Properties Tables | ' | ||||||||||||||||||||
Schedule of Investments in hotel properties | ' | ||||||||||||||||||||
The following table sets forth summary information regarding the hotel properties the Company owned as of June 30, 2014: | |||||||||||||||||||||
Property Name | Date Acquired | Location | Ownership Interest | Purchase Price(1) | Rooms | Mortgage Debt Outstanding(2) | |||||||||||||||
Woodlands Hotel (Homewood Suites by Hilton) | 8-Nov-12 | The Woodlands, Texas | 100 | % | $ | 12,000,000 | 91 | $ | 6,712,789 | ||||||||||||
Germantown Hotel (Hyatt Place) | 9-Apr-13 | Germantown, Tennessee | 100 | % | 11,300,000 | 127 | 7,664,234 | ||||||||||||||
Charleston Hotel (Hyatt Place) | 2-Jul-13 | North Charleston, South Carolina | 100 | % | 11,800,000 | 113 | 7,702,948 | ||||||||||||||
Austin Hotel (Hampton Inn) | 30-Dec-13 | Austin, Texas | 100 | % | 15,350,000 | 123 | 11,437,327 | ||||||||||||||
Grapevine Hotel (Residence Inn) | March 31, 2014 | Grapevine, Texas | 100 | % | 20,500,000 | 133 | 13,221,467 | ||||||||||||||
Silicon Valley Hotel (TownPlace Suites) | June 24, 2014 | Newark, California | 100 | % | 10,000,000 | 127 | 5,060,493 | ||||||||||||||
Totals | $ | 80,950,000 | 714 | $ | 51,799,258 | ||||||||||||||||
-1 | Excludes closing costs. | ||||||||||||||||||||
-2 | As of June 30, 2014. | ||||||||||||||||||||
Investments in hotel properties consisted of the following at June 30, 2014 and December 31, 2013: | |||||||||||||||||||||
30-Jun-14 | 31-Dec-13 | ||||||||||||||||||||
Land | $ | 12,680,000 | $ | 6,760,000 | |||||||||||||||||
Buildings and improvements | 64,787,835 | 39,861,360 | |||||||||||||||||||
Furniture, fixtures and equipment | 5,461,736 | 3,982,000 | |||||||||||||||||||
Total cost | 82,929,571 | 50,603,360 | |||||||||||||||||||
Accumulated depreciation | (2,819,874 | ) | (1,467,236 | ) | |||||||||||||||||
Investment in hotel properties, net | $ | 80,109,697 | $ | 49,136,124 | |||||||||||||||||
Schedule of pro forma consolidated financial information | ' | ||||||||||||||||||||
The following unaudited pro forma consolidated financial information for the three and six months ended June 30, 2014 and 2013 is presented as if the Company acquired the Germantown Hotel, Charleston Hotel, Austin Hotel, Grapevine Hotel and Silicon Valley Hotel on January 1, 2013. This information is not necessarily indicative of what the actual results of operations would have been had the Company completed the acquisition of the Germantown Hotel, the Charleston Hotel, the Austin Hotel, the Grapevine Hotel and the Silicon Valley Hotel on January 1, 2013, nor does it purport to represent the Company’s future operations: | |||||||||||||||||||||
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||
Revenue | $ | 6,517,114 | $ | 5,907,670 | $ | 12,420,084 | $ | 12,527,590 | |||||||||||||
Net income (loss) | (135,435 | ) | (185,701 | ) | (672,523 | ) | 368,122 | ||||||||||||||
Net income (loss) attributable to common shareholders | (154,876 | ) | (205,583 | ) | (711,258 | ) | 328,945 | ||||||||||||||
Net income (loss) per common share attributable to common shareholders, basic and diluted | $ | (0.03 | ) | $ | (0.10 | ) | $ | (0.17 | ) | $ | 0.19 |
Debt_Tables
Debt (Tables) | 6 Months Ended | ||||||||||||||
Jun. 30, 2014 | |||||||||||||||
Debt Disclosure [Abstract] | ' | ||||||||||||||
Schedule of Notes Payable | ' | ||||||||||||||
As of June 30, 2014 and December 31, 2013, the Company’s notes payable consisted of the following: | |||||||||||||||
Principal as of | Principal as of | Interest Rate at | Maturity Date | ||||||||||||
30-Jun-14 | 31-Dec-13 | June 30, 2014 | |||||||||||||
Hyatt Place Note Acquisition Note | $ | 10,509,962 | $ | 10,677,350 | 3 | % | 5-May-18 | ||||||||
Woodlands Hotel Loan | 6,712,789 | 6,777,812 | 6 | % | 6-Dec-16 | ||||||||||
Germantown Hotel Loan | 7,664,234 | 7,728,405 | 4.3 | % | 6-May-23 | ||||||||||
Charleston Hotel Loan | 7,702,948 | 7,757,788 | 5.193 | % | 1-Aug-23 | ||||||||||
Austin Hotel Loan | 11,437,327 | 11,500,000 | 5.426 | % | 6-Jan-24 | ||||||||||
Grapevine Hotel Loan | 13,221,467 | — | 5.25 | % | 6-Apr-24 | ||||||||||
Silicon Valley Hotel Loan | 5,060,493 | — | 5.5 | % | 6-Jul-22 | ||||||||||
Total | $ | 62,309,220 | $ | 44,441,355 |
Equity_Tables
Equity (Tables) | 6 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
Stockholders' Equity Note [Abstract] | ' | ||||||||||||
Schedule of distributions paid in cash and pursuant to the DRIP | ' | ||||||||||||
The following table summarizes distributions paid in cash and pursuant to the DRIP for the six months ended June 30, 2013 and 2014. | |||||||||||||
Period (1) | Cash Distribution (1) | Distribution Paid Pursuant to DRIP (1)(2) | Total Amount of Distribution (1) | ||||||||||
First Quarter 2013 | $ | 200,579 | $ | 72,609 | $ | 273,188 | |||||||
Second Quarter 2013 | 283,395 | 89,775 | 373,170 | ||||||||||
Total | $ | 483,974 | $ | 162,384 | $ | 646,358 | |||||||
First Quarter 2014 | $ | 482,368 | $ | 194,592 | $ | 676,960 | |||||||
Second Quarter 2014 | 630,109 | 257,705 | 887,814 | ||||||||||
Total | $ | 1,112,477 | $ | 452,297 | $ | 1,564,774 | |||||||
-1 | Distributions are paid on a monthly basis. Distributions for all record dates of a given month are paid approximately 15 days following the end of such month. | ||||||||||||
-2 | Amount of distributions paid in shares of common stock pursuant to our distribution reinvestment plan. |
Incentive_Award_Plan_Tables
Incentive Award Plan (Tables) | 6 Months Ended | |||||||||
Jun. 30, 2014 | ||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | |||||||||
Schedule of activity under the Independent Directors Compensation Plan | ' | |||||||||
The following is a summary of activity under the Independent Directors Compensation Plan for the six months ended June 30, 2014 and year ended December 31, 2013: | ||||||||||
Number of Shares | Weighted Average Grant Date Fair Value | |||||||||
Balance of non-vested shares as of January 1, 2013 | 8,125 | $ | 10 | |||||||
Shares granted on August 13, 2013 | 7,500 | 10 | ||||||||
Shares vested | (10,000 | ) | 10 | |||||||
Balance of non-vested shares as of December 31, 2013 | 5,625 | 10 | ||||||||
Shares vested | (3,750 | ) | 10 | |||||||
Balance of non-vested shares as of June 30, 2014 | 1,875 | $ | 10 | |||||||
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 6 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Commitments and Contingencies Disclosure [Abstract] | ' | ||||||||
Schedule of composition of restricted cash | ' | ||||||||
The composition of the Company’s restricted cash as of June 30, 2014 and December 31, 2013 are as follows: | |||||||||
30-Jun-14 | 31-Dec-13 | ||||||||
Property improvement plan | $ | 3,805,765 | $ | 2,212,866 | |||||
Real estate taxes | 490,043 | 538,263 | |||||||
Insurance | 159,219 | 210,849 | |||||||
Hotel furniture and fixtures | 645,266 | 333,551 | |||||||
Seasonality | 115,028 | — | |||||||
Total restricted cash | $ | 5,215,321 | $ | 3,295,529 | |||||
Income_Taxes_Tables
Income Taxes (Tables) | 6 Months Ended | ||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||||||||||
Schedule of income tax expense (benefit) | ' | ||||||||||||||||
The income tax expense for the three months and six months ended June 30, 2014 and 2013 consisted of the following: | |||||||||||||||||
Three months ended June 30, | Six months ended June 30, | ||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||
Current expense | $ | 93,000 | $ | 42,100 | $ | 145,900 | $ | 63,100 | |||||||||
Deferred expense | — | — | — | — | |||||||||||||
Total expense, net | $ | 93,000 | $ | 42,100 | $ | 145,900 | $ | 63,100 | |||||||||
Federal | $ | 84,300 | $ | 35,000 | $ | 136,300 | $ | 56,000 | |||||||||
State | 8,700 | 7,100 | 9,600 | 7,100 | |||||||||||||
Total tax expense | $ | 93,000 | $ | 42,100 | $ | 145,900 | $ | 63,100 |
Organization_Details_Narrative
Organization (Details Narrative) (USD $) | 6 Months Ended | 6 Months Ended | 53 Months Ended | 26 Months Ended | ||||||||||||
Jun. 30, 2014 | Dec. 31, 2013 | Feb. 14, 2012 | Apr. 15, 2009 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Oct. 12, 2012 | Jun. 30, 2014 | |
Woodlands Property [Member] | Germantown Hotel Property [Member] | Charleston Hotel Property [Member] | Austin Hotel Property [Member] | Grapevine Hotel [Member] | Silicon Valley Hotel [Member] | Note Joint Venture (Hyatt Place Property) [Member] | Perimeter Joint Venture [Member] | Common Stock [Member] | DRIP Common Stock [Member] | Initial Public Offering [Member] | Follow On Offering [Member] | |||||
N | N | N | N | N | N | |||||||||||
Common Stock Shares Authorized, value | ' | ' | $900,000,000 | $1,000,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common Stock Shares Authorized in Distribution Reinvestment Plan, value | ' | ' | 100,000,000 | 100,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Issuance of common stock and operating partnership units, net of offering costs, shares | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,335,024 | ' | 1,126,253 | 4,524,348 |
Common stock issued under DRIP | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 47,610 | ' | 29,582 | 97,145 |
Proceeds from stock and DRIP offering | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 10,966,713 | 44,272,027 |
Common stock, shares issued | 5,714,073 | 3,331,439 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5,650,601 | 126,727 | ' | ' |
Proceeds from Offering of Common Stock | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $55,238,740 | ' | ' | ' |
Common stock offering price, dollars per share | ' | ' | $10 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Dividend Reinvestment Plan Common Stock Price, dollars per share | ' | ' | $9.50 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Membership interest percentage in joint venture (in percent) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 74.50% | 75.00% | ' | ' | ' | ' |
Number of rooms | ' | ' | ' | ' | 91 | 127 | 113 | 123 | 133 | 127 | ' | ' | ' | ' | ' | ' |
Description of operating partnership (OP) | 'The Company is the sole general partner of the OP. The initial limited partners of the OP are Moody National LPOP I, LLC ("Moody LPOP") and Moody OP Holdings I, LLC ("Moody Holdings), each an affiliate of the Sponsor. | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Redemption price of special units upon termination | $1 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Summary_of_Significant_Account3
Summary of Significant Accounting Policies (Details Narrative) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
Deferred financing fees | $111,486 | $69,411 |
Moody National Advisor I LLC - Advisor [Member] | ' | ' |
Percent of organization and offering costs (in percent) | 15.00% | ' |
Moody National Advisor I LLC - Advisor [Member] | Initial Public Offering [Member] | ' | ' |
Total offering costs | 6,155,405 | ' |
Offering cost directly incurred by company | 4,442,041 | ' |
Offering cost reimbursed to advisor | 1,829,324 | ' |
Limit on offering costs, percent | 15.00% | ' |
Moody National Advisor I LLC - Advisor [Member] | Follow On Offering [Member] | ' | ' |
Receivable from Advisor for offering costs | $115,960 | ' |
Limit on offering costs, percent | 15.00% | ' |
Summary_of_Significant_Account4
Summary of Significant Accounting Policies (Details) | 6 Months Ended |
Jun. 30, 2014 | |
Buildings and improvements [Member] | ' |
Estimated useful lives | '39 years |
External Improvements [Member] | Lower Range [Member] | ' |
Estimated useful lives | '10 years |
External Improvements [Member] | Upper Range [Member] | ' |
Estimated useful lives | '20 years |
Furniture, fixtures and equipment [Member] | Lower Range [Member] | ' |
Estimated useful lives | '5 years |
Furniture, fixtures and equipment [Member] | Upper Range [Member] | ' |
Estimated useful lives | '10 years |
Summary_of_Significant_Account5
Summary of Significant Accounting Policies (Details 1) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
Expected future amortization of deferred costs: | ' | ' |
2014 | $56,049 | ' |
2015 | 111,380 | ' |
2016 | 110,846 | ' |
2017 | 92,543 | ' |
Thereafter | 576,084 | ' |
Total | 946,902 | 660,372 |
Loan Costs [Member] | ' | ' |
Expected future amortization of deferred costs: | ' | ' |
2014 | 43,959 | ' |
2015 | 87,200 | ' |
2016 | 86,666 | ' |
2017 | 68,363 | ' |
Thereafter | 316,332 | ' |
Total | 602,520 | ' |
Franchise Costs [Member] | ' | ' |
Expected future amortization of deferred costs: | ' | ' |
2014 | 12,090 | ' |
2015 | 24,180 | ' |
2016 | 24,180 | ' |
2017 | 24,180 | ' |
Thereafter | 259,752 | ' |
Total | $344,382 | ' |
Investment_in_Hotel_Properties2
Investment in Hotel Properties (Details Narrative) (USD $) | 3 Months Ended | 6 Months Ended | 0 Months Ended | 6 Months Ended | 0 Months Ended | 6 Months Ended | ||||||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Mar. 31, 2014 | Jun. 30, 2014 | Jun. 24, 2014 | Jun. 30, 2014 | |||||
Grapevine Hotel [Member] | Grapevine Hotel [Member] | Silicon Valley Hotel [Member] | Silicon Valley Hotel [Member] | |||||||||
Aggregate purchase price | ' | ' | $80,950,000 | [1] | ' | $20,500,000 | [1] | ' | $10,000,000 | [1] | ' | |
Debt, face amount | ' | ' | ' | ' | 13,250,000 | ' | 5,250,000 | ' | ||||
Mortgage Debt Outstanding | 51,799,258 | [2] | ' | 51,799,258 | [2] | ' | 13,221,467 | [2] | ' | 5,060,493 | [2] | ' |
Purchase price allocation, land | ' | ' | ' | ' | 2,600,000 | ' | 3,320,000 | ' | ||||
Purchase price allocation, building and improvements | ' | ' | ' | ' | 17,500,000 | ' | 6,302,000 | ' | ||||
Purchase price allocation, furniture fixtures and equipment | ' | ' | ' | ' | 400,000 | ' | 378,000 | ' | ||||
Acquisition costs | 303,276 | 410,520 | 751,892 | 442,054 | 443,190 | ' | 283,276 | ' | ||||
Revenues | 5,696,248 | 1,955,416 | 9,371,830 | 3,024,543 | ' | 1,463,000 | ' | 84,000 | ||||
Net Loss | ($293,854) | ($211,534) | ($736,923) | ($93,227) | ' | $294,000 | ' | $260,000 | ||||
[1] | Excludes closing costs. | |||||||||||
[2] | As of June 30, 2014. |
Investment_in_Hotel_Properties3
Investment in Hotel Properties (Details) (USD $) | 6 Months Ended | 0 Months Ended | ||||||||||||
Jun. 30, 2014 | Nov. 08, 2012 | Apr. 09, 2013 | Jul. 02, 2013 | Dec. 30, 2013 | Mar. 31, 2014 | Jun. 24, 2014 | ||||||||
Woodlands Property [Member] | Germantown Hotel Property [Member] | Charleston Hotel Property [Member] | Austin Hotel Property [Member] | Grapevine Hotel [Member] | Silicon Valley Hotel [Member] | |||||||||
Property Name | ' | 'Woodlands Hotel (Homewood Suites by Hilton) | 'Germantown Hotel (Hyatt Place) | 'Charleston Hotel (Hyatt Place) | 'Austin Hotel (Hampton Inn) | 'Grapevine Hotel (Residence Inn) | 'Silicon Valley Hotel (TownPlace Suites) | |||||||
Date Acquired | ' | 8-Nov-12 | 9-Apr-13 | 2-Jul-13 | 30-Dec-13 | 31-Mar-14 | 24-Jun-14 | |||||||
Location | ' | 'The Woodlands, Texas | 'Germantown, Tennessee | 'North Charleston, South Carolina | 'Austin, Texas | 'B Grapevine, Texas | 'Newark, California | |||||||
Ownership Percentage | ' | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | 100.00% | |||||||
Purchase Price | $80,950,000 | [1] | $12,000,000 | [1] | $11,300,000 | [1] | $11,800,000 | [1] | $15,350,000 | [1] | $20,500,000 | [1] | $10,000,000 | [1] |
Rooms | 714 | 91 | 127 | 113 | 123 | 133 | 127 | |||||||
Mortgage Debt Outstanding | $51,799,258 | [2] | $6,712,789 | [2] | $7,664,234 | [2] | $7,702,948 | [2] | $11,437,327 | [2] | $13,221,467 | [2] | $5,060,493 | [2] |
[1] | Excludes closing costs. | |||||||||||||
[2] | As of June 30, 2014. |
Investment_in_Hotel_Properties4
Investment in Hotel Properties (Details 1) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
Real Estate [Abstract] | ' | ' |
Land | $12,680,000 | $6,760,000 |
Buildings and improvements | 64,787,835 | 39,861,360 |
Furniture, fixtures and equipment | 5,461,736 | 3,982,000 |
Total cost | 82,929,571 | 50,603,360 |
Accumulated depreciation | -2,819,874 | -1,467,236 |
Investment in hotel properties, net | $80,109,697 | $49,136,124 |
Investment_in_Hotel_Properties5
Investment in Hotel Properties (Details 2) (USD $) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | |
Real Estate [Abstract] | ' | ' | ' | ' |
Revenue | $6,517,114 | $5,907,670 | $12,420,084 | $12,527,590 |
Net income (loss) | -135,435 | -185,701 | -672,523 | 368,122 |
Net income (loss) attributable to common shareholders | ($154,876) | ($205,583) | ($711,258) | $328,945 |
Net income (loss) per common share attributable to common shareholders, basic and diluted | ($0.03) | ($0.10) | ($0.17) | $0.19 |
Notes_Receivable_Details_Narra
Notes Receivable (Details Narrative) (USD $) | 6 Months Ended | 0 Months Ended | |||||||
Jun. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 03, 2011 | Jun. 03, 2011 | Jun. 30, 2014 | ||
Moody National Operating Partnership I, L.P (OP) [Member] | Trust member [Member] | Moody National Mortgage Corporation [Member] | Hyatt Place Acquisition Loan [Member] | Hyatt Place Property Note [Member] | Hyatt Place Property Note [Member] | ||||
Mortgage note receivable | $12,165,202 | $12,269,485 | ' | ' | ' | ' | ' | ' | |
Name of issuer | ' | ' | ' | ' | ' | ' | 'Moody National HP Grapevine Trust | ' | |
Outstanding principal balance | ' | ' | ' | ' | ' | ' | 12,759,199 | ' | |
Name of notes acquired entity | ' | ' | ' | ' | ' | ' | 'MNHP Note Holder, LLC | ' | |
Acquisition of Hyatt Place Note at a purchase price | 80,950,000 | [1] | ' | ' | ' | ' | ' | 12,759,199 | ' |
Debt, face amount | ' | ' | ' | ' | ' | 11,483,280 | ' | ' | |
Membership interest percentage (in percent) | ' | ' | 74.50% | 11.50% | 14.00% | ' | ' | ' | |
Description of Interest terms | ' | ' | ' | ' | ' | ' | 'The Hyatt Place Note bears interest at a fixed rate of 5.15% per annum from the Closing Date through August 21, 2012 (the BFirst Change DateB). For the period from the First Change Date through August 21, 2015 (the BSecond Change DateB), the Hyatt Place Note will bear interest at a fixed rate equal to (a) the variable interest rate per annum published in The Wall Street Journal as the BPrime RateB for the U.S. (the BPrime RateB) in effect as of the First Change Date, plus (b) 1.90%, provided that in no event will the interest rate exceed the maximum interest rate permitted by applicable law (the BMaximum RateB). For the period from the Second Change Date through the Maturity Date, the Hyatt Place Note will bear interest at a fixed rate equal to (a) the Prime Rate in effect as of the Second Change Date, plus (b) 1.90%, provided that in no event will the interest rate exceed the Maximum Rate. The Prime Rate at March 31, 2012 was 3.25%. The Trust may prepay the Hyatt Place Note, in whole or in part, at any time without penalty or premium. | ' | |
Fixed interest rate (in percent) | ' | ' | ' | ' | ' | ' | 5.15% | 3.25% | |
Variable Interest Rate, basis | ' | ' | ' | ' | ' | ' | 'US Prime Rate | ' | |
Spread on Interest Rate | ' | ' | ' | ' | ' | ' | 1.90% | ' | |
Fair value of notes receivable | $12,165,202 | $12,269,485 | ' | ' | ' | ' | ' | ' | |
[1] | Excludes closing costs. |
Debt_Details_Narrative
Debt (Details Narrative) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
Debt Disclosure [Abstract] | ' | ' |
Percentage of prohibited borrowing capacity to net assets | 300.00% | ' |
Estimated fair value on notes payable | $62,309,220 | $44,441,355 |
Debt_Details
Debt (Details) (USD $) | 6 Months Ended | |
Jun. 30, 2014 | Dec. 31, 2013 | |
Notes Payable | $62,309,220 | $44,441,355 |
Hyatt Place Acquisition Loan [Member] | ' | ' |
Notes Payable | 10,509,962 | 10,677,350 |
Interest Rate | 3.00% | ' |
Maturity Date | 5-May-18 | ' |
Woodlands Loan [Member] | ' | ' |
Notes Payable | 6,712,789 | 6,777,812 |
Interest Rate | 6.00% | ' |
Maturity Date | 6-Dec-16 | ' |
Germantown Hotel Loan [Member] | ' | ' |
Notes Payable | 7,664,234 | 7,728,405 |
Interest Rate | 4.30% | ' |
Maturity Date | 6-May-23 | ' |
Charleston Hotel Loan [Member] | ' | ' |
Notes Payable | 7,702,948 | 7,757,788 |
Interest Rate | 5.19% | ' |
Maturity Date | 1-Aug-23 | ' |
Austin Hotel Loan [Member] | ' | ' |
Notes Payable | 11,437,327 | 11,500,000 |
Interest Rate | 5.43% | ' |
Maturity Date | 6-Jan-24 | ' |
Grapevine Hotel Loan [Member] | ' | ' |
Notes Payable | 13,221,467 | ' |
Interest Rate | 5.25% | ' |
Maturity Date | 6-Apr-24 | ' |
Silicon Valley Hotel Loan [Member] | ' | ' |
Notes Payable | $5,060,493 | ' |
Interest Rate | 5.50% | ' |
Maturity Date | 6-Jul-22 | ' |
Equity_Details_Narrative
Equity (Details Narrative) (USD $) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Dec. 31, 2013 | |
Common stock, shares authorized | 400,000,000 | ' | 400,000,000 | ' | 400,000,000 |
Preferred stock, shares authorized | 50,000,000 | ' | 50,000,000 | ' | 50,000,000 |
Common stock, par value (in dollars per share) | $0.01 | ' | $0.01 | ' | $0.01 |
Preferred stock, par value (in dollars per share) | $0.01 | ' | $0.01 | ' | $0.01 |
Common stock sold (in cash) | ' | ' | $20,403,690 | ' | ' |
Common stock, shares issued | 5,714,073 | ' | 5,714,073 | ' | 3,331,439 |
Common stock, shares outstanding | 5,714,073 | ' | 5,714,073 | ' | 3,331,439 |
Distribution paid per share | $0.00 | ' | $0.00 | ' | ' |
Annualized distribution rate | 8.00% | ' | 8.00% | ' | ' |
Price per share | $10 | ' | $10 | ' | ' |
Noncontrolling interest in consolidated joint ventures | 276,457 | ' | 276,457 | ' | 486,000 |
(Income) loss attributable to noncontrolling interest from consolidated joint venture | 19,438 | 19,895 | 38,737 | 39,181 | ' |
Common Stock [Member] | ' | ' | ' | ' | ' |
Issuance of common stock and operating partnership units, net of offering costs, shares | ' | ' | 2,335,024 | ' | ' |
Common stock sold (in cash) | ' | ' | $23,351 | ' | ' |
Common stock, shares issued | 5,650,601 | ' | 5,650,601 | ' | ' |
DRIP Common Stock [Member] | ' | ' | ' | ' | ' |
Common stock, shares issued | 126,727 | ' | 126,727 | ' | ' |
Equity_Details
Equity (Details) (USD $) | 3 Months Ended | 6 Months Ended | ||||||||||
Jun. 30, 2014 | Mar. 31, 2014 | Jun. 30, 2013 | Mar. 31, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | |||||||
Stockholders' Equity Note [Abstract] | ' | ' | ' | ' | ' | ' | ||||||
Cash Distribution | $630,109 | [1] | $482,368 | [1] | $283,395 | [1] | $200,579 | [1] | $1,112,477 | [1] | $483,974 | [1] |
Distribution Paid Pursuant to DRIP | 257,705 | [1],[2] | 194,592 | [1],[2] | 89,775 | [1],[2] | 72,609 | [1],[2] | 452,297 | [1],[2] | 162,384 | [1],[2] |
Total Amount of Distribution | $887,814 | [1] | $676,960 | [1] | $373,170 | [1] | $273,188 | [1] | $1,564,774 | [1] | $646,358 | [1] |
[1] | Distributions are paid on a monthly basis. Distributions for all record dates of a given month are paid approximately 15 days following the end of such month. | |||||||||||
[2] | Amount of distributions paid in shares of common stock pursuant to our distribution reinvestment plan. |
Related_Party_Arrangements_Det
Related Party Arrangements (Details Narrative) (USD $) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | |
Percentage of acquisition fee (in percent) | 1.50% | ' | 1.50% | ' |
Percentage of origination fee in lieu of acquisition (in percent) | 1.50% | ' | 1.50% | ' |
Debt financing fee percentage | 1.00% | ' | 1.00% | ' |
Advisor expense reimbursement - alternative 1 | 2.00% | ' | 2.00% | ' |
Advisor expense reimbursement - alternative 2 | 25.00% | ' | 25.00% | ' |
Operating expenses | ' | ' | $1,359,945 | ' |
Operating expenses exceeded specified limit | ' | ' | 75,038 | ' |
Operating expenses not reimbursable | 3,622,281 | ' | 3,622,281 | ' |
Property management fees | 166,114 | 53,759 | 271,654 | 81,028 |
Accounting fees paid | 37,500 | 15,000 | 67,500 | 22,500 |
The Company [Member] | ' | ' | ' | ' |
Operating expenses | ' | ' | 771,035 | ' |
Acquisitions in 2013 - Grapevine Hotel and the Silicon Valley Hotel [Member] | ' | ' | ' | ' |
Acquisition fee | 478,500 | ' | 478,500 | ' |
Debt financing fee | ' | ' | 183,100 | ' |
Acquisitions in 2013 - Germantown, Charleston, Austin [Member] | ' | ' | ' | ' |
Acquisition fee | 169,500 | ' | 169,500 | ' |
Debt financing fee | ' | ' | 78,000 | ' |
Follow On Offering [Member] | ' | ' | ' | ' |
Percentage of selling commisssion on gross offering (in percent) | ' | ' | 6.50% | ' |
Percentage of dealers manager fee on gross offering (in percent) | ' | ' | 3.50% | ' |
Selling commission | ' | ' | 3,296,362 | ' |
Dealers manager fee | ' | ' | 972,030 | ' |
Moody Securities [Member] | Initial Public Offering [Member] | ' | ' | ' | ' |
Percentage of selling commisssion on gross offering (in percent) | ' | ' | 6.50% | ' |
Percentage of dealers manager fee on gross offering (in percent) | ' | ' | 3.50% | ' |
Selling commission | ' | ' | 746,368 | ' |
Dealers manager fee | ' | ' | 190,626 | ' |
Moody National Advisor I LLC - Advisor [Member] | ' | ' | ' | ' |
Percent of organization and offering costs (in percent) | 15.00% | ' | 15.00% | ' |
Assets management fee | 210,133 | 0 | 366,891 | 0 |
Operating expenses | ' | ' | 588,910 | ' |
Operating expenses exceeded specified limit | ' | ' | 16,500 | ' |
Reimbursable expenses waived or assumed | 1,967,721 | ' | 1,967,721 | ' |
Moody National Advisor I LLC - Advisor [Member] | Initial Public Offering [Member] | ' | ' | ' | ' |
Total offering costs | 6,155,405 | ' | 6,155,405 | ' |
Accumulated Offering costs | 3,214,000 | ' | 3,214,000 | ' |
Offering cost directly incurred by company | 4,442,041 | ' | 4,442,041 | ' |
Offering cost reimbursed to advisor | 1,829,324 | ' | 1,829,324 | ' |
Percentage of disposition fee on sale of each property (in percent) | 3.00% | ' | 3.00% | ' |
Maximum percentage of disposition fee and real estate commissions (in percent) | 6.00% | ' | 6.00% | ' |
Moody National Advisor I LLC - Advisor [Member] | Follow On Offering [Member] | ' | ' | ' | ' |
Accumulated Offering costs | 1,713,000 | ' | 1,713,000 | ' |
Receivable from Advisor for offering costs | $115,960 | ' | $115,960 | ' |
Incentive_Award_Plan_Details_N
Incentive Award Plan (Details Narrative) (USD $) | 3 Months Ended | 6 Months Ended | 6 Months Ended | |||||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Jun. 30, 2014 | |
Independent directors compensation plan [Member] | Independent directors compensation plan [Member] | Independent directors compensation plan [Member] | Independent directors compensation plan [Member] | |||||
Restricted stock [Member] | Restricted stock [Member] | Restricted stock [Member] | Restricted stock [Member] | |||||
Board of Directors [Member] | ||||||||
Entitlement number of shares issued, minimum offering exceeds certain specified limit | ' | ' | ' | ' | ' | ' | ' | 5,000 |
Number of shares issued to new joining directors | ' | ' | ' | ' | ' | ' | ' | 5,000 |
Entitlement number of shares issued , Reelection of directors at annual general meeting | ' | ' | ' | ' | ' | ' | ' | 2,500 |
Minimum offering amount threshold | ' | ' | ' | ' | ' | ' | ' | $2,000,000 |
Number of remaining shares available for future issuance | ' | ' | ' | ' | ' | ' | ' | 1,958,750 |
Outstanding shares | ' | ' | ' | ' | 41,250 | ' | ' | ' |
Weighted average grant date fair value | ' | ' | ' | ' | $10 | $10 | $10 | $10 |
Remaining unrecognized compensation expense | ' | ' | ' | ' | ' | ' | ' | 232 |
Non-vested shares | ' | ' | ' | ' | 1,875 | 5,625 | 8,125 | ' |
Compensation expenses | $21,130 | $21,349 | $42,028 | $56,031 | ' | ' | ' | ' |
Incentive_Award_Plan_Details
Incentive Award Plan (Details) (Independent directors compensation plan [Member], USD $) | 0 Months Ended | 6 Months Ended | 12 Months Ended |
Aug. 14, 2013 | Jun. 30, 2014 | Dec. 31, 2013 | |
Restricted stock [Member] | Restricted stock [Member] | ||
Number of Shares | ' | ' | ' |
Balance of non-vested shares, beginning | ' | 5,625 | 8,125 |
Shares granted | 7,500 | ' | ' |
Shares vested | ' | -3,750 | -10,000 |
Balance of non-vested shares, ending | ' | 1,875 | 5,625 |
Weighted Average Grant Date Fair Value (per share) | ' | ' | ' |
Balance of non-vested shares, beginning | ' | $10 | $10 |
Shares granted | ' | ' | $10 |
Shares vested | ' | $10 | $10 |
Balance of non-vested shares, ending | ' | $10 | $10 |
Subordinated_Participation_Int1
Subordinated Participation Interest (Details Narrative) | Jun. 30, 2014 |
Subordinated Participation Interest | ' |
Maximum percentage of income received to special unit holders | 15.00% |
Percentage of additional operating income received | 8.00% |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
Commitments and Contingencies Disclosure [Abstract] | ' | ' |
Property improvement plan | $3,805,765 | $2,212,866 |
Real estate taxes | 490,043 | 538,263 |
Insurance | 159,219 | 210,849 |
Hotel furniture and fixtures | 645,266 | 333,551 |
Seasonality | 115,028 | ' |
Total restricted cash | $5,215,321 | $3,295,529 |
Income_Taxes_Details_Narrative
Income Taxes (Details Narrative) (USD $) | Jun. 30, 2014 |
Income Tax Disclosure [Abstract] | ' |
Operating loss carry-forwards | $335,800 |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | |
Income Tax Disclosure [Abstract] | ' | ' | ' | ' |
Current expense | $93,000 | $42,100 | $145,900 | $63,100 |
Federal | 84,300 | 35,000 | 136,300 | 56,000 |
State | 8,700 | 7,100 | 9,600 | 7,100 |
Income tax expense | $93,000 | $42,100 | $145,900 | $63,100 |
Subsequent_Events_Details_Narr
Subsequent Events (Details Narrative) (USD $) | 3 Months Ended | 6 Months Ended | 27 Months Ended | 0 Months Ended | |||||||||||||
Jun. 30, 2014 | Mar. 31, 2014 | Jun. 30, 2013 | Mar. 31, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Dec. 31, 2013 | Aug. 11, 2014 | Jul. 15, 2014 | Jul. 31, 2014 | Jun. 30, 2014 | |||||||
Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | ||||||||||||||
Distributions Declared [Member] | Distributions Declared [Member] | Distributions Declared [Member] | |||||||||||||||
Issuance of common stock and operating partnership units, net of offering costs, shares | ' | ' | ' | ' | ' | ' | ' | 6,372,662 | ' | ' | ' | ||||||
Common Stock issued under DRIP | ' | ' | ' | ' | ' | ' | ' | 138,230 | ' | ' | ' | ||||||
Proceeds from gross primary offering and DRIP | ' | ' | ' | ' | ' | ' | ' | $62,344,320 | ' | ' | ' | ||||||
Cash Distribution | ' | ' | ' | ' | ' | ' | ' | ' | 241,796 | ' | ' | ||||||
Distribution Paid Pursuant to DRIP | 257,705 | [1],[2] | 194,592 | [1],[2] | 89,775 | [1],[2] | 72,609 | [1],[2] | 452,297 | [1],[2] | 162,384 | [1],[2] | ' | ' | 109,321 | ' | ' |
Distribution Declared | 351,117 | ' | 140,324 | ' | 351,117 | 140,324 | 217,877 | ' | ' | 406,474 | 351,117 | ||||||
Aggregate purchase price | ' | ' | ' | ' | $80,950,000 | [3] | ' | ' | ' | ' | ' | ' | |||||
[1] | Distributions are paid on a monthly basis. Distributions for all record dates of a given month are paid approximately 15 days following the end of such month. | ||||||||||||||||
[2] | Amount of distributions paid in shares of common stock pursuant to our distribution reinvestment plan. | ||||||||||||||||
[3] | Excludes closing costs. |