Exhibit 99.1
CRANSTON, RHODE ISLAND – JUNE 24, 2024. As you may be aware, on June 17, 2024, the board of directors (the “Board”) of Procaccianti Hotel REIT, Inc. (the “PROC Hotel REIT” or the “Company”) at the recommendation of the Audit Committee of the Board, comprised solely of independent directors, unanimously approved and established an estimated net asset value (“NAV”) for the Company’s: (i) K-I Shares of $10.17 per share; (ii) K Shares of $10.17 per share; (iii) K-T Shares of $12.23 per share; (iv) A Shares of $9.82 per share; and (v) B Shares of $0.00 per share (collectively, the “Estimated Per Share NAVs”). In connection with the Estimated Per Share NAVs, PROC Hotel REIT would like to communicate the following factors:
| · | Hotel values (and other real estate classes) have moderated due to an approximate 500 basis point increase in the Fed Funds rate in 2022 and 2023. |
| · | Additionally, hotel values have been impacted by inflationary factors such as higher operating costs, utilities, insurance and higher wages. |
| · | Capital market pressures (SVB, First Republic, Signature Bank) have impacted liquidity and values industry wide. |
| · | Growth rates in hospitality demand have moderated. The COVID-19 pandemic ultimately resulted in a wave of domestic travel before international borders were re-opened. As the pandemic has subsided, increased international travel is cutting into domestic travel, so hotel owners are competing for the remaining travelers which is impacting hotel rates and top line income. |
For a full description of the methodology and assumptions used to determine the estimated per share NAVs and the limitations of the Estimated Per Share NAVs, please see PROC Hotel REIT’s Current Report on Form 8-K that was filed with the U.S. Securities and Exchange Commission (“SEC”) on June 20, 2024.
ABOUT PROC HOTEL REIT
PROC Hotel REIT is a Maryland corporation that has elected to be taxed as a real estate investment trust (“REIT”) for U.S. federal income tax purposes commencing with its taxable year ended December 31, 2018. PROC Hotel REIT intends to acquire and own a diversified portfolio of hospitality properties consisting primarily of existing extended-stay, select-service and compact full-service hotel properties that are classified in the “upper midscale,” “upscale,” and “upper upscale” chain scales of the hospitality industry, as defined by Smith Travel Research, and that are operated under widely recognized brands licensed from hotel franchisors. For some of the hotel properties PROC Hotel REIT acquires, it intends to execute a modest value-add strategy, whereby PROC Hotel REIT acquires assets underperforming their full potential in high-demand markets, remedies operational or managerial inefficiencies, implements sophisticated revenue optimization strategies, invests additional capital to improve the competitiveness of the assets, and increases occupancies, average daily rates, and the property value.
PROC Hotel REIT’s sponsor, Procaccianti Companies, Inc. (Est. 1958), is one of the most respected privately-held real estate investment and services firms in the United States, and the initial public offering of PROC Hotel REIT, which terminated on August 13, 2021, was distributed by S2K Financial LLC, a distributor of institutional-based investment programs.
CONTACT
info@s2kco.com
(877)227-4141
FORWARD-LOOKING STATEMENTS
Certain statements contained in these talking points, other than historical facts, may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include, but are not limited to, statements related to the Company’s expectations regarding the performance of its business and the Estimated Per Share NAVs of the Company’s common and capital stock; any changes to the Company’s distribution policy; the Company’s expectations regarding its future operations and long-term financial prospects, inflationary pressures and interest rate increases. Stanger relied on forward-looking information, some of which was provided by or on behalf of the Company, in preparing its valuation materials. Therefore, neither such statements nor Stanger’s valuation materials are intended to, nor shall they, serve as a guarantee of the Company’s performance in future periods. You can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties, including those described under the section entitled “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, as updated by the Company’s subsequent Quarterly Report on Form 10-Q for the period ended March 31, 2024 filed with the SEC. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this Current Report on Form 8-K and in the Company’s other filings with the SEC. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Actual events may cause the value and returns on the Company’s investments to be less than that used for purposes of the Company’s Estimated Per Share NAVs.
