Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Mar. 27, 2024 | Jun. 30, 2022 | |
Document and Entity Information [Abstract] | ||||
Document Type | 10-K | |||
Document Annual Report | true | |||
Document Period End Date | Dec. 31, 2022 | |||
Document Transition Report | false | |||
Entity File Number | 000-56082 | |||
Entity Registrant Name | LODGING FUND REIT III, INC. | |||
Entity Incorporation, State or Country Code | MD | |||
Entity Tax Identification Number | 83-0556111 | |||
Entity Address, Address Line One | 1635 43rd Street South, Suite 205 | |||
Entity Address, City or Town | Fargo | |||
Entity Address, State or Province | ND | |||
Entity Address, Postal Zip Code | 58103 | |||
City Area Code | 701 | |||
Local Phone Number | 630-6500 | |||
Title of 12(b) Security | None | |||
No Trading Symbol Flag | true | |||
Security Exchange Name | NONE | |||
Entity Well-known Seasoned Issuer | No | |||
Entity Voluntary Filers | No | |||
Entity Current Reporting Status | No | |||
Entity Interactive Data Current | No | |||
Entity Filer Category | Non-accelerated Filer | |||
Entity Small Business | true | |||
Entity Emerging Growth Company | true | |||
Entity Ex Transition Period | false | |||
ICFR Auditor Attestation Flag | false | |||
Document Financial Statement Error Correction [Flag] | false | |||
Entity Shell Company | false | |||
Entity Public Float | $ 0 | |||
Entity Common Stock, Shares Outstanding | 9,966,585 | |||
Auditor Firm ID | 668 | 34 | ||
Auditor Name | Marcum llp | DELOITTE & TOUCHE LLP | ||
Auditor Location | New York, NY | Tempe, Arizona | ||
Entity Central Index Key | 0001745032 | |||
Current Fiscal Year End Date | --12-31 | |||
Document Fiscal Year Focus | 2022 | |||
Document Fiscal Period Focus | FY | |||
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Assets | ||
Investment in hotel properties, net of accumulated depreciation of $17,458,998 and $9,487,728 | $ 290,217,642 | $ 169,424,775 |
Cash and cash equivalents | 6,193,449 | 7,866,401 |
Restricted cash | 10,732,832 | 6,469,999 |
Accounts receivable, net | 1,468,732 | 748,364 |
Franchise fees, net | 2,363,114 | 1,459,641 |
Prepaid expenses and other assets | 1,409,993 | 4,360,555 |
Total Assets (variable interest entities - $25,599,444 and $0) | 312,385,762 | 190,329,735 |
Liabilities and Equity | ||
Debt, net | 189,678,547 | 103,126,884 |
Finance lease liabilities | 13,026,849 | |
Accounts payable | 3,034,148 | 1,549,380 |
Accrued expenses | 5,853,519 | 2,621,520 |
Distributions payable | 678,867 | 495,657 |
Total liabilities (variable interest entities - $19,064,885 and $0) | 223,393,216 | 117,873,335 |
Equity | ||
Preferred stock, $0.01 par value, 100,000,000 shares authorized; no shares issued and outstanding | ||
Common stock, $0.01 par value, 900,000,000 shares authorized; 9,607,462 and 8,348,310 shares issued and outstanding | 96,074 | 83,481 |
Additional paid-in capital | 93,798,070 | 81,655,994 |
Accumulated deficit | (67,239,693) | (43,586,952) |
Total stockholders' equity | 26,654,451 | 38,152,523 |
Total equity | 88,992,546 | 72,456,400 |
Total Liabilities and Equity | 312,385,762 | 190,329,735 |
Related Party | ||
Liabilities and Equity | ||
Other liabilities | 6,277,432 | 2,580,326 |
Nonrelated Party | ||
Liabilities and Equity | ||
Other liabilities | 4,843,854 | 7,499,568 |
Series B LP Units | ||
Equity | ||
Non-controlling interest | (2,841,056) | (1,563,489) |
Series GO LP Units | ||
Equity | ||
Non-controlling interest | 14,688,392 | 12,498,527 |
Series T LP Units | ||
Equity | ||
Non-controlling interest | 45,739,120 | 21,931,757 |
Common LP Units | ||
Equity | ||
Non-controlling interest | $ 4,751,639 | $ 1,437,082 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Accumulated depreciation | $ 17,458,998 | $ 9,487,728 |
Assets | 312,385,762 | 190,329,735 |
Liabilities | $ 223,393,216 | $ 117,873,335 |
Preferred stock, Par Value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 100,000,000 | 100,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 900,000,000 | 900,000,000 |
Common stock, shares issued | 9,607,463 | 8,348,310 |
Common stock, shares outstanding | 9,607,462 | 8,348,310 |
Variable interest entities | ||
Accumulated depreciation | $ 471,491 | $ 0 |
Assets | 24,924,626 | 0 |
Liabilities | $ 18,390,067 | $ 0 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Revenues | ||
Total revenue | $ 53,129,294 | $ 27,112,007 |
Expenses | ||
Property operations | 25,985,687 | 12,153,087 |
General and administrative | 10,577,266 | 6,449,285 |
Sales and marketing | 3,318,003 | 1,674,557 |
Franchise fees | 4,849,226 | 2,512,796 |
Management fees | 4,204,291 | 2,779,715 |
Acquisition expense | 729,545 | 81,963 |
Depreciation and amortization | 8,049,377 | 4,831,022 |
Total expenses | 57,713,395 | 30,482,425 |
Other Income (Expense) | ||
Other income (expense), net | 2,530,374 | 58,564 |
PPP loan forgiveness | 1,684,400 | |
Interest expense | (11,011,008) | (4,560,186) |
Total other income (expense) | (8,480,634) | (2,817,222) |
Net Loss Before Income Taxes | (13,064,735) | (6,187,640) |
Income tax (expense) benefit | (5,845,015) | 920,965 |
Net Loss | (18,909,750) | (5,266,675) |
Net Loss Attributable to Common Stockholders | $ (13,982,439) | $ (4,171,551) |
Basic Net Loss Per Share of Common Stock (in dollars per share) | $ (1.54) | $ (0.52) |
Diluted Net Loss Per Share of Common Stock (in dollars per share) | $ (1.54) | $ (0.52) |
Weighted-average Shares of Common Stock Outstanding, Basic (in shares) | 9,071,919 | 8,031,965 |
Weighted-average Shares of Common Stock Outstanding, Diluted (in shares) | 9,071,919 | 8,031,965 |
Series B LP Units | ||
Other Income (Expense) | ||
Net loss attributable to non-controlling interest | $ (943,150) | $ (261,540) |
Series GO LP Units | ||
Other Income (Expense) | ||
Net loss attributable to non-controlling interest | (3,101,944) | (757,966) |
Common LP Units | ||
Other Income (Expense) | ||
Net loss attributable to non-controlling interest | (882,217) | (75,618) |
Room revenue | ||
Revenues | ||
Total revenue | 50,335,176 | 26,111,767 |
Other revenue | ||
Revenues | ||
Total revenue | $ 2,794,118 | $ 1,000,240 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total Stockholder's Equity | Non-controlling Interest Series B LP Units | Non-controlling Interest Series GO LP Units | Non-controlling Interest Series T LP Units. | Non-controlling Interest Common LP Units | Total |
Balance - Beginning at Dec. 31, 2020 | $ 76,116 | $ 74,610,627 | $ (31,855,995) | $ 42,830,748 | $ (1,005,785) | $ 3,784,965 | $ 45,609,928 | ||
Balance - Beginning (Shares) at Dec. 31, 2020 | 7,611,653 | ||||||||
Issuance of common stock | $ 4,074 | 3,941,223 | 3,945,297 | 3,945,297 | |||||
Issuance of common stock (Shares) | 407,478 | ||||||||
Issuance of GO Units | 10,736,835 | 10,736,835 | |||||||
Issuance of T Units | $ 21,931,757 | 21,931,757 | |||||||
Issuance of Common LP Units | $ 1,521,000 | 1,521,000 | |||||||
Offering costs | (1,932,301) | (1,932,301) | (1,265,307) | (3,197,608) | |||||
Distributions declared ($0.70 per share) | (5,627,105) | (5,627,105) | (296,164) | (8,300) | (5,931,569) | ||||
Distributions reinvested | $ 4,172 | 3,959,868 | 3,964,040 | 3,964,040 | |||||
Distributions reinvested (in shares) | 417,267 | ||||||||
Redemptions | $ (881) | (855,724) | (856,605) | $ (856,605) | |||||
Redemptions (in shares) | (88,088) | (88,088) | |||||||
Net loss | (4,171,551) | (4,171,551) | (261,540) | (757,966) | (75,618) | $ (5,266,675) | |||
Balance - Ending at Dec. 31, 2021 | $ 83,481 | 81,655,994 | (43,586,952) | 38,152,523 | (1,563,489) | 12,498,527 | 21,931,757 | 1,437,082 | 72,456,400 |
Balance - Ending (Shares) at Dec. 31, 2021 | 8,348,310 | ||||||||
Issuance of common stock | $ 11,801 | 11,450,572 | 11,462,373 | 11,462,373 | |||||
Issuance of common stock (Shares) | 1,180,020 | ||||||||
Issuance of stock-based compensation | $ 60 | 59,940 | 60,000 | 60,000 | |||||
Issuance of stock-based compensation (in shares) | 6,000 | ||||||||
Issuance of GO Units | 6,275,891 | 6,275,891 | |||||||
Issuance of T Units | 23,807,363 | 23,807,363 | |||||||
Issuance of Common LP Units | 4,600,000 | 4,600,000 | |||||||
Offering costs | (3,323,984) | (3,323,984) | (476,643) | (3,800,627) | |||||
Distributions declared ($0.70 per share) | (6,346,318) | (6,346,318) | (334,417) | (507,439) | (403,226) | (7,591,400) | |||
Distributions reinvested | $ 2,084 | 1,977,531 | 1,979,615 | 1,979,615 | |||||
Distributions reinvested (in shares) | 208,381 | ||||||||
Redemptions | $ (1,352) | (1,345,967) | (1,347,319) | $ (1,347,319) | |||||
Redemptions (in shares) | (135,248) | (135,248) | |||||||
Net loss | (13,982,439) | (13,982,439) | (943,150) | (3,101,944) | (882,217) | $ (18,909,750) | |||
Balance - Ending at Dec. 31, 2022 | $ 96,074 | $ 93,798,070 | $ (67,239,693) | $ 26,654,451 | $ (2,841,056) | $ 14,688,392 | $ 45,739,120 | $ 4,751,639 | $ 88,992,546 |
Balance - Ending (Shares) at Dec. 31, 2022 | 9,607,463 |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY | ||
Distributions declared (in dollars per share) | $ 0.70 | $ 0.70 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Cash Flows from Operating Activities: | ||
Net loss | $ (18,909,750) | $ (5,266,675) |
Adjustments to reconcile net loss to cash used in operating activities: | ||
Depreciation | 7,995,492 | 4,831,022 |
Stock-based compensation expense | 60,000 | |
Amortization | 1,526,442 | 477,420 |
Gain on PPP loan forgiveness | (1,684,400) | |
Loss on disposal of fixed assets | 28,466 | 87,178 |
Gain on acquisition of VIE | (3,810,081) | |
Deferred tax assets, net | 5,755,669 | (997,828) |
Change in operating assets and liabilities: | ||
Accounts receivable | (551,394) | (634,082) |
Franchise fees | (1,050,000) | (587,500) |
Prepaid expenses and other assets | 593,085 | (1,291,019) |
Increase in finance lease liability | 188,920 | |
Accounts payable | 1,285,156 | 842,477 |
Accrued expenses | 2,923,389 | 1,068,589 |
Due to related parties | 3,503,397 | 750,341 |
Other liabilities | (868,891) | 1,356,079 |
Net cash used in operating activities | (1,330,100) | (1,048,398) |
Cash Flows from Investing Activities: | ||
Acquisitions of hotel properties | (50,865,357) | (2,167,243) |
Cash and restricted cash acquired in consolidation of VIE | 1,342,428 | |
Improvements and additions to hotel properties | (5,958,414) | (2,881,728) |
Net cash used in investing activities | (55,481,343) | (5,048,971) |
Cash Flows from Financing Activities: | ||
Proceeds from mortgage debt | 63,832,375 | 13,947,218 |
Proceeds from lines of credit | 15,030,156 | 2,000,000 |
Proceeds from PPP loans | 921,300 | |
Principal payments on mortgage debt | (21,047,086) | (14,062,123) |
Principal payments on lines of credit | (3,250,000) | (1,400,000) |
Payments of deferred financing costs | (2,481,549) | (1,284,117) |
Proceeds from issuance of common stock | 11,462,373 | 3,945,297 |
Proceeds from issuance of GO Units | 6,275,891 | 10,736,835 |
Payments of offering costs | (3,815,080) | (3,090,352) |
Payments for shares redeemed | (1,347,319) | (856,605) |
Distributions paid | (5,258,437) | (2,952,751) |
Net cash provided by financing activities | 59,401,324 | 7,904,702 |
Net change in cash, cash equivalents, and restricted cash | 2,589,881 | 1,807,333 |
Beginning Cash, Cash Equivalents, and Restricted Cash | 14,336,400 | 12,529,067 |
Ending Cash, Cash Equivalents, and Restricted Cash | 16,926,281 | 14,336,400 |
Supplemental Disclosure of Cash Flow Information: | ||
Interest paid | 7,586,812 | 4,371,165 |
Income taxes paid | 42,158 | |
Supplemental Disclosure of Non-Cash Investing and Financing Activities: | ||
Offering costs included in accounts payable | (38,024) | 36,355 |
Offering costs included in due to related parties | 23,570 | 78,902 |
Offering costs included in accrued expenses | (8,000) | |
Distributions included in due to related parties | 170,138 | (152,967) |
Reinvested distributions | 1,979,615 | 3,964,040 |
Initial ASC 842 adoption of right-of-use asset | 2,478,696 | |
Reconciliation of Cash, Cash Equivalents, and Restricted Cash: | ||
Cash and cash equivalents, beginning of period | 7,866,401 | 7,960,159 |
Restricted cash, beginning of period | 6,469,999 | 4,568,908 |
Beginning Cash, Cash Equivalents, and Restricted Cash | 14,336,400 | 12,529,067 |
Cash and cash equivalents, end of period | 6,193,449 | 7,866,401 |
Restricted cash, end of period | 10,732,832 | 6,469,999 |
Ending Cash, Cash Equivalents, and Restricted Cash | 16,926,281 | 14,336,400 |
Courtyard by Marriott (the "Aurora Property") | ||
Supplemental Disclosure of Non-Cash Investing and Financing Activities: | ||
Issuance of T Units | 6,742,757 | |
Debt issued for acquisition | 15,000,000 | |
Holiday Inn (the "EI Paso Property") | ||
Supplemental Disclosure of Non-Cash Investing and Financing Activities: | ||
Issuance of T Units | 2,100,000 | |
Debt issued for acquisition | 7,900,000 | |
Hilton Garden Inn (the "Houston Property") | ||
Supplemental Disclosure of Non-Cash Investing and Financing Activities: | ||
Issuance of T Units | 6,910,000 | |
Debt issued for acquisition | 13,000,000 | |
Sheraton Hotel (the "Northbrook Property") | ||
Supplemental Disclosure of Non-Cash Investing and Financing Activities: | ||
Issuance of T Units | 6,179,000 | |
Debt issued for acquisition | 3,700,000 | |
Hampton Inn and Suites, Fargo Medical Center (the "Fargo Property") | ||
Supplemental Disclosure of Non-Cash Investing and Financing Activities: | ||
Issuance of T Units | 4,091,291 | |
Debt assumed for acquisition | 7,198,709 | |
Fairfield Inn & Suites (the "Lakewood Property") | ||
Supplemental Disclosure of Non-Cash Investing and Financing Activities: | ||
Issuance of T Units | 5,638,000 | |
Residence Inn, The Fort Collins Property | ||
Supplemental Disclosure of Non-Cash Investing and Financing Activities: | ||
Issuance of T Units | 3,703,690 | |
Debt issued for acquisition | 11,500,000 | |
Hilton Garden Inn (the "Pineville HGI Property") | ||
Supplemental Disclosure of Non-Cash Investing and Financing Activities: | ||
Issuance of T Units | 2,729,211 | |
Hilton Garden Inn (the "Charlotte Property") | ||
Supplemental Disclosure of Non-Cash Investing and Financing Activities: | ||
Issuance of T Units | 6,427,546 | |
Holiday Inn Wichita Property [Member] | ||
Supplemental Disclosure of Non-Cash Investing and Financing Activities: | ||
Issuance of T Units | 1,217,625 | |
Common LP Units | Sheraton Hotel (the "Northbrook Property") | ||
Supplemental Disclosure of Non-Cash Investing and Financing Activities: | ||
Issuance of T Units | $ 1,521,000 | |
Common LP Units | Courtyard El Paso Airport, (the "El Paso Airport Property") | ||
Supplemental Disclosure of Non-Cash Investing and Financing Activities: | ||
Issuance of T Units | $ 4,600,000 |
ORGANIZATION
ORGANIZATION | 12 Months Ended |
Dec. 31, 2022 | |
ORGANIZATION | |
ORGANIZATION | 1. ORGANIZATION Lodging Fund REIT III, Inc. (“LF REIT III”), was formed on April 9, 2018 as a Maryland corporation. LF REIT III, together with its subsidiaries (the “Company”), was formed for the principal purpose of acquiring, through purchase or contribution, direct or indirect ownership interests in a diverse portfolio of limited-service, select-service, full-service and extended-stay hotel properties located primarily in “America’s Heartland,” which the Company defines as the geographic area from North Dakota to Texas and the Appalachian Mountains to the Rocky Mountains. LF REIT III has elected to be treated as a real estate investment trust, or REIT, for federal income tax purposes beginning with the taxable year ended December 31, 2018. The Company’s business activities are directed and managed by Legendary Capital REIT III, LLC (the “Advisor”) and its affiliates, which are related parties through common management, pursuant to the Amended and Restated Advisory Agreement (the “Advisory Agreement”), dated June 1, 2018. The Company has no foreign operations or assets and its operating structure includes only one operating Substantially all of the Company’s assets and liabilities are held by, and substantially all of its operations are conducted through, Lodging Fund REIT III OP, LP (the “Operating Partnership,” or “OP”), a subsidiary of LF REIT III. The OP has three voting classes of partnership units, Common General Partnership Units (“GP Units”), Interval Units and Common Limited Partnership Units (“Common LP Units”), and three classes of non-voting partnership units, Series B Limited Partnership Units (“Series B LP Units”), Series Growth & Opportunity (“GO”) Limited Partnership Units (“Series GO LP Units”) and Series T Limited Partnership Units (“Series T LP Units”). LF REIT III was the sole general partner of the OP, as of December 31, 2022 and 2021. As of December 31, 2022, there were 612,100 outstanding Common LP Units, no outstanding Interval Units, there were 1,000 outstanding Series B LP Units, all of which were owned by the Advisor, 3,124,503 Series GO LP Units and 5,073,506 Series T LP Units. On June 1, 2018, the Company commenced a private offering of shares of common stock, $0.01 par value per share, with a maximum offering of $100,000,000, which was increased to $150,000,000 in shares of the Company’s common stock in December 2021 (the “Offering”). The Offering is to accredited investors only, pursuant to a confidential private placement memorandum exempt from registration under the Securities Act of 1933, as amended. In addition to sales of common shares for cash, the Company has adopted a dividend reinvestment plan (“DRIP”), which permits stockholders to reinvest their distributions back into the Company. As of December 31, 2022, the Company had issued and sold 9,894,987 shares of common stock, including 1,018,460 shares attributable to the DRIP, and received aggregate proceeds of $96.7 million. As of December 31, 2022, the Company had repurchased 287,525 shares, which represents an original investment of $2,858,355 for $2,794,469 under the Company’s Share Repurchase Plan. As of December 31, 2022, all of the redemption proceeds have been paid. On April 29, 2020, the Company classified and designated 7,000,000 shares of authorized but unissued common stock, $0.01 par value per share, as shares of “Interval Common Stock,” to be part of the Offering. The offering of the Interval Common Stock was a maximum offering of $30,000,000, which could be increased to $60,000,000 in the sole discretion of the Company’s board of directors, (the “Interval Share Offering”) to accredited investors only, pursuant to a confidential private placement memorandum exempt from registration under the Securities Act of 1933, as amended. The Company’s board of directors allowed the Interval Share Offering to expire on March 31, 2022. The Company did not issue or sell any shares of Interval Common Stock in the Offering. On June 15, 2020, the Operating Partnership commenced a private offering of limited partnership units in the OP, designated as Series GO LP Units, with a maximum offering of $20,000,000, which could be increased to $30,000,000 in the sole discretion of LF REIT III as the General Partner of the Operating Partnership (the “GO Unit Offering”) to accredited investors only, pursuant to a confidential private placement memorandum exempt from registration under the Securities Act of 1933, as amended. The Series GO LP Units were being offered until the earlier of (i) the sale of $20,000,000 in Series GO LP Units (which could be increased to $30,000,000 in the Company’s sole discretion), (ii) June 14, 2022 or (iii) the Operating Partnership terminates the GO Unit Offering at an earlier date in its sole discretion. The Company’s board of directors terminated the GO Unit Offering as of February 14, 2022. The Company’s board of directors approved and ratified additional sales after February 14, 2022 in the GO Unit Offering for sales which were pending as of that date. As of December 31, 2022, the Operating Partnership had issued and sold 3,124,503 Series GO LP Units and received aggregate proceeds of $21.5 million. The Operating Partnership may issue Series T LP Units from time to time to persons who contribute direct or indirect interests in real estate to the Operating Partnership. The Series T LP Units will have allocations and distributions that are dictated by the Partnership Agreement of the Operating Partnership and the applicable contribution agreement for the real estate. Certain Series T LP Units may have different allocations and distributions than other Series T LP Units. The amount of the allocations and distributions will be determined by the General Partner in its sole discretion at the time of issuance of the Series T LP Units and any future distributions are dependent on the financial performance of the contributed real estate based on a mathematical formula. The Series T LP Units are eligible for conversion into Common LP Units beginning 24 or 36 months, or longer in some instances, after their issuance and will automatically convert into Common LP Units upon other events as described in the Partnership Agreement of the Operating Partnership. The conversion of Series T LP Units into Common LP Units may vary with each issuance and is generally based on a formula that applies an applicable capitalization rate to the then-current trailing twelve months net operating income of the hotel property less the loan balance outstanding as of the contribution date as assumed by the Operating Partnership, and less other amounts incurred by the Operating Partnership including but not limited to certain closing costs, loan assumption fees and defeasance costs, property improvement plan (“PIP”) and capital expenditures, operating cash infused by the Operating Partnership, and any shortfall of certain minimum cumulative investment yield. There is no guarantee that the future financial performance of the contributed hotel property will be sufficient to result in the issuance of Common LP Units resulting from the application of the conversion formula applicable to the issuance of Series T LP Units at the time of the conversion. As of December 31, 2022, the Company had recorded an aggregate value of $45.7 million to the Series T LP Units in connection with such property contributions. On December 3, 2021, the Operating Partnership commenced a private placement offering of its Common LP Units. As of December 31, 2022, the Operating Partnership had issued and sold 612,100 Common LP Units, with a value of $10.00 per unit, in connection with property contributions. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation Use of Estimates Revenue Recognition an accrual basis as they are earned. Any cash received prior to a guest’s arrival is recorded as an advance deposit from the guest and recognized as revenue at the time of the guest’s occupancy at the hotel property. Investment in Hotel Properties The Company’s acquisitions generally consist of land, land improvements, buildings, building improvements, and furniture, fixtures and equipment (“FF&E”). The Company may also acquire intangible assets or liabilities related to in-place leases, management agreements, debt, and advanced bookings. For transactions determined to be asset acquisitions, the Company allocates the purchase price among the assets acquired and the liabilities assumed on a relative fair value basis at the date of acquisition. The Company determines the fair value of assets acquired and liabilities assumed with the assistance of third-party valuation specialists, using cash flow analysis as well as available market and cost data. The determination of fair value includes making numerous estimates and assumptions. The difference between the fair value and the face value of debt assumed in connection with an acquisition is recorded as a premium or discount and amortized to interest expense over the remaining term of the debt assumed. The valuation of assumed debt liabilities is based on our estimate of the current market rates for similar liabilities in effect at the acquisition date. The Company’s investments in hotel properties are carried at cost and are depreciated using the straight-line method over the estimated useful lives of 15 years 40 years 3 7 years The Company assesses the carrying value of its hotel properties whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. The recoverability is measured by comparing the carrying amount of the property to the estimated future undiscounted cash flows of the property, which take into account current market conditions, and the Company’s intent with respect to holding or disposing of the hotel properties. If the Company’s analysis indicates that the carrying value is not recoverable on an undiscounted cash flow basis, the Company will recognize an impairment loss for the amount by which the carrying value exceeds the fair value. The fair value is determined through various valuation techniques, including internally developed discounted cash flow models, comparable market transactions or third-party appraisals. The use of projected future cash flows is based on assumptions that are consistent with a market participant’s future expectations for the industry and the economy in general and the Company’s expected use of the underlying hotel properties. The assumptions and estimates related to the future cash flows and the capitalization rates are complex and subjective in nature. Changes in economic and operating conditions that occur subsequent to a current impairment analysis and the Company’s ultimate use of the hotel property could impact the assumptions and result in future impairment losses to the hotel properties. Advertising Costs Non-controlling Interest Cash and Cash Equivalents Restricted Cash Accounts Receivable Deferred Financing Costs Offering Costs Property Operations Expenses Property Management Fees Franchise Fees Acquisition Costs acquisition due diligence costs are recorded as, and included in, prepaid expenses and other assets on the accompanying consolidated balance sheets. Net Loss Per Share of Common Stock Stock-Based Compensation Income Taxes As a REIT, the Company is generally not subject to U.S. federal corporate income tax on the portion of taxable income that is distributed to stockholders. If the Company fails to qualify for taxation as a REIT in any taxable year, the Company will be subject to U.S. federal income taxes at regular corporate rates and it may not be able to qualify as a REIT for four subsequent taxable years. As a REIT, the Company may be subject to certain state and local taxes on its income and property, and to U.S. federal income and excise taxes on undistributed taxable income. Taxable income from non-REIT activities managed through the Company’s taxable REIT subsidiary (“TRS”) is subject to U.S. federal, state, and local income taxes at the applicable rates. The TRS accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax basis, and for net operating loss, capital loss and tax credit carryforwards. The deferred tax assets and liabilities are measured using the enacted income tax rates in effect for the year in which those temporary differences are expected to be realized or settled. The effect on the deferred tax assets and liabilities from a change in tax rates is recognized in earnings in the period when the new rate is enacted. However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of all available evidence, including the future reversals of existing taxable temporary differences, future projected taxable income and tax planning strategies. Valuation allowances are provided if, based upon the weight of the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company performs periodic reviews for any uncertain tax positions and, if necessary, will record the expected future tax consequences of uncertain tax positions in the consolidated financial statements. Fair Value Measurement Level 1 Level 2 Level 3 The Company’s estimates of fair value were determined using available market information and appropriate valuation methods. Considerable judgment is necessary to develop estimated fair value. The use of different market assumptions or estimation methods may have a material effect on the estimated fair value amounts. The Company classifies assets and liabilities in the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement. Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, “Leases” (“ASU No. 2016-02”) (Topic 842), which replaces Leases (Topic 840), and sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). ASU No. 2016-02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance under Leases (Topic 840), for operating leases. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales type leases, direct financing leases and operating leases. The Company adopted this standard effective January 1, 2022, electing to recognize and measure its leases prospectively at the beginning of the period of adoption, without restating the presentation of periods prior to the effective date, which continue to be reported in accordance with the Company’s historical accounting policy. At adoption of the new standard, the Company recorded a right-of-use asset and lease liability for its Sheraton Northbrook, Illinois hotel property (the "Northbrook Property") ground lease measured at the estimated present value of the remaining minimum lease payments under the lease. The Company’s ground lease is classified as a financing lease under Topic 842. For this finance lease, effective January 1, 2022, the Company began recognizing depreciation and amortization expense and interest expense in the Company’s consolidated statements of operations instead of ground lease rent expense. While the total expense recognized over the life of a lease is unchanged, the timing of expense recognition for finance leases results in higher expense recognition during the earlier years of the lease and lower expense during the later years of the lease. In addition to recording operating and financing right-of-use assets and lease liabilities, the Company also reclassified at adoption its intangible liability for its above market ground lease to the beginning right-of-use asset. See Note 3 for more information regarding the Company’s lease assets and liabilities. |
INVESTMENT IN HOTEL PROPERTIES
INVESTMENT IN HOTEL PROPERTIES | 12 Months Ended |
Dec. 31, 2022 | |
INVESTMENT IN HOTEL PROPERTIES | |
INVESTMENT IN HOTEL PROPERTIES | 3. INVESTMENT IN HOTEL PROPERTIES Investment in hotel properties as of December 31, 2022 and 2021 consisted of the following: December 31, December 31, 2022 2021 Land and land improvements $ 32,650,698 $ 20,034,309 Building and building improvements 241,278,409 144,883,150 Furniture, fixtures, and equipment 21,884,508 13,986,611 Right-of-use asset - ground lease 7,286,984 — Construction in progress 4,576,041 8,433 Investment in hotel properties, at cost 307,676,640 178,912,503 Less: accumulated depreciation (17,458,998) (9,487,728) Investment in hotel properties, net $ 290,217,642 $ 169,424,775 As of December 31, 2022, the Company consolidated nineteen hotel properties, consisting of eighteen hotel properties owned by the Company and an equity and profits interest in the parent of the entity which holds a leasehold interest in one hotel property, with an aggregate of 2,261 rooms located in eleven states. On August 10, 2022, the Company consolidated a variable interest entity (“VIE”) that owns one hotel in El Paso, Texas (the “El Paso University Property”). The Company is the primary beneficiary of this VIE as the Company has the power to direct the activities that most significantly affect its economic performance. Additionally, the Company has the obligation to absorb its losses and the right to receive benefits that could be significant to it. Accordingly, the Company initially recognized the VIE’s assets, liabilities, and noncontrolling interest at fair value. The Company’s condensed consolidated balance sheet includes the following assets and liabilities of this entity: December 31, December 31, 2022 2021 Assets Investment in hotel properties, net of accumulated depreciation of $471,491 and $0 $ 22,036,289 $ — Cash and cash equivalents 493,056 — Restricted cash 2,173,237 — Accounts receivable, net 154,976 — Prepaid expenses and other assets 67,068 — Total Assets $ 24,924,626 $ — Liabilities Debt, net $ 12,244,068 $ — Finance lease liability 4,862,172 — Accounts payable 182,692 — Accrued expenses 445,763 — Other liabilities 655,372 — Total liabilities $ 18,390,067 $ — Acquisitions of Hotel Properties The Company acquired seven properties and an equity and profits interest in the parent of the entity which holds a leasehold interest in one hotel property during the year ended December 31, 2022. The Company acquired four properties during the year ended December 31, 2021. Each of the Company’s hotel acquisitions to date have been determined to be asset acquisitions. The table below outlines the details of the properties acquired during the years ended December 31, 2022 and December 31, 2021. 2022 Acquisitions Number Date of Guest Purchase Transaction % Hotel Property Type Location Acquired Rooms Price Costs Total Interest Hampton Inn & Suites Limited-Service Fargo, ND January 18, 2022 90 $ 11,440,000 (1) $ 302,222 $ 11,742,222 100 % Courtyard by Marriott Select-Service El Paso, TX February 8, 2022 90 15,120,000 (2) 333,234 15,453,234 100 % Fairfield Inn & Suites Limited-Service Lakewood, CO March 29, 2022 142 18,800,000 (3) 862,117 19,662,117 100 % Residence Inn Extended-Stay Fort Collins, CO August 3, 2022 113 15,800,000 (4) 546,009 16,346,009 100 % Hilton Garden Inn Select-Service Pineville, NC August 25, 2022 113 10,930,000 (5) 347,149 11,277,149 100 % Hilton Garden Inn Select-Service Charlotte, NC August 25, 2022 112 15,440,000 (6) 416,387 15,856,387 100 % Holiday Inn Limited-Service Wichita, KS December 22, 2022 84 7,400,000 (7) 234,310 7,634,310 100 % 744 $ 94,930,000 $ 3,041,428 $ 97,971,428 2021 Acquisitions Number Date of Guest Purchase Transaction % Hotel Property Type Location Acquired Rooms Price Costs Total Interest Courtyard by Marriott Select-Service Aurora, CO February 4, 2021 141 $ 23,610,000 (8) $ 458,129 $ 24,068,129 100 % Holiday Inn Select-Service El Paso, TX May 12, 2021 175 10,300,000 (9) 361,019 10,661,019 100 % Hilton Garden Inn Select-Service Houston, TX August 3, 2021 182 19,910,000 (10) 918,353 20,828,353 100 % Sheraton Hotel Full-Service Northbrook, IL December 3, 2021 160 11,400,000 (11) 340,005 11,740,005 100 % 658 $ 65,220,000 $ 2,077,506 $ 67,297,506 (1) Includes the issuance of $4,091,291 in Series T LP Units of the Operating Partnership. (2) Includes the issuance of $4,600,000 in Common Limited Partnership Units of the Operating Partnership. (3) Includes the issuance of $5,638,000 in Series T LP Units of the Operating Partnership. (4) Includes the issuance of $3,703,690 in Series T LP Units of the Operating Partnership. (5) Includes the issuance of $2,729,211 in Series T LP Units of the Operating Partnership. (6) Includes the issuance of $6,427,546 in Series T LP Units of the Operating Partnership. (7) Includes the issuance of $1,217,625 in Series T LP Units of the Operating Partnership. (8) Includes the issuance of $6,742,757 in Series T LP Units of the Operating Partnership. (9) Includes the issuance of $2,100,000 in Series T LP Units of the Operating Partnership. (10) Includes the issuance of $6,910,000 in Series T LP Units of the Operating Partnership. (11) Includes the issuance of $6,179,000 in Series T LP Units and $1,521,000 in Common Limited Partnership Units of the Operating Partnership In addition, on August 10, 2022, the Company acquired a 24.9% equity and profits interest in High Desert Garden Holdings, LLC, which is the parent of the entity which holds a leasehold interest in the Hilton Garden Inn, located in El Paso, Texas (the “El Paso University Property”) in exchange for a capital contribution of $3.2 million. The El Paso University Property is a select-service hotel with 153 guest rooms. See “—2022 Business Combinations” below for additional information regarding this transaction. The allocation of the aggregate purchase price in accordance with GAAP guidance prescribed in ASC Topic 805, Business Combinations For the Years Ended December 31, 2022 2021 Land and land improvements $ 12,538,514 $ 9,694,077 Building and building improvements 79,702,403 58,503,137 Furniture, fixtures, and equipment 5,730,511 4,597,353 Total assets acquired 97,971,428 72,794,567 Above market ground lease (1) — (5,497,061) Total liabilities assumed — (5,497,061) Total purchase price (2) $ 97,971,428 $ 67,297,506 Assumed mortgage debt 7,198,709 — Net purchase price $ 90,772,719 $ 67,297,506 (1) The above market ground lease is recognized on the consolidated balance sheet within Other Liabilities as of December 31, 2021. See Northbrook Property Above Market Ground Lease discussion below. (2) Total purchase price includes purchase price plus all transaction costs. All acquisitions completed during the years ended December 31, 2022 and 2021 were considered asset acquisitions under ASC 805. Eleven of the hotel properties owned by the Company as of December 31, 2022 are subject to management agreements with NHS, LLC dba National Hospitality Services (“NHS”) with an initial term expiring on December 31 of the fifth full calendar year following the effective date of the agreement, which will automatically renew for successive five-year five one The seller of the Pineville Property, an affiliate of Beacon, was entitled to additional cash consideration if the property exceeds certain performance criteria based on increases in the property’s net operating income (“NOI”) for a selected 12-month period of time. At any time during the period beginning April 1, 2021 through the date of the final NOI determination (on or about April 30, 2023), the seller of the property could have made a one-time election to receive the additional consideration. The variable amount of the additional consideration, if any, was based on the excess of the property’s actual NOI over a base NOI for the applicable 12-month calculation period divided by the stated cap rate for such calculation period. As of December 31, 2022, no amounts were owed or paid to the seller of the Pineville Property, and no election to receive the additional consideration had been made. As of the date of this filing, the period to elect to receive additional consideration has passed with no election being made. 2022 Acquisitions Hampton Inn & Suites Fargo Medical Center – Fargo, North Dakota On January 18, 2022, the Operating Partnership acquired a Hampton Inn & Suites hotel property in Fargo, North Dakota (the “Fargo Property”) for contractual consideration comprised of $7.2 million in debt, $150,000 in cash and the issuance of $4.1 million in Series T LP Units of the Operating Partnership. The Series T LP Units will convert into Common LP Units of the Operating Partnership beginning 36 months, or in the event the Operating Partnership is then in the process of transacting a sale of the Operating Partnership’s assets or another significant capital event necessitating a conversion is then in process, after January 18, 2022, at which point the value will be calculated pursuant to the terms of an Amended and Restated Contribution Agreement, dated January 18, 2022. The number of Common LP Units to be issued to the contributor based on such conversion may be higher or lower than the initial valuation of the Series T LP Units. Accordingly, the aggregate purchase price used for the acquisition accounting noted in the tables above and below of $11.4 million, was determined to be the value assigned by a third-party appraisal, as the appraisal value was more reliably measurable. Courtyard El Paso Airport – El Paso, Texas On February 8, 2022, the Operating Partnership acquired a Courtyard by Marriott hotel property in El Paso, Texas (the “El Paso Airport Property”) for contractual consideration comprised of $10.0 million in debt, $620,000 in cash and the issuance of $4.6 million in Common LP Units. Fairfield Inn & Suites Denver Southwest Lakewood – Lakewood, Colorado On March 29, 2022, the Operating Partnership acquired a Fairfield Inn & Suites hotel property in Lakewood, Colorado (the “Lakewood Property”) for contractual consideration of $12.6 million in debt, $552,000 in cash and approximately $6.2 million in Series T LP Units of the Operating Partnership. The Series T LP Units will convert into Common LP Units of the Operating Partnership beginning 36 months, or in the event the Operating Partnership is then in the process of transacting a sale of the Operating Partnership’s assets or another significant capital event necessitating a conversion is then in process, up to 48 months, after March 29, 2022, at which point the value will be calculated pursuant to the terms of an Amended and Restated Contribution Agreement, dated March 29, 2022. The number of Common LP Units to be issued to the contributor based on such conversion may be higher or lower than the initial valuation of the Series T LP Units. Accordingly, the aggregate purchase price used for the acquisition accounting noted in the tables above and below of $18.8 million, was determined to be the value assigned by a third-party appraisal, as the appraisal value was more reliably measurable. Residence Inn by Marriott Fort Collins – Fort Collins, Colorado On August 3, 2022, the Operating Partnership acquired a Residence Inn by Marriott hotel property in Fort Collins, Colorado (the “Fort Collins Property”) for contractual consideration comprised of $11.5 million in debt, the issuance of 560,369 Series T LP Units of the Operating Partnership, and approximately $600,000 in cash at closing. The Series T Limited Units will convert into Common Limited Units of the Operating Partnership beginning 36 months , or at the option of the contributor, up to 48 months , after the closing, or upon the sale of the Fort Collins RI property or substantially all of the Operating Partnership’s assets, at which point . Accordingly, the aggregate purchase price used for the acquisition accounting noted in the tables above and below of $15.8 million, was determined to be the value assigned by a third-party appraisal, as the appraisal value was more reliably measurable. Hilton Garden Charlotte North – Charlotte, North Carolina On August 25, 2022, the Operating Partnership acquired a Hilton Garden Inn hotel property in Charlotte, North Carolina (the “Charlotte Property”) for contractual consideration comprised of the payoff of the existing loan secured by the Charlotte Property in the amount of . Hilton Garden Pineville – Pineville, North Carolina On August 25, 2022, the Operating Partnership acquired a Hilton Garden Inn hotel property in Pineville, North Carolina (the “Pineville HGI Property”) for . the aggregate purchase price used for the acquisition accounting noted in the tables above and below of $10.9 million, was determined to be the value assigned by a third-party appraisal, as the appraisal value was more reliably measurable. Holiday Inn Express & Suites - Wichita Airport On December 22, 2022, the Operating Partnership acquired a Holiday Inn Express & Suites hotel property in Wichita, Kansas (the “Wichita Property”) for contractual consideration comprised of the origination of a new loan by subsidiaries of the Operating Partnership with Choice Financial Group (the “Wichita HIEX Lender”) for $5.6 million, secured by the Wichita Property the issuance by the Operating Partnership of 121,762 Series T Limited Units of the Operating Partnership, and the payment by the Operating Partnership of $0.5 million in cash, a portion of which was used to pay off the portion of the Wichita Contributor’s existing loan not covered by the proceeds of the new loan with the Wichita HIEX Lender. The Series T Limited Units will convert into Common Limited Units of the Operating Partnership 36 months after the closing. The number of Common Limited Units to be issued to the Wichita Contributor upon conversion will be calculated pursuant to the terms of the Pineville HGI Contribution Agreement, which may be higher or lower than the initial valuation of the Series T LP Units. Accordingly, the aggregate purchase price used for the acquisition accounting noted in the tables above and below of $7.4 million, was determined to be the value assigned by a third-party appraisal, as the appraisal value was more reliably measurable. 2022 Business Combinations Hilton Garden Inn El Paso University – El Paso, Texas On August 10, 2022, the Operating Partnership acquired an equity and profits interest in High Desert Garden Holdings, LLC, a Delaware limited liability company (“HDGH”), the parent of the entity which holds a leasehold interest in a Hilton Garden Inn located in El Paso, Texas (the “El Paso University Property”) pursuant to a Reorganization and Membership Interest Purchase Agreement dated as of August 10, 2022 by and among the Operating Partnership, Roma Commercial, Inc., ASI Capital, LLC, and VB Hotel Group A, LLC and pursuant to a First Amendment to the Fourth Amended and Restated Operating Agreement of High Desert Garden Holdings, LLC (collectively and as amended (the “El Paso University Amended Agreements”)). High Desert Investors, LP, a Delaware limited partnership (“HDI”), a wholly-owned subsidiary of HDGH, holds a leasehold interest in real estate and the El Paso University Property located on such real estate. Pursuant to the El Paso University Amended Agreements, the Operating Partnership acquired a 24.9% membership interest in HDGH in exchange for a capital contribution of $3.2 million. The Operating Partnership has the unconditional right, at any time prior to December 31, 2027 and at its discretion, to acquire all membership interest in HDGH on the terms and conditions as provided in the El Paso University Amended Agreements. After paying any member loans, the Operating Partnership will receive 100% of distributions from operations, subject to annual cash distributions for members that existed before the El Paso University Amended Agreements (the “Prior Members”), which are entitled to up to 6.0% of the value of the Prior Member’s ownership percentage, depending upon the net operating income (“NOI”) of the El Paso University Hotel Property during each such applicable year. The Operating Partnership will fund any capital requirements for HDGH and has the option to fund such requirements by making a loan to HDGH at a 12% per annum interest rate. HDI is the borrower (“Borrower”) under a loan in the original principal amount of $14.4 million which is secured by HDI’s leasehold interest in the El Paso University Property and the real estate on which it is located. The loan has a fixed interest rate of 4.939% per annum and matures on August 6, 2025. In connection with the transactions effected through the El Paso University Amended Agreements, Corey Maple, a director and executive officer of the Company, entered into a guaranty with the lender to guarantee payment, when due, of the loan amount and the performance of agreements by Borrower contained in the loan documents, as further described in the guaranty. The Company accounted for this transaction as a business combination in accordance with GAAP guidance prescribed in ASC Topic 805, Business Combination rates that best reflect current market interest rates for financings with similar characteristics and credit quality, and assuming the loan is outstanding through its maturity. The fair values were based on estimated cash flow projections that utilize appropriate discount rates and available market information. Such inputs were categorized as Level 3, as defined in the GAAP fair value hierarchy. Level 3 valuations incorporate subjective judgements and consider assumptions that are not observable in the market. In connection with this transaction, the Company allocated the purchase price of HDGH based on the estimated fair value of assets acquired and liabilities assumed as follows: August 10, 2022 Assets Building $ 16,700,000 Furniture, fixtures & equipment 900,000 Right-of-use asset - ground lease 4,862,172 Cash and cash equivalents 36,790 Restricted cash 1,305,636 Accounts receivable, net 168,974 Prepaid expenses and other assets 107,291 Total Assets $ 24,080,863 Liabilities Debt $ 12,781,084 Finance lease liability 4,862,172 Accounts payable 237,636 Accrued expenses 1,970,554 Other liabilities 419,336 Total liabilities $ 20,270,782 Assets in excess of liabilities (gain on acquisition of VIE) $ 3,810,081 2021 Acquisitions The Courtyard by Marriott in Aurora, Colorado (the “Aurora Property”) was acquired on February 4, 2021 for contractual consideration comprised of $15.0 million in debt, $1.9 million in cash paid at closing and the issuance of $6.7 million in Series T LP Units of the Operating Partnership. The Series T LP Units will convert into Common LP Units of the Operating Partnership beginning 36 months, or at the option of the contributor, up to 48 months, after February 4, 2021, at which point the value will be calculated pursuant to the terms of a Contribution Agreement, dated as of September 1, 2020, as amended on February 4, 2021. The number of Common LP Units to be issued to the contributor based on such conversion may be higher or lower than the initial valuation of the Series T LP Units. Accordingly, the aggregate purchase price used for the acquisition accounting noted in the tables above and below of $23.6 million, was determined to be the value assigned by a third-party appraisal, as the appraisal value was more reliably measurable. On May 12, 2021, the Operating Partnership acquired the Holiday Inn El Paso West Sunland Park hotel property in El Paso, Texas (the “El Paso HI Property”) for contractual consideration comprised of $7.9 million in debt, $300,000 in cash paid at closing and the issuance of $2.1 million in Series T LP Units of the Operating Partnership. The Series T LP Units will convert into Common LP Units of the Operating Partnership beginning 36 months, or in the event the Operating Partnership is then in the process of transacting a sale of the Operating Partnership’s assets or another significant capital event necessitating a conversion is then in process, up to 48 months, after May 12, 2021, at which point the value will be calculated pursuant to the terms of an Amended and Restated Contribution Agreement, dated May 12, 2021. The number of Common LP Units to be issued to the contributor based on such conversion may be higher or lower than the initial valuation of the Series T LP Units. Accordingly, the aggregate purchase price used for the acquisition accounting noted in the tables above and below of $10.3 million, was determined to be the value assigned by a third-party appraisal, as the appraisal value was more reliably measurable. On August 3, 2021, the Operating Partnership acquired the Hilton Garden Inn Houston Bush Intercontinental Airport hotel property in Houston, Texas (the “Houston Property”) for contractual consideration comprised of $13.0 million in debt, $719,000 in cash paid at closing and the issuance of $6.9 million Series T LP Units of the Operating Partnership. The Series T LP Units will convert into Common LP Units of the Operating Partnership beginning 36 months, or in the event the Operating Partnership is then in the process of transacting a sale of the Operating Partnership’s assets or another significant capital event necessitating a conversion is then in process, up to 48 months, after August 3, 2021, at which point the value will be calculated pursuant to the terms of the Second Amended and Restated Contribution Agreement, dated August 3, 2021. The number of Common LP Units to be issued to the contributor based on such conversion may be higher or lower than the initial valuation of the Series T LP Units. Accordingly, the aggregate purchase price used for the acquisition accounting noted in the tables above and below of $19.9 million, was determined to be the value assigned by a third-party appraisal, as the appraisal value was more reliably measurable. On December 3, 2021, the Operating Partnership acquired the Sheraton Hotel Chicago Northbrook hotel property located in Northbrook, Illinois (the “Northbrook Property”) for contractual consideration comprised of $3.7 million in debt, the issuance by the Operating Partnership of $6.2 million Series T Limited Units of the Operating Partnership and $1.5 million in Common Limited Partnership Units of the Operating Partnership. The Series T LP Units will convert into Common LP Units of the Operating Partnership beginning 36 months, or at the option of the contributor, up to 48 months, after December 3, 2021, at which point the value will be calculated pursuant to the terms of an Amended & Restated Contribution Agreement dated December 3, 2021. The number of Common LP Units to be issued to the contributor based on such conversion may be higher or lower than the initial valuation of the Series T LP Units. Accordingly, the aggregate purchase price used for the acquisition accounting noted in the tables above and below of $11.4 million, was determined to be the value assigned by a third-party appraisal, as the appraisal value was more reliably measurable. Northbrook Property Above Market Ground Lease On December 3, 2021, in connection with the purchase of the Northbrook Property, the Company recorded an above market ground lease liability of $5,497,061, which was recognized on the consolidated balance sheet within Other Liabilities. The Company assumed the ground lease 15 years into a 61-year lease maturing in 2067. The yearly base rent, paid monthly, increases 3% every year through maturity. As of December 31, 2022, the Company’s finance lease had a discount rate of 7.75%. Upon adoption of ASU No. 2016-02 on January 1, 2022, the Company derecognized the above market ground lease liability by reclassifying it as a partial offset to the beginning right-of-use asset related to this financing lease. At adoption of the new standard, the Company recognized a lease liability of $7,975,757 and a right-of-use asset of $2,478,696, which included the derecognition of the above-market ground lease liability. For the year ended December 31, 2022, the Company recognized interest expense of $624,859 and right-of-use amortization expense of $53,885 related to the finance lease. El Paso University Property Ground Lease On August 10, 2022, in connection with the El Paso University Property, the Company recognized a finance lease liability of $4,862,172 and a right-of-use asset of $4,862,172 related to a ground lease assumed. The Company assumed the ground lease with a remaining term of 32 years, maturing in 2054. Annual rentals are comprised of a base rent due at the beginning of the year plus, if applicable, a percent of revenue in excess of the base rent. The annual base rent is adjusted every five years by an average of a percent of the annual revenue in preceding years. If revenue remains below the previous five-year base rent, then there is no change to base rent. As of December 31, 2022, the finance lease had a discount rate of 9.00%. The following table reconciles the undiscounted cash flows for each of the next five years and total of the remaining years to the finance lease liability included in the Company’s consolidated balance sheet as of December 31, 2022. 2023 $ 596,767 2024 610,237 2025 624,112 2026 645,791 2027 660,511 Thereafter 44,016,796 Total finance lease payments 47,154,214 Interest (34,127,365) Present value of finance lease liabilities $ 13,026,849 |
PREPAID EXPENSES AND OTHER ASSE
PREPAID EXPENSES AND OTHER ASSETS | 12 Months Ended |
Dec. 31, 2022 | |
PREPAID EXPENSES AND OTHER ASSETS | |
PREPAID EXPENSES AND OTHER ASSETS | 4. PREPAID EXPENSES AND OTHER ASSETS Prepaid expenses and other assets consisted of the following: December 31, December 31, 2022 2021 Franchise fees (1) $ 150,000 $ 525,000 Acquisition costs 485,304 541,821 Deferred tax assets, net — 2,464,768 Insurance 389,656 464,398 Other 385,033 364,568 $ 1,409,993 $ 4,360,555 (1) Prepaid franchise fees paid in 2022 in relation to Sheraton Albuquerque Airport, terminated in 2023. Prepaid franchise fees paid in 2021 in relation to the Fargo acquisition, El Paso Airport acquisition, and El Paso University acquisition in 2022. See Note 13 Subsequent Events. |
ACCRUED EXPENSES
ACCRUED EXPENSES | 12 Months Ended |
Dec. 31, 2022 | |
ACCRUED EXPENSES | |
ACCRUED EXPENSES | 5. ACCRUED EXPENSES Accrued expenses consisted of the following: December 31, December 31, 2022 2021 Property taxes $ 3,215,458 $ 1,686,801 Interest 1,585,813 357,030 Other 1,052,248 577,689 $ 5,853,519 $ 2,621,520 |
DEBT
DEBT | 12 Months Ended |
Dec. 31, 2022 | |
DEBT | |
DEBT | 6. DEBT Lines of Credit Revolving Line of Credit - Western State Bank On February 10, 2020, the Company entered into a $5.0 million revolving line of credit with Western State Bank (“Western Line of Credit”). The Western Line of Credit requires monthly payments of interest only, with all outstanding principal amounts being due and payable at maturity on February 10, 2021. On January 19, 2021, the Western Line of Credit was amended to extend the maturity date to May 10, 2021. The Western Line of Credit had a variable interest rate equal to the U.S. Prime Rate, plus 0.50%. On May 6, 2021, the Western Line of Credit was amended to extend the maturity date to May 10, 2022. On that date, the interest rate was also amended to incorporate an interest rate floor equal to 4.00%. On May 5, 2022, the Western Line of Credit was amended to extend the maturity date to December 15, 2022. On December 15, 2022, the Western Line of Credit was amended to extend the maturity to April 15, 2023. Additionally, through the amendment on December 15, 2022, the Western Line of Credit is secured by the Company’s Hampton Inn hotel property in Eagan, Minnesota, the Company’s Holiday Inn Express hotel property in Cedar Rapids, Iowa, the Company’s Hampton Inn hotel property in Fargo, North Dakota and limited partnership units of the Operating Partnership. No other changes were made to the Western Line of Credit as a result of the amendments. The interest rate as of December 31, 2022 was 8.00%. The Western Line of Credit is secured by the Company’s Cedar Rapids Property, Eagan Property, and Fargo Property which are also subject to term loans with the same lender, and 300,000 Common LP Units of the Operating Partnership. The Western Line of Credit includes cross-collateralization and cross-default provisions such that the existing mortgage loan agreements with respect to the Cedar Rapids Property, the Eagan Property, and the Fargo Property as well as future loan agreements that the Company may enter into with this lender, are cross-defaulted and cross-collateralized with each other. The Western Line of Credit, including all cross-collateralized debt, is guaranteed by Corey Maple. As of December 31, 2022, there was a $5.0 million balance outstanding on the Western Line of Credit. See Note 13 “Subsequent Events” of the notes to the consolidated financial statements included as part of this Annual Report on Form 10-K for a description of amendments to the Western Line of Credit subsequent to December 31, 2022. Revolving Line of Credit – Legendary A-1 Bonds, LLC On August 10, 2022, the Operating Partnership entered into a $5.0 million revolving line of credit loan agreement (the “A-1 Line of Credit”) with Legendary A-1 Bonds, LLC (“A-1 Bonds”), which is an affiliate of the Advisor which is owned by Norman Leslie, a director and officer of the Company and principal of the Advisor and Corey Maple, a director of the Company and principal of the Advisor. The A-1 Line of Credit requires monthly payments of interest only beginning September 1, 2022, with all outstanding principal and interest amounts being due and payable at maturity on December 31, 2022. The A-1 Line of Credit has a fixed interest rate of 7.0% per annum. Outstanding amounts under the A-1 Line of Credit may be prepaid in whole or in part without penalty. The A-1 Line of Credit was initially secured by 500,000 unissued Common LP Units of the Operating Partnership. On December 22, 2022, the line of credit was amended to extend the maturity date to December 31, 2023 and to increase the line of credit to $7.5 million. Through the Amendment, the A-1 Line of Credit is secured by 750,000 unissued Common LP units of the Operating Partnership. As of December 31, 2022, there was a $7,380,156 balance outstanding on the A-1 Line of Credit. Mortgage Debt As of December 31, 2022, the Company had $180.3 million in outstanding mortgage debt secured by each of their nineteen hotel properties, with maturity dates ranging from March 2023 to April 2029. Seventeen of the loans have fixed interest rates ranging from 3.70% to 6.41%. One loan is a variable interest loan at a rate of LIBOR plus 6.0% per annum, provided that LIBOR shall not be less than 1.0%, resulting in an effective rate of 10.15% as of December 31, 2022. Another loan is a variable interest loan at a rate of LIBOR or an equivalent rate plus 6.25% per annum, provided that the variable rate shall not be less than 0.75%, resulting in an effective rate of 10.40% as of December 31, 2022. Collectively, the weighted-average interest rate is 5.74%. The loans generally require monthly payments of principal and interest on an amortized basis, with certain loans allowing for an interest-only period following origination, and generally require a balloon payment due at maturity. As of December 31, 2022 and December 31, 2021, certain mortgage debt was guaranteed by the members of the Advisor. See Note 9 “Related Party Transactions” of the notes to the consolidated financial statements included as part of this Annual Report on Form 10-K for additional information regarding debt that was guaranteed by members of the Advisor. As part of the consolidated outstanding mortgage debt above, the owner of the leasehold interest in the El Paso University Property is the borrower under a $14.4 million loan secured by the lease hold interest in the El Paso University Property, Corey Maple entered into a guaranty and environmental indemnity in connection with the loan. The loan has a fixed interest rate of 4.94% per annum and matures on August 6, 2025. There were no mortgage loan amendments during the fiscal year ended December 31, 2022. See Note 13 “Subsequent Events” of the notes to the consolidated financial statements included as part of this Annual Report on Form 10-K for a description of changes to mortgage debt occurring subsequent to December 31, 2022. As of December 31, 2022, the Company was not in compliance with the required financial covenants under the terms of its promissory notes secured by the Pineville Property, Cedar Rapids Property and Houston Property and related loan documents (the “Pineville Loan”), (the “Cedar Rapids Loan”) and (the “Houston Loan”) which constitutes an event that puts the Company into a trigger period pursuant to the loan documents. The Company has requested and received waivers of the financial covenants for the year ending December 31, 2022 for the Pineville Property, Cedar Rapids Property and Houston Property. Except as described above, the Company was in compliance with all debt covenants as of December 31, 2022. Paycheck Protection Program (“PPP”) Loans In April 2020, the Company entered into six unsecured promissory notes under the Paycheck Protection Program (the “PPP”), totaling $763,100 (the “Original PPP Loans”). The PPP was established under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was passed in March 2020, and is administered by the U.S. Small Business Administration (the “SBA”). The term of each Original PPP loan was two years, which could be extended to five years at the Company’s election. The interest rate on each PPP loan was 1.0% per annum, which was deferred for a period of time. In January 2021, the Company entered into six new unsecured promissory notes totaling $716,400, under the Second Draw Paycheck Protection Program (the “Second Draw PPP”) created by the Consolidated Appropriations Act, 2021 (the “CAA Act”), through Western State Bank. The term of each Second Draw PPP loan was five years. The interest rate on each Second Draw PPP loan was 1.0% per annum, which was deferred for the first sixteen months of the term of the loan. In February 2021, the Company, through its subsidiary LF3 Southaven TRS, LLC (“Southaven TRS”), entered into an unsecured promissory note under the PPP through Western State Bank. The amount of the PPP loan for Southaven TRS was $85,400. The term of the PPP loan was five years. The interest rate on the PPP loan was 1.0% per annum, which was deferred for the first sixteen months of the term of the loan. In April 2021, the Company, through its subsidiary Southaven TRS, entered into an unsecured promissory note under the Second Draw PPP created by the CAA Act, through Western State Bank (the “Southaven TRS Second Draw PPP”). The term of the Southaven Second Draw PPP loan was five years. The amount of the Southaven TRS Second Draw PPP loan was $119,500. The interest rate on the Southaven TRS Second Draw PPP loan was 1.0% per annum, which was deferred for the first sixteen months of the term of the loan. Under the terms of the CARES Act and the CAA Act, as applicable, PPP loan recipients and Second Draw PPP loan recipients can apply for, and be granted, forgiveness for all or a portion of such loans. Such forgiveness will be determined, subject to limitations and ongoing rulemaking by the SBA, based on the use of loan proceeds for payroll costs and mortgage interest, rent or utility costs, the maintenance of employee and compensation levels and certain other approved expenses. In February 2021, the Company applied for and received 100% forgiveness of all six Original PPP Loans. In June 2021, the Company received forgiveness on the full balance of the Second Draw PPP and Southaven TRS PPP loans. In August 2021, the Company received forgiveness on the full balance of the Southaven TRS Second Draw PPP loan. The following table sets forth the hotel properties securing each loan, the interest rate, maturity date, and the outstanding balance as of December 31, 2022 and 2021 for each of the Company’s mortgage debt obligations. Interest Outstanding Outstanding Rate as of Balance as of Balance as of December 31, Maturity December 31, December 31, 2022 Date 2022 2021 Holiday Inn Express - Cedar Rapids (1) 5.33% 9/1/2024 $ 5,799,804 $ 5,858,134 Hampton Inn & Suites - Pineville 5.13% 6/6/2024 8,580,586 8,782,284 Hampton Inn - Eagan 4.60% 1/1/2025 9,063,528 9,277,193 Home2 Suites - Prattville 4.13% 8/1/2024 9,199,041 9,425,085 Home2 Suites - Lubbock 4.69% 10/6/2026 7,343,948 7,573,597 Fairfield Inn & Suites - Lubbock 4.93% 4/6/2029 8,971,430 9,125,908 Homewood Suites - Southaven 3.70% 3/3/2025 13,007,706 13,343,841 Courtyard by Marriott - Aurora (2)(3) 10.15% 2/5/2024 (4) 15,000,000 15,000,000 Holiday Inn - El Paso (3) 5.00% 5/15/2023 (5) 7,900,000 7,900,000 Hilton Garden Inn - Houston (6) 3.85% 9/2/2026 13,947,217 13,947,218 Sheraton - Northbrook (3)(7) 10.40% 12/5/2024 3,766,639 3,700,000 Hampton Inn - Fargo (8) 4.00% 3/1/2027 7,275,480 — Courtyard by Marriott - El Paso (9)(10) 6.01% 5/13/2027 9,990,000 — Fairfield Inn & Suites - Lakewood (3) 7.00% 3/28/2023 (11) 13,845,000 — Residence Inn - Fort Collins (12)(13) 7.00% 8/3/2023 11,500,000 — Hilton Garden Inn - El Paso 4.94% 8/6/2025 12,613,869 — Hilton Garden Inn - Pineville (14) 6.20% 8/25/2027 7,020,000 — Hilton Garden Inn - Charlotte (14) 6.20% 8/25/2027 9,805,000 — Holiday Inn Express - Wichita (9) 6.41% 12/21/2027 5,642,000 — Total Mortgage Debt 180,271,248 103,933,260 Premium on assumed debt, net 221,082 722,905 Deferred financing costs, net (3,193,939) (2,129,281) Net Mortgage 177,298,391 102,526,884 $5.0 million revolving line of credit - Western (15) 8.00% 4/15/2023 (17) 5,000,000 600,000 $7.5 million revolving line of credit - A-1 Bonds (16) 7.00% 12/31/2023 7,380,156 — Total Lines of Credit 12,380,156 600,000 Debt, net $ 189,678,547 $ 103,126,884 (1) Loan is interest-only through April 30, 2022 and is at a fixed rate of interest. (2) Variable interest rate equal to 30-day LIBOR plus 6.00% , provided that LIBOR shall not be less than 1.00% . (3) Loan is interest-only until maturity. (4) The Company has notified the lender of its intention to exercise the option under the loan agreement to extend the maturity date to February 5, 2025. The parties are working to finalize the extension documents as of the date of this filing. (5) Maturity date extended to May 15, 2024. See Note 13 “Subsequent Events.” (6) Loan is interest-only for the first 24 months after origination. (7) Variable interest rate equal to 30-day LIBOR or equivalent rate plus 6.25% , provided that LIBOR or equivalent rate shall not be less than 0.75% . (8) Proceeds of this loan were used to repay in full the original loan secured by the Fargo Property entered into on January 24, 2022 with A-1 Bonds. (9) Loan is interest-only for the first 18 months after origination. (10) Proceeds of this loan were used to repay in full the original loan secured by the El Paso Airport Property entered into on February 14, 2022 with A-1 Bonds. (11) Maturity date extended to March 28, 2024 per terms of loan agreement. See Note 13 “Subsequent Events.” (12) Tranche 3’s maturity date is August 2, 2028. Tranche 1 is interest-only until maturity, beginning six months after the issuance of the loan. Tranche 3’s payments are deferred until a certain appraised value is attained in accordance with the terms of the loan. (13) On April 18, 2023, this loan was repaid in full and refinanced with a new loan secured by the Fort Collins Property. See Note 13 “Subsequent Events.” (14) Loan is interest-only through February 25, 2024. (15) Variable interest rate equal to U.S. Prime plus 0.50% (16) See note 9, - Legendary A-1 Bonds, LLC (“A-1 Bonds”) (17) Maturity date extended to April 30, 2024. See Note 13 “Subsequent Events.” Future Minimum Payments As of December 31, 2022, the future minimum principal payments on the Company’s debt were as follows: 2023 $ 47,739,453 2024 44,152,355 2025 34,546,247 2026 20,667,343 2027 37,472,428 Thereafter 8,073,578 192,651,404 Premium on assumed debt, net 221,082 Deferred financing costs, net (3,193,939) $ 189,678,547 The $47.7 million of future minimum principal payments due in 2023 includes the maturities of the mortgage debt secured individually by the Lakewood Property, El Paso Property, and Fort Collins Property of $13.8 million, $7.9 million and $11.5 million, respectively, as well as the maturities of the Western Line of Credit and the A-1 Bonds Line of Credit. Subsequent to December 31, 2022, the Company extended the maturity dates of the mortgage loans related to the Lakewood Property and the Holiday Inn El Paso Property to March 28, 2024 and May 15, 2024, respectively, pursuant to the terms of the agreements. The mortgage loan related to the Fort Collins Property was repaid in full and replaced with a new loan secured by the Fort Collins Property. The maturity dates for the lines of credit were also extended. See Note 13 “Subsequent Events.” |
FAIR VALUE OF FINANCIAL INSTRUM
FAIR VALUE OF FINANCIAL INSTRUMENTS | 12 Months Ended |
Dec. 31, 2022 | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | 7. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company’s financial instruments as of December 31, 2022 and 2021 consisted of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, lines of credit, and mortgage debt. With the exception of the Company’s mortgage debt, the carrying amounts of the financial instruments presented in the consolidated financial statements approximate their fair value as of December 31, 2022 and 2021. The fair value of the Company’s mortgage debt was estimated by discounting each loan’s future cash flows over the remaining term of the mortgage using an estimate of current borrowing rates for debt instruments with similar terms and maturities, which are Level 3 inputs in the fair value hierarchy. As of December 31, 2022, the estimated fair value of the Company’s mortgage debt was $175.8 million, compared to the gross carrying value $180.3 million. As of December 31, 2021, the estimated fair value of the Company’s mortgage debt was $103.7 million, compared to the gross carrying value $103.9 million. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2022 | |
INCOME TAXES | |
INCOME TAXES | 8. INCOME TAXES The Company’s earnings (losses), other than those generated by the Company’s TRS, are not generally subject to federal corporate and state income taxes due to the Company’s REIT election. The Company did not pay any federal and state income taxes for the periods ended December 31, 2022 and 2021. The Company did not have any uncertain tax positions as of December 31, 2022 and 2021, respectively. For the years ended December 31, 2022 and 2021, all distributions paid were determined to be 100% returns of capital contributions. The Company’s TRS generated a net operating loss (“NOL”) for the years ended December 31, 2022 and 2021, which can be carried forward to offset future taxable income. As of December 31, 2022 and 2021, the Company had recorded a net deferred tax liability of $3,290,901 and a net deferred tax asset of $2,464,768, respectively, primarily attributable to its NOLs generated in the current year and prior periods, net of temporary differences primarily related to deprecation. The Company’s NOLs will expire in 2038-2042 for state tax purposes and will not expire for federal tax purposes. As of December 31, 2022 and 2021, the Company had deferred tax assets attributable to NOL carryforwards for federal income tax purposes of $6.3 million and $4.2 million, respectively, and NOL carryforwards for state income tax purposes of $1.0 million and $0.6 million, respectively. The Company recorded a valuation allowance of $7.3 million against the deferred tax asset in 2022. As of December 31, 2022, the tax years 2018 through 2021 remain subject to examination by the U.S. Internal Revenue Service (“IRS”) and various state tax jurisdictions. The CARES Act contains numerous income tax provisions, such as temporarily relaxing limitations on the deductibility of interest expense, accelerating depreciable lives of certain qualified building improvements, and allowing for NOL’s arising in tax years beginning after December 31, 2017 and before January 1, 2021 to be carried back to each of the preceding 5-year periods. In addition, for tax years beginning prior to 2021, the CARES Act removed the 80% absorption limitation previously enacted under the Tax Cuts and Jobs Act of 2017. The income tax aspects of the CARES Act are not expected to have a material impact on the Company’s financial statements. The components of the Company’s income tax benefit are as follows: For the Years Ended December 31, 2022 2021 Federal: Deferred $ (5,047,228) $ 976,040 State: Current (89,346) (76,861) Deferred (708,441) 21,786 Income tax (expense)/benefit $ (5,845,015) $ 920,965 The provision for income taxes is derived from the income tax expense that is determined by applying the applicable U.S. statutory federal income tax rate to pretax income as a result of the following differences: For the Years Ended December 31, 2022 % 2021 % Expected income tax benefit at U.S. Federal statutory rate $ 2,743,594 -21.0% $ 1,299,405 -21.0% Tax impact of REIT election (614,966) 4.7% (620,327) 10.0% Expected tax benefit at TRS 2,128,628 -16.3% 679,078 -11.0% Valuation Allowance (7,314,530) - Gross tax (expense)/benefit (5,185,902) 679,078 State income tax expense, net (89,346) 0.7% (76,859) 1.2% Temporary differences - deprecation (569,767) 4.4% (111,547) 1.8% Permanent differences - PPP - 0.0% 430,293 -7.0% Income tax (expense)/benefit $ (5,845,015) 44.7% $ 920,965 -14.9% As of December 31, 2022 and 2021, the Company’s deferred tax assets and liabilities consisted of the following: December 31, 2022 2021 Deferred Tax Assets: Net operating loss carryforwards - Federal $ 6,265,111 $ 4,157,396 Net operating loss carryforwards - State 1,049,419 588,661 Valuation Allowance (7,314,530) - - 4,746,057 Deferred Tax Liabilities: Tax FF&E basis less than book basis - Federal (2,864,293) (1,974,462) Tax FF&E basis less than book basis - State (426,608) (306,827) (3,290,901) (2,281,289) Deferred tax (liabilities)/assets, net $ (3,290,901) $ 2,464,768 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2022 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | 9. RELATED PARTY TRANSACTIONS Legendary Capital REIT III, LLC The Advisor earns a one-time acquisition fee of up to 1.4% of the hotel purchase price including funds allocated for any PIP at the time of each hotel property acquisition, a financing fee of up to 1.4% of the hotel purchase price including funds allocated for any PIP at the time of closing the initial financing, and an annual asset management fee of up to 0.75% of the gross assets of the Company, which is payable on a monthly basis. The Advisor will also be paid a refinancing fee of up to 0.75% of the principal amount of any refinancing at the time of closing the refinancing, and a disposition fee equal to between 0.0% and 4.0% of the hotel sales price, payable at the closing of the disposition, and real estate commissions of up to 3.0% of the hotel purchase price in connection with the sale of a hotel property in which the Advisor or its affiliates provided substantial services, but in no event greater than one-half of the total commissions paid with respect to such property if a commission is paid to a third-party as well as the Advisor, and in no event will total commissions exceed 5.0% of the hotel sales price. Certain affiliates of the Advisor may receive an annual guarantee fee equal to 1.0% of the guaranty amount, paid on a monthly basis, for debt obligations of the hotel properties personally guaranteed by such affiliates. The Advisor may earn an annual subordinated performance fee equal to 20% of the distributions after the common stockholders and Operating Partnership limited partners (other than the Series B Limited Partnership Unit (“Series B LP Unit”) holders) have received a 6% cumulative, but not compounded, return per annum. Per the terms of the Operating Partnership’s operating agreement, the Advisor receives distributions from the Operating Partnership in connection with their ownership of non-voting Series B LP Units. The Advisor’s ownership of Series B LP Units is presented as non-controlling interest on the accompanying consolidated financial statements. In years other than the year of liquidation, after the Company’s common stockholders have received a 6% cumulative but not compounded return on their original capital contributions, the Advisor receives distributions equal to 5% of the total distributions made. In the year of liquidation, termination, merger or other cessation of the general partner, or the liquidation of the Operating Partnership, holders of the Series B LP Units shall be distributed an amount equal to 5% of the limited partners’ capital contributions after the common stockholders and the limited partners have received a return of their original capital contributions plus a 6% cumulative but not compounded return. In the year of liquidation, termination, merger or other cessation of the general partner, or the liquidation of the Operating Partnership holders of the Series B LP Units shall also be distributed an amount equal to 20% of the net proceeds from the sale of the properties, after the common stockholders and the limited partners have received a return of their original capital contributions plus a 6% cumulative but not compounded return from all distributions. The Advisor and its affiliates may be reimbursed by the Company for certain organization and offering expenses in connection with the Company’s securities offerings, including legal, printing, marketing and other offering-related costs and expenses. Following the termination of the Offering, the Advisor will reimburse the Company for any such amounts incurred by the Company in excess of 15% of the gross proceeds of the Offering. In addition, the Company may pay directly or reimburse the Advisor and its affiliates for certain costs incurred in connection with its provision of services to the Company, including certain acquisition costs, financing costs, and sales and marketing costs as well as an allocable share of general and administrative overhead costs. All reimbursements are paid to the Advisor and its affiliates at cost. Fees and reimbursements earned and payable to the Advisor and its affiliates, for the years ended December 31, 2022 and 2021, were as follows: Incurred For the Years Ended December 31, 2022 2021 Fees: Acquisition fees $ 1,626,599 $ 1,036,796 Financing fees 1,861,628 1,036,796 Asset management fees 1,918,321 1,188,607 Performance fees 181,541 160,774 $ 5,588,089 $ 3,422,973 Reimbursements: Offering costs $ 2,256,081 $ 1,739,185 General and administrative 3,640,108 2,996,060 Sales and marketing 321,821 211,691 Acquisition costs 67,051 106,357 $ 6,285,061 $ 5,053,293 For the years ended December 31, 2022 and 2021, the Operating Partnership recognized distributions payable to the Advisor in the amount of $334,417 and $296,164 respectively, in connection with the Advisor’s ownership of Series B LP Units. For the years ended December 31, 2022 and 2021, the Company paid distributions The members of the Advisor personally guaranty certain loans of the Company and may receive a guarantee fee of up to 1.0% per annum of the guaranty amount. As of December 31, 2022, Corey Maple, is a guarantor of the Company’s loans secured by the hotel properties located in Prattville, Alabama, Southaven, Mississippi and Fargo, North Dakota, which had original loan amounts of $9.6 million, $13.5 million and $7.4 million respectively, is a guarantor of 50% of the loan secured by the Houston Property, which had an original loan amount of $13.9 million, is a guarantor of the Company’s line of credit in the original amount of $5.0 million which is secured by the hotel properties located in Cedar Rapids, Iowa, Eagan, Minnesota, and Fargo, North Dakota, and 300,000 Common LP Units of Lodging Fund REIT III OP, LP, and is a guarantor of the Company’s loans secured by the El Paso University Property located in El Paso, Texas, and is a guarantor of 50% of the loan secured by the hotel property in Wichita, Kansas, which had original loan amounts of $14.4 million and $5.6 million respectively. Norman Leslie is a guarantor of the Company’s loan secured by the Company’s hotel property in Pineville, North Carolina, which had an original loan amount of $9.3 million. For the years ended December 31, 2022 and 2021, the Company accrued guarantee fees in the amount of $155,676 and $159,414 respectively to each Mr. Maple Mr. Leslie As of December 31, 2022 and 2021, the Company had amounts due and payable to the Advisor and its affiliates of $5,612,134 and $2,035,708 respectively, which is included in due to related parties on the accompanying consolidated balance sheets. NHS, LLC dba National Hospitality Services NHS earns a monthly base management fee for property management services, including overseeing the day-to-day operations of the hotel properties, equal to up to 4% of gross revenue. NHS may also earn an accounting fee of $14.00 per room for accounting services, payable monthly, and an administrative fee equal to 0.60% of gross revenues for administrative and other services. The Company reimburses NHS for certain costs of operating the properties incurred on behalf of the Company. All reimbursements are paid to NHS at cost. NHS also earns a flat fee of $5,000 per hotel property for due diligence services, including analyzing, evaluating, and reporting on documentation and information received by sellers or contributors during the period of due diligence. Such fee is waived if, upon acquisition by us, NHS is selected as the management company for the hotel property. NHS is also reimbursed for actual out-of-pocket costs incurred in providing the due diligence services. See Note 13 “Subsequent Events” for an additional transaction with NHS occurring subsequent to December 31, 2022. Fees and reimbursements earned and payable to, NHS for the years ended December 31, 2022 and 2021, were as follows: Incurred Payable as of For the Years Ended December 31, December 31, December 31, 2022 2021 2022 2021 Fees: Management fees $ 1,071,385 $ 663,377 $ 145,733 $ 66,407 Administrative fees 184,101 107,466 22,791 9,461 Accounting fees 195,096 125,592 31,164 12,726 $ 1,450,582 $ 896,435 $ 199,688 $ 88,594 Reimbursements $ 1,273,180 $ 490,792 $ 143,009 $ 119,638 One Rep Construction, LLC (“One Rep”)— Corey Maple Norman Leslie Legendary A-1 Bonds, LLC (“A-1 Bonds”) – filing. On August 9, 2022, the Company entered into a $5.0 million revolving line of credit with A-1 Bonds, which line of credit was increased to $7.5 million as of December 15, 2022. As of December 31, 2022, $7.4 million was outstanding under the A-1 Line of Credit. See Note 13 Subsequent Events for additional loans made by A-1 Bonds and amendments to existing loans made by A-1 Bonds occurring subsequent to December 31, 2022. |
FRANCHISE AGREEMENTS
FRANCHISE AGREEMENTS | 12 Months Ended |
Dec. 31, 2022 | |
FRANCHISE AGREEMENTS | |
FRANCHISE AGREEMENTS | 10. FRANCHISE AGREEMENTS As of December 31, 2022 and 2021, all of the Company’s hotel properties were operated under franchise agreements with initial terms of 10 to 18 years . Franchise agreements allow the hotel properties to operate under the respective brands. Pursuant to the franchise agreements, the Company pays a royalty fee of 5% to 6% of room revenue, plus additional fees for marketing, central reservation systems and other franchisor costs. Certain hotels are also charged a program fee of generally between 3% and 4% of room revenue. The Company paid an initial fee of $50,000 to $175,000 at the time of entering into each franchise agreement which is being amortized over the term of each agreement. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
Dec. 31, 2022 | |
STOCKHOLDERS' EQUITY | |
STOCKHOLDERS' EQUITY | 11. STOCKHOLDERS’ EQUITY The Company is authorized to issue 900,000,000 shares of common stock and 100,000,000 shares of preferred stock. Each share of common stock entitles the holder to one vote per share on all matters upon which stockholders are entitled to vote and to receive distributions as authorized by the Company’s board of directors. The Interval Common Stock described below do not have voting rights. The rights of the holders of shares of preferred stock may be defined at such time any series of preferred shares are issued. Common Stock Initial Offering On June 1, 2018, the Company commenced a private offering of shares of common stock, $0.01 par value per share, at a price of $10.00 per share, with a maximum offering of $100,000,000, which was increased to $150,000,000 in December 2021, to accredited investors only pursuant to a confidential private placement memorandum exempt from registration under the Securities Act of 1933, as amended. Dividend Reinvestment Plan The Company has adopted a dividend reinvestment plan (“DRIP”), which permits stockholders to reinvest their distributions back into the Company, purchasing shares of common stock at 95% of the then-current share net asset value (“NAV”). Distributions Distributions are determined by the board of directors based on the Company’s financial condition and other relevant factors. Distribution Net Cash Distributions Declared Per Distributions Paid (3) Flows Provided By Period Declared (1) Share (1) (2) Cash Reinvested Total (Used In) Operations First Quarter 2022 $ 1,556,308 $ 0.175 $ 933,464 $ 567,240 $ 1,500,704 $ (3,293,181) Second Quarter 2022 1,540,200 0.175 1,203,791 526,159 1,729,950 20,841 Third Quarter 2022 1,821,829 0.175 1,094,353 452,923 1,547,276 2,268,982 Fourth Quarter 2022 1,762,398 0.175 1,234,969 433,293 1,668,262 (326,742) $ 6,680,735 $ 0.700 $ 4,466,577 $ 1,979,615 $ 6,446,192 $ (1,330,100) Distribution Net Cash Distributions Declared Per Distributions Paid (3) Flows Provided By Period Declared (1) Share (1) (2) Cash Reinvested Total (Used In) Operations First Quarter 2021 $ 1,430,216 $ 0.175 $ 246,084 $ 1,081,828 $ 1,327,912 $ (1,292,235) Second Quarter 2021 1,465,038 0.175 251,625 1,107,080 1,358,705 853,375 Third Quarter 2021 1,500,023 0.175 1,114,951 1,223,741 2,338,692 122,840 Fourth Quarter 2021 1,527,992 0.175 1,340,091 551,391 1,891,482 (732,378) $ 5,923,269 $ 0.700 $ 2,952,751 $ 3,964,040 $ 6,916,791 $ (1,048,398) (1) Distributions for the periods from January 1, 2021 through March 31, 2021 were payable to each stockholder 30% in cash (or through the DRIP if then currently enrolled in the DRIP) and 70% in shares of common stock issued through the DRIP, or at the election of the stockholder, in shares of common stock valued at $10.00 per share. Distributions for the periods from April 1, 2021 through June 30, 2021 were payable to each stockholder 60% in cash (or through the DRIP if then currently enrolled in the DRIP) and 40% in shares of common stock issued through the DRIP, or at the election of the stockholder, in shares of common stock valued at $10.00 per share. Distributions for the period from July 1, 2021 through December 31, 2022 were payable to each stockholder as 100% in cash on a monthly basis. (2) Assumes each share was issued and outstanding each day that was a record date for distributions during the period presented. (3) Beginning the second quarter of 2020 through the second quarter of 2021, distributions were paid on a quarterly basis. Beginning in the third quarter of 2021, distributions were paid on a monthly basis. In general, distributions for all record dates of a given month are paid on or about the tenth day of the following month. Share Repurchase Plan The board of directors has adopted a share repurchase plan that may enable its stockholders to have their shares repurchased in limited circumstances. In its sole discretion, the board of directors could choose to terminate or suspend the plan or to amend its provisions without stockholder approval. The repurchase plan may be reviewed and modified by the board of directors as it deems necessary in its sole discretion. The price at which the Company will repurchase shares is dependent on the amount of time the holder has owned the shares, and the then current value of the shares. There are several limitations on the Company’s ability to repurchase shares under the share repurchase plan, including, but not limited to, a limitation that during any calendar year, the maximum number of shares potentially eligible for repurchase can only be the number of shares that the Company could purchase with the amount of net proceeds from the sale of shares under the Company’s dividend reinvestment plan during the prior calendar year. The board of directors may, in its sole discretion, reject any request for repurchase and may, at any time and without stockholder approval, upon 10 business days’ written notice to the stockholders (i) amend, suspend or terminate its share repurchase plan and (ii) increase or decrease the funding available for the repurchase of shares pursuant to our share repurchase plan. The Company repurchased 135,248 shares pursuant to repurchase requests received during the year ended December 31, 2022, which represented an original investment of $1,352,472 for $1,347,319. As of December 31, 2022, all redemption proceeds had been paid. During the year ended December 31, 2021 we repurchased 88,088 shares, which represents an original investment of $880,883 for $856,605. As of December 31, 2022, the Company had $1,931,014 available for eligible repurchases in all of 2023. Interval Common Stock Distributions Holders of shares of Interval Common Stock will be entitled to receive, when and as authorized by the board of directors of the Company and declared by the Company, distributions at a rate equal to 86% of the distribution rate for the Company’s common stock as authorized by the board of directors and declared by the Company. Distributions on the Interval Shares may be paid in cash, capital stock of the Company or a combination of cash and capital stock of the Company as determined by the board of directors and will be paid at such times as distributions are paid to the holders of common stock. Repurchase Plan The board of directors has adopted a repurchase plan for the Interval Common Stock (the “Repurchase Plan”). The Repurchase Plan is generally available to holders of Interval Common Stock who have held their shares of Interval Common Stock (“Interval Shares”) for at least one year . The Repurchase Plan provides that so long as the Repurchase Reserve (defined below) exists, the Company will repurchase up to the lesser of (i) 5% of the aggregate value of the Interval Shares (“Interval Shares Value”) on the last day of the same calendar quarter of the preceding year and (ii) 5% of the Interval Shares Value on the last day of the preceding calendar quarter. After the Repurchase Reserve has been exhausted, the Company will limit repurchases of Interval Shares to repurchases that can be made with the net proceeds from the dividend reinvestment plan for the Interval Shares received in the prior calendar year up to the lesser of (i) 1.25% per calendar quarter and (ii) 5% per calendar year of the Interval Shares Value. The limitations described in this paragraph are referred to as the “Repurchase Limitations.” The Company will establish a reserve (the “Repurchase Reserve”) of liquid assets in an amount equal to 20% of the aggregate gross proceeds from the Company’s private offering of Interval Shares, which will be comprised of cash and cash-like instruments, government securities, publicly traded REIT shares and other publicly traded securities (the “Reserve Assets”), but which is expected to primarily include publicly traded REIT shares. The Repurchase Reserve will be used solely to repurchase the Interval Shares. The board of directors may, but has no obligation to, increase the amount of the Repurchase Reserve at any time. The Company will have no obligation to restore any amounts resulting from a decline in value of the Reserve Assets. After the Repurchase Reserve has been exhausted, subject to the Repurchase Limitations, the Company will use only the net proceeds from the dividend reinvestment plan received in the prior calendar year to repurchase the Interval Shares. Subject to the Repurchase Limitations, on the applicable repurchase date, the Company will repurchase the Interval Shares timely submitted for repurchase for a price equal to the NAV per share of the Company’s common stock on such repurchase date as determined by the board of directors. The board of directors may, upon 10 days’ written notice to the holders of Interval Shares, amend, suspend or terminate the Repurchase Plan at any time, and such amendment, suspension or termination may be implemented immediately. Notwithstanding the foregoing, the Repurchase Plan may not be terminated prior to the date the Repurchase Reserve is exhausted. Interval Share Offering The Company was offering up to 3,000,000 shares of Interval Common Stock in the Company’s ongoing private offering, which amount may be increased to up to 6,000,000 Interval Shares in the sole discretion of the board of directors. Except as otherwise provided in the offering memorandum, the initial purchase price for the Interval Shares is $10.00 per Interval Share, with Interval Shares purchased in the Company’s dividend reinvestment plan at an initial price of $9.50 per Interval Share. The Company’s board of directors allowed the Interval Share Offering to expire on March 31, 2022. The Company did not issue or sell any shares of Interval Common Stock. Non-Controlling Interests As of December 31, 2022, the Operating Partnership had four classes of Limited Partner Units which included the Common LP Units, the Series B LP Units, the Series T LP Units and the GO Limited Units. The Series B LP Units are issued to the Advisor and entitle the Advisor to receive annual distributions and an incentive distribution based on the net proceeds received from the sale of the Projects. Non-Controlling Interest – Series T LP Units The Series T LP Units are expected to be issued to persons who contribute their property interests in certain Projects to the Partnership in exchange for Series T LP Units. The Series T LP Units will have allocations and distributions as determined by the General Partner in its sole discretion at the time of issuance of the Series T LP Units, and any future distributions are dependent on the financial performance of the contributed real estate based on a mathematical formula. The Series T LP Units are eligible for conversion into Common LP Units beginning 24 or 36 months, or longer in some instances, after their issuance and will automatically convert into Common LP Units upon other events. There is no guarantee that the future financial performance of the contributed hotel property will be sufficient to result in the issuance of Common LP Units resulting from the application of the conversion formula applicable to the issuance of the Series T LP Units at the time of conversion. As of December 31, 2022, the Company had recorded an aggregate value of $45.7 million to the Series T LP Units in connection with such property contributions. Non-Controlling Interest – Series GO LP Units Distributions The holders of Series GO LP Units will not receive any distributions from the Operating Partnership until after they have held their Series GO LP Units for a period of 18 months. Thereafter, the Series GO Limited Partners will receive the same distributions payable to the holders of the Common LP Units and GP Units (together with the Series GO LP Units and Interval Units, the “Participating Partnership Units”), other than with respect to proceeds received upon the sale or exchange of a property which are not reinvested in additional properties. Upon the sale of all or substantially all of the GP Units held by LF REIT III or any sale, exchange or merger of LF REIT III or the Operating Partnership (each, a “Termination Event”), or with respect to proceeds received upon the sale or exchange of a property which are not reinvested in additional properties, distributions will be made between the Series GO LP Units and the other Participating Partnership Units as follows: (i) first, to the Participating Partnership Units in proportion to their Partnership Units until the GP Units (the Common LP Units and the Interval Units) have received 70% of their original capital contributions (determined on a grossed-up basis) reduced by any prior distributions received in connection with the sale of a property in which the sale proceeds are not reinvested in additional properties; (ii) second, to the Participating Partnership Units in proportion to their Partnership Units until each Participating Partnership Unit has received a Participating Amount ($1.00 for any period after December 31, 2020, $2.00 for any period after December 31, 2021 and $3.00 for any period after December 31, 2022, determined as a singular determination and not a cumulative determination); (iii) third, to the Participating Partnership Units (other than the Series GO LP Units) in proportion to their Partnership Units until the GP Units have received any remaining unreturned original capital contributions; (iv) fourth, to the Series GO Limited Partners in proportion to their Series GO LP Units until the amount distributed to the Series GO Limited Partners per Series GO LP Unit is equal to the amount distributed to the Participating Partnership Units per Participating Partnership Unit (other than the Series GO Limited Partners) pursuant to (iii); and (v) thereafter, to the Participating Partnership Units in proportion to their Participating Partnership Units. GO Unit Offering On June 15, 2020, the Operating Partnership commenced a private offering of limited partnership units in the OP, designated as Series GO LP Units, with a maximum offering of $20,000,000, which could be increased to $30,000,000 in the sole discretion of LF REIT III as the General Partner of the Operating Partnership (the “GO Unit Offering”) to accredited investors only, pursuant to a confidential private placement memorandum exempt from registration under the Securities Act of 1933, as amended. The Series GO LP Units were being offered until the earlier of (i) the sale of $20,000,000 in Series GO LP Units (which could be increased to $30,000,000 in the Company’s sole discretion), (ii) June 14, 2022 or (iii) the Operating Partnership terminates the GO Unit Offering at an earlier date in its sole discretion. The Company’s board of directors terminated the GO Unit Offering as of February 14, 2022. The Company’s board of directors approved and ratified additional sales after February 14, 2022 in the GO Units Offering for sales which were pending as of that date. As of December 31, 2022, the Operating Partnership had issued and sold 3,124,503 Series GO LP Units and received aggregate proceeds of $21.5 million. Non-Controlling Interest – Series B LP Units Distributions Under the Operating Partnership Agreement, the Advisor, as the Series B Limited Partner, will receive, from the Operating Partnership, distributions as follows: (a) for all years, an amount equal to 5.0% of the total of (i) the total distributions made to the Partners (other than the Series B Limited Partner) and (ii) the total distributions made to the Series B Limited Partner, after the Partners (other than the Series B Limited Partner) have received a 6.0% cumulative, but not compounded, return on their original capital contributions, and (b) for the year of liquidation or other cessation of the General Partner or the Partnership, an amount equal to 5.0% of the original capital contributions made by the Partners, after the Partners (other than the Series B Limited Partner) have received a return of their capital contributions plus a six percent (6%) cumulative, but not compounded return from all distributions. Series B LP Unit Offering As of December 31, 2022, the Operating Partnership has issued 1,000 Series B LP Units to the Advisor. Non-Controlling Interest – Common LP Units On December 3, 2021, the Operating Partnership commenced a private placement offering of its Common LP Units. As of December 31, 2022, the Operating Partnership had issued and sold 612,100 Common LP Units, with a value of $10.00 per unit, in connection with the Northbrook Property acquisition and El Paso Airport Property acquisition. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2022 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 12. COMMITMENTS AND CONTINGENCIES Legal Matters On September 12, 2022, the Advisor and Corey R. Maple received a “Wells notice” from the SEC stating that the SEC staff had made a preliminary determination to recommend to the SEC that it bring an enforcement action against the Advisor and Mr. Maple alleging violations of securities laws in connection with the SEC’s investigation of the Company’s reimbursement of and financial accounting for certain expenses incurred by the Advisor as well as the adequacy of its disclosures related to those policies and practices. The Wells notice was neither a formal charge of wrongdoing nor a final determination that the Advisor or Mr. Maple has violated any law. As of December 31, 2022, the Company was unable to estimate the cost of complying with the Wells notice or its outcome. The Advisor and Corey R. Maple agreed to a settlement with the SEC in connection with the action described above on August 28, 2023. See Note 13, “Subsequent Events.” Property Acquisitions The seller of the Pineville Property was entitled to additional cash consideration if the property exceeds certain performance criteria based on increases in the property’s net operating income (“NOI”) for a selected 12-month period of time. At any time during the period beginning April 1, 2021 through the date of the final NOI determination (on or about April 30, 2023), the seller of the property could have made a one-time election to receive the additional consideration. The variable amount of the additional consideration, if any, was based on the excess of the property’s actual NOI over a base NOI for the applicable 12-month calculation period divided by the stated cap rate for such calculation period. As of December 31, 2022, no additional consideration had been paid to the seller of the Pineville Property, and no election to receive the additional consideration had been made. As of the date of this filing, the period to elect to receive additional consideration has passed with no election being made. In November 2019, the Company entered into a purchase agreement, to acquire three hotel properties in Pennsylvania, from a third party group of sellers (collectively, the “PA Sellers”), for $46.9 million plus closing costs, subject to adjustment as provided in the purchase agreement. The Company has deposited a total of $1.5 million into escrow as earnest money (the “Earnest Money”) pending the closing or termination of the purchase agreement. In July 2020, the Company and the PA Sellers exchanged written notices of default with one another in accordance with the terms of the purchase agreement. The notice from each party was based on allegations that the other party failed to perform its obligations under the purchase agreement. On October 27, 2020, the PA Sellers filed a lawsuit against Lodging Fund REIT III OP, LP in the Supreme Court of Pennsylvania alleging breach of the purchase agreement. The PA Sellers sought the full amount of the Earnest Money and recovery of fees and expenses incurred in bringing the lawsuit. The likelihood of any material loss in connection with the case could not be determined as of December 31, 2022. As a result, no amount was recorded related to this matter as of December 31, 2022, the Earnest Money remained in escrow and is included in restricted cash on the accompanying consolidated balance sheets. This litigation was resolved subsequent to December 31, 2022. See Note 13 “Subsequent Events.” Properties under Contract as of December 31, 2022 On August 16, 2022, the Operating Partnership and Terrapin ABQ Airport, LLC (the “Sheraton Albuquerque Airport Contributor”) entered into a Legendary Equity Preservation UPREIT (Pat. Pend.) Contribution Agreement (the “Sheraton Albuquerque Airport Contribution Agreement”), pursuant to which the Sheraton Albuquerque Airport Contributor agreed to contribute the 276-room Sheraton Hotel Albuquerque Airport in Albuquerque, New Mexico (the “Sheraton Albuquerque Airport Property”) to the Operating Partnership. The Sheraton Albuquerque Airport Contributor is not affiliated with the Company or Legendary Capital REIT III, LLC, the Company’s external advisor. The aggregate consideration for the Sheraton Albuquerque Airport Property under the Sheraton Albuquerque Airport Agreement is $13,500,000 plus closing costs, subject to adjustment as provided in the Albuquerque Sheraton Contribution Agreement. The majority of the consideration consists of the assumption or refinancing by the Operating Partnership of existing debt secured by the Sheraton Albuquerque Airport Hotel Property. The remaining consideration consists of the issuance by the Operating Partnership of Common Limited Partnership Units of the Operating Partnership and cash at closing. As required by the Sheraton Albuquerque Airport Contribution Agreement, the Operating Partnership deposited $250,000 into escrow as earnest money pending the closing or termination of the Sheraton Albuquerque Airport Contribution Agreement. Except in certain circumstances described in the Sheraton Albuquerque Airport Contribution Agreement, if the Operating Partnership fails to perform its obligations under the Sheraton Albuquerque Airport Contribution Agreement, it will forfeit the earnest money. The Company terminated the Sheraton Albuquerque Airport Contribution Agreement subsequent to December 31, 2022. See Note 13 “Subsequent Events” of the notes to the consolidated financial statements included as part of this Annual Report on Form 10-K for a description of the termination of this agreement as well as the contribution agreements entered into subsequent to December 31, 2022. The Operating Partnership entered into contribution agreements for the contribution of hotel properties in Fort Collins, Colorado, Manhattan, Kansas, and Lawrence Kansas, during 2022. Each of these agreements was terminated by the Operating Partnership on August 30, 2022, and the earnest money deposit with respect to each such property was fully refunded to the Operating Partnership on August 30, 2022. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2022 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 13. SUBSEQUENT EVENTS Update to Offering Price and Share NAV The Company’s board of directors approved a revised net asset value (“NAV”) of the Company’s assets as of December 31, 2022. As a result, the price per share of the Company’s common stock, $0.01 par value per share (each, a “Share”), in the Offering and the Share NAV were adjusted from $10.00 to $10.57 effective January 6, 2023. The issue price of the Common LP Unit and the Series T LP Unit of the Operating Partnership also increased to $10.57 . The Offering price was determined by the board of directors taking into account appraisals of the Company’s real estate properties and other factors deemed relevant by the board of directors. The Company makes no representations, whether express or implied, as to the value of the Shares offered in the Offering. In the event the Offering price per Share is increased or decreased, the number of Shares subject to the Offering will be adjusted to reflect such change and the maximum offering amount will remain unchanged. A-1 Line of Credit Amendments On January 12, 2023, the Operating Partnership, the Company and A-1 Bonds entered into a Change in Terms Amendment in connection with the A-1 Line of Credit. This Amendment increased the A-1 Line of Credit to $10.0 million and increased the number of Common LP Units of the Operating Partnership securing the A-1 Line of Credit to 1,000,000 Common LP Units On April 18, 2023, the Operating Partnership, the Company and A-1 Bonds entered into a Change in Terms Amendment in connection with the A-1 Line of Credit. This Amendment increased the A-1 Line of Credit to $13.3 million and increased the number of Common LP Units of the Operating Partnership securing the A-1 Line of Credit to 1,330,000 Common LP Units. The Company and A-1 Bonds are working to finalize an extension of the A-1 Line of Credit as of the date of this filing, however there can be no assurance that an extension will be granted. Western Line of Credit Amendments On April 15, 2023, the Operating Partnership, the Company and Corey Maple entered into a Change in Terms Amendment in connection with the Western Line of Credit, which extended the maturity date of the Western Line of Credit from April 15, 2023 to June 15, 2023. On July 31, 2023, the Operating Partnership, the Company, Corey Maple, LF3 Fargo Med, LLC, LF3 Eagan, LLC, and LF3 Cedar Rapids, LLC entered into a Change in Terms Agreement in connection with the Western Line of Credit, which extended the maturity date of the Western Line of Credit from June 15, 2023 to September 15, 2023. This amendment also added an additional 200,000 limited partnership units of the Operating Partnership as collateral for the loan, for a total of 300,000 limited partnership units. On October 9, 2023, the Operating Partnership, the Company, Corey Maple, LF3 Fargo Med, LLC, LF3 Eagan, LLC, and LF3 Cedar Rapids, LLC entered into a Change in Terms Agreement, effective as of October 4, 2023 in connection with the Western Line of Credit, which extended the maturity date of the Western Line of Credit from September 15, 2023 to November 15, 2023. This amendment also reduced the maximum credit to $4.67 million and required the Operating Partnership to pay Western State Bank a principal curtailment of $0.3 million. On December 27, 2023, the Operating Partnership, the Company, Corey Maple, LF3 Fargo Med, LLC, LF3 Eagan, LLC, and LF3 Cedar Rapids, LLC entered into a Change in Terms Agreement in connection with the Western Line of Credit, which extended the maturity date of the Western Line of Credit from November 15, 2023 to April 30, 2024. NHS Loan On March 6, 2023, the Company entered into a $600,000 loan agreement (the “NHS Loan”) with NHS. The NHS Loan requires the payment of monthly interest beginning on April 6, 2023, with all outstanding principal and interest amounts being due and payable at maturity on July 6, 2023. The NHS Loan has a fixed interest rate of 7.0% per annum. Outstanding amounts under the NHS Loan may be prepaid in whole or in part without penalty. The NHS Loan is secured by 60,000 partnership units of the Operating Partnership. On December 28, 2023, the Company entered into a Change in Terms Agreement with the Operating Partnership and NHS in connection with the NHS Loan to extend the maturity date of the NHS Loan to January 31, 2024. This amendment also provided that in lieu of monthly interest payments, all accrued interest shall be due and payable on the maturity date with the full principal balance. The Company and NHS are working to finalize an extension of the NHS loan as of the date of this filing, however there can be no assurance that an extension will be granted. Fort Collins Loan Refinancing On April 18, 2023, pursuant to the Loan Agreement, dated as of April 18, 2023 (the “New Fort Collins Loan Agreement”), LF3 RIFC, LLC and LF3 RIFC TRS LLC (collectively, the “Fort Collins Borrower”), subsidiaries of the Operating Partnership entered into a new $11.2 million loan with Access Point Financial, LLC (“Access Point”), which is secured by the Fort Collins Property (the “New Fort Collins Loan”). Access Point is not affiliated with the Company or the Advisor. The New Fort Collins Loan is evidenced by a promissory note and has a variable interest rate per annum equal to 30-day secured overnight financing rate plus 6.25%. The New Fort Collins Loan matures May 4, 2025, with the option for up to three one-year extensions if requirements are met, including certain required debt service coverage ratios and the payment of an extension fee. The New Fort Collins Loan requires monthly interest-only payments through May 4, 2025, followed by monthly payments of principal and interest through any extensions, with the outstanding principal and interest due at maturity. The Fort Collins Borrower has the right to prepay up to 10% of the outstanding principal amount of the New Fortt Collins Loan on certain permitted prepayment dates with a 10-day notice. If prepaid during the first 25 months of the initial term, such a prepayment would include a prepayment fee equal to the sum of 24 months of interest payments that, but for the prepayment, would have been due and payable on the prepaid principal amount had a prepayment not occurred. When the Fort Collins Borrower pays the entire remaining principal balance, whether prepaid or on maturity, the Fort Collins Borrower will incur an exit fee of $112,000. The New Fort Collins Loan includes cross-default provisions such that a default under certain other agreements of the Fort Collins Borrower, the Guarantors described below and the property manager of the Fort Collins Property constitute a default under the New Fort Collins Loan. The Fort Collins Borrower used the proceeds of the New Fort Collins Loan to repay the original $11.5 million loan with A-1 Bonds which was secured by the Fort Collins Property, pursuant to a Loan Agreement, dated as of August 3, 2022. The original loan was evidenced by three promissory notes in the amounts of $10,298,535 (“Tranche 1”), $700,000 (“Tranche 2”) and $501,465 (“Tranche 3”) and had a fixed interest rate of 7.0% per annum. On April 18, 2023, the proceeds of the New Fort Collins Loan were used to refinance the original loan, and the outstanding obligations under Tranche 1 were repaid in full and under Tranche 2 were forgiven. A 1.75% exit fee was paid on Tranche 1, and no penalty Pursuant to the New Fort Collins Loan Agreement, Corey Maple and Norman Leslie entered into a Guaranty with Access Point to guarantee payment when due of the principal amount of indebtedness outstanding, including accrued interest and collection costs and expenses, and the performance of the agreements of the Fort Collins Borrower contained in the loan documents. El Paso HI Loan Modification LF3 El Paso, LLC and LF3 El Paso TRS LLC (collectively, the “El Paso HI Borrower”), subsidiaries of the Operating Partnership, entered into a $7.9 million loan (the “Holiday Inn El Paso Loan”) with EPH Development Fund LLC (“EPH”), secured by the El Paso HI Property, pursuant to a loan agreement, dated as of May 12, 2021. The Holiday Inn El Paso Loan had a maturity date of May 15, 2023. On May 15, 2023, the El Paso HI Borrower, the Operating Partnership and Corey R. Maple entered into a first loan modification agreement with EPH, which extended the maturity date to May 15, 2024. As a condition to the extension, the El Paso HI Borrower agreed to pay down $300,000 of the Holiday Inn El Paso Loan, modifying the principal outstanding balance to be $7.6 million. In addition, as a condition to the extension, the El Paso HI Borrower agreed to deposit $819,674 into an FF&E Reserve account held by EPH. As an additional condition to the extension, the Operating Partnership and HD Sunland Park Property LLC (the “El Paso HI Contributor”) agreed to amend the Amended and Restated Contribution Agreement, dated as of May 12, 2021, to allow the Operating Partnership to offer the El Paso HI Contributor of the El Paso HI Property an adjustment in the conversion of Series T Limited Units to Common Limited Units or other financial adjustments if the Operating Partnership determines that the El Paso HI Contributor’s extension of the determination of the Series T value to 48 months after issuance to the El Paso HI Contributor may result in actual or possible financial or other loss or litigation. Lakewood Loan Extended As previously disclosed, the subsidiaries of the Operating Partnership and A-1 Bonds entered into a loan agreement in the amount of $12.6 million secured by the Lakewood Property. Per the terms of the agreement, the subsidiaries of the Operating Partnership executed the option to extend the maturity date of the loan to March 28, 2024. SEC Settlement As mentioned in Note 12 “Commitments and Contingencies”, on August 28, 2023, the Advisor and Corey R. Maple agreed to a settlement with the SEC, in which the Advisor agreed to pay disgorgement of $463,900 to the Company. Creation of Series GO II LP Units On April 7, 2023, the Operating Partnership established the terms of a new series of limited partner units designated as Series Growth & Opportunity II Limited Partner Units (“Series GO II LP Units”) to be issued from time to time. The Operating Partnership commenced a separate offering for the purchase of the Series GO II LP Units at a purchase price equal to 75% of the Share NAV. The purchase price based on the current Share NAV is $7.93 per Series Go II LP Unit. The Series GO II LP Units will be specially allocated all Net Income (including book-up income) in proportion to the 25% issue price shortfall, until the positive Capital Account balance of each Series GO II LP Unit is equal to the Share NAV. As a result, the issuance of Series GO II LP Units will be dilutive to the General Partner Units and therefore, to the shares of common stock of the Company. See “—GO II Unit Offering” below for status of the offering. Resolution of Litigation with PA Sellers Effective November 20, 2023, the Operating Partnership and Central PA Equities 17, LLC, Central PA Equities 19, LLC, and Springwood – FHP LP (collectively, the “PA Seller”) enter into a settlement agreement and general release of all claims (the “Settlement Agreement”) regarding the asset purchase agreement dated November 22, 2019 (as amended, the “Purchase Agreement”). Pursuant to the Purchase Agreement, the Operating Partnership agreed to acquire the 108-room Fairfield Inn & Suites by Marriott hotel in Hershey, Pennsylvania, the 107-room Home2 Suites by Hilton hotel in York, Pennsylvania, and the 100-room Hampton Inn & Suites by Hilton hotel in York, Pennsylvania (collectively, the “Hotel Properties”) from the PA Seller for $46.9 million plus closing costs, subject to adjustment as provided in the Purchase Agreement. As required by the Purchase Agreement, the Operating Partnership deposited a total of $1.5 million into escrow as earnest money pending the closing or termination of the Purchase Agreement (the “Earnest Money Deposit”). Pursuant to the Settlement Agreement, the PA Seller received $700,000 of the Earnest Money Deposit, and the Operating Partnership received $800,000 of the Earnest Money Deposit. Accrued interest on the Deposit was split between the parties with 7/15 8/15 Agreement. The Operating Partnership and all related entities are released and forever discharged from all claims related to or arising from the Purchase Agreement. Distributions Paid On January 10, 2023, the Company paid cash distributions totaling $420,543 and DRIP distributions totaling $139,519, cash distributions totaling $35,706 for Common Limited Units of the Operating Partnership and cash distributions totaling $83,099 for Series GO LP Units of the Operating Partnership, at a daily rate of $0.00191781 per share of Common Stock in the Company, equivalent to an annualized rate of seven percent (7.00%) per share based on the Company’s initial offering price of $10.00, for daily record dates December 1 through December 31, 2022 to holders of record on each calendar day of such period. On February 7, 2023, the Company declared cash distributions totaling $434,653 and DRIP distributions totaling $126,842, cash distributions totaling $35,706 for Common Limited Units of the Operating Partnership and cash distributions totaling $86,988 for Series GO LP Units of the Operating Partnership, at a daily rate of $0.00191781 per share of Common Stock in the Company, equivalent to an annualized rate of seven percent (7.00%) per share based on the Company’s initial offering price of $10.00, for daily record dates January 1 through January 31, 2023 to holders of record on each calendar day of such period. The distribution declared for January 2023 was paid on February 10, 2023. On March 7, 2023, the Company declared cash distributions totaling $434,351 and DRIP distributions totaling $129,458, cash distributions totaling $35,706 for Common Limited Units of the Operating Partnership and cash distributions totaling $90,200 for Series GO LP Units of the Operating Partnership, at a daily rate of $0.00191781 per share of Common Stock in the Company, equivalent to an annualized rate of seven percent (7.00%) per share based on the Company’s initial offering price of $10.00, for daily record dates February 1 through February 28, 2023 to holders of record on each calendar day of such period. The distribution declared for February 2023 was paid on March 10, 2023. On April 4, 2023, the Company declared cash distributions totaling $432,563 and DRIP distributions totaling $132,987, cash distributions totaling $35,706 for Common Limited Units of the Operating Partnership and cash distributions totaling $93,696 for Series GO LP Units of the Operating Partnership, at a daily rate of $0.00191781 per share of Common Stock in the Company, equivalent to an annualized rate of seven percent (7.00%) per share based on the Company’s initial offering price of $10.00, for daily record dates March 1 through March 31, 2023 to holders of record on each calendar day of such period. The distribution declared for March 2023 was paid on April 10, 2023. On May 9, 2023, the Company declared cash distributions totaling $441,332 and DRIP distributions totaling $125,684, cash distributions totaling $35,706 for Common Limited Units of the Operating Partnership and cash distributions totaling $102,500 for Series GO LP Units of the Operating Partnership, at a daily rate of $0.00191781 per share of Common Stock in the Company, equivalent to an annualized rate of seven percent (7.00%) per share based on the Company’s initial offering price of $10.00, for daily record dates April 1 through April 30, 2023 to holders of record on each calendar day of such period. The distribution declared for April 2023 was paid on May 10, 2023. On June 12, 2023, the Company declared cash distributions totaling $441,771 and DRIP distributions totaling $126,101, cash distributions totaling $35,706 for Common Limited Units of the Operating Partnership and cash distributions totaling $113,949 for Series GO LP Units of the Operating Partnership, at a daily rate of $0.00191781 per share of Common Stock in the Company, equivalent to an annualized rate of seven percent (7.00%) per share based on the Company’s initial offering price of $10.00, for daily record dates May 1 through May 31, 2023 to holders of record on each calendar day of such period. The distribution declared for May 2023 was paid on June 15, 2023. On July 10, 2023, the Company declared cash distributions totaling $442,403 and DRIP distributions totaling $127,081, cash distributions totaling $35,706 for Common Limited Units of the Operating Partnership and cash distributions totaling $125,067 for Series GO LP Units of the Operating Partnership, at a daily rate of $0.00191781 per share of Common Stock in the Company, equivalent to an annualized rate of seven percent (7.00%) per share based on the Company’s initial offering price of $10.00, for daily record dates June 1 through June 30, 2023 to holders of record on each calendar day of such period. The distribution declared for June 2023 was paid on July 14, 2023. On August 8, 2023, the Company declared cash distributions totaling $443,331 and DRIP distributions totaling $130,236, cash distributions totaling $35,706 for Common Limited Units of the Operating Partnership and cash distributions totaling $138,225 for Series GO LP Units of the Operating Partnership, at a daily rate of $0.00191781 per share of Common Stock in the Company, equivalent to an annualized rate of seven percent (7.00%) per share based on the Company’s initial offering price of $10.00, for daily record dates July 1 through July 31, 2023 to holders of record on each calendar day of such period. The distribution declared for July 2023 was paid on August 11, 2023. On September 11, 2023, the Company declared cash distributions totaling $451,509 and DRIP distributions totaling $123,716, cash distributions totaling $35,706 for Common Limited Units of the Operating Partnership and cash distributions totaling $160,212 for Series GO LP Units of the Operating Partnership, at a daily rate of $0.00191781 per share of Common Stock in the Company, equivalent to an annualized rate of seven percent (7.00%) per share based on the Company’s initial offering price of $10.00, for daily record dates August 1 through August 31, 2023 to holders of record on each calendar day of such period. The distribution declared for August 2023 was paid on September 15, 2023. On October 24, 2023, the Company declared cash distributions totaling $451,660 and DRIP distributions totaling $124,848, cash distributions totaling $35,706 for Common Limited Units of the Operating Partnership and cash distributions totaling $175,525 for Series GO LP Units of the Operating Partnership, at a daily rate of $0.00191781 per share of Common Stock in the Company, equivalent to an annualized rate of seven percent (7.00%) per share based on the Company’s initial offering price of $10.00, for daily record dates September 1 through September 30, 2023 to holders of record on each calendar day of such period. The distribution declared for September 2023 was paid on October 27, 2023. On November 7, 2023, the Company declared cash distributions totaling $473,526 and DRIP distributions totaling $103,722, cash distributions totaling $35,706 for Common Limited Units of the Operating Partnership and cash distributions totaling $181,841 for Series GO LP Units of the Operating Partnership, at a daily rate of $0.00191781 per share of Common Stock in the Company, equivalent to an annualized rate of seven percent (7.00%) per share based on the Company’s initial offering price of $10.00, for daily record dates October 1 through October 31, 2023 to holders of record on each calendar day of such period. The distribution declared for October 2023 was paid on November 20, 2023. On December 6, 2023, the Company declared cash distributions totaling $471,485 and DRIP distributions totaling $106,956, cash distributions totaling $35,706 for Common Limited Units of the Operating Partnership and cash distributions totaling $182,164 for Series GO LP Units of the Operating Partnership, at a daily rate of $0.00191781 per share of Common Stock in the Company, equivalent to an annualized rate of seven percent (7.00%) per share based on the Company’s initial offering price of $10.00, for daily record dates November 1 through November 30, 2023 to holders of record on each calendar day of such period. The distribution declared for November 2023 was paid on December 29, 2023. On January 16, 2024, the Company declared cash distributions totaling $471,271 and DRIP distributions totaling $108,117 cash distributions totaling $35,706 for Common Limited Units of the Operating Partnership and cash distributions totaling $182,262 for Series GO LP Units of the Operating Partnership, at a daily rate of $0.00191781 per share of Common Stock in the Company, equivalent to an annualized rate of seven percent (7.00%) per share based on the Company’s initial offering price of $10.00, for daily record dates December 1 through December 31, 2023 to holders of record on each calendar day of such period. The distribution declared for December 2023 remained unpaid at the time of this filing. Properties Under Contract On January 31, 2023, the Operating Partnership and CS Real Estate Holding LLC (the “College Station Voco Contributor”) entered into a Legendary Equity Preservation UPREIT (Pat. Pend.) Contribution Agreement (the “College Station Voco Contribution Agreement”), pursuant to which the College Station Voco Contributor agreed to contribute the 166 -room Aggieland Boutique Hotel in College Station, Texas, which the Operating Partnership intends to convert into a Voco by IHG (the “College Station Voco Hotel Property”) to the Operating Partnership. The College Station Voco Contributor is not affiliated with the Company or Legendary Capital REIT III, LLC, the Company’s external advisor. The aggregate consideration for the College Station Voco Hotel Property under the College Station Voco Contribution Agreement is $18,500,000 plus closing costs, subject to adjustment as provided in the College Station Voco Contribution Agreement. The majority of the consideration consists of the assumption or refinancing by the Operating Partnership of existing debt secured by the College Station Voco Hotel Property. The remaining consideration consists of the issuance by the Operating Partnership of Series T Limited Units of the Operating Partnership and cash at closing. As required by the College Station Voco Contribution Agreement, the Operating Partnership will deposit $50,000 into escrow as earnest money pending the closing or termination of the College Station Voco Contribution Agreement. Except in certain circumstances described in the College Station Voco Contribution Agreement, if the Operating Partnership fails to perform its obligations under the College Station Voco Contribution Agreement, it will forfeit the earnest money. On April 23, 2023, the Operating Partnership terminated the Legendary Equity Preservation UPREIT (Pat. Pend.) Contribution Agreement entered into on August 16, 2022 in connection with the contribution of the 276-room Sheraton Hotel Albuquerque Airport in Albuquerque, New Mexico. Subsequent to December 31, 2022 and prior to termination, the Operating Partnership deposited an additional $150,000 into escrow as earnest money pending the closing or termination of the Sheraton Albuquerque Airport Contribution Agreement. Upon termination, $300,000 of the total earnest money deposit was returned to the Operating Partnership. Status of the Offering Our board of directors extended the term of the Offering to May 31, 2024. As of the date of this filing, the Company’s private offering remained open for new investment, and since the inception of the offering the Company had issued and sold 10,254,110 shares of common stock, including 1,178,323 shares issued pursuant to the DRIP, resulting in the receipt of gross offering proceeds of $100.3 million. Series T LP Units The Operating Partnership did not issue any Series T LP Units during the year ended December 31, 2023 to the date of this filing. Common LP Units The Operating Partnership did not issue any Common LP Units during the year ended December 31, 2023 to the date of this filing. GO II Unit Offering On April 7, 2023, the Operating Partnership commenced an offering of Series GO II LP Units. The Operating Partnership has issued and sold 197,606 Series Go II LP Units, resulting in the receipt of gross offering proceeds of $1.5 million as of the date of this filing. ****** |
SCHEDULE III - Real Estate and
SCHEDULE III - Real Estate and Accumulated Depreciation | 12 Months Ended |
Dec. 31, 2022 | |
SCHEDULE III - Real Estate and Accumulated Depreciation | |
SCHEDULE III - Real Estate and Accumulated Depreciation | Real Estate and Accumulated Depreciation As of December 31, 2022 Costs Capitalized Subsequent to Initial Cost Acquisition Gross Amounts at End of Year Building, Building, Building, Land and Building Building Land and Building Date Number Land Improvements Improvements Land Improvements Accumulated Depreciable Description Acquired of Rooms Encumbrances Improvements and FF&E and FF&E Improvements and FF&E Total (1) Depreciation Lives Holiday Inn Express - Nov - 2018 83 $ 5,799,804 $ 1,536,966 $ 6,321,367 $ 910,576 $ 1,547,077 $ 7,231,943 $ 8,779,020 $ (1,231,464) 3 - 40 yrs. Hampton Inn & Suites - Mar - 2019 111 8,580,586 2,014,533 12,327,740 1,267,174 2,014,533 13,594,914 15,609,447 (1,769,083) 3 - 40 yrs. Hampton Inn - Jun - 2019 122 9,063,528 1,691,813 12,536,520 279,950 1,691,813 12,816,470 14,508,283 (1,808,653) 3 - 40 yrs. Home2 Suites - Jul - 2019 90 9,199,041 1,691,954 13,414,060 111,532 1,691,954 13,525,592 15,217,546 (1,639,694) 3 - 40 yrs. Home2 Suites - Dec - 2019 100 7,343,948 803,229 13,906,502 903,900 803,229 14,810,402 15,613,631 (1,615,279) 3 - 40 yrs. Fairfield Inn & Suites - Jan - 2020 101 8,971,430 982,934 15,261,162 72,570 982,934 15,333,732 16,316,666 (1,872,497) 3 - 40 yrs. Homewood Suites - Feb - 2020 99 13,007,706 1,593,232 19,351,858 163,033 1,593,232 19,514,891 21,108,123 (1,915,279) 3 - 40 yrs. Courtyard by Marriott - Feb - 2021 141 15,000,000 4,400,098 19,668,031 263,625 4,400,098 19,931,656 24,331,754 (1,389,927) 3 - 40 yrs. Holiday Inn - May - 2021 175 7,900,000 1,747,553 8,913,467 458,343 1,747,553 9,371,810 11,119,363 (786,348) 3 - 40 yrs. Hilton Garden Inn - Aug - 2021 182 13,947,218 3,168,376 17,659,977 3,432,964 3,168,376 21,092,941 24,261,317 (803,339) 3 - 40 yrs. Sheraton Hotel - Dec - 2021 160 3,766,639 2,856,747 16,859,016 (38,350) 2,856,747 16,820,666 19,677,413 (555,424) 3 - 40 yrs. Hampton Inn & Suites - Jan - 2022 90 7,275,480 2,041,684 9,700,538 212,639 2,041,684 9,913,177 11,954,861 (286,677) 3 - 40 yrs. Courtyard by Marriott - Feb - 2022 90 9,990,000 1,856,428 13,596,806 98,307 1,856,428 13,695,113 15,551,541 (459,922) 3 - 40 yrs. Fairfield Inn & Suites - Mar - 2022 142 13,845,000 2,091,051 17,571,066 283,590 2,091,051 17,854,656 19,945,707 (309,795) 3 - 40 yrs. Residence Inn - Aug - 2022 113 11,500,000 2,402,288 13,943,721 32,807 2,402,288 13,976,528 16,378,816 (173,130) 3 - 40 yrs. Hilton Garden Inn - Aug - 2022 153 12,613,869 4,862,172 17,600,000 45,608 4,862,172 17,645,608 22,507,780 (471,491) 3 - 40 yrs. Hilton Garden Inn - Aug - 2022 113 7,020,000 1,891,718 9,385,430 18,180 1,891,718 9,403,611 11,295,329 (150,613) 3 - 40 yrs. Hilton Garden inn - Aug - 2022 112 9,805,000 1,622,610 14,233,777 4,966 1,622,610 14,238,743 15,861,353 (201,003) 3 - 40 yrs. Holiday Inn Express - Dec - 2022 84 5,642,000 632,735 7,001,575 4,380 632,735 7,005,955 7,638,690 (19,380) 3 - 40 yrs. 2,261 $ 180,271,249 $ 39,888,121 $ 259,252,614 $ 8,525,794 $ 39,898,232 $ 267,778,408 $ 307,676,640 $ (17,458,998) (1) The aggregate cost for federal income tax purposes is approximately $307.1 million at December 31, 2022 (unaudited). Investment in Real Estate: 2022 Balance at beginning of period $ 178,912,503 Acquisitions 120,433,600 Improvements 8,330,537 Balance at end of period $ 307,676,640 Accumulated Depreciation: 2022 Balance at beginning of period $ (9,487,728) Depreciation expense (7,995,492) Asset write-offs 24,222 Balance at end of period $ (17,458,998) |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation |
Use of Estimates | Use of Estimates |
Revenue Recognition | Revenue Recognition an accrual basis as they are earned. Any cash received prior to a guest’s arrival is recorded as an advance deposit from the guest and recognized as revenue at the time of the guest’s occupancy at the hotel property. |
Investment in Hotel Properties | Investment in Hotel Properties The Company’s acquisitions generally consist of land, land improvements, buildings, building improvements, and furniture, fixtures and equipment (“FF&E”). The Company may also acquire intangible assets or liabilities related to in-place leases, management agreements, debt, and advanced bookings. For transactions determined to be asset acquisitions, the Company allocates the purchase price among the assets acquired and the liabilities assumed on a relative fair value basis at the date of acquisition. The Company determines the fair value of assets acquired and liabilities assumed with the assistance of third-party valuation specialists, using cash flow analysis as well as available market and cost data. The determination of fair value includes making numerous estimates and assumptions. The difference between the fair value and the face value of debt assumed in connection with an acquisition is recorded as a premium or discount and amortized to interest expense over the remaining term of the debt assumed. The valuation of assumed debt liabilities is based on our estimate of the current market rates for similar liabilities in effect at the acquisition date. The Company’s investments in hotel properties are carried at cost and are depreciated using the straight-line method over the estimated useful lives of 15 years 40 years 3 7 years The Company assesses the carrying value of its hotel properties whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. The recoverability is measured by comparing the carrying amount of the property to the estimated future undiscounted cash flows of the property, which take into account current market conditions, and the Company’s intent with respect to holding or disposing of the hotel properties. If the Company’s analysis indicates that the carrying value is not recoverable on an undiscounted cash flow basis, the Company will recognize an impairment loss for the amount by which the carrying value exceeds the fair value. The fair value is determined through various valuation techniques, including internally developed discounted cash flow models, comparable market transactions or third-party appraisals. The use of projected future cash flows is based on assumptions that are consistent with a market participant’s future expectations for the industry and the economy in general and the Company’s expected use of the underlying hotel properties. The assumptions and estimates related to the future cash flows and the capitalization rates are complex and subjective in nature. Changes in economic and operating conditions that occur subsequent to a current impairment analysis and the Company’s ultimate use of the hotel property could impact the assumptions and result in future impairment losses to the hotel properties. |
Advertising Costs | Advertising Costs |
Non-controlling Interest | Non-controlling Interest |
Cash and Cash Equivalents | Cash and Cash Equivalents |
Restricted Cash | Restricted Cash |
Accounts Receivable | Accounts Receivable |
Deferred Financing Costs | Deferred Financing Costs |
Offering Costs | Offering Costs |
Property Operations Expenses | Property Operations Expenses |
Property Management Fees | Property Management Fees |
Franchise Fees | Franchise Fees |
Acquisition Costs | Acquisition Costs acquisition due diligence costs are recorded as, and included in, prepaid expenses and other assets on the accompanying consolidated balance sheets. |
Net Loss Per Share of Common Stock | Net Loss Per Share of Common Stock |
Stock-Based Compensation | Stock-Based Compensation |
Income Taxes | Income Taxes As a REIT, the Company is generally not subject to U.S. federal corporate income tax on the portion of taxable income that is distributed to stockholders. If the Company fails to qualify for taxation as a REIT in any taxable year, the Company will be subject to U.S. federal income taxes at regular corporate rates and it may not be able to qualify as a REIT for four subsequent taxable years. As a REIT, the Company may be subject to certain state and local taxes on its income and property, and to U.S. federal income and excise taxes on undistributed taxable income. Taxable income from non-REIT activities managed through the Company’s taxable REIT subsidiary (“TRS”) is subject to U.S. federal, state, and local income taxes at the applicable rates. The TRS accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax basis, and for net operating loss, capital loss and tax credit carryforwards. The deferred tax assets and liabilities are measured using the enacted income tax rates in effect for the year in which those temporary differences are expected to be realized or settled. The effect on the deferred tax assets and liabilities from a change in tax rates is recognized in earnings in the period when the new rate is enacted. However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of all available evidence, including the future reversals of existing taxable temporary differences, future projected taxable income and tax planning strategies. Valuation allowances are provided if, based upon the weight of the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company performs periodic reviews for any uncertain tax positions and, if necessary, will record the expected future tax consequences of uncertain tax positions in the consolidated financial statements. |
Fair Value Measurement | Fair Value Measurement Level 1 Level 2 Level 3 The Company’s estimates of fair value were determined using available market information and appropriate valuation methods. Considerable judgment is necessary to develop estimated fair value. The use of different market assumptions or estimation methods may have a material effect on the estimated fair value amounts. The Company classifies assets and liabilities in the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, “Leases” (“ASU No. 2016-02”) (Topic 842), which replaces Leases (Topic 840), and sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). ASU No. 2016-02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance under Leases (Topic 840), for operating leases. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales type leases, direct financing leases and operating leases. The Company adopted this standard effective January 1, 2022, electing to recognize and measure its leases prospectively at the beginning of the period of adoption, without restating the presentation of periods prior to the effective date, which continue to be reported in accordance with the Company’s historical accounting policy. At adoption of the new standard, the Company recorded a right-of-use asset and lease liability for its Sheraton Northbrook, Illinois hotel property (the "Northbrook Property") ground lease measured at the estimated present value of the remaining minimum lease payments under the lease. The Company’s ground lease is classified as a financing lease under Topic 842. For this finance lease, effective January 1, 2022, the Company began recognizing depreciation and amortization expense and interest expense in the Company’s consolidated statements of operations instead of ground lease rent expense. While the total expense recognized over the life of a lease is unchanged, the timing of expense recognition for finance leases results in higher expense recognition during the earlier years of the lease and lower expense during the later years of the lease. In addition to recording operating and financing right-of-use assets and lease liabilities, the Company also reclassified at adoption its intangible liability for its above market ground lease to the beginning right-of-use asset. See Note 3 for more information regarding the Company’s lease assets and liabilities. |
INVESTMENT IN HOTEL PROPERTIES
INVESTMENT IN HOTEL PROPERTIES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Investment in Hotel Properties | |
Schedule of investment in hotel properties | December 31, December 31, 2022 2021 Land and land improvements $ 32,650,698 $ 20,034,309 Building and building improvements 241,278,409 144,883,150 Furniture, fixtures, and equipment 21,884,508 13,986,611 Right-of-use asset - ground lease 7,286,984 — Construction in progress 4,576,041 8,433 Investment in hotel properties, at cost 307,676,640 178,912,503 Less: accumulated depreciation (17,458,998) (9,487,728) Investment in hotel properties, net $ 290,217,642 $ 169,424,775 |
Schedule of Company's VIE condensed consolidated balance sheet | December 31, December 31, 2022 2021 Assets Investment in hotel properties, net of accumulated depreciation of $471,491 and $0 $ 22,036,289 $ — Cash and cash equivalents 493,056 — Restricted cash 2,173,237 — Accounts receivable, net 154,976 — Prepaid expenses and other assets 67,068 — Total Assets $ 24,924,626 $ — Liabilities Debt, net $ 12,244,068 $ — Finance lease liability 4,862,172 — Accounts payable 182,692 — Accrued expenses 445,763 — Other liabilities 655,372 — Total liabilities $ 18,390,067 $ — |
Schedule of acquisitions of hotel properties | 2022 Acquisitions Number Date of Guest Purchase Transaction % Hotel Property Type Location Acquired Rooms Price Costs Total Interest Hampton Inn & Suites Limited-Service Fargo, ND January 18, 2022 90 $ 11,440,000 (1) $ 302,222 $ 11,742,222 100 % Courtyard by Marriott Select-Service El Paso, TX February 8, 2022 90 15,120,000 (2) 333,234 15,453,234 100 % Fairfield Inn & Suites Limited-Service Lakewood, CO March 29, 2022 142 18,800,000 (3) 862,117 19,662,117 100 % Residence Inn Extended-Stay Fort Collins, CO August 3, 2022 113 15,800,000 (4) 546,009 16,346,009 100 % Hilton Garden Inn Select-Service Pineville, NC August 25, 2022 113 10,930,000 (5) 347,149 11,277,149 100 % Hilton Garden Inn Select-Service Charlotte, NC August 25, 2022 112 15,440,000 (6) 416,387 15,856,387 100 % Holiday Inn Limited-Service Wichita, KS December 22, 2022 84 7,400,000 (7) 234,310 7,634,310 100 % 744 $ 94,930,000 $ 3,041,428 $ 97,971,428 2021 Acquisitions Number Date of Guest Purchase Transaction % Hotel Property Type Location Acquired Rooms Price Costs Total Interest Courtyard by Marriott Select-Service Aurora, CO February 4, 2021 141 $ 23,610,000 (8) $ 458,129 $ 24,068,129 100 % Holiday Inn Select-Service El Paso, TX May 12, 2021 175 10,300,000 (9) 361,019 10,661,019 100 % Hilton Garden Inn Select-Service Houston, TX August 3, 2021 182 19,910,000 (10) 918,353 20,828,353 100 % Sheraton Hotel Full-Service Northbrook, IL December 3, 2021 160 11,400,000 (11) 340,005 11,740,005 100 % 658 $ 65,220,000 $ 2,077,506 $ 67,297,506 (1) Includes the issuance of $4,091,291 in Series T LP Units of the Operating Partnership. (2) Includes the issuance of $4,600,000 in Common Limited Partnership Units of the Operating Partnership. (3) Includes the issuance of $5,638,000 in Series T LP Units of the Operating Partnership. (4) Includes the issuance of $3,703,690 in Series T LP Units of the Operating Partnership. (5) Includes the issuance of $2,729,211 in Series T LP Units of the Operating Partnership. (6) Includes the issuance of $6,427,546 in Series T LP Units of the Operating Partnership. (7) Includes the issuance of $1,217,625 in Series T LP Units of the Operating Partnership. (8) Includes the issuance of $6,742,757 in Series T LP Units of the Operating Partnership. (9) Includes the issuance of $2,100,000 in Series T LP Units of the Operating Partnership. (10) Includes the issuance of $6,910,000 in Series T LP Units of the Operating Partnership. (11) Includes the issuance of $6,179,000 in Series T LP Units and $1,521,000 in Common Limited Partnership Units of the Operating Partnership |
Schedule of aggregate purchase price for the hotel properties | For the Years Ended December 31, 2022 2021 Land and land improvements $ 12,538,514 $ 9,694,077 Building and building improvements 79,702,403 58,503,137 Furniture, fixtures, and equipment 5,730,511 4,597,353 Total assets acquired 97,971,428 72,794,567 Above market ground lease (1) — (5,497,061) Total liabilities assumed — (5,497,061) Total purchase price (2) $ 97,971,428 $ 67,297,506 Assumed mortgage debt 7,198,709 — Net purchase price $ 90,772,719 $ 67,297,506 (1) The above market ground lease is recognized on the consolidated balance sheet within Other Liabilities as of December 31, 2021. See Northbrook Property Above Market Ground Lease discussion below. (2) Total purchase price includes purchase price plus all transaction costs. |
Schedule of present value of finance lease liabilities | 2023 $ 596,767 2024 610,237 2025 624,112 2026 645,791 2027 660,511 Thereafter 44,016,796 Total finance lease payments 47,154,214 Interest (34,127,365) Present value of finance lease liabilities $ 13,026,849 |
HDGH | |
Investment in Hotel Properties | |
Schedule of assets and liabilities of the entity | August 10, 2022 Assets Building $ 16,700,000 Furniture, fixtures & equipment 900,000 Right-of-use asset - ground lease 4,862,172 Cash and cash equivalents 36,790 Restricted cash 1,305,636 Accounts receivable, net 168,974 Prepaid expenses and other assets 107,291 Total Assets $ 24,080,863 Liabilities Debt $ 12,781,084 Finance lease liability 4,862,172 Accounts payable 237,636 Accrued expenses 1,970,554 Other liabilities 419,336 Total liabilities $ 20,270,782 Assets in excess of liabilities (gain on acquisition of VIE) $ 3,810,081 |
PREPAID EXPENSES AND OTHER AS_2
PREPAID EXPENSES AND OTHER ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
PREPAID EXPENSES AND OTHER ASSETS | |
Schedule of prepaid expenses and other assets | December 31, December 31, 2022 2021 Franchise fees (1) $ 150,000 $ 525,000 Acquisition costs 485,304 541,821 Deferred tax assets, net — 2,464,768 Insurance 389,656 464,398 Other 385,033 364,568 $ 1,409,993 $ 4,360,555 (1) Prepaid franchise fees paid in 2022 in relation to Sheraton Albuquerque Airport, terminated in 2023. Prepaid franchise fees paid in 2021 in relation to the Fargo acquisition, El Paso Airport acquisition, and El Paso University acquisition in 2022. See Note 13 Subsequent Events. |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
ACCRUED EXPENSES | |
Schedule of accrued expenses | December 31, December 31, 2022 2021 Property taxes $ 3,215,458 $ 1,686,801 Interest 1,585,813 357,030 Other 1,052,248 577,689 $ 5,853,519 $ 2,621,520 |
DEBT - (Tables)
DEBT - (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
DEBT | |
Schedule of debt outstanding | Interest Outstanding Outstanding Rate as of Balance as of Balance as of December 31, Maturity December 31, December 31, 2022 Date 2022 2021 Holiday Inn Express - Cedar Rapids (1) 5.33% 9/1/2024 $ 5,799,804 $ 5,858,134 Hampton Inn & Suites - Pineville 5.13% 6/6/2024 8,580,586 8,782,284 Hampton Inn - Eagan 4.60% 1/1/2025 9,063,528 9,277,193 Home2 Suites - Prattville 4.13% 8/1/2024 9,199,041 9,425,085 Home2 Suites - Lubbock 4.69% 10/6/2026 7,343,948 7,573,597 Fairfield Inn & Suites - Lubbock 4.93% 4/6/2029 8,971,430 9,125,908 Homewood Suites - Southaven 3.70% 3/3/2025 13,007,706 13,343,841 Courtyard by Marriott - Aurora (2)(3) 10.15% 2/5/2024 (4) 15,000,000 15,000,000 Holiday Inn - El Paso (3) 5.00% 5/15/2023 (5) 7,900,000 7,900,000 Hilton Garden Inn - Houston (6) 3.85% 9/2/2026 13,947,217 13,947,218 Sheraton - Northbrook (3)(7) 10.40% 12/5/2024 3,766,639 3,700,000 Hampton Inn - Fargo (8) 4.00% 3/1/2027 7,275,480 — Courtyard by Marriott - El Paso (9)(10) 6.01% 5/13/2027 9,990,000 — Fairfield Inn & Suites - Lakewood (3) 7.00% 3/28/2023 (11) 13,845,000 — Residence Inn - Fort Collins (12)(13) 7.00% 8/3/2023 11,500,000 — Hilton Garden Inn - El Paso 4.94% 8/6/2025 12,613,869 — Hilton Garden Inn - Pineville (14) 6.20% 8/25/2027 7,020,000 — Hilton Garden Inn - Charlotte (14) 6.20% 8/25/2027 9,805,000 — Holiday Inn Express - Wichita (9) 6.41% 12/21/2027 5,642,000 — Total Mortgage Debt 180,271,248 103,933,260 Premium on assumed debt, net 221,082 722,905 Deferred financing costs, net (3,193,939) (2,129,281) Net Mortgage 177,298,391 102,526,884 $5.0 million revolving line of credit - Western (15) 8.00% 4/15/2023 (17) 5,000,000 600,000 $7.5 million revolving line of credit - A-1 Bonds (16) 7.00% 12/31/2023 7,380,156 — Total Lines of Credit 12,380,156 600,000 Debt, net $ 189,678,547 $ 103,126,884 (1) Loan is interest-only through April 30, 2022 and is at a fixed rate of interest. (2) Variable interest rate equal to 30-day LIBOR plus 6.00% , provided that LIBOR shall not be less than 1.00% . (3) Loan is interest-only until maturity. (4) The Company has notified the lender of its intention to exercise the option under the loan agreement to extend the maturity date to February 5, 2025. The parties are working to finalize the extension documents as of the date of this filing. (5) Maturity date extended to May 15, 2024. See Note 13 “Subsequent Events.” (6) Loan is interest-only for the first 24 months after origination. (7) Variable interest rate equal to 30-day LIBOR or equivalent rate plus 6.25% , provided that LIBOR or equivalent rate shall not be less than 0.75% . (8) Proceeds of this loan were used to repay in full the original loan secured by the Fargo Property entered into on January 24, 2022 with A-1 Bonds. (9) Loan is interest-only for the first 18 months after origination. (10) Proceeds of this loan were used to repay in full the original loan secured by the El Paso Airport Property entered into on February 14, 2022 with A-1 Bonds. (11) Maturity date extended to March 28, 2024 per terms of loan agreement. See Note 13 “Subsequent Events.” (12) Tranche 3’s maturity date is August 2, 2028. Tranche 1 is interest-only until maturity, beginning six months after the issuance of the loan. Tranche 3’s payments are deferred until a certain appraised value is attained in accordance with the terms of the loan. (13) On April 18, 2023, this loan was repaid in full and refinanced with a new loan secured by the Fort Collins Property. See Note 13 “Subsequent Events.” (14) Loan is interest-only through February 25, 2024. (15) Variable interest rate equal to U.S. Prime plus 0.50% (16) See note 9, - Legendary A-1 Bonds, LLC (“A-1 Bonds”) (17) Maturity date extended to April 30, 2024. See Note 13 “Subsequent Events.” |
Schedule of future minimum principal payments | 2023 $ 47,739,453 2024 44,152,355 2025 34,546,247 2026 20,667,343 2027 37,472,428 Thereafter 8,073,578 192,651,404 Premium on assumed debt, net 221,082 Deferred financing costs, net (3,193,939) $ 189,678,547 |
INCOME TAXES - (Tables)
INCOME TAXES - (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
INCOME TAXES | |
Schedule of the components of the company's income tax benefit | For the Years Ended December 31, 2022 2021 Federal: Deferred $ (5,047,228) $ 976,040 State: Current (89,346) (76,861) Deferred (708,441) 21,786 Income tax (expense)/benefit $ (5,845,015) $ 920,965 |
Schedule of reconciliation of income taxes at U.S statutory federal income tax rate | For the Years Ended December 31, 2022 % 2021 % Expected income tax benefit at U.S. Federal statutory rate $ 2,743,594 -21.0% $ 1,299,405 -21.0% Tax impact of REIT election (614,966) 4.7% (620,327) 10.0% Expected tax benefit at TRS 2,128,628 -16.3% 679,078 -11.0% Valuation Allowance (7,314,530) - Gross tax (expense)/benefit (5,185,902) 679,078 State income tax expense, net (89,346) 0.7% (76,859) 1.2% Temporary differences - deprecation (569,767) 4.4% (111,547) 1.8% Permanent differences - PPP - 0.0% 430,293 -7.0% Income tax (expense)/benefit $ (5,845,015) 44.7% $ 920,965 -14.9% |
Schedule of the company's deferred tax assets and liabilities | December 31, 2022 2021 Deferred Tax Assets: Net operating loss carryforwards - Federal $ 6,265,111 $ 4,157,396 Net operating loss carryforwards - State 1,049,419 588,661 Valuation Allowance (7,314,530) - - 4,746,057 Deferred Tax Liabilities: Tax FF&E basis less than book basis - Federal (2,864,293) (1,974,462) Tax FF&E basis less than book basis - State (426,608) (306,827) (3,290,901) (2,281,289) Deferred tax (liabilities)/assets, net $ (3,290,901) $ 2,464,768 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Advisor And Affiliates | |
Related Party Transactions | |
Schedule of fees and reimbursements incurred and payable | Incurred For the Years Ended December 31, 2022 2021 Fees: Acquisition fees $ 1,626,599 $ 1,036,796 Financing fees 1,861,628 1,036,796 Asset management fees 1,918,321 1,188,607 Performance fees 181,541 160,774 $ 5,588,089 $ 3,422,973 Reimbursements: Offering costs $ 2,256,081 $ 1,739,185 General and administrative 3,640,108 2,996,060 Sales and marketing 321,821 211,691 Acquisition costs 67,051 106,357 $ 6,285,061 $ 5,053,293 |
NHS | |
Related Party Transactions | |
Schedule of fees and reimbursements incurred and payable | Incurred Payable as of For the Years Ended December 31, December 31, December 31, 2022 2021 2022 2021 Fees: Management fees $ 1,071,385 $ 663,377 $ 145,733 $ 66,407 Administrative fees 184,101 107,466 22,791 9,461 Accounting fees 195,096 125,592 31,164 12,726 $ 1,450,582 $ 896,435 $ 199,688 $ 88,594 Reimbursements $ 1,273,180 $ 490,792 $ 143,009 $ 119,638 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
STOCKHOLDERS' EQUITY | |
Schedule of dividend declared and paid | Distribution Net Cash Distributions Declared Per Distributions Paid (3) Flows Provided By Period Declared (1) Share (1) (2) Cash Reinvested Total (Used In) Operations First Quarter 2022 $ 1,556,308 $ 0.175 $ 933,464 $ 567,240 $ 1,500,704 $ (3,293,181) Second Quarter 2022 1,540,200 0.175 1,203,791 526,159 1,729,950 20,841 Third Quarter 2022 1,821,829 0.175 1,094,353 452,923 1,547,276 2,268,982 Fourth Quarter 2022 1,762,398 0.175 1,234,969 433,293 1,668,262 (326,742) $ 6,680,735 $ 0.700 $ 4,466,577 $ 1,979,615 $ 6,446,192 $ (1,330,100) Distribution Net Cash Distributions Declared Per Distributions Paid (3) Flows Provided By Period Declared (1) Share (1) (2) Cash Reinvested Total (Used In) Operations First Quarter 2021 $ 1,430,216 $ 0.175 $ 246,084 $ 1,081,828 $ 1,327,912 $ (1,292,235) Second Quarter 2021 1,465,038 0.175 251,625 1,107,080 1,358,705 853,375 Third Quarter 2021 1,500,023 0.175 1,114,951 1,223,741 2,338,692 122,840 Fourth Quarter 2021 1,527,992 0.175 1,340,091 551,391 1,891,482 (732,378) $ 5,923,269 $ 0.700 $ 2,952,751 $ 3,964,040 $ 6,916,791 $ (1,048,398) (1) Distributions for the periods from January 1, 2021 through March 31, 2021 were payable to each stockholder 30% in cash (or through the DRIP if then currently enrolled in the DRIP) and 70% in shares of common stock issued through the DRIP, or at the election of the stockholder, in shares of common stock valued at $10.00 per share. Distributions for the periods from April 1, 2021 through June 30, 2021 were payable to each stockholder 60% in cash (or through the DRIP if then currently enrolled in the DRIP) and 40% in shares of common stock issued through the DRIP, or at the election of the stockholder, in shares of common stock valued at $10.00 per share. Distributions for the period from July 1, 2021 through December 31, 2022 were payable to each stockholder as 100% in cash on a monthly basis. (2) Assumes each share was issued and outstanding each day that was a record date for distributions during the period presented. (3) Beginning the second quarter of 2020 through the second quarter of 2021, distributions were paid on a quarterly basis. Beginning in the third quarter of 2021, distributions were paid on a monthly basis. In general, distributions for all record dates of a given month are paid on or about the tenth day of the following month. |
ORGANIZATION (Details)
ORGANIZATION (Details) | 12 Months Ended | ||||
Dec. 31, 2022 USD ($) segment item $ / shares shares | Dec. 31, 2021 USD ($) $ / shares | Jun. 15, 2020 USD ($) | Apr. 29, 2020 USD ($) $ / shares shares | Jun. 01, 2018 USD ($) $ / shares | |
Organization | |||||
Number of reportable segments | segment | 1 | ||||
Number of operating segments | segment | 1 | ||||
Number of voting classes of partnership units | item | 3 | ||||
Number of non voting classes of partnership units | item | 3 | ||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | |||
Common LP Units | |||||
Organization | |||||
Value of outstanding units | $ 4,751,639 | $ 1,437,082 | |||
Series T LP Units | |||||
Organization | |||||
Value of outstanding units | $ 45,739,120 | 21,931,757 | |||
Series T LP Units | Minimum | |||||
Organization | |||||
Time period after issuance, for the conversion of Series T LP Units in to Common LP Units | 24 months | ||||
Series T LP Units | Maximum | |||||
Organization | |||||
Time period after issuance, for the conversion of Series T LP Units in to Common LP Units | 36 months | ||||
Series GO LP Units | |||||
Organization | |||||
Value of outstanding units | $ 14,688,392 | 12,498,527 | |||
Operating Partnership | Common LP Units | |||||
Organization | |||||
Number of outstanding partnership units | shares | 612,100 | ||||
Operating Partnership | Series B Limited Partnership Units | |||||
Organization | |||||
Number of outstanding partnership units | shares | 1,000 | ||||
Operating Partnership | Series T LP Units | |||||
Organization | |||||
Number of outstanding partnership units | shares | 5,073,506 | ||||
Operating Partnership | Series GO LP Units | |||||
Organization | |||||
Number of outstanding partnership units | shares | 3,124,503 | ||||
Operating Partnership | Interval Units | |||||
Organization | |||||
Number of outstanding partnership units | shares | 0 | ||||
Private Offering | Series GO LP Units | |||||
Organization | |||||
Maximum offering | $ 20,000,000 | ||||
Maximum offering per the sole discretion of the General Partner | $ 30,000,000 | ||||
Cumulative number of units issued since inception of the Offering (in shares) | shares | 3,124,503 | ||||
Cumulative gross proceeds from issuance of units since inception of the Offering | $ 21,500,000 | ||||
Private Offering | Operating Partnership | Common LP Units | |||||
Organization | |||||
Cumulative number of units issued since inception of the Offering (in shares) | shares | 612,100 | ||||
Units issued price (In dollars per share) | $ / shares | $ 10 | ||||
Private Offering | Interval Common Stock | |||||
Organization | |||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | ||||
Number of shares of common stock designated as non-voting shares of Interval Common Stock (in shares) | shares | 7,000,000 | ||||
Maximum offering | $ 30,000,000 | ||||
Maximum offering per the sole discretion of the Company's board of directors | $ 60,000,000 | ||||
Private Offering | Common Stock | |||||
Organization | |||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | ||||
Maximum offering | $ 150,000,000 | $ 100,000,000 | |||
Cumulative number of shares issued (in shares) | shares | 9,894,987 | ||||
Cumulative number of shares issued pursuant to the DRIP (in shares) | shares | 1,018,460 | ||||
Cumulative proceeds from issuance of stock | $ 96,700,000 | ||||
Cumulative number of shares repurchased (in shares) | shares | 287,525 | ||||
Cumulative stock repurchased, original investment | $ 2,858,355 | ||||
Cumulative stock repurchased under DRIP, original investment | $ 2,794,469 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Cash and Cash Equivalents | ||
FDIC Insurance limit | $ 250,000 | $ 250,000 |
Advertising Costs | ||
Advertising Expense | $ 1,462,672 | 1,154,540 |
Property Management Fees | ||
Management fees (as a percent) | 4% | |
Asset management fees (as a percent) | 0.75% | |
Acquisition Costs | ||
Acquisition fee (as a percent) | 1.40% | |
General and Administrative Expense | ||
Stock-Based Compensation | ||
Stock-based compensation expense | $ 60,000 | $ 0 |
Land improvements | ||
Investment in Hotel Properties | ||
Estimated useful lives (in years) | 15 years | |
Building improvements | ||
Investment in Hotel Properties | ||
Estimated useful lives (in years) | 40 years | |
Furniture, fixtures, and equipment | Minimum | ||
Investment in Hotel Properties | ||
Estimated useful lives (in years) | 3 years | |
Furniture, fixtures, and equipment | Maximum | ||
Investment in Hotel Properties | ||
Estimated useful lives (in years) | 7 years |
INVESTMENT IN HOTEL PROPERTIE_2
INVESTMENT IN HOTEL PROPERTIES - Summary (Details) | Dec. 31, 2022 USD ($) property room state | Dec. 31, 2021 USD ($) |
Investment in hotel properties consisted of the following: | ||
Land and land improvements | $ 32,650,698 | $ 20,034,309 |
Building and building improvements | 241,278,409 | 144,883,150 |
Furniture, fixtures, and equipment | 21,884,508 | 13,986,611 |
Finance ground lease assets | 7,286,984 | |
Construction in progress | 4,576,041 | 8,433 |
Investment in hotel properties, at cost | 307,676,640 | 178,912,503 |
Less: accumulated depreciation | (17,458,998) | (9,487,728) |
Investment in hotel properties, net | $ 290,217,642 | $ 169,424,775 |
Other disclosures | ||
Number of hotel properties consolidated | property | 19 | |
Number of hotel properties owned | property | 18 | |
Number of hotel properties not owned by the Company | property | 1 | |
Aggregate number of rooms in hotel properties | room | 2,261 | |
Number of states where hotel properties are owned | state | 11 |
INVESTMENT IN HOTEL PROPERTIE_3
INVESTMENT IN HOTEL PROPERTIES - VIE (Details) | Dec. 31, 2022 USD ($) property | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) |
Assets | |||
Investment in hotel properties, net of accumulated depreciation of $471,491 and $0 | $ 290,217,642 | $ 169,424,775 | |
Accumulated depreciation | 17,458,998 | 9,487,728 | |
Cash and cash equivalents | 6,193,449 | 7,866,401 | $ 7,960,159 |
Restricted Cash | 10,732,832 | 6,469,999 | |
Accounts receivable, net | 1,468,732 | 748,364 | |
Prepaid expenses and other assets | 1,409,993 | 4,360,555 | |
Total Assets (variable interest entities - $25,599,444 and $0) | 312,385,762 | 190,329,735 | |
Liabilities | |||
Debt, net | 189,678,547 | 103,126,884 | |
Finance lease liabilities | 13,026,849 | ||
Accounts payable | 3,034,148 | 1,549,380 | |
Accrued expenses | 5,853,519 | 2,621,520 | |
Total liabilities (variable interest entities - $19,064,885 and $0) | 223,393,216 | 117,873,335 | |
Variable Interest Entity, Primary Beneficiary | |||
Assets | |||
Investment in hotel properties, net of accumulated depreciation of $471,491 and $0 | 22,036,289 | ||
Accumulated depreciation | 471,491 | 0 | |
Cash and cash equivalents | 493,056 | ||
Restricted Cash | 2,173,237 | ||
Accounts receivable, net | 154,976 | ||
Prepaid expenses and other assets | 67,068 | ||
Total Assets (variable interest entities - $25,599,444 and $0) | 24,924,626 | 0 | |
Liabilities | |||
Debt, net | 12,244,068 | ||
Finance lease liabilities | 4,862,172 | ||
Accounts payable | 182,692 | ||
Accrued expenses | 445,763 | ||
Other liabilities | 655,372 | ||
Total liabilities (variable interest entities - $19,064,885 and $0) | $ 18,390,067 | $ 0 | |
Variable Interest Entity, Primary Beneficiary | Holiday Inn (the "EI Paso Property") | |||
Liabilities | |||
Number of hotel properties owned by VIE | property | 1 |
INVESTMENT IN HOTEL PROPERTIE_4
INVESTMENT IN HOTEL PROPERTIES - Acquisitions (Details) | 12 Months Ended | |||||||||||||
Dec. 22, 2022 USD ($) room | Aug. 25, 2022 USD ($) room shares | Aug. 10, 2022 USD ($) room | Aug. 03, 2022 USD ($) room shares | May 12, 2022 USD ($) | Mar. 29, 2022 USD ($) room | Feb. 08, 2022 USD ($) room | Jan. 18, 2022 USD ($) room | Dec. 03, 2021 USD ($) room | Aug. 03, 2021 USD ($) room | May 12, 2021 USD ($) room | Feb. 04, 2021 USD ($) room | Dec. 31, 2022 USD ($) property item room | Dec. 31, 2021 USD ($) room property | |
Acquisitions | ||||||||||||||
Number of hotel properties acquired | property | 7 | 4 | ||||||||||||
Number of hotel properties not owned by the Company | property | 1 | |||||||||||||
Number of guest rooms | room | 744 | 658 | ||||||||||||
Purchase Price | $ 94,930,000 | $ 65,220,000 | ||||||||||||
Transaction Costs | 3,041,428 | 2,077,506 | ||||||||||||
Total | $ 97,971,428 | $ 67,297,506 | ||||||||||||
Vista Management Agreement | ||||||||||||||
Acquisitions | ||||||||||||||
Management agreement, number of renewal periods | item | 2 | |||||||||||||
Successive renewal term | 5 years | |||||||||||||
HP Management Agreement | ||||||||||||||
Acquisitions | ||||||||||||||
Initial term of management agreement | 3 years | |||||||||||||
Successive renewal term | 3 years | |||||||||||||
KAJ Management Agreement | ||||||||||||||
Acquisitions | ||||||||||||||
Initial term of management agreement | 5 years | |||||||||||||
Successive renewal term | 1 year | |||||||||||||
NHS Management Agreement | ||||||||||||||
Acquisitions | ||||||||||||||
Number of Properties Subject to Management Agreement | item | 11 | |||||||||||||
Management agreement, automatic renewal term | 5 years | |||||||||||||
Aimbridge Management Agreement | ||||||||||||||
Acquisitions | ||||||||||||||
Management agreement, automatic renewal term | 1 year | |||||||||||||
Initial term of management agreement | 5 years | |||||||||||||
Successive renewal term | 1 year | |||||||||||||
Series T LP Units. | Minimum | ||||||||||||||
Acquisitions | ||||||||||||||
Time period for the conversion of Series T LP Units in to Common LP Units | 24 months | |||||||||||||
Series T LP Units. | Maximum | ||||||||||||||
Acquisitions | ||||||||||||||
Time period for the conversion of Series T LP Units in to Common LP Units | 36 months | |||||||||||||
Hampton Inn and Suites, Fargo Medical Center (the "Fargo Property") | ||||||||||||||
Acquisitions | ||||||||||||||
Number of guest rooms | room | 90 | |||||||||||||
Purchase Price | $ 11,440,000 | |||||||||||||
Transaction Costs | 302,222 | |||||||||||||
Total | $ 11,742,222 | |||||||||||||
Interest (as a percent) | 100% | |||||||||||||
Time period for the conversion of Series T LP Units in to Common LP Units | 36 months | |||||||||||||
Asset acquisition, new loan | $ 7,200,000 | |||||||||||||
Cash consideration | 150,000 | |||||||||||||
Hampton Inn and Suites, Fargo Medical Center (the "Fargo Property") | Series T LP Units. | ||||||||||||||
Acquisitions | ||||||||||||||
Amount of units issued as consideration | $ 4,091,291 | |||||||||||||
Courtyard El Paso Airport, (the "El Paso Airport Property") | ||||||||||||||
Acquisitions | ||||||||||||||
Number of guest rooms | room | 90 | |||||||||||||
Purchase Price | $ 15,120,000 | |||||||||||||
Transaction Costs | 333,234 | |||||||||||||
Total | $ 15,453,234 | |||||||||||||
Interest (as a percent) | 100% | |||||||||||||
Asset acquisition, new loan | $ 10,000,000 | |||||||||||||
Cash consideration | 620,000 | |||||||||||||
Courtyard El Paso Airport, (the "El Paso Airport Property") | Common LP Units | ||||||||||||||
Acquisitions | ||||||||||||||
Amount of units issued as consideration | $ 4,600,000 | |||||||||||||
Fairfield Inn & Suites (the "Lakewood Property") | ||||||||||||||
Acquisitions | ||||||||||||||
Number of guest rooms | room | 142 | |||||||||||||
Purchase Price | $ 18,800,000 | |||||||||||||
Transaction Costs | 862,117 | |||||||||||||
Total | $ 19,662,117 | |||||||||||||
Interest (as a percent) | 100% | |||||||||||||
Amount of units issued as consideration | $ 6,200,000 | |||||||||||||
Asset acquisition, new loan | 12,600,000 | |||||||||||||
Cash consideration | $ 552,000 | |||||||||||||
Fairfield Inn & Suites (the "Lakewood Property") | Minimum | ||||||||||||||
Acquisitions | ||||||||||||||
Time period for the conversion of Series T LP Units in to Common LP Units | 36 months | |||||||||||||
Fairfield Inn & Suites (the "Lakewood Property") | Maximum | ||||||||||||||
Acquisitions | ||||||||||||||
Time period for the conversion of Series T LP Units in to Common LP Units | 48 months | |||||||||||||
Fairfield Inn & Suites (the "Lakewood Property") | Series T LP Units. | ||||||||||||||
Acquisitions | ||||||||||||||
Amount of units issued as consideration | $ 5,638,000 | |||||||||||||
Residence Inn by Marriott Fort Collins (the "RI Hotel Property") | ||||||||||||||
Acquisitions | ||||||||||||||
Number of guest rooms | room | 113 | |||||||||||||
Purchase Price | $ 15,800,000 | |||||||||||||
Transaction Costs | 546,009 | |||||||||||||
Total | $ 16,346,009 | |||||||||||||
Interest (as a percent) | 100% | |||||||||||||
Asset acquisition, new loan | $ 11,500,000 | |||||||||||||
Cash consideration | $ 600,000 | |||||||||||||
Residence Inn by Marriott Fort Collins (the "RI Hotel Property") | Minimum | ||||||||||||||
Acquisitions | ||||||||||||||
Time period for the conversion of Series T LP Units in to Common LP Units | 36 months | |||||||||||||
Residence Inn by Marriott Fort Collins (the "RI Hotel Property") | Maximum | ||||||||||||||
Acquisitions | ||||||||||||||
Time period for the conversion of Series T LP Units in to Common LP Units | 48 months | |||||||||||||
Residence Inn by Marriott Fort Collins (the "RI Hotel Property") | Series T LP Units. | ||||||||||||||
Acquisitions | ||||||||||||||
Amount of units issued as consideration | $ 3,703,690 | |||||||||||||
Units issued as consideration | shares | 560,369 | |||||||||||||
Hilton Garden Inn, (the "El Paso University Property") | ||||||||||||||
Acquisitions | ||||||||||||||
Acquisition expense | $ 571,198 | |||||||||||||
Hilton Garden Inn, (the "El Paso University Property") | El Paso University Amended Agreements | ||||||||||||||
Acquisitions | ||||||||||||||
Percentage of value of ownership interest of the prior members | 6% | |||||||||||||
Hilton Garden Inn, (the "El Paso University Property") | El Paso University Amended Agreements | HDGH [Member] | ||||||||||||||
Acquisitions | ||||||||||||||
Number of guest rooms | room | 153 | |||||||||||||
Member interest acquired in exchange for capital contributions (as a percent) | 24.90% | |||||||||||||
Capital contributions received | $ 3,200,000 | |||||||||||||
Percentage of distributions from operations to be received | 100% | |||||||||||||
Interest rate of loan, option (as a percent) | 12% | |||||||||||||
Loan principal amount, counterparty | $ 14,400,000 | |||||||||||||
Loan interest rate, counterparty | 4.939% | |||||||||||||
Hilton Garden Inn (the "Pineville HGI Property") | ||||||||||||||
Acquisitions | ||||||||||||||
Number of guest rooms | room | 113 | |||||||||||||
Purchase Price | $ 10,930,000 | |||||||||||||
Transaction Costs | 347,149 | |||||||||||||
Total | $ 11,277,149 | |||||||||||||
Interest (as a percent) | 100% | |||||||||||||
Time period for the conversion of Series T LP Units in to Common LP Units | 24 months | |||||||||||||
Hilton Garden Inn (the "Pineville HGI Property") | Western Alliance Bank | ||||||||||||||
Acquisitions | ||||||||||||||
Asset acquisition, new loan | $ 7,800,000 | |||||||||||||
Asset acquisition, new loan by subsidiaries | 7,000,000 | |||||||||||||
Hilton Garden Inn (the "Pineville HGI Property") | Series T LP Units. | ||||||||||||||
Acquisitions | ||||||||||||||
Amount of units issued as consideration | 249,921 | $ 2,729,211 | ||||||||||||
Cash consideration | $ 400,000 | |||||||||||||
Hilton Garden Inn (the "Charlotte Property") | ||||||||||||||
Acquisitions | ||||||||||||||
Number of guest rooms | room | 112 | |||||||||||||
Purchase Price | $ 15,440,000 | |||||||||||||
Transaction Costs | 416,387 | |||||||||||||
Total | $ 15,856,387 | |||||||||||||
Interest (as a percent) | 100% | |||||||||||||
Time period for the conversion of Series T LP Units in to Common LP Units | 24 months | |||||||||||||
Loan amount | $ 9,800,000 | |||||||||||||
Cash consideration | 400,000 | |||||||||||||
Hilton Garden Inn (the "Charlotte Property") | Western Alliance Bank | ||||||||||||||
Acquisitions | ||||||||||||||
Asset acquisition, new loan | 8,700,000 | |||||||||||||
Hilton Garden Inn (the "Charlotte Property") | Series T LP Units. | ||||||||||||||
Acquisitions | ||||||||||||||
Amount of units issued as consideration | $ 6,427,546 | |||||||||||||
Units issued as consideration | shares | 598,755 | |||||||||||||
Holiday Inn (the "Wichita Property ") | ||||||||||||||
Acquisitions | ||||||||||||||
Number of guest rooms | room | 84 | |||||||||||||
Purchase Price | $ 7,400,000 | |||||||||||||
Transaction Costs | 234,310 | |||||||||||||
Total | $ 7,634,310 | |||||||||||||
Interest (as a percent) | 100% | |||||||||||||
Time period for the conversion of Series T LP Units in to Common LP Units | 36 months | |||||||||||||
Contractual consideration | $ 7,400,000 | |||||||||||||
Asset acquisition, new loan | 5,600,000 | |||||||||||||
Holiday Inn (the "Wichita Property ") | Series T LP Units. | ||||||||||||||
Acquisitions | ||||||||||||||
Amount of units issued as consideration | 121,762 | $ 1,217,625 | ||||||||||||
Cash consideration | 500,000 | |||||||||||||
Courtyard by Marriott (the "Aurora Property") | ||||||||||||||
Acquisitions | ||||||||||||||
Number of guest rooms | room | 141 | |||||||||||||
Purchase Price | $ 23,600,000 | $ 23,610,000 | ||||||||||||
Transaction Costs | 458,129 | |||||||||||||
Total | $ 24,068,129 | |||||||||||||
Interest (as a percent) | 100% | |||||||||||||
Asset acquisition, new loan | $ 15,000,000 | |||||||||||||
Cash consideration | $ 1,900,000 | |||||||||||||
Courtyard by Marriott (the "Aurora Property") | Minimum | ||||||||||||||
Acquisitions | ||||||||||||||
Time period for the conversion of Series T LP Units in to Common LP Units | 36 months | |||||||||||||
Courtyard by Marriott (the "Aurora Property") | Maximum | ||||||||||||||
Acquisitions | ||||||||||||||
Time period for the conversion of Series T LP Units in to Common LP Units | 48 months | |||||||||||||
Courtyard by Marriott (the "Aurora Property") | Series T LP Units. | ||||||||||||||
Acquisitions | ||||||||||||||
Amount of units issued as consideration | $ 6,742,757 | $ 2,100,000 | $ 6,700,000 | |||||||||||
Holiday Inn (the "EI Paso Property") | ||||||||||||||
Acquisitions | ||||||||||||||
Number of guest rooms | room | 175 | |||||||||||||
Purchase Price | $ 10,300,000 | |||||||||||||
Transaction Costs | 361,019 | |||||||||||||
Total | $ 10,661,019 | |||||||||||||
Interest (as a percent) | 100% | |||||||||||||
Asset acquisition, new loan | $ 7,900,000 | |||||||||||||
Cash consideration | $ 300,000 | |||||||||||||
Holiday Inn (the "EI Paso Property") | Minimum | ||||||||||||||
Acquisitions | ||||||||||||||
Time period for the conversion of Series T LP Units in to Common LP Units | 36 months | |||||||||||||
Holiday Inn (the "EI Paso Property") | Maximum | ||||||||||||||
Acquisitions | ||||||||||||||
Time period for the conversion of Series T LP Units in to Common LP Units | 48 months | |||||||||||||
Holiday Inn (the "EI Paso Property") | Series T LP Units. | ||||||||||||||
Acquisitions | ||||||||||||||
Amount of units issued as consideration | $ 2,100,000 | |||||||||||||
Hilton Garden Inn (the "Houston Property") | ||||||||||||||
Acquisitions | ||||||||||||||
Number of guest rooms | room | 182 | |||||||||||||
Purchase Price | $ 19,910,000 | |||||||||||||
Transaction Costs | 918,353 | |||||||||||||
Total | $ 20,828,353 | |||||||||||||
Interest (as a percent) | 100% | |||||||||||||
Asset acquisition, new loan | $ 13,000,000 | |||||||||||||
Cash consideration | $ 719,000 | |||||||||||||
Hilton Garden Inn (the "Houston Property") | Minimum | ||||||||||||||
Acquisitions | ||||||||||||||
Time period for the conversion of Series T LP Units in to Common LP Units | 36 months | |||||||||||||
Hilton Garden Inn (the "Houston Property") | Maximum | ||||||||||||||
Acquisitions | ||||||||||||||
Time period for the conversion of Series T LP Units in to Common LP Units | 48 months | |||||||||||||
Hilton Garden Inn (the "Houston Property") | Series T LP Units. | ||||||||||||||
Acquisitions | ||||||||||||||
Amount of units issued as consideration | $ 6,910,000 | $ 6,900,000 | ||||||||||||
Sheraton Hotel (the "Northbrook Property") | ||||||||||||||
Acquisitions | ||||||||||||||
Number of guest rooms | room | 160 | |||||||||||||
Purchase Price | $ 11,400,000 | |||||||||||||
Transaction Costs | 340,005 | |||||||||||||
Total | $ 11,740,005 | |||||||||||||
Interest (as a percent) | 100% | |||||||||||||
Asset acquisition, new loan | $ 3,700,000 | |||||||||||||
Sheraton Hotel (the "Northbrook Property") | Minimum | ||||||||||||||
Acquisitions | ||||||||||||||
Time period for the conversion of Series T LP Units in to Common LP Units | 36 months | |||||||||||||
Sheraton Hotel (the "Northbrook Property") | Maximum | ||||||||||||||
Acquisitions | ||||||||||||||
Time period for the conversion of Series T LP Units in to Common LP Units | 48 months | |||||||||||||
Sheraton Hotel (the "Northbrook Property") | Series T LP Units. | ||||||||||||||
Acquisitions | ||||||||||||||
Amount of units issued as consideration | $ 6,179,000 | |||||||||||||
Sheraton Hotel (the "Northbrook Property") | Common LP Units | ||||||||||||||
Acquisitions | ||||||||||||||
Amount of units issued as consideration | $ 1,521,000 |
INVESTMENT IN HOTEL PROPERTIE_5
INVESTMENT IN HOTEL PROPERTIES - Purchase Price Allocation (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Acquisitions | ||
Land and Land Improvements | $ 32,650,698 | $ 20,034,309 |
Building and building improvements | 241,278,409 | 144,883,150 |
Furniture, fixtures, and equipment | 21,884,508 | 13,986,611 |
Total Assets (variable interest entities - $25,599,444 and $0) | 312,385,762 | 190,329,735 |
Asset Acquisitions 2022 | ||
Acquisitions | ||
Land and Land Improvements | 12,538,514 | |
Building and building improvements | 79,702,403 | |
Furniture, fixtures, and equipment | 5,730,511 | |
Total Assets (variable interest entities - $25,599,444 and $0) | 97,971,428 | |
Total purchase price | 97,971,428 | |
Assumed mortgage debt | 7,198,709 | |
Net purchase price | $ 90,772,719 | |
Asset Acquisitions 2021 | ||
Acquisitions | ||
Land and Land Improvements | 9,694,077 | |
Building and building improvements | 58,503,137 | |
Furniture, fixtures, and equipment | 4,597,353 | |
Total Assets (variable interest entities - $25,599,444 and $0) | 72,794,567 | |
Above market lease | (5,497,061) | |
Total liabilities assumed | (5,497,061) | |
Total purchase price | 67,297,506 | |
Net purchase price | $ 67,297,506 |
INVESTMENT IN HOTEL PROPERTIE_6
INVESTMENT IN HOTEL PROPERTIES - Estimated fair value of assets acquired and liabilities assumed (Details) - HDGH | Aug. 10, 2022 USD ($) |
Assets | |
Building | $ 16,700,000 |
Furniture, fixtures & equipment | 900,000 |
Right of use asset - ground lease | 4,862,172 |
Cash and cash equivalents | 36,790 |
Restricted cash | 1,305,636 |
Accounts receivable, net | 168,974 |
Prepaid expenses and other assets | 107,291 |
Total Assets | 24,080,863 |
Liabilities | |
Debt | 12,781,084 |
Finance lease liabilities | 4,862,172 |
Accounts payable | 237,636 |
Accrued expenses | 1,970,554 |
Other liabilities | 419,336 |
Total liabilities | 20,270,782 |
Assets in excess of liabilities (gain on acquisition of VIE) | $ 3,810,081 |
INVESTMENT IN HOTEL PROPERTIE_7
INVESTMENT IN HOTEL PROPERTIES - Leases (Details) - USD ($) | 12 Months Ended | |||
Aug. 10, 2022 | Dec. 03, 2021 | Dec. 31, 2022 | Jan. 01, 2022 | |
Ground Lease | ||||
Lease liability | $ 13,026,849 | |||
Right-of-use asset | $ 7,286,984 | |||
Northbrook Property | ||||
Ground Lease | ||||
Above market ground lease liability at acquisition date | $ 5,497,061 | |||
Period of time that has expired on lease at time of acquisition (in years) | 15 years | |||
Lease Term (in years) | 61 years | |||
Yearly percentage increase in base rent | 3% | |||
Discount rate percentage (in %) | 7.75% | |||
Finance lease, interest expense | $ 624,859 | |||
Right-of-use amortization expense | $ 53,885 | |||
El Paso University Property | ||||
Ground Lease | ||||
Lease Term (in years) | 32 years | |||
Discount rate percentage (in %) | 9% | |||
Lease liability | $ 4,862,172 | |||
Right-of-use asset | $ 4,862,172 | |||
Adjustment term of annual base rent | 5 years | |||
ASU 2016-02 | Cumulative Effect, Period of Adoption, Adjusted Balance | Northbrook Property | ||||
Ground Lease | ||||
Lease liability | $ 7,975,757 | |||
Right-of-use asset | $ 2,478,696 |
INVESTMENT IN HOTEL PROPERTIE_8
INVESTMENT IN HOTEL PROPERTIES - Lease Payments (Details) | Dec. 31, 2022 USD ($) |
Reconciliation of undiscounted cash flows to finance lease liability: | |
2023 | $ 596,767 |
2024 | 610,237 |
2025 | 624,112 |
2026 | 645,791 |
2027 | 660,511 |
Thereafter | 44,016,796 |
Total finance lease payments | 47,154,214 |
Interest | (34,127,365) |
Present value of finance lease liabilities | $ 13,026,849 |
PREPAID EXPENSES AND OTHER AS_3
PREPAID EXPENSES AND OTHER ASSETS (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
PREPAID EXPENSES AND OTHER ASSETS | ||
Franchise fees | $ 150,000 | $ 525,000 |
Acquisition costs | 485,304 | 541,821 |
Deferred tax assets, net | 2,464,768 | |
Insurance | 389,656 | 464,398 |
Other | 385,033 | 364,568 |
Total | $ 1,409,993 | $ 4,360,555 |
ACCRUED EXPENSES (Details)
ACCRUED EXPENSES (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
ACCRUED EXPENSES | ||
Property taxes | $ 3,215,458 | $ 1,686,801 |
Interest | 1,585,813 | 357,030 |
Other | 1,052,248 | 577,689 |
Total | $ 5,853,519 | $ 2,621,520 |
DEBT - Lines of Credit (Details
DEBT - Lines of Credit (Details) - USD ($) | 12 Months Ended | ||||
Dec. 31, 2022 | Dec. 22, 2022 | Aug. 10, 2022 | Dec. 31, 2021 | Feb. 10, 2020 | |
Western Line of Credit | |||||
Debt | |||||
Line of credit | $ 5,000,000 | $ 5,000,000 | |||
Western Line of Credit | U.S. Prime Rate | |||||
Debt | |||||
Basis spread (as a percent) | 0.50% | ||||
A-1 Line of Credit | |||||
Debt | |||||
Line of credit | $ 7,500,000 | $ 7,500,000 | |||
Revolving line of credit | |||||
Debt | |||||
Outstanding amount | 7,400,000 | ||||
Revolving line of credit | Western Line of Credit | |||||
Debt | |||||
Line of credit | $ 5,000,000 | ||||
Partnership units pledged | 300,000 | ||||
Outstanding amount | $ 5,000,000 | ||||
Interest rate (as a percent) | 4% | ||||
Interest rate (as a percent) | 8% | ||||
Revolving line of credit | Western Line of Credit | U.S. Prime Rate | |||||
Debt | |||||
Basis spread (as a percent) | 0.50% | ||||
Revolving line of credit | A-1 Line of Credit | |||||
Debt | |||||
Line of credit | $ 5,000,000 | ||||
Outstanding amount | $ 7,380,156 | ||||
Interest rate (as a percent) | 7% | ||||
Interest rate (as a percent) | 7% | ||||
Revolving line of credit | A-1 Line of Credit | Common LP Units | |||||
Debt | |||||
Partnership units held as collateral | 750,000 | 500,000 |
DEBT - Mortgage Debt (Details)
DEBT - Mortgage Debt (Details) | 12 Months Ended | |
Dec. 31, 2022 USD ($) property loan | Dec. 31, 2021 USD ($) | |
Debt | ||
Outstanding balance | $ 192,651,404 | |
Interest payable | 1,585,813 | $ 357,030 |
Mortgage Debt | ||
Debt | ||
Outstanding balance | $ 180,271,248 | $ 103,933,260 |
Number of properties as security for mortgage debt | property | 19 | |
Fixed Rate Mortgage Loans | ||
Debt | ||
Number of fixed interest rate loans | loan | 17 | |
Fixed Rate Mortgage Loans | Minimum | ||
Debt | ||
Fixed interest rate (as a percent) | 3.70% | |
Fixed Rate Mortgage Loans | Maximum | ||
Debt | ||
Fixed interest rate (as a percent) | 6.41% | |
Variable Rate Mortgage Loan One | LIBOR | ||
Debt | ||
Basis spread (as a percent) | 6% | |
Reference rate threshold (as a percent) | 1% | |
Number of variable interest rate loans | loan | 1 | |
Effective interest rate (as a percent) | 10.15% | |
Variable Rate Mortgage Loan Two | LIBOR | ||
Debt | ||
Basis spread (as a percent) | 6.25% | |
Reference rate threshold (as a percent) | 0.75% | |
Effective interest rate (as a percent) | 10.40% | |
Weighted-average interest rate (as a percent) | 5.74% | |
High Desert Garden Holdings, LLC, El Paso University Property | Mortgage Debt | ||
Debt | ||
Fixed interest rate (as a percent) | 4.94% | |
Principal amount | $ 14,400,000 |
DEBT - PPP Loans (Details)
DEBT - PPP Loans (Details) | 1 Months Ended | ||||
Apr. 30, 2021 USD ($) | Feb. 28, 2021 USD ($) loan | Jan. 31, 2021 USD ($) loan | Apr. 30, 2020 USD ($) loan | Dec. 31, 2022 USD ($) | |
Debt | |||||
Outstanding balance | $ 192,651,404 | ||||
PPP Loans | |||||
Debt | |||||
Outstanding balance | $ 763,100 | ||||
Interest rate (as a percent) | 1% | ||||
Number of unsecured promissory notes | loan | 6 | ||||
Percentage of loan forgiven | 100% | ||||
Number of loans forgiven | loan | 6 | ||||
PPP Loans | Minimum | |||||
Debt | |||||
Term of loan | 2 years | ||||
PPP Loans | Maximum | |||||
Debt | |||||
Term of loan | 5 years | ||||
Second Draw PPP Loan | |||||
Debt | |||||
Outstanding balance | $ 716,400 | ||||
Term of loan | 5 years | ||||
Interest rate (as a percent) | 1% | ||||
Interest deferral period | 16 months | ||||
Number of unsecured promissory notes | loan | 6 | ||||
Southaven TRS PPP Loan | |||||
Debt | |||||
Principal amount | $ 85,400 | ||||
Term of loan | 5 years | ||||
Interest rate (as a percent) | 1% | ||||
Interest deferral period | 16 months | ||||
Southaven TRS Second Draw PPP Loan | |||||
Debt | |||||
Principal amount | $ 119,500 | ||||
Term of loan | 5 years | ||||
Interest rate (as a percent) | 1% | ||||
Interest deferral period | 16 months |
DEBT - Summary of Debt (Details
DEBT - Summary of Debt (Details) - USD ($) | 12 Months Ended | ||||||||
Dec. 31, 2022 | Oct. 09, 2023 | Apr. 18, 2023 | Jan. 12, 2023 | Dec. 22, 2022 | Aug. 10, 2022 | Dec. 31, 2021 | Apr. 30, 2020 | Feb. 10, 2020 | |
Outstanding Debt: | |||||||||
Outstanding balance | $ 192,651,404 | ||||||||
Premium on assumed debt, net | 221,082 | ||||||||
Deferred financing costs, net | (3,193,939) | ||||||||
Debt, net | 189,678,547 | $ 103,126,884 | |||||||
Revolving line of credit | |||||||||
Outstanding Debt: | |||||||||
Outstanding balance | 12,380,156 | 600,000 | |||||||
Mortgage Debt | |||||||||
Outstanding Debt: | |||||||||
Outstanding balance | 180,271,248 | 103,933,260 | |||||||
Premium on assumed debt, net | 221,082 | 722,905 | |||||||
Deferred financing costs, net | (3,193,939) | (2,129,281) | |||||||
Net Mortgage | 177,298,391 | 102,526,884 | |||||||
Western Line of Credit | |||||||||
Outstanding Debt: | |||||||||
Line of credit | $ 5,000,000 | 5,000,000 | |||||||
Western Line of Credit | Subsequent Event | |||||||||
Outstanding Debt: | |||||||||
Line of credit | $ 4,670,000 | ||||||||
Western Line of Credit | U.S. Prime Rate | |||||||||
Outstanding Debt: | |||||||||
Basis spread (as a percent) | 0.50% | ||||||||
Western Line of Credit | Revolving line of credit | |||||||||
Outstanding Debt: | |||||||||
Line of credit | $ 5,000,000 | ||||||||
Interest rate (as a percent) | 8% | ||||||||
Outstanding balance | $ 5,000,000 | 600,000 | |||||||
Western Line of Credit | Revolving line of credit | U.S. Prime Rate | |||||||||
Outstanding Debt: | |||||||||
Basis spread (as a percent) | 0.50% | ||||||||
A-1 Line of Credit | |||||||||
Outstanding Debt: | |||||||||
Line of credit | $ 7,500,000 | $ 7,500,000 | |||||||
A-1 Line of Credit | Subsequent Event | |||||||||
Outstanding Debt: | |||||||||
Line of credit | $ 13,300,000 | $ 10,000,000 | |||||||
A-1 Line of Credit | Revolving line of credit | |||||||||
Outstanding Debt: | |||||||||
Line of credit | $ 5,000,000 | ||||||||
Interest rate (as a percent) | 7% | ||||||||
Outstanding balance | $ 7,380,156 | ||||||||
PPP Loans | |||||||||
Outstanding Debt: | |||||||||
Interest rate (as a percent) | 1% | ||||||||
Outstanding balance | $ 763,100 | ||||||||
Holiday Inn Express (the "Cedar Rapids Property") | Mortgage Debt | |||||||||
Outstanding Debt: | |||||||||
Interest rate (as a percent) | 5.33% | ||||||||
Outstanding balance | $ 5,799,804 | 5,858,134 | |||||||
Hampton Inn & Suites(the "Pineville Property") | Mortgage Debt | |||||||||
Outstanding Debt: | |||||||||
Interest rate (as a percent) | 5.13% | ||||||||
Outstanding balance | $ 8,580,586 | 8,782,284 | |||||||
Hampton Inn (the "Eagan Property") | Mortgage Debt | |||||||||
Outstanding Debt: | |||||||||
Interest rate (as a percent) | 4.60% | ||||||||
Outstanding balance | $ 9,063,528 | 9,277,193 | |||||||
Home2 Suites (the "Prattville Property") | Mortgage Debt | |||||||||
Outstanding Debt: | |||||||||
Interest rate (as a percent) | 4.13% | ||||||||
Outstanding balance | $ 9,199,041 | 9,425,085 | |||||||
Home2 Suites (the "Lubbock Home2 Property") | Mortgage Debt | |||||||||
Outstanding Debt: | |||||||||
Interest rate (as a percent) | 4.69% | ||||||||
Outstanding balance | $ 7,343,948 | 7,573,597 | |||||||
Fairfield Inn & Suites (the "Lubbock Home2 Property") | Mortgage Debt | |||||||||
Outstanding Debt: | |||||||||
Interest rate (as a percent) | 4.93% | ||||||||
Outstanding balance | $ 8,971,430 | 9,125,908 | |||||||
Homewood Suites (the "Southaven Property") | Mortgage Debt | |||||||||
Outstanding Debt: | |||||||||
Interest rate (as a percent) | 3.70% | ||||||||
Outstanding balance | $ 13,007,706 | 13,343,841 | |||||||
Courtyard by Marriott (the "Aurora Property") | LIBOR | |||||||||
Outstanding Debt: | |||||||||
Basis spread (as a percent) | 6% | ||||||||
Reference rate threshold (as a percent) | 1% | ||||||||
Courtyard by Marriott (the "Aurora Property") | Mortgage Debt | |||||||||
Outstanding Debt: | |||||||||
Interest rate (as a percent) | 10.15% | ||||||||
Outstanding balance | $ 15,000,000 | 15,000,000 | |||||||
Holiday Inn (the "EI Paso Property") | Mortgage Debt | |||||||||
Outstanding Debt: | |||||||||
Interest rate (as a percent) | 5% | ||||||||
Outstanding balance | $ 7,900,000 | 7,900,000 | |||||||
Hilton Garden Inn (the "Houston Property") | |||||||||
Outstanding Debt: | |||||||||
Interest-only period | 24 months | ||||||||
Hilton Garden Inn (the "Houston Property") | Mortgage Debt | |||||||||
Outstanding Debt: | |||||||||
Interest rate (as a percent) | 3.85% | ||||||||
Outstanding balance | $ 13,947,217 | 13,947,218 | |||||||
Sheraton Hotel (the "Northbrook Property") | LIBOR | |||||||||
Outstanding Debt: | |||||||||
Basis spread (as a percent) | 6.25% | ||||||||
Reference rate threshold (as a percent) | 0.75% | ||||||||
Sheraton Hotel (the "Northbrook Property") | Mortgage Debt | |||||||||
Outstanding Debt: | |||||||||
Interest rate (as a percent) | 10.40% | ||||||||
Outstanding balance | $ 3,766,639 | $ 3,700,000 | |||||||
Hampton Inn - (the "Fargo Property") | Mortgage Debt | |||||||||
Outstanding Debt: | |||||||||
Interest rate (as a percent) | 4% | ||||||||
Outstanding balance | $ 7,275,480 | ||||||||
Courtyard by Marriott (the "El Paso Property") | |||||||||
Outstanding Debt: | |||||||||
Interest-only period | 18 months | ||||||||
Courtyard by Marriott (the "El Paso Property") | Mortgage Debt | |||||||||
Outstanding Debt: | |||||||||
Interest rate (as a percent) | 6.01% | ||||||||
Outstanding balance | $ 9,990,000 | ||||||||
Fairfield Inn & Suites (the "Lakewood Property") | Mortgage Debt | |||||||||
Outstanding Debt: | |||||||||
Interest rate (as a percent) | 7% | ||||||||
Outstanding balance | $ 13,845,000 | ||||||||
Residence Inn (the "Fort Collins Property") | Mortgage Debt | |||||||||
Outstanding Debt: | |||||||||
Interest rate (as a percent) | 7% | ||||||||
Outstanding balance | $ 11,500,000 | ||||||||
Hilton Garden Inn, (the "El Paso University Property") | Mortgage Debt | |||||||||
Outstanding Debt: | |||||||||
Interest rate (as a percent) | 4.94% | ||||||||
Outstanding balance | $ 12,613,869 | ||||||||
Hilton Garden Inn (the "Pineville HGI Property") | Mortgage Debt | |||||||||
Outstanding Debt: | |||||||||
Interest rate (as a percent) | 6.20% | ||||||||
Outstanding balance | $ 7,020,000 | ||||||||
Hilton Garden Inn (the "Charlotte Property") | Mortgage Debt | |||||||||
Outstanding Debt: | |||||||||
Interest rate (as a percent) | 6.20% | ||||||||
Outstanding balance | $ 9,805,000 | ||||||||
Holiday Inn Express (the "Wichita Hotel Property") | Mortgage Debt | |||||||||
Outstanding Debt: | |||||||||
Interest rate (as a percent) | 6.41% | ||||||||
Outstanding balance | $ 5,642,000 |
DEBT - Future Minimum Payments
DEBT - Future Minimum Payments (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Future minimum payments | ||
2023 | $ 47,739,453 | |
2024 | 44,152,355 | |
2025 | 34,546,247 | |
2026 | 20,667,343 | |
2027 | 37,472,428 | |
Thereafter | 8,073,578 | |
Total | 192,651,404 | |
Premium on assumed debt, net | 221,082 | |
Deferred financing costs, net | (3,193,939) | |
Debt, net | 189,678,547 | $ 103,126,884 |
Fairfield Inn & Suites (the "Lakewood Property") | ||
Future minimum payments | ||
2023 | 13,800,000 | |
Holiday Inn (the "EI Paso Property") | ||
Future minimum payments | ||
2023 | 7,900,000 | |
Fort Collins Property | ||
Future minimum payments | ||
2023 | $ 11,500,000 |
FAIR VALUE OF FINANCIAL INSTR_2
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Fair value of financial instruments | ||
Gross carrying value | $ 192,651,404 | |
Mortgage Debt | ||
Fair value of financial instruments | ||
Fair value of mortgage debt | 175,800,000 | $ 103,700,000 |
Gross carrying value | $ 180,271,248 | $ 103,933,260 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Taxes | ||
Valuation Allowance | $ (7,314,530) | |
Percentage of distributions paid that were determined to be returns of capital distributions | 100% | 100% |
Net deferred tax asset & liabilities | $ 3,290,901 | $ 2,464,768 |
Federal | ||
Income Taxes | ||
NOL carryforwards | 6,300,000 | 4,200,000 |
State | ||
Income Taxes | ||
NOL carryforwards | $ 1,000,000 | $ 600,000 |
INCOME TAXES - Components of In
INCOME TAXES - Components of Income Tax Benefit (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Federal: | ||
Deferred | $ (5,047,228) | $ 976,040 |
State: | ||
Current | (89,346) | (76,861) |
Deferred | (708,441) | 21,786 |
Income tax (expense)/benefit | $ (5,845,015) | $ 920,965 |
INCOME TAXES - Reconciliation (
INCOME TAXES - Reconciliation (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Effective income tax reconciliation, amount | ||
Expected income tax benefit at U.S. Federal statutory rate | $ 2,743,594 | $ 1,299,405 |
Tax impact of REIT election | (614,966) | (620,327) |
Expected tax benefit at TRS | 2,128,628 | 679,078 |
Valuation Allowance | (7,314,530) | |
Gross tax (expense)/benefit | (5,185,902) | 679,078 |
State income tax (expense) benefit, net | (89,346) | (76,859) |
Temporary differences - deprecation | (569,767) | (111,547) |
Permanent differences - PPP | 430,293 | |
Income tax (expense)/benefit | $ (5,845,015) | $ 920,965 |
Effective income tax reconciliation, percent | ||
Expected income tax benefit at U.S. Federal statutory rate (as a percent) | (21.00%) | (21.00%) |
Tax impact of REIT election (as a percent) | 4.70% | 10% |
Expected tax benefit at TRS (as a percent) | (16.30%) | (11.00%) |
State income tax (expense) benefit, net (as a percent) | 0.70% | 1.20% |
Temporary differences - depreciation (as a percent) | 4.40% | 1.80% |
Permanent differences - PPP (as a percent) | (0.00%) | (7.00%) |
Income tax (expense)/benefit (as a percent) | 44.70% | (14.90%) |
INCOME TAXES - Deferred Taxes (
INCOME TAXES - Deferred Taxes (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred Tax Assets: | ||
Net operating loss carryforwards - Federal | $ 6,265,111 | $ 4,157,396 |
Net operating loss carryforwards - State | 1,049,419 | 588,661 |
Valuation Allowance | (7,314,530) | |
Total, deferred tax assets | 4,746,057 | |
Deferred Tax Liabilities: | ||
Tax FF&E basis less than book basis - Federal | (2,864,293) | (1,974,462) |
Tax FF&E basis less than book basis - State | (426,608) | (306,827) |
Total, deferred tax liabilities | (3,290,901) | (2,281,289) |
Deferred tax (liabilities)/assets, net | $ 3,290,901 | $ 2,464,768 |
RELATED PARTY TRANSACTIONS - Ot
RELATED PARTY TRANSACTIONS - Other (Details) | 12 Months Ended | ||||
Dec. 31, 2022 USD ($) $ / room $ / property shares | Dec. 31, 2021 USD ($) shares | Dec. 15, 2022 USD ($) | Aug. 09, 2022 USD ($) | Feb. 10, 2020 USD ($) | |
Related Party Transactions | |||||
Distributions Paid | $ 5,258,437 | $ 2,952,751 | |||
Accrued guarantee fees | 941,758 | ||||
Western Line of Credit | |||||
Related Party Transactions | |||||
Revolving line of credit | $ 5,000,000 | 5,000,000 | |||
Advisor And Affiliates | |||||
Related Party Transactions | |||||
Guarantee fees (as a percent) | 1% | ||||
Reimbursements payable | $ 5,612,134 | 2,035,708 | |||
NHS | |||||
Related Party Transactions | |||||
Renewal term of advisory agreement | 5 years | ||||
Monthly base management fee (as a percent) | 4% | ||||
Accounting fee per room | $ / room | 14 | ||||
Administrative fee (as a percent) | 0.60% | ||||
Flat fee per property | $ / property | 5,000 | ||||
Corey Maple | |||||
Related Party Transactions | |||||
Accrued guarantee fees | $ 155,676 | 159,414 | |||
Corey Maple | Western Line of Credit | |||||
Related Party Transactions | |||||
Line of credit amount guaranteed by related party | $ 5,000,000 | ||||
Partnership units held as collateral | shares | 300,000 | ||||
Norman Leslie | |||||
Related Party Transactions | |||||
Accrued guarantee fees | $ 155,676 | 159,414 | |||
Legendary A-1 Bonds, LLC | |||||
Related Party Transactions | |||||
Loan amount | 42,500,000 | 13,000,000 | |||
Home2 Suites (the "Prattville Property") | Corey Maple | |||||
Related Party Transactions | |||||
Debt guaranteed by related party | 9,600,000 | ||||
Hampton Inn & Suites(the "Pineville Property") | Norman Leslie | |||||
Related Party Transactions | |||||
Debt guaranteed by related party | $ 9,300,000 | ||||
Hilton Garden Inn (the "Houston Property") | Corey Maple | |||||
Related Party Transactions | |||||
Related party loan guarantee percentage | 50 | ||||
Debt guaranteed by related party | $ 13,900,000 | ||||
Homewood Suites, Southhaven, Mississippi | Corey Maple | |||||
Related Party Transactions | |||||
Debt guaranteed by related party | 13,500,000 | ||||
Home wood Suites Fargo North Dakota | Corey Maple | |||||
Related Party Transactions | |||||
Loan amount | 7,400,000 | ||||
Hilton Garden Inn, (the "El Paso University Property") | Corey Maple | |||||
Related Party Transactions | |||||
Debt guaranteed by related party | 14,400,000 | ||||
Holiday Inn Express (the "Wichita Hotel Property") | Corey Maple | |||||
Related Party Transactions | |||||
Debt guaranteed by related party | 5,600,000 | ||||
Revolving line of credit | Western Line of Credit | |||||
Related Party Transactions | |||||
Revolving line of credit | $ 5,000,000 | ||||
Revolving line of credit | Legendary A-1 Bonds, LLC | |||||
Related Party Transactions | |||||
Revolving line of credit | $ 7,500,000 | $ 5,000,000 | |||
Advisory Agreement | Legendary Capital REIT III, LLC | |||||
Related Party Transactions | |||||
Distributions payable | $ 334,417 | 296,164 | |||
Advisory Agreement | Legendary Capital REIT III, LLC | |||||
Related Party Transactions | |||||
Term of advisory agreement | 10 years | ||||
Acquisition fee (as a percent) | 1.40% | ||||
Financing fee (as a percent) | 1.40% | ||||
Asset management fee (as a percent) | 0.75% | ||||
Refinancing fee (as a percent) | 0.75% | ||||
Real estate commissions, maximum (as a percent) | 5% | ||||
Annual guarantee fee (as a percent) | 1% | ||||
Annual subordinated performance fee (as a percent) | 20% | ||||
Cumulative return (as a percent) | 6% | ||||
Distributions (as a percent) | 5% | ||||
Distributions as a percent of the limited partners' capital contributions in event of liquidation, termination, merger or other cessation (as a percent) | 5% | ||||
Distributions as a percent of net proceeds from sale of properties in event of liquidation, termination, merger or other cessation (as a percent) | 20% | ||||
Reimbursement after termination of the Offering (as a percent) | 15% | ||||
Advisory Agreement | Legendary Capital REIT III, LLC | Maximum | |||||
Related Party Transactions | |||||
Disposal fee (as a percent) | 4% | ||||
Real estate commissions (as a percent) | 3% | ||||
Advisory Agreement | Legendary Capital REIT III, LLC | Minimum | |||||
Related Party Transactions | |||||
Disposal fee (as a percent) | 0% | ||||
Advisory Agreement | Legendary Capital REIT III, LLC | Corey Maple | |||||
Related Party Transactions | |||||
Distributions Paid | $ 40,123 | $ 46,205 | |||
Number of shares held by shareholders | shares | 57,319 | 57,319 | |||
Advisory Agreement | Legendary Capital REIT III, LLC | Norman Leslie | |||||
Related Party Transactions | |||||
Distributions Paid | $ 40,123 | $ 46,205 | |||
Number of shares held by shareholders | shares | 57,319 | 57,319 |
RELATED PARTY TRANSACTIONS - Le
RELATED PARTY TRANSACTIONS - Legendary Capital (Details) - Advisor And Affiliates - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Related Party Transactions | ||
Fees incurred | $ 5,588,089 | $ 3,422,973 |
Reimbursements incurred | 6,285,061 | 5,053,293 |
Acquisition Fees | ||
Related Party Transactions | ||
Fees incurred | 1,626,599 | 1,036,796 |
Financing Fees | ||
Related Party Transactions | ||
Fees incurred | 1,861,628 | 1,036,796 |
Asset Management Fees | ||
Related Party Transactions | ||
Fees incurred | 1,918,321 | 1,188,607 |
Performance Fees | ||
Related Party Transactions | ||
Fees incurred | 181,541 | 160,774 |
Offering Costs | ||
Related Party Transactions | ||
Reimbursements incurred | 2,256,081 | 1,739,185 |
General and Administrative | ||
Related Party Transactions | ||
Reimbursements incurred | 3,640,108 | 2,996,060 |
Sales and Marketing | ||
Related Party Transactions | ||
Reimbursements incurred | 321,821 | 211,691 |
Acquisition Costs | ||
Related Party Transactions | ||
Reimbursements incurred | $ 67,051 | $ 106,357 |
RELATED PARTY TRANSACTIONS - NH
RELATED PARTY TRANSACTIONS - NHS (Details) - NHS - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Related Party Transactions | ||
Fees incurred | $ 1,450,582 | $ 896,435 |
Fees payable | 199,688 | 88,594 |
Reimbursements incurred | 1,273,180 | 490,792 |
Reimbursements payable | 143,009 | 119,638 |
Management Fees. | ||
Related Party Transactions | ||
Fees incurred | 1,071,385 | 663,377 |
Fees payable | 145,733 | 66,407 |
Administrative Fees | ||
Related Party Transactions | ||
Fees incurred | 184,101 | 107,466 |
Fees payable | 22,791 | 9,461 |
Accounting Fees | ||
Related Party Transactions | ||
Fees incurred | 195,096 | 125,592 |
Fees payable | $ 31,164 | $ 12,726 |
RELATED PARTY TRANSACTIONS - On
RELATED PARTY TRANSACTIONS - One Rep Construction, LLC (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
One Rep Construction, LLC | ||
Related Party Transactions | ||
Fees payable | $ 8,138 | |
One Rep Construction, LLC | Construction Management fees | ||
Related Party Transactions | ||
Fees incurred | $ 61,739 | |
One Rep Construction, LLC | ||
Related Party Transactions | ||
Fees payable | $ 33,947 | |
One Rep Construction, LLC | Minimum | ||
Related Party Transactions | ||
Construction management fee (as a percent) | 6% | |
One Rep Construction, LLC | Maximum | ||
Related Party Transactions | ||
Construction management fee (as a percent) | 7% | |
One Rep Construction, LLC | Construction Management fees | ||
Related Party Transactions | ||
Fees incurred | $ 258,037 | |
Corey Maple | One Rep Construction, LLC | ||
Related Party Transactions | ||
Ownership interest by related party (as a percent) | 33.33% | |
Norman Leslie | One Rep Construction, LLC | ||
Related Party Transactions | ||
Ownership interest by related party (as a percent) | 33.33% | |
David Ekman | One Rep Construction, LLC | ||
Related Party Transactions | ||
Ownership interest by related party (as a percent) | 33.33% |
RELATED PARTY TRANSACTIONS - A-
RELATED PARTY TRANSACTIONS - A-1 Bonds (Details) $ in Millions | 12 Months Ended | |||
Dec. 31, 2022 USD ($) property | Dec. 15, 2022 USD ($) | Aug. 09, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Revolving line of credit | ||||
Related Party Transactions | ||||
Long-term Line of Credit | $ 7.4 | |||
Legendary A-1 Bonds, LLC | ||||
Related Party Transactions | ||||
Loan amount | $ 42.5 | $ 13 | ||
Number of hotel properties under which the loans are secured | property | 4 | |||
Annual principal payment of loan | $ 28.2 | |||
Legendary A-1 Bonds, LLC | Revolving line of credit | ||||
Related Party Transactions | ||||
Revolving line of credit | $ 7.5 | $ 5 |
FRANCHISE AGREEMENTS - (Details
FRANCHISE AGREEMENTS - (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Maximum | ||
Franchise Agreements | ||
Initial term of franchise agreement | 18 years | 18 years |
Royalty fee (as a percent) | 6% | 6% |
Program fee (as a percent) | 4% | 4% |
Initial franchise fee | $ 175,000 | $ 175,000 |
Minimum | ||
Franchise Agreements | ||
Initial term of franchise agreement | 10 years | 10 years |
Royalty fee (as a percent) | 5% | 5% |
Program fee (as a percent) | 3% | 3% |
Initial franchise fee | $ 50,000 | $ 50,000 |
STOCKHOLDERS' EQUITY - Common S
STOCKHOLDERS' EQUITY - Common Stock (Details) | 12 Months Ended | ||||
Dec. 31, 2022 Vote $ / shares shares | Dec. 31, 2021 USD ($) $ / shares shares | Jun. 30, 2021 $ / shares | Mar. 31, 2021 $ / shares | Jun. 01, 2018 USD ($) $ / shares | |
Stockholders' Equity | |||||
Common stock, shares authorized | shares | 900,000,000 | 900,000,000 | |||
Preferred stock, shares authorized | shares | 100,000,000 | 100,000,000 | |||
Common stock voting rights | Vote | 1 | ||||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | |||
Common stock, offering price | $ 10 | $ 10 | |||
Percentage of current share net asset value | 95% | ||||
Private offering | Common Stock | |||||
Stockholders' Equity | |||||
Common stock, par value (in dollars per share) | $ 0.01 | ||||
Common stock, offering price | $ 10 | ||||
Maximum offering | $ | $ 150,000,000 | $ 100,000,000 |
STOCKHOLDERS' EQUITY - Distribu
STOCKHOLDERS' EQUITY - Distributions (Details) - USD ($) | 3 Months Ended | 12 Months Ended | 18 Months Ended | ||||||||
Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2022 | |
STOCKHOLDERS' EQUITY | |||||||||||
Distributions Declared | $ 1,762,398 | $ 1,821,829 | $ 1,540,200 | $ 1,556,308 | $ 1,527,992 | $ 1,500,023 | $ 1,465,038 | $ 1,430,216 | $ 6,680,735 | $ 5,923,269 | |
Distribution Declared Per Share | $ 0.175 | $ 0.175 | $ 0.175 | $ 0.175 | $ 0.175 | $ 0.175 | $ 0.175 | $ 0.175 | $ 0.700 | $ 0.700 | |
Distributions paid in cash | $ 1,234,969 | $ 1,094,353 | $ 1,203,791 | $ 933,464 | $ 1,340,091 | $ 1,114,951 | $ 251,625 | $ 246,084 | $ 4,466,577 | $ 2,952,751 | |
Distributions reinvested | 433,293 | 452,923 | 526,159 | 567,240 | 551,391 | 1,223,741 | 1,107,080 | 1,081,828 | 1,979,615 | 3,964,040 | |
Total distributions | 1,668,262 | 1,547,276 | 1,729,950 | 1,500,704 | 1,891,482 | 2,338,692 | 1,358,705 | 1,327,912 | 6,446,192 | 6,916,791 | |
Net Cash Flows Provided By (Used In) Operations | $ (326,742) | $ 2,268,982 | $ 20,841 | $ (3,293,181) | $ (732,378) | $ 122,840 | $ 853,375 | $ (1,292,235) | $ (1,330,100) | $ (1,048,398) | |
Share price (in dollars per share) | $ 10 | $ 10 | |||||||||
Percentage of distribution in cash | 60% | 30% | 100% | ||||||||
Percentage of distribution in shares of common stock issued through DRIP | 40% | 70% |
STOCKHOLDERS' EQUITY - Share Re
STOCKHOLDERS' EQUITY - Share Repurchase Program (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Stockholders' Equity | ||
Notice period | 10 days | |
Number of shares repurchased | 135,248 | 88,088 |
Stock repurchased, original investment | $ 1,352,472 | $ 880,883 |
Value of stock repurchased | 1,347,319 | $ 856,605 |
Share repurchase plan, amount available for eligible repurchases | $ 1,931,014 | |
Repurchase Plan | ||
Stockholders' Equity | ||
Notice period | 10 days |
STOCKHOLDERS' EQUITY - Interval
STOCKHOLDERS' EQUITY - Interval Common Stock (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2022 | Jun. 30, 2021 | Mar. 31, 2021 | |
Stockholders' Equity | |||
Notice period | 10 days | ||
Common stock, offering price | $ 10 | $ 10 | |
Repurchase Plan | |||
Stockholders' Equity | |||
Minimum period of time holders of Interval Common Stock shares must be required to have held the Interval Common Stock shares to participate in the Repurchase Plan | 1 year | ||
Limit of repurchases of Interval Common Shares after Repurchase Reserve has been exhausted, percentage per calendar quarter | 1.25% | ||
Limit of repurchases of Interval Common Shares after Repurchase Reserve has been exhausted, percentage per calendar year of the Interval Shares Value | 5% | ||
Repurchase Reserve expressed as a percentage of the aggregate gross proceeds from the Company's private offering of Interval Shares | 20% | ||
Notice period | 10 days | ||
Repurchase Plan | Last day of same calendar quarter preceding year | |||
Stockholders' Equity | |||
Percentage of Aggregate Value of Interval Shares to be repurchased, threshold | 5% | ||
Repurchase Plan | Last day of preceding calendar quarter | |||
Stockholders' Equity | |||
Percentage of Aggregate Value of Interval Shares to be repurchased, threshold | 5% | ||
Interval Common Stock | |||
Stockholders' Equity | |||
Dividend rate (as a percent) | 86% | ||
Share price, dividend reinvestment plan (in dollars per share) | 9.50 | ||
Private offering | Interval Common Stock | |||
Stockholders' Equity | |||
Maximum number of shares authorized per the offering | 3,000,000 | ||
Maximum number of shares authorized per the offering at the sole direction of the Board of Directors | 6,000,000 | ||
Common stock, offering price | $ 10 |
STOCKHOLDERS' EQUITY - Noncontr
STOCKHOLDERS' EQUITY - Noncontrolling Interests (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Jun. 15, 2020 | |
Series GO LP Units | |||
Stockholders' Equity | |||
Non-voting partnership units, holding period required before distributions will be paid | 18 months | ||
Specified percentage of original GP unit capital contributions | 70% | ||
Participating amount, any period after December 31, 2020 | $ 1 | ||
Participating amount, any period after December 31, 2021 | 2 | ||
Participating amount, any period after December 31, 2022 | $ 3 | ||
Value of outstanding units | $ 14,688,392 | $ 12,498,527 | |
Series B LP Units | |||
Stockholders' Equity | |||
Value of outstanding units | $ (2,841,056) | (1,563,489) | |
Distributions (as a percent) | 5% | ||
Cumulative return (as a percent) | 6% | ||
Percentage of original contributions (as percent) | 5% | ||
Series T LP Units. | |||
Stockholders' Equity | |||
Value of outstanding units | $ 45,739,120 | 21,931,757 | |
Series T LP Units. | Minimum | |||
Stockholders' Equity | |||
Time period after issuance, for the conversion of Series T LP Units in to Common LP Units | 24 months | ||
Series T LP Units. | Maximum | |||
Stockholders' Equity | |||
Time period after issuance, for the conversion of Series T LP Units in to Common LP Units | 36 months | ||
Common LP Units | |||
Stockholders' Equity | |||
Value of outstanding units | $ 4,751,639 | $ 1,437,082 | |
Operating Partnership | Series B LP Units | |||
Stockholders' Equity | |||
Number of issued partnership units | 1,000 | ||
Private offering | Series GO LP Units | |||
Stockholders' Equity | |||
Maximum offering | $ 20,000,000 | ||
Maximum offering per the sole discretion of the General Partner | $ 30,000,000 | ||
Cumulative number of units issued since inception of the Offering (in shares) | 3,124,503 | ||
Cumulative gross proceeds from issuance of units since inception of the Offering | $ 21,500,000 | ||
Private offering | Operating Partnership | Common LP Units | |||
Stockholders' Equity | |||
Cumulative number of units issued since inception of the Offering (in shares) | 612,100 | ||
Units issued price (In dollars per share) | $ 10 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) | 1 Months Ended | 12 Months Ended | ||
Aug. 16, 2022 USD ($) room | Nov. 30, 2019 USD ($) property | Dec. 31, 2022 USD ($) room | Dec. 31, 2021 room | |
COMMITMENTS AND CONTINGENCIES | ||||
Number of guest rooms | room | 744 | 658 | ||
Legal matter | $ 0 | |||
Pennsylvania Hotel Properties | ||||
COMMITMENTS AND CONTINGENCIES | ||||
Real estate acquisition, additional consideration | $ 0 | |||
Pennsylvania Purchase Agreement | Pennsylvania Hotel Properties | ||||
COMMITMENTS AND CONTINGENCIES | ||||
Escrow deposit | $ 1,500,000 | |||
Number of real estate properties to be acquired | property | 3 | |||
Contractual consideration | $ 46,900,000 | |||
Sheraton Albuquerque Airport Contribution Agreement | ||||
COMMITMENTS AND CONTINGENCIES | ||||
Escrow deposit | $ 250,000 | |||
Sheraton Albuquerque Airport Contribution Agreement | Sheraton Albuquerque Airport Property | ||||
COMMITMENTS AND CONTINGENCIES | ||||
Threshold closing cost payable | $ 13,500,000 | |||
Sheraton Albuquerque Airport Contribution Agreement | Sheraton Hotel Albuquerque Airport, New Mexico | ||||
COMMITMENTS AND CONTINGENCIES | ||||
Number of guest rooms | room | 276 |
SUBSEQUENT EVENTS - Offering Pr
SUBSEQUENT EVENTS - Offering Price and NAV, Debt (Details) | 12 Months Ended | ||||||||||||||||||||||||||||
Jan. 16, 2024 USD ($) $ / shares | Dec. 06, 2023 USD ($) $ / shares | Nov. 07, 2023 USD ($) $ / shares | Oct. 24, 2023 USD ($) $ / shares | Oct. 09, 2023 USD ($) | Sep. 11, 2023 USD ($) $ / shares | Aug. 08, 2023 USD ($) $ / shares | Jul. 10, 2023 USD ($) $ / shares | Jun. 12, 2023 USD ($) $ / shares | May 15, 2023 USD ($) | May 09, 2023 USD ($) $ / shares | Apr. 18, 2023 USD ($) item shares | Apr. 07, 2023 USD ($) $ / shares shares | Apr. 04, 2023 USD ($) $ / shares | Mar. 07, 2023 USD ($) $ / shares | Mar. 06, 2023 USD ($) shares | Feb. 07, 2023 USD ($) $ / shares | Jan. 10, 2023 USD ($) $ / shares | Dec. 31, 2022 USD ($) room $ / shares shares | Dec. 31, 2021 USD ($) room $ / shares shares | Mar. 28, 2024 USD ($) | Jul. 31, 2023 shares | Jan. 12, 2023 USD ($) shares | Jan. 06, 2023 $ / shares | Jan. 05, 2023 $ / shares | Dec. 22, 2022 USD ($) | Jun. 30, 2021 $ / shares | May 12, 2021 USD ($) | Mar. 31, 2021 $ / shares | |
Subsequent Events | |||||||||||||||||||||||||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | |||||||||||||||||||||||||||
Distributions paid in cash | $ 5,258,437 | $ 2,952,751 | |||||||||||||||||||||||||||
Cash distributions declared | 7,591,400 | $ 5,931,569 | |||||||||||||||||||||||||||
Share price (in dollars per share) | $ / shares | $ 10 | $ 10 | |||||||||||||||||||||||||||
Outstanding balance | $ 192,651,404 | ||||||||||||||||||||||||||||
Number of guest rooms | room | 744 | 658 | |||||||||||||||||||||||||||
Number of shares repurchased | shares | 135,248 | 88,088 | |||||||||||||||||||||||||||
Series T LP Units. | Maximum | |||||||||||||||||||||||||||||
Subsequent Events | |||||||||||||||||||||||||||||
Time period after issuance, for the conversion of Series T LP Units in to Common LP Units | 36 months | ||||||||||||||||||||||||||||
A-1 Line of Credit | |||||||||||||||||||||||||||||
Subsequent Events | |||||||||||||||||||||||||||||
Revolving line of credit | $ 7,500,000 | $ 7,500,000 | |||||||||||||||||||||||||||
Western Line of Credit | |||||||||||||||||||||||||||||
Subsequent Events | |||||||||||||||||||||||||||||
Revolving line of credit | $ 5,000,000 | $ 5,000,000 | |||||||||||||||||||||||||||
Holiday Inn El Paso Loan | |||||||||||||||||||||||||||||
Subsequent Events | |||||||||||||||||||||||||||||
Loan amount | $ 7,900,000 | ||||||||||||||||||||||||||||
Subsequent Event | |||||||||||||||||||||||||||||
Subsequent Events | |||||||||||||||||||||||||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | ||||||||||||||||||||||||||||
Net asset value per share (In dollars per share) | $ / shares | 10.57 | $ 10 | |||||||||||||||||||||||||||
Distributions paid in cash | $ 420,543 | ||||||||||||||||||||||||||||
Distributions paid pursuant to the DRIP | $ 139,519 | ||||||||||||||||||||||||||||
Cash distributions declared | $ 471,271 | $ 471,485 | $ 473,526 | $ 451,660 | $ 451,509 | $ 443,331 | $ 442,403 | $ 441,771 | $ 441,332 | $ 432,563 | $ 434,351 | $ 434,653 | |||||||||||||||||
DRIP distributions declared | $ 108,117 | $ 106,956 | $ 103,722 | $ 124,848 | $ 123,716 | $ 130,236 | $ 127,081 | $ 126,101 | $ 125,684 | $ 132,987 | $ 129,458 | $ 126,842 | |||||||||||||||||
Common stock dividends per share declared on daily rate basis | $ / shares | $ 0.00191781 | $ 0.00191781 | $ 0.00191781 | $ 0.00191781 | $ 0.00191781 | $ 0.00191781 | $ 0.00191781 | $ 0.00191781 | $ 0.00191781 | $ 0.00191781 | $ 0.00191781 | $ 0.00191781 | $ 0.00191781 | ||||||||||||||||
Annual dividend rate (as a percent) | 7% | 7% | 7% | 7% | 7% | 7% | 7% | 7% | 7% | 7% | 7% | 7% | 7% | ||||||||||||||||
Share price (in dollars per share) | $ / shares | $ 10 | $ 10 | $ 10 | $ 10 | $ 10 | $ 10 | $ 10 | $ 10 | $ 10 | $ 10 | $ 10 | $ 10 | $ 10 | ||||||||||||||||
Subsequent Event | Common LP Units | |||||||||||||||||||||||||||||
Subsequent Events | |||||||||||||||||||||||||||||
Units issued price (In dollars per share) | $ / shares | 10.57 | ||||||||||||||||||||||||||||
Cash distributions paid for Operating Partnership units | $ 35,706 | ||||||||||||||||||||||||||||
Cash distributions declared for Operating Partnership units | $ 35,706 | $ 35,706 | $ 35,706 | $ 35,706 | $ 35,706 | $ 35,706 | $ 35,706 | $ 35,706 | $ 35,706 | $ 35,706 | $ 35,706 | $ 35,706 | |||||||||||||||||
Subsequent Event | Series GO II LP Units | |||||||||||||||||||||||||||||
Subsequent Events | |||||||||||||||||||||||||||||
Units issued price (In dollars per share) | $ / shares | $ 7.93 | ||||||||||||||||||||||||||||
Percentage of income sharing proportion | 25% | ||||||||||||||||||||||||||||
Purchase Price of Unit As A Percentage of Share Net Assets Value | 75% | ||||||||||||||||||||||||||||
Units issued and sold (in units) | shares | 197,606 | ||||||||||||||||||||||||||||
Proceeds from units issued and sold | $ 1,500,000 | ||||||||||||||||||||||||||||
Subsequent Event | Series GO LP Units | |||||||||||||||||||||||||||||
Subsequent Events | |||||||||||||||||||||||||||||
Cash distributions paid for Operating Partnership units | $ 83,099 | ||||||||||||||||||||||||||||
Cash distributions declared for Operating Partnership units | $ 182,262 | $ 182,164 | $ 181,841 | $ 175,525 | $ 160,212 | $ 138,225 | $ 125,067 | $ 113,949 | $ 102,500 | $ 93,696 | $ 90,200 | $ 86,988 | |||||||||||||||||
Subsequent Event | Series T LP Units. | |||||||||||||||||||||||||||||
Subsequent Events | |||||||||||||||||||||||||||||
Units issued price (In dollars per share) | $ / shares | $ 10.57 | ||||||||||||||||||||||||||||
Subsequent Event | A-1 Line of Credit | |||||||||||||||||||||||||||||
Subsequent Events | |||||||||||||||||||||||||||||
Revolving line of credit | $ 13,300,000 | $ 10,000,000 | |||||||||||||||||||||||||||
Subsequent Event | A-1 Line of Credit | Common LP Units | |||||||||||||||||||||||||||||
Subsequent Events | |||||||||||||||||||||||||||||
Partnership units held as collateral | shares | 1,330,000 | 1,000,000 | |||||||||||||||||||||||||||
Subsequent Event | Western Line of Credit | |||||||||||||||||||||||||||||
Subsequent Events | |||||||||||||||||||||||||||||
Revolving line of credit | $ 4,670,000 | ||||||||||||||||||||||||||||
Partnership units held as collateral | shares | 300,000 | ||||||||||||||||||||||||||||
Additional partnership units held as collateral | shares | 200,000 | ||||||||||||||||||||||||||||
Loan principal curtailment | $ 300,000 | ||||||||||||||||||||||||||||
Subsequent Event | NHS Loan | |||||||||||||||||||||||||||||
Subsequent Events | |||||||||||||||||||||||||||||
Interest rate (as a percent) | 7% | ||||||||||||||||||||||||||||
Loan amount | $ 600,000 | ||||||||||||||||||||||||||||
Operating partnership | shares | 60,000 | ||||||||||||||||||||||||||||
Subsequent Event | Original Fort Collins Loan Agreement | |||||||||||||||||||||||||||||
Subsequent Events | |||||||||||||||||||||||||||||
Interest rate (as a percent) | 7% | ||||||||||||||||||||||||||||
Number of Loans | item | 3 | ||||||||||||||||||||||||||||
Repayments of Debt | $ 11,500,000 | ||||||||||||||||||||||||||||
Subsequent Event | Original Fort Collins Loan Agreement | Tranche 1 | |||||||||||||||||||||||||||||
Subsequent Events | |||||||||||||||||||||||||||||
Penalty incurred on repayment of debt | $ 0 | ||||||||||||||||||||||||||||
Exit fee (as a percent) | 1.75% | ||||||||||||||||||||||||||||
Loan amount | $ 10,298,535 | ||||||||||||||||||||||||||||
Subsequent Event | Original Fort Collins Loan Agreement | Tranche 2 | |||||||||||||||||||||||||||||
Subsequent Events | |||||||||||||||||||||||||||||
Penalty incurred on repayment of debt | 0 | ||||||||||||||||||||||||||||
Loan amount | 700,000 | ||||||||||||||||||||||||||||
Subsequent Event | Original Fort Collins Loan Agreement | Tranche 3 | |||||||||||||||||||||||||||||
Subsequent Events | |||||||||||||||||||||||||||||
Loan amount | $ 501,465 | ||||||||||||||||||||||||||||
Subsequent Event | New Fort Collins Loan Agreement | |||||||||||||||||||||||||||||
Subsequent Events | |||||||||||||||||||||||||||||
Number of options to extend debt instrument term | item | 3 | ||||||||||||||||||||||||||||
Percentage of prepayment of outstanding principal amount | 10% | ||||||||||||||||||||||||||||
Prepayment period | 10 days | ||||||||||||||||||||||||||||
Prepayment period on initial term which includes prepayment fee | 25 months | ||||||||||||||||||||||||||||
Number of months of interest payments considered for prepayment fee calculation | 24 months | ||||||||||||||||||||||||||||
Debt instrument exit fee | $ 112,000 | ||||||||||||||||||||||||||||
Loan amount | $ 11,200,000 | ||||||||||||||||||||||||||||
Additional maturity term | 1 year | ||||||||||||||||||||||||||||
Subsequent Event | New Fort Collins Loan Agreement | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate [Member] | |||||||||||||||||||||||||||||
Subsequent Events | |||||||||||||||||||||||||||||
Basis spread (as a percent) | 6.25% | ||||||||||||||||||||||||||||
Subsequent Event | Holiday Inn El Paso Loan | |||||||||||||||||||||||||||||
Subsequent Events | |||||||||||||||||||||||||||||
Amount agreed to deposit by the borrower in FF&E reserve | $ 819,674 | ||||||||||||||||||||||||||||
Time period after issuance, for the conversion of Series T LP Units in to Common LP Units | 48 months | ||||||||||||||||||||||||||||
Outstanding balance | $ 7,600,000 | ||||||||||||||||||||||||||||
Repayments of Debt | $ 300,000 | ||||||||||||||||||||||||||||
Subsequent Event | Lakewood Loan Extended [Member] | |||||||||||||||||||||||||||||
Subsequent Events | |||||||||||||||||||||||||||||
Loan amount | $ 12,600,000 |
SUBSEQUENT EVENTS - SEC Settlem
SUBSEQUENT EVENTS - SEC Settlement, GO II LP Units, Litigation (Details) - USD ($) | 12 Months Ended | |||||||||||||||||||||
Aug. 28, 2023 | Apr. 07, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Jan. 16, 2024 | Dec. 06, 2023 | Nov. 20, 2023 | Nov. 07, 2023 | Oct. 24, 2023 | Sep. 11, 2023 | Aug. 08, 2023 | Jul. 10, 2023 | Jun. 12, 2023 | May 09, 2023 | Apr. 04, 2023 | Mar. 07, 2023 | Feb. 07, 2023 | Jan. 10, 2023 | Jan. 06, 2023 | Aug. 16, 2022 | Jun. 30, 2021 | Mar. 31, 2021 | |
Subsequent Events | ||||||||||||||||||||||
Share price (in dollars per share) | $ 10 | $ 10 | ||||||||||||||||||||
Number of shares repurchased | 135,248 | 88,088 | ||||||||||||||||||||
Contract termination | ||||||||||||||||||||||
Subsequent Events | ||||||||||||||||||||||
Escrow deposit | $ 150,000 | |||||||||||||||||||||
Amount deposited in escrow as earnest money | $ 300,000 | |||||||||||||||||||||
Subsequent Event | ||||||||||||||||||||||
Subsequent Events | ||||||||||||||||||||||
Share price (in dollars per share) | $ 10 | $ 10 | $ 10 | $ 10 | $ 10 | $ 10 | $ 10 | $ 10 | $ 10 | $ 10 | $ 10 | $ 10 | $ 10 | |||||||||
Subsequent Event | Advisor | ||||||||||||||||||||||
Subsequent Events | ||||||||||||||||||||||
SEC settlement, disgorgement | $ 463,900 | |||||||||||||||||||||
Subsequent Event | Common LP Units | ||||||||||||||||||||||
Subsequent Events | ||||||||||||||||||||||
Units issued price (In dollars per share) | $ 10.57 | |||||||||||||||||||||
Subsequent Event | Series GO II LP Units | ||||||||||||||||||||||
Subsequent Events | ||||||||||||||||||||||
Units issued price (In dollars per share) | $ 7.93 | |||||||||||||||||||||
Percentage of income sharing proportion | 25% | |||||||||||||||||||||
Purchase Price of Unit As A Percentage of Share Net Assets Value | 75% | |||||||||||||||||||||
Subsequent Event | Series T LP Units. | ||||||||||||||||||||||
Subsequent Events | ||||||||||||||||||||||
Units issued price (In dollars per share) | $ 10.57 | |||||||||||||||||||||
Subsequent Event | Settlement Agreement, November 2023 | ||||||||||||||||||||||
Subsequent Events | ||||||||||||||||||||||
Original contractual purchase price | $ 46,900,000 | |||||||||||||||||||||
Earnest money deposit required per the terms of the Purchase Agreement | 1,500,000 | |||||||||||||||||||||
Subsequent Event | Settlement Agreement, November 2023 | Central PA Equities 17, LLC, Central PA Equities 19, LLC, and Springwood - FHP LP | ||||||||||||||||||||||
Subsequent Events | ||||||||||||||||||||||
Earnest money deposit returned per terms of Settlement Agreement | $ 700,000 | |||||||||||||||||||||
Accrued interest on earnest money deposit, percentage allocated to each of the parties | 46.67% | |||||||||||||||||||||
Subsequent Event | Settlement Agreement, November 2023 | Operating Partnership | ||||||||||||||||||||||
Subsequent Events | ||||||||||||||||||||||
Earnest money deposit returned per terms of Settlement Agreement | $ 800,000 | |||||||||||||||||||||
Accrued interest on earnest money deposit, percentage allocated to each of the parties | 53.33% |
SUBSEQUENT EVENTS - Other (Deta
SUBSEQUENT EVENTS - Other (Details) | 12 Months Ended | ||||||||||||||||||||||
Jan. 16, 2024 USD ($) $ / shares | Dec. 06, 2023 USD ($) $ / shares | Nov. 07, 2023 USD ($) $ / shares | Oct. 24, 2023 USD ($) $ / shares | Sep. 11, 2023 USD ($) $ / shares | Aug. 28, 2023 USD ($) | Aug. 08, 2023 USD ($) $ / shares | Jul. 10, 2023 USD ($) $ / shares | Jun. 12, 2023 USD ($) $ / shares | May 09, 2023 USD ($) $ / shares | Apr. 07, 2023 USD ($) $ / shares shares | Apr. 04, 2023 USD ($) $ / shares | Mar. 07, 2023 USD ($) $ / shares | Feb. 07, 2023 USD ($) $ / shares | Jan. 31, 2023 USD ($) room | Jan. 10, 2023 USD ($) $ / shares | Dec. 31, 2022 USD ($) room $ / shares shares | Dec. 31, 2021 USD ($) room $ / shares shares | Dec. 31, 2023 USD ($) shares | Jan. 06, 2023 $ / shares | Jan. 05, 2023 $ / shares | Jun. 30, 2021 $ / shares | Mar. 31, 2021 $ / shares | |
Subsequent Events | |||||||||||||||||||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | |||||||||||||||||||||
Distributions paid in cash | $ 5,258,437 | $ 2,952,751 | |||||||||||||||||||||
Cash distributions declared | 7,591,400 | $ 5,931,569 | |||||||||||||||||||||
Share price (in dollars per share) | $ / shares | $ 10 | $ 10 | |||||||||||||||||||||
Outstanding balance | $ 192,651,404 | ||||||||||||||||||||||
Number of guest rooms | room | 744 | 658 | |||||||||||||||||||||
Number of shares repurchased | shares | 135,248 | 88,088 | |||||||||||||||||||||
Series T LP Units. | Maximum | |||||||||||||||||||||||
Subsequent Events | |||||||||||||||||||||||
Time period after issuance, for the conversion of Series T LP Units in to Common LP Units | 36 months | ||||||||||||||||||||||
Private offering | Series GO LP Units | |||||||||||||||||||||||
Subsequent Events | |||||||||||||||||||||||
Cumulative number of units issued since inception of the Offering (in shares) | shares | 3,124,503 | ||||||||||||||||||||||
Cumulative gross proceeds from issuance of units since inception of the Offering | $ 21,500,000 | ||||||||||||||||||||||
Subsequent Event | |||||||||||||||||||||||
Subsequent Events | |||||||||||||||||||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | ||||||||||||||||||||||
Net asset value per share (In dollars per share) | $ / shares | 10.57 | $ 10 | |||||||||||||||||||||
Distributions paid in cash | $ 420,543 | ||||||||||||||||||||||
Distributions paid pursuant to the DRIP | $ 139,519 | ||||||||||||||||||||||
Cash distributions declared | $ 471,271 | $ 471,485 | $ 473,526 | $ 451,660 | $ 451,509 | $ 443,331 | $ 442,403 | $ 441,771 | $ 441,332 | $ 432,563 | $ 434,351 | $ 434,653 | |||||||||||
DRIP distributions declared | $ 108,117 | $ 106,956 | $ 103,722 | $ 124,848 | $ 123,716 | $ 130,236 | $ 127,081 | $ 126,101 | $ 125,684 | $ 132,987 | $ 129,458 | $ 126,842 | |||||||||||
Common stock dividends per share declared on daily rate basis | $ / shares | $ 0.00191781 | $ 0.00191781 | $ 0.00191781 | $ 0.00191781 | $ 0.00191781 | $ 0.00191781 | $ 0.00191781 | $ 0.00191781 | $ 0.00191781 | $ 0.00191781 | $ 0.00191781 | $ 0.00191781 | $ 0.00191781 | ||||||||||
Annual dividend rate (as a percent) | 7% | 7% | 7% | 7% | 7% | 7% | 7% | 7% | 7% | 7% | 7% | 7% | 7% | ||||||||||
Share price (in dollars per share) | $ / shares | $ 10 | $ 10 | $ 10 | $ 10 | $ 10 | $ 10 | $ 10 | $ 10 | $ 10 | $ 10 | $ 10 | $ 10 | $ 10 | ||||||||||
Subsequent Event | Aggieland Boutique Hotel | College Station Voco Contribution Agreement | |||||||||||||||||||||||
Subsequent Events | |||||||||||||||||||||||
Escrow deposit | $ 50,000 | ||||||||||||||||||||||
Number of guest rooms | room | 166 | ||||||||||||||||||||||
Property under contract, aggregate consideration to be transferred | $ 18,500,000 | ||||||||||||||||||||||
Subsequent Event | Advisor | |||||||||||||||||||||||
Subsequent Events | |||||||||||||||||||||||
SEC settlement, disgorgement | $ 463,900 | ||||||||||||||||||||||
Subsequent Event | Common LP Units | |||||||||||||||||||||||
Subsequent Events | |||||||||||||||||||||||
Units issued price (In dollars per share) | $ / shares | 10.57 | ||||||||||||||||||||||
Cash distributions paid for Operating Partnership units | $ 35,706 | ||||||||||||||||||||||
Cash distributions declared for Operating Partnership units | $ 35,706 | $ 35,706 | $ 35,706 | $ 35,706 | $ 35,706 | $ 35,706 | $ 35,706 | $ 35,706 | $ 35,706 | $ 35,706 | $ 35,706 | $ 35,706 | |||||||||||
Subsequent Event | Series GO II LP Units | |||||||||||||||||||||||
Subsequent Events | |||||||||||||||||||||||
Units issued price (In dollars per share) | $ / shares | $ 7.93 | ||||||||||||||||||||||
Percentage of income sharing proportion | 25% | ||||||||||||||||||||||
Purchase Price of Unit As A Percentage of Share Net Assets Value | 75% | ||||||||||||||||||||||
Units issued and sold (in units) | shares | 197,606 | ||||||||||||||||||||||
Proceeds from units issued and sold | $ 1,500,000 | ||||||||||||||||||||||
Subsequent Event | Series GO LP Units | |||||||||||||||||||||||
Subsequent Events | |||||||||||||||||||||||
Cash distributions paid for Operating Partnership units | $ 83,099 | ||||||||||||||||||||||
Cash distributions declared for Operating Partnership units | $ 182,262 | $ 182,164 | $ 181,841 | $ 175,525 | $ 160,212 | $ 138,225 | $ 125,067 | $ 113,949 | $ 102,500 | $ 93,696 | $ 90,200 | $ 86,988 | |||||||||||
Subsequent Event | Series T LP Units. | |||||||||||||||||||||||
Subsequent Events | |||||||||||||||||||||||
Units issued price (In dollars per share) | $ / shares | $ 10.57 | ||||||||||||||||||||||
Subsequent Event | Private offering | Common Stock | |||||||||||||||||||||||
Subsequent Events | |||||||||||||||||||||||
Cumulative number of shares issued since inception of the Offering | shares | 10,254,110 | ||||||||||||||||||||||
Cumulative number of shares issued pursuant to the DRIP (in shares) | shares | 1,178,323 | ||||||||||||||||||||||
Cumulative gross proceeds from issuance of stock since inception of the Offering | $ 100,300,000 |
SCHEDULE III - Real Estate an_2
SCHEDULE III - Real Estate and Accumulated Depreciation - Changes in Real Estate and Accumulated Depreciation (Details) | 12 Months Ended | |
Dec. 31, 2022 USD ($) room | Dec. 31, 2021 USD ($) | |
Real Estate and Accumulated Depreciation. | ||
Number of Rooms | room | 2,261 | |
Encumbrances | $ 180,271,249 | |
Initial Cost | ||
Land and Land Improvements | 39,888,121 | |
Building, Building Improvements and FF&E | 259,252,614 | |
Costs Capitalized Subsequent to Acquisition | ||
Building, Building Improvements and FF&E | 8,525,794 | |
Gross Amount at End of Year | ||
Land and Land Improvements | 39,898,232 | |
Building, Building Improvements and FF&E | 267,778,408 | |
Total | 307,676,640 | $ 178,912,503 |
Accumulated Depreciation | (17,458,998) | $ (9,487,728) |
Aggregate cost for federal income tax purposes | $ 307,100,000 | |
Holiday Inn Express (the "Cedar Rapids Property") | ||
Real Estate and Accumulated Depreciation. | ||
Number of Rooms | room | 83 | |
Encumbrances | $ 5,799,804 | |
Initial Cost | ||
Land and Land Improvements | 1,536,966 | |
Building, Building Improvements and FF&E | 6,321,367 | |
Costs Capitalized Subsequent to Acquisition | ||
Building, Building Improvements and FF&E | 910,576 | |
Gross Amount at End of Year | ||
Land and Land Improvements | 1,547,077 | |
Building, Building Improvements and FF&E | 7,231,943 | |
Total | 8,779,020 | |
Accumulated Depreciation | $ (1,231,464) | |
Hampton Inn & Suites(the "Pineville Property") | ||
Real Estate and Accumulated Depreciation. | ||
Number of Rooms | room | 111 | |
Encumbrances | $ 8,580,586 | |
Initial Cost | ||
Land and Land Improvements | 2,014,533 | |
Building, Building Improvements and FF&E | 12,327,740 | |
Costs Capitalized Subsequent to Acquisition | ||
Building, Building Improvements and FF&E | 1,267,174 | |
Gross Amount at End of Year | ||
Land and Land Improvements | 2,014,533 | |
Building, Building Improvements and FF&E | 13,594,914 | |
Total | 15,609,447 | |
Accumulated Depreciation | $ (1,769,083) | |
Hampton Inn (the "Eagan Property") | ||
Real Estate and Accumulated Depreciation. | ||
Number of Rooms | room | 122 | |
Encumbrances | $ 9,063,528 | |
Initial Cost | ||
Land and Land Improvements | 1,691,813 | |
Building, Building Improvements and FF&E | 12,536,520 | |
Costs Capitalized Subsequent to Acquisition | ||
Building, Building Improvements and FF&E | 279,950 | |
Gross Amount at End of Year | ||
Land and Land Improvements | 1,691,813 | |
Building, Building Improvements and FF&E | 12,816,470 | |
Total | 14,508,283 | |
Accumulated Depreciation | $ (1,808,653) | |
Home2 Suites (the "Prattville Property") | ||
Real Estate and Accumulated Depreciation. | ||
Number of Rooms | room | 90 | |
Encumbrances | $ 9,199,041 | |
Initial Cost | ||
Land and Land Improvements | 1,691,954 | |
Building, Building Improvements and FF&E | 13,414,060 | |
Costs Capitalized Subsequent to Acquisition | ||
Building, Building Improvements and FF&E | 111,532 | |
Gross Amount at End of Year | ||
Land and Land Improvements | 1,691,954 | |
Building, Building Improvements and FF&E | 13,525,592 | |
Total | 15,217,546 | |
Accumulated Depreciation | $ (1,639,694) | |
Home2 Suites (the "Lubbock Home2 Property") | ||
Real Estate and Accumulated Depreciation. | ||
Number of Rooms | room | 100 | |
Encumbrances | $ 7,343,948 | |
Initial Cost | ||
Land and Land Improvements | 803,229 | |
Building, Building Improvements and FF&E | 13,906,502 | |
Costs Capitalized Subsequent to Acquisition | ||
Building, Building Improvements and FF&E | 903,900 | |
Gross Amount at End of Year | ||
Land and Land Improvements | 803,229 | |
Building, Building Improvements and FF&E | 14,810,402 | |
Total | 15,613,631 | |
Accumulated Depreciation | $ (1,615,279) | |
Fairfield Inn & Suites (the "Lubbock Home2 Property") | ||
Real Estate and Accumulated Depreciation. | ||
Number of Rooms | room | 101 | |
Encumbrances | $ 8,971,430 | |
Initial Cost | ||
Land and Land Improvements | 982,934 | |
Building, Building Improvements and FF&E | 15,261,162 | |
Costs Capitalized Subsequent to Acquisition | ||
Building, Building Improvements and FF&E | 72,570 | |
Gross Amount at End of Year | ||
Land and Land Improvements | 982,934 | |
Building, Building Improvements and FF&E | 15,333,732 | |
Total | 16,316,666 | |
Accumulated Depreciation | $ (1,872,497) | |
Homewood Suites (the "Southaven Property") | ||
Real Estate and Accumulated Depreciation. | ||
Number of Rooms | room | 99 | |
Encumbrances | $ 13,007,706 | |
Initial Cost | ||
Land and Land Improvements | 1,593,232 | |
Building, Building Improvements and FF&E | 19,351,858 | |
Costs Capitalized Subsequent to Acquisition | ||
Building, Building Improvements and FF&E | 163,033 | |
Gross Amount at End of Year | ||
Land and Land Improvements | 1,593,232 | |
Building, Building Improvements and FF&E | 19,514,891 | |
Total | 21,108,123 | |
Accumulated Depreciation | $ (1,915,279) | |
Courtyard by Marriott (the "Aurora Property") | ||
Real Estate and Accumulated Depreciation. | ||
Number of Rooms | room | 141 | |
Encumbrances | $ 15,000,000 | |
Initial Cost | ||
Land and Land Improvements | 4,400,098 | |
Building, Building Improvements and FF&E | 19,668,031 | |
Costs Capitalized Subsequent to Acquisition | ||
Building, Building Improvements and FF&E | 263,625 | |
Gross Amount at End of Year | ||
Land and Land Improvements | 4,400,098 | |
Building, Building Improvements and FF&E | 19,931,656 | |
Total | 24,331,754 | |
Accumulated Depreciation | $ (1,389,927) | |
Holiday Inn (the "EI Paso Property") | ||
Real Estate and Accumulated Depreciation. | ||
Number of Rooms | room | 175 | |
Encumbrances | $ 7,900,000 | |
Initial Cost | ||
Land and Land Improvements | 1,747,553 | |
Building, Building Improvements and FF&E | 8,913,467 | |
Costs Capitalized Subsequent to Acquisition | ||
Building, Building Improvements and FF&E | 458,343 | |
Gross Amount at End of Year | ||
Land and Land Improvements | 1,747,553 | |
Building, Building Improvements and FF&E | 9,371,810 | |
Total | 11,119,363 | |
Accumulated Depreciation | $ (786,348) | |
Hilton Garden Inn (the "Houston Property") | ||
Real Estate and Accumulated Depreciation. | ||
Number of Rooms | room | 182 | |
Encumbrances | $ 13,947,218 | |
Initial Cost | ||
Land and Land Improvements | 3,168,376 | |
Building, Building Improvements and FF&E | 17,659,977 | |
Costs Capitalized Subsequent to Acquisition | ||
Building, Building Improvements and FF&E | 3,432,964 | |
Gross Amount at End of Year | ||
Land and Land Improvements | 3,168,376 | |
Building, Building Improvements and FF&E | 21,092,941 | |
Total | 24,261,317 | |
Accumulated Depreciation | $ (803,339) | |
Sheraton Hotel (the "Northbrook Property") | ||
Real Estate and Accumulated Depreciation. | ||
Number of Rooms | room | 160 | |
Encumbrances | $ 3,766,639 | |
Initial Cost | ||
Land and Land Improvements | 2,856,747 | |
Building, Building Improvements and FF&E | 16,859,016 | |
Costs Capitalized Subsequent to Acquisition | ||
Building, Building Improvements and FF&E | (38,350) | |
Gross Amount at End of Year | ||
Land and Land Improvements | 2,856,747 | |
Building, Building Improvements and FF&E | 16,820,666 | |
Total | 19,677,413 | |
Accumulated Depreciation | $ (555,424) | |
Hampton Inn & Suites (The "Fargo Property") | ||
Real Estate and Accumulated Depreciation. | ||
Number of Rooms | room | 90 | |
Encumbrances | $ 7,275,480 | |
Initial Cost | ||
Land and Land Improvements | 2,041,684 | |
Building, Building Improvements and FF&E | 9,700,538 | |
Costs Capitalized Subsequent to Acquisition | ||
Building, Building Improvements and FF&E | 212,639 | |
Gross Amount at End of Year | ||
Land and Land Improvements | 2,041,684 | |
Building, Building Improvements and FF&E | 9,913,177 | |
Total | 11,954,861 | |
Accumulated Depreciation | $ (286,677) | |
Courtyard by Marriott (the "El Paso Property") | ||
Real Estate and Accumulated Depreciation. | ||
Number of Rooms | room | 90 | |
Encumbrances | $ 9,990,000 | |
Initial Cost | ||
Land and Land Improvements | 1,856,428 | |
Building, Building Improvements and FF&E | 13,596,806 | |
Costs Capitalized Subsequent to Acquisition | ||
Building, Building Improvements and FF&E | 98,307 | |
Gross Amount at End of Year | ||
Land and Land Improvements | 1,856,428 | |
Building, Building Improvements and FF&E | 13,695,113 | |
Total | 15,551,541 | |
Accumulated Depreciation | $ (459,922) | |
Fairfield Inn & Suites (the "Lakewood Property") | ||
Real Estate and Accumulated Depreciation. | ||
Number of Rooms | room | 142 | |
Encumbrances | $ 13,845,000 | |
Initial Cost | ||
Land and Land Improvements | 2,091,051 | |
Building, Building Improvements and FF&E | 17,571,066 | |
Costs Capitalized Subsequent to Acquisition | ||
Building, Building Improvements and FF&E | 283,590 | |
Gross Amount at End of Year | ||
Land and Land Improvements | 2,091,051 | |
Building, Building Improvements and FF&E | 17,854,656 | |
Total | 19,945,707 | |
Accumulated Depreciation | $ (309,795) | |
Residence Inn (The "For Collins Property") | ||
Real Estate and Accumulated Depreciation. | ||
Number of Rooms | room | 113 | |
Encumbrances | $ 11,500,000 | |
Initial Cost | ||
Land and Land Improvements | 2,402,288 | |
Building, Building Improvements and FF&E | 13,943,721 | |
Costs Capitalized Subsequent to Acquisition | ||
Building, Building Improvements and FF&E | 32,807 | |
Gross Amount at End of Year | ||
Land and Land Improvements | 2,402,288 | |
Building, Building Improvements and FF&E | 13,976,528 | |
Total | 16,378,816 | |
Accumulated Depreciation | $ (173,130) | |
Hilton Garden Inn, (the "El Paso Property") | ||
Real Estate and Accumulated Depreciation. | ||
Number of Rooms | room | 153 | |
Encumbrances | $ 12,613,869 | |
Initial Cost | ||
Land and Land Improvements | 4,862,172 | |
Building, Building Improvements and FF&E | 17,600,000 | |
Costs Capitalized Subsequent to Acquisition | ||
Building, Building Improvements and FF&E | 45,608 | |
Gross Amount at End of Year | ||
Land and Land Improvements | 4,862,172 | |
Building, Building Improvements and FF&E | 17,645,608 | |
Total | 22,507,780 | |
Accumulated Depreciation | $ (471,491) | |
Hilton Garden Inn (The "Pineville Property") | ||
Real Estate and Accumulated Depreciation. | ||
Number of Rooms | room | 113 | |
Encumbrances | $ 7,020,000 | |
Initial Cost | ||
Land and Land Improvements | 1,891,718 | |
Building, Building Improvements and FF&E | 9,385,430 | |
Costs Capitalized Subsequent to Acquisition | ||
Building, Building Improvements and FF&E | 18,180 | |
Gross Amount at End of Year | ||
Land and Land Improvements | 1,891,718 | |
Building, Building Improvements and FF&E | 9,403,611 | |
Total | 11,295,329 | |
Accumulated Depreciation | $ (150,613) | |
Hilton Garden Inn (the "Charlotte Property") | ||
Real Estate and Accumulated Depreciation. | ||
Number of Rooms | room | 112 | |
Encumbrances | $ 9,805,000 | |
Initial Cost | ||
Land and Land Improvements | 1,622,610 | |
Building, Building Improvements and FF&E | 14,233,777 | |
Costs Capitalized Subsequent to Acquisition | ||
Building, Building Improvements and FF&E | 4,966 | |
Gross Amount at End of Year | ||
Land and Land Improvements | 1,622,610 | |
Building, Building Improvements and FF&E | 14,238,743 | |
Total | 15,861,353 | |
Accumulated Depreciation | $ (201,003) | |
Holiday Inn Express (the "Wichita Hotel Property") | ||
Real Estate and Accumulated Depreciation. | ||
Number of Rooms | room | 84 | |
Encumbrances | $ 5,642,000 | |
Initial Cost | ||
Land and Land Improvements | 632,735 | |
Building, Building Improvements and FF&E | 7,001,575 | |
Costs Capitalized Subsequent to Acquisition | ||
Building, Building Improvements and FF&E | 4,380 | |
Gross Amount at End of Year | ||
Land and Land Improvements | 632,735 | |
Building, Building Improvements and FF&E | 7,005,955 | |
Total | 7,638,690 | |
Accumulated Depreciation | $ (19,380) | |
Minimum | Holiday Inn Express (the "Cedar Rapids Property") | ||
Gross Amount at End of Year | ||
Depreciable Lives | 3 years | |
Minimum | Hampton Inn & Suites(the "Pineville Property") | ||
Gross Amount at End of Year | ||
Depreciable Lives | 3 years | |
Minimum | Hampton Inn (the "Eagan Property") | ||
Gross Amount at End of Year | ||
Depreciable Lives | 3 years | |
Minimum | Home2 Suites (the "Prattville Property") | ||
Gross Amount at End of Year | ||
Depreciable Lives | 3 years | |
Minimum | Home2 Suites (the "Lubbock Home2 Property") | ||
Gross Amount at End of Year | ||
Depreciable Lives | 3 years | |
Minimum | Fairfield Inn & Suites (the "Lubbock Home2 Property") | ||
Gross Amount at End of Year | ||
Depreciable Lives | 3 years | |
Minimum | Homewood Suites (the "Southaven Property") | ||
Gross Amount at End of Year | ||
Depreciable Lives | 3 years | |
Minimum | Courtyard by Marriott (the "Aurora Property") | ||
Gross Amount at End of Year | ||
Depreciable Lives | 3 years | |
Minimum | Holiday Inn (the "EI Paso Property") | ||
Gross Amount at End of Year | ||
Depreciable Lives | 3 years | |
Minimum | Hilton Garden Inn (the "Houston Property") | ||
Gross Amount at End of Year | ||
Depreciable Lives | 3 years | |
Minimum | Sheraton Hotel (the "Northbrook Property") | ||
Gross Amount at End of Year | ||
Depreciable Lives | 3 years | |
Minimum | Hampton Inn & Suites (The "Fargo Property") | ||
Gross Amount at End of Year | ||
Depreciable Lives | 3 years | |
Minimum | Courtyard by Marriott (the "El Paso Property") | ||
Gross Amount at End of Year | ||
Depreciable Lives | 3 years | |
Minimum | Fairfield Inn & Suites (the "Lakewood Property") | ||
Gross Amount at End of Year | ||
Depreciable Lives | 3 years | |
Minimum | Residence Inn (The "For Collins Property") | ||
Gross Amount at End of Year | ||
Depreciable Lives | 3 years | |
Minimum | Hilton Garden Inn, (the "El Paso Property") | ||
Gross Amount at End of Year | ||
Depreciable Lives | 3 years | |
Minimum | Hilton Garden Inn (The "Pineville Property") | ||
Gross Amount at End of Year | ||
Depreciable Lives | 3 years | |
Minimum | Hilton Garden Inn (the "Charlotte Property") | ||
Gross Amount at End of Year | ||
Depreciable Lives | 3 years | |
Minimum | Holiday Inn Express (the "Wichita Hotel Property") | ||
Gross Amount at End of Year | ||
Depreciable Lives | 3 years | |
Maximum | Holiday Inn Express (the "Cedar Rapids Property") | ||
Gross Amount at End of Year | ||
Depreciable Lives | 40 years | |
Maximum | Hampton Inn & Suites(the "Pineville Property") | ||
Gross Amount at End of Year | ||
Depreciable Lives | 40 years | |
Maximum | Hampton Inn (the "Eagan Property") | ||
Gross Amount at End of Year | ||
Depreciable Lives | 40 years | |
Maximum | Home2 Suites (the "Prattville Property") | ||
Gross Amount at End of Year | ||
Depreciable Lives | 40 years | |
Maximum | Home2 Suites (the "Lubbock Home2 Property") | ||
Gross Amount at End of Year | ||
Depreciable Lives | 40 years | |
Maximum | Fairfield Inn & Suites (the "Lubbock Home2 Property") | ||
Gross Amount at End of Year | ||
Depreciable Lives | 40 years | |
Maximum | Homewood Suites (the "Southaven Property") | ||
Gross Amount at End of Year | ||
Depreciable Lives | 40 years | |
Maximum | Courtyard by Marriott (the "Aurora Property") | ||
Gross Amount at End of Year | ||
Depreciable Lives | 40 years | |
Maximum | Holiday Inn (the "EI Paso Property") | ||
Gross Amount at End of Year | ||
Depreciable Lives | 40 years | |
Maximum | Hilton Garden Inn (the "Houston Property") | ||
Gross Amount at End of Year | ||
Depreciable Lives | 40 years | |
Maximum | Sheraton Hotel (the "Northbrook Property") | ||
Gross Amount at End of Year | ||
Depreciable Lives | 40 years | |
Maximum | Hampton Inn & Suites (The "Fargo Property") | ||
Gross Amount at End of Year | ||
Depreciable Lives | 40 years | |
Maximum | Courtyard by Marriott (the "El Paso Property") | ||
Gross Amount at End of Year | ||
Depreciable Lives | 40 years | |
Maximum | Fairfield Inn & Suites (the "Lakewood Property") | ||
Gross Amount at End of Year | ||
Depreciable Lives | 40 years | |
Maximum | Residence Inn (The "For Collins Property") | ||
Gross Amount at End of Year | ||
Depreciable Lives | 40 years | |
Maximum | Hilton Garden Inn, (the "El Paso Property") | ||
Gross Amount at End of Year | ||
Depreciable Lives | 40 years | |
Maximum | Hilton Garden Inn (The "Pineville Property") | ||
Gross Amount at End of Year | ||
Depreciable Lives | 40 years | |
Maximum | Hilton Garden Inn (the "Charlotte Property") | ||
Gross Amount at End of Year | ||
Depreciable Lives | 40 years | |
Maximum | Holiday Inn Express (the "Wichita Hotel Property") | ||
Gross Amount at End of Year | ||
Depreciable Lives | 40 years |
SCHEDULE III- Real Estate and A
SCHEDULE III- Real Estate and Accumulated Depreciation - Investment in Real Estate and Accumulated Depreciation (Details) | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Investment in Real Estate: | |
Balance at beginning of period | $ 178,912,503 |
Acquisitions | 120,433,600 |
Improvements | 8,330,537 |
Balance at end of period | 307,676,640 |
Accumulated Depreciation: | |
Balance at beginning of period | (9,487,728) |
Depreciation expense | (7,995,492) |
Asset write-offs | 24,222 |
Balance at end of period | $ (17,458,998) |