Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2023 | Aug. 23, 2024 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
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 Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 9,997,390 | |
Entity Central Index Key | 0001745032 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Assets | ||
Investment in hotel properties, net of accumulated depreciation and amortization of $25,130,902 and $17,512,882 | $ 288,679,525 | $ 290,217,642 |
Cash and cash equivalents | 4,470,530 | 6,193,449 |
Restricted cash | 10,796,560 | 10,732,832 |
Accounts receivable, net | 1,511,116 | 1,468,732 |
Franchise fees, net | 2,233,322 | 2,363,114 |
Prepaid expenses and other assets | 2,436,798 | 1,409,993 |
Total Assets (variable interest entities - $23,062,031 and $24,924,626) | 310,127,851 | 312,385,762 |
Liabilities and Equity | ||
Debt, net | 192,848,681 | 189,678,547 |
Finance lease liabilities | 13,058,478 | 13,026,849 |
Accounts payable | 4,508,798 | 3,034,148 |
Accrued expenses | 5,453,363 | 5,853,519 |
Distributions payable | 787,738 | 678,867 |
Total liabilities (variable interest entities - $17,664,175 and $18,390,067) | 232,265,592 | 223,393,216 |
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; 9,892,637 and 9,607,463 shares issued and outstanding | 98,925 | 96,074 |
Additional paid-in capital | 96,658,424 | 93,798,070 |
Accumulated deficit | (78,251,439) | (67,239,693) |
Total stockholders' equity | 18,505,910 | 26,654,451 |
Total equity | 77,862,259 | 88,992,546 |
Total Liabilities and Equity | 310,127,851 | 312,385,762 |
Related Party | ||
Liabilities and Equity | ||
Other liabilities | 10,612,122 | 6,277,432 |
Nonrelated Party | ||
Liabilities and Equity | ||
Other liabilities | 4,996,412 | 4,843,854 |
Series B LP Units | ||
Equity | ||
Non-controlling interest | (3,404,932) | (2,841,056) |
Series GO LP Units | ||
Equity | ||
Non-controlling interest | 12,655,262 | 14,688,392 |
Series GO 2 LP Units | ||
Equity | ||
Non-controlling interest | 205,121 | |
Series T LP Units. | ||
Equity | ||
Non-controlling interest | 45,739,120 | 45,739,120 |
Common LP Units | ||
Equity | ||
Non-controlling interest | $ 4,161,778 | $ 4,751,639 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Accumulated depreciation and amortization | $ 25,130,902 | $ 17,512,882 |
Assets | 310,127,851 | 312,385,762 |
Liabilities | $ 232,265,592 | $ 223,393,216 |
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 | 9,892,637 | 9,607,463 |
Common stock, shares outstanding | 9,892,637 | 9,607,463 |
Variable interest entities | ||
Accumulated depreciation and amortization | $ 1,086,350 | $ 471,491 |
Assets | 23,062,031 | 24,924,626 |
Liabilities | $ 17,664,175 | $ 18,390,067 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Revenues | ||||
Total revenue | $ 20,939,757 | $ 15,933,950 | $ 57,965,868 | $ 37,561,177 |
Expenses | ||||
Property operations | 9,153,250 | 7,450,413 | 26,357,159 | 18,072,890 |
General and administrative | 2,721,467 | 3,055,244 | 7,579,924 | 7,675,667 |
Sales and marketing | 1,308,458 | 965,647 | 3,671,850 | 2,361,157 |
Franchise fees | 1,854,040 | 1,360,965 | 5,009,775 | 3,259,689 |
Management fees | 1,357,487 | 1,126,514 | 3,939,314 | 2,855,302 |
Acquisition expense | 108,467 | 707,639 | 125,691 | 714,943 |
Depreciation and amortization | 2,501,563 | 2,238,046 | 7,633,945 | 5,557,640 |
Total expenses | 19,004,732 | 16,904,468 | 54,317,658 | 40,497,288 |
Other (Expense) Income | ||||
Other (expense) income, net | (27,615) | 3,429,368 | 1,383,302 | 2,971,319 |
Interest expense | (3,622,611) | (2,998,008) | (11,050,307) | (7,644,072) |
Total other (expense) income | (3,650,226) | 431,360 | (9,667,005) | (4,672,753) |
Net Loss Before Income Taxes | (1,715,201) | (539,158) | (6,018,795) | (7,608,864) |
Income tax (expense) benefit | 21,137 | (6,215,577) | 122,130 | (5,788,557) |
Net Loss | (1,694,064) | (6,754,735) | (5,896,665) | (13,397,421) |
Net Loss Attributable to Common Stockholders | $ (1,265,831) | $ (5,027,981) | $ (4,376,215) | $ (9,878,573) |
Basic Net Loss Per Share of Common Stock | $ (0.13) | $ (0.54) | $ (0.45) | $ (1.11) |
Diluted Net Loss Per Share of Common Stock | $ (0.45) | $ (1.11) | ||
Weighted-average Shares of Common Stock Outstanding, Basic | 9,857,876 | 9,340,058 | 9,753,255 | 8,905,257 |
Weighted-average Shares of Common Stock Outstanding, Diluted | 9,753,255 | 8,905,257 | ||
Series B LP Units | ||||
Other (Expense) Income | ||||
Net loss attributable to non-controlling interest | $ (84,306) | $ (337,366) | $ (294,375) | $ (669,151) |
Series GO LP Units | ||||
Other (Expense) Income | ||||
Net loss attributable to non-controlling interest | (264,831) | (1,081,735) | (944,104) | (2,218,686) |
Series GO 2 LP Units | ||||
Other (Expense) Income | ||||
Net loss attributable to non-controlling interest | (3,776) | (13,461) | ||
Common LP Units | ||||
Other (Expense) Income | ||||
Net loss attributable to non-controlling interest | (75,320) | (307,653) | (268,510) | (631,011) |
Room | ||||
Revenues | ||||
Total revenue | 19,800,092 | 15,153,864 | 54,450,185 | 35,730,226 |
Other | ||||
Revenues | ||||
Total revenue | $ 1,139,665 | $ 780,086 | $ 3,515,683 | $ 1,830,951 |
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 GO 2 LP Units | Non-controlling Interest Series T LP Units. | Non-controlling Interest Common LP Units | Total |
Balance - Beginning 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 - Beginning (Shares) at Dec. 31, 2021 | 8,348,310 | |||||||||
Issuance of common stock | $ 2,754 | 2,657,100 | 2,659,854 | 2,659,854 | ||||||
Issuance of common stock (Shares) | 275,378 | |||||||||
Issuance of stock-based compensation | $ 15 | 14,985 | 15,000 | 15,000 | ||||||
Issuance of stock-based compensation (in shares) | 1,500 | |||||||||
Issuance of GO Units | 6,138,291 | 6,138,291 | ||||||||
Issuance of T Units | 9,729,291 | 9,729,291 | ||||||||
Issuance of Common LP Units | 4,600,000 | 4,600,000 | ||||||||
Offering costs | (730,836) | (730,836) | (463,548) | (1,194,384) | ||||||
Distributions declared ($0.175 per share) | (1,478,078) | (1,478,078) | (78,230) | (98,783) | (1,655,091) | |||||
Distributions reinvested | $ 597 | 566,643 | 567,240 | 567,240 | ||||||
Distributions reinvested (in shares) | 59,709 | |||||||||
Redemptions | $ (643) | (637,531) | (638,174) | (638,174) | ||||||
Redemptions (in shares) | (64,306) | |||||||||
Net loss | (2,522,697) | (2,522,697) | (175,006) | (624,093) | (178,639) | (3,500,435) | ||||
Balance - Ending at Mar. 31, 2022 | $ 86,204 | 84,257,191 | (48,318,563) | 36,024,832 | (1,816,725) | 17,549,177 | 31,661,048 | 5,759,660 | 89,177,992 | |
Balance - Ending (Shares) at Mar. 31, 2022 | 8,620,591 | |||||||||
Balance - Beginning 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 - Beginning (Shares) at Dec. 31, 2021 | 8,348,310 | |||||||||
Net loss | (13,397,421) | |||||||||
Balance - Ending at Sep. 30, 2022 | $ 95,029 | 92,795,972 | (60,930,284) | 31,960,717 | (2,478,937) | 15,809,603 | 44,521,495 | 5,109,962 | 94,922,840 | |
Balance - Ending (Shares) at Sep. 30, 2022 | 9,502,987 | |||||||||
Balance - Beginning 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 - Beginning (Shares) at Dec. 31, 2021 | 8,348,310 | |||||||||
Redemptions | $ (1,347,319) | |||||||||
Redemptions (in shares) | (135,248) | |||||||||
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 | |||||||||
Balance - Beginning at Mar. 31, 2022 | $ 86,204 | 84,257,191 | (48,318,563) | 36,024,832 | (1,816,725) | 17,549,177 | 31,661,048 | 5,759,660 | 89,177,992 | |
Balance - Beginning (Shares) at Mar. 31, 2022 | 8,620,591 | |||||||||
Issuance of common stock | $ 4,858 | 4,712,201 | 4,717,059 | 4,717,059 | ||||||
Issuance of common stock (Shares) | 485,825 | |||||||||
Issuance of stock-based compensation | $ 15 | 14,985 | 15,000 | 15,000 | ||||||
Issuance of stock-based compensation (in shares) | 1,500 | |||||||||
Issuance of GO Units | 137,600 | 137,600 | ||||||||
Offering costs | (1,127,509) | (1,127,509) | (12,095) | (1,139,604) | ||||||
Distributions declared ($0.175 per share) | (1,458,251) | (1,458,251) | (81,949) | (287,857) | (1,828,057) | |||||
Distributions reinvested | $ 554 | 525,605 | 526,159 | 526,159 | ||||||
Distributions reinvested (in shares) | 55,386 | |||||||||
Redemptions | $ (576) | (575,303) | (575,879) | (575,879) | ||||||
Redemptions (in shares) | (57,615) | |||||||||
Net loss | (2,327,895) | (2,327,895) | (156,779) | (512,858) | (144,719) | (3,142,251) | ||||
Balance - Ending at Jun. 30, 2022 | $ 91,055 | 88,934,679 | (53,232,218) | 35,793,516 | (2,055,453) | 17,161,824 | 31,661,048 | 5,327,084 | 87,888,019 | |
Balance - Ending (Shares) at Jun. 30, 2022 | 9,105,687 | |||||||||
Issuance of common stock | $ 3,615 | 3,526,995 | 3,530,610 | 3,530,610 | ||||||
Issuance of common stock (Shares) | 361,451 | |||||||||
Issuance of stock-based compensation | $ 15 | 14,985 | 15,000 | 15,000 | ||||||
Issuance of stock-based compensation (in shares) | 1,500 | |||||||||
Issuance of T Units | 12,860,447 | 12,860,447 | ||||||||
Offering costs | (934,374) | (934,374) | (1,000) | (935,374) | ||||||
Distributions declared ($0.175 per share) | (1,735,711) | (1,735,711) | (86,118) | (269,486) | 90,531 | (2,000,784) | ||||
Distributions reinvested | $ 477 | 452,446 | 452,923 | 452,923 | ||||||
Distributions reinvested (in shares) | 47,676 | |||||||||
Redemptions | $ (133) | (133,133) | (133,266) | (133,266) | ||||||
Redemptions (in shares) | (13,327) | |||||||||
Net loss | (5,027,981) | (5,027,981) | (337,366) | (1,081,735) | (307,653) | (6,754,735) | ||||
Balance - Ending at Sep. 30, 2022 | $ 95,029 | 92,795,972 | (60,930,284) | 31,960,717 | (2,478,937) | 15,809,603 | 44,521,495 | 5,109,962 | 94,922,840 | |
Balance - Ending (Shares) at Sep. 30, 2022 | 9,502,987 | |||||||||
Balance - Beginning 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 - Beginning (Shares) at Dec. 31, 2022 | 9,607,463 | |||||||||
Issuance of common stock | $ 612 | 625,388 | 626,000 | 626,000 | ||||||
Issuance of common stock (Shares) | 61,190 | |||||||||
Issuance of stock-based compensation | $ 10 | 10,560 | 10,570 | 10,570 | ||||||
Issuance of stock-based compensation (in shares) | 1,000 | |||||||||
Offering costs | (449,537) | (449,537) | (2,665) | (452,202) | ||||||
Distributions declared ($0.175 per share) | (1,690,854) | (1,690,854) | (88,992) | (270,884) | (107,117) | (2,157,847) | ||||
Distributions reinvested | $ 394 | 395,426 | 395,820 | 395,820 | ||||||
Distributions reinvested (in shares) | 39,418 | |||||||||
Net loss | (2,907,639) | (2,907,639) | (196,267) | (640,192) | (182,076) | (3,926,174) | ||||
Balance - Ending at Mar. 31, 2023 | $ 97,090 | 94,829,444 | (72,287,723) | 22,638,811 | (3,126,315) | 13,774,651 | 45,739,120 | 4,462,446 | 83,488,713 | |
Balance - Ending (Shares) at Mar. 31, 2023 | 9,709,071 | |||||||||
Balance - Beginning 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 - Beginning (Shares) at Dec. 31, 2022 | 9,607,463 | |||||||||
Redemptions (in shares) | 0 | |||||||||
Net loss | $ (5,896,665) | |||||||||
Balance - Ending at Sep. 30, 2023 | $ 98,925 | 96,658,424 | (78,251,439) | 18,505,910 | (3,404,932) | 12,655,262 | $ 205,121 | 45,739,120 | 4,161,778 | 77,862,259 |
Balance - Ending (Shares) at Sep. 30, 2023 | 9,892,637 | |||||||||
Balance - Beginning at Mar. 31, 2023 | $ 97,090 | 94,829,444 | (72,287,723) | 22,638,811 | (3,126,315) | 13,774,651 | 45,739,120 | 4,462,446 | 83,488,713 | |
Balance - Beginning (Shares) at Mar. 31, 2023 | 9,709,071 | |||||||||
Issuance of common stock | $ 395 | 393,475 | 393,870 | 393,870 | ||||||
Issuance of common stock (Shares) | 39,534 | |||||||||
Issuance of stock-based compensation | $ 10 | 10,560 | 10,570 | 10,570 | ||||||
Issuance of stock-based compensation (in shares) | 1,000 | |||||||||
Issuance of GO 2 Units | 306,863 | 306,863 | ||||||||
Offering costs | (555,193) | (555,193) | (82,344) | (637,537) | ||||||
Distributions declared ($0.175 per share) | (1,704,373) | (1,704,373) | (89,704) | (341,515) | (107,117) | (2,242,709) | ||||
Distributions reinvested | $ 383 | 384,389 | 384,772 | 384,772 | ||||||
Distributions reinvested (in shares) | 38,318 | |||||||||
Net loss | (202,745) | (202,745) | (13,802) | (39,081) | (9,685) | (11,114) | (276,427) | |||
Balance - Ending at Jun. 30, 2023 | $ 97,878 | 95,617,868 | (74,750,034) | 20,965,712 | (3,229,821) | 13,394,055 | 214,834 | 45,739,120 | 4,344,215 | 81,428,115 |
Balance - Ending (Shares) at Jun. 30, 2023 | 9,787,923 | |||||||||
Issuance of common stock | $ 658 | 649,342 | 650,000 | 650,000 | ||||||
Issuance of common stock (Shares) | 65,768 | |||||||||
Issuance of stock-based compensation | $ 10 | 10,560 | 10,570 | 10,570 | ||||||
Issuance of stock-based compensation (in shares) | 1,000 | |||||||||
Offering costs | (510,274) | (510,274) | (5,937) | (516,211) | ||||||
Distributions declared ($0.175 per share) | (1,725,300) | (1,725,300) | (90,805) | (473,962) | (107,117) | (2,397,184) | ||||
Distributions reinvested | $ 379 | 380,654 | 381,033 | 381,033 | ||||||
Distributions reinvested (in shares) | 37,946 | |||||||||
Net loss | (1,265,831) | (1,265,831) | (84,306) | (264,831) | (3,776) | (75,320) | (1,694,064) | |||
Balance - Ending at Sep. 30, 2023 | $ 98,925 | $ 96,658,424 | $ (78,251,439) | $ 18,505,910 | $ (3,404,932) | $ 12,655,262 | $ 205,121 | $ 45,739,120 | $ 4,161,778 | $ 77,862,259 |
Balance - Ending (Shares) at Sep. 30, 2023 | 9,892,637 |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares | 3 Months Ended | |||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | |
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY | ||||||
Distributions declared (in dollars per share) | $ 0.175 | $ 0.175 | $ 0.175 | $ 0.175 | $ 0.175 | $ 0.175 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Cash Flows from Operating Activities: | ||
Net loss | $ (5,896,665) | $ (13,397,421) |
Adjustments to reconcile net loss to cash used in operating activities: | ||
Depreciation | 7,387,704 | 5,426,165 |
Stock-based compensation expense | 31,710 | 45,000 |
Amortization | 1,228,800 | 996,391 |
Gain on extinguishment of debt | (700,000) | |
Loss on disposal of fixed assets | 108,659 | 28,466 |
Deferred tax (liabilities) assets, net | (121,957) | 5,792,126 |
Change in operating assets and liabilities: | ||
Accounts receivable | (42,384) | (395,504) |
Franchise fees | (975,000) | |
Prepaid expenses and other assets | 2,264,096 | 366,070 |
Increase in finance lease liability | 31,629 | 141,665 |
Accounts payable | 1,221,098 | 1,415,532 |
Accrued expenses | (400,156) | 1,716,272 |
Due to related parties | 3,938,543 | 2,149,057 |
Other liabilities | (3,016,386) | (502,096) |
Net cash provided by (used in) operating activities | 6,034,691 | (1,003,358) |
Cash Flows from Investing Activities: | ||
Acquisitions of hotel properties | (44,448,672) | |
Cash and restricted cash acquired in consolidation of VIE | 1,342,428 | |
Improvements and additions to hotel properties | (6,204,487) | (4,518,129) |
Net cash used in investing activities | (6,204,487) | (47,624,374) |
Cash Flows from Financing Activities: | ||
Proceeds from mortgage debt | 11,200,000 | 57,853,103 |
Proceeds from lines of credit | 4,643,584 | 10,957,303 |
Principal payments on mortgage debt | (12,050,106) | (20,563,995) |
Principal payments on lines of credit | (349,375) | (3,250,000) |
Payments of deferred financing costs | (426,736) | (2,282,746) |
Proceeds from issuance of common stock | 1,669,870 | 10,907,523 |
Proceeds from issuance of GO Units | 6,275,891 | |
Proceeds from issuance of GO 2 Units | 306,863 | |
Payments of offering costs | (1,200,302) | (3,223,478) |
Payments for shares redeemed | (1,214,053) | |
Distributions paid | (5,283,193) | (3,694,927) |
Net cash (used in) provided by financing activities | (1,489,395) | 51,764,621 |
Net change in cash, cash equivalents, and restricted cash | (1,659,191) | 3,136,889 |
Beginning Cash, Cash Equivalents, and Restricted Cash | 16,926,281 | 14,336,400 |
Ending Cash, Cash Equivalents, and Restricted Cash | 15,267,090 | 17,473,289 |
Supplemental Disclosure of Cash Flow Information: | ||
Interest paid | 9,564,398 | 5,188,936 |
Income taxes paid | 42,158 | 42,158 |
Supplemental Disclosure of Non-Cash Investing and Financing Activities: | ||
Offering costs included in accounts payable | 253,552 | 186,413 |
Offering costs included in due to related parties | 152,096 | (140,529) |
Distributions included in due to related parties | 244,051 | 82,018 |
Redemptions included in other liabilities | 133,266 | |
Reinvested distributions | 1,161,625 | 1,546,322 |
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 | 6,193,449 | 7,866,401 |
Restricted cash, beginning of period | 10,732,832 | 6,469,999 |
Cash, cash equivalents, and restricted cash, beginning of period | 15,267,090 | 17,473,289 |
Cash and cash equivalents, end of period | 4,470,530 | 7,610,165 |
Restricted cash, end of period | 10,796,560 | 9,863,124 |
Cash, cash equivalents, and restricted cash, end of period | $ 15,267,090 | 17,473,289 |
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 by Marriott Fort Collins (the "RI Hotel 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 | |
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 | 9 Months Ended |
Sep. 30, 2023 | |
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 and reportable segment. 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 four 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”), Series Growth & Opportunity II (“GO II”) Limited Partner Units (“Series GO II 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 September 30, 2023 and December 31, 2022. As of September 30, 2023, there were 612,100 outstanding Common LP Units, no outstanding Interval Units, 1,000 outstanding Series B LP Units, all of which were owned by the Advisor, 3,124,503 Series GO LP Units, 41,622 Series GO II 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 September 30, 2023, the Company had issued and sold 10,180,161 shares of common stock, including 1,134,142 shares attributable to the DRIP, and received aggregate proceeds of $99.6 million. As of September 30, 2023, 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 September 30, 2023, 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 September 30, 2023, the Operating Partnership had issued and sold 3,124,503 Series GO LP Units and received gross 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 either 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 September 30, 2023, 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 September 30, 2023, the Operating Partnership had issued and sold 612,100 Common LP Units, with a then-current value of $10.57 per unit, in connection with property contributions. On April 7, 2023, the Operating Partnership commenced a private offering of limited partnership units in the OP, designated as Series GO II LP Units, with a maximum offering of $30,000,000, which could be increased to $60,000,000 in the sole discretion of LF REIT III as the General Partner of the Operating Partnership, (the “GO II 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 II LP Units are offered at a purchase price equal to 75% of the NAV of the Company’s common stock. The Series GO II LP Units are being offered until the earlier of (i) the sale of $30,000,000 in Series GO II LP Units (which could be increased to $60,000,000 in the Company’s sole discretion), (ii) March 31, 2024, which date may be extended for two 1-year |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2023 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation interests. If the entity is considered to be a VIE, the Company determines whether the Company is the primary beneficiary, and then consolidates those VIEs for which the Company has determined that the Company is the primary beneficiary. If the entity in which the Company holds an interest does not meet the definition of a VIE, the Company evaluates whether the Company has a controlling financial interest through the Company’s voting interest in the entity. The Company consolidates entities when the Company owns more than 50 percent of the voting shares of a company or otherwise has a controlling financial interest. References in these financial statements to the net (loss) income attributable to stockholders do not include non-controlling interests, which represent the outside ownership interests of the Company’s consolidated, non-wholly owned entities and are presented separately in the consolidated financial statements. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates Revenue Recognition 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 Stock-Based Compensation Net Loss Per Share of Common Stock 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 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. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU No. 2016-13”), which requires that entities use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowance for credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU No. 2016-13 will be effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted ASU No. 2016-13 using the modified retrospective approach and the adoption did not have a material impact on the Company’s consolidated financial statements. |
INVESTMENT IN HOTEL PROPERTIES
INVESTMENT IN HOTEL PROPERTIES | 9 Months Ended |
Sep. 30, 2023 | |
INVESTMENT IN HOTEL PROPERTIES | |
INVESTMENT IN HOTEL PROPERTIES | 3. INVESTMENT IN HOTEL PROPERTIES Investment in hotel properties as of September 30, 2023 and December 31, 2022 consisted of the following: September 30, December 31, 2023 2022 Land and land improvements $ 32,650,698 $ 32,650,698 Building and building improvements 241,278,409 241,278,409 Furniture, fixtures, and equipment 22,808,984 21,884,508 Right-of-use asset - ground lease 7,340,868 7,340,868 Construction in progress 9,731,468 4,576,041 Investment in hotel properties, at cost 313,810,427 307,730,524 Less: accumulated depreciation and amortization (25,130,902) (17,512,882) Investment in hotel properties, net $ 288,679,525 $ 290,217,642 As of September 30, 2023, 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 ten 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: September 30, December 31, 2023 2022 Assets Investment in hotel properties, net of accumulated depreciation of $1,086,350 and $471,491 $ 21,371,337 $ 22,036,289 Cash and cash equivalents 324,274 493,056 Restricted cash 1,079,625 2,173,237 Accounts receivable, net 255,531 154,976 Prepaid expenses and other assets 31,264 67,068 Total Assets $ 23,062,031 $ 24,924,626 Liabilities Debt, net $ 12,126,473 $ 12,244,068 Finance lease liability 4,750,889 4,862,172 Accounts payable 176,313 182,692 Accrued expenses 236,174 445,763 Other liabilities 374,326 655,372 Total liabilities $ 17,664,175 $ 18,390,067 Acquisitions of Hotel Properties The Company acquired no properties during the nine months ended September 30, 2023. 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. 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 year ended December 31, 2022. 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 (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. 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 September 30, December 31, 2023 2022 Land and land improvements $ — $ 12,538,514 Building and building improvements — 79,702,403 Furniture, fixtures, and equipment — 5,730,511 Total assets acquired — 97,971,428 Assumed mortgage debt — 7,198,709 Net purchase price $ — $ 90,772,719 All acquisitions completed during the year ended December 31, 2022 were considered asset acquisitions under ASC 805. Eleven of the hotel properties owned by the Company as of September 30, 2023 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 September 30, 2023, 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 Partnership with Western Alliance Bank (the “Charlotte HGI Lender”) in the original principal amount of $9.8 million secured by the Charlotte Property (the “Charlotte HGI Loan Agreement”), the issuance by the Operating Partnership of 598,755 Series T Limited Units of the Operating Partnership, and the payment by the Operating Partnership of $0.4 million in cash. The Series T LP Units will convert into Common Limited Units of the Operating Partnership beginning 24 months after the closing. The number of Common Limited Units to be issued to the Contributor upon conversion will be calculated pursuant to the terms of the Charlotte HGI Contribution Agreement, which may be higher or lower than the initial valuation of the Series T LP Units . 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 . 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 toa 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 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 Northbrook Property Above Market Ground Lease On December 3, 2021, in connection with the purchase of the Northbrook Property, the Company recognized 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 September 30 2023, 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 nine months ended September 30, 2023, the Company recognized interest expense of $478,295 and right-of-use amortization expense of $40,414 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 September 30, 2023, 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 September 30, 2023. 2023 $ 113,633 2024 610,237 2025 624,112 2026 645,791 2027 660,511 Thereafter 44,016,797 Total finance lease payments 46,671,081 Interest (33,612,603) Present value of finance lease liabilities $ 13,058,478 |
DEBT
DEBT | 9 Months Ended |
Sep. 30, 2023 | |
DEBT | |
DEBT | 4. DEBT Lines of Credit & Loans 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 (the “Western Revolving Line of Credit”). The Western Revolving 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 Revolving Line of Credit was amended to extend the maturity date to May 10, 2021. The Western Revolving Line of Credit had a variable interest rate equal to the U.S. Prime Rate, plus 0.50%. On May 6, 2021, the Western Revolving 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 Revolving 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. On April 15, 2023, the Western Line of Credit was amended to extend the maturity to June 15, 2023. No other changes were made to the Western Line of Credit as a result of the amendments. On July 31, 2023, the Western Line of Credit was amended to extend the maturity 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 Western Line of Credit was amended effective as of October 4, 2023, 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. The interest rate as of September 30, 2023 was 9.00% per annum. As of September 30, 2023, the Western Revolving Line of Credit was secured by the Company’s Cedar Rapids Property and 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 September 30, 2023, there was a $5.0 million balance outstanding on the Western Line of Credit. See Note 11 “Subsequent Events” of the notes to the consolidated financial statements included as part of this Quarterly Report on Form 10-Q for a description of amendments to the Western Line of Credit subsequent to September 30, 2023. 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 Revolving 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. On January 12, 2023, the A-1 Revolving Line of Credit was amended to increase the line of credit to $10.0 million, increased the number of Common LP Units of the Operating Partnership securing the A-1 Revolving Line of Credit to 1,000,000 unissued Common LP Units and extended the maturity date to December 31, 2023. The A-1 Revolving Line of Credit has a fixed interest rate of 7.00% per annum. Outstanding amounts under the A-1 Revolving Line of Credit may be prepaid in whole or in part without penalty. On April 18, 2023, the A-1 Revolving Line of Credit was amended to increase the line of credit to $13.3 million and increased the number of Common LP Units of the Operating Partnership securing the A-1 Revolving Line of Credit to 1,330,000 unissued Common LP Units. As of September 30, 2023, there was an $11.1 million balance outstanding on the A-1 Revolving Line of Credit. See Note 11 “Subsequent Events” of the notes to the consolidated financial statements included as part of this Quarterly Report on Form 10-Q for a description of amendments to the A-1 Line of Credit subsequent to September 30, 2023. 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. As of September 30, 2023, there was a $600,000 balance outstanding on the NHS Loan. See Note 11 “Subsequent Events” of the notes to the consolidated financial statements included as part of this Quarterly Report on Form 10-Q for a description of amendments to the NHS Loan subsequent to September 30, 2023. Mortgage Debt As of September 30, 2023, the Company had $178.7 million in outstanding mortgage debt secured by each of its nineteen consolidated properties, with maturity dates ranging from February 2024 to April 2029. Sixteen of the loans have fixed interest rates ranging from 3.70% to 7.00%. 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 11.44% as of September 30, 2023. Another loan is a variable interest loan at a rate of LIBOR or an equivalent rate plus 6.25%, provided that the variable rate shall not be less than 0.75%, resulting in an effective rate of 11.69% as of September 30, 2023. Another loan is a variable interest loan at a rate of the 30-day secured overnight financing rate or an equivalent rate plus 6.25%, provided that the variable rate shall not be less than 10.00%, resulting in an effective rate of 11.58% as of September 30, 2023. Collectively, the weighted-average interest rate is 6.18%. 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 September 30, 2023 and December 31, 2022, certain mortgage debt was guaranteed by the members of the Advisor. See Note 7 “Related Party Transactions” of the notes to the consolidated financial statements included as part of this Quarterly Report on Form 10-Q 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. 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 Fort 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 was incurred on Tranche 1 or Tranche 2 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. See Note 11 “Subsequent Events” of the notes to the consolidated financial statements included as part of this Quarterly Report on Form 10-Q for a description of changes to mortgage debt occurring subsequent to September 30, 2023. As of September 30, 2023, the Company was not in compliance with the required financial covenants under the terms of its promissory note secured by the Pineville Property and related loan documents (the “Pineville Loan”), which constitutes an event that puts the Company into a trigger period pursuant to the loan documents. On July 23, 2024, the Company sold the Pineville Property and no waiver of the financial covenants is needed. See Note 11 “Subsequent Events” of the notes to the consolidated financial statements included as part of this Quarterly Report on Form 10-Q for a description of the sale of the Pineville Property subsequent to September 30, 2023. Except as described above for the Pineville Loan, the Company was in compliance with all debt covenants as of September 30, 2023. The following table sets forth the hotel properties securing the Company’s hotel mortgage debt and revolving lines of credit as of September 30, 2023 and December 31, 2022. Interest Outstanding Outstanding Rate as of Balance as of Balance as of September 30, Maturity September 30, December 31, 2023 Date 2023 2022 Holiday Inn Express - Cedar Rapids (1) 5.33% 9/1/2024 $ 5,724,580 $ 5,799,804 Hampton Inn & Suites - Pineville (2) 5.13% 6/6/2024 8,422,579 8,580,586 Hampton Inn - Eagan 4.60% 1/1/2025 8,896,931 9,063,528 Home2 Suites - Prattville 4.13% 8/1/2024 9,038,276 9,199,041 Home2 Suites - Lubbock 4.69% 10/6/2026 7,164,643 7,343,948 Fairfield Inn & Suites - Lubbock 4.93% 4/6/2029 8,850,704 8,971,430 Homewood Suites - Southaven 3.70% 3/3/2025 12,747,555 13,007,706 Courtyard by Marriott - Aurora (3)(4) 11.44% 2/5/2024 (5) 15,000,000 15,000,000 Holiday Inn - El Paso (4) 5.00% 5/15/2024 (6) 7,600,000 7,900,000 Hilton Garden Inn - Houston (7) 3.85% 9/2/2026 13,947,217 13,947,217 Sheraton - Northbrook (4)(8) 11.69% 12/5/2024 3,766,639 3,766,639 Hampton Inn - Fargo (9) 4.00% 3/1/2027 7,141,208 7,275,480 Courtyard by Marriott - El Paso (10)(11) 6.01% 5/13/2027 9,990,000 9,990,000 Fairfield Inn & Suites - Lakewood (4)(12) 7.00% 3/28/2024 13,845,000 13,845,000 Residence Inn - Fort Collins (13) 11.58% 5/4/2025 11,200,000 — Residence Inn - Fort Collins - A-1 (13)(14) 7.00% 8/3/2028 501,465 11,500,000 Hilton Garden Inn - El Paso 4.94% 8/6/2025 12,417,345 12,613,869 Hilton Garden Inn - Pineville (15) 6.20% 8/25/2027 7,020,000 7,020,000 Hilton Garden Inn - Charlotte (15) 6.20% 8/25/2027 9,805,000 9,805,000 Holiday Inn Express - Wichita (10) 6.41% 12/21/2027 5,642,000 5,642,000 Total Mortgage Debt 178,721,142 180,271,248 Premium on assumed debt, net 200,994 221,082 Deferred financing costs, net (2,747,820) (3,193,939) Net Mortgage 176,174,316 177,298,391 $5.0 million revolving line of credit - Western (16) 9.00% 11/15/23 (18) 4,966,625 5,000,000 $13.3 million revolving line of credit - A-1 Bonds (17) 7.00% 12/31/2023 11,107,740 7,380,156 $0.6 million loan - NHS 7.00% 1/31/2024 (19) 600,000 — Total Other Debt 16,674,365 12,380,156 Debt, net $ 192,848,681 $ 189,678,547 (1) Loan was interest-only through April 30, 2022 and is at a fixed rate of interest. (2) On July 23, 2024, the Hampton Inn & Suites Pineville was sold and the loan was repaid on the closing date. (3) Variable interest rate equal to 30-day LIBOR plus 6.00% , provided that LIBOR shall not be less than 1.00% . (4) Loan is interest-only until maturity. (5) 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. (6) On May 15, 2024, the maturity date was extended to November 15, 2024. See Note 11 “Subsequent Events.” (7) Loan is interest-only for the first 24 months after origination. (8) 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% . (9) 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. (10) Loan is interest-only for the first 18 months after origination. (11) 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. (12) On March 27, 2024, this loan was repaid in full and refinanced with two new loans secured by the Lakewood Property and unissued common limited partnership units of the Operating Partnership. See Note 11 “Subsequent Events.” (13) On April 18, 2023, Tranche 1 and Tranche 2 were repaid in full and refinanced with a new loan secured by the Fort Collins Property. (14) Tranche 3’s maturity date is August 2, 2028. (15) Loan is interest-only through February 25, 2024. (16) Variable interest rate equal to U.S. Prime plus 0.50% (17) On March 27, 2024, this line of credit was increased to $15.5 million and the maturity date was extended to December 31, 2024. See Note 7, - Legendary A-1 Bonds, LLC (“A-1 Bonds”) and Note 11 “Subsequent Events.” (18) On October 9, 2023, the maturity date was extended to November 15, 2023, On December 27, 2023, the maturity date was extended to April 30, 2024. On May 10, 2024, the maturity date was extended to June 5, 2024. The Company and Western State Bank are working to finalize an extension of this line of credit as of the date of this filing. See Note 11 “Subsequent Events.” (19) On December 28, 2023, the maturity date was extended to January 31, 2024. On August 21, 2024, the maturity date was extended to September 30, 2025. See Note 11 “Subsequent Events.” Future Minimum Payments As of September 30, 2023, the future minimum principal payments on the Company’s debt were as follows: 2023 $ 16,677,105 2024 53,616,109 2025 58,377,761 2026 20,677,037 2027 37,472,452 Thereafter 8,575,043 195,395,507 Premium on assumed debt, net 200,994 Deferred financing costs, net (2,747,820) $ 192,848,681 The $16.7 million of future minimum principal payments due in 2023 includes the maturities of the A-1 and Western Lines of Credit. See Note 11 “Subsequent Events” of the notes to the consolidated financial statements included as part of this Quarterly Report on Form 10-Q for a description of amendments and refinancing subsequent to September 30, 2023. |
FAIR VALUE OF FINANCIAL INSTRUM
FAIR VALUE OF FINANCIAL INSTRUMENTS | 9 Months Ended |
Sep. 30, 2023 | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | 5. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company’s financial instruments as of September 30, 2023 and December 31, 2022 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 September 30, 2023. 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 current borrowing rates for debt instruments with similar terms and maturities, which are Level 3 inputs in the fair value hierarchy. As of September 30, 2023, the estimated fair value of the Company’s mortgage debt was $175.6 million, compared to the gross carrying value $178.7 million. 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. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2023 | |
INCOME TAXES | |
INCOME TAXES | 6. 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 period ended September 30, 2023 and did not pay any federal and state income taxes for the period ended September 30, 2022. The Company did not have any uncertain tax positions as of September 30, 2023 or December 31, 2022. The Company’s TRS generated a net operating loss (“NOL”) for the nine months ended September 30, 2023 and the year ended December 31, 2022, which can be carried forward to offset future taxable income. As of September 30, 2023, the Company expects its TRS to generate additional NOL during the year ended December 31, 2023, and as a result, the Company has recognized a full valuation allowance against its deferred tax assets of $8.1 million, resulting in a net deferred tax liability of $3.2 million. As of December 31, 2022, the Company had recorded a net deferred tax liability of $3.3 million, primarily attributable to its NOLs generated in the current year and prior periods, net of temporary differences primarily related to deprecation. The net deferred tax liability is recognized on the consolidated balance sheet within Other Liabilities. The Company’s NOLs will expire in 2038 through 2042 for state tax purposes and will not expire for federal tax purposes. As of September 30, 2023, and December 31, 2022, the Company had deferred tax assets attributable to NOL carryforwards for federal income tax purposes of $6.8 million and $6.3 million, respectively, and NOL carryforwards for state income tax purposes of $1.3 million and $1.0 million, respectively. The Company recorded a valuation allowance of $7.3 million against the deferred tax asset in 2022. As of September 30, 2023, the tax years 2018 through 2022 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. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2023 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | 7. 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, payable 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 nine months ended September 30, 2023 and 2022, were as follows: Incurred For the Nine Months Ended September 30, 2023 2022 Fees: Acquisition fees $ — $ 1,484,822 Financing fees 84,000 1,719,851 Asset management fees 1,860,496 1,368,584 $ 1,944,496 $ 4,573,257 Reimbursements: Offering costs $ 1,163,681 $ 1,831,075 General and administrative 2,332,578 2,753,552 Sales and marketing 134,459 224,011 Acquisition costs 190,995 44,318 $ 3,821,713 $ 4,852,956 For the three and nine months ended September 30, 2023, the Operating Partnership recorded distributions payable to the Advisor in the amount of $90,805 and $269,501, respectively, in connection with the Advisor’s ownership of Series B LP Units. For the three and nine months ended September 30, 2022, the Operating Partnership recorded distributions payable to the Advisor in the amount of $86,118 and $246,297, respectively. As of September 30, 2023 and 2022, the Company had distributions payable to the Advisor in the amount of $589,119 and $256,948, respectively. For the nine months ended September 30, 2023 and 2022, 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 September 30, 2023, 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 50% of the loan secured by the Wichita Property, is a guarantor of the new loan secured by the Fort Collins Property, which had an original loan amount of $11.2 million and is a guarantor of the Company’s $5.0 million line of credit which is secured by the hotel properties located in Cedar Rapids, Iowa and Eagan, Minnesota, and 100,000 Common LP Units of Lodging Fund REIT III OP, LP. Mr. Maple is also a guarantor of the loan secured by the El Paso University Property, which had an original principal loan amount of $14.4 million. As of September 30, 2023, Norman Leslie is a guarantor of the Company’s new loan secured by the Fort Collins Property, which had an original loan amount of $11.2 million, and was 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 nine months ended September 30, 2023 and for the year ended December 31, 2022, the Company accrued guarantee fees in the amount of $114,199 and $155,676 respectively to each Mr. Maple Mr. Leslie As of September 30, 2023 and December 31, 2022, the Company had amounts due and payable to the Advisor and its affiliates of $8,675,105 and $5,612,134, 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. 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. As of September 30, 2023, there was a $600,000 balance outstanding on the NHS Loan. See Note 11 “Subsequent Events” of the notes to the consolidated financial statements included as part of this Quarterly Report on Form 10-Q for a description of amendments to the NHS Loan subsequent to September 30, 2023. Fees and reimbursements earned by NHS for the nine months ended September 30, 2023 and 2022, and fees and reimbursements payable to NHS as of September 30, 2023 and December 31, 2022, were as follows: Incurred Payable as of For the Nine Months Ended September 30, September 30, December 31, 2023 2022 2023 2022 Fees: Management fees $ 835,776 $ 489,107 $ 145,129 $ 145,733 Administrative fees 94,033 91,922 16,672 22,791 Accounting fees 122,024 78,418 17,820 31,164 $ 1,051,833 $ 659,447 $ 179,621 $ 199,688 Reimbursements $ 639,528 $ 341,150 $ 196,469 $ 143,009 One Rep Construction, LLC (“One Rep”) One Rep is a related party through common management and ownership, as Corey Maple, Norman Leslie , and David Ekman , each hold a 33.33% ownership interest in One Rep. One Rep is a construction management company which provided construction management services to the Company during 2023 and 2022 related to the renovation construction activities at certain hotel properties. For the services provided, One Rep is paid a construction management fee to 6% or 7% of the total project costs. The Company reimburses One Rep for certain costs incurred on behalf of the Company, and all reimbursements are paid to One Rep at cost. For the nine months ended and 2022, the Company incurred $191,803 and $159,177 of construction management fees and reimbursements payable to One Rep, respectively. As of and December 31, 2022, the amounts outstanding and due to One Rep were $38,817 and $33,947 , respectively, which is included in due to related parties on the accompanying consolidated balance sheets. Legendary A-1 Bonds, LLC (“A-1 Bonds”) |
FRANCHISE AGREEMENTS
FRANCHISE AGREEMENTS | 9 Months Ended |
Sep. 30, 2023 | |
FRANCHISE AGREEMENTS | |
FRANCHISE AGREEMENTS | 8. FRANCHISE AGREEMENTS As of September 30, 2023 and December 31, 2022, 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 | 9 Months Ended |
Sep. 30, 2023 | |
STOCKHOLDERS' EQUITY | |
STOCKHOLDERS' EQUITY | 9. 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 Operations First Quarter 2023 $ 1,779,846 $ 0.175 $ 1,424,802 $ 395,820 $ 1,820,622 $ 264,655 Second Quarter 2023 1,794,077 0.175 1,317,166 384,772 1,701,938 3,484,371 Third Quarter 2023 1,816,105 0.175 1,344,743 381,033 1,725,776 2,285,665 $ 5,390,028 $ 0.525 $ 4,086,711 $ 1,161,625 $ 5,248,336 $ 6,034,691 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 $ (3,245,454) Second Quarter 2022 1,540,200 0.175 1,203,791 526,159 1,729,950 68,428 Third Quarter 2022 1,821,829 0.175 1,094,353 452,923 1,547,276 2,173,668 $ 4,918,337 $ 0.525 $ 3,231,608 $ 1,546,322 $ 4,777,930 $ (1,003,358) (1) Distributions for the period from January 1, 2022 through September 30, 2023 were payable to each stockholder as 100% in cash on a monthly basis. (2) Assumes share was issued and outstanding each day that was a record date for distributions during the period presented. (3) Distributions for the period from January 1, 2022 through September 30, 2023 were paid on a monthly basis. In general, distributions for all record dates of a given month during such period 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 no shares during the nine months ended September 30, 2023. The Company repurchased 135,248 shares, pursuant to repurchase requests received during the year ended December 31, 2022, which represents an original investment of $1,352,472 for $1,347,319. As of September 30, 2023, all redemption proceeds had been paid. As of September 30, 2023, the Company had $1,931,014 available for eligible repurchases for the remainder of 2023. Update to Offering Price and Share NAV The Company’s board of directors approved a revised 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 board of directors has not determined the NAV of the Company’s assets since December 31, 2022. As a result, the current Share NAV and Offering price per Share may not reflect an accurate estimation of the Company’s enterprise value. 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. 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 1 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 September 30, 2023, the Operating Partnership had five classes of Limited Partner Units which included the Common LP Units, the Series B LP Units, the Series T LP Units, the Series GO LP Units and the Series GO II LP 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 (as defined below). 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 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 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 may 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 September 30, 2023, 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 September 30, 2023, 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 September 30, 2023, the Operating Partnership had issued and sold 612,100 Common LP Units, Non-Controlling Interest – Series GO II LP Units Distributions The holders of Series GO II LP Units will not receive any distributions from the Operating Partnership until after they have held their Series GO II LP Units for a period of 18 months 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 (including the Series GO II LP 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 II Unit Offering On April 7, 2023, the Operating Partnership commenced a private offering of limited partnership units in the OP, designated as Series GO II LP Units, with a maximum offering of $30,000,000, which could be increased to $60,000,000 in the sole discretion of LF REIT III as the General Partner of the Operating Partnership, (the “GO II 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 purchase price of the Series GO II LP Units in the offering is equal to 75% of the Share NAV and, 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 the Series GO II LP Units will be dilutive to the General Partner Units and therefore, to the shares of common stock of the Company. The Series GO II LP Units are being offered until the earlier of (i) the sale of $30,000,000 in Series GO II LP Units (which could be increased to $60,000,000 in the Company’s sole discretion), (ii) March 31, 2024, which date may be extended for two 1-year |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2023 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 10. 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. The Advisor and Corey R. Maple agreed to a settlement with the SEC in connection with the action described above on August 28, 2023, in which the Advisor agreed to pay disgorgement of $463,900 to the Company. 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 September 30, 2023, no additional consideration had 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 September 30, 2023. As a result, no amount was recorded related to this matter as of September 30, 2023, the Earnest Money remained in escrow and is included in restricted cash on the accompanying consolidated balance sheets. This litigation was resolved subsequent to September 30, 2023. See Note 11 “Subsequent Events.” Contribution Agreements Entered into or Terminated During the Nine Months Ended September 30, 2023 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. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2023 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 11. SUBSEQUENT EVENTS A-1 Line of Credit Amendments On March 27, 2024, the Operating Partnership, the Company and A-1 Bonds entered into a Fourth Amendment to the Revolving Line of Credit Loan Agreement (the “Fourth Amendment”) in connection with the A-1 Line of Credit. The Fourth Amendment extended the maturity date of the A-1 Line of Credit to December 31, 2024 and increased the A-1 Line of Credit to $15.5 million. Through the Fourth Amendment, the A-1 Line of Credit is secured by 1,550,000 unissued common limited partnership units of the Operating Partnership. In consideration of the extension of the maturity date, the Operating Partnership paid to the A-1 Lender an extension fee in the amount of $133,000. The Fourth Amended and Restated Promissory Note (the “Amended Promissory Note”) entered into by the Operating Partnership in connection with the Fourth Amendment provides that (i) the interest rate on the A-1 Line of Credit is increased to 14.5% per annum, and (ii) the A-1 Lender will receive an exit fee equal to 1.5% of the full amount due under the Line of Credit upon the earlier of (a) full repayment (whether on the maturity date or prior thereto or any other date), and (b) the maturity date. No other changes were made to the A-1 Line of Credit as a result of the Fourth Amendment or the Amended Promissory Note. As of August 23, 2024, $15.1 million is outstanding under the A-1 Line of Credit. Western Line of Credit Amendments 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. On May 10, 2024, 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 April 30, 2024 to June 5, 2024. In addition, the Operating Partnership was required to make a principal payment in the amount of $250,000 . The Company and Western State Bank are working to finalize an extension of the Western Line of Credit as of the date of this filing, however there can be no assurance that an extension will be granted. As of August 23, 2024, $4.2 million is outstanding under the Western Line of Credit. NHS Loan 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. On August 21, 2024, 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 September 30, 2025. As of August 23, 2024, $0.6 million is outstanding under the NHS Loan. Lakewood Loan Extension, Termination and New Loans 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 (the “Original Lakewood Loan”). 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. On March 27, 2024, the subsidiaries of the Operating Partnership entered into a new $12.0 million loan with Bluebird Credit EM LLC (the “New Lakewood Loan”) secured by the Lakewood Property. The New Lakewood Loan is evidenced by a promissory note and has an adjustable interest rate based on the SOFR Index plus 7.0% (increasing to 7.5% during the extension of the loan), with an initial interest rate of 12.327%; provided, however, in no event will the interest rate be adjusted to less than 11.0%. The maturity date of the New Lakewood Loan is October 5, 2025, with an option to extend the term for an additional 6 months through April 6, 2026, upon payment of a $60,000 extension fee and satisfaction of certain other conditions. The New Lakewood Loan requires monthly interest-only payments throughout the term, with the outstanding principal and interest due at maturity. The Borrower has the right to prepay the New Lakewood Loan in whole but not in part at any time, subject to a 30-day prior notice to the New Lakewood Lender and payment of an exit fee equal to $120,000 and a prepayment premium calculated pursuant to the terms of the New Lakewood Loan Agreement. Pursuant to the New Lakewood Loan Agreement, Norman Leslie, a director and executive officer of the Company, entered into a Guaranty (the “New Lakewood Guaranty”) with the New Lakewood Lender to guarantee payment when due of the principal amount of indebtedness outstanding, including accrued interest and collection costs and expenses, as further described in the New Lakewood Guaranty. Additionally, on March 27, 2024, the Operating Partnership entered into a new loan in an amount up to $4,896,801 (the “New A-1 Lakewood Loan”) with the A-1 Lender, an affiliate of the Company’s Advisor. The New A-1 Lakewood Loan is evidenced by a promissory note and has a fixed interest rate of 14.5% per annum and a maturity date of March 27, 2026. The New A-1 Lakewood Loan requires monthly interest-only payments throughout the term, with the outstanding principal and interest due at maturity. The Operating Partnership has the right to prepay the New A-1 Lakewood Loan in whole or in part without charge, penalty or premium. The A-1 Lender received an origination fee of $73,452 on the effective date of the New A-1 Lakewood Loan and will receive an exit fee equal to 1.5% of the full amount of the New A-1 Lakewood Loan upon the earlier of (a) full repayment (whether on the maturity date or prior thereto or any other date), and (b) the maturity date. Pursuant to a Pledge and Security Agreement entered into by the Company with the A-1 Lender, the New A-1 Lakewood Loan is secured by 489,680 unissued common limited partnership units of the Operating Partnership. On March 27, 2024, the proceeds from the New Lakewood Loan and the New A-1 Lakewood Loan were used to refinance the Original Lakewood Loan, and the outstanding obligations under Original Lakewood Loan were repaid in full. At the closing of the refinancing, an unpaid extension fee in the amount of $138,450 was paid to the A-1 Lender under the Original Lakewood Loan which was due but not paid in connection with the prior March 2023 extension of the Original Lakewood Loan. All guaranties in connection and collateral with respect to the Original Lakewood Loan have been terminated or released, and all commitments with respect to the Original Lakewood Loan have been terminated or released. El Paso HI Second Loan Modification On May 15, 2024, the El Paso HI Borrower, the Operating Partnership and Corey R. Maple entered into a second loan modification agreement with EPH, which extended the maturity date to November 15, 2024. As a condition to the extension, the El Paso HI Borrower agreed to pay a $76,000 extension fee. With the second modification agreement, the El Paso HI Borrower is entitled to an additional six-month extension, if requested. In addition, the Holiday Inn El Paso Loan has a new interest rate of 9.00%. 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 Distributions Paid 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 was paid on March 29, 2024. On April 22, 2024, the Company declared cash distributions totaling $237,857 and DRIP distributions totaling $52,904, cash distributions totaling $17,853 for Common Limited Units of the Operating Partnership and cash distributions totaling $91,131 for Series GO LP Units of the Operating Partnership, at a daily rate of $0.000958905 per share of Common Stock in the Company, equivalent to an annualized rate of three and one half percent (3.50%)per share based on the Company’s initial offering price of $10.00, for daily record dates March 1 through March 31, 2024 to holders of record on each calendar day of such period. The distribution declared for March 2024 was paid on April 25, 2024. On May 20, 2024, the Company declared cash distributions totaling $271,667 and DRIP distributions totaling $60,693, cash distributions totaling $20,403 for Common Limited Units of the Operating Partnership and cash distributions totaling $104,150 for Series GO LP Units of the Operating Partnership, at a daily rate of $0.001095890 per share of Common Stock in the Company, equivalent to an annualized rate of four percent (4.00%) per share based on the Company’s initial offering price of $10.00, for daily record dates April 1 through April 30, 2024 to holders of record on each calendar day of such period. The distribution declared for April 2024 was paid on May 23, 2024. On June 18, 2024, the Company declared cash distributions totaling $311,181 and DRIP distributions totaling $62,992, cash distributions totaling $22,954 for Common Limited Units of the Operating Partnership and cash distributions totaling $117,169 for Series GO LP Units of the Operating Partnership, at a daily rate of $0.001232877 per share of Common Stock in the Company, equivalent to an annualized rate of four and one half percent (4.50%) per share based on the Company’s initial offering price of $10.00, for daily record dates May 1 through May 31, 2024 to holders of record on each calendar day of such period. The distribution declared for May 2024 was paid on June 20, 2024. On July 19, 2024, the Company declared cash distributions totaling $345,775 and DRIP distributions totaling $70,312, cash distributions totaling $25,504 for Common Limited Units of the Operating Partnership and cash distributions totaling $130,186 for Series GO LP Units of the Operating Partnership, at a daily rate of $0.001366120 per share of Common Stock in the Company, equivalent to an annualized rate of five percent (5.00%) per share based on the Company’s initial offering price of $10.00, for daily record dates June 1 through June 30, 2024 to holders of record on each calendar day of such period. The distribution declared for June 2024 was paid on July 23, 2024. On August 20, 2024, the Company declared cash distributions totaling $356,690 and DRIP distributions totaling $59,688, cash distributions totaling $25,504 for Common Limited Units of the Operating Partnership and cash distributions totaling $130,186 for Series GO LP Units of the Operating Partnership, at a daily rate of $0.001366120 per share of Common Stock in the Company, equivalent to an annualized rate of five percent (5.00%) per share based on the Company’s initial offering price of $10.00, for daily record dates July 1 through July 31, 2024 to holders of record on each calendar day of such period. The distribution declared for July 2024 remained unpaid at the time of this filing. Properties Under Contract On April 15, 2024, the Operating Partnership and Stow Hotel Associates, LLC (the “Stow Contributor”) entered into a Legendary Equity Preservation UPREIT (Pat. Pend.) Contribution Agreement (the “Hampton Stow Contribution Agreement”) pursuant to which the Stow Contributor agreed to contribute the 84-room Hampton Stow hotel in Stow, Ohio to the Operating Partnership. The aggregate consideration for the Hampton Stow under the Hampton Stow Contribution Agreement is $10.2 million, with a majority of the consideration consisting of the assumption by the Operating Partnership of existing debt secured by the Hampton Stow and the remaining consideration consisting of the issuance by the Operating Partnership of Series T LP Units of the Operating Partnership. As required by the Hampton Stow Contribution Agreement, the Operating Partnership deposited $50,000 into an escrow as earnest money pending the closing or termination of the Hampton Stow Contribution Agreement. Except in certain circumstances described in the Hampton Stow Contribution Agreement, if the Operating Partnership fails to perform its obligations under the Hampton Stow Contribution Agreement, it will forfeit the earnest money. On April 15, 2024, the Operating Partnership and the Stow Contributor entered into a Legendary Equity Preservation UPREIT (Pat. Pend.) Contribution Agreement (the “Staybridge Stow Contribution Agreement”) pursuant to which the Stow Contributor agreed to contribute the 92-room Staybridge Suites Akron-Stow-Cuyahoga Falls hotel in Stow, Ohio to the Operating Partnership. The aggregate consideration for the Staybridge Stow under the Staybridge Stow Contribution Agreement is $10.9 million, with a majority of the consideration consisting of the assumption by the Operating Partnership of existing debt secured by the Staybridge Stow and the remaining consideration consisting of the issuance by the Operating Partnership of Series T LP Units of the Operating Partnership and cash at closing. As required by the Staybridge Stow Contribution Agreement, the Operating Partnership deposited $50,000 into an escrow as earnest money pending the closing or termination of the Staybridge Stow Contribution Agreement. Except in certain circumstances described in the Staybridge Stow Contribution Agreement, if the Operating Partnership fails to perform its obligations under the Staybridge Stow Contribution Agreement, it will forfeit the earnest money. Pineville Property Sold and Loan Repaid On July 23, 2024, the Company sold the Pineville Property to an unaffiliated purchaser for $8,850,000 in cash, subject to customary prorations and adjustments. The mortgage loan secured by the Pineville Property was repaid in full at closing from sale proceeds. All guaranties in connection with such loan and collateral with respect to such loan have been terminated or released, and all commitments with respect to such loan have been terminated or released. Status of the Offering Our board of directors extended the term of the Offering to May 31, 2025. 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 10,284,915 shares of common stock, including 1,203,059 shares issued pursuant to the DRIP, resulting in the receipt of gross offering proceeds of $100.6 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 17, 2024, our Board of Directors extended the term of the GO II Unit Offering to March 31, 2025. The Operating Partnership has issued and sold 363,426 Series Go II LP Units, resulting in the receipt of gross offering proceeds of $2.7 million as of the date of this filing. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Pay vs Performance Disclosure | ||||
Net Income (Loss) | $ (1,265,831) | $ (5,027,981) | $ (4,376,215) | $ (9,878,573) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation interests. If the entity is considered to be a VIE, the Company determines whether the Company is the primary beneficiary, and then consolidates those VIEs for which the Company has determined that the Company is the primary beneficiary. If the entity in which the Company holds an interest does not meet the definition of a VIE, the Company evaluates whether the Company has a controlling financial interest through the Company’s voting interest in the entity. The Company consolidates entities when the Company owns more than 50 percent of the voting shares of a company or otherwise has a controlling financial interest. References in these financial statements to the net (loss) income attributable to stockholders do not include non-controlling interests, which represent the outside ownership interests of the Company’s consolidated, non-wholly owned entities and are presented separately in the consolidated financial statements. All intercompany balances and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates |
Revenue Recognition | Revenue Recognition |
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 |
Stock-Based Compensation | Stock-Based Compensation |
Net Loss Per Share of Common Stock | Net Loss Per Share of Common Stock |
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 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. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU No. 2016-13”), which requires that entities use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowance for credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU No. 2016-13 will be effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted ASU No. 2016-13 using the modified retrospective approach and the adoption did not have a material impact on the Company’s consolidated financial statements. |
INVESTMENT IN HOTEL PROPERTIES
INVESTMENT IN HOTEL PROPERTIES (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Real Estate [Line Items] | |
Schedule of investment in hotel properties | September 30, December 31, 2023 2022 Land and land improvements $ 32,650,698 $ 32,650,698 Building and building improvements 241,278,409 241,278,409 Furniture, fixtures, and equipment 22,808,984 21,884,508 Right-of-use asset - ground lease 7,340,868 7,340,868 Construction in progress 9,731,468 4,576,041 Investment in hotel properties, at cost 313,810,427 307,730,524 Less: accumulated depreciation and amortization (25,130,902) (17,512,882) Investment in hotel properties, net $ 288,679,525 $ 290,217,642 |
Schedule of Company's VIE condensed consolidated balance sheet | September 30, December 31, 2023 2022 Assets Investment in hotel properties, net of accumulated depreciation of $1,086,350 and $471,491 $ 21,371,337 $ 22,036,289 Cash and cash equivalents 324,274 493,056 Restricted cash 1,079,625 2,173,237 Accounts receivable, net 255,531 154,976 Prepaid expenses and other assets 31,264 67,068 Total Assets $ 23,062,031 $ 24,924,626 Liabilities Debt, net $ 12,126,473 $ 12,244,068 Finance lease liability 4,750,889 4,862,172 Accounts payable 176,313 182,692 Accrued expenses 236,174 445,763 Other liabilities 374,326 655,372 Total liabilities $ 17,664,175 $ 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 (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. |
Schedule of reconciliation of undiscounted cash flows for each of the next five years and total of the remaining years to the finance lease liability | 2023 $ 113,633 2024 610,237 2025 624,112 2026 645,791 2027 660,511 Thereafter 44,016,797 Total finance lease payments 46,671,081 Interest (33,612,603) Present value of finance lease liabilities $ 13,058,478 |
HDGH | |
Real Estate [Line Items] | |
Schedule of assets acquired and liabilities assumed | 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 |
DEBT (Tables)
DEBT (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
DEBT | |
Schedule of hotel properties securing the Company's hotel mortgage debt and revolving lines of credit | Interest Outstanding Outstanding Rate as of Balance as of Balance as of September 30, Maturity September 30, December 31, 2023 Date 2023 2022 Holiday Inn Express - Cedar Rapids (1) 5.33% 9/1/2024 $ 5,724,580 $ 5,799,804 Hampton Inn & Suites - Pineville (2) 5.13% 6/6/2024 8,422,579 8,580,586 Hampton Inn - Eagan 4.60% 1/1/2025 8,896,931 9,063,528 Home2 Suites - Prattville 4.13% 8/1/2024 9,038,276 9,199,041 Home2 Suites - Lubbock 4.69% 10/6/2026 7,164,643 7,343,948 Fairfield Inn & Suites - Lubbock 4.93% 4/6/2029 8,850,704 8,971,430 Homewood Suites - Southaven 3.70% 3/3/2025 12,747,555 13,007,706 Courtyard by Marriott - Aurora (3)(4) 11.44% 2/5/2024 (5) 15,000,000 15,000,000 Holiday Inn - El Paso (4) 5.00% 5/15/2024 (6) 7,600,000 7,900,000 Hilton Garden Inn - Houston (7) 3.85% 9/2/2026 13,947,217 13,947,217 Sheraton - Northbrook (4)(8) 11.69% 12/5/2024 3,766,639 3,766,639 Hampton Inn - Fargo (9) 4.00% 3/1/2027 7,141,208 7,275,480 Courtyard by Marriott - El Paso (10)(11) 6.01% 5/13/2027 9,990,000 9,990,000 Fairfield Inn & Suites - Lakewood (4)(12) 7.00% 3/28/2024 13,845,000 13,845,000 Residence Inn - Fort Collins (13) 11.58% 5/4/2025 11,200,000 — Residence Inn - Fort Collins - A-1 (13)(14) 7.00% 8/3/2028 501,465 11,500,000 Hilton Garden Inn - El Paso 4.94% 8/6/2025 12,417,345 12,613,869 Hilton Garden Inn - Pineville (15) 6.20% 8/25/2027 7,020,000 7,020,000 Hilton Garden Inn - Charlotte (15) 6.20% 8/25/2027 9,805,000 9,805,000 Holiday Inn Express - Wichita (10) 6.41% 12/21/2027 5,642,000 5,642,000 Total Mortgage Debt 178,721,142 180,271,248 Premium on assumed debt, net 200,994 221,082 Deferred financing costs, net (2,747,820) (3,193,939) Net Mortgage 176,174,316 177,298,391 $5.0 million revolving line of credit - Western (16) 9.00% 11/15/23 (18) 4,966,625 5,000,000 $13.3 million revolving line of credit - A-1 Bonds (17) 7.00% 12/31/2023 11,107,740 7,380,156 $0.6 million loan - NHS 7.00% 1/31/2024 (19) 600,000 — Total Other Debt 16,674,365 12,380,156 Debt, net $ 192,848,681 $ 189,678,547 (1) Loan was interest-only through April 30, 2022 and is at a fixed rate of interest. (2) On July 23, 2024, the Hampton Inn & Suites Pineville was sold and the loan was repaid on the closing date. (3) Variable interest rate equal to 30-day LIBOR plus 6.00% , provided that LIBOR shall not be less than 1.00% . (4) Loan is interest-only until maturity. (5) 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. (6) On May 15, 2024, the maturity date was extended to November 15, 2024. See Note 11 “Subsequent Events.” (7) Loan is interest-only for the first 24 months after origination. (8) 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% . (9) 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. (10) Loan is interest-only for the first 18 months after origination. (11) 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. (12) On March 27, 2024, this loan was repaid in full and refinanced with two new loans secured by the Lakewood Property and unissued common limited partnership units of the Operating Partnership. See Note 11 “Subsequent Events.” (13) On April 18, 2023, Tranche 1 and Tranche 2 were repaid in full and refinanced with a new loan secured by the Fort Collins Property. (14) Tranche 3’s maturity date is August 2, 2028. (15) Loan is interest-only through February 25, 2024. (16) Variable interest rate equal to U.S. Prime plus 0.50% (17) On March 27, 2024, this line of credit was increased to $15.5 million and the maturity date was extended to December 31, 2024. See Note 7, - Legendary A-1 Bonds, LLC (“A-1 Bonds”) and Note 11 “Subsequent Events.” (18) On October 9, 2023, the maturity date was extended to November 15, 2023, On December 27, 2023, the maturity date was extended to April 30, 2024. On May 10, 2024, the maturity date was extended to June 5, 2024. The Company and Western State Bank are working to finalize an extension of this line of credit as of the date of this filing. See Note 11 “Subsequent Events.” (19) On December 28, 2023, the maturity date was extended to January 31, 2024. On August 21, 2024, the maturity date was extended to September 30, 2025. See Note 11 “Subsequent Events.” |
Schedule of future minimum principal payments on the Company's debt | 2023 $ 16,677,105 2024 53,616,109 2025 58,377,761 2026 20,677,037 2027 37,472,452 Thereafter 8,575,043 195,395,507 Premium on assumed debt, net 200,994 Deferred financing costs, net (2,747,820) $ 192,848,681 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Legendary Capital REIT III, LLC | |
Related Party Transactions | |
Schedule of fees and reimbursements incurred and payable | Incurred For the Nine Months Ended September 30, 2023 2022 Fees: Acquisition fees $ — $ 1,484,822 Financing fees 84,000 1,719,851 Asset management fees 1,860,496 1,368,584 $ 1,944,496 $ 4,573,257 Reimbursements: Offering costs $ 1,163,681 $ 1,831,075 General and administrative 2,332,578 2,753,552 Sales and marketing 134,459 224,011 Acquisition costs 190,995 44,318 $ 3,821,713 $ 4,852,956 |
NHS | |
Related Party Transactions | |
Schedule of fees and reimbursements incurred and payable | Incurred Payable as of For the Nine Months Ended September 30, September 30, December 31, 2023 2022 2023 2022 Fees: Management fees $ 835,776 $ 489,107 $ 145,129 $ 145,733 Administrative fees 94,033 91,922 16,672 22,791 Accounting fees 122,024 78,418 17,820 31,164 $ 1,051,833 $ 659,447 $ 179,621 $ 199,688 Reimbursements $ 639,528 $ 341,150 $ 196,469 $ 143,009 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
STOCKHOLDERS' EQUITY | |
Schedule of distributions | Distribution Net Cash Distributions Declared Per Distributions Paid (3) Flows Provided By Period Declared (1) Share (1) (2) Cash Reinvested Total Operations First Quarter 2023 $ 1,779,846 $ 0.175 $ 1,424,802 $ 395,820 $ 1,820,622 $ 264,655 Second Quarter 2023 1,794,077 0.175 1,317,166 384,772 1,701,938 3,484,371 Third Quarter 2023 1,816,105 0.175 1,344,743 381,033 1,725,776 2,285,665 $ 5,390,028 $ 0.525 $ 4,086,711 $ 1,161,625 $ 5,248,336 $ 6,034,691 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 $ (3,245,454) Second Quarter 2022 1,540,200 0.175 1,203,791 526,159 1,729,950 68,428 Third Quarter 2022 1,821,829 0.175 1,094,353 452,923 1,547,276 2,173,668 $ 4,918,337 $ 0.525 $ 3,231,608 $ 1,546,322 $ 4,777,930 $ (1,003,358) (1) Distributions for the period from January 1, 2022 through September 30, 2023 were payable to each stockholder as 100% in cash on a monthly basis. (2) Assumes share was issued and outstanding each day that was a record date for distributions during the period presented. (3) Distributions for the period from January 1, 2022 through September 30, 2023 were paid on a monthly basis. In general, distributions for all record dates of a given month during such period are paid on or about the tenth day of the following month. |
ORGANIZATION (Details)
ORGANIZATION (Details) | 9 Months Ended | |||||||||
Apr. 07, 2023 USD ($) item | Sep. 30, 2023 USD ($) segment item $ / shares shares | Jan. 06, 2023 $ / shares | Dec. 31, 2022 USD ($) $ / shares | Sep. 30, 2022 item | Jun. 15, 2022 USD ($) | Dec. 31, 2021 USD ($) | 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 | 4 | |||||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | |||||||
Common LP Units | ||||||||||
Organization | ||||||||||
Units issued price (In dollars per share) | $ / shares | 10.57 | |||||||||
Value of outstanding units | $ 4,161,778 | $ 4,751,639 | ||||||||
Series T LP Units. | ||||||||||
Organization | ||||||||||
Units issued price (In dollars per share) | $ / shares | $ 10.57 | |||||||||
Value of outstanding units | $ 45,739,120 | 45,739,120 | ||||||||
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 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 GO LP Units | ||||||||||
Organization | ||||||||||
Value of outstanding units | $ 12,655,262 | $ 14,688,392 | ||||||||
Series GO II LP Units | ||||||||||
Organization | ||||||||||
Value of outstanding units | $ 205,121 | |||||||||
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 | Series GO II LP Units | ||||||||||
Organization | ||||||||||
Number of outstanding partnership units | shares | 41,622 | |||||||||
Maximum offering | $ 30,000,000 | |||||||||
Maximum offering per the sole discretion of the General Partner | $ 60,000,000 | |||||||||
Number of extension period | item | 2 | |||||||||
Units offering extension period (Year) | 1 year | |||||||||
Cumulative number of shares issued | shares | 41,622 | |||||||||
Cumulative proceeds from issuance of stock | $ 300,000 | |||||||||
Percentage of purchase price equal to NAV | 75% | |||||||||
Interval Common Stock | Operating Partnership | ||||||||||
Organization | ||||||||||
Number of outstanding partnership units | shares | 0 | |||||||||
Private offering | ||||||||||
Organization | ||||||||||
Cumulative number of shares repurchased | shares | 287,525 | |||||||||
Cumulative stock repurchased, original investment | $ 2,858,355 | |||||||||
Cumulative stock repurchased under DRIP, original investment | $ 2,794,469 | |||||||||
Private offering | Series GO LP Units | ||||||||||
Organization | ||||||||||
Maximum offering | $ 20,000,000 | $ 20,000,000 | ||||||||
Maximum offering per the sole discretion of the General Partner | $ 30,000,000 | $ 30,000,000 | ||||||||
Cumulative number of units issued since inception of the Offering | 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 | shares | 612,100 | |||||||||
Units issued price (In dollars per share) | $ / shares | $ 10.57 | |||||||||
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 | 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 | shares | 10,180,161 | |||||||||
Cumulative number of shares issued pursuant to the DRIP | shares | 1,134,142 | |||||||||
Cumulative proceeds from issuance of stock | $ 99,600,000 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Cash and Cash Equivalents | ||||
FDIC Insurance limit | $ 250,000 | $ 250,000 | ||
Advertising Costs | ||||
Advertising Expense | 740,592 | $ 518,745 | $ 1,999,611 | $ 1,127,524 |
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% | |||
Stock-Based Compensation | ||||
Stock-based compensation expense | $ 10,570 | $ 15,000 | $ 31,710 | $ 45,000 |
Income Taxes | ||||
Non eligibility term for REIT non compliance | 4 years | |||
Land improvements | ||||
Investment in Hotel Properties | ||||
Estimated useful lives | 15 years | 15 years | ||
Building improvements | ||||
Investment in Hotel Properties | ||||
Estimated useful lives | 40 years | 40 years | ||
Furniture, fixtures, and equipment | Minimum | ||||
Investment in Hotel Properties | ||||
Estimated useful lives | 3 years | 3 years | ||
Furniture, fixtures, and equipment | Maximum | ||||
Investment in Hotel Properties | ||||
Estimated useful lives | 7 years | 7 years |
INVESTMENT IN HOTEL PROPERTIE_2
INVESTMENT IN HOTEL PROPERTIES - Summary (Details) | Sep. 30, 2023 USD ($) property room state | Dec. 31, 2022 USD ($) property |
Investment in hotel properties consisted of the following: | ||
Land and land improvements | $ 32,650,698 | $ 32,650,698 |
Building and building improvements | 241,278,409 | 241,278,409 |
Furniture, fixtures, and equipment | 22,808,984 | 21,884,508 |
Right of use asset - ground lease | 7,340,868 | 7,340,868 |
Construction in progress | 9,731,468 | 4,576,041 |
Investment in hotel properties, at cost | 313,810,427 | 307,730,524 |
Less: accumulated depreciation and amortization | (25,130,902) | (17,512,882) |
Investment in hotel properties, net | $ 288,679,525 | $ 290,217,642 |
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 | 1 |
Aggregate number of rooms in hotel properties | room | 2,261 | |
Number of states where hotel properties are owned | state | 10 |
INVESTMENT IN HOTEL PROPERTIE_3
INVESTMENT IN HOTEL PROPERTIES - VIE (Details) | Sep. 30, 2023 USD ($) | Dec. 31, 2022 USD ($) | Sep. 30, 2022 USD ($) | Aug. 10, 2022 property | Dec. 31, 2021 USD ($) |
Assets | |||||
Investment in hotel properties, net of accumulated depreciation | $ 288,679,525 | $ 290,217,642 | |||
Accumulated depreciation and amortization | 25,130,902 | 17,512,882 | |||
Cash and cash equivalents | 4,470,530 | 6,193,449 | $ 7,610,165 | $ 7,866,401 | |
Restricted Cash | 10,796,560 | 10,732,832 | |||
Accounts receivable, net | 1,511,116 | 1,468,732 | |||
Prepaid expenses and other assets | 2,436,798 | 1,409,993 | |||
Assets | 310,127,851 | 312,385,762 | |||
Liabilities | |||||
Debt, net | 192,848,681 | 189,678,547 | |||
Finance lease liabilities | 13,058,478 | 13,026,849 | |||
Accounts Payable | 4,508,798 | 3,034,148 | |||
Accrued expenses | 5,453,363 | 5,853,519 | |||
Total liabilities (variable interest entities - $17,664,175 and $18,390,067) | 232,265,592 | 223,393,216 | |||
Variable Interest Entity, Primary Beneficiary | |||||
Assets | |||||
Investment in hotel properties, net of accumulated depreciation | 21,371,337 | 22,036,289 | |||
Accumulated depreciation and amortization | 1,086,350 | 471,491 | |||
Cash and cash equivalents | 324,274 | 493,056 | |||
Restricted Cash | 1,079,625 | 2,173,237 | |||
Accounts receivable, net | 255,531 | 154,976 | |||
Prepaid expenses and other assets | 31,264 | 67,068 | |||
Assets | 23,062,031 | 24,924,626 | |||
Liabilities | |||||
Debt, net | 12,126,473 | 12,244,068 | |||
Finance lease liabilities | 4,750,889 | 4,862,172 | |||
Accounts Payable | 176,313 | 182,692 | |||
Accrued expenses | 236,174 | 445,763 | |||
Other Liabilities | 374,326 | 655,372 | |||
Total liabilities (variable interest entities - $17,664,175 and $18,390,067) | $ 17,664,175 | $ 18,390,067 | |||
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) | 9 Months Ended | 12 Months Ended | |||||||
Dec. 22, 2022 USD ($) room shares | Aug. 25, 2022 USD ($) room shares | Aug. 10, 2022 USD ($) room | Aug. 03, 2022 USD ($) room shares | Mar. 29, 2022 USD ($) room | Feb. 08, 2022 USD ($) room | Jan. 18, 2022 USD ($) room | Sep. 30, 2023 USD ($) item property | Dec. 31, 2022 USD ($) property room | |
Acquisitions | |||||||||
Number of hotel properties acquired | property | 0 | 7 | |||||||
Number of hotel properties not owned by the Company | property | 1 | 1 | |||||||
Number of guest rooms | room | 744 | ||||||||
Purchase Price | $ 94,930,000 | ||||||||
Transaction Costs | 3,041,428 | ||||||||
Total | $ 97,971,428 | ||||||||
Business combination, acquisition related costs | $ 571,198 | ||||||||
Management Agreement With Vista Host Inc [Member] | |||||||||
Acquisitions | |||||||||
Management agreement, number of renewal periods | item | 2 | ||||||||
Successive renewal term | 5 years | ||||||||
Management Agreement With HP Hotel Management Inc [Member] | |||||||||
Acquisitions | |||||||||
Initial term of management agreement | 3 years | ||||||||
Successive renewal term | 3 years | ||||||||
Management Agreement With KAJ Hospitality Inc [Member] | |||||||||
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") | 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 | |||||||||
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% | ||||||||
Hilton Garden Inn, (the "El Paso University Property") | El Paso University Amended Agreements | HDI | |||||||||
Acquisitions | |||||||||
Loan interest rate, counterparty | 4.939% | ||||||||
Loan principal amount, counterparty | $ 14,400,000 | ||||||||
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 | $ 2,729,211 | ||||||||
Units issued as consideration | shares | 249,921 | ||||||||
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 | ||||||||
Asset acquisition, new loan | $ 5,600,000 | ||||||||
Holiday Inn (the "Wichita Property") | Series T LP Units. | |||||||||
Acquisitions | |||||||||
Amount of units issued as consideration | $ 1,217,625 | ||||||||
Units issued as consideration | shares | 121,762 | ||||||||
Cash consideration | $ 500,000 |
INVESTMENT IN HOTEL PROPERTIE_5
INVESTMENT IN HOTEL PROPERTIES - Purchase Price Allocation (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Acquisitions | ||
Land and Land Improvements | $ 32,650,698 | $ 32,650,698 |
Building and building improvements | 241,278,409 | 241,278,409 |
Furniture, fixtures, and equipment | 22,808,984 | 21,884,508 |
Assets | $ 310,127,851 | 312,385,762 |
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 | |
Assets | 97,971,428 | |
Assumed mortgage debt | 7,198,709 | |
Net purchase price | $ 90,772,719 |
INVESTMENT IN HOTEL PROPERTIE_6
INVESTMENT IN HOTEL PROPERTIES - Assets and liabilities of the business combination (Details) - High Desert Garden Holdings, LLC | 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 ($) | 9 Months Ended | ||||
Aug. 10, 2022 | Dec. 03, 2021 | Sep. 30, 2023 | Dec. 31, 2022 | Jan. 01, 2022 | |
Ground Lease | |||||
Lease liability | $ 13,058,478 | $ 13,026,849 | |||
Right of use asset - ground lease | $ 7,340,868 | $ 7,340,868 | |||
Sheraton Hotel (the "Northbrook Property") | |||||
Ground Lease | |||||
Above market ground lease liability at acquisition date | $ 5,497,061 | ||||
Lease Term | 61 years | ||||
Period of time that has expired on lease at time of acquisition | 15 years | ||||
Yearly percentage increase in base rent | 3% | ||||
Discount rate percentage | 7.75% | ||||
Finance lease, interest expense | $ 478,295 | ||||
Right-of-use amortization expense | $ 40,414 | ||||
Hilton Garden Inn, (the "El Paso University Property") | |||||
Ground Lease | |||||
Lease Term | 32 years | ||||
Discount rate percentage | 9% | ||||
Lease liability | $ 4,862,172 | ||||
Right of use asset - ground lease | $ 4,862,172 | ||||
Adjustment term of annual base rent | 5 years | ||||
Accounting Standards Update 2016-02 | Cumulative Effect, Period of Adoption, Adjusted Balance | Sheraton Hotel (the "Northbrook Property") | |||||
Ground Lease | |||||
Lease liability | $ 7,975,757 | ||||
Right of use asset - ground lease | $ 2,478,696 |
INVESTMENT IN HOTEL PROPERTIE_8
INVESTMENT IN HOTEL PROPERTIES - Lease Payments (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Reconciliation of undiscounted cash flows to finance lease liability: | ||
2023 | $ 113,633 | |
2024 | 610,237 | |
2025 | 624,112 | |
2026 | 645,791 | |
2027 | 660,511 | |
Thereafter | 44,016,797 | |
Total finance lease payments | 46,671,081 | |
Interest | (33,612,603) | |
Present value of finance lease liabilities | $ 13,058,478 | $ 13,026,849 |
DEBT - Lines of Credit (Details
DEBT - Lines of Credit (Details) - USD ($) $ in Thousands | 9 Months Ended | |||||||||
Oct. 09, 2023 | Sep. 30, 2023 | Aug. 23, 2024 | Mar. 27, 2024 | Jul. 31, 2023 | Apr. 18, 2023 | Jan. 12, 2023 | Aug. 10, 2022 | May 06, 2021 | Feb. 10, 2020 | |
Western Line of Credit | Subsequent Event | ||||||||||
Debt | ||||||||||
Maximum borrowing capacity | $ 4,670 | |||||||||
Loan Principal Curtailment | 300 | |||||||||
Revolving line of credit | Western Line of Credit | ||||||||||
Debt | ||||||||||
Maximum borrowing capacity | $ 5,000 | $ 5,000 | ||||||||
Outstanding amount | $ 5,000 | |||||||||
Interest rate (as a percent) | 4% | |||||||||
Interest rate (as a percent) | 9% | |||||||||
Additional partnership units held as collateral | 200,000 | |||||||||
Partnership units held as collateral | 300,000 | |||||||||
Partnership units pledged | 300,000 | |||||||||
Revolving line of credit | Western Line of Credit | Subsequent Event | ||||||||||
Debt | ||||||||||
Maximum borrowing capacity | 4,670 | |||||||||
Outstanding amount | $ 4,200 | |||||||||
Loan Principal Curtailment | $ 300 | |||||||||
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 | ||||||||||
Maximum borrowing capacity | $ 13,300 | $ 13,300 | $ 10,000 | $ 5,000 | ||||||
Outstanding amount | $ 11,100 | |||||||||
Interest rate (as a percent) | 7% | 7% | ||||||||
Revolving line of credit | A-1 Line of Credit | Subsequent Event | ||||||||||
Debt | ||||||||||
Maximum borrowing capacity | $ 15,500 | |||||||||
Outstanding amount | $ 15,100 | |||||||||
Interest rate (as a percent) | 14.50% | |||||||||
Revolving line of credit | A-1 Line of Credit | Common LP Units | ||||||||||
Debt | ||||||||||
Partnership units held as collateral | 1,330,000 | 1,000,000 | ||||||||
Revolving line of credit | A-1 Line of Credit | Common LP Units | Subsequent Event | ||||||||||
Debt | ||||||||||
Partnership units held as collateral | 1,550,000 |
DEBT - NHS loan (Details)
DEBT - NHS loan (Details) - NHS Loan - USD ($) | Mar. 06, 2023 | Sep. 30, 2023 |
Debt | ||
Principal amount | $ 600,000 | $ 600,000 |
Interest rate (as a percent) | 7% | 7% |
Number of securities or shares or partnership units | 60,000 |
DEBT - Mortgage Debt (Details)
DEBT - Mortgage Debt (Details) | 9 Months Ended | |
Sep. 30, 2023 USD ($) property loan | Dec. 31, 2022 USD ($) | |
Debt | ||
Outstanding balance | $ 195,395,507 | |
Mortgage Debt | ||
Debt | ||
Outstanding balance | $ 178,721,142 | $ 180,271,248 |
Number of properties as security for mortgage debt | property | 19 | |
Fixed Rate Mortgage Loans | ||
Debt | ||
Number of loans with fixed interest rates | loan | 16 | |
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) | 7% | |
Variable Rate Mortgage Loan | ||
Debt | ||
Weighted-average interest rate (as a percent) | 6.18% | |
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) | 11.44% | |
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) | 11.69% | |
Variable Rate Mortgage Loan Three | SOFR | ||
Debt | ||
Basis spread (as a percent) | 6.25% | |
Reference rate threshold (as a percent) | 10% | |
Effective interest rate (as a percent) | 11.58% | |
High Desert Garden Holdings, LLC, El Paso University Property | Mortgage Debt | ||
Debt | ||
Principal amount | $ 14,400,000 | |
Interest rate (as a percent) | 4.94% |
DEBT - Fort Collins Loan Refina
DEBT - Fort Collins Loan Refinancing (Details) | Apr. 18, 2023 USD ($) item |
New Fort Collins Loan Agreement | |
Debt | |
Loan amount | $ 11,200,000 |
Number of Options to Extend Debt Instrument Term | item | 3 |
Additional maturity term | 1 year |
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 |
New Fort Collins Loan Agreement | SOFR | |
Debt | |
Basis spread (as a percent) | 6.25% |
Original Fort Collins Loan Agreement | |
Debt | |
Interest rate (as a percent) | 7% |
Exit fee (as a percent) | 1.75% |
Repayments of Debt | $ 11,500,000 |
Number of Loans | item | 3 |
Original Fort Collins Loan Agreement | Tranche 1 | |
Debt | |
Loan amount | $ 10,298,535 |
Penalty Incurred On Repayment Of Debt | 0 |
Original Fort Collins Loan Agreement | Tranche 2 | |
Debt | |
Loan amount | 700,000 |
Penalty Incurred On Repayment Of Debt | 0 |
Original Fort Collins Loan Agreement | Tranche 3 | |
Debt | |
Loan amount | $ 501,465 |
DEBT - EI Paso HI Loan Modifica
DEBT - EI Paso HI Loan Modification (Details) - USD ($) | May 15, 2023 | May 12, 2021 | Sep. 30, 2023 |
Debt | |||
Outstanding balance | $ 195,395,507 | ||
Holiday Inn El Paso Loan | |||
Debt | |||
Loan amount | $ 7,900,000 | ||
Repayments of Debt | $ 300,000 | ||
Outstanding balance | 7,600,000 | ||
Amount agreed to deposit by the borrower in FF&E reserve | $ 819,674 | ||
Time period for the conversion of Series T LP Units in to Common LP Units | 48 months |
DEBT - Summary of Debt (Details
DEBT - Summary of Debt (Details) | 9 Months Ended | ||||||||
Sep. 30, 2023 USD ($) | Mar. 27, 2024 USD ($) loan | Oct. 09, 2023 USD ($) | Apr. 18, 2023 USD ($) | Mar. 06, 2023 | Jan. 12, 2023 USD ($) | Dec. 31, 2022 USD ($) | Aug. 10, 2022 USD ($) | Feb. 10, 2020 USD ($) | |
Outstanding Debt: | |||||||||
Outstanding balance | $ 195,395,507 | ||||||||
Premium on assumed debt, net | 200,994 | ||||||||
Deferred financing costs, net | (2,747,820) | ||||||||
Debt, net | 192,848,681 | $ 189,678,547 | |||||||
Revolving line of credit | |||||||||
Outstanding Debt: | |||||||||
Total Other Debt | 16,674,365 | 12,380,156 | |||||||
Mortgage Debt | |||||||||
Outstanding Debt: | |||||||||
Outstanding balance | 178,721,142 | 180,271,248 | |||||||
Premium on assumed debt, net | 200,994 | 221,082 | |||||||
Deferred financing costs, net | (2,747,820) | (3,193,939) | |||||||
Net Mortgage | 176,174,316 | 177,298,391 | |||||||
Western Line of Credit | Subsequent Event | |||||||||
Outstanding Debt: | |||||||||
Maximum borrowing capacity | $ 4,670,000 | ||||||||
Western Line of Credit | Revolving line of credit | |||||||||
Outstanding Debt: | |||||||||
Maximum borrowing capacity | $ 5,000,000 | $ 5,000,000 | |||||||
Interest rate (as a percent) | 9% | ||||||||
Total Other Debt | $ 4,966,625 | 5,000,000 | |||||||
Western Line of Credit | Revolving line of credit | Subsequent Event | |||||||||
Outstanding Debt: | |||||||||
Maximum borrowing capacity | $ 4,670,000 | ||||||||
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 | Revolving line of credit | |||||||||
Outstanding Debt: | |||||||||
Maximum borrowing capacity | $ 13,300,000 | $ 13,300,000 | $ 10,000,000 | $ 5,000,000 | |||||
Interest rate (as a percent) | 7% | 7% | |||||||
Total Other Debt | $ 11,107,740 | 7,380,156 | |||||||
A-1 Line of Credit | Revolving line of credit | Subsequent Event | |||||||||
Outstanding Debt: | |||||||||
Maximum borrowing capacity | $ 15,500,000 | ||||||||
NHS Loan | |||||||||
Outstanding Debt: | |||||||||
Maximum borrowing capacity | $ 600,000 | ||||||||
Interest rate (as a percent) | 7% | 7% | |||||||
Total Other Debt | $ 600,000 | ||||||||
Holiday Inn Express (the "Cedar Rapids Property") | Mortgage Debt | |||||||||
Outstanding Debt: | |||||||||
Interest rate (as a percent) | 5.33% | ||||||||
Outstanding balance | $ 5,724,580 | 5,799,804 | |||||||
Hampton Inn & Suites(the "Pineville Property") | Mortgage Debt | |||||||||
Outstanding Debt: | |||||||||
Interest rate (as a percent) | 5.13% | ||||||||
Outstanding balance | $ 8,422,579 | 8,580,586 | |||||||
Hampton Inn (the "Eagan Property") | Mortgage Debt | |||||||||
Outstanding Debt: | |||||||||
Interest rate (as a percent) | 4.60% | ||||||||
Outstanding balance | $ 8,896,931 | 9,063,528 | |||||||
Home2 Suites (the "Prattville Property") | Mortgage Debt | |||||||||
Outstanding Debt: | |||||||||
Interest rate (as a percent) | 4.13% | ||||||||
Outstanding balance | $ 9,038,276 | 9,199,041 | |||||||
Home2 Suites (the "Lubbock Home2 Property") | Mortgage Debt | |||||||||
Outstanding Debt: | |||||||||
Interest rate (as a percent) | 4.69% | ||||||||
Outstanding balance | $ 7,164,643 | 7,343,948 | |||||||
Fairfield Inn & Suites (the "Lubbock Home2 Property") | Mortgage Debt | |||||||||
Outstanding Debt: | |||||||||
Interest rate (as a percent) | 4.93% | ||||||||
Outstanding balance | $ 8,850,704 | 8,971,430 | |||||||
Homewood Suites (the "Southaven Property") | Mortgage Debt | |||||||||
Outstanding Debt: | |||||||||
Interest rate (as a percent) | 3.70% | ||||||||
Outstanding balance | $ 12,747,555 | 13,007,706 | |||||||
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) | 11.44% | ||||||||
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 | $ 7,600,000 | 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 | 13,947,217 | |||||||
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) | 11.69% | ||||||||
Outstanding balance | $ 3,766,639 | 3,766,639 | |||||||
Hampton Inn - Fargo | Mortgage Debt | |||||||||
Outstanding Debt: | |||||||||
Interest rate (as a percent) | 4% | ||||||||
Outstanding balance | $ 7,141,208 | 7,275,480 | |||||||
Courtyard By Marriott El Paso Property | |||||||||
Outstanding Debt: | |||||||||
Interest-only period | 18 months | ||||||||
Courtyard By Marriott El Paso Property | Mortgage Debt | |||||||||
Outstanding Debt: | |||||||||
Interest rate (as a percent) | 6.01% | ||||||||
Outstanding balance | $ 9,990,000 | 9,990,000 | |||||||
Fairfield Inn & Suites (the "Lakewood Property") | Subsequent Event | |||||||||
Outstanding Debt: | |||||||||
Number of Loans | loan | 2 | ||||||||
Fairfield Inn & Suites (the "Lakewood Property") | Mortgage Debt | |||||||||
Outstanding Debt: | |||||||||
Interest rate (as a percent) | 7% | ||||||||
Outstanding balance | $ 13,845,000 | 13,845,000 | |||||||
Residence Inn - Fort Collins | Mortgage Debt | |||||||||
Outstanding Debt: | |||||||||
Interest rate (as a percent) | 11.58% | ||||||||
Outstanding balance | $ 11,200,000 | ||||||||
Residence Inn - Fort Collins A-1 | Mortgage Debt | |||||||||
Outstanding Debt: | |||||||||
Interest rate (as a percent) | 7% | ||||||||
Outstanding balance | $ 501,465 | 11,500,000 | |||||||
Hilton Garden Inn, (the "El Paso University Property") | Mortgage Debt | |||||||||
Outstanding Debt: | |||||||||
Interest rate (as a percent) | 4.94% | ||||||||
Outstanding balance | $ 12,417,345 | 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 | 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 | 9,805,000 | |||||||
Holiday Inn Express - Wichita | Mortgage Debt | |||||||||
Outstanding Debt: | |||||||||
Interest rate (as a percent) | 6.41% | ||||||||
Outstanding balance | $ 5,642,000 | $ 5,642,000 |
DEBT - Future Minimum Payments
DEBT - Future Minimum Payments (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Future minimum payments | ||
2023 | $ 16,677,105 | |
2024 | 53,616,109 | |
2025 | 58,377,761 | |
2026 | 20,677,037 | |
2027 | 37,472,452 | |
Thereafter | 8,575,043 | |
Total | 195,395,507 | |
Premium on assumed debt, net | 200,994 | |
Deferred financing costs, net | (2,747,820) | |
Debt, net | $ 192,848,681 | $ 189,678,547 |
FAIR VALUE OF FINANCIAL INSTR_2
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) | Sep. 30, 2023 | Dec. 31, 2022 |
Fair value of financial instruments | ||
Gross carrying value | $ 195,395,507 | |
Mortgage Debt | ||
Fair value of financial instruments | ||
Fair value | 175,600,000 | $ 175,800,000 |
Gross carrying value | $ 178,721,142 | $ 180,271,248 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Income Taxes | |||
Income taxes paid | $ 0 | $ 0 | |
Uncertain tax positions | 0 | $ 0 | |
Deferred tax asset valuation allowance | 8,100,000 | 7,300,000 | |
Net deferred tax liability | 3,200,000 | 3,300,000 | |
Federal | |||
Income Taxes | |||
NOL carryforwards | 6,800,000 | 6,300,000 | |
State | |||
Income Taxes | |||
NOL carryforwards | $ 1,300,000 | $ 1,000,000 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Mar. 06, 2023 USD ($) shares | Sep. 30, 2023 USD ($) shares | Sep. 30, 2022 USD ($) shares | Sep. 30, 2023 USD ($) $ / room $ / property shares | Sep. 30, 2022 USD ($) shares | Dec. 31, 2022 USD ($) | Apr. 18, 2023 USD ($) | |
Related Party Transactions | |||||||
Distributions Paid | $ 5,283,193 | $ 3,694,927 | |||||
Accrued guarantee fees | $ 1,170,156 | $ 1,170,156 | |||||
New Fort Collins Loan Agreement | |||||||
Related Party Transactions | |||||||
Loan amount | $ 11,200,000 | ||||||
Advisor And Affiliates | |||||||
Related Party Transactions | |||||||
Guarantee fees (as a percent) | 1% | 1% | |||||
Reimbursements payable | $ 8,675,105 | $ 8,675,105 | $ 5,612,134 | ||||
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 | ||||||
Loan amount | $ 600,000 | 600,000 | $ 600,000 | ||||
Interest rate (as a percent) | 7% | ||||||
Number of securities or shares or partnership units | shares | 60,000 | ||||||
Corey Maple | |||||||
Related Party Transactions | |||||||
Accrued guarantee fees | 114,199 | 114,199 | 155,676 | ||||
Corey Maple | New Fort Collins Loan Agreement | |||||||
Related Party Transactions | |||||||
Loan amount | 11,200,000 | 11,200,000 | |||||
Norman Leslie | |||||||
Related Party Transactions | |||||||
Accrued guarantee fees | 114,199 | 114,199 | 155,676 | ||||
Norman Leslie | New Fort Collins Loan Agreement | |||||||
Related Party Transactions | |||||||
Loan amount | 11,200,000 | 11,200,000 | |||||
Home2 Suites (the "Prattville Property") | Corey Maple | |||||||
Related Party Transactions | |||||||
Loan amount | 9,600,000 | 9,600,000 | |||||
Hampton Inn & Suites(the "Pineville Property") | |||||||
Related Party Transactions | |||||||
Loan amount | 9,300,000 | $ 9,300,000 | |||||
Hilton Garden Inn (the "Houston Property") | Corey Maple | |||||||
Related Party Transactions | |||||||
Related party loan guarantee percentage | 50 | ||||||
Loan amount | 13,900,000 | $ 13,900,000 | |||||
Homewood Suites, Southhaven, Mississippi | Corey Maple | |||||||
Related Party Transactions | |||||||
Loan amount | 13,500,000 | 13,500,000 | |||||
Homewood Suites, Fargo, North Dakota | Corey Maple | |||||||
Related Party Transactions | |||||||
Loan amount | 7,400,000 | 7,400,000 | |||||
Holiday Inn (the "EI Paso Property") | Corey Maple | |||||||
Related Party Transactions | |||||||
Loan amount | $ 14,400,000 | $ 14,400,000 | |||||
Holiday Inn (the "Wichita Property") | Corey Maple | |||||||
Related Party Transactions | |||||||
Related party loan guarantee percentage | 50 | ||||||
Revolving line of credit | Corey Maple | |||||||
Related Party Transactions | |||||||
Partnership units held as collateral | shares | 100,000 | 100,000 | |||||
Revolving line of credit | Legendary Capital REIT III, LLC | |||||||
Related Party Transactions | |||||||
Revolving line of credit | $ 5,000,000 | $ 5,000,000 | |||||
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% | ||||||
Distributions payable | $ 90,805 | $ 86,118 | $ 269,501 | 246,297 | |||
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 | Advisor And Affiliates | |||||||
Related Party Transactions | |||||||
Distributions payable | $ 589,119 | $ 256,948 | |||||
Advisory Agreement | Legendary Capital REIT III, LLC | Corey Maple | |||||||
Related Party Transactions | |||||||
Distributions Paid | $ 30,092 | $ 30,092 | |||||
Number of shares held by shareholders | shares | 57,319 | 57,319 | 57,319 | 57,319 | |||
Advisory Agreement | Legendary Capital REIT III, LLC | Norman Leslie | |||||||
Related Party Transactions | |||||||
Distributions Paid | $ 30,092 | $ 30,092 | |||||
Number of shares held by shareholders | shares | 57,319 | 57,319 | 57,319 | 57,319 |
RELATED PARTY TRANSACTIONS - Le
RELATED PARTY TRANSACTIONS - Legendary Capital (Details) - Advisor And Affiliates - USD ($) | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Related Party Transactions | ||
Fees incurred | $ 1,944,496 | $ 4,573,257 |
Reimbursements incurred | 3,821,713 | 4,852,956 |
Acquisition Fees | ||
Related Party Transactions | ||
Fees incurred | 1,484,822 | |
Financing Fees | ||
Related Party Transactions | ||
Fees incurred | 84,000 | 1,719,851 |
Asset Management Fees | ||
Related Party Transactions | ||
Fees incurred | 1,860,496 | 1,368,584 |
Offering Costs | ||
Related Party Transactions | ||
Reimbursements incurred | 1,163,681 | 1,831,075 |
General and Administrative | ||
Related Party Transactions | ||
Reimbursements incurred | 2,332,578 | 2,753,552 |
Sales and Marketing | ||
Related Party Transactions | ||
Reimbursements incurred | 134,459 | 224,011 |
Acquisition Costs | ||
Related Party Transactions | ||
Reimbursements incurred | $ 190,995 | $ 44,318 |
RELATED PARTY TRANSACTIONS - NH
RELATED PARTY TRANSACTIONS - NHS (Details) - NHS - USD ($) | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Related Party Transactions | |||
Fees incurred | $ 1,051,833 | $ 659,447 | |
Fees payable | 179,621 | $ 199,688 | |
Reimbursements incurred | 639,528 | 341,150 | |
Reimbursements payable | 196,469 | 143,009 | |
Management Fees. | |||
Related Party Transactions | |||
Fees incurred | 835,776 | 489,107 | |
Fees payable | 145,129 | 145,733 | |
Administrative Fees | |||
Related Party Transactions | |||
Fees incurred | 94,033 | 91,922 | |
Fees payable | 16,672 | 22,791 | |
Accounting Fees | |||
Related Party Transactions | |||
Fees incurred | 122,024 | $ 78,418 | |
Fees payable | $ 17,820 | $ 31,164 |
RELATED PARTY TRANSACTIONS - On
RELATED PARTY TRANSACTIONS - One Rep Construction, LLC (Details) - USD ($) | 9 Months Ended | ||
Sep. 30, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | |
One Rep Construction, LLC | |||
Related Party Transactions | |||
Reimbursements payable | $ 38,817 | $ 33,947 | |
One Rep Construction, LLC | Construction Management fees | |||
Related Party Transactions | |||
Fees payable | $ 191,803 | $ 159,177 | |
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% | ||
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) - Legendary A-1 Bonds, LLC | 12 Months Ended | ||||
Dec. 31, 2022 USD ($) property | Sep. 30, 2023 USD ($) | Apr. 18, 2023 USD ($) shares | Jan. 12, 2023 USD ($) shares | Aug. 09, 2022 USD ($) | |
Related Party Transactions | |||||
Loan amount | $ 42,500,000 | $ 0 | |||
Repayments of Debt | $ 28,200,000 | ||||
Number of hotel properties under which the loans are secured | property | 4 | ||||
A-1 Line of Credit | |||||
Related Party Transactions | |||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 13,300,000 | $ 10,000,000 | $ 5,000,000 | ||
Interest rate (as a percent) | 7% | ||||
Partnership Units Held As Collateral | shares | 1,330,000 | 1,000,000 | |||
Outstanding amount | $ 11,107,740 |
FRANCHISE AGREEMENTS - (Details
FRANCHISE AGREEMENTS - (Details) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2023 | Dec. 31, 2022 | |
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) | 9 Months Ended | ||||
Sep. 30, 2023 Vote $ / shares shares | Jan. 06, 2023 $ / shares | Dec. 31, 2022 $ / shares shares | Dec. 31, 2021 USD ($) | Jun. 01, 2018 USD ($) $ / 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 | $ 0.01 | ||
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 | 9 Months Ended | 21 Months Ended | ||||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | |
STOCKHOLDERS' EQUITY | |||||||||
Distributions Declared | $ 1,816,105 | $ 1,794,077 | $ 1,779,846 | $ 1,821,829 | $ 1,540,200 | $ 1,556,308 | $ 5,390,028 | $ 4,918,337 | |
Distribution Declared Per Share | $ 0.175 | $ 0.175 | $ 0.175 | $ 0.175 | $ 0.175 | $ 0.175 | $ 0.525 | $ 0.525 | |
Distributions paid in cash | $ 1,344,743 | $ 1,317,166 | $ 1,424,802 | $ 1,094,353 | $ 1,203,791 | $ 933,464 | $ 4,086,711 | $ 3,231,608 | |
Distributions reinvested | 381,033 | 384,772 | 395,820 | 452,923 | 526,159 | 567,240 | 1,161,625 | 1,546,322 | |
Total distributions | 1,725,776 | 1,701,938 | 1,820,622 | 1,547,276 | 1,729,950 | 1,500,704 | 5,248,336 | 4,777,930 | |
Net Cash Flows Provided By (Used In) Operations | $ 2,285,665 | $ 3,484,371 | $ 264,655 | $ 2,173,668 | $ 68,428 | $ (3,245,454) | $ 6,034,691 | $ (1,003,358) | |
Percentage of distribution in cash | 100% |
STOCKHOLDERS' EQUITY - Share Re
STOCKHOLDERS' EQUITY - Share Repurchase Program (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Dec. 31, 2022 | |
STOCKHOLDERS' EQUITY | |||||
Number of shares repurchased | 0 | 135,248 | |||
Stock repurchased, original investment | $ 1,352,472 | ||||
Value of stock repurchased | $ 133,266 | $ 575,879 | $ 638,174 | $ 1,347,319 | |
Share repurchase plan, amount available for eligible repurchases | $ 1,931,014 |
STOCKHOLDERS' EQUITY - Offering
STOCKHOLDERS' EQUITY - Offering Price and Share NAV (Details) - $ / shares | Sep. 30, 2023 | Jan. 06, 2023 | Jan. 05, 2023 | Dec. 31, 2022 |
Stockholders' Equity | ||||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | $ 0.01 | |
Net asset value per share (In dollars per share) | 10.57 | $ 10 | ||
Common LP Units | ||||
Stockholders' Equity | ||||
Units issued price (In dollars per share) | 10.57 | |||
Series T LP Units. | ||||
Stockholders' Equity | ||||
Units issued price (In dollars per share) | $ 10.57 |
STOCKHOLDERS' EQUITY - Interval
STOCKHOLDERS' EQUITY - Interval Common Stock (Details) | 9 Months Ended |
Sep. 30, 2023 $ / shares shares | |
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) | $ / shares | 9.50 |
Private offering | Interval Common Stock | |
Stockholders' Equity | |
Maximum number of shares authorized per the offering | shares | 3,000,000 |
Maximum number of shares authorized per the offering at the sole direction of the Board of Directors | shares | 6,000,000 |
Common stock, offering price | $ / shares | $ 10 |
STOCKHOLDERS' EQUITY - Noncontr
STOCKHOLDERS' EQUITY - Noncontrolling Interests (Details) | 9 Months Ended | |||||
Apr. 07, 2023 USD ($) item $ / shares | Sep. 30, 2023 USD ($) class $ / shares shares | Jan. 06, 2023 $ / shares | Dec. 31, 2022 USD ($) | Jun. 15, 2022 USD ($) | Jun. 15, 2020 USD ($) | |
Stockholders' Equity | ||||||
Number of classes of limited partner units | class | 5 | |||||
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 | $ / shares | $ 1 | |||||
Participating amount, any period after December 31, 2021 | $ / shares | 2 | |||||
Participating amount, any period after December 31, 2022 | $ / shares | $ 3 | |||||
Value of outstanding units | $ | $ 12,655,262 | $ 14,688,392 | ||||
Series B LP Units | ||||||
Stockholders' Equity | ||||||
Value of outstanding units | $ | $ (3,404,932) | (2,841,056) | ||||
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 | 45,739,120 | ||||
Units issued price (In dollars per share) | $ / shares | $ 10.57 | |||||
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 | $ | $ 4,161,778 | $ 4,751,639 | ||||
Units issued price (In dollars per share) | $ / shares | $ 10.57 | |||||
Series GO II 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 | $ / shares | $ 1 | |||||
Participating amount, any period after December 31, 2021 | $ / shares | 2 | |||||
Participating amount, any period after December 31, 2022 | $ / shares | $ 3 | |||||
Operating Partnership | Series B LP Units | ||||||
Stockholders' Equity | ||||||
Number of issued partnership units | shares | 1,000 | |||||
Private offering | Series GO LP Units | ||||||
Stockholders' Equity | ||||||
Maximum offering | $ | $ 20,000,000 | $ 20,000,000 | ||||
Maximum offering per the sole discretion of the General Partner | $ | $ 30,000,000 | $ 30,000,000 | ||||
Cumulative number of units issued since inception of the Offering | shares | 3,124,503 | |||||
Cumulative gross proceeds from issuance of units since inception of the Offering | $ | $ 21,500,000 | |||||
Private offering | Series GO II LP Units | ||||||
Stockholders' Equity | ||||||
Maximum offering | $ | $ 30,000,000 | |||||
Maximum offering per the sole discretion of the General Partner | $ | $ 60,000,000 | |||||
Number of extension period | item | 2 | |||||
Units offering extension period (Year) | 1 year | |||||
Cumulative number of units issued since inception of the Offering | shares | 41,622 | |||||
Cumulative gross proceeds from issuance of units since inception of the Offering | $ | $ 300,000 | |||||
Units issued price (In dollars per share) | $ / shares | $ 7.93 | |||||
Percentage of purchase price equal to NAV | 75% | |||||
Percentage of income sharing proportion | 25% | |||||
Private offering | Operating Partnership | Common LP Units | ||||||
Stockholders' Equity | ||||||
Cumulative number of units issued since inception of the Offering | shares | 612,100 | |||||
Units issued price (In dollars per share) | $ / shares | $ 10.57 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) | 1 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Aug. 28, 2023 USD ($) | Jan. 31, 2023 USD ($) room | Aug. 16, 2022 room | Nov. 30, 2019 USD ($) property | Sep. 30, 2023 USD ($) | Dec. 31, 2022 room | Apr. 22, 2023 USD ($) | |
COMMITMENTS AND CONTINGENCIES | |||||||
Number of guest rooms | room | 744 | ||||||
Real estate acquisition, additional consideration | $ 0 | ||||||
Loss contingency | $ 0 | ||||||
Advisor | |||||||
COMMITMENTS AND CONTINGENCIES | |||||||
SEC settlement, disgorgement | $ 463,900 | ||||||
Pennsylvania Purchase Agreement | Pennsylvania Hotel Properties | |||||||
COMMITMENTS AND CONTINGENCIES | |||||||
Number of real estate properties to be acquired | property | 3 | ||||||
Contractual consideration | $ 46,900,000 | ||||||
Escrow Deposit | $ 1,500,000 | ||||||
Sheraton Albuquerque Airport Contribution Agreement | Sheraton Albuquerque Airport Property | |||||||
COMMITMENTS AND CONTINGENCIES | |||||||
Number of guest rooms | room | 276 | ||||||
Escrow Deposit | $ 150,000 | ||||||
Earnest money deposit returned as a result of termination of contribution agreement | $ 300,000 | ||||||
College Station Voco Contribution Agreement | Aggieland Boutique Hotel | |||||||
COMMITMENTS AND CONTINGENCIES | |||||||
Number of guest rooms | room | 166 | ||||||
Property under contract, aggregate consideration to be transferred | $ 18,500,000 | ||||||
Escrow Deposit | $ 50,000 |
SUBSEQUENT EVENTS - A-1 Line of
SUBSEQUENT EVENTS - A-1 Line of Credit Amendments (Details) - A-1 Line of Credit - Revolving line of credit - USD ($) | Mar. 27, 2024 | Aug. 23, 2024 | Sep. 30, 2023 | Apr. 18, 2023 | Jan. 12, 2023 | Aug. 10, 2022 |
Subsequent Events | ||||||
Maximum borrowing capacity | $ 13,300,000 | $ 13,300,000 | $ 10,000,000 | $ 5,000,000 | ||
Outstanding amount | $ 11,100,000 | |||||
Subsequent Event | ||||||
Subsequent Events | ||||||
Maximum borrowing capacity | $ 15,500,000 | |||||
Extension fee | $ 133,000 | |||||
Interest rate (as a percent) | 14.50% | |||||
Exit fee (as a percent) | 1.50% | |||||
Outstanding amount | $ 15,100,000 | |||||
Common LP Units | ||||||
Subsequent Events | ||||||
Partnership units held as collateral | 1,330,000 | 1,000,000 | ||||
Common LP Units | Subsequent Event | ||||||
Subsequent Events | ||||||
Partnership units held as collateral | 1,550,000 |
SUBSEQUENT EVENTS - Western Lin
SUBSEQUENT EVENTS - Western Line of Credit Amendments and NHS Loan (Details) - USD ($) | May 10, 2024 | Oct. 09, 2023 | Aug. 23, 2024 | Sep. 30, 2023 | Feb. 10, 2020 |
Subsequent Events | |||||
Outstanding balance | $ 195,395,507 | ||||
Western Line of Credit | Revolving line of credit | |||||
Subsequent Events | |||||
Outstanding amount | 5,000,000 | ||||
Maximum borrowing capacity | $ 5,000,000 | $ 5,000,000 | |||
Western Line of Credit | Subsequent Event | |||||
Subsequent Events | |||||
Maximum borrowing capacity | $ 4,670,000 | ||||
Loan principal curtailment | 300,000 | ||||
Western Line of Credit | Subsequent Event | Revolving line of credit | |||||
Subsequent Events | |||||
Repayments of line of credit | $ 250,000 | ||||
Outstanding amount | $ 4,200,000 | ||||
Maximum borrowing capacity | 4,670,000 | ||||
Loan principal curtailment | $ 300,000 | ||||
NHS Loan | Subsequent Event | |||||
Subsequent Events | |||||
Outstanding balance | $ 600,000 |
SUBSEQUENT EVENTS - Lakewood Lo
SUBSEQUENT EVENTS - Lakewood Loan Extension, Termination and New Loans (Details) - Subsequent Event | Mar. 27, 2024 USD ($) shares |
Original Lakewood Loan | |
Subsequent Events | |
Loan amount | $ 12,600,000 |
New Lakewood Loan | |
Subsequent Events | |
Loan amount | $ 12,000,000 |
Initial interest rate | 12.327% |
Additional maturity term | 6 months |
Extension fee | $ 60,000 |
Prepayment period | 30 days |
Debt instrument exit fee | $ 120,000 |
New Lakewood Loan | Minimum | |
Subsequent Events | |
Initial interest rate | 11% |
New Lakewood Loan | SOFR | |
Subsequent Events | |
Basis spread (as a percent) | 7% |
Basis spread on variable rate, extension period | 7.50% |
New A-1 Lakewood Loan | |
Subsequent Events | |
Payment of extension fee | $ 138,450 |
Exit fee (as a percent) | 1.50% |
Debt instrument, maximum borrowing capacity | $ 4,896,801 |
Interest rate (as a percent) | 14.50% |
Debt origination fee | $ 73,452 |
New A-1 Lakewood Loan | Common LP Units | |
Subsequent Events | |
Partnership units held as collateral | shares | 489,680 |
SUBSEQUENT EVENTS - El Paso HI
SUBSEQUENT EVENTS - El Paso HI Second Loan Modification (Details) - Holiday Inn El Paso Loan - Subsequent Event | May 15, 2024 USD ($) |
Subsequent Event [Line Items] | |
Extension fee | $ 76,000 |
Interest rate (as a percent) | 9% |
SUBSEQUENT EVENTS - Resolution
SUBSEQUENT EVENTS - Resolution of Litigation with PA Sellers (Details) - USD ($) | Aug. 28, 2023 | Nov. 20, 2023 |
Advisor | ||
Subsequent Events | ||
SEC settlement, disgorgement | $ 463,900 | |
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 | 0.4667% | |
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 | 0.5333% |
SUBSEQUENT EVENTS - Distributio
SUBSEQUENT EVENTS - Distributions Paid (Details) - Subsequent Event - USD ($) | Aug. 20, 2024 | Jul. 19, 2024 | Jun. 18, 2024 | May 20, 2024 | Apr. 22, 2024 | Jan. 16, 2024 | Dec. 06, 2023 | Nov. 07, 2023 | Oct. 24, 2023 |
Subsequent Event [Line Items] | |||||||||
Cash distributions declared | $ 356,690 | $ 345,775 | $ 311,181 | $ 271,667 | $ 237,857 | $ 471,271 | $ 471,485 | $ 473,526 | $ 451,660 |
DRIP distributions declared | $ 59,688 | $ 70,312 | $ 62,992 | $ 60,693 | $ 52,904 | $ 108,117 | $ 106,956 | $ 103,722 | $ 124,848 |
Common stock dividends per share declared on daily rate basis | $ 0.001366120 | $ 0.001366120 | $ 0.001232877 | $ 0.001095890 | $ 0.000958905 | $ 0.00191781 | $ 0.00191781 | $ 0.00191781 | $ 0.00191781 |
Annual dividend rate (as a percent) | 5% | 5% | 4.50% | 4% | 3.50% | 7% | 7% | 7% | 7% |
Share price (in dollars per share) | $ 10 | $ 10 | $ 10 | $ 10 | $ 10 | $ 10 | $ 10 | $ 10 | $ 10 |
Common LP Units | |||||||||
Subsequent Event [Line Items] | |||||||||
Cash distributions declared for Operating Partnership units | $ 25,504 | $ 25,504 | $ 22,954 | $ 20,403 | $ 17,853 | $ 35,706 | $ 35,706 | $ 35,706 | $ 35,706 |
Series GO LP Units | |||||||||
Subsequent Event [Line Items] | |||||||||
Cash distributions declared for Operating Partnership units | $ 130,186 | $ 130,186 | $ 117,169 | $ 104,150 | $ 91,131 | $ 182,262 | $ 182,164 | $ 181,841 | $ 175,525 |
SUBSEQUENT EVENTS - Properties
SUBSEQUENT EVENTS - Properties Under Contract, Pineville Property Sold, Status of the Offering, GO II Unit Offering (Details) | 12 Months Ended | ||||||
Aug. 15, 2024 USD ($) room | Jul. 23, 2024 USD ($) | Apr. 15, 2024 USD ($) room | Apr. 07, 2023 USD ($) shares | Dec. 31, 2022 room | Sep. 08, 2024 USD ($) shares | Sep. 30, 2023 USD ($) shares | |
Subsequent Event [Line Items] | |||||||
Number Of Guest Rooms | room | 744 | ||||||
Series GO II LP Units | |||||||
Subsequent Event [Line Items] | |||||||
Units issued and sold | shares | 363,426 | ||||||
Proceeds from units issued and sold | $ 2,700,000 | ||||||
Common Stock | Private offering | |||||||
Subsequent Event [Line Items] | |||||||
Cumulative number of shares issued since inception of the Offering | shares | 10,180,161 | ||||||
Cumulative number of shares issued pursuant to the DRIP | shares | 1,134,142 | ||||||
Cumulative gross proceeds from issuance of stock since inception of the Offering | $ 99,600,000 | ||||||
Subsequent Event | Hampton Stow Contribution Agreement | |||||||
Subsequent Event [Line Items] | |||||||
Number Of Guest Rooms | room | 84 | ||||||
Escrow Deposit | $ 50,000 | ||||||
Property under contract, aggregate consideration to be transferred | $ 10,200,000 | ||||||
Subsequent Event | Staybridge Stow Contribution Agreement | |||||||
Subsequent Event [Line Items] | |||||||
Number Of Guest Rooms | room | 92 | ||||||
Earnest money deposit returned per terms of Settlement Agreement | $ 10,900,000 | ||||||
Escrow Deposit | $ 50,000 | ||||||
Subsequent Event | Hampton Inn & Suites(the "Pineville Property") | |||||||
Subsequent Event [Line Items] | |||||||
Sale of property | $ 8,850,000 | ||||||
Subsequent Event | Common Stock | Private offering | |||||||
Subsequent Event [Line Items] | |||||||
Cumulative number of shares issued since inception of the Offering | shares | 10,284,915 | ||||||
Cumulative number of shares issued pursuant to the DRIP | shares | 1,203,059 | ||||||
Cumulative gross proceeds from issuance of stock since inception of the Offering | $ 100,600,000 |