Cover Page
Cover Page - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Mar. 26, 2024 | Jun. 30, 2023 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2023 | ||
Document Transition Report | false | ||
Entity File Number | 000-56623 | ||
Entity Registrant Name | STIRLING HOTELS & RESORTS, INC. | ||
Entity Incorporation, State or Country Code | MD | ||
Entity Tax Identification Number | 93-3514045 | ||
Entity Address, Address Line One | 14185 Dallas Parkway | ||
Entity Address, Address Line Two | Suite 1200 | ||
Entity Address, City or Town | Dallas | ||
Entity Address, State or Province | TX | ||
Entity Address, Postal Zip Code | 75254 | ||
City Area Code | 972 | ||
Local Phone Number | 490-9600 | ||
Title of 12(g) Security | Class S Common Stock, $0.01 par value per share | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | No | ||
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 | ||
ICFR Auditor Attestation Flag | false | ||
Document Financial Statement Error Correction [Flag] | false | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 398 | ||
Documents Incorporated by Reference | This Annual Report on Form 10-K incorporates by reference the information contained in our Pre-Effective Amendment No. 1 to Form 10 filed on February 2, 2024. | ||
Entity Central Index Key | 0002003881 | ||
Current Fiscal Year End Date | --12-31 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2023 | ||
Document Fiscal Period Focus | FY | ||
Entity Public Float | $ 0 |
Audit Information
Audit Information | 12 Months Ended |
Dec. 31, 2023 | |
Audit Information [Abstract] | |
Auditor Name | BDO USA, P.C. |
Auditor Location | Dallas, Texas |
Auditor Firm ID | 243 |
CONSOLIDATED BALANCE SHEET
CONSOLIDATED BALANCE SHEET | Dec. 31, 2023 USD ($) |
ASSETS | |
Cash and cash equivalents | $ 0 |
Investment in Stirling REIT OP, LP | 24 |
Total Assets | 24 |
LIABILITIES AND EQUITY | |
Total Liabilities | 0 |
Commitments and contingencies (note 6) | |
Equity | |
Preferred stock | 0 |
Additional paid-in-capital | 25 |
Accumulated deficit | (1) |
Total equity | 24 |
Total Liabilities and Equity | 24 |
Class E Common Stock | |
Equity | |
Common stock | 0 |
Class D Common Stock | |
Equity | |
Common stock | 0 |
Class I Common Stock | |
Equity | |
Common stock | 0 |
Class S Common Stock | |
Equity | |
Common stock | 0 |
Class T Common Stock | |
Equity | |
Common stock | $ 0 |
CONSOLIDATED BALANCE SHEET (Par
CONSOLIDATED BALANCE SHEET (Parenthetical) | Dec. 31, 2023 $ / shares shares |
Preferred stock, par value (in dollars per shares) | $ / shares | $ 0.01 |
Preferred stock, shares authorized (in shares) | 100,000,000 |
Preferred stock, shares issued (in shares) | 0 |
Preferred stock, shares outstanding (in shares) | 0 |
Class E Common Stock | |
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 |
Common stock, shares authorized (in shares) | 100,000,000 |
Common stock, shares issued (in shares) | 0 |
Common stock, shares outstanding (in shares) | 0 |
Class D Common Stock | |
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 |
Common stock, shares authorized (in shares) | 300,000,000 |
Common stock, shares issued (in shares) | 0 |
Common stock, shares outstanding (in shares) | 0 |
Class I Common Stock | |
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 |
Common stock, shares authorized (in shares) | 300,000,000 |
Common stock, shares issued (in shares) | 1 |
Common stock, shares outstanding (in shares) | 1 |
Class S Common Stock | |
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 |
Common stock, shares authorized (in shares) | 300,000,000 |
Common stock, shares issued (in shares) | 0 |
Common stock, shares outstanding (in shares) | 0 |
Class T Common Stock | |
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 |
Common stock, shares authorized (in shares) | 300,000,000 |
Common stock, shares issued (in shares) | 0 |
Common stock, shares outstanding (in shares) | 0 |
CONSOLIDATED STATEMENT OF OPERA
CONSOLIDATED STATEMENT OF OPERATIONS | 4 Months Ended |
Dec. 31, 2023 USD ($) $ / shares shares | |
REVENUE | |
Total revenue | $ 0 |
EXPENSES | |
Total operating expenses | 0 |
Operating income (loss) | 0 |
Equity in earnings (loss) of Stirling REIT OP, LP | (1) |
Income (loss) before income taxes | (1) |
Income tax (expense) benefit | 0 |
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDER | $ (1) |
Basic: | |
Net income (loss) attributable to common stockholder (in dollars per share) | $ / shares | $ (1) |
Weighted average common shares outstanding - basic (in shares) | shares | 1 |
Diluted: | |
Net income (loss) attributable to common stockholder (in dollars per share) | $ / shares | $ (1) |
Weighted average common shares outstanding - diluted (in shares) | shares | 1 |
CONSOLIDATED STATEMENT OF COMPR
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS) | 4 Months Ended |
Dec. 31, 2023 USD ($) | |
Statement of Comprehensive Income [Abstract] | |
Net income (loss) | $ (1) |
Other comprehensive income (loss), net of tax: | |
Total other comprehensive income (loss) | 0 |
Comprehensive income (loss) | $ (1) |
CONSOLIDATED STATEMENT OF EQUIT
CONSOLIDATED STATEMENT OF EQUITY - 4 months ended Dec. 31, 2023 - USD ($) | Total | Common Stock Class I Common Stock | Additional Paid-in Capital | Accumulated Deficit |
Beginning balance, value at Aug. 31, 2023 | $ 0 | $ 0 | ||
Beginning balance, shares (in shares) at Aug. 31, 2023 | 0 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Issuance of common stock, net (in shares) | 1 | |||
Issuance of common stock | 25 | 25 | ||
Net income (loss) | (1) | $ (1) | ||
Ending balance, value at Dec. 31, 2023 | $ 24 | $ 25 | $ (1) | |
Ending balance, shares (in shares) at Dec. 31, 2023 | 1 |
CONSOLIDATED STATEMENT OF CASH
CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) | 4 Months Ended | 12 Months Ended |
Dec. 31, 2023 | Dec. 31, 2023 | |
Cash Flows from Operating Activities | ||
Net income (loss) | $ (1) | |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Equity in earnings (loss) of unconsolidated entities | 1 | $ 1 |
Net cash provided by (used in) operating activities | 0 | |
Cash Flows from Investing Activities | ||
Investment in unconsolidated entities | (25) | |
Net cash provided by (used in) investing activities | (25) | |
Cash Flows from Financing Activities | ||
Proceeds from issuance of common stock | 25 | |
Net cash provided by (used in) financing activities | 25 | |
Net increase (decrease) in cash, cash equivalents and restricted cash | 0 | |
Cash, cash equivalents and restricted cash at beginning of period | 0 | |
Cash, cash equivalents and restricted cash at end of period | 0 | 0 |
Supplemental Cash Flow Information | ||
Interest paid | 0 | |
Income taxes paid (refunded) | 0 | |
Supplemental Disclosure of Cash, Cash Equivalents and Restricted Cash | ||
Cash and cash equivalents at beginning of period | 0 | |
Restricted cash at beginning of period | 0 | |
Cash, cash equivalents and restricted cash at beginning of period | 0 | |
Cash and cash equivalents at end of period | 0 | 0 |
Restricted cash at end of period | 0 | 0 |
Cash, cash equivalents and restricted cash at end of period | $ 0 | $ 0 |
Organization
Organization | 12 Months Ended |
Dec. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization Stirling Hotels & Resorts, Inc. (the “Company”) was formed on September 1, 2023 as a Maryland corporation and intends to qualify as a real estate investment trust (“REIT”) for U.S. federal income tax purposes beginning with the taxable year ending December 31, 2024 and will make an election in 2025 upon filing its 2024 tax return. Substantially all of the Company’s business will be conducted through Stirling REIT OP, LP (“Stirling OP”), a Delaware limited partnership formed on September 26, 2023. The Company is the sole member of the sole general partner of Stirling OP and owns a non-economic general partner interest in Stirling OP. A wholly owned subsidiary of the Company is a limited partner of Stirling OP. Stirling REIT Special Limited Partner LLC (the “Special Limited Partner”), a Delaware limited partnership, owns a special limited partner interest in Stirling OP. In addition, in order for the income from any hotel property investments to constitute “rents from real properties” for purposes of the gross income test required for REIT qualification, the Company will lease each hotel property to a subsidiary of Stirling OP, which we intend to be treated as a taxable REIT subsidiary, or TRS. The Company was organized to invest primarily in a diverse portfolio of stabilized income-producing hotels and resorts across all chain scales primarily located in the United States and operated under widely recognized brands. The Company and Stirling OP is externally managed by Stirling REIT Advisors LLC (the “Advisor”), an affiliate of Ashford Inc. (“Ashford”), the Company’s sponsor. On December 6, 2023, Stirling OP acquired four hotel properties and assumed a mortgage loan secured by the four hotel properties (the “Initial Portfolio”) from Ashford Hospitality Limited Partnership (“Ashford Hospitality OP”) and Ashford TRS Corporation (“Ashford Hospitality TRS,” and together with Ashford Hospitality OP, the “Anchor Investor”), each a subsidiary of Ashford Hospitality Trust, Inc. (“Ashford Trust”), in exchange for Class I units of Stirling OP pursuant to the terms of the contribution agreement (the “Contribution Agreement”), by and among Stirling OP and the Anchor Investor. The gross contribution value was $56.2 million. Additionally, Stirling OP assumed a mortgage loan with a carrying value of $30.2 million. The acquisition also included $9.0 million of net working capital and reserves and was subject to customary post-closing adjustments resulting in a net contribution value of the Initial Portfolio of $35.0 million. Subsequent to December 31, 2023, estimated working capital and reserves were finalized resulting in the Anchor Investor returning 4,423 Class I units totaling approximately $111,000 to Stirling OP. The final net contribution value of the Initial Portfolio was $34.9 million. The Company determined the acquisition of the Initial Portfolio resulted in Ashford Trust becoming the primary beneficiary of Stirling OP in contemplation of: 1) the related party group comprised of (i) Ashford Trust and (ii) the initial stockholder who has control over election or removal of the board of directors of the Company that have power to direct the most significant activities of Stirling OP; and 2) the consideration that substantially all the economics are held by Ashford Trust through its equity interest, and substantially all of the activities are performed on Ashford Trust’s behalf. As a result, Ashford Trust began consolidating Stirling OP as of December 6, 2023. Pursuant to the Contribution Agreement the Anchor Investor entered into a lock-up agreement with respect to its Class I units that restrict the assignment, sale, and transfer of the units for a period of one year following the closing of the transactions contemplated by the Contribution Agreement (the “Lock-Up Agreement”). In addition, pursuant to the Lock-Up Agreement, the Anchor Investor is prohibited from redeeming the Class I units for a period of three years following such closing. At the end of the three-year period, the Class I units may be redeemed pursuant to the terms of the Stirling OP Agreement and any Class I units converted to shares of the Company’s Class I common stock may be repurchased by the Company pursuant to the terms and conditions of the Company’s share repurchase plan. In addition, the Anchor Investor agreed not to withdraw as a participant in the distribution reinvestment plan of Stirling OP, and thereby receive any distributions payable on its Class I units in additional Class I units, through December 31, 2024. Concurrently with entry into the Contribution Agreement, the Company, directly or through its wholly owned subsidiaries, entered into the Advisory Agreement, the Stirling OP Agreement, the Master Hotel Management Agreement and the Master Project Management Agreement, each as described in additional detail in note 4. |
Capitalization
Capitalization | 12 Months Ended |
Dec. 31, 2023 | |
Equity [Abstract] | |
Capitalization | Capitalization On September 5, 2023, the Company was capitalized with a $25 investment from its sole stockholder in exchange for the issuance of one share of the Company’s common stock. The Company is undertaking a continuous private offering to accredited investors, pursuant to which it will offer and sell up to $1,000,000,000 in shares of its common stock consisting of up to $900,000,000 in shares in the primary offering and up to $100,000,000 in shares pursuant to the distribution reinvestment plan (the “Offering”). The Company intends to sell any combination of four classes of shares of its common stock, Class T, Class S, Class D and Class I shares, with a dollar value up to the maximum offering amount. The share classes will have different upfront selling commissions, dealer manager fees and ongoing distribution fees. The purchase price per share for each class of common stock will vary and will generally equal the Company’s prior month’s net asset value (“NAV”) per share, as calculated monthly, plus applicable upfront selling commissions and dealer manager fees. The Company has authorized Class E shares for the Advisor and its affiliates for receipt in payment of the management fee and the distribution of the performance participation allocation. The Class E shares are not subject to any upfront selling commissions, dealer manager fees, distribution fees, management fees payable to the Advisor or the performance participation allocation to the Special Limited Partner. See note 4 for additional information on fees payable to the Advisor and its affiliates. On December 4, 2023, the Company filed with the Maryland State Department of Assessments and Taxation the (“SDAT”) Articles of Amendment and Restatement to provide that the Company has the authority to issue a total of 1,400,000,000 shares of capital stock, of which 1,300,000,000 shares are classified as common stock, of which 300,000,000 of which are classified as Class D common stock, 100,000,000 of which are classified as Class E common stock, 300,000,000 of which are classified as Class I common stock, 300,000,000 of which are classified as Class S common stock, 300,000,000 of which are classified as Class T common stock, and 100,000,000 shares are classified as preferred stock with a par value $0.01 per share. In addition, the sole share of common stock outstanding was reclassified as a Class I share of common stock. The Charter was effective upon filing. Distribution Reinvestment Plan We have adopted a distribution reinvestment plan whereby stockholders will have their cash distributions automatically reinvested in additional shares of our common stock unless they elect to receive their distributions in cash. If stockholders participate in our distribution reinvestment plan, the cash distributions attributable to the class of shares that they own will be automatically invested in additional shares of the same class. The purchase price for shares purchased under our distribution reinvestment plan will be equal to the most recently disclosed transaction price for such shares at the time of the record date of the distribution Stockholders will not pay upfront selling commissions or dealer manager fees when purchasing shares pursuant to the distribution reinvestment plan., but distribution fees will apply depending upon the class of shares purchased. Participants may terminate their participation in the distribution reinvestment plan with ten Share Repurchase Plan Stockholders may request on a monthly basis that we repurchase all or any portion of their shares pursuant to our share repurchase plan, we are not obligated to repurchase any shares and may choose to repurchase only some, or even none, of the shares that have been requested to be repurchased in any particular month in our discretion. In addition, our ability to fulfill repurchase requests is subject to a number of limitations. As a result, share repurchases may not be available each month. Under our share repurchase plan, to the extent we choose to repurchase shares in any particular month, we will only repurchase shares as of the opening of the last business day of that month (each such date, a “Repurchase Date”). Repurchases will be made at the transaction price in effect on the Repurchase Date, except that shares that have not been outstanding for at least one year will be repurchased at 95% of the transaction price (an “Early Repurchase Deduction”). The end of the one-year holding period will be measured as of the first business day immediately following the prospective repurchase date. Additionally, stockholders who have received shares of our common stock in exchange for their common units in Stirling OP may include the period of time such stockholder held such common units in Stirling OP for purposes of calculating the holding period for such shares of our common stock. The Early Repurchase Deduction may only be waived in the case of repurchase requests arising from the death or qualified disability of the holder and in other limited circumstances. We will begin share repurchases under the plan on the first month of the quarter following our first closing in the private offering. The Early Repurchase Deduction will not apply to shares acquired through our distribution reinvestment plan. The aggregate NAV of total repurchases (based on the price at which the shares are repurchased) of all classes (excluding any Early Repurchase Deduction applicable to the repurchased shares) is limited to no more than 2% of our aggregate NAV per month (measured using the aggregate NAV attributable to stockholders as of the end of the immediately preceding month) and no more than 5% of our aggregate NAV per calendar quarter (measured using the aggregate NAV attributable to stockholders as of the end of the immediately preceding quarter). In the event that we determine to repurchase some but not all of the shares submitted for repurchase during any month, shares submitted for repurchase during such month will be repurchased on a pro rata basis after we have repurchased all shares for which repurchase has been requested due to death or disability. All unsatisfied repurchase requests must be resubmitted after the start of the next month or quarter, or upon the recommencement of the share repurchase plan, as applicable. Shares held by our Advisor or the Special Limited Partner acquired as payment of our Advisor’s management fee or in respect of distributions on the performance participation interest, respectively, will not be subject to our share repurchase plan, including with respect to any repurchase limits or the Early Repurchase Deduction and will not be included in the calculation of our aggregate NAV for purposes of the 2% monthly or 5% quarterly limitations on repurchases. Declaration of Distributions On December 14, 2023, our board of directors declared a distribution for the month of December of $0.1042 per unit/share for outstanding OP unitholders and common stockholders of record as of the close of business on December 31, 2023, to be paid January 15, 2024. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation —The accompanying consolidated financial statement includes the accounts of the Company and its subsidiaries. All intercompany balances and transactions are eliminated in consolidation. Use of Estimates —The preparation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents —Cash and cash equivalents represent cash held in banks, cash on hand, and liquid investments with original maturities of three months or less at the date of purchase. The Company may have bank balances in excess of federally insured amounts; however, the Company deposits its cash and cash equivalents with high credit-quality institutions to minimize credit risk exposure. The Company did not hold cash or cash equivalents as of December 31, 2023. Investment in Stirling OP —Our investment in Stirling OP is accounted for under the equity method of accounting by recording the initial investment and our percentage of interest in the entities’ net income/loss. We review the investments for impairment each reporting period pursuant to the applicable authoritative accounting guidance. An investment is impaired when its estimated fair value is less than the carrying amount of our investment. Any other-than-temporary impairment is recorded in “equity in earnings (loss) of unconsolidated entities” in the consolidated statements of operations. No such impairment was recorded for the period from September 1, 2023 (date of inception) through December 31, 2023. Our investment in Stirling OP is considered to be variable interests in the underlying entities. Each VIE, as defined by authoritative accounting guidance, must be consolidated by a reporting entity if the reporting entity is the primary beneficiary because it has (i) the power to direct the VIE’s activities that most significantly impact the VIE’s economic performance, and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE. Because we do not have the power and financial responsibility to direct Stirling OP’s activities and operations, we are not considered to be the primary beneficiary of Stirling OP on an ongoing basis and therefore Stirling OP is not consolidated. Income Taxes —The Company is a taxable corporation for the period ended December 31, 2023. The Company intends to make an election to be taxed as a real estate investment trust (“REIT”) under Sections 856 through 860 of the Internal Revenue Code beginning with its taxable year ending December 31, 2024. Until that time, the Company will be subject to taxation at regular corporate rates under the Internal Revenue Code. If the Company qualifies for taxation as a REIT, the Company generally will not be subject to federal corporate income tax to the extent it distributes 90% of its taxable income to its stockholders. REITs are subject to a number of other organizational and operational requirements. Even if the Company qualifies for taxation as a REIT, it may be subject to certain state and local taxes on its income and property, and federal income and excise taxes on its undistributed income. Organization and Offering Expense s —The Advisor has agreed to advance organization and offering expenses on behalf of the Company (including legal, accounting, and other expenses attributable to the organization, but excluding upfront selling commissions, dealer manager fees and distribution fees) through December 31, 2024. Pursuant to the advisory agreement, the Company will reimburse the Advisor for all such advanced expenses ratably over a 60 month period commencing January 1, 2025. As of December 31, 2023, the Advisor and its affiliates have incurred organization and offering expenses on the Company’s behalf of approximately $2.1 million. These organization and offering expenses are not recorded in the accompanying financial statements because such costs are the responsibility of Stirling OP and are included in its balance sheet and statement of operations as of and for the year ended December 31, 2023. When recorded by the Company, organizational expenses will be expensed as incurred, and offering expenses will be charged to stockholders’ equity as such amounts will be reimbursed to the Advisor or its affiliates from the gross proceeds of the Offering. Any amount due to the Advisor but not paid will be recognized as a liability on the consolidated balance sheet. Operating Expenses —Operating expenses incurred directly by the Company are expensed in the period incurred. The Advisor will advance on behalf of the Company certain of the Company’s general and administrative expenses through December 31, 2024, at which point the Company will reimburse the Advisor for all such advanced expenses ratably over a 60 month period commencing January 1, 2025. Earnings Per Share —Basic net loss per share is computed by dividing net loss for the period by the weighted average number of shares of common stock outstanding during the period. Diluted loss per share is computed by dividing net loss for the period by the weighted average number of shares of common stock and common stock equivalents outstanding (unless their effect is anti-dilutive) for the period. The weighted average number of shares of common stock outstanding is identical for both basic and diluted shares for the period from September 1, 2023 (date of inception) through December 31, 2023. Recently Issued Accounting Standard s —In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 is effective for our annual periods beginning January 1, 2024, and for interim periods beginning January 1, 2025, with early adoption permitted. We are currently evaluating the potential effect that the updated standard will have on our financial statement disclosures. In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topics 740): Improvements to Income Tax Disclosures to expand the disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid. ASU 2023-09 is effective for our annual periods beginning January 1, 2025, with early adoption permitted. We are currently evaluating the potential effect that the updated standard will have on our financial statement disclosures. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2023 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Certain affiliates of the Company, including the Advisor, will receive fees and compensation in connection with the offering and ongoing management of the assets of the Company. Advisory Agreement —The Company entered into an advisory agreement (the “Advisory Agreement”) with the Advisor. Pursuant to the advisory agreement between the Company, Stirling OP, Stirling TRS Corporation (“Stirling TRS”), a Delaware corporation and the Company’s taxable REIT subsidiary, and the Advisor, the Advisor is responsible for sourcing, evaluating and monitoring the Company’s investment opportunities and making decisions related to the acquisition, management, financing and disposition of the Company’s assets, in accordance with the Company’s investment objectives, guidelines, policies and limitations, subject to oversight by the Company’s board of directors. The Advisor will be paid an annual management fee (payable monthly in arrears) of 1.25% of aggregate NAV represented by the Class T, Class S, Class D and Class I shares. Additionally, to the extent Stirling OP issues Class T, Class S, Class D or Class I operating partnership units to parties other than the Company, Stirling OP will pay the Advisor a management fee equal to 1.25% of the aggregate NAV of Stirling OP attributable to such Class T, Class S, Class D and Class I operating partnership units not held by the Company per annum payable monthly in arrears. No management fee will be paid with respect to Class E shares or Class E units of Stirling OP. The management fee is allocated on a class-specific basis and borne by all holders of the applicable class. The management fee will be paid, at the Advisor’s election, in cash, Class E shares or Class E units of Stirling OP. If the Advisor elects to receive any portion of its management fee in Class E shares or Class E units of Stirling OP, the Company may be obligated to repurchase such Class E shares or Class E units from the Advisor at a later date. Such repurchases will be outside the Company’s share repurchase plan and thus will not be subject to the repurchase limits of the share repurchase plan or any early repurchase deduction. The Company does not intend to pay the Advisor any acquisition or other similar fees in connection with making investments. The Company will, however, reimburse the Advisor for out-of-pocket expenses in connection with the selection and acquisition of properties and real estate related debt, whether or not such investments are acquired, and make payments to third parties in connection with making investments. In addition to organization and offering expense and acquisition expense reimbursements, the Company will reimburse the Advisor for out-of-pocket costs and expenses it incurs in connection with the services it provides to the Company, including, but not limited to, (i) the actual cost of goods and services used by the Company and obtained from third parties, including fees paid to administrators, consultants, attorneys, technology providers and other service providers, and brokerage fees paid in connection with the purchase and sale of investments, (ii) expenses of managing and operating the Company’s properties, whether payable to an affiliate or a non-affiliated person, and (iii) expenses related to personnel of the Advisor performing services for the Company other than those who provide investment advisory services or serve as executive officers of the Company. Stirling OP Agreement —Upon the amendment and restatement of the agreement of limited partnership of Stirling OP (the “Stirling OP Agreement”), the Special Limited Partner will hold a performance participation interest in Stirling OP that entitles it to receive an allocation from Stirling OP equal to 12.5% of the annual Total Return, subject to a 5% annual Hurdle Amount and a High-Water Mark, with a Catch-Up (each term as will be defined in the Stirling OP Agreement). Such allocation will be measured on a calendar basis, made quarterly and accrue monthly. Class E units of Stirling OP will not be subject to the performance participation allocation. Distributions on the performance participation interest may be payable in cash or Class E units at the election of the Special Limited Partner. To the extent that the Special Limited Partner elects to receive such distributions in Class E units, the Special Limited Partner may request that Stirling OP repurchase such Class E units for cash at the then-current NAV per unit. Repurchase requests for Class E units will not be subject to the one-year hold period provided for other limited partners. Master Hotel Management Agreement —The Company, through Stirling TRS, entered into a master hotel management agreement (the “Master Hotel Management Agreement”) with Remington Lodging & Hospitality, LLC (“Remington Hospitality”), a wholly owned subsidiary of Ashford, to provide hotel and restaurant management services for certain of the Company’s hotels. For providing these services, Remington Hospitality will receive a monthly base fee on assets managed that is equal to the greater of (i) $16,897 (to be increased annually based on any increases in CPI over the preceding annual period) or (ii) 3% of a property’s gross revenues. Remington Hospitality may also earn an incentive management fee that is equal to the lesser of (i) 1% of a hotel’s gross revenues for each fiscal year and (ii) the amount by which the actual house profit exceeds the budgeted house profit determined on a property-by-property basis. Master Project Management Agreement —The Company entered into a master project management agreement (the “Master Project Management Agreement”) with Premier Project Management LLC (“Premier”), a subsidiary of Ashford, to provide design, construction, architecture, development or project management, procurement and other project related services to the Company and its properties. For providing these services, Premier may earn a project management fee equal to 4% of the total project costs associated with the implementation of the capital improvement budget, an architecture fee that is 6.5% of the total construction costs, an interior design fee that is 6.0% of the purchase price of furniture, fixtures and equipment (“FFE”), a procurement fee of 8.0% of the purchase price of FFE (if the purchase price of such FFE exceeds $2,000,000 for a specific hotel in a calendar year, the procurement fee shall be reduced to 6.0% for all FFE purchased in excess of $2,000,000), a construction fee of 10% of the total construction costs (for projects without a general contractor), a freight expediting fee that is 8% of the cost of expediting FFE, a warehousing fee that is 8% of the cost of warehousing goods delivered to the job site and a development fee of 4% on the total project costs associated with a development project. Dealer Manager Agreement —The Company entered into a Dealer Manager Agreement with the Dealer Manager. Under the terms of the Dealer Manager Agreement, the Dealer Manager serves as the dealer manager, and certain participating broker-dealers solicit capital, for our private offering of Class T shares, Class S shares, Class D shares and Class I shares. The Dealer Manager is entitled to receive upfront selling commissions of up to 3.0%, and upfront dealer manager fees of 0.5%, of the transaction price of each Class T share sold in the primary offering, however such amounts may vary based on agreements between the Dealer Manager and certain selected dealers provided that the sum will not exceed 3.5% of the transaction price. The Dealer Manager is entitled to receive upfront selling commissions of up to 3.5% of the transaction price of each Class S share sold in the primary offering. The Dealer Manager is entitled to receive upfront selling commissions of up to 1.5% of the transaction price of each Class D share sold in the primary offering. The Dealer Manager anticipates that all or a portion of the upfront selling commissions and dealer manager fees will be retained by, or reallowed (paid) to, selected dealers. No upfront selling commissions or dealer manager fees will be paid with respect to purchases of Class I shares or shares of any class sold pursuant to our distribution reinvestment plan. From time-to-time Ashford Securities may serve as the Dealer Manager for future public or private programs with those offerings conducted concurrently with our offering. As a result, our sponsor and the Dealer Manager may face conflicts of interest arising from potential competition with these other programs for investors and investment capital. Miscellaneous Agreements |
Investment In Stirling REIT OP,
Investment In Stirling REIT OP, LP | 12 Months Ended |
Dec. 31, 2023 | |
Investments, All Other Investments [Abstract] | |
Investment In Stirling REIT OP, LP | Investment in Stirling REIT OP, LP The following tables summarizes the condensed consolidated balance sheet and our ownership interest in Stirling REIT OP, LP as of December 31, 2023, and the condensed consolidated statements of operations and our equity in earnings (loss) of Stirling REIT OP, LP for the year ended December 31, 2023: Stirling REIT OP, LP Condensed Consolidated Balance Sheet December 31, 2023 Total Assets $ 47,845,000 Total Liabilities 33,452,000 Total partners’ capital of Stirling REIT OP, LP 14,393,000 Total liabilities and partners’ capital of Stirling REIT OP, LP $ 47,845,000 Our ownership in Stirling REIT OP, LP $ 24 Stirling REIT OP, LP Condensed Consolidated Statement of Operations Year Ended December 31, 2023 Total revenue $ 16,846,000 Total operating expenses 16,966,000 Operating income (loss) (120,000) Interest expense, amortization and write-offs of deferred loan costs loan costs (1,809,000) Other income (expense) 3,000 Income tax (expense) benefit (405,000) Net income (loss) $ (2,331,000) Our equity in earnings (loss) of Stirling REIT OP, LP $ (1) |
Economic Dependency
Economic Dependency | 12 Months Ended |
Dec. 31, 2023 | |
Economic Dependency [Abstract] | |
Economic Dependency | Economic Dependency The Company will be dependent on the Advisor and its affiliates for certain services that are essential to it, including the sale of the Company’s shares of common stock, acquisition and disposition decisions, hotel management, and certain other responsibilities. In the event that the Advisor and its affiliates are unable to provide such services, the Company would be required to find alternative service providers. |
Commitment and Contingencies
Commitment and Contingencies | 12 Months Ended |
Dec. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies The Company may be subject, from time to time, to various legal proceedings and claims that arise in the ordinary course of business. As of December 31, 2023, the Company was not subject to any material litigation nor was the Company aware of any material litigation threatened against it. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On January 30, 2024, our board of directors declared a distribution for the month of January of $0.1042 per unit/share for outstanding OP unitholders and common stockholders of record as of the close of business on January 31, 2024, paid on February 15, 2024. On February 20, 2024, our board of directors declared a distribution for the month of February of $0.1042 per unit/share for outstanding OP unitholders and common stockholders of record as of the close of business on February 29, 2024, paid on March 15, 2024. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure | 4 Months Ended |
Dec. 31, 2023 USD ($) | |
Pay vs Performance Disclosure | |
Net income (loss) | $ (1) |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Dec. 31, 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) | 12 Months Ended |
Dec. 31, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation and Principles of Consolidation |
Principles of Consolidation | Basis of Presentation and Principles of Consolidation |
Use of Estimates | Use of Estimates —The preparation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents —Cash and cash equivalents represent cash held in banks, cash on hand, and liquid investments with original maturities of three months or less at the date of purchase. The Company may have bank balances in excess of federally insured amounts; however, the Company deposits its cash and cash equivalents with high credit-quality institutions to minimize credit risk exposure. The Company did not hold cash or cash equivalents as of December 31, 2023. |
Investment in Stirling OP | Investment in Stirling OP —Our investment in Stirling OP is accounted for under the equity method of accounting by recording the initial investment and our percentage of interest in the entities’ net income/loss. We review the investments for impairment each reporting period pursuant to the applicable authoritative accounting guidance. An investment is impaired when its estimated fair value is less than the carrying amount of our investment. Any other-than-temporary impairment is recorded in “equity in earnings (loss) of unconsolidated entities” in the consolidated statements of operations. No such impairment was recorded for the period from September 1, 2023 (date of inception) through December 31, 2023. Our investment in Stirling OP is considered to be variable interests in the underlying entities. Each VIE, as defined by authoritative accounting guidance, must be consolidated by a reporting entity if the reporting entity is the primary beneficiary because it has (i) the power to direct the VIE’s activities that most significantly impact the VIE’s economic performance, and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE. Because we do not have the power and financial responsibility to direct Stirling OP’s activities and operations, we are not considered to be the primary beneficiary of Stirling OP on an ongoing basis and therefore Stirling OP is not consolidated. |
Income Taxes | Income Taxes —The Company is a taxable corporation for the period ended December 31, 2023. The Company intends to make an election to be taxed as a real estate investment trust (“REIT”) under Sections 856 through 860 of the Internal Revenue Code beginning with its taxable year ending December 31, 2024. Until that time, the Company will be subject to taxation at regular corporate rates under the Internal Revenue Code. If the Company qualifies for taxation as a REIT, the Company generally will not be subject to federal corporate income tax to the extent it distributes 90% of its taxable income to its stockholders. REITs are subject to a number of other organizational and operational requirements. Even if the Company qualifies for taxation as a REIT, it may be subject to certain state and local taxes on its income and property, and federal income and excise taxes on its undistributed income. |
Organization And Offering Expenses | Organization and Offering Expense s —The Advisor has agreed to advance organization and offering expenses on behalf of the Company (including legal, accounting, and other expenses attributable to the organization, but excluding upfront selling commissions, dealer manager fees and distribution fees) through December 31, 2024. Pursuant to the advisory agreement, the Company will reimburse the Advisor for all such advanced expenses ratably over a 60 month period commencing January 1, 2025. As of December 31, 2023, the Advisor and its affiliates have incurred organization and offering expenses on the Company’s behalf of approximately $2.1 million. These organization and offering expenses are not recorded in the accompanying financial statements because such costs are the responsibility of Stirling OP and are included in its balance sheet and statement of operations as of and for the year ended December 31, 2023. When recorded by the Company, organizational expenses will be expensed as incurred, and offering expenses will be charged to stockholders’ equity as such amounts will be reimbursed to the Advisor or its affiliates from the gross proceeds of the Offering. Any amount due to the Advisor but not paid will be recognized as a liability on the consolidated balance sheet. |
Operating Expenses | Operating Expenses —Operating expenses incurred directly by the Company are expensed in the period incurred. The Advisor will advance on behalf of the Company certain of the Company’s general and administrative expenses through December 31, 2024, at which point the Company will reimburse the Advisor for all such advanced expenses ratably over a 60 month period commencing January 1, 2025. |
Earnings Per Share | Earnings Per Share —Basic net loss per share is computed by dividing net loss for the period by the weighted average number of shares of common stock outstanding during the period. Diluted loss per share is computed by dividing net loss for the period by the weighted average number of shares of common stock and common stock equivalents outstanding (unless their effect is anti-dilutive) for the period. The weighted average number of shares of common stock outstanding is identical for both basic and diluted shares for the period from September 1, 2023 (date of inception) through December 31, 2023. |
Recently Issued Accounting Standards | Recently Issued Accounting Standard s —In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07 Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures about significant segment expenses. ASU 2023-07 is effective for our annual periods beginning January 1, 2024, and for interim periods beginning January 1, 2025, with early adoption permitted. We are currently evaluating the potential effect that the updated standard will have on our financial statement disclosures. In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topics 740): Improvements to Income Tax Disclosures |
Investment In Stirling REIT O_2
Investment In Stirling REIT OP, LP (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Investments, All Other Investments [Abstract] | |
Investment In Stirling REIT OP, LP | The following tables summarizes the condensed consolidated balance sheet and our ownership interest in Stirling REIT OP, LP as of December 31, 2023, and the condensed consolidated statements of operations and our equity in earnings (loss) of Stirling REIT OP, LP for the year ended December 31, 2023: Stirling REIT OP, LP Condensed Consolidated Balance Sheet December 31, 2023 Total Assets $ 47,845,000 Total Liabilities 33,452,000 Total partners’ capital of Stirling REIT OP, LP 14,393,000 Total liabilities and partners’ capital of Stirling REIT OP, LP $ 47,845,000 Our ownership in Stirling REIT OP, LP $ 24 Stirling REIT OP, LP Condensed Consolidated Statement of Operations Year Ended December 31, 2023 Total revenue $ 16,846,000 Total operating expenses 16,966,000 Operating income (loss) (120,000) Interest expense, amortization and write-offs of deferred loan costs loan costs (1,809,000) Other income (expense) 3,000 Income tax (expense) benefit (405,000) Net income (loss) $ (2,331,000) Our equity in earnings (loss) of Stirling REIT OP, LP $ (1) |
Organization (Details)
Organization (Details) $ in Thousands | 3 Months Ended | ||
Dec. 06, 2023 USD ($) hotel | Mar. 28, 2024 USD ($) shares | Dec. 31, 2023 | |
Asset Acquisition [Line Items] | |||
Period to transfer units following the closing of transaction (in years) | 1 year | ||
Period before units can be redeemed (in years) | 3 years | ||
Year of inception | |||
Hotel Assets | |||
Asset Acquisition [Line Items] | |||
Number of assets acquired | hotel | 4 | ||
Purchase price of acquisition | $ 56,200 | ||
Net working capital and reserves | 9,000 | ||
Net contribution value | 35,000 | ||
Hotel Assets | Subsequent Event | |||
Asset Acquisition [Line Items] | |||
Net contribution value | $ 34,900 | ||
Hotel Assets | Class I Common Stock | Subsequent Event | Ashford Trust | |||
Asset Acquisition [Line Items] | |||
Shares returned (in shares) | shares | 4,423 | ||
Value of shares returned | $ 111 | ||
Hotel Assets | Mortgages | |||
Asset Acquisition [Line Items] | |||
Debt Balance | $ 30,200 |
Capitalization (Details)
Capitalization (Details) - USD ($) | Dec. 14, 2023 | Sep. 05, 2023 | Dec. 31, 2023 | Dec. 04, 2023 |
Temporary Equity [Line Items] | ||||
Additional paid-in-capital | $ 25 | $ 25 | ||
Issuance of common stock, net (in shares) | 1 | |||
Capital stock, shares authorized (in shares) | 1,400,000,000 | |||
Common stock, shares authorized (in shares) | 1,300,000,000 | |||
Preferred stock, shares authorized (in shares) | 100,000,000 | 100,000,000 | ||
Common stock, par value (in dollars per share) | $ 0.01 | |||
Preferred stock, par value (in dollars per shares) | $ 0.01 | $ 0.01 | ||
Termination notice period (in days) | 10 days | |||
Holding period | 1 year | |||
Early purchase deduction (as a percent) | 95% | |||
Percentage of share repurchase limitations per month (as a percent) | 2% | |||
Percentage of share repurchase limitation per calendar quarter (as a percent) | 5% | |||
Dividends declared - common stock (in dollars per share) | $ 0.1042 | |||
Private Offering | ||||
Temporary Equity [Line Items] | ||||
Sale of stock, authorized amount | $ 1,000,000,000 | |||
Primary Offering | ||||
Temporary Equity [Line Items] | ||||
Sale of stock, authorized amount | 900,000,000 | |||
Distribution Reinvestment Plan | ||||
Temporary Equity [Line Items] | ||||
Sale of stock, authorized amount | $ 100,000,000 | |||
Class D Common Stock | ||||
Temporary Equity [Line Items] | ||||
Common stock, shares authorized (in shares) | 300,000,000 | 300,000,000 | ||
Common stock, par value (in dollars per share) | $ 0.01 | |||
Class E Common Stock | ||||
Temporary Equity [Line Items] | ||||
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 | ||
Common stock, par value (in dollars per share) | $ 0.01 | |||
Class I Common Stock | ||||
Temporary Equity [Line Items] | ||||
Common stock, shares authorized (in shares) | 300,000,000 | 300,000,000 | ||
Common stock, par value (in dollars per share) | $ 0.01 | |||
Class S Common Stock | ||||
Temporary Equity [Line Items] | ||||
Common stock, shares authorized (in shares) | 300,000,000 | 300,000,000 | ||
Common stock, par value (in dollars per share) | $ 0.01 | |||
Class T Common Stock | ||||
Temporary Equity [Line Items] | ||||
Common stock, shares authorized (in shares) | 300,000,000 | 300,000,000 | ||
Common stock, par value (in dollars per share) | $ 0.01 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Reimbursement period (in months) | 60 months |
Operating expenses reimbursement period (in months) | 60 months |
Stirlings REIT OP | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Organization and operating expenses | $ 2.1 |
Related Party Transactions (Det
Related Party Transactions (Details) | Dec. 31, 2023 USD ($) |
Related Party Transaction [Line Items] | |
Annual management fee | 1.25% |
Percentage of total annual return (as a percent) | 12.50% |
Hurdle rate (as a percent) | 5% |
Monthly base fee on assets | $ 16,897 |
Monthly base fee on assets (as a percent) | 3% |
Incentive project management fee, percent of gross revenue | 1% |
Project management fee, percent of total gross revenues | 4% |
Project management fee, percent related to architecture fees | 6.50% |
Fees related to interior design (as a percent) | 6% |
Fees related to FFE purchasing, percent of purchase price | 8% |
Purchase price threshold for single hotel in calendar year | $ 2,000,000 |
Procurement fee for amount over purchase price threshold | 6% |
Fees related to construction (as a percent) | 10% |
Fees related to freight expediting (as a percent) | 8% |
Fees related to warehousing (as a percent) | 8% |
Fees related to development (as a percent) | 4% |
Class T Common Stock | |
Related Party Transaction [Line Items] | |
Percentage of upfront selling commissions, class T (as a percent) | 3% |
Percentage of upfront dealer manager fees, class T (as a percent) | 0.50% |
Percentage of transaction fee that will not exceed the sum (as a percent) | 3.50% |
Class S Common Stock | |
Related Party Transaction [Line Items] | |
Percentage of upfront selling commissions, class T (as a percent) | 3.50% |
Class D Common Stock | |
Related Party Transaction [Line Items] | |
Percentage of upfront selling commissions, class T (as a percent) | 1.50% |
Investment In Stirling REIT O_3
Investment In Stirling REIT OP, LP (Details) | 4 Months Ended | 12 Months Ended |
Dec. 31, 2023 USD ($) | Dec. 31, 2023 USD ($) | |
Schedule of Equity Method Investments [Line Items] | ||
Total Assets | $ 24 | $ 24 |
Total Liabilities | 0 | 0 |
Total Liabilities and Equity | 24 | 24 |
Our ownership in Stirling REIT OP, LP | 24 | 24 |
Total revenue | 0 | |
Operating income (loss) | 0 | |
Income tax (expense) benefit | 0 | |
Net income (loss) | (1) | |
Equity in earnings (loss) of Stirling REIT OP, LP | (1) | (1) |
Stirlings REIT OP | ||
Schedule of Equity Method Investments [Line Items] | ||
Our ownership in Stirling REIT OP, LP | 24 | 24 |
Stirlings REIT OP | ||
Schedule of Equity Method Investments [Line Items] | ||
Total Assets | 47,845,000 | 47,845,000 |
Total Liabilities | 33,452,000 | 33,452,000 |
Total partners’ capital of Stirling REIT OP, LP | 14,393,000 | 14,393,000 |
Total Liabilities and Equity | $ 47,845,000 | 47,845,000 |
Total revenue | 16,846,000 | |
Total operating expenses | 16,966,000 | |
Operating income (loss) | (120,000) | |
Interest expense, amortization and write-offs of deferred loan costs loan costs | (1,809,000) | |
Other income (expense) | 3,000 | |
Income tax (expense) benefit | (405,000) | |
Net income (loss) | $ (2,331,000) |
Subsequent Events (Details)
Subsequent Events (Details) - $ / shares | Feb. 20, 2024 | Jan. 30, 2024 | Dec. 14, 2023 |
Subsequent Event [Line Items] | |||
Dividends declared - common stock (in dollars per share) | $ 0.1042 | ||
Subsequent Event | |||
Subsequent Event [Line Items] | |||
Dividends declared - common stock (in dollars per share) | $ 0.1042 | $ 0.1042 |