Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2021 | May 13, 2021 | |
Document Information | ||
Entity Registrant Name | PROCACCIANTI HOTEL REIT, INC. | |
Entity Central Index Key | 0001692345 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2021 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Shell Company | false | |
Class K Common Stock | ||
Document Information | ||
Entity Common Stock, Shares Outstanding | 3,730,752 | |
Class K-I Common Stock | ||
Document Information | ||
Entity Common Stock, Shares Outstanding | 1,052,693 | |
Class K-T Common Stock | ||
Document Information | ||
Entity Common Stock, Shares Outstanding | 50,690 | |
Class A Common Stock | ||
Document Information | ||
Entity Common Stock, Shares Outstanding | 581,410 | |
Class B Common Stock | ||
Document Information | ||
Entity Common Stock, Shares Outstanding | 125,000 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
ASSETS | ||
Property and equipment, net | $ 88,955,958 | $ 89,588,704 |
Cash | 9,888,023 | 7,404,266 |
Restricted cash | 3,140,443 | 2,865,681 |
Accounts receivable, net | 231,031 | 124,902 |
Due from related parties | 90,085 | 68,050 |
Prepaid expenses and other assets, net | 659,750 | 902,543 |
Total Assets | 102,965,290 | 100,954,146 |
Liabilities | ||
Mortgage notes payable, net | 56,643,989 | 56,747,853 |
Other debt | 1,908,589 | 1,018,917 |
Accounts payable, accrued expenses and other, net | 2,982,627 | 2,705,897 |
Due to related parties | 2,775,868 | 2,648,575 |
Total Liabilities | 64,311,073 | 63,121,242 |
Commitments and Contingencies | ||
Commitments and Contingencies | ||
Noncontrolling interest of the Operating Partnership | 1,144,695 | 1,172,329 |
Stockholders' Equity | ||
Additional paid-in capital | 42,347,679 | 40,343,076 |
Cumulative loss | (7,203,094) | (6,092,421) |
Cumulative distributions | (3,528,321) | (3,528,321) |
Total Stockholders' Equity | 31,668,914 | 30,772,185 |
Noncontrolling interest | 5,840,608 | 5,888,390 |
Total Equity | 37,509,522 | 36,660,575 |
Total Liabilities and Stockholders' Equity | 102,965,290 | 100,954,146 |
Class K Common Stock | ||
Stockholders' Equity | ||
Common stock, value, issued | 36,872 | 36,081 |
Class K-I Common Stock | ||
Stockholders' Equity | ||
Common stock, value, issued | 8,236 | 6,668 |
Class K-T Common Stock | ||
Stockholders' Equity | ||
Common stock, value, issued | 478 | 478 |
Class A Common Stock | ||
Stockholders' Equity | ||
Common stock, value, issued | 5,814 | 5,374 |
Class B Common Stock | ||
Stockholders' Equity | ||
Common stock, value, issued | $ 1,250 | $ 1,250 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Mar. 31, 2021 | Dec. 31, 2020 |
Common stock, shares authorized | 248,125,000 | |
Class K Common Stock | ||
Common stock, par value per share (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 55,500,000 | 55,500,000 |
Common stock, shares issued | 3,687,243 | 3,608,062 |
Common Stock, shares outstanding | 3,687,243 | 3,608,062 |
Class K-I Common Stock | ||
Common stock, par value per share (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 55,500,000 | 55,500,000 |
Common stock, shares issued | 823,558 | 666,728 |
Common Stock, shares outstanding | 823,558 | 666,728 |
Class K-T Common Stock | ||
Common stock, par value per share (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 116,000,000 | 116,000,000 |
Common stock, shares issued | 47,769 | 47,769 |
Common Stock, shares outstanding | 47,769 | 47,769 |
Class A Common Stock | ||
Common stock, par value per share (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 21,000,000 | 21,000,000 |
Common stock, shares issued | 581,410 | 537,410 |
Common Stock, shares outstanding | 581,410 | 537,410 |
Class B Common Stock | ||
Common stock, par value per share (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 125,000 | 125,000 |
Common stock, shares issued | 125,000 | 125,000 |
Common Stock, shares outstanding | 125,000 | 125,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Revenues | ||
Total revenues | $ 2,912,109 | $ 3,000,887 |
Expenses | ||
Other property expenses | 1,497,805 | 1,396,545 |
Property management fees to affiliates | 87,425 | 90,224 |
Corporate general and administrative | 320,238 | 570,909 |
Other fees to affiliates | 143,614 | 549,756 |
Acquisition costs | 72,149 | |
Depreciation and amortization | 776,396 | 662,512 |
Total expenses | 3,567,164 | 4,297,560 |
Loss on acquisition | (133,521) | |
Operating loss | (655,055) | (1,430,194) |
Interest expense, net | (631,487) | (553,010) |
Unrealized gain (loss) on interest rate swap | 100,453 | (224,609) |
Net loss before income taxes | (1,186,089) | (2,207,813) |
Income tax expense | 0 | (7,029) |
Net loss | (1,186,089) | (2,214,842) |
Net loss attributable to noncontrolling interest | (75,416) | (125,259) |
Net loss attributable to common stockholders | (1,110,673) | (2,089,583) |
Class K Common Stock | ||
Expenses | ||
Net loss attributable to common stockholders | $ (769,962) | $ (1,461,066) |
Net loss per common share - basic and diluted (in dollars per share) | $ (0.21) | $ (0.48) |
Weighted average number of common shares outstanding - basic and diluted (in shares) | 3,640,406 | 3,042,789 |
Class K-I Common Stock | ||
Expenses | ||
Net loss attributable to common stockholders | $ (161,674) | $ (269,176) |
Net loss per common share - basic and diluted (in dollars per share) | $ (0.21) | $ (0.48) |
Weighted average number of common shares outstanding - basic and diluted (in shares) | 764,401 | 560,588 |
Class K-T Common Stock | ||
Expenses | ||
Net loss attributable to common stockholders | $ (10,103) | $ (22,625) |
Net loss per common share - basic and diluted (in dollars per share) | $ (0.21) | $ (0.48) |
Weighted average number of common shares outstanding - basic and diluted (in shares) | 47,769 | 47,119 |
Class A Common Stock | ||
Expenses | ||
Net loss attributable to common stockholders | $ (120,921) | $ (258,047) |
Net loss per common share - basic and diluted (in dollars per share) | $ (0.21) | $ (0.48) |
Weighted average number of common shares outstanding - basic and diluted (in shares) | 572,121 | 537,410 |
Class B Common Stock | ||
Expenses | ||
Net loss attributable to common stockholders | $ (48,013) | $ (78,669) |
Net loss per common share - basic and diluted (in dollars per share) | $ (0.38) | $ (0.63) |
Weighted average number of common shares outstanding - basic and diluted (in shares) | 125,000 | 125,000 |
Rooms | ||
Revenues | ||
Total revenues | $ 2,663,075 | $ 2,616,236 |
Expenses | ||
Total expenses | 615,112 | 692,655 |
Food and beverage | ||
Revenues | ||
Total revenues | 147,203 | 282,552 |
Expenses | ||
Total expenses | 126,574 | 262,810 |
Other operating | ||
Revenues | ||
Total revenues | $ 101,831 | $ 102,099 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND NONCONTROLLING INTEREST - USD ($) | Class K Common StockCommon Stock [Member] | Class K Common Stock | Class K-I Common StockCommon Stock [Member] | Class K-I Common Stock | Class K-T Common StockCommon Stock [Member] | Class K-T Common Stock | Class A Common StockCommon Stock [Member] | Class A Common Stock | Class B Common StockCommon Stock [Member] | Class B Common Stock | Additional Paid-in Capital | Cumulative Loss | Cumulative Distributions | Total Procaccianti Hotel REIT, Inc. Stockholders' Equity | Noncontrolling Interest | Total |
BALANCE at Dec. 31, 2019 | $ 26,808 | $ 4,917 | $ 456 | $ 5,374 | $ 1,250 | $ 31,607,360 | $ (2,265,816) | $ (1,631,573) | $ 27,748,776 | $ 6,564,956 | $ 34,313,732 | |||||
BALANCE (in shares) at Dec. 31, 2019 | 2,680,845 | 491,718 | 45,616 | 537,410 | 125,000 | |||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||
Issuance of common stock | $ 6,180 | $ 1,373 | $ 20 | 7,436,225 | 7,443,798 | 7,443,798 | ||||||||||
Issuance of common stock (in shares) | 617,967 | 137,312 | 2,000 | |||||||||||||
Issuance of common stock pursuant to distribution reinvestment plan | $ 29 | $ 27 | $ 4 | 56,636 | 56,696 | 56,696 | ||||||||||
Issuance of common stock pursuant to distribution reinvestment plan (in shares) | 2,926 | 2,669 | 373 | |||||||||||||
Commissions on sales of common stock and related dealer manager fees and stockholder servicing fees | (622,973) | (622,973) | (622,973) | |||||||||||||
Other offering costs to affiliates | (502,102) | (502,102) | (502,102) | |||||||||||||
Net loss | (2,089,583) | (2,089,583) | (63,183) | (2,152,766) | ||||||||||||
Distributions paid | (450,397) | (450,397) | (98,000) | (548,397) | ||||||||||||
Contributions | 120,050 | 120,050 | ||||||||||||||
BALANCE at Mar. 31, 2020 | $ 33,017 | $ 6,317 | $ 480 | $ 5,374 | $ 1,250 | 37,975,146 | (4,355,399) | (2,081,970) | 31,584,215 | 6,523,823 | 38,108,038 | |||||
BALANCE (in shares) at Mar. 31, 2020 | 3,301,738 | 631,699 | 47,989 | 537,410 | 125,000 | |||||||||||
BALANCE at Dec. 31, 2020 | $ 36,081 | $ 6,668 | $ 478 | $ 5,374 | $ 1,250 | 40,343,076 | (6,092,421) | (3,528,321) | 30,772,185 | 5,888,390 | 36,660,575 | |||||
BALANCE (in shares) at Dec. 31, 2020 | 3,608,062 | 3,608,062 | 666,728 | 666,728 | 47,769 | 47,769 | 537,410 | 537,410 | 125,000 | 125,000 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||||||||||
Issuance of common stock | $ 801 | $ 1,568 | $ 440 | 2,368,158 | 2,370,967 | 2,370,967 | ||||||||||
Issuance of common stock (in shares) | 80,181 | 156,830 | 44,000 | |||||||||||||
Commissions on sales of common stock and related dealer manager fees and stockholder servicing fees | (104,773) | (104,773) | (104,773) | |||||||||||||
Repurchase of common stock | $ (10) | (7,910) | (7,920) | (7,920) | ||||||||||||
Repurchase of common stock (in shares) | (1,000) | |||||||||||||||
Other offering costs to affiliates | (250,872) | (250,872) | (250,872) | |||||||||||||
Net loss | (1,110,673) | (1,110,673) | (47,782) | (1,158,455) | ||||||||||||
BALANCE at Mar. 31, 2021 | $ 36,872 | $ 8,236 | $ 478 | $ 5,814 | $ 1,250 | $ 42,347,679 | $ (7,203,094) | $ (3,528,321) | $ 31,668,914 | $ 5,840,608 | $ 37,509,522 | |||||
BALANCE (in shares) at Mar. 31, 2021 | 3,687,243 | 3,687,243 | 823,558 | 823,558 | 47,769 | 47,769 | 581,410 | 581,410 | 125,000 | 125,000 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Cash Flows from Operating Activities: | ||
Net loss | $ (1,186,089) | $ (2,214,842) |
Adjustments to reconcile net loss to cash provided by operating activities: | ||
Depreciation and amortization | 776,396 | 662,512 |
Amortization of deferred financing costs and debt discount as interest | (2,472) | 16,422 |
Amortization of key money loans | (16,653) | (13,373) |
Loss on acquisition | 133,521 | |
Unrealized (gain) loss on interest rate swap | (100,453) | 224,609 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (106,129) | 91,323 |
Due from related parties | (22,035) | (165,462) |
Prepaid expenses and other assets | 238,925 | 172,850 |
Accounts payable, accrued expenses and other | 393,836 | 352,038 |
Due to related parties | 158,208 | 778,671 |
Net cash provided by operating activities | 133,534 | 38,269 |
Cash Flows from Investing Activities: | ||
Acquisition of hotel property, net | (12,240,256) | |
Capital improvements | (139,782) | (49,685) |
Net cash used in investing activities | (139,782) | (12,289,941) |
Cash Flows from Financing Activities: | ||
Proceeds from issuance of common stock | 2,370,967 | 7,443,798 |
Payment of commissions and dealer manager fees and stockholder servicing fees | (104,773) | (622,973) |
Payment of other offering costs to affiliate | (281,787) | |
Proceeds from mortgage note | 2,000,000 | |
Proceeds from other debt | 889,672 | |
Payments of mortgage notes principal | (101,392) | |
Payment of deferred financing costs | (94,770) | |
Distributions to stockholders | (393,701) | |
Distributions to noncontrolling interest | (98,000) | |
Contributions from noncontrolling interest | 120,050 | |
Repurchase of common stock | (7,920) | |
Net cash provided by financing activities | 2,764,767 | 8,354,404 |
Increase (decrease) in cash and cash equivalents and restricted cash | 2,758,519 | (3,897,268) |
Cash and cash equivalents and restricted cash, beginning of period | 10,269,947 | 13,001,797 |
Cash and cash equivalents and restricted cash, end of period | $ 13,028,466 | $ 9,104,529 |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Supplemental Disclosure of Cash Flow Information | ||
Cash and cash equivalents | $ 9,888,023 | $ 6,433,610 |
Restricted cash | 3,140,443 | 2,670,919 |
Total cash and cash equivalents and restricted cash shown on the consolidated statements of cash flows | 13,028,466 | 9,104,529 |
Cash paid for interest | 468,372 | 624,940 |
Cash paid for income taxes | $ 400 | |
Supplemental Disclosure of Noncash Transactions | ||
Common stock issued pursuant to distribution reinvestment plan | 56,696 | |
Other offering costs paid to affiliates | (274,877) | |
Decrease in due from related parties | 274,877 | |
Assumption of mortgage note payable | $ 15,598,479 |
Organization and Description of
Organization and Description of Business | 3 Months Ended |
Mar. 31, 2021 | |
Organization and Description of Business | |
Organization and Description of Business | Note 1 - Organization and Description of Business Procaccianti Hotel REIT, Inc. (the “Company”) was incorporated under the general corporation laws of the State of Maryland on August 24, 2016. The Company used the proceeds from its Private Offering (defined below) and used and expects to continue to use the proceeds from its Public Offering (defined below) to acquire and own a diverse portfolio of hospitality properties consisting primarily of select-service, extended-stay, and compact full-service hotel properties throughout the United States (“U.S.”). The Company elected to be taxed as a real estate investment trust (“REIT”) for U.S. federal income tax purposes commencing with its taxable year ended December 31, 2018. Substantially all of the Company’s business is conducted through Procaccianti Hotel REIT, L.P., a Delaware limited partnership, (the “Operating Partnership”). The Company is the sole general partner of the Operating Partnership. As of March 31, 2021, the Company owned interests in four select-service hotels located in four states with a total of 483 rooms. For more information on the Company’s real estate portfolio, see Note 3 – “Investments in Hotels.” On September 30, 2016, the Company commenced a private offering (“Private Offering”) of shares of Class K common stock, $0.01 par value per share (“K Shares”), and units, which are comprised of four K Shares and one share of Class A common stock (“A Shares”), each with a $0.01 par value per share (“Units”), for $10.00 per K Share and $50.00 per Unit, with a targeted maximum offering of $150,000,000 in K Shares (including K Shares sold as part of a Unit) to accredited investors only pursuant to a confidential private placement memorandum exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”). The Company terminated its Private Offering prior to the commencement of the Public Offering and, as of such termination, received approximately $15,582,755 in gross proceeds from the sale of K Shares and A Shares, including Units, in the Private Offering. Of the $15,582,755 in gross proceeds raised, $2,954,095 was from the sale of A Shares to TPG Hotel REIT Investor, LLC (“THR”) to fund organization and offering expenses associated with the K Shares and Units. With the A Share proceeds from the Private Offering, the Company paid $782,705 in selling commissions, $275,794 in dealer manager fees and recognized $1,083,912 in other offering costs for the duration of the Private Offering. On August 14, 2018, the Company commenced its initial public offering (“Public Offering”) pursuant to a registration statement on Form S‑11 (Registration No. 333‑217578) (“Registration Statement”), filed under the Securities Act with the U.S. Securities and Exchange Commission (“SEC”), to offer up to $550,000,000 in shares of common stock, including $500,000,000 in shares of common stock pursuant to the primary offering, consisting of the following three share classes: K Shares, at an initial offering price of $10.00 per K Share, Class K-I common stock, (“K-I Shares”), at an initial offering price of $9.50 per K-I Share and Class K-T common stock (“K-T Shares”), at an initial offering price of $10.00 per K-T Share, and $50,000,000 in shares of common stock pursuant to the Company’s distribution reinvestment plan (the “DRIP”) at $9.50 per K Share, $9.50 per K-I Share and $9.50 per K-T Share. On November 16, 2018, the Company revised the offering price per K-I Share in the primary offering from $9.50 to $9.30 per K-I Share, exclusive of the DRIP, which remained at $9.50 per K-I Share. On April 7, 2020, in response to the global pandemic of the novel coronavirus ("COVID-19"), the Company's board of directors unanimously approved the temporary suspension of (i) the sale of K Shares, K-I Shares and K-T Shares in the Public Offering, effective as of April 7, 2020 and (ii) the operation of the DRIP, effective as of April 17, 2020. On June 10, 2020, the Company's board of directors determined an estimated net asset value (“NAV”) per share of all classes of the Company's capital stock, each calculated as of March 31, 2020, as follows: (i) $8.56 per K-Share; (ii) $8.55 per K-I Share; (iii) $8.56 per K-T Share; (iv) $0.00 per A Share; and (v) $0.00 per B Share (as defined below) and unanimously approved the resumption of the acceptance of subscriptions and the resumption of the operation of the DRIP, which became effective with the next authorized payment of distributions. The offering and total dollar amount available for purchase per class in the primary portion of the Public Offering are as follows: $7.95 per K-I Share (up to $125,000,000 in shares), $8.56 per K Share (up to $125,000,000 in shares) and $8.56 per K-T Share (up to $250,000,000 in shares). The DRIP offering prices and total dollar amount available for purchase in the Company's DRIP are as follows: $8.13 per K-I Share (up to $12,500,000 in shares), $8.13 per K Share (up to $12,500,000 in shares), and $8.13 per K-T Share (up to $25,000,000 in shares). Since the commencement of the Public Offering and through March 31, 2021, the Company received approximately $32,120,726 in gross proceeds from the sale of K Shares, K-I Shares and K-T Shares in the Public Offering, including $131,936, $102,455 and $10,512 of gross proceeds from K Shares, K-I Shares and K-T Shares issued pursuant to the DRIP, respectively. Additionally, the Company received $2,630,000 from the sale of A Shares to THR from a private placement, proceeds of which were used to fund the payment of organization and offering expenses related to the Public Offering and also to account for the difference between the applicable estimated NAV per K Share and the applicable offering price of K-I Shares sold in the primary offering and any amount equal to any discount to the applicable offering price of K Shares, K-I Shares and K-T Shares (excluding volume discounts). On June 10, 2020, the board of directors authorized the extension of the term of the Company's Public Offering until August 14, 2021, unless further extended by the board of directors as permitted under applicable law or earlier terminated by the board of directors. The Company may, in its discretion, terminate the Public Offering at any time. If the Company's board of directors determines that it is in the Company's best interest, the Company may conduct follow-on public offerings upon the termination of the Public Offering. The Company's charter does not restrict its ability to conduct offerings in the future. On February 27, 2020, as partial consideration for the Company's acquisition of the Hilton Garden Inn hotel property located in Providence, Rhode Island (“Hilton Garden Inn Providence”), the Operating Partnership issued 128,124 Class K units of limited partnership interests in the Operating Partnership ("Class K OP Units") valued at $10.00 per Class K OP Unit. Such issuance represents a total investment of $1,281,244 in Class K OP Units. Individuals with direct or indirect interests in the sellers of the Hilton Garden Inn Providence who are direct or indirect owners of the Procaccianti Companies, Inc. (the “Sponsor”) and Procaccianti Hotel Advisors, LLC (“PHA”) received only Class K OP Units and no cash as consideration. The Company is externally managed by PHA pursuant to the Advisory Agreement (as defined below). PHA is an affiliate of the Company’s Sponsor. Novel Coronavirus (COVID-19) In December 2019, COVID-19 was identified in Wuhan, China, subsequently spread to other regions of the world, and has resulted in significant travel restrictions and extended shutdown of numerous businesses in every state in the United States. In March 2020, the World Health Organization declared COVID-19 to be a global pandemic. Since late February 2020, COVID-19 has had and continues to have a significant effect on the hospitality industry. Thus far, responses to the COVID-19 outbreak have included mandates from federal, state and/or local authorities that have restricted travel and the conduct of business, such as stay-at-home orders, quarantines, travel bans, border closings, business closures and other similar measures, which have significantly reduced overall lodging demand. In response to government mandates and health official orders, the Springhill Suites Wilmington (as defined below) was instructed to close effective March 30, 2020 and remained closed until May 1, 2020, and other of the Company’s hotel properties were required to close food and beverage outlets. Since the beginning of March 2020, the Company has experienced significant declines in occupancy and revenue per available room (“RevPAR”) associated with COVID-19 throughout its hotel portfolio, which has had a negative impact on the Company’s operations and financial results. The full financial impact of the reduction in hotel demand caused by the pandemic cannot be reasonably estimated at this time due to uncertainty as to its severity and duration. Given the current availability and effectiveness of the COVID-19 vaccines, in addition to a decrease in government related mandates, the Company hopes to see an improvement in traveler sentiment. However, the Company expects that COVID-19 will continue to negatively affect the Company’s operating results and cash flow for at least the first-half of 2021. The Company implemented cost elimination and efficiency initiatives at each of the hotels by reducing labor costs and tempering certain services and amenities. The COVID-19 outbreak and associated responses could continue to negatively impact future hotel revenues and operations at the Company’s properties, which could result in a material impact to the Company’s future results of operations, cash flows and financial condition. The Company believes cash and restricted cash on hand, cash generated from operations, proceeds from the Company’s Public Offering and borrowings from other sources, including advances from the Company’s Sponsor, if necessary, will be sufficient to meet the Company’s anticipated cash needs for at least the next 12 months. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2021 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note 2 - Summary of Significant Accounting Policies Basis of Presentation The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany balances and transactions are eliminated in consolidation. The accompanying condensed consolidated financial statements of the Company are unaudited. Certain information and disclosures required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements have been condensed or omitted. The Company believes the disclosures made are adequate to make the information presented not misleading. However, the accompanying condensed consolidated financial statements should be read in conjunction with the financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. In the opinion of management, all adjustments, which include only normal recurring adjustments considered necessary for a fair and consistent presentation, have been included in these condensed consolidated financial statements. Operating results for the interim period are not necessarily indicative of the results that may be expected for the full year. The Company consolidates variable interest entities (“VIEs”) as defined under the Consolidation Topic (“Topic 810”) of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) when it has the power to direct the activities that most significantly impact the VIE’s performance and the obligation to absorb losses or the right to receive benefits from the VIE that could be significant. At March 31, 2021, the assets of our VIEs were $67,355,956, and consist primarily of land, building, furniture, fixtures, and equipment and are available to satisfy our VIEs’ obligations. The liabilities of our VIEs were $45,099,724 at March 31, 2021 and consist primarily of long-term debt. The Company has guaranteed certain obligations of its VIEs. The Company has no foreign operations or assets, and its operating structure includes only one segment. Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assumptions and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Fair Value of Financial Instruments Under GAAP, the Company is required to disclose the fair value of certain financial instruments on a recurring basis. The accompanying condensed consolidated balance sheets include the following financial instruments: cash, restricted cash, accounts receivable, accounts payable, mortgage notes payable and other debt. The Company considers the carrying value of cash, restricted cash, accounts receivable, accounts payable and other debt to approximate the fair value of these financial instruments based on the short duration between origination of the instruments and their expected realization. A fair value measurement is based on the assumptions that market participants would use in pricing an asset or liability in an orderly transaction. The hierarchy for inputs used in measuring fair value is as follows: · Level 1 : unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities; · Level 2 : quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and · Level 3 : prices or valuation techniques where little or no market data is available that requires inputs that are both significant to the fair value measurement and unobservable. As of March 31, 2021, the estimated fair value of the mortgage notes payable was $55,148,862 compared to the carrying value of $56,743,061. These financial instruments are valued using Level 3 inputs through a discounted cash flow analysis of the contractual cash flows of the notes payable discounted at a market rate. Revenue Recognition Revenue is generally recognized as services are performed. Revenue represents primarily room rentals, food and beverage sales, and other fees. The Company collects sales tax from all nonexempt customers and remits the entire amount to the appropriate states upon collection from the customer. The Company’s accounting policy is to exclude the tax collected and remitted to the state from revenue and expenses. Cash and Cash Equivalents Cash and cash equivalents represent cash on hand or held in banks and highly liquid investments with original maturities of three months or less. Restricted Cash The Company maintains reserves for property taxes and capital improvements as required by the debt agreements. At March 31, 2021 and 2020, reserves for property taxes were $674,480 and $566,511, respectively, and reserves for capital improvements were $1,683,344 and $2,039,476, respectively. The Company also included $36,140 and $64,932 of guest advance deposits as restricted cash at March 31, 2021 and 2020, respectively. Organization and Offering Costs Organization and offering costs (“O&O Costs”) include selling commissions, dealer manager fees, stockholder servicing fees and any other elements of underwriting compensation, legal, accounting, printing, mailing and filing fees and expenses, due diligence expenses of participating broker-dealers supported by detailed and itemized invoices, costs in connection with preparing sales materials, design and website expenses, fees and expenses of the Company’s transfer agent, fees to attend retail seminars sponsored by participating broker-dealers and reimbursements for customary travel, lodging, and meals. The Company charges O&O Costs against additional paid in capital on the condensed consolidated balance sheet as it raises proceeds in its Public Offering. Income Taxes The Company elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”), and has operated as a REIT, commencing with the taxable year ended December 31, 2018. To qualify as a REIT, the Company must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of its annual REIT taxable income to its stockholders (which is computed without regard to the dividends-paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP). As a REIT, the Company generally will not be subject to U.S. federal income tax to the extent it distributes qualifying dividends to its stockholders. If the Company fails to qualify as a REIT in any taxable year following the year it initially elects to be taxed as a REIT, it will be subject to U.S. federal income tax on its taxable income at regular corporate income tax rates and generally will not be permitted to qualify for treatment as a REIT for U.S. federal income tax purposes for the four taxable years following the year during which qualification is lost unless the Internal Revenue Service grants the Company relief under certain statutory provisions. Such an event could materially adversely affect the Company’s net income and net cash available for distribution to its stockholders. Because the Company is prohibited from operating hotel properties pursuant to certain tax laws relating to its qualification as a REIT, the entities through which the Company owns hotel properties will lease the hotel properties to one or more taxable REIT subsidiaries (“TRSs”). A TRS is a corporate subsidiary of a REIT that jointly elects, with the REIT, to be treated as a TRS of the REIT, and that pays U.S. federal income tax at regular corporate rates on its taxable income. The Company accounts for income taxes of its TRSs using the asset and liability method under which deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities from a change in tax rates is recognized in earnings in the period prior to when the new rates become effective. The Company records a valuation allowance for net deferred tax assets that are not expected to be realized. The Company has reviewed tax positions under GAAP guidance that clarify the relevant criteria and approach for the recognition and measurement of uncertain tax positions. The guidance prescribes a recognition threshold and measurement attribute for the financial statement recognition of a tax position taken, or expected to be taken, in a tax return. A tax position may only be recognized in the financial statements if it is more likely than not that the tax position will be sustained upon examination. At March 31, 2021, the Company had no material uncertain tax positions. The preparation of the Company’s various tax returns requires the use of estimates for federal and state income tax purposes. These estimates may be subjected to review by the respective taxing authorities. A revision to an estimate may result in an assessment of additional taxes, penalties and interest. At this time, a range in which the Company’s estimates may change is not expected to be material. The Company will account for interest and penalties relating to uncertain tax positions in the current period results of operations, if necessary. The Company has tax years 2017 through 2020 remaining subject to examination by federal and various state tax jurisdictions. Noncontrolling Interest Noncontrolling interest represents the portion of equity of Procaccianti Convertible Fund, LLC ("PCF") held by owners other than the Company. Noncontrolling interest is reported in the condensed consolidated balance sheets within equity, separately from stockholders’ equity. Revenue, expenses, and net income attributable to both the Company and the noncontrolling interest are reported in the condensed consolidated statement of operations. Noncontrolling Interest of the Operating Partnership Noncontrolling interest of the Operating Partnership represents the value of the 128,124 Class K OP Units that were issued to affiliate sellers in connection with the acquisition of the Hilton Garden Inn Providence. Noncontrolling interest of the Operating Partnership is reported in the mezzanine section of the condensed consolidated balance sheet, as the units are redeemable at the request of the holder for cash equal to the fair market value of a K Share as defined in the Amended and Restated Agreement of Limited Partnership of Procaccianti Hotel REIT, L.P. (the “Amended and Restated Operating Partnership Agreement”). The Company may elect to acquire any such unit presented for redemption for one K Share or cash. Revenue, expenses, and net income attributable to both the Company and the noncontrolling interest of the Operating Partnership are reported in the condensed consolidated statement of operations. Per Share Data The Company calculates its basic and diluted earnings per common share (“EPS”) utilizing the two-class method. Under the two-class method both basic and diluted EPS are calculated for each class of common stock considering distributions declared and accumulated and the rights of common shares and participating securities in any undistributed earnings. Undistributed earnings are allocated to all outstanding common shares based on the relative percentage of each class of shares to the total number of outstanding shares. 3,000 non-vested restricted K Shares held by the Company's independent directors as of March 31, 2021 are included in the calculation of basic EPS because such shares have been issued and participate in distributions. The Company’s calculated earnings per share for the three months ended March 31, 2021 and 2020, were as follows: Three Months Ended March 31, 2021 2020 Net loss $ (1,110,673) $ (2,089,583) Less: Class K Common Stock dividends declared and accumulated 628,344 453,908 Less: Class K-I Common Stock dividends declared and accumulated 131,938 83,629 Less: Class K-T Common Stock dividends declared and accumulated 8,245 7,029 Less: Class A Common Stock dividends declared and accumulated 98,834 80,171 Undistributed net loss $ (1,978,034) $ (2,714,320) Class K Common Stock: Undistributed net loss $ (1,398,306) $ (1,914,974) Class K Common Stock dividends declared and accumulated 628,344 453,908 Net loss $ (769,962) $ (1,461,066) Net loss per common share, basic and diluted $ (0.21) $ (0.48) Weighted average number of common shares outstanding, basic and diluted 3,640,406 3,042,789 Class K-I Common Stock: Undistributed net loss $ (293,612) $ (352,805) Class K-I Common Stock dividends declared and accumulated 131,938 83,629 Net loss $ (161,674) $ (269,176) Net loss per common share, basic and diluted $ (0.21) $ (0.48) Weighted average number of common shares outstanding, basic and diluted 764,401 560,588 Class K-T Common Stock: Undistributed net loss $ (18,348) $ (29,654) Class K-T Common Stock dividends declared and accumulated 8,245 7,029 Net loss $ (10,103) $ (22,625) Net loss per common share, basic and diluted $ (0.21) $ (0.48) Weighted average number of common shares outstanding, basic and diluted 47,769 47,119 Class A Common Stock: Undistributed net loss $ (219,755) $ (338,218) Class A Common Stock dividends declared and accumulated 98,834 80,171 Net loss $ (120,921) $ (258,047) Net loss per common share, basic and diluted $ (0.21) $ (0.48) Weighted average number of common shares outstanding, basic and diluted 572,121 537,410 Class B Common Stock: Undistributed net loss $ (48,013) $ (78,669) Net loss per common share, basic and diluted $ (0.38) $ (0.63) Weighted average number of common shares outstanding, basic and diluted 125,000 125,000 |
Investments in Hotels
Investments in Hotels | 3 Months Ended |
Mar. 31, 2021 | |
Investments in Hotels | |
Investments in Hotels | Note 3 – Investments in Hotels The following table sets forth summary information regarding the Company’s investments in hotel properties as of March 31, 2021: Contract Mortgage Date Ownership Purchase Debt Property Name Acquired Location Interest Price (1) (2) Rooms Outstanding Springhill Suites Wilmington 05/24/2017 (1) Wilmington, NC 51 % $ 18,000,000 120 $ 11,122,539 Staybridge Suites St. Petersburg 06/29/2017 (1) St. Petersburg, FL 51 % $ 20,500,000 119 $ 13,166,603 Hotel Indigo Traverse City 08/15/2018 Traverse City,MI 100 % $ 26,050,000 107 $ 15,092,000 Hilton Garden Inn Providence 02/27/2020 Providence, RI 100 % $ 28,500,000 137 $ 16,936,901 1) Represents the date and contract purchase price of PCF’s acquisition of the Springhill Suites Wilmington property (the “Springhill Suites Wilmington”) and the Staybridge Suites St. Petersburg property (the “Staybridge Suites St. Petersburg”). The Company exercised its option under an option agreement to purchase a 51% membership interest in PCF on March 29, 2018. 2) Contract purchase price excludes acquisition fees and costs. Investments in hotel properties consisted of the following as of March 31, 2021 and December 31, 2020: March 31, December 31, 2021 2020 Land $ 11,588,686 $ 11,588,686 Building and improvements 77,371,126 77,286,159 Furniture, fixtures, and equipment 7,299,647 7,244,831 Total cost 96,259,459 96,119,676 Accumulated depreciation (7,303,501) (6,530,972) Property and equipment, net $ 88,955,958 $ 89,588,704 Depreciation expense for the three months ended March 31, 2021 and 2020 was $772,529 and $659,477, respectively. |
Mortgage Notes Payable
Mortgage Notes Payable | 3 Months Ended |
Mar. 31, 2021 | |
Mortgage Notes Payable | |
Mortgage Notes Payable | Note 4 – Mortgage Notes Payable Included in mortgage notes payable at March 31, 2021, is a $13,166,603 mortgage payable secured by the Staybridge Suites St. Petersburg (the “St. Petersburg Note”), a $11,122,539 mortgage payable secured by the Springhill Suites Wilmington (the “Wilmington Note”), a $15,092,000 mortgage payable secured by the Hotel Indigo Traverse City (the “TCI Note”) and a $16,936,901 mortgage payable secured by the Hilton Garden Inn Providence (the “HGI Note”). The mortgage notes payable each contain customary affirmative covenants, negative covenants and events of default. The St. Petersburg Note required monthly interest payments at 4.34% through August 1, 2020, and subsequent to August 1, 2020, monthly principal and interest payments of $66,255 through July 1, 2024, the maturity date. The St. Petersburg Note is collateralized by the Staybridge Suites St. Petersburg, including equipment, and has been guaranteed by TH Investment Holdings II, LLC, an affiliate of the Sponsor. All required payments have been made as of March 31, 2021. As a result of the negative impact of the COVID-19 pandemic, the Staybridge Suites St. Petersburg failed to maintain the required debt service coverage ratio as defined in the St. Petersburg Note loan documents for the period ended June 30, 2020. In August 2020, the Company received a written waiver of all debt service coverage testing for the test due for the periods ended June 30, 2020 and September 30, 2020, from its lender. The lender approved an additional modification of the debt service coverage test for the period ending December 31, 2020 and March 31, 2021. Therefore, as of March 31, 2021, the Staybridge Suites St. Petersburg was in compliance with its applicable covenants and all required payments have been made as agreed. The Wilmington Note required monthly interest payments at 4.49% through June 1, 2020, and subsequent to June 1, 2020, monthly principal and interest payments of $57,026 through June 1, 2024, the maturity date. The Wilmington Note is collateralized by the Springhill Suites Wilmington, including equipment, and has been guaranteed by TH Investment Holdings II, LLC, an affiliate of the Sponsor. All required payments have been made as of March 31, 2021. As a result of the negative impact of the COVID-19 pandemic, the Springhill Suites Wilmington failed to maintain the required debt service coverage ratio as defined in the Wilmington Note loan documents for the period ended December 31, 2020. In March 2021, the Company received a written waiver of all debt service coverage testing for the test due for the periods ended December 31, 2020 through June 30, 2021, from its lender. Therefore, as of March 31, 2021, the Springhill Suites Wilmington was in compliance with its applicable covenants and all required payments have been made as agreed. The TCI Note bears interest at LIBOR plus a LIBOR rate margin of 2.50% at March 31, 2021. The TCI Note provides for interest only monthly payments until maturity. The principal amount will be due on the maturity date, which is August 15, 2021; provided, however, the maturity date may be extended by up to three additional one-year periods, provided no default exists and with prior written notice of at least 45 days before scheduled maturity. The TCI Note is collateralized by the Hotel Indigo Traverse City, including equipment, and has been guaranteed by TH Investment Holdings II, LLC, an affiliate of the Sponsor. On April 21, 2020, a subsidiary of the Operating Partnership, entered into a First Amendment to Loan Agreement and Other Loan Documents (the "Hotel Indigo Loan Modification Documents") with its existing lender, Citizens Bank, N.A. ("Citizens Bank"), to amend the terms of the TCI Note. The Hotel Indigo Loan Modification Documents waived the Operating Partnership’s requirement to achieve the stated debt service coverage ratio for the period from January 1, 2020 through June 30, 2021 and provides that all net worth, liquidity and financial covenant testing and any requirements of the guarantor, TH Investment Holdings II, LLC, an affiliate of the Sponsor, to comply with such covenants are waived from January 1, 2020 through June 30, 2021. As of March 31, 2021, the Operating Partnership and its subsidiary were compliant with their loan obligations, including applicable covenants, and all required payments have been made as agreed. The HGI Note requires monthly interest payments at a fixed rate of 4.25% through February 15, 2023 and monthly principal and interest payments based on a 30-year amortization schedule thereafter to maturity on May 15, 2025. The HGI Note is collateralized by the Hilton Garden Inn Providence, including equipment, and has been guaranteed by the Company. On April 23, 2020, the Operating Partnership, through its subsidiary, and the Company entered into an Omnibus Amendment and Reaffirmation Agreement (the "Hilton Garden Inn Loan Modification Agreement") with the lender, to amend the terms of the mortgage loan and loan documents on the HGI Note. Pursuant to the Hilton Garden Inn Loan Modification Agreement, interest only payments that were due on the six consecutive payment dates starting with the payment scheduled for April 2020 are deferred until the date that is twelve months after the date each payment was originally due. The HGI Note resumed interest payments in October 2020 and began repaying previously deferred amounts in April 2021. In addition, the Hilton Garden Inn Loan Modification Agreement provides that all financial covenant testing and any other requirements of the Operating Partnership to comply with such covenants are waived until the year ending December 31, 2021, and that all net worth, liquidity and financial covenant testing and any requirements of the Company as guarantor to comply with such covenants are waived until the year ending December 31, 2021. As of March 31, 2021, the HGI Note was compliant with the above referenced loan arrangements. Although the Company has taken steps to enhance its ability to maintain sufficient liquidity, as noted here and elsewhere in this Quarterly Report on Form 10-Q, a protracted negative economic impact resulting from the COVID-19 pandemic may cause increased pressure on the Company's ability to satisfy its mortgage loan covenants. Interest expense on mortgage notes payable for the three months ended March 31, 2021 and 2020 was $622,025 and $541,129, respectively. Also included in mortgage notes payable as of March 31, 2021, is $162,921 of net deferred financing costs and debt discounts and premiums. For the three months ended March 31, 2021 and 2020, the Company amortized $2,472 and $16,422, respectively, of net deferred financing costs and debt discounts and premiums as interest expense. |
Interest Rate Swap
Interest Rate Swap | 3 Months Ended |
Mar. 31, 2021 | |
Interest Rate Swap [Abstract] | |
Interest Rate Swap | Note 5 – Interest Rate Swap The Company is exposed to certain risks relating to its ongoing business operations, including the effect of changes in interest rates. The Company has an interest rate swap agreement to manage interest rate risk exposure on $15,092,000 of the TCI Note due in 2021. The value of interest rate swaps is primarily impacted by interest rates, market expectations about interest rates, and the remaining life of the instrument. In general, increases in interest rates, or anticipated increases in interest rates, will increase the value of the fixed rate payer position and decrease the value of the variable rate payer position. As the remaining life of the interest rate swap decreases, the value of both positions will generally move towards zero. The following table summarizes the terms of the Company's outstanding interest rate swap agreement: Notional Fair Value of Amount as of Liability as of March 31, Interest Effective Maturity March 31, Balance Sheet Location 2021 Rate (1) Date Date 2021 (2) Interest rate swap Accounts payable, accrued expenses and other, net $ 15,092,000 5.30 % 8/15/2018 8/15/2021 $ (188,959) 1) The interest rate consists of the underlying index swapped to a fixed rate rather than floating rate LIBOR, plus a premium. The Company notes that the maturity date of the interest rate swap is prior to the LIBOR phase-out deadline and therefore does not expect any impact to the terms or value of the swap. 2) Changes in fair value are recorded as unrealized gain (loss) in the condensed consolidated statements of operations as the Company did not designate this interest rate swap as a hedge. The Company valued the interest rate swap using Level 2 inputs. Concurrent with the Hotel Indigo Loan Modification Documents, the Operating Partnership, through its subsidiary, entered into a Swap Modification Agreement with Citizens Bank (the “Swap Modification Agreement”) to modify the swap derivative contract with Citizens Bank that fixes the interest rate on the outstanding balance of the mortgage loan. The Swap Modification Agreement modified the requirements to make payments under the swap derivative contract and provided for a deferral of any payments during the period beginning on April 21, 2020 and ending on July 1, 2020. The Hotel Indigo Traverse City repaid the deferred swap interest and all required payments have been made as agreed. |
Other Debt
Other Debt | 3 Months Ended |
Mar. 31, 2021 | |
Other Debt. | |
Other Debt | Note 6 – Other Debt On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") was adopted by the Federal Government, which, among other things, provided emergency assistance to qualifying businesses and individuals as a result of the COVID-19 pandemic. The CARES Act also included the establishment of the Paycheck Protection Program ("PPP"), a U.S. Small Business Administration (the “SBA”) loan to businesses with fewer than 500 employees that may be partially forgivable. In 2020, the Company received $1,018,917 in PPP loans relating to the four hotel properties (the "PPP Loans"). On January 11, 2021, the PPP opened an additional round of funding, which allowed eligible borrowers that had previously received a PPP loan to apply for a second draw PPP loan with the same general terms as the first. Second draw PPP loans can be used to help fund payroll costs, including benefits. Funds can also be used to pay mortgage interest, rent, utilities, worker protection costs related to COVID-19, uninsured property damage costs caused by looting or vandalism, and certain supplier costs and expenses for operations. The Company applied for the second round of funding and received $889,672 of the approximately $1,426,712 applied for as of March 31, 2021. The remaining $537,040 of second round of funding was received in April 2021. These loans are presented as other debt on the condensed consolidated balance sheets under ASC 470, Debt. Pursuant to the CARES Act, the Company can apply for, and be granted, forgiveness for all or a portion of the PPP Loans. The loans’ principal and accrued interest are forgivable to the extent that the proceeds are used for eligible purposes, subject to limitations and ongoing rulemaking by the SBA, and that the Company maintains its payroll levels over a twenty-four week period following the loan date. The loan forgiveness amount may be reduced if the Company terminates employees or reduces salaries during the twenty-four week period. The Company used the proceeds from the PPP Loans to retain employees and maintain payroll and make mortgage and utility payments to support business continuity throughout the COVID-19 pandemic, which amounts are intended to be eligible for forgiveness, subject to the provisions of the CARES Act. The Company has applied for full forgiveness of all the first round of PPP loans and such applications are currently in review with the SBA. Upon formal written approval of the forgiveness application from the SBA, the Company intends to recognize a gain on loan extinguishment in the consolidated statement of operations equal to the amount forgiven. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2021 | |
Related Party Transactions | |
Related Party Transactions | Note 7 – Related Party Transactions The Company entered into the Amended and Restated Advisory Agreement on August 2, 2018, with PHA and the Operating Partnership (as amended and renewed, the “Advisory Agreement”). The Advisory Agreement has a one-year term, subject to renewals upon mutual consent of PHA and the Company’s independent directors for an unlimited number of successive one-year periods. On November 22, 2019, the Company, the Operating Partnership and PHA entered into the Second Amendment to the Advisory Agreement (the “Advisory Agreement Amendment”) in order to revise certain terms regarding the accrual of interest on deferred acquisition, disposition and asset management fees, as well as the deferral of asset management fees paid to PHA. On July 28, 2020, the board of directors of the Company, including all independent directors of the Company, after review of PHA's performance during the last year, authorized the Company to execute a mutual consent to renew the Advisory Agreement, by and among the Company, the Operating Partnership and PHA. The renewal was for a one-year term and was effective on August 3, 2020. Pursuant to the Advisory Agreement, PHA oversees the Company’s day-to-day operations, including the provision of general ledger accounting, fund accounting, legal services, investor relations, and other administrative services. PHA also performs, or oversees the performance of, the Company’s corporate operations and required administrative services, which include maintaining required financial records and preparing reports to stockholders and filings with the SEC. In addition, PHA assists an independent valuation firm and the Company’s board of directors in calculating and determining the Company’s estimated NAV, and assists the Company in overseeing the preparation and filing of tax returns, payment of expenses and for the performance of administrative and professional services rendered to the Company by others. The Company reimburses PHA for certain expenses and pays PHA certain fees pertaining to services provided. Operating Expenses The Company is also required to reimburse PHA for costs incurred in providing these administrative services. PHA is required to allocate the cost of such services to the Company based on objective factors such as total assets, revenues and/or time allocations. At least annually, the Company’s board of directors will review the amount of administrative services expense reimbursable to PHA to determine whether such amounts are reasonable in relation to the services provided. Through December 31, 2020, PHA had forfeited its right to collect reimbursement for providing these administrative services provided through such date. In the three months ended March 31, 2021, the Company’s Sponsor requested reimbursement for $42,004 of such administrative service expenses. This amount is included in due to related parties on the condensed consolidated balance sheet as of March 31, 2021. Acquisition Fee The Company will pay PHA acquisition fees as described below: Acquisition Fee : Fee for providing services including selecting, evaluating and acquiring potential investments, or the acquisition fee. The total acquisition fee payable to PHA shall equal 1.5% of the Gross Contract Purchase Price of an investment, which as defined in the Advisory Agreement, represents the amount actually paid or allocated in respect of the purchase of an investment, inclusive of acquisition expenses and any indebtedness assumed or incurred. Payment of such fee will be deferred until the occurrence of a (i) liquidation event (i.e., any voluntary or involuntary liquidation or dissolution of the Company, including as a result of the sale of all or substantially all of the Company’s assets for cash or other consideration), (ii) the Company’s sale or merger in a transaction that provides stockholders with cash, securities or a combination of cash and securities, (iii) the listing of the Company’s shares of common stock on a national securities exchange, or (iv) the termination of the Advisory Agreement, other than for cause, or the non-renewal of the Advisory Agreement. The preceding clauses (ii) and (iii) are defined as an “Other Liquidity Event”. Under the Advisory Agreement Amendment, deferred acquisition fees will accrue interest at a cumulative, non-compounded rate of 6.0% per annum until the day immediately following the Fifth Anniversary (as defined herein), at which time such interest will cease to further accrue. There were no acquisition fees for the three months ended March 31, 2021. For the three months ended March 31, 2020, the Company incurred $441,370 in acquisition fees related to the Hilton Garden Inn Providence, which are included in other fees to affiliates on the condensed consolidated statement of operations. As of March 31, 2021 and 2020, there were $979,350 and $979,350, respectively, of deferred acquisition fees included in due to related parties on the condensed consolidated balance sheets. Interest expense on outstanding acquisition fees was $14,449 and $10,413, respectively, for the three months ended March 31, 2021 and 2020, and is included in interest expense on the condensed consolidated statement of operations and in due to related parties on the condensed consolidated balance sheets. Asset Management Fee The Company will pay PHA asset management fees as described below: Asset Management Fee : Quarterly fee equal to one-fourth of 0.75% of the adjusted cost of the Company’s assets and the amounts actually paid or allocated in respect of the acquisition of loans, before reduction for depreciation, amortization, impairment charges, and cumulative acquisition costs charged to expense in accordance with GAAP, or the asset management fee. The adjusted cost will include the purchase price, acquisition expenses, capital expenditures, and other customary capitalized costs. The Advisory Agreement Amendment clarified the duration of the asset management fee and accrual of interest on deferred asset management fees. The asset management fee will be payable to PHA quarterly in arrears, based on the adjusted cost on the last date of the prior quarter, adjusted for appropriate closing dates for individual investments. Payment of the asset management fee will be deferred on a quarterly basis if at any time all accumulated, accrued, and unpaid 6% distributions have not been paid in full to the holders of the K Shares, K-I Shares, K-T Shares and any parity security. Any such deferred asset management fees will accrue interest at a cumulative, non-compounded rate of 6.0% per annum. If the Company has not completed a liquidation event by the fifth anniversary of the date the Company terminates the Public Offering (including any follow-on offering) (the “Fifth Anniversary”), on the day immediately following the Fifth Anniversary, (i) the asset management fees payable pursuant to the Advisory Agreement cease to accrue and (ii) interest that accrued at a non-compounded rate of 6.0% per annum on the deferred asset management fees will cease to accrue. For the avoidance of doubt, all accrued and unpaid principal and interest amounts in connection with the asset management fee at the Fifth Anniversary will remain outstanding. For the three months ended March 31, 2021 and 2020, the Company incurred $143,614 and $108,386, respectively, in asset management fees. Asset management fees are included in other fees to affiliates on the condensed consolidated statements of operations and in due to related parties on the condensed consolidated balance sheets. As of March 31, 2021 and 2020, there were $1,220,945 and $647,627, respectively, of deferred asset management fees included in due to related parties on the condensed consolidated balance sheets. Interest expense on the outstanding asset management fees was $18,014 and $9,474 for the three months ended March 31, 2021 and 2020, respectively. These amounts are included in interest expense on the condensed consolidated statements of operations and in due to related parties on the condensed consolidated balance sheets. Disposition Fee The Company will pay PHA disposition fees as described below: Disposition Fee : Fee for providing a substantial amount of services in connection with the sale of a property or real estate-related assets, as determined by a majority of the Company’s independent directors, or the disposition fee. The disposition fee will equal one-half of the brokerage commissions paid on the sale of an investment. In no event will the disposition fee exceed 1.5% of the sales price of each investment. Payment of the disposition fee to PHA will be deferred until the occurrence of (i) a liquidation event, (ii) an Other Liquidity Event, or (iii) the termination of the Advisory Agreement, other than for cause, or the non-renewal of the Advisory Agreement. Under the Advisory Agreement Amendment, deferred disposition fees will accrue interest at a cumulative, non-compounded rate of 6.0% per annum until the day immediately following the Fifth Anniversary, at which time such interest will cease to further accrue. There were no disposition fees incurred for the three months ended March 31, 2021 and 2020. Acquisition Expenses The Company will reimburse PHA for acquisition expenses actually incurred (excluding personnel costs) related to selecting, evaluating, and making investments on the Company’s behalf. All acquisition expenses as of March 31, 2021 and 2020 were paid directly by the Company and there have been no reimbursements to PHA. Organization and Offering Costs O&O Costs include selling commissions, dealer manager fees, stockholder servicing fees and any other elements of underwriting compensation, as well as legal, accounting, printing, mailing and filing fees and expenses, due diligence expenses of participating broker-dealers supported by detailed and itemized invoices, costs in connection with preparing sales materials, design and website expenses, fees and expenses of the Company’s transfer agent, fees to attend retail seminars sponsored by participating broker-dealers and reimbursements for customary travel, lodging, and meals. For more information regarding selling commissions, dealer manager fees, stockholder servicing fees and any other elements of underwriting compensation, see Note 8 – “Stockholders’ Equity”. Certain O&O Costs have been incurred by PHA on behalf of the Company. As of March 31, 2021, the total amount of O&O Costs, exclusive of selling commissions, dealer manager fees and stockholder servicing fees, incurred by PHA and its affiliates related to the Private Offering and the Public Offering was $8,482,919, of which $1,026,564 has been reimbursed through the issuance of A Shares to an affiliate of PHA and through cash payments to PHA of $2,585,532. The Company may reimburse PHA and its affiliates for O&O Costs incurred on the Company’s behalf, but only to the extent the reimbursement would not cause the selling commissions, dealer manager fees, stockholder servicing fees and other O&O Costs to exceed 15% of the gross offering proceeds of the Public Offering as of the termination of the Public Offering, or the 15% cap. As of March 31, 2021, $3,523,171 is reimbursable to PHA and its affiliates by the Company in the future, subject to the 15% cap. The Company records O&O Costs as charges against additional paid in capital on the condensed consolidated balance sheets as the Company raises proceeds in its continuous Public Offering. These amounts represent 15% of the gross offering proceeds of the Private Offering and the Public Offering as of March 31, 2021, the maximum amount allowed to be recognized by the Company in its financial statements in accordance with the rules established by the Financial Industry Regulatory Authority, Inc. (“FINRA”). The Company recognized O&O Costs of $355,645 and $1,125,074 for the three months ended March 31, 2021 and 2020, respectively. As of March 31, 2021, the Company had a balance due to PHA for reimbursement of O&O Costs within the 15% cap of $90,872, which is included in due to related parties in the condensed consolidated balance sheet as of March 31, 2021. As of the date of this filing, the Company has reimbursed PHA for this amount. Property Management Fee and Reimbursement Wholly owned subsidiaries of PCF and the Operating Partnership entered into hotel management agreements with affiliates of the Company for the management of each of the Company's hotels. Under the terms of the management agreements, the manager operates and manages each hotel, including making all human resource decisions. The employees of the hotels are employed by the managers, however, pursuant to the management agreements, all compensation of hotel personnel is recorded as a direct operating expense of the hotel. The manager of each hotel is paid a base management fee equal to 3% of the respective hotel’s gross revenues and is also reimbursed for certain expenses and centralized service costs. The terms of the in-place management agreements expire June 28, 2021, May 23, 2021, August 14, 2023 and February 26, 2025 for the Staybridge Suites St. Petersburg, the Springhill Suites Wilmington, the Hotel Indigo Traverse City, and the Hilton Garden Inn Providence, respectively. Aggregate property management fees incurred were $87,425 and $90,224 for the three months ended March 31, 2021 and 2020, respectively, and are included in property management fees to affiliates on the condensed consolidated statements of operations. As of March 31, 2021, $38,305 of accrued property management fees payable were included in due to related parties on the condensed consolidated balance sheet. Aggregate net reimbursements for certain expenses for the three months ended March 31, 2021 and 2020 were $61,488 and $19,968, respectively. As of March 31, 2021, $12,648 of expense reimbursements were included in due to related parties on the condensed consolidated balance sheet. During the three months ended March 31, 2021 and 2020, the Company paid $90,335 and $548, respectively, to TPG Risk Services, LLC, an affiliate of the Sponsor, for the reimbursement of prepaid insurance at the hotel properties. As of March 31, 2021, the Company had a balance of $11,424 due from TPG Risk Services, LLC, which is included in the due from related parties on the condensed consolidated balance sheet. Construction Management Fee The Company pays its property managers or third parties selected by PHA, after requesting bids from such parties, a construction management fee (which may include expense reimbursements) based on market rates for such services in the markets in which the hotel properties are located and will take into account the nature of the services to be performed, which generally will constitute the supervision or coordination of any construction, improvements, refurbishments, renovations, or restorations of the Company’s hotel properties. If PHA selects the property manager or another affiliate of the Sponsor to perform such services, any resulting agreement must be approved by a majority of the Company’s board of directors, including a majority of its independent directors. The Company reimbursed TPG Construction, LLC, an affiliate of the Sponsor, $12,685 and $25,776 during the three months ended March 31, 2021 and 2020, respectively, for capital expenditure costs incurred at the hotel properties. As of March 31, 2021 and 2020, $28,512 and $0, respectively, of construction reimbursements were included in the due to related parties balance. Included in the due from related parties balance as of March 31, 2021, was a $45,085 receivable from TPG Construction, LLC relating to working capital requests to provide funding for vendors and contractor deposits at the Hotel Indigo Traverse City and the Hilton Garden Inn Providence. Additional Service Fees If the Company requests that PHA or its affiliates perform other services, including but not limited to, renovation evaluations, the compensation terms for those services must be approved by a majority of the Company’s board of directors, including a majority of the independent directors. No such fees for additional services were incurred for the three months ended March 31, 2021 and 2020. Payment Upon Listing of Shares If the Company lists any of its shares of capital stock on a national securities exchange (which automatically results in a termination of the Advisory Agreement), the Company will be obligated to pay PHA the amount PHA would be entitled to receive on account of deferred asset management fees, acquisition fees, and disposition fees (and any accrued interest thereon) as if the Company liquidated and received liquidation proceeds equal to the market value of the Company, which is limited to the excess of market value over the liquidation preference on K Shares, K-I Shares and K-T Shares. Payment Upon a Merger or Acquisition Transaction If the Company terminates the Advisory Agreement in connection with or in contemplation of a transaction involving a merger or acquisition, the Company would be obligated to pay PHA the amount PHA would be entitled to receive as if the Company liquidated and received net liquidation proceeds equal to the consideration paid to the stockholders in such transaction. Payment Upon Other Advisory Agreement Termination The Company may elect not to renew the Advisory Agreement. The Company has the right to terminate the Advisory Agreement without cause, or other than in connection with a listing of the Company’s shares or a transaction involving a merger or acquisition or other than for cause (“Non-cause Advisory Agreement Termination”). If a Non-cause Advisory Agreement Termination were to occur, the Company would be obligated to make a cash payment to PHA in the amount of any deferred asset management fees, plus any interest accrued thereon, the full acquisition fees previously earned, plus interest accrued thereon, and the full disposition fees previously earned, plus any interest accrued thereon, regardless of the value of the Company’s assets or net assets. The Company would be obligated to repurchase its A Shares for an amount equal to the greater of: (1) any accrued common ordinary distributions on the A Shares plus the stated value of the outstanding A Shares ($10.00 per A Share) or (2) the amount the holders of A Shares would be entitled to receive if the Company liquidated and received net liquidation proceeds equal to the fair market value (determined by appraisals as of the termination date) of the Company’s investments less any loans secured by such investments, limited in the case of non-recourse loans to the value of investments securing such loans. Any shares of Class B common stock, with a par value of $0.01 per share (“B Shares”), then outstanding would remain outstanding. The amounts payable on account of the repurchase of A Shares may be paid, in the discretion of a majority of the Company’s board of directors, including a majority of the Company’s independent directors, in the form of promissory notes bearing interest at the then-current rate, as determined in good faith by a majority of the Company’s independent directors. Payment Upon Advisory Agreement Termination for Cause If the Company terminates the Advisory Agreement for cause, the Company would not have a current obligation to make any payments to PHA or to S2K Servicing LLC (formerly known as Colony S2K Servicing LLC), an affiliate of S2K Financial LLC (the “Dealer Manager”). However, any A Shares and B Shares held by them or their affiliates would remain outstanding. In addition, any deferred asset management fees, plus any interest accrued thereon, the full acquisition fees previously earned, plus any interest accrued thereon, and the full disposition fees previously earned, plus any interest accrued thereon, would remain outstanding obligations, and the deferred fees would continue to accrue interest at a non-compounded annual rate of 6.0%. Such deferred fees and interest thereon would be payable upon a liquidation event. Amended and Restated Operating Partnership Agreement In connection with the Hilton Garden Inn Providence acquisition, effective February 27, 2020, the Company, as general partner of the Operating Partnership, Procaccianti Hotel REIT, LP, LLC and certain principals and affiliates of the Sponsor that were issued Class K OP Units entered into an Amended and Restated Operating Partnership Agreement. Loans from Affiliates The Company has combined subordinated promissory notes of $94,194 from PHA that bear interest at the current blended long term applicable federal rate (“AFR”). The blended long term AFR was 1.660% and 1.745% for the three months ended March 31, 2021 and 2020, respectively. The maturity date of the notes is the date after all outstanding K Shares have received all accumulated, accrued and unpaid distributions due and owing under the terms of the Company’s organization documents and the liquidation preference on the K Shares pursuant to the Company’s organization documents has been paid in full, as well as upon any event of default. These amounts are included in due to related parties on the condensed consolidated balance sheets at March 31, 2021 and December 31, 2020. Interest expense was $386 and $410 for the three months ended March 31, 2021 and 2020, respectively, and is included in interest expense on the condensed consolidated statements of operations and in due to related parties on the condensed consolidated balance sheets. |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2021 | |
Stockholders’ Equity | |
Stockholders' Equity | Note 8 - Stockholders’ Equity Under the Company’s charter, the total number of shares of common stock authorized for issuance is 248,125,000, consisting of 55,500,000 K Shares, 55,500,000 K-I Shares, 116,000,000 K-T Shares, 21,000,000 A Shares, and 125,000 B Shares. The Company’s K Shares, K-I Shares and K-T Shares entitle the holders 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. Holders of K Shares, K-I Shares and K-T Shares will be entitled to receive cumulative cash distributions on each share at the rate of 7.0% per annum of each share's distribution base. Prior to March 31, 2020, distributions accrued at the rate of 6.0% per annum of each share’s distribution base. The distribution base will initially be $10.00 per K Share, $10.00 per K-I Share and $10.00 per K-T Share and will be reduced for distributions that the board of directors declares and pays out of net sales proceeds from the sale or disposition of assets to the extent such distributions are not used to pay accumulated, accrued, and unpaid dividends on such K Shares, K-I Shares, and K-T Shares. K Shares, K-I Shares and K-T Shares will rank, on a pro rata basis, senior to all other classes of stock with respect to distribution rights and rights upon the Company’s liquidation. In certain situations (other than upon liquidation), the Company may have excess cash available for distribution and the board of directors may authorize special distributions in which case the holders of K Shares, K-I Shares and K-T Shares would receive 50% of any such excess cash. Holders of K Shares, K-I Shares and K-T Shares would also generally be entitled to receive 50% of any remaining liquidation cash pro rata based on the number of K Shares, K-I Shares and K-T Shares outstanding. A Shares entitle the holders to one vote per share on all matters upon which stockholders are entitled to vote and to receive distributions and other distributions of excess cash as authorized by the Company’s board of directors. Following the payment of all accumulated, accrued and unpaid distributions on K Shares, K-I Shares and K-T Shares and payment of any accrued asset management fees (and any interest thereon), each A Share will be entitled to receive distributions at a rate not to exceed 7.0% of the stated value of $10.00 per share from income and cash flow from ordinary operations on a cumulative basis. In certain situations (other than upon liquidation), the Company may have excess cash available for distribution and the board of directors may authorize special distributions in which case the holders of A Shares will receive 37.5% of any such excess cash on a pro rata basis. A Shares would also generally be entitled to receive 37.5% of any remaining liquidation cash pro rata based on the number of A Shares outstanding. B Shares will have no voting rights, other than the right to vote on and approve any further issuances of or an increase in the authorized number of B Shares. In addition, if the Company were to list any shares of its common stock on a national securities exchange, the Company will repurchase its B Shares in accordance with its charter. Holders of B Shares are not entitled to distributions; however, in certain situations (other than upon liquidation) the Company may have excess cash available for distribution and the board of directors may authorize special distributions in which case the holders of B Shares would receive 12.5% of any such excess cash on a pro rata basis. Holders of B Shares would also generally be entitled to receive 12.5% of any remaining liquidation cash pro rata based on the number of B Shares outstanding. At the termination of the Private Offering, the Company had issued 1,253,618 K Shares and 23,000 A Shares to unaffiliated investors, resulting in receipt of gross proceeds of $12,398,660 from K Share issuances and $230,000 from A Share issuances. A Shares sold to unaffiliated investors were issued as part of a Unit. As of March 31, 2021, under the Public Offering, the Company had issued 2,469,167 K Shares, 818,306 K-I Shares, and 47,540 K-T Shares to unaffiliated investors, resulting in receipt of gross proceeds of $24,048,117 from K Share issuances, $7,352,306 from K-I Share issuances, and $475,400 from K-T Share issuances. As of March 31, 2021, the Company had issued 15,237 K Shares, 11,574 K-I Shares and 1,219 K-T Shares pursuant to the DRIP, resulting in gross proceeds pursuant to the DRIP of $131,936, $102,455 and $10,512, respectively. As of March 31, 2021, the Company had issued 1,000 restricted K Shares to each of the Company’s three independent directors for a total of 3,000 restricted K Shares in connection with the Company’s long-term incentive plan, as described below. As of March 31, 2021, the Company had issued 428,410 A Shares to THR, an affiliate of PHA, for aggregate proceeds of $4,284,095, or $10.00 per share. In addition, the Company issued 130,000 additional A Shares to THR in exchange for notes receivable, payable to the Company upon demand. The note receivable from THR was reduced for amounts reimbursed to PHA by the Company for certain costs incurred on the Company’s behalf, with no remaining balance as of March 31, 2021. As of March 31, 2021, the Company sold 10 K-I Shares for aggregate proceeds of $100, or $10.00 per K-I Share and sold 10 K-T Shares for aggregate proceeds of $100, or $10.00 per K-T Share, to an affiliate of the Company. In addition, on September 29, 2016, the Company issued 125,000 B shares to S2K Servicing LLC. During the three months ended March 31, 2021, pursuant to the primary portion of the Public Offering, the Company sold 80,181 K Shares for aggregate gross proceeds of $684,167, or $8.53 per K Share, and 156,830 K-I Shares for aggregate gross proceeds of $1,246,800, or $7.95 per K-I Share. During the same period, the Company sold 44,000 A Shares to THR for aggregate gross proceeds of $440,000, or $10.00 per A Share. Subsequent to March 31, 2021 and through May 13, 2021, pursuant to the primary portion of the Public Offering, the Company sold approximately 78,209 K Shares to investors at a weighted average price of $8.49 per K Share for gross proceeds of $664,191. The Company sold approximately 229,135 K-I Shares to investors at a weighted average price of $7.95 per K-I Share for gross proceeds of $1,821,621. The Company sold approximately 2,921 K-T Shares to investors at a weighted average price of $8.56 per K-T Share for gross proceeds of $25,000. On February 27, 2020, as partial consideration for the Company’s acquisition of the Hilton Garden Inn Providence, the Operating Partnership issued 128,124 Class K OP Units valued at $10.00 per Class K OP Unit. Such issuance represents a total investment of $1,281,244 in Class K OP Units of the Operating Partnership. Individuals with direct or indirect interests in the sellers of the Hilton Garden Inn Providence who are direct or indirect owners of the Company’s Sponsor and PHA received only Class K OP Units and no cash as consideration. In response to adverse effects of the COVID-19 pandemic, the Company’s board of directors unanimously approved the temporary suspension of (i) the sale of K Shares, K-I Shares and K-T Shares in the Public Offering, effective as of April 7, 2020 and (ii) the operation of the DRIP, effective as of April 17, 2020. On June 10, 2020, the Company’s board of directors unanimously approved the resumption of the acceptance of subscriptions and the resumption of the operation of the DRIP. PHA was obligated to purchase sufficient A Shares to fund payment of O&O Costs associated with the Private Offering and is obligated to purchase sufficient A Shares to fund payment of O&O Costs related to the Public Offering and also to account for the difference between the applicable NAV per K-I Share and the applicable offering price per K-I Share and any amount equal to any discount to the applicable offering price of K Shares, K-I Shares and K-T Shares (excluding volume discounts). PHA’s obligation can be fulfilled by its affiliates, including the Sponsor or entities affiliated with the Sponsor. The Company paid the Dealer Manager, as dealer manager of the Private Offering, selling commissions of up to 7% of the gross offering proceeds from the sale of K Shares and Units in the Private Offering. The Dealer Manager re-allowed all selling commissions to participating broker-dealers. The Company also paid the Dealer Manager a dealer manager fee of up to 3% of the gross offering proceeds from the sale of K Shares and Units. The Dealer Manager could re-allow a portion of its dealer manager fees to participating broker-dealers. Selling commissions and dealer manager fees were paid with proceeds from the sale of A Shares to PHA or its affiliates. There were no selling commissions or dealer manager fees payable on account of shares of any class purchased by PHA, S2K Servicing LLC, or their affiliates. As of March 31, 2021, the Company recognized $1,058,501 of selling commissions and dealer manager fees in connection with the Private Offering. The Company pays the Dealer Manager selling commissions of up to 7% of the gross offering proceeds from the sale of K Shares and selling commissions of up to 3% of the gross offering proceeds from the sale of K-T Shares in the primary portion of the Public Offering. No selling commissions are payable in connection with the sale of K-I Shares. The Dealer Manager may re-allow all selling commissions to participating broker-dealers. The Company also pays the Dealer Manager a dealer manager fee of up to 3% of the gross offering proceeds from the sale of K Shares, K-I Shares and K-T Shares sold in the primary portion of the Public Offering. The Dealer Manager may allow a portion of its dealer manager fees to participating broker-dealers. Selling commission and dealer manager fees are generally paid with proceeds from the sale of A Shares to PHA or its affiliates. There are no selling commissions or dealer manager fees payable on account of shares of any class purchased by PHA, S2K Servicing LLC, or any K Shares, K-I Shares and K-T Shares sold pursuant to the DRIP. The selling commissions and dealer manager fees may be reduced or waived in connection with certain categories of sales. As of March 31, 2021, the Company recognized $2,586,805 of selling commissions and dealer manager fees in connection with the Public Offering. The Company also pays the Dealer Manager with respect to each K-T Share sold in the primary portion of the Public Offering, a stockholder servicing fee equal to 1%, annualized, of the amount of the Company’s estimated NAV per K-T Share for each K-T Share purchased in the primary portion of the Public Offering, for providing services to a holder of K-T Shares. The stockholder servicing fee accrues daily and is payable monthly in arrears. The Dealer Manager will reallow all or a portion of the stockholder servicing fee to participating broker-dealers and servicing broker-dealers. The Company will cease paying the stockholder servicing fee with respect to K-T Shares sold in the primary portion of the Public Offering in accordance with the terms set forth in the prospectus portion of the Registration Statement. As of March 31, 2021, the Company recognized $6,749 of stockholder servicing fees in connection with the Public Offering. If the Company’s board of directors determines, in any year, that the Company has excess cash, the Company’s board of directors will declare a special distribution entitling (a) the holders of K Shares, K-I Shares, K-T Shares to share, pro rata in accordance with the number of K Shares, K-I Shares and K-T Shares, 50% of such excess cash (or 87.5% of such excess cash if the A Shares have been repurchased in connection with a Non-cause Advisory Agreement Termination); (b) the holders of B Shares to share, pro rata in accordance with the number of B Shares, 12.5% of excess cash; and (c) the holders of A Shares (including PHA or its affiliates) to share, pro rata in accordance with the number of A Shares, 37.5% of such excess cash (unless all such A Shares previously have been repurchased in connection with a Non-cause Advisory Agreement Termination, in which case the excess cash otherwise apportioned to the A Shares would be distributed to the holders of the K Shares, K-I Shares and K-T Shares as noted above). Upon a liquidation event, any remaining liquidation cash will be paid as a special distribution (a) to the holders of K Shares, K-I Shares and K-T Shares, pro rata in accordance with the number of K Shares, K-I Shares and K-T Shares, 50% of such excess cash (or 87.5% of such excess cash if the A Shares have been repurchased in connection with a Non-cause Advisory Agreement Termination); (b) to the holders of B Shares, pro rata in accordance with the number of B Shares, 12.5% of excess cash; and (c) to the holders of A Shares (including PHA or its affiliates), pro rata in accordance with the number of A Shares, 37.5% of such excess cash (unless all such A Shares previously have been repurchased in connection with a Non-cause Advisory Agreement Termination, in which case the excess cash otherwise apportioned to the A Shares would be distributed to the holders of the K Shares, K-I Shares and K-T Shares as noted above). The Company established a long-term incentive plan pursuant to which the Company’s board of directors (including independent directors), officers and employees, PHA and its affiliates and their respective employees, employees of entities that provide services to the Company, managers of the Company’s advisor or directors or managers of entities that provide services to the Company and their respective employees, certain of the Company’s consultants and certain consultants to PHA and its affiliates or entities that provide services to the Company and their respective employees may be granted incentive awards in the form of restricted stock, options, and other equity-based awards. In accordance with the Company’s long-term incentive plan, each new independent director that joins the Company’s board of directors is awarded 250 restricted K Shares in connection to his or her initial election to the board of directors. In addition, in connection with an independent director’s re-election to the Company’s board of directors at each annual meeting of stockholders, he or she will receive an additional 250 restricted K Shares. Restricted K Shares issued to independent directors will vest in equal amounts annually over a four-year period on and following the first anniversary of the date of grant in increments of 25% per annum; provided, however, that the restricted K Shares will become fully vested on the earlier to occur of (1) the termination of the independent director’s service as a director due to his or her death or disability, or (2) a change in control of the Company. On February 11, 2019, the Company issued 500 restricted K Shares to each of the Company’s three independent directors for a total of 1,500 restricted K Shares. These awards were in relation to their initial election to the board of directors and their re-election. An additional 250 restricted K Shares were awarded to each independent director upon his or her re-election at the Company’s 2019 and 2020 annual meetings of stockholders on July 11, 2019 and November 17, 2020, respectively. Share Repurchase Program and Redeemable Common Stock The Company’s share repurchase program may provide eligible stockholders with limited, interim liquidity by enabling them to sell shares back to the Company, subject to restrictions and applicable law. The Company is not required to repurchase shares. The share repurchase program is only intended to provide interim liquidity to stockholders until a liquidity event occurs, such as the commencement of execution on a plan of liquidation, the listing of the K Shares, K-I Shares or K-T Shares (or successor security) on a national securities exchange, or the Company’s merger with a listed company. The Company cannot guarantee that a liquidity event will occur. On October 26, 2018, the Company’s board of directors approved and adopted the Amended and Restated Share Repurchase Program (the “A&R SRP”). The A&R SRP provides that the Company will not repurchase in excess of 5.0% of the weighted average number of K Shares, K-I Shares and K-T Shares outstanding during the trailing 12 months prior to the end of the fiscal quarter for which repurchases are being paid (provided, however, that while shares subject to a repurchase requested upon the death of a stockholder will be included in calculating the maximum number of shares that may be repurchased, shares subject to a repurchase requested upon the death of a stockholder will not be subject to the percentage cap). Additionally, in the event that any stockholder fails to maintain a minimum balance of $2,000 of K Shares, K-I Shares or K-T Shares, the Company may repurchase all of the shares held by that stockholder at the per share repurchase price in effect on the date the Company determines that the stockholder has failed to meet the minimum balance, less any applicable repurchase discount. Minimum account repurchases will apply even in the event that the failure to meet the minimum balance is caused solely by a decline in the Company’s estimated NAV per share. In addition, the Company’s repurchase of any shares will be limited to the extent that the Company does not have, as determined in the Company’s board of directors’ discretion, sufficient funds available to fund any such repurchase. Most of the Company’s assets will consist of properties which cannot be readily liquidated without affecting the Company’s ability to realize full value upon their disposition. Therefore, the Company may not have sufficient liquid resources to satisfy all repurchase requests. In addition, the Company’s board of directors may amend, suspend (in whole or in part) or terminate the A&R SRP at any time upon 30 days’ notice to stockholders. Further, the Company’s board of directors reserves the right, in its sole discretion, to reject any requests for repurchases. In the event the Company cannot repurchase all shares presented for repurchase in any fiscal quarter, based upon insufficient cash available and/or the limit on the number of shares it may repurchase, the Company would give first priority to the repurchase of deceased stockholders’ shares. The Company would next give priority to (i) requests of stockholders with “qualifying disabilities” (as defined in the A&R SRP), and in the discretion of the Company’s board of directors, stockholders with another involuntary exigent circumstance, such as bankruptcy, and (ii) next, to requests for full repurchases of accounts with a balance of 100 or less shares at the time the Company receives the request, in order to reduce the expense of maintaining small accounts. Thereafter, the Company will honor the remaining quarterly repurchase requests on a pro-rata basis. Unfulfilled requests will be carried over automatically to subsequent repurchase periods unless a stockholder withdraws a request pursuant to the terms of the A&R SRP. Repurchases of K Shares, K-I Shares and K-T Shares will be made quarterly upon written request to the Company at least 15 days prior to the end of the applicable quarter. Valid repurchase requests will be honored approximately 30 days following the end of the applicable quarter (the “Repurchase Date”). Stockholders may withdraw their repurchase request at any time up to five business days prior to the Repurchase Date. No shares can be repurchased under the Company’s A&R SRP until after the first anniversary of the date of purchase of such shares; provided, however, that this holding period shall not apply to repurchases requested within two years after the death or disability of a stockholder. Additionally, any shares purchased pursuant to the Company’s DRIP will be excluded from the one-year holding requirement. For stockholders that have made more than one purchase of K Shares, K-I Shares or K-T Shares in the Public Offering and/or Private Offering, the one-year holding period will be calculated separately with respect to each such purchase. Repurchases of K Shares, K-I Shares and K-T Shares, when requested, are at the Company’s sole discretion and generally will be made quarterly. Shares repurchased under the A&R SRP program will become unissued shares and will not be resold unless such sales are made pursuant to transactions that are registered or exempt from registration under applicable securities laws. The Company will not pay its Sponsor, board of directors, PHA or their affiliates any fees to complete transactions under the A&R SRP. The per share repurchase price will depend on the length of time the stockholder has held such shares as follows: Share Purchase Anniversary Repurchase Price on Repurchase Date Less than 1 year No Repurchase Allowed 1 year 92.5% of most recent estimated per share NAV 2 years 95.0% of most recent estimated per share NAV 3 years 97.5% of most recent estimated per share NAV 4 years 100.0% of most recent estimated per share NAV In the event of a stockholder's death or disability 100.0% of most recent estimated per share NAV Notwithstanding the foregoing, pursuant to securities laws and regulations, at any time the Company is engaged in an offering, the repurchase amount shall never be more than the current offering price of such shares. Shares repurchased in connection with a stockholder’s bankruptcy or other exigent circumstance, in the sole discretion of the Company’s board of directors, within one year from the purchase date will be repurchased at a price per share equal to the price per share the Company would pay had the stockholder held the shares for one year from the purchase date. The purchase price for repurchased shares will be adjusted for any stock dividends, combinations, splits, recapitalizations, or similar corporate actions with respect to the Company’s common stock. If the Company has sold any properties and have made one or more special distributions to stockholders of all or a portion of the net proceeds from such sales, the per share repurchase price will be reduced by the net sale proceeds per share distributed to stockholders prior to the Repurchase Date to the extent such distributions are not used to pay accumulated, accrued and unpaid distributions on such K Shares, K-I Shares and K-T Shares. The Company’s board of directors will, in its sole discretion, determine which distributions, if any, constitute a special distribution. While the Company’s board of directors does not have specific criteria for determining a special distribution, the Company expects that a special distribution will occur only upon the sale of a property and the subsequent distribution of net sale proceeds. On March 20, 2020, the Company’s board of directors decided to temporarily suspend repurchases under the A&R SRP due to the negative impact of the COVID-19 pandemic on the Company’s portfolio at the time, effective with repurchase requests that would have been processed in April 2020; provided, however, the Company continued to process repurchases due to death in accordance with the terms of the A&R SRP. On June 10, 2020, the Company’s board of directors determined to fully reopen the share repurchase program to all repurchase requests commencing with the next quarter Repurchase Date, beginning in July 2020. Shares will be repurchased subject to and upon the terms and conditions of the A&R SRP. The Company generally repurchases shares approximately 30 days following the end of the applicable quarter in which requests were received. The Company's board of directors approved outstanding repurchase requests received during the three months ended December 31, 2020, and, on February 8, 2021, the Company repurchased 1,000 K Shares for $7,920, or $7.92 per K Share. The Company's board of directors approved two outstanding repurchase requests that were received during the three months ended March 31, 2021, and, on May 7, 2021, the Company repurchased 34,700 K Shares for $289,421, or $8.34 per K Share. The Company's board of directors approved two outstanding repurchase requests due to death that were received during the three months ended March 31, 2020, and, on May 1, 2020, the Company repurchased 23,500 K Shares for $235,000, or $10.00 per K Share. Distributions On January 23, 2020, the Company's board of directors authorized the payment of distributions, with respect to each K Share, K-I Share and K-T Share outstanding as of December 31, 2019, to the holders of record of K Shares, K-I Shares and K-T Shares as of the close of business on January 28, 2020. With respect to the K Shares, K-I Shares and K-T Shares outstanding as of December 31, 2019, the cumulative amount of distributions that had accrued on a daily basis with respect to each K Share, K-I Share and K-T Share since September 30, 2019, was $378,942, or $0.0016438356 per K Share per day, $65,432, or $0.0016438356 per K-I Share per day, and $6,023, or $0.0016438356 per K-T Share per day, respectively. Such distributions were paid to stockholders in cash or in additional shares pursuant to the DRIP on January 31, 2020. On April 29, 2020, the Company's board of directors authorized the payment of distributions, with respect to each K Share, K-I Share and K-T Share outstanding as of March 31, 2020, to the holders of record of K Shares, K-I Shares and K-T Shares as of the close of business on April 30, 2020. With respect to the K Shares, K-I Shares and K-T Shares outstanding as of March 31, 2020, the cumulative amount of distributions that had accrued on a daily basis with respect to each K Share, K-I Share and K-T Share since December 31, 2019, was $453,908, or $0.0016393443 per K Share per day, $83,629, or $0.0016393443 per K-I Share per day, and $7,029, or $0.0016393443 per K-T Share per day, respectively. Such distributions were paid to stockholders in cash on May 1, 2020. On March 3, 2020, the Company's stockholders approved to amend the Company's charter (1) to increase the rate at which cash distributions on K Shares, K-I Shares and K-T Shares automatically accrue under the Company's charter from 6% to 7% per annum of the K Share Distribution Base of such K Share, K-I Share Distribution Base of such K-I Share and K-T Share Distribution Base of such K-T Share, respectively, and (2) to increase the maximum rate at which distributions on A Shares may be authorized by the Company's board of directors and declared by the Company from 6% to 7% of the stated value of an A Share ($10.00) from income and cash flow from ordinary operations on a cumulative basis. The changes pursuant to the Articles of Amendment to the Company's charter became effective beginning with distributions that accrued on March 31, 2020. On October 27, 2020, the Company's board of directors authorized the payment of distributions, with respect to each K Share, K-I Share and K-T Share outstanding as of June 30, 2020, to the holders of record of K Shares, K-I Shares and K-T Shares as of the close of business on October 30, 2020. With respect to the K Shares, K-I Shares and K-T Shares outstanding as of June 30, 2020, the cumulative amount of distributions that had accrued on a daily basis with respect to each K Share, K-I Share and K-T Share since March 31, 2020, was $571,905, or $0.0019125683 per K Share per day, $109,943, or $0.0019125683 per K-I Share per day, and $8,352, or $0.0019125683 per K-T Share per day, respectively. Such distributions were paid to stockholders in cash or in additional shares pursuant to the DRIP on November 12, 2020. With respect to the K Shares, K-I Shares and K-T Shares outstanding as of September 30, 2020, the cumulative amount of distributions that had accumulated on a daily basis with respect to each K Share, K-I Share and K-T Share since June 30, 2020 was $584,848, or $0.0019125683 per K Share per day, $111,990, or $0.0019125683 per K-I Share per day, and $8,444, or $0.0019125683 per K-T Share per day, respectively. On October 27, 2020, the Company's board of directors deemed it to be in the best interests of the Company for the Company to authorize, declare, and pay distributions in an aggregate amount representing approximately 30% of the accumulated distribution with respect to each K Share, K-I Share and K-T Share outstanding as of September 30, 2020, to the holders of record of K Shares, K-I Shares and K-T Shares as of the close of business on October 30, 2020. The Company paid $175,453, or $0.0005737705 per K Share per day, $33,597, or $0.0005737705 per K-I Share per day, and $2,533, or $0.0005737705 per K-T Share per day, respectively, in cash or in additional shares pursuant to the DRIP to stockholders on November 16, 2020. The Company paid quarterly distributions with respect to the quarter ended March 31, 2020, the quarter ended June 30, 2020, and the partial distribution for the quarter ended September 30, 2020, with operating cash flow from its hotel properties, consistent with prior distributions. The Company's board of directors will make determinations as to the payment of future distributions on a quarter-by-quarter basis; however, distributions will continue to accumulate pursuant to the Company's charter. With respect to the K Shares, K-I Shares and K-T Shares outstanding as of December 31, 2020, the cumulative amount of distributions that had accumulated on a daily basis with respect to each K Share, K-I Share and K-T Share since September 30, 2020, was $610,742, or $0.0019125683 per K Share per day, $116,199, or $0.0019125683 per K-I Share per day, and $8,422, or $0.0019125683 per K-T Share per day, respectively. With respect to the K Shares, K-I Shares and K-T Shares outstanding as of March 31, 2021, the cumulative amount of distributions that had accumulated on a daily basis with respect to each K Share, K-I Share and K-T Share since December 31, 2020, was $628,344, or $0.0019178082 per K Share per day, $131,938, or $0.0019178082 per K-I Share per day, and $8,245, or $0.0019178082 per K-T Share per day, respectively. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2021 | |
Income Taxes | |
Income Taxes | Note 9 - Income Taxes The Company recognized consolidated income tax expense of $0 and $7,029 for the three months ended March 31, 2021 and 2020, respectively. These amounts relate to the operations of the Company’s TRSs. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany balances and transactions are eliminated in consolidation. The accompanying condensed consolidated financial statements of the Company are unaudited. Certain information and disclosures required by U.S. generally accepted accounting principles (“GAAP”) for complete financial statements have been condensed or omitted. The Company believes the disclosures made are adequate to make the information presented not misleading. However, the accompanying condensed consolidated financial statements should be read in conjunction with the financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. In the opinion of management, all adjustments, which include only normal recurring adjustments considered necessary for a fair and consistent presentation, have been included in these condensed consolidated financial statements. Operating results for the interim period are not necessarily indicative of the results that may be expected for the full year. The Company consolidates variable interest entities (“VIEs”) as defined under the Consolidation Topic (“Topic 810”) of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) when it has the power to direct the activities that most significantly impact the VIE’s performance and the obligation to absorb losses or the right to receive benefits from the VIE that could be significant. At March 31, 2021, the assets of our VIEs were $67,355,956, and consist primarily of land, building, furniture, fixtures, and equipment and are available to satisfy our VIEs’ obligations. The liabilities of our VIEs were $45,099,724 at March 31, 2021 and consist primarily of long-term debt. The Company has guaranteed certain obligations of its VIEs. The Company has no foreign operations or assets, and its operating structure includes only one segment. |
Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assumptions and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Under GAAP, the Company is required to disclose the fair value of certain financial instruments on a recurring basis. The accompanying condensed consolidated balance sheets include the following financial instruments: cash, restricted cash, accounts receivable, accounts payable, mortgage notes payable and other debt. The Company considers the carrying value of cash, restricted cash, accounts receivable, accounts payable and other debt to approximate the fair value of these financial instruments based on the short duration between origination of the instruments and their expected realization. A fair value measurement is based on the assumptions that market participants would use in pricing an asset or liability in an orderly transaction. The hierarchy for inputs used in measuring fair value is as follows: · Level 1 : unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities; · Level 2 : quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which significant inputs and significant value drivers are observable in active markets; and · Level 3 : prices or valuation techniques where little or no market data is available that requires inputs that are both significant to the fair value measurement and unobservable. As of March 31, 2021, the estimated fair value of the mortgage notes payable was $55,148,862 compared to the carrying value of $56,743,061. These financial instruments are valued using Level 3 inputs through a discounted cash flow analysis of the contractual cash flows of the notes payable discounted at a market rate. |
Revenue Recognition | Revenue Recognition Revenue is generally recognized as services are performed. Revenue represents primarily room rentals, food and beverage sales, and other fees. The Company collects sales tax from all nonexempt customers and remits the entire amount to the appropriate states upon collection from the customer. The Company’s accounting policy is to exclude the tax collected and remitted to the state from revenue and expenses. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents represent cash on hand or held in banks and highly liquid investments with original maturities of three months or less. |
Restricted Cash | Restricted Cash The Company maintains reserves for property taxes and capital improvements as required by the debt agreements. At March 31, 2021 and 2020, reserves for property taxes were $674,480 and $566,511, respectively, and reserves for capital improvements were $1,683,344 and $2,039,476, respectively. The Company also included $36,140 and $64,932 of guest advance deposits as restricted cash at March 31, 2021 and 2020, respectively. |
Organization and Offering Costs | Organization and Offering Costs Organization and offering costs (“O&O Costs”) include selling commissions, dealer manager fees, stockholder servicing fees and any other elements of underwriting compensation, legal, accounting, printing, mailing and filing fees and expenses, due diligence expenses of participating broker-dealers supported by detailed and itemized invoices, costs in connection with preparing sales materials, design and website expenses, fees and expenses of the Company’s transfer agent, fees to attend retail seminars sponsored by participating broker-dealers and reimbursements for customary travel, lodging, and meals. The Company charges O&O Costs against additional paid in capital on the condensed consolidated balance sheet as it raises proceeds in its Public Offering. |
Income Taxes | Income Taxes The Company elected to be taxed as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”), and has operated as a REIT, commencing with the taxable year ended December 31, 2018. To qualify as a REIT, the Company must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of its annual REIT taxable income to its stockholders (which is computed without regard to the dividends-paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP). As a REIT, the Company generally will not be subject to U.S. federal income tax to the extent it distributes qualifying dividends to its stockholders. If the Company fails to qualify as a REIT in any taxable year following the year it initially elects to be taxed as a REIT, it will be subject to U.S. federal income tax on its taxable income at regular corporate income tax rates and generally will not be permitted to qualify for treatment as a REIT for U.S. federal income tax purposes for the four taxable years following the year during which qualification is lost unless the Internal Revenue Service grants the Company relief under certain statutory provisions. Such an event could materially adversely affect the Company’s net income and net cash available for distribution to its stockholders. Because the Company is prohibited from operating hotel properties pursuant to certain tax laws relating to its qualification as a REIT, the entities through which the Company owns hotel properties will lease the hotel properties to one or more taxable REIT subsidiaries (“TRSs”). A TRS is a corporate subsidiary of a REIT that jointly elects, with the REIT, to be treated as a TRS of the REIT, and that pays U.S. federal income tax at regular corporate rates on its taxable income. The Company accounts for income taxes of its TRSs using the asset and liability method under which deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities from a change in tax rates is recognized in earnings in the period prior to when the new rates become effective. The Company records a valuation allowance for net deferred tax assets that are not expected to be realized. The Company has reviewed tax positions under GAAP guidance that clarify the relevant criteria and approach for the recognition and measurement of uncertain tax positions. The guidance prescribes a recognition threshold and measurement attribute for the financial statement recognition of a tax position taken, or expected to be taken, in a tax return. A tax position may only be recognized in the financial statements if it is more likely than not that the tax position will be sustained upon examination. At March 31, 2021, the Company had no material uncertain tax positions. The preparation of the Company’s various tax returns requires the use of estimates for federal and state income tax purposes. These estimates may be subjected to review by the respective taxing authorities. A revision to an estimate may result in an assessment of additional taxes, penalties and interest. At this time, a range in which the Company’s estimates may change is not expected to be material. The Company will account for interest and penalties relating to uncertain tax positions in the current period results of operations, if necessary. The Company has tax years 2017 through 2020 remaining subject to examination by federal and various state tax jurisdictions. |
Noncontrolling Interests | Noncontrolling Interest Noncontrolling interest represents the portion of equity of Procaccianti Convertible Fund, LLC ("PCF") held by owners other than the Company. Noncontrolling interest is reported in the condensed consolidated balance sheets within equity, separately from stockholders’ equity. Revenue, expenses, and net income attributable to both the Company and the noncontrolling interest are reported in the condensed consolidated statement of operations. |
Noncontrolling Interest of the Operating Partnership | Noncontrolling Interest of the Operating Partnership Noncontrolling interest of the Operating Partnership represents the value of the 128,124 Class K OP Units that were issued to affiliate sellers in connection with the acquisition of the Hilton Garden Inn Providence. Noncontrolling interest of the Operating Partnership is reported in the mezzanine section of the condensed consolidated balance sheet, as the units are redeemable at the request of the holder for cash equal to the fair market value of a K Share as defined in the Amended and Restated Agreement of Limited Partnership of Procaccianti Hotel REIT, L.P. (the “Amended and Restated Operating Partnership Agreement”). The Company may elect to acquire any such unit presented for redemption for one K Share or cash. Revenue, expenses, and net income attributable to both the Company and the noncontrolling interest of the Operating Partnership are reported in the condensed consolidated statement of operations. |
Per Share Data | Per Share Data The Company calculates its basic and diluted earnings per common share (“EPS”) utilizing the two-class method. Under the two-class method both basic and diluted EPS are calculated for each class of common stock considering distributions declared and accumulated and the rights of common shares and participating securities in any undistributed earnings. Undistributed earnings are allocated to all outstanding common shares based on the relative percentage of each class of shares to the total number of outstanding shares. 3,000 non-vested restricted K Shares held by the Company's independent directors as of March 31, 2021 are included in the calculation of basic EPS because such shares have been issued and participate in distributions. The Company’s calculated earnings per share for the three months ended March 31, 2021 and 2020, were as follows: Three Months Ended March 31, 2021 2020 Net loss $ (1,110,673) $ (2,089,583) Less: Class K Common Stock dividends declared and accumulated 628,344 453,908 Less: Class K-I Common Stock dividends declared and accumulated 131,938 83,629 Less: Class K-T Common Stock dividends declared and accumulated 8,245 7,029 Less: Class A Common Stock dividends declared and accumulated 98,834 80,171 Undistributed net loss $ (1,978,034) $ (2,714,320) Class K Common Stock: Undistributed net loss $ (1,398,306) $ (1,914,974) Class K Common Stock dividends declared and accumulated 628,344 453,908 Net loss $ (769,962) $ (1,461,066) Net loss per common share, basic and diluted $ (0.21) $ (0.48) Weighted average number of common shares outstanding, basic and diluted 3,640,406 3,042,789 Class K-I Common Stock: Undistributed net loss $ (293,612) $ (352,805) Class K-I Common Stock dividends declared and accumulated 131,938 83,629 Net loss $ (161,674) $ (269,176) Net loss per common share, basic and diluted $ (0.21) $ (0.48) Weighted average number of common shares outstanding, basic and diluted 764,401 560,588 Class K-T Common Stock: Undistributed net loss $ (18,348) $ (29,654) Class K-T Common Stock dividends declared and accumulated 8,245 7,029 Net loss $ (10,103) $ (22,625) Net loss per common share, basic and diluted $ (0.21) $ (0.48) Weighted average number of common shares outstanding, basic and diluted 47,769 47,119 Class A Common Stock: Undistributed net loss $ (219,755) $ (338,218) Class A Common Stock dividends declared and accumulated 98,834 80,171 Net loss $ (120,921) $ (258,047) Net loss per common share, basic and diluted $ (0.21) $ (0.48) Weighted average number of common shares outstanding, basic and diluted 572,121 537,410 Class B Common Stock: Undistributed net loss $ (48,013) $ (78,669) Net loss per common share, basic and diluted $ (0.38) $ (0.63) Weighted average number of common shares outstanding, basic and diluted 125,000 125,000 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Summary of Significant Accounting Policies | |
Schedule of EPS | Three Months Ended March 31, 2021 2020 Net loss $ (1,110,673) $ (2,089,583) Less: Class K Common Stock dividends declared and accumulated 628,344 453,908 Less: Class K-I Common Stock dividends declared and accumulated 131,938 83,629 Less: Class K-T Common Stock dividends declared and accumulated 8,245 7,029 Less: Class A Common Stock dividends declared and accumulated 98,834 80,171 Undistributed net loss $ (1,978,034) $ (2,714,320) Class K Common Stock: Undistributed net loss $ (1,398,306) $ (1,914,974) Class K Common Stock dividends declared and accumulated 628,344 453,908 Net loss $ (769,962) $ (1,461,066) Net loss per common share, basic and diluted $ (0.21) $ (0.48) Weighted average number of common shares outstanding, basic and diluted 3,640,406 3,042,789 Class K-I Common Stock: Undistributed net loss $ (293,612) $ (352,805) Class K-I Common Stock dividends declared and accumulated 131,938 83,629 Net loss $ (161,674) $ (269,176) Net loss per common share, basic and diluted $ (0.21) $ (0.48) Weighted average number of common shares outstanding, basic and diluted 764,401 560,588 Class K-T Common Stock: Undistributed net loss $ (18,348) $ (29,654) Class K-T Common Stock dividends declared and accumulated 8,245 7,029 Net loss $ (10,103) $ (22,625) Net loss per common share, basic and diluted $ (0.21) $ (0.48) Weighted average number of common shares outstanding, basic and diluted 47,769 47,119 Class A Common Stock: Undistributed net loss $ (219,755) $ (338,218) Class A Common Stock dividends declared and accumulated 98,834 80,171 Net loss $ (120,921) $ (258,047) Net loss per common share, basic and diluted $ (0.21) $ (0.48) Weighted average number of common shares outstanding, basic and diluted 572,121 537,410 Class B Common Stock: Undistributed net loss $ (48,013) $ (78,669) Net loss per common share, basic and diluted $ (0.38) $ (0.63) Weighted average number of common shares outstanding, basic and diluted 125,000 125,000 |
Investments in Hotels (Tables)
Investments in Hotels (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Investments in Hotels | |
Schedule of investments in hotel properties | Contract Mortgage Date Ownership Purchase Debt Property Name Acquired Location Interest Price (1) (2) Rooms Outstanding Springhill Suites Wilmington 05/24/2017 (1) Wilmington, NC 51 % $ 18,000,000 120 $ 11,122,539 Staybridge Suites St. Petersburg 06/29/2017 (1) St. Petersburg, FL 51 % $ 20,500,000 119 $ 13,166,603 Hotel Indigo Traverse City 08/15/2018 Traverse City,MI 100 % $ 26,050,000 107 $ 15,092,000 Hilton Garden Inn Providence 02/27/2020 Providence, RI 100 % $ 28,500,000 137 $ 16,936,901 1) Represents the date and contract purchase price of PCF’s acquisition of the Springhill Suites Wilmington property (the “Springhill Suites Wilmington”) and the Staybridge Suites St. Petersburg property (the “Staybridge Suites St. Petersburg”). The Company exercised its option under an option agreement to purchase a 51% membership interest in PCF on March 29, 2018. 2) Contract purchase price excludes acquisition fees and costs. |
Schedule of investments in hotel properties, fixed assets | March 31, December 31, 2021 2020 Land $ 11,588,686 $ 11,588,686 Building and improvements 77,371,126 77,286,159 Furniture, fixtures, and equipment 7,299,647 7,244,831 Total cost 96,259,459 96,119,676 Accumulated depreciation (7,303,501) (6,530,972) Property and equipment, net $ 88,955,958 $ 89,588,704 |
Interest Rate Swap (Tables)
Interest Rate Swap (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Interest Rate Swap [Abstract] | |
Schedule of outstanding interest rate swap agreement | The following table summarizes the terms of the Company's outstanding interest rate swap agreement: Notional Fair Value of Amount as of Liability as of March 31, Interest Effective Maturity March 31, Balance Sheet Location 2021 Rate (1) Date Date 2021 (2) Interest rate swap Accounts payable, accrued expenses and other, net $ 15,092,000 5.30 % 8/15/2018 8/15/2021 $ (188,959) 1) The interest rate consists of the underlying index swapped to a fixed rate rather than floating rate LIBOR, plus a premium. The Company notes that the maturity date of the interest rate swap is prior to the LIBOR phase-out deadline and therefore does not expect any impact to the terms or value of the swap. 2) Changes in fair value are recorded as unrealized gain (loss) in the condensed consolidated statements of operations as the Company did not designate this interest rate swap as a hedge. The Company valued the interest rate swap using Level 2 inputs. |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
Stockholders’ Equity | |
Schedule of length of time use to calculate repurchase price | Share Purchase Anniversary Repurchase Price on Repurchase Date Less than 1 year No Repurchase Allowed 1 year 92.5% of most recent estimated per share NAV 2 years 95.0% of most recent estimated per share NAV 3 years 97.5% of most recent estimated per share NAV 4 years 100.0% of most recent estimated per share NAV In the event of a stockholder's death or disability 100.0% of most recent estimated per share NAV |
Organization and Description _2
Organization and Description of Business (Details) | Aug. 14, 2020USD ($)$ / shares | Feb. 27, 2020USD ($)$ / sharesshares | May 23, 2019USD ($)$ / shares | Aug. 14, 2018USD ($)$ / shares | Sep. 30, 2016USD ($)$ / sharesshares | Mar. 31, 2021USD ($)stateroomitem$ / shares | Dec. 31, 2020USD ($)$ / shares | Jun. 10, 2020$ / shares | Nov. 16, 2018$ / shares |
Subsidiary, Sale of Stock | |||||||||
Number of owned interests in select - service hotels | item | 4 | ||||||||
Number of states select service hotels located | state | 4 | ||||||||
Number of select service hotels rooms | room | 483 | ||||||||
Total investment | $ | $ 88,955,958 | $ 89,588,704 | |||||||
Hilton Garden Inn Providence | |||||||||
Subsidiary, Sale of Stock | |||||||||
Number of Class K OP Units issued | shares | 128,124 | ||||||||
Value of Class K OP Units issued (in dollars per share) | $ 10 | ||||||||
Total investment | $ | $ 1,281,244 | ||||||||
Cash consideration received by individuals with direct or indirect interests in the sellers of the hotel | $ | $ 0 | ||||||||
Initial public offering | |||||||||
Subsidiary, Sale of Stock | |||||||||
Amount of shares sold for termination of private offering prior to commencement of public offering | $ | $ 32,120,726 | ||||||||
Amount of shares authorized under IPO | $ | $ 550,000,000 | ||||||||
Amount of shares offered | $ | $ 500,000,000 | ||||||||
Estimated net asset value | $ | $ 50,000,000 | ||||||||
Private offering | |||||||||
Subsidiary, Sale of Stock | |||||||||
Units issued, price per unit | $ 50 | ||||||||
Class A Common Stock | |||||||||
Subsidiary, Sale of Stock | |||||||||
Common stock, par value per share (in dollars per share) | $ 0.01 | $ 0.01 | |||||||
Net Asset Value Per Share | $ 0 | ||||||||
Class A Common Stock | Private offering | |||||||||
Subsidiary, Sale of Stock | |||||||||
Number of shares consist in one units | shares | 1 | ||||||||
Common stock, par value per share (in dollars per share) | $ 0.01 | ||||||||
Amount of shares sold for termination of private offering prior to commencement of public offering | $ | $ 2,954,095 | $ 2,630,000 | |||||||
Selling commissions | $ | 782,705 | ||||||||
Dealer manager fees | $ | 275,794 | ||||||||
Other offering costs | $ | 1,083,912 | ||||||||
Class B Common Stock | |||||||||
Subsidiary, Sale of Stock | |||||||||
Common stock, par value per share (in dollars per share) | $ 0.01 | 0.01 | |||||||
Net Asset Value Per Share | 0 | ||||||||
Class K Shares and Class A shares | Private offering | |||||||||
Subsidiary, Sale of Stock | |||||||||
Amount of shares sold for termination of private offering prior to commencement of public offering | $ | $ 15,582,755 | ||||||||
Class K Common Stock | |||||||||
Subsidiary, Sale of Stock | |||||||||
Common stock, par value per share (in dollars per share) | 0.01 | 0.01 | |||||||
Net Asset Value Per Share | 8.56 | ||||||||
Class K Common Stock | Distribution reinvestment plan | |||||||||
Subsidiary, Sale of Stock | |||||||||
Initial offering price per share | $ 9.50 | $ 8.13 | |||||||
Amount of shares offered | $ | $ 12,500,000 | ||||||||
Proceeds from DRIP | $ | $ 131,936 | ||||||||
Class K Common Stock | Initial public offering | |||||||||
Subsidiary, Sale of Stock | |||||||||
Initial offering price per share | $ 8.56 | $ 10 | |||||||
Amount of shares offered | $ | $ 125,000,000 | ||||||||
Class K Common Stock | Private offering | |||||||||
Subsidiary, Sale of Stock | |||||||||
Number of shares consist in one units | shares | 4 | ||||||||
Targeted maximum offering | $ | $ 150,000,000 | ||||||||
Common stock, par value per share (in dollars per share) | $ 0.01 | ||||||||
Shares issued price per share | $ 10 | ||||||||
Class K-I Common Stock | |||||||||
Subsidiary, Sale of Stock | |||||||||
Common stock, par value per share (in dollars per share) | $ 0.01 | 0.01 | |||||||
Shares issued price per share | 10 | ||||||||
Net Asset Value Per Share | 8.55 | ||||||||
Class K-I Common Stock | Distribution reinvestment plan | |||||||||
Subsidiary, Sale of Stock | |||||||||
Initial offering price per share | $ 9.50 | $ 8.13 | |||||||
Amount of shares offered | $ | $ 12,500,000 | ||||||||
Proceeds from DRIP | $ | $ 102,455 | ||||||||
Class K-I Common Stock | Initial public offering | |||||||||
Subsidiary, Sale of Stock | |||||||||
Initial offering price per share | $ 7.95 | 9.50 | $ 9.30 | ||||||
Amount of shares offered | $ | $ 125,000,000 | ||||||||
Class K-I Common Stock | Initial public offering | Distribution reinvestment plan | |||||||||
Subsidiary, Sale of Stock | |||||||||
Initial offering price per share | $ 9.50 | ||||||||
Class K-T Common Stock | |||||||||
Subsidiary, Sale of Stock | |||||||||
Common stock, par value per share (in dollars per share) | $ 0.01 | $ 0.01 | |||||||
Shares issued price per share | 10 | ||||||||
Net Asset Value Per Share | $ 8.56 | ||||||||
Class K-T Common Stock | Distribution reinvestment plan | |||||||||
Subsidiary, Sale of Stock | |||||||||
Initial offering price per share | $ 9.50 | $ 8.13 | |||||||
Amount of shares offered | $ | $ 25,000,000 | ||||||||
Proceeds from DRIP | $ | $ 10,512 | ||||||||
Class K-T Common Stock | Initial public offering | |||||||||
Subsidiary, Sale of Stock | |||||||||
Initial offering price per share | $ 8.56 | $ 10 | |||||||
Amount of shares offered | $ | $ 250,000,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - EPS (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Earnings Per Share | ||
Undistributed net loss | $ (1,978,034) | $ (2,714,320) |
Net loss | (1,110,673) | (2,089,583) |
Class K Common Stock | ||
Earnings Per Share | ||
Undistributed net loss | (1,398,306) | (1,914,974) |
Common Stock dividends declared and accumulated | 628,344 | 453,908 |
Net loss | $ (769,962) | $ (1,461,066) |
Net loss per common share - basic and diluted (in dollars per share) | $ (0.21) | $ (0.48) |
Weighted average number of common shares outstanding, basic and diluted (in shares) | 3,640,406 | 3,042,789 |
Class K-I Common Stock | ||
Earnings Per Share | ||
Undistributed net loss | $ (293,612) | $ (352,805) |
Common Stock dividends declared and accumulated | 131,938 | 83,629 |
Net loss | $ (161,674) | $ (269,176) |
Net loss per common share - basic and diluted (in dollars per share) | $ (0.21) | $ (0.48) |
Weighted average number of common shares outstanding, basic and diluted (in shares) | 764,401 | 560,588 |
Class K-T Common Stock | ||
Earnings Per Share | ||
Undistributed net loss | $ (18,348) | $ (29,654) |
Common Stock dividends declared and accumulated | 8,245 | 7,029 |
Net loss | $ (10,103) | $ (22,625) |
Net loss per common share - basic and diluted (in dollars per share) | $ (0.21) | $ (0.48) |
Weighted average number of common shares outstanding, basic and diluted (in shares) | 47,769 | 47,119 |
Class A Common Stock | ||
Earnings Per Share | ||
Undistributed net loss | $ (219,755) | $ (338,218) |
Common Stock dividends declared and accumulated | 98,834 | 80,171 |
Net loss | $ (120,921) | $ (258,047) |
Net loss per common share - basic and diluted (in dollars per share) | $ (0.21) | $ (0.48) |
Weighted average number of common shares outstanding, basic and diluted (in shares) | 572,121 | 537,410 |
Class B Common Stock | ||
Earnings Per Share | ||
Undistributed net loss | $ (48,013) | $ (78,669) |
Net loss | $ (48,013) | $ (78,669) |
Net loss per common share - basic and diluted (in dollars per share) | $ (0.38) | $ (0.63) |
Weighted average number of common shares outstanding, basic and diluted (in shares) | 125,000 | 125,000 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Additional Information (Details) | Feb. 27, 2020shares | Mar. 31, 2021USD ($)segmentshares | Dec. 31, 2020USD ($) | Mar. 31, 2020USD ($) |
Total of VIE and asset acquisition: | ||||
Assets | $ 102,965,290 | $ 100,954,146 | ||
Liabilities | $ 64,311,073 | 63,121,242 | ||
Number of segment | segment | 1 | |||
Carrying value of mortgage notes payable | $ 56,643,989 | $ 56,747,853 | ||
Uncertain tax positions | 0 | |||
Hilton Garden Inn Providence | ||||
Total of VIE and asset acquisition: | ||||
Number Of Operating Partnership Units Issued | shares | 128,124 | |||
Procaccianti Convertible Fund, LLC (PCF) | ||||
Total of VIE and asset acquisition: | ||||
Fair value of mortgage notes payable | 55,148,862 | |||
Carrying value of mortgage notes payable | 56,743,061 | |||
Reserves for property taxes | 674,480 | $ 566,511 | ||
Reserves for capital improvements | 1,683,344 | 2,039,476 | ||
Advance deposits | $ 36,140 | $ 64,932 | ||
Percentages of annual taxable income to stockholders | 90.00% | |||
Procaccianti Convertible Fund, LLC (PCF) | Restricted K Shares | Director | ||||
Total of VIE and asset acquisition: | ||||
Number of shares issued and participate in dividends | shares | 3,000 | |||
Procaccianti Convertible Fund, LLC (PCF) | Variable Interest Entity, Primary Beneficiary | ||||
Total of VIE and asset acquisition: | ||||
Assets | $ 67,355,956 | |||
Liabilities | $ 45,099,724 |
Investments in Hotels - Investm
Investments in Hotels - Investments in hotel properties (Details) | 3 Months Ended | |
Mar. 31, 2021USD ($)room | ||
Springhill Suites Wilmington Mayfaire | ||
Schedule of Investments | ||
Date Acquired | May 24, 2017 | [1] |
Location | Wilmington, NC | |
Ownership interest | 51.00% | |
Contract Purchase Price | $ 18,000,000 | [1],[2] |
Rooms | room | 120 | |
Mortgage debt Outstanding | $ 11,122,539 | |
Staybridge Suites St. Petersburg | ||
Schedule of Investments | ||
Date Acquired | Jun. 29, 2017 | [1] |
Location | St. Petersburg, FL | |
Ownership interest | 51.00% | |
Contract Purchase Price | $ 20,500,000 | [1],[2] |
Rooms | room | 119 | |
Mortgage debt Outstanding | $ 13,166,603 | |
Hotel Indigo Traverse City | ||
Schedule of Investments | ||
Date Acquired | Aug. 15, 2018 | |
Location | Traverse City,MI | |
Ownership interest | 100.00% | |
Contract Purchase Price | $ 26,050,000 | [1],[2] |
Rooms | room | 107 | |
Mortgage debt Outstanding | $ 15,092,000 | |
Hilton Garden Inn Providence | ||
Schedule of Investments | ||
Date Acquired | Feb. 27, 2020 | |
Location | Providence, RI | |
Ownership interest | 100.00% | |
Contract Purchase Price | $ 28,500,000 | [1],[2] |
Rooms | room | 137 | |
Mortgage debt Outstanding | $ 16,936,901 | |
[1] | Represents the date and contract purchase price of PCF’s acquisition of the Springhill Suites Wilmington property (the “Springhill Suites Wilmington”) and the Staybridge Suites St. Petersburg property (the “Staybridge Suites St. Petersburg”). The Company exercised its option under an option agreement to purchase a 51% membership interest in PCF on March 29, 2018. | |
[2] | Contract purchase price excludes acquisition fees and costs. |
Investments in Hotels - Inves_2
Investments in Hotels - Investment in hotel properties consist of fixed assets (Details) - USD ($) | Mar. 31, 2021 | Dec. 31, 2020 |
Investments in Hotels | ||
Land | $ 11,588,686 | $ 11,588,686 |
Building and improvements | 77,371,126 | 77,286,159 |
Furniture, fixtures, and equipment | 7,299,647 | 7,244,831 |
Total cost | 96,259,459 | 96,119,676 |
Accumulated depreciation | (7,303,501) | (6,530,972) |
Property and equipment, net | $ 88,955,958 | $ 89,588,704 |
Investments in Hotels - Additio
Investments in Hotels - Additional Information (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 29, 2018 | |
Business Acquisition [Line Items] | |||
Depreciation | $ 772,529 | $ 659,477 | |
Procaccianti Convertible Fund, LLC (PCF) | |||
Business Acquisition [Line Items] | |||
Entity ownership percentage | 51.00% |
Mortgage Notes Payable (Details
Mortgage Notes Payable (Details) - USD ($) | Aug. 15, 2018 | Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 |
Debt Instrument [Line Items] | ||||
Mortgage notes payable, net | $ 56,643,989 | $ 56,747,853 | ||
Deferred finance costs and debt discounts | (2,472) | $ 16,422 | ||
Interest expense on mortgage notes payable | $ 622,025 | $ 541,129 | ||
Interest rate swap | ||||
Debt Instrument [Line Items] | ||||
Mortgage note due date | Aug. 15, 2021 | |||
Mortgage payable | ||||
Debt Instrument [Line Items] | ||||
Deferred finance costs and debt discounts | $ 162,921 | |||
Mortgage payable secured by the St. Pete Hotel | ||||
Debt Instrument [Line Items] | ||||
Mortgage notes payable, net | $ 13,166,603 | |||
Interest rate | 4.34% | |||
Interest payments | $ 66,255 | |||
Interest payment starting date | Aug. 1, 2020 | |||
Interest payment ending date | Jul. 1, 2024 | |||
Description of variable rate | Monthly | |||
Mortgage Payable Secured By Wilmington Hotel [Member] | ||||
Debt Instrument [Line Items] | ||||
Mortgage notes payable, net | $ 11,122,539 | |||
Interest rate | 4.49% | |||
Interest payments | $ 57,026 | |||
Interest payment starting date | Jun. 1, 2020 | |||
Interest payment ending date | Jun. 1, 2024 | |||
Description of variable rate | Monthly | |||
Mortgage Payable Secured By Wilmington Hotel Tci [Member] | ||||
Debt Instrument [Line Items] | ||||
Mortgage notes payable, net | $ 15,092,000 | |||
Debt Instrument, Basis Spread on Variable Rate | 2.50% | |||
Mortgage Payable Secured By Wilmington Hotel Tci [Member] | Interest rate swap | ||||
Debt Instrument [Line Items] | ||||
Mortgage note due date | Aug. 15, 2021 | |||
Mortgage Payable Secured By Hilton Garden Inn Providence | ||||
Debt Instrument [Line Items] | ||||
Mortgage notes payable, net | $ 16,936,901 | |||
Interest rate | 4.25% | |||
Interest payment starting date | Feb. 15, 2023 | |||
Interest payment ending date | May 15, 2025 | |||
Amortization schedule | 30 years |
Interest Rate Swap - Summary of
Interest Rate Swap - Summary of Outstanding Interest Rate Swap (Details) - Interest rate swap | 3 Months Ended | |
Mar. 31, 2021USD ($) | ||
Derivatives, Fair Value [Line Items] | ||
Notional Amount | $ 15,092,000 | |
Maturity Date | Aug. 15, 2021 | |
Accounts payable, accrued expenses and other, net | ||
Derivatives, Fair Value [Line Items] | ||
Notional Amount | $ 15,092,000 | [1] |
Interest Rate | 5.30% | |
Effective Date | Aug. 15, 2018 | |
Maturity Date | Aug. 15, 2021 | |
Fair Value of Liability | $ (188,959) | [2] |
[1] | The interest rate consists of the underlying index swapped to a fixed rate rather than floating rate LIBOR, plus a premium. The Company notes that the maturity date of the interest rate swap is prior to the LIBOR phase-out deadline and therefore does not expect any impact to the terms or value of the swap. | |
[2] | Changes in fair value are recorded as unrealized gain (loss) in the condensed consolidated statements of operations as the Company did not designate this interest rate swap as a hedge. The Company valued the interest rate swap using Level 2 inputs. |
Interest Rate Swap - Additional
Interest Rate Swap - Additional Information (Details) - Interest rate swap | 3 Months Ended |
Mar. 31, 2021USD ($) | |
Derivatives, Fair Value [Line Items] | |
Notional Amount | $ 15,092,000 |
Mortgage note due date | Aug. 15, 2021 |
Other Debt (Details)
Other Debt (Details) - PPP Loan | 1 Months Ended | 3 Months Ended | 9 Months Ended |
Apr. 30, 2021USD ($) | Mar. 31, 2021USD ($) | Dec. 31, 2020USD ($)item | |
Debt Instrument [Line Items] | |||
Proceeds from loan | $ 537,040 | $ 889,672 | $ 1,018,917 |
Number of hotel properties | item | 4 | ||
Debt Instrument, Face Amount | $ 1,426,712 |
Related Party Transactions - Ac
Related Party Transactions - Acquisition Fee, Asset Management Fee and Disposition Fee (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Related Party Transactions | ||
Reimbursements Expenses | $ 12,648 | |
Acquisition fees in due to related parties | 979,350 | $ 979,350 |
Procaccianti Hotel Advisors, LLC ("PHA") | ||
Related Party Transactions | ||
Reimbursements Expenses | $ 42,004 | |
Advisory agreement with PHA and Operating Partnership | ||
Related Party Transactions | ||
Percentage of total acquisition fee payable to PHA | 1.50% | |
Non-compounded rate of interest on deferred acquisition fees | 6.00% | |
Acquisition fee | $ 0 | 441,370 |
Accrued interest on outstanding acquisition fees | $ 14,449 | 10,413 |
One fourth of percentage of quarterly asset management fee | 0.75% | |
Accumulated, accrued, and unpaid distributions percentage | 6.00% | |
Non-compounded rate of interest on deferred asset management fees | 6.00% | |
Asset management fees | $ 143,614 | 108,386 |
Accrued interest on outstanding asset management fees | $ 18,014 | 9,474 |
Maximum percentage of sales price of real estate investment as disposition fee | 1.50% | |
Non-compounded rate of interest on deferred disposition fees | 6.00% | |
Advisory agreement with PHA and Operating Partnership | Due to Related Party | ||
Related Party Transactions | ||
Deferred asset management fees | $ 1,220,945 | $ 647,627 |
Related Party Transactions - Or
Related Party Transactions - Organization and Offering Costs, Advances to PHA and Property Management Fee and Reimbursement (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Related Party Transactions | |||
Offering costs paid to PHA through issuance of A Shares | $ 274,877 | ||
Due from related parties | $ 90,085 | $ 68,050 | |
Aggregate property management fees | 87,425 | 90,224 | |
Accrued property management fees payable | 38,305 | ||
Aggregate net reimbursements | 61,488 | 19,968 | |
Reimbursement of prepaid insurance | 11,424 | ||
Due to related parties | 2,775,868 | $ 2,648,575 | |
Reimbursements expenses | 12,648 | ||
Procaccianti Hotel Advisors, LLC ("PHA") | |||
Related Party Transactions | |||
Reimbursements expenses | 42,004 | ||
TPG Risk Services, LLC | |||
Related Party Transactions | |||
Reimbursement of prepaid insurance | 90,335 | 548 | |
Advisory agreement with PHA and Operating Partnership | Procaccianti Hotel Advisors, LLC ("PHA") | |||
Related Party Transactions | |||
Recognized organization and offering costs | $ 355,645 | $ 1,125,074 | |
Percentage of gross proceeds on public offering | 15.00% | ||
Percentage cap for reimbursement of organization and offering costs | 15.00% | ||
Organization and offering costs incurred by PHA and its affiliates | $ 8,482,919 | ||
Reimbursement of organization and offering costs through issuance of A shares | 1,026,564 | ||
Reimbursement of common shares issuance to affiliate | 2,585,532 | ||
Amount of organization and offering costs reimbursable | 3,523,171 | ||
Due from related parties | $ 90,872 | ||
Hotel management agreement with PHR St. Petersburg Hotel Manager, LLC | |||
Related Party Transactions | |||
Percentage of hotel's gross revenues as base management fee | 3.00% |
Related Party Transactions - Co
Related Party Transactions - Construction Management Fee, Payment Upon Advisory Agreement Termination for Cause and Loans from Affiliates (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 | |
Related Party Transactions | |||
Due from related parties | $ 90,085 | $ 68,050 | |
Due to related parties | 2,775,868 | $ 2,648,575 | |
TPG Construction, LLC | |||
Related Party Transactions | |||
Reimbursement of capital expenditure costs | 12,685 | $ 25,776 | |
Due from related parties | 45,085 | ||
Due to related parties | 28,512 | $ 0 | |
Procaccianti Hotel Advisors, LLC ("PHA") | |||
Related Party Transactions | |||
Principal amount | $ 94,194 | ||
Long Term Applicable Federal Rate | 1.66% | 1.745% | |
Interest Expense | $ 386 | $ 410 | |
Class B Common Stock | |||
Related Party Transactions | |||
Common stock, par value per share (in dollars per share) | $ 0.01 | $ 0.01 | |
Advisory agreement with PHA and Operating Partnership | |||
Related Party Transactions | |||
Stated value of A shares repurchased in Non-cause Advisory Agreement Termination | $ 10 | ||
Non-compounded annual rate of accrued interest on deferred fees if agreement terminates for cause | 6.00% | ||
Advisory agreement with PHA and Operating Partnership | Procaccianti Hotel Advisors, LLC ("PHA") | |||
Related Party Transactions | |||
Due from related parties | $ 90,872 | ||
Advisory agreement with PHA and Operating Partnership | Class B Common Stock | |||
Related Party Transactions | |||
Common stock, par value per share (in dollars per share) | $ 0.01 |
Stockholders' Equity - Per shar
Stockholders' Equity - Per share repurchase price (Details) | 3 Months Ended |
Mar. 31, 2021 | |
Less than 1 year | |
Class of Stock [Line Items] | |
Repurchase Price on Repurchase Date | No Repurchase Allowed |
1 year | |
Class of Stock [Line Items] | |
Repurchase Price on Repurchase Date | 92.5% of most recent estimated per share NAV |
2 years | |
Class of Stock [Line Items] | |
Repurchase Price on Repurchase Date | 95.0% of most recent estimated per share NAV |
3 years | |
Class of Stock [Line Items] | |
Repurchase Price on Repurchase Date | 97.5% of most recent estimated per share NAV |
4 years | |
Class of Stock [Line Items] | |
Repurchase Price on Repurchase Date | 100.0% of most recent estimated per share NAV |
In the event of a stockholder's death or disability | |
Class of Stock [Line Items] | |
Repurchase Price on Repurchase Date | 100.0% of most recent estimated per share NAV |
Stockholders' Equity - Addition
Stockholders' Equity - Additional Information (Details) - $ / shares | Mar. 31, 2020 | Mar. 31, 2021 | Dec. 31, 2020 |
Class of Stock [Line Items] | |||
Common stock, shares authorized | 248,125,000 | ||
Class K Common Stock | |||
Class of Stock [Line Items] | |||
Common stock, shares authorized | 55,500,000 | 55,500,000 | |
Common stock, par value per share (in dollars per share) | $ 0.01 | $ 0.01 | |
Common stock, voting rights | one vote | ||
Rate of cumulative cash distributions | 6.00% | 7.00% | |
Base distribution per share | $ 10 | ||
Percentage of excess cash available for distribution | 50.00% | ||
Percentage of remaining liquidation cash distribution on pro rata basis | 50.00% | ||
Class K-I Common Stock | |||
Class of Stock [Line Items] | |||
Common stock, shares authorized | 55,500,000 | 55,500,000 | |
Common stock, par value per share (in dollars per share) | $ 0.01 | $ 0.01 | |
Common stock, voting rights | one vote | ||
Rate of cumulative cash distributions | 6.00% | 7.00% | |
Base distribution per share | $ 10 | ||
Percentage of excess cash available for distribution | 50.00% | ||
Percentage of remaining liquidation cash distribution on pro rata basis | 50.00% | ||
Class K-T Common Stock | |||
Class of Stock [Line Items] | |||
Common stock, shares authorized | 116,000,000 | 116,000,000 | |
Common stock, par value per share (in dollars per share) | $ 0.01 | $ 0.01 | |
Common stock, voting rights | one vote | ||
Rate of cumulative cash distributions | 6.00% | 7.00% | |
Base distribution per share | $ 10 | ||
Percentage of excess cash available for distribution | 50.00% | ||
Percentage of remaining liquidation cash distribution on pro rata basis | 50.00% | ||
Class A Common Stock | |||
Class of Stock [Line Items] | |||
Common stock, shares authorized | 21,000,000 | 21,000,000 | |
Common stock, par value per share (in dollars per share) | $ 0.01 | $ 0.01 | |
Common stock, voting rights | one vote | ||
Rate of cumulative cash distributions | 7.00% | ||
Base distribution per share | $ 10 | ||
Percentage of excess cash available for distribution | 37.50% | ||
Percentage of remaining liquidation cash distribution on pro rata basis | 37.50% | ||
Class B Common Stock | |||
Class of Stock [Line Items] | |||
Common stock, shares authorized | 125,000 | 125,000 | |
Common stock, par value per share (in dollars per share) | $ 0.01 | $ 0.01 | |
Common stock, voting rights | no voting rights | ||
Percentage of excess cash available for distribution | 12.50% | ||
Percentage of remaining liquidation cash distribution on pro rata basis | 12.50% |
Stockholders' Equity - Long-ter
Stockholders' Equity - Long-term incentive plan - (Details) - shares | Feb. 11, 2019 | Mar. 31, 2021 |
Director | ||
Class of Stock [Line Items] | ||
Number of shares awarded | 1,500 | |
Long-term incentive plan | Director | Restricted K shares | ||
Class of Stock [Line Items] | ||
Number of shares awarded | 500 | 250 |
Additional number of shares awarded | 250 | |
Award vesting period | 4 years | |
Award vesting increments percentage | 25.00% | |
Award terms | (1) the termination of the independent director's service as a director due to his or her death or disability, or (2) a change in control of the Company. | |
Number of shares issuable in future | 250 | |
Long-term incentive plan | Independent director two | Restricted K shares | ||
Class of Stock [Line Items] | ||
Number of shares awarded | 500 | |
Number of shares issuable in future | 250 | |
Long-term incentive plan | Independent director three | Restricted K shares | ||
Class of Stock [Line Items] | ||
Number of shares awarded | 500 | |
Number of shares issuable in future | 250 | |
Long-term incentive plan | Three independent directors | Restricted K shares | ||
Class of Stock [Line Items] | ||
Number of shares awarded | 1,500 |
Stockholders' Equity - Share Re
Stockholders' Equity - Share Repurchase Program and Redeemable Common Stock - (Details) - USD ($) | May 07, 2021 | Feb. 08, 2021 | May 01, 2020 | Oct. 26, 2018 | Mar. 31, 2021 | Mar. 31, 2020 |
Class of Stock [Line Items] | ||||||
Issuance of common stock | $ 2,370,967 | $ 7,443,798 | ||||
Value of share repurchase | $ 7,920 | |||||
Class K-I Common Stock | ||||||
Class of Stock [Line Items] | ||||||
Shares issued price per share | $ 10 | |||||
Class K-T Common Stock | ||||||
Class of Stock [Line Items] | ||||||
Shares issued price per share | $ 10 | |||||
A&R SRP | Class K Common Stock | ||||||
Class of Stock [Line Items] | ||||||
Percentage of weighted average number of shares outstanding | 5.00% | |||||
Minimum balance required to be maintained by stockholders | $ 2,000 | |||||
Maximum balance of shares requested to be repurchased | 100 | |||||
Prior period of share repurchase | 15 days | |||||
Repurchase requests period | 30 days | |||||
A&R SRP | Class K-I Common Stock | ||||||
Class of Stock [Line Items] | ||||||
Percentage of weighted average number of shares outstanding | 5.00% | |||||
Minimum balance required to be maintained by stockholders | $ 2,000 | |||||
Maximum balance of shares requested to be repurchased | 100 | |||||
Prior period of share repurchase | 15 days | |||||
Repurchase requests period | 30 days | |||||
A&R SRP | Class K-T Common Stock | ||||||
Class of Stock [Line Items] | ||||||
Percentage of weighted average number of shares outstanding | 5.00% | |||||
Minimum balance required to be maintained by stockholders | $ 2,000 | |||||
Maximum balance of shares requested to be repurchased | 100 | |||||
Prior period of share repurchase | 15 days | |||||
Repurchase requests period | 30 days | |||||
Two outstanding repurchase requests | Class K Common Stock | ||||||
Class of Stock [Line Items] | ||||||
Repurchase of common stock (in shares) | 34,700 | 1,000 | 23,500 | |||
Value of share repurchase | $ 289,421 | $ 7,920 | $ 235,000 | |||
Average Price Paid per Share | $ 8.34 | $ 7.92 | $ 10 |
Stockholders' Equity - Distribu
Stockholders' Equity - Distributions - (Details) - USD ($) | Nov. 16, 2020 | Oct. 27, 2020 | Apr. 29, 2020 | Jan. 23, 2020 | Mar. 31, 2021 | Dec. 31, 2020 | Sep. 30, 2020 | Mar. 03, 2020 |
Distribution Made to Limited Liability Company (LLC) Member | ||||||||
Cumulative distributions | $ 3,528,321 | $ 3,528,321 | ||||||
Distributions | Class A Common Stock | ||||||||
Distribution Made to Limited Liability Company (LLC) Member | ||||||||
Cumulative amount of distribution per share per day | $ 10 | |||||||
Distributions | Class A Common Stock | Minimum [Member] | ||||||||
Distribution Made to Limited Liability Company (LLC) Member | ||||||||
Charter Distribution Percentage | 6.00% | |||||||
Distributions | Class A Common Stock | Maximum [Member] | ||||||||
Distribution Made to Limited Liability Company (LLC) Member | ||||||||
Charter Distribution Percentage | 7.00% | |||||||
Distributions | Class K Common Stock | ||||||||
Distribution Made to Limited Liability Company (LLC) Member | ||||||||
Cumulative distributions | $ 571,905 | $ 453,908 | $ 378,942 | $ 628,344 | $ 610,742 | $ 584,848 | ||
Cumulative amount of distribution per share per day | $ 0.0019125682 | $ 0.0016393443 | $ 0.0016438356 | $ 0.0019178079 | $ 0.0019125682 | $ 0.0019125682 | ||
Date of Record | Oct. 30, 2020 | Apr. 30, 2020 | Jan. 28, 2020 | |||||
Distribution Date | Nov. 12, 2020 | May 1, 2020 | Jan. 31, 2020 | |||||
Declaration Date | Oct. 27, 2020 | Apr. 29, 2020 | Jan. 23, 2020 | |||||
Percentage of distributions that can be authorized, declared, and paid | 30.00% | |||||||
Dividends paid | $ 175,453 | |||||||
Dividends per share cash paid | $ 0.0005737701 | |||||||
Distributions | Class K Common Stock | Minimum [Member] | ||||||||
Distribution Made to Limited Liability Company (LLC) Member | ||||||||
Charter Distribution Percentage | 6.00% | |||||||
Distributions | Class K Common Stock | Maximum [Member] | ||||||||
Distribution Made to Limited Liability Company (LLC) Member | ||||||||
Charter Distribution Percentage | 7.00% | |||||||
Distributions | Class K-I Common Stock | ||||||||
Distribution Made to Limited Liability Company (LLC) Member | ||||||||
Cumulative distributions | $ 109,943 | $ 83,629 | $ 65,432 | $ 131,938 | $ 116,199 | $ 111,990 | ||
Cumulative amount of distribution per share per day | $ 0.0019125682 | $ 0.0016393443 | $ 0.0016438356 | $ 0.0019178079 | $ 0.0019125682 | $ 0.0019125682 | ||
Date of Record | Oct. 30, 2020 | Apr. 30, 2020 | Jan. 28, 2020 | |||||
Distribution Date | Nov. 15, 2020 | May 1, 2020 | Jan. 31, 2020 | |||||
Declaration Date | Oct. 27, 2020 | Apr. 29, 2020 | Jan. 23, 2020 | |||||
Percentage of distributions that can be authorized, declared, and paid | 30.00% | |||||||
Dividends paid | $ 33,597 | |||||||
Dividends per share cash paid | $ 0.0005737701 | |||||||
Distributions | Class K-I Common Stock | Minimum [Member] | ||||||||
Distribution Made to Limited Liability Company (LLC) Member | ||||||||
Charter Distribution Percentage | 6.00% | |||||||
Distributions | Class K-I Common Stock | Maximum [Member] | ||||||||
Distribution Made to Limited Liability Company (LLC) Member | ||||||||
Charter Distribution Percentage | 7.00% | |||||||
Distributions | Class K-T Common Stock | ||||||||
Distribution Made to Limited Liability Company (LLC) Member | ||||||||
Cumulative distributions | $ 8,352 | $ 7,029 | $ 6,023 | $ 8,245 | $ 8,422 | $ 8,444 | ||
Cumulative amount of distribution per share per day | $ 0.0019125682 | $ 0.0016393443 | $ 0.0016438356 | $ 0.0019178079 | $ 0.0019125682 | $ 0.0019125682 | ||
Date of Record | Oct. 30, 2020 | Apr. 30, 2020 | Jan. 28, 2020 | |||||
Distribution Date | Nov. 15, 2020 | May 1, 2020 | Jan. 31, 2020 | |||||
Declaration Date | Oct. 27, 2020 | Apr. 29, 2020 | Jan. 23, 2020 | |||||
Percentage of distributions that can be authorized, declared, and paid | 30.00% | |||||||
Dividends paid | $ 2,533 | |||||||
Dividends per share cash paid | $ 0.0005737701 | |||||||
Distributions | Class K-T Common Stock | Minimum [Member] | ||||||||
Distribution Made to Limited Liability Company (LLC) Member | ||||||||
Charter Distribution Percentage | 6.00% | |||||||
Distributions | Class K-T Common Stock | Maximum [Member] | ||||||||
Distribution Made to Limited Liability Company (LLC) Member | ||||||||
Charter Distribution Percentage | 7.00% |
Stockholders' Equity - Additi_2
Stockholders' Equity - Additional Information 1 (Details) | May 13, 2021USD ($)$ / sharesshares | Feb. 27, 2020USD ($)$ / sharesshares | Sep. 29, 2016shares | Mar. 31, 2021USD ($)director$ / sharesshares | Mar. 31, 2020USD ($) | Dec. 31, 2020USD ($)shares | Sep. 30, 2016$ / shares |
Class of Stock | |||||||
Proceeds from issuance of common stock | $ | $ 2,370,967 | $ 7,443,798 | |||||
Value of issuance of common stock | $ | 2,370,967 | $ 7,443,798 | |||||
Total investment | $ | 88,955,958 | $ 89,588,704 | |||||
Hilton Garden Inn Providence | |||||||
Class of Stock | |||||||
Number of Class K OP Units issued | 128,124 | ||||||
Value of Class K OP Units issued (in dollars per share) | $ / shares | $ 10 | ||||||
Total investment | $ | $ 1,281,244 | ||||||
Cash consideration received by individuals with direct or indirect interests in the sellers of the hotel | $ | $ 0 | ||||||
Dealer Manager | Initial public offering | |||||||
Class of Stock | |||||||
Selling commissions and dealer manager fees | $ | 2,586,805 | ||||||
Value of stockholder servicing fee | $ | 6,749 | ||||||
Dealer Manager | Private offering | |||||||
Class of Stock | |||||||
Selling commissions and dealer manager fees | $ | $ 1,058,501 | ||||||
Class K Common Stock | |||||||
Class of Stock | |||||||
Common stock, shares issued | 3,687,243 | 3,608,062 | |||||
Percentage of excess cash as special distribution declared on pro rata basis | 50.00% | ||||||
Class K Common Stock | Initial public offering | Distribution reinvestment plan | |||||||
Class of Stock | |||||||
Issuance of common stock (in shares) | 15,237 | ||||||
Value of issuance of common stock | $ | $ 131,936 | ||||||
Class K Common Stock | Private offering | |||||||
Class of Stock | |||||||
Shares issued price per share | $ / shares | $ 10 | ||||||
Class K Common Stock | Unaffiliated investors | Initial public offering | |||||||
Class of Stock | |||||||
Common stock, shares issued | 2,469,167 | ||||||
Proceeds from issuance of common stock | $ | $ 24,048,117 | ||||||
Class K Common Stock | Unaffiliated investors | Private offering | |||||||
Class of Stock | |||||||
Common stock, shares issued | 1,253,618 | ||||||
Proceeds from issuance of common stock | $ | $ 12,398,660 | ||||||
Class K Common Stock | Dealer Manager | Initial public offering | |||||||
Class of Stock | |||||||
Dealer manager selling commissions percentage | 7.00% | ||||||
Dealer manager fee, percentage | 3.00% | ||||||
Class K Common Stock | Dealer Manager | Private offering | |||||||
Class of Stock | |||||||
Dealer manager selling commissions percentage | 7.00% | ||||||
Selling commissions, percentage | 3.00% | ||||||
Class K Common Stock | Investors | Initial public offering | |||||||
Class of Stock | |||||||
Issuance of common stock (in shares) | 80,181 | ||||||
Shares issued price per share | $ / shares | $ 8.53 | ||||||
Value of issuance of common stock | $ | $ 684,167 | ||||||
Class K Common Stock | Three Independent director | |||||||
Class of Stock | |||||||
Number of restricted shares issued | 3,000 | ||||||
Number of independent directors | director | 3 | ||||||
Class K Common Stock | Independent director one | |||||||
Class of Stock | |||||||
Number of restricted shares issued | 1,000 | ||||||
Class K Common Stock | Independent director two | |||||||
Class of Stock | |||||||
Number of restricted shares issued | 1,000 | ||||||
Class K Common Stock | Independent director three | |||||||
Class of Stock | |||||||
Number of restricted shares issued | 1,000 | ||||||
Class A Common Stock | |||||||
Class of Stock | |||||||
Common stock, shares issued | 581,410 | 537,410 | |||||
Percentage of excess liquidation cash if A shares repurchased in Non-cause Advisory Agreement Termination | 87.50% | ||||||
Class A Common Stock | Unaffiliated investors | Private offering | |||||||
Class of Stock | |||||||
Common stock, shares issued | 23,000 | ||||||
Proceeds from issuance of common stock | $ | $ 230,000 | ||||||
Class A Common Stock | TPG Hotel REIT Investor, LLC (THR) | |||||||
Class of Stock | |||||||
Common stock, shares issued | 428,410 | ||||||
Proceeds from issuance of common stock | $ | $ 4,284,095 | ||||||
Number of shares issued in exchange of notes receivable | 130,000 | ||||||
Shares issued price per share | $ / shares | $ 10 | ||||||
Class A Common Stock | TPG Hotel REIT Investor, LLC (THR) | Initial public offering | |||||||
Class of Stock | |||||||
Issuance of common stock (in shares) | 44,000 | ||||||
Shares issued price per share | $ / shares | $ 10 | ||||||
Value of issuance of common stock | $ | $ 440,000 | ||||||
Class A Common Stock | Procaccianti Hotel Advisors, LLC ("PHA") | |||||||
Class of Stock | |||||||
Percentage of excess cash if A shares repurchased in Non-cause Advisory Agreement Termination | 37.50% | ||||||
Percentage of excess liquidation cash if A shares repurchased in Non-cause Advisory Agreement Termination | 37.50% | ||||||
Class B Common Stock | |||||||
Class of Stock | |||||||
Common stock, shares issued | 125,000 | 125,000 | |||||
Percentage of excess liquidation cash if A shares repurchased in Non-cause Advisory Agreement Termination | 12.50% | ||||||
Class B Common Stock | Dealer Manager | |||||||
Class of Stock | |||||||
Number of shares issued in exchange of notes receivable | 125,000 | ||||||
Class K-I Common Stock | |||||||
Class of Stock | |||||||
Common stock, shares issued | 823,558 | 666,728 | |||||
Shares issued price per share | $ / shares | $ 10 | ||||||
Number of shares sold (in shares) | 10 | ||||||
Value of shares sold | $ | $ 100 | ||||||
Percentage of excess cash as special distribution declared on pro rata basis | 50.00% | ||||||
Percentage of excess liquidation cash as special distribution declared on pro rata basis | 50.00% | ||||||
Class K-I Common Stock | Initial public offering | Distribution reinvestment plan | |||||||
Class of Stock | |||||||
Issuance of common stock (in shares) | 11,574 | ||||||
Value of issuance of common stock | $ | $ 102,455 | ||||||
Class K-I Common Stock | Unaffiliated investors | Initial public offering | |||||||
Class of Stock | |||||||
Common stock, shares issued | 818,306 | ||||||
Proceeds from issuance of common stock | $ | $ 7,352,306 | ||||||
Class K-I Common Stock | Dealer Manager | Initial public offering | |||||||
Class of Stock | |||||||
Dealer manager fee, percentage | 3.00% | ||||||
Class K-I Common Stock | Investors | Initial public offering | |||||||
Class of Stock | |||||||
Issuance of common stock (in shares) | 156,830 | ||||||
Shares issued price per share | $ / shares | $ 7.95 | ||||||
Value of issuance of common stock | $ | $ 1,246,800 | ||||||
Class K-T Common Stock | |||||||
Class of Stock | |||||||
Common stock, shares issued | 47,769 | 47,769 | |||||
Shares issued price per share | $ / shares | $ 10 | ||||||
Number of shares sold (in shares) | 10 | ||||||
Value of shares sold | $ | $ 100 | ||||||
Percentage of excess cash as special distribution declared on pro rata basis | 50.00% | ||||||
Percentage of excess liquidation cash as special distribution declared on pro rata basis | 50.00% | ||||||
Class K-T Common Stock | Initial public offering | Distribution reinvestment plan | |||||||
Class of Stock | |||||||
Issuance of common stock (in shares) | 1,219 | ||||||
Value of issuance of common stock | $ | $ 10,512 | ||||||
Class K-T Common Stock | Unaffiliated investors | Initial public offering | |||||||
Class of Stock | |||||||
Common stock, shares issued | 47,540 | ||||||
Proceeds from issuance of common stock | $ | $ 475,400 | ||||||
Class K-T Common Stock | Dealer Manager | Initial public offering | |||||||
Class of Stock | |||||||
Dealer manager selling commissions percentage | 3.00% | ||||||
Dealer manager fee, percentage | 3.00% | ||||||
Stockholder servicing fee, percentage | 1.00% | ||||||
Subsequent Events | Class K Common Stock | Investors | Initial public offering | |||||||
Class of Stock | |||||||
Issuance of common stock (in shares) | 78,209 | ||||||
Value of issuance of common stock | $ | $ 664,191 | ||||||
Weighted average price | $ / shares | $ 8.49 | ||||||
Subsequent Events | Class K-I Common Stock | Investors | Initial public offering | |||||||
Class of Stock | |||||||
Issuance of common stock (in shares) | 229,135 | ||||||
Value of issuance of common stock | $ | $ 1,821,621 | ||||||
Weighted average price | $ / shares | $ 7.95 | ||||||
Subsequent Events | Class K-T Common Stock | Investors | Initial public offering | |||||||
Class of Stock | |||||||
Issuance of common stock (in shares) | 2,921 | ||||||
Value of issuance of common stock | $ | $ 25,000 | ||||||
Weighted average price | $ / shares | $ 8.56 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Income Taxes | ||
Income tax expense | $ 0 | $ (7,029) |