Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2022 | Aug. 11, 2022 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 000-56082 | |
Entity Registrant Name | LODGING FUND REIT III, INC. | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 83-0556111 | |
Entity Address, Address Line One | 1635 43rd Street South, Suite 205 | |
Entity Address, City or Town | Fargo | |
Entity Address, State or Province | ND | |
Entity Address, Postal Zip Code | 58103 | |
City Area Code | 701 | |
Local Phone Number | 630-6500 | |
Title of 12(b) Security | None | |
No Trading Symbol Flag | true | |
Security Exchange Name | NONE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 9,286,897 | |
Entity Central Index Key | 0001745032 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2022 | Dec. 31, 2021 |
Assets | ||
Investment in hotel properties, net of accumulated depreciation of $12,770,510 and $9,487,728 | $ 217,426,442 | $ 169,424,775 |
Cash and cash equivalents | 7,085,493 | 7,866,401 |
Restricted cash | 6,774,233 | 6,469,999 |
Accounts receivable, net | 767,712 | 748,364 |
Franchise fees, net | 1,871,864 | 1,459,641 |
Prepaid expenses and other assets | 5,248,366 | 4,360,555 |
Total Assets | 239,174,110 | 190,329,735 |
Liabilities and Equity | ||
Debt, net | 131,974,319 | 103,126,884 |
Finance lease liability | 8,071,071 | |
Accounts payable | 2,780,221 | 1,549,380 |
Accrued expenses | 2,952,841 | 2,621,520 |
Distributions payable | 597,972 | 495,657 |
Due to related parties | 3,782,289 | 2,580,326 |
Other liabilities | 1,127,378 | 7,499,568 |
Total liabilities | 151,286,091 | 117,873,335 |
Commitments and contingencies (See Note 10) | ||
Equity | ||
Preferred stock, $0.01 par value, 100,000,000 shares authorized; no shares issued and outstanding | ||
Common stock, $0.01 par value, 900,000,000 shares authorized; 9,105,687 and 8,348,310 shares issued and outstanding | 91,055 | 83,481 |
Additional paid-in capital | 88,934,679 | 81,655,994 |
Accumulated deficit | (53,232,218) | (43,586,952) |
Total stockholders' equity | 35,793,516 | 38,152,523 |
Total equity | 87,888,019 | 72,456,400 |
Total Liabilities and Equity | 239,174,110 | 190,329,735 |
Series B LP Units | ||
Equity | ||
Non-controlling interest | (2,055,453) | (1,563,489) |
Series GO LP Units | ||
Equity | ||
Non-controlling interest | 17,161,824 | 12,498,527 |
Series T LP Units. | ||
Equity | ||
Non-controlling interest | 31,661,048 | 21,931,757 |
Common LP Units | ||
Equity | ||
Non-controlling interest | $ 5,327,084 | $ 1,437,082 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Jun. 30, 2022 | Dec. 31, 2021 |
CONSOLIDATED BALANCE SHEETS | ||
Accumulated depreciation | $ 12,770,510 | $ 9,487,728 |
Preferred stock, Par Value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 100,000,000 | 100,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 900,000,000 | 900,000,000 |
Common stock, shares issued | 9,105,687 | 8,348,310 |
Common stock, shares outstanding | 9,105,687 | 8,348,310 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | |
Revenues | ||||
Total revenue | $ 12,331,424 | $ 6,338,512 | $ 21,627,227 | $ 10,123,673 |
Expenses | ||||
Property operations | 5,842,004 | 2,561,807 | 10,622,477 | 4,304,055 |
General and administrative | 2,395,956 | 1,692,370 | 4,620,423 | 3,038,212 |
Sales and marketing | 815,144 | 522,307 | 1,395,510 | 827,761 |
Franchise fees | 1,081,528 | 503,718 | 1,898,724 | 800,070 |
Management fees | 933,692 | 559,065 | 1,728,788 | 997,155 |
Acquisition expense | (6,213) | 20,977 | 7,304 | 48,443 |
Depreciation and amortization | 1,695,354 | 1,151,739 | 3,319,594 | 2,154,791 |
Total expenses | 12,757,465 | 7,011,983 | 23,592,820 | 12,170,487 |
Other Income (Expense) | ||||
Other income (expense), net | (258,656) | (97,008) | (458,049) | (181,233) |
PPP loan forgiveness | 801,800 | 1,564,900 | ||
Interest expense | (2,232,972) | (1,014,443) | (4,646,064) | (1,961,516) |
Total other income (expense) | (2,491,628) | (309,651) | (5,104,113) | (577,849) |
Net Loss Before Income Taxes | (2,917,669) | (983,122) | (7,069,706) | (2,624,663) |
Income tax (expense) benefit | (224,582) | 391,346 | 427,020 | 366,346 |
Net Loss | (3,142,251) | (591,776) | (6,642,686) | (2,258,317) |
Net Loss Attributable to Common Stockholders | $ (2,327,895) | $ (481,488) | $ (4,850,592) | $ (1,905,115) |
Basic Net Loss Per Share of Common Stock | $ (0.26) | $ (0.06) | $ (0.56) | $ (0.24) |
Diluted Net Loss Per Share of Common Stock | $ (0.26) | $ (0.06) | $ (0.56) | $ (0.24) |
Weighted-average Shares of Common Stock Outstanding, Basic | 8,881,540 | 7,940,665 | 8,684,253 | 7,846,869 |
Weighted-average Shares of Common Stock Outstanding, Diluted | 8,881,540 | 7,940,665 | 8,684,253 | 7,846,869 |
Series B LP Units | ||||
Other Income (Expense) | ||||
Net loss attributable to non-controlling interest | $ (156,779) | $ (29,462) | $ (331,785) | $ (112,440) |
Series GO LP Units | ||||
Other Income (Expense) | ||||
Net loss attributable to non-controlling interest | (512,858) | (80,826) | (1,136,951) | (240,762) |
Common LP Units | ||||
Other Income (Expense) | ||||
Net loss attributable to non-controlling interest | (144,719) | (323,358) | ||
Room | ||||
Revenues | ||||
Total revenue | 11,762,267 | 6,174,243 | 20,576,362 | 9,895,034 |
Other | ||||
Revenues | ||||
Total revenue | $ 569,157 | $ 164,269 | $ 1,050,865 | $ 228,639 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total Stockholder's Equity | Non-controlling Interest Series B LP Units | Non-controlling Interest Series GO LP Units | Non-controlling Interest Series T LP Units. | Non-controlling Interest Common LP Units | Total |
Balance - Beginning at Dec. 31, 2020 | $ 76,116 | $ 74,610,627 | $ (31,855,995) | $ 42,830,748 | $ (1,005,785) | $ 3,784,965 | $ 45,609,928 | ||
Balance - Beginning (Shares) at Dec. 31, 2020 | 7,611,653 | ||||||||
Issuance of common stock | $ 824 | 793,756 | 794,580 | 794,580 | |||||
Issuance of common stock (Shares) | 82,414 | ||||||||
Issuance of GO Units | 4,201,300 | 4,201,300 | |||||||
Issuance of T Units | $ 6,747,577 | 6,747,577 | |||||||
Offering costs | (287,745) | (287,745) | (534,354) | (822,099) | |||||
Distributions declared | (1,358,705) | (1,358,705) | (71,511) | (1,430,216) | |||||
Distributions reinvested | $ 1,139 | 1,080,689 | 1,081,828 | 1,081,828 | |||||
Distributions reinvested (in shares) | 113,877 | ||||||||
Net loss | (1,423,627) | (1,423,627) | (82,978) | (159,936) | (1,666,541) | ||||
Balance - Ending at Mar. 31, 2021 | $ 78,079 | 76,485,072 | (34,926,072) | 41,637,079 | (1,160,274) | 7,291,975 | 6,747,577 | 54,516,357 | |
Balance - Ending (Shares) at Mar. 31, 2021 | 7,807,944 | ||||||||
Balance - Beginning at Dec. 31, 2020 | $ 76,116 | 74,610,627 | (31,855,995) | 42,830,748 | (1,005,785) | 3,784,965 | 45,609,928 | ||
Balance - Beginning (Shares) at Dec. 31, 2020 | 7,611,653 | ||||||||
Net loss | (2,258,317) | ||||||||
Balance - Ending at Jun. 30, 2021 | $ 79,631 | 77,973,779 | (37,209,546) | 40,843,864 | (1,262,988) | 8,382,679 | 8,788,635 | 56,752,190 | |
Balance - Ending (Shares) at Jun. 30, 2021 | 7,963,220 | ||||||||
Balance - Beginning at Dec. 31, 2020 | $ 76,116 | 74,610,627 | (31,855,995) | 42,830,748 | (1,005,785) | 3,784,965 | 45,609,928 | ||
Balance - Beginning (Shares) at Dec. 31, 2020 | 7,611,653 | ||||||||
Redemptions | $ (856,605) | ||||||||
Redemptions (in shares) | (88,088) | ||||||||
Balance - Ending at Dec. 31, 2021 | $ 83,481 | 81,655,994 | (43,586,952) | 38,152,523 | (1,563,489) | 12,498,527 | 21,931,757 | $ 1,437,082 | $ 72,456,400 |
Balance - Ending (Shares) at Dec. 31, 2021 | 8,348,310 | ||||||||
Balance - Beginning at Mar. 31, 2021 | $ 78,079 | 76,485,072 | (34,926,072) | 41,637,079 | (1,160,274) | 7,291,975 | 6,747,577 | 54,516,357 | |
Balance - Beginning (Shares) at Mar. 31, 2021 | 7,807,944 | ||||||||
Issuance of common stock | $ 807 | 782,663 | 783,470 | 783,470 | |||||
Issuance of common stock (Shares) | 80,737 | ||||||||
Issuance of GO Units | 1,329,000 | 1,329,000 | |||||||
Issuance of T Units | 2,041,058 | 2,041,058 | |||||||
Offering costs | (410,200) | (410,200) | (157,470) | (567,670) | |||||
Distributions declared | (1,391,786) | (1,391,786) | (73,252) | (1,465,038) | |||||
Distributions reinvested | $ 1,165 | 1,105,915 | 1,107,080 | 1,107,080 | |||||
Distributions reinvested (in shares) | 116,535 | ||||||||
Redemptions | $ (420) | (399,871) | (400,291) | (400,291) | |||||
Redemptions (in shares) | (41,996) | ||||||||
Net loss | (481,488) | (481,488) | (29,462) | (80,826) | (591,776) | ||||
Balance - Ending at Jun. 30, 2021 | $ 79,631 | 77,973,779 | (37,209,546) | 40,843,864 | (1,262,988) | 8,382,679 | 8,788,635 | 56,752,190 | |
Balance - Ending (Shares) at Jun. 30, 2021 | 7,963,220 | ||||||||
Balance - Beginning at Dec. 31, 2021 | $ 83,481 | 81,655,994 | (43,586,952) | 38,152,523 | (1,563,489) | 12,498,527 | 21,931,757 | 1,437,082 | 72,456,400 |
Balance - Beginning (Shares) at Dec. 31, 2021 | 8,348,310 | ||||||||
Issuance of common stock | $ 2,769 | 2,672,085 | 2,674,854 | 2,674,854 | |||||
Issuance of common stock (Shares) | 276,878 | ||||||||
Issuance of GO Units | 6,138,291 | 6,138,291 | |||||||
Issuance of T Units | 9,729,291 | 9,729,291 | |||||||
Issuance of Common LP Units | 4,600,000 | 4,600,000 | |||||||
Offering costs | (730,836) | (730,836) | (463,548) | (1,194,384) | |||||
Distributions declared | (1,478,078) | (1,478,078) | (78,230) | (98,783) | (1,655,091) | ||||
Distributions reinvested | $ 597 | 566,643 | 567,240 | 567,240 | |||||
Distributions reinvested (in shares) | 59,709 | ||||||||
Redemptions | $ (643) | (637,531) | (638,174) | (638,174) | |||||
Redemptions (in shares) | (64,306) | ||||||||
Net loss | (2,522,697) | (2,522,697) | (175,006) | (624,093) | (178,639) | (3,500,435) | |||
Balance - Ending at Mar. 31, 2022 | $ 86,204 | 84,257,191 | (48,318,563) | 36,024,832 | (1,816,725) | 17,549,177 | 31,661,048 | 5,759,660 | 89,177,992 |
Balance - Ending (Shares) at Mar. 31, 2022 | 8,620,591 | ||||||||
Balance - Beginning at Dec. 31, 2021 | $ 83,481 | 81,655,994 | (43,586,952) | 38,152,523 | (1,563,489) | 12,498,527 | 21,931,757 | 1,437,082 | 72,456,400 |
Balance - Beginning (Shares) at Dec. 31, 2021 | 8,348,310 | ||||||||
Redemptions | $ (1,214,053) | ||||||||
Redemptions (in shares) | (121,921) | ||||||||
Net loss | $ (6,642,686) | ||||||||
Balance - Ending at Jun. 30, 2022 | $ 91,055 | 88,934,679 | (53,232,218) | 35,793,516 | (2,055,453) | 17,161,824 | 31,661,048 | 5,327,084 | 87,888,019 |
Balance - Ending (Shares) at Jun. 30, 2022 | 9,105,687 | ||||||||
Balance - Beginning at Mar. 31, 2022 | $ 86,204 | 84,257,191 | (48,318,563) | 36,024,832 | (1,816,725) | 17,549,177 | 31,661,048 | 5,759,660 | 89,177,992 |
Balance - Beginning (Shares) at Mar. 31, 2022 | 8,620,591 | ||||||||
Issuance of common stock | $ 4,873 | 4,727,186 | 4,732,059 | 4,732,059 | |||||
Issuance of common stock (Shares) | 487,325 | ||||||||
Issuance of GO Units | 137,600 | 137,600 | |||||||
Offering costs | (1,127,509) | (1,127,509) | (12,095) | (1,139,604) | |||||
Distributions declared | (1,458,251) | (1,458,251) | (81,949) | (287,857) | (1,828,057) | ||||
Distributions reinvested | $ 554 | 525,605 | 526,159 | 526,159 | |||||
Distributions reinvested (in shares) | 55,386 | ||||||||
Redemptions | $ (576) | (575,303) | (575,879) | (575,879) | |||||
Redemptions (in shares) | (57,615) | ||||||||
Net loss | (2,327,895) | (2,327,895) | (156,779) | (512,858) | (144,719) | (3,142,251) | |||
Balance - Ending at Jun. 30, 2022 | $ 91,055 | $ 88,934,679 | $ (53,232,218) | $ 35,793,516 | $ (2,055,453) | $ 17,161,824 | $ 31,661,048 | $ 5,327,084 | $ 87,888,019 |
Balance - Ending (Shares) at Jun. 30, 2022 | 9,105,687 |
CONSOLIDATED STATEMENTS OF CH_2
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares | 3 Months Ended | |||
Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2021 | Mar. 31, 2021 | |
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY | ||||
Distributions declared (in dollars per share) | $ 0.175 | $ 0.175 | $ 0.175 | $ 0.175 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||
Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Cash Flows from Operating Activities: | |||||||||
Net loss | $ (3,142,251) | $ (3,500,435) | $ (591,776) | $ (1,666,541) | $ (6,642,686) | $ (2,258,317) | |||
Adjustments to reconcile net loss to cash used in operating activities: | |||||||||
Depreciation | 3,319,594 | 2,154,791 | |||||||
Stock-based compensation expense | 30,000 | ||||||||
Amortization | 371,932 | 174,301 | |||||||
Gain on PPP loan forgiveness | (1,564,900) | ||||||||
Loss on disposal of fixed assets | (12,612) | ||||||||
Deferred tax assets, net | (422,415) | (391,487) | |||||||
Change in operating assets and liabilities: | |||||||||
Accounts receivable | (19,348) | (548,060) | |||||||
Franchise fees | (475,000) | (262,500) | |||||||
Prepaid expenses and other assets | (465,397) | (211,072) | |||||||
Accounts payable | 1,055,769 | 723,865 | |||||||
Accrued expenses | 331,321 | 303,449 | |||||||
Due to related parties | 1,107,510 | 936,613 | |||||||
Other liabilities | (1,451,008) | 504,457 | |||||||
Net cash used in operating activities | 20,841 | (3,293,181) | $ (732,378) | $ 122,840 | 853,375 | (1,292,235) | (3,272,340) | (438,860) | $ (1,048,398) |
Cash Flows from Investing Activities: | |||||||||
Acquisitions of hotel properties | (940,636) | (2,221,365) | |||||||
Improvements and additions to hotel properties | (3,316,894) | (1,210,239) | |||||||
Net cash used in investing activities | (4,257,530) | (3,431,604) | |||||||
Cash Flows from Financing Activities: | |||||||||
Proceeds from mortgage debt | 17,392,288 | ||||||||
Proceeds from lines of credit | 1,750,000 | 1,000,000 | |||||||
Proceeds from PPP loans | 921,300 | ||||||||
Principal payments on mortgage debt | (17,989,514) | (466,943) | |||||||
Principal payments on lines of credit | (2,350,000) | (1,000,000) | |||||||
Payments of deferred financing costs | (507,625) | (475,238) | |||||||
Increase in finance lease liability | 95,314 | ||||||||
Proceeds from issuance of common stock | 7,376,913 | 1,578,050 | |||||||
Proceeds from issuance of GO Units | 6,275,891 | 5,530,300 | |||||||
Payments of offering costs | (2,214,642) | (1,182,751) | |||||||
Payments for shares redeemed | (638,174) | (400,291) | |||||||
Distributions paid | (1,203,791) | (933,464) | (1,340,091) | (1,114,951) | (251,625) | (246,084) | (2,137,255) | (497,709) | (2,952,751) |
Net cash provided by financing activities | 7,053,196 | 5,006,718 | |||||||
Net change in cash, cash equivalents, and restricted cash | (476,674) | 1,136,254 | |||||||
Beginning Cash, Cash Equivalents, and Restricted Cash | 14,336,400 | 13,665,321 | 12,529,067 | 14,336,400 | 12,529,067 | 12,529,067 | |||
Ending Cash, Cash Equivalents, and Restricted Cash | 13,859,726 | 14,336,400 | 13,665,321 | 13,859,726 | 13,665,321 | 14,336,400 | |||
Supplemental Disclosure of Cash Flow Information: | |||||||||
Interest paid, net of amounts capitalized | 3,096,351 | 1,951,174 | |||||||
Income taxes paid | 26,000 | 1,963 | |||||||
Supplemental Disclosure of Non-Cash Investing and Financing Activities: | |||||||||
Offering costs included in accounts payable | 175,072 | 60,147 | |||||||
Offering costs included in due to related parties | (55,727) | 154,871 | |||||||
Offering costs included in accrued expenses | (8,000) | ||||||||
Distributions included in due to related parties | 150,179 | 144,763 | |||||||
Redemptions included in other liabilities | 575,879 | ||||||||
Reinvested distributions | 1,093,399 | 2,188,908 | |||||||
Initial ASC 842 adoption of right-of-use asset | 2,478,696 | ||||||||
Reconciliation of Cash, Cash Equivalents, and Restricted Cash: | |||||||||
Cash and cash equivalents, beginning of period | 7,866,401 | 6,572,353 | 7,960,159 | 7,866,401 | 7,960,159 | 7,960,159 | |||
Restricted cash, beginning of period | $ 6,469,999 | $ 7,092,968 | $ 4,568,908 | 6,469,999 | 4,568,908 | 4,568,908 | |||
Cash, cash equivalents, and restricted cash, beginning of period | 13,859,726 | 14,336,400 | 13,665,321 | 13,859,726 | 13,665,321 | 14,336,400 | |||
Cash and cash equivalents, end of period | 7,085,493 | 7,866,401 | 6,572,353 | 7,085,493 | 6,572,353 | 7,866,401 | |||
Restricted cash, end of period | 6,774,233 | 6,469,999 | 7,092,968 | 6,774,233 | 7,092,968 | 6,469,999 | |||
Cash, cash equivalents, and restricted cash, end of period | $ 13,859,726 | $ 14,336,400 | $ 13,665,321 | 13,859,726 | 13,665,321 | $ 14,336,400 | |||
Courtyard by Marriott (the "Aurora Property") | |||||||||
Supplemental Disclosure of Non-Cash Investing and Financing Activities: | |||||||||
Issuance of T Units | 6,688,635 | ||||||||
Debt issued for acquisition | 15,000,000 | ||||||||
Holiday Inn (the "EI Paso Property") | |||||||||
Supplemental Disclosure of Non-Cash Investing and Financing Activities: | |||||||||
Issuance of T Units | 2,100,000 | ||||||||
Debt issued for acquisition | $ 7,900,000 | ||||||||
Hampton Inn and Suites, Fargo Medical Center (the "Fargo Property") | |||||||||
Supplemental Disclosure of Non-Cash Investing and Financing Activities: | |||||||||
Issuance of T Units | 4,091,291 | ||||||||
Debt issued for acquisition | 7,198,709 | ||||||||
Fairfield Inn & Suites (the "Lakewood Property") | |||||||||
Supplemental Disclosure of Non-Cash Investing and Financing Activities: | |||||||||
Issuance of T Units | 5,638,000 | ||||||||
Debt issued for acquisition | 13,081,364 | ||||||||
Courtyard El Paso Airport, (the "El Paso Airport Property") | |||||||||
Supplemental Disclosure of Non-Cash Investing and Financing Activities: | |||||||||
Issuance of T Units | 4,600,000 | ||||||||
Debt issued for acquisition | $ 9,990,000 |
ORGANIZATION
ORGANIZATION | 6 Months Ended |
Jun. 30, 2022 | |
ORGANIZATION | |
ORGANIZATION | 1. ORGANIZATION Lodging Fund REIT III, Inc. (“LF REIT III”), was formed on April 9, 2018 as a Maryland corporation. LF REIT III, together with its subsidiaries (the “Company”), was formed for the principal purpose of acquiring, through purchase or contribution, direct or indirect ownership interests in a diverse portfolio of limited-service, select-service, full-service and extended stay hotel properties located primarily in “America’s Heartland,” which the Company defines as the geographic area from North Dakota to Texas and the Appalachian Mountains to the Rocky Mountains. LF REIT III has elected to be treated as a real estate investment trust, or REIT, for federal income tax purposes beginning with the taxable year ended December 31, 2018. The Company’s business activities are directed and managed by Legendary Capital REIT III, LLC (the “Advisor”) and its affiliates, which are related parties through common management, pursuant to the Amended and Restated Advisory Agreement (the “Advisory Agreement”), dated June 1, 2018. The Company has no foreign operations or assets, and its operating structure includes only one operating and reportable segment. Substantially all of the Company’s assets and liabilities are held by, and substantially all of its operations are conducted through, Lodging Fund REIT III OP, LP (the “Operating Partnership,” or “OP”), a subsidiary of LF REIT III. The OP has three voting classes of partnership units, Common General Partnership Units (“GP Units”), Interval Units and Common Limited Partnership Units (“Common LP Units”), and three classes of non-voting partnership units, Series B Limited Partnership Units (“Series B LP Units”), Series Growth & Opportunity (“GO”) Limited Partnership Units (“Series GO LP Units”) and Series T Limited Partnership Units (“Series T LP Units”). LF REIT III was the sole general partner of the OP, as of June 30, 2022 and December 31, 2021. As of June 30, 2022, there were 612,100 outstanding Common LP Units, no outstanding Interval Units, there were 1,000 outstanding Series B LP Units, all of which were owned by the Advisor, 3,125,041 Series GO LP Units and 3,542,699 Series T LP Units. On June 1, 2018, the Company commenced a private offering of shares of common stock, $0.01 par value per share, with a maximum offering of $100,000,000, which was increased to $150,000,000 in shares of the Company’s common stock in December 2021 (the “Offering”). The Offering is to accredited investors only, pursuant to a confidential private placement memorandum exempt from registration under the Securities Act of 1933, as amended. In addition to sales of common shares for cash, the Company has adopted a dividend reinvestment plan (“DRIP”), which permits stockholders to reinvest their distributions back into the Company. As of June 30, 2022, the Company had issued and sold 9,379,886 shares of common stock, including 925,174 shares attributable to the DRIP, and received aggregate proceeds of $91.7 million. As of June 30, 2022, the Company had repurchased 274,199 shares, which represents an original investment of $2,741,988 for $2,661,203 under the Company’s Share Repurchase Plan. As of June 30, 2022, $575,879 of the redemption proceeds had not yet been paid and is included in other liabilities on the accompanying consolidated balance sheet. See Note 11. On April 29, 2020, the Company classified and designated 7,000,000 shares of authorized but unissued common stock, $0.01 par value per share, as shares of “Interval Common Stock,” to be part of the Offering. The offering of the Interval Common Stock was a maximum offering of $30,000,000, which could be increased to $60,000,000 in the sole discretion of the Company’s board of directors, (the “Interval Share Offering”) to accredited investors only, pursuant to a confidential private placement memorandum exempt from registration under the Securities Act of 1933, as amended. The Company’s board of directors allowed the Interval Share Offering to expire on March 31, 2022. The Company did not issue or sell any shares of Interval Common Stock in the Offering. On June 15, 2020, the Operating Partnership commenced a private offering of limited partnership units in the OP, designated as Series GO LP Units, with a maximum offering of $20,000,000, which could be increased to $30,000,000 in the sole discretion of LF REIT III as the General Partner of the Operating Partnership, (the “GO Unit Offering”) to accredited investors only, pursuant to a confidential private placement memorandum exempt from registration under the Securities Act of 1933, as amended. The Series GO LP Units were being offered until the earlier of (i) the sale of $20,000,000 in Series GO LP Units (which could be increased to $30,000,000 in the Company’s sole discretion), (ii) June 14, 2022 or (iii) the Operating Partnership terminates the GO Unit Offering at an earlier date in its sole discretion. The Company’s board of directors terminated the GO Unit Offering as of February 14, 2022. The Company’s board of directors approved and ratified additional sales after February 14, 2022 in the GO Unit Offering for sales which were pending as of that date. As of June 30, 2022, the Operating Partnership had issued and sold 3,125,041 Series GO LP Units and received aggregate proceeds of $21.5 million. The Operating Partnership may issue Series T LP Units from time to time to persons who contribute direct or indirect interests in real estate to the Operating Partnership. The Series T LP Units will have allocations and distributions that are dictated by the Partnership Agreement of the Operating Partnership and the applicable contribution agreement for the real estate. Certain Series T LP Units may have different allocations and distributions than other Series T LP Units. The amount of the allocations and distributions will be determined by the General Partner in its sole discretion at the time of issuance of the Series T LP Units and any future distributions are dependent on the financial performance of the contributed real estate based on a mathematical formula. The Series T LP Units are eligible for conversion into Common LP Units beginning 36 months after their issuance and will automatically convert into Common LP Units upon other events as described in the Partnership Agreement of the Operating Partnership. The conversion of Series T LP Units into Common LP Units may vary with each issuance and is generally based on a formula that applies an applicable capitalization rate to the then-current trailing twelve months net operating income of the hotel property less the loan balance outstanding as of the contribution date as assumed by the Operating Partnership, and less other amounts incurred by the Operating Partnership including but not limited to certain closing costs, loan assumption fees and defeasance costs, property improvement plan (“PIP”) and capital expenditures, operating cash infused by the Operating Partnership, and any shortfall of certain minimum cumulative investment yield. There is no guarantee that the future financial performance of the contributed hotel property will be sufficient to result in the issuance of Common LP Units resulting from the application of the conversion formula applicable to the issuance of Series T LP Units at the time of the conversion. As of June 30, 2022, the Company had recorded an aggregate value of $31.7 million to the Series T LP Units in connection with such property contributions. On December 3, 2021, the Operating Partnership commenced a private placement offering of its Common LP Units. As of June 30, 2022, the Operating Partnership had issued and sold 612,100 Common LP Units in connection with property contributions. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation Use of Estimates During the first quarter of 2020, the global outbreak of COVID-19 was identified and has since spread to nearly every country and territory, including every state in the United States. The COVID-19 pandemic and the related governmental restrictions instituted to slow the spread of the virus continues to adversely impact many industries, with the travel and hospitality industries being particularly adversely affected. Although our hotel properties have remained open through the pandemic, our occupancy levels have been lower than historical levels. The outbreak could have a continued adverse impact on economic and market conditions and could trigger a continued slowdown in leisure and business travel, which is adversely impacting the travel and hospitality industries. Further, increasing labor costs and shortages, supply chain disruptions and related commodity and other price inflation resulting from the COVID-19 pandemic may cause an increase in renovation, construction and operating costs, may limit our access to critical operating supplies, and may continue to adversely affect our hotel operations and financial results. The fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19 on economic and market conditions. The Company believes the estimates and assumptions underlying the Company’s consolidated financial statements are reasonable and supportable based on the information available as of June 30, 2022, however uncertainty over the ultimate impact COVID-19, including the continued emergence of new strains of COVID-19, such as the Delta and Omicron variant, will have on the global economy generally, and the Company’s business in particular, makes any estimates and assumptions as of June 30, 2022 inherently less certain than they would be absent the current and potential impacts of COVID-19. The Company has taken significant measures to mitigate the negative financial and operational impacts of COVID-19 on the Company. The Company has made changes to our business and investment strategies that are expected to enhance the Company’s liquidity and reduce costs, including payment of distributions in stock, in part or in whole, pursuant to the DRIP, deferring most non-essential capital projects, obtaining waivers under and amendments to the Company’s credit agreements. Revenue Recognition Investment in Hotel Properties The Company’s acquisitions generally consist of land, land improvements, buildings, building improvements, and furniture, fixtures and equipment (“FF&E”). The Company may also acquire intangible assets or liabilities related to in-place leases, management agreements, debt, and advanced bookings. For transactions determined to be asset acquisitions, the Company allocates the purchase price among the assets acquired and the liabilities assumed on a relative fair value basis at the date of acquisition. The Company determines the fair value of assets acquired and liabilities assumed with the assistance of third-party valuation specialists, using cash flow analysis as well as available market and cost data. The determination of fair value includes making numerous estimates and assumptions. The difference between the fair value and the face value of debt assumed in connection with an acquisition is recorded as a premium or discount and amortized to interest expense over the remaining term of the debt assumed. The valuation of assumed debt liabilities is based on our estimate of the current market rates for similar liabilities in effect at the acquisition date. The Company’s investments in hotel properties are carried at cost and are depreciated using the straight-line method over the estimated useful lives of 15 years for land improvements, 40 years for buildings and building improvements and three The Company assesses the carrying value of its hotel properties whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. The recoverability is measured by comparing the carrying amount of the property to the estimated future undiscounted cash flows of the property, which take into account current market conditions, including the impact of COVID-19, and the Company’s intent with respect to holding or disposing of the hotel properties. If the Company’s analysis indicates that the carrying value is not recoverable on an undiscounted cash flow basis, the Company will recognize an impairment loss for the amount by which the carrying value exceeds the fair value. The fair value is determined through various valuation techniques, including internally developed discounted cash flow models, comparable market transactions or third-party appraisals. The use of projected future cash flows is based on assumptions that are consistent with a market participant’s future expectations for the industry and the economy in general and the Company’s expected use of the underlying hotel properties. The assumptions and estimates related to the future cash flows and the capitalization rates are complex and subjective in nature. Changes in economic and operating conditions, including those occurring as a result of the impact of the COVID-19 pandemic, that occur subsequent to a current impairment analysis and the Company’s ultimate use of the hotel property could impact the assumptions and result in future impairment losses to the hotel properties. Advertising Costs Non-controlling Interest Cash and Cash Equivalents Restricted Cash Accounts Receivable Deferred Financing Costs Offering Costs Property Operations Expenses Property Management Fees Franchise Fees Acquisition Costs Stock-Based Compensation Net Loss Per Share of Common Stock Income Taxes As a REIT, the Company is generally not subject to U.S. federal corporate income tax on the portion of taxable income that is distributed to stockholders. If the Company fails to qualify for taxation as a REIT in any taxable year, the Company will be subject to U.S. federal income taxes at regular corporate rates and it may not be able to qualify as a REIT for four subsequent taxable years. As a REIT, the Company may be subject to certain state and local taxes on its income and property, and to U.S. federal income and excise taxes on undistributed taxable income. Taxable income from non-REIT activities managed through the Company’s taxable REIT subsidiary (“TRS”) is subject to U.S. federal, state, and local income taxes at the applicable rates. The TRS accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax basis, and for net operating loss, capital loss and tax credit carryforwards. The deferred tax assets and liabilities are measured using the enacted income tax rates in effect for the year in which those temporary differences are expected to be realized or settled. The effect on the deferred tax assets and liabilities from a change in tax rates is recognized in earnings in the period when the new rate is enacted. However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of all available evidence, including the future reversals of existing taxable temporary differences, future projected taxable income and tax planning strategies. Valuation allowances are provided if, based upon the weight of the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company performs periodic reviews for any uncertain tax positions and, if necessary, will record the expected future tax consequences of uncertain tax positions in the consolidated financial statements. Fair Value Measurement Level 1 Level 2 Level 3 The Company’s estimates of fair value were determined using available market information and appropriate valuation methods. Considerable judgment is necessary to develop estimated fair value. The use of different market assumptions or estimation methods may have a material effect on the estimated fair value amounts. The Company classifies assets and liabilities in the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement. Accounting Standards Recently Adopted In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, “Leases” (“ASU No. 2016-02”) (Topic 842), which replaces Leases (Topic 840), and sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). ASU No. 2016-02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right of use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance under Leases (Topic 840), for operating leases. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales type leases, direct financing leases and operating leases. The Company adopted this standard effective January 1, 2022, electing to recognize and measure its leases prospectively at the beginning of the period of adoption, without restating the presentation of periods prior to the effective date, which continue to be reported in accordance with the Company’s historical accounting policy. At adoption of the new standard, the Company recorded a right-of-use asset and lease liability for its Sheraton Northbrook, Illinois hotel property (the "Northbrook Property") ground lease measured at the estimated present value of the remaining minimum lease payments under the lease. The Company’s ground lease is classified as a financing lease under Topic 842. For this finance lease, effective January 1, 2022, the Company began recognizing depreciation and amortization expense and interest expense in the Company’s consolidated statements of operations instead of ground lease rent expense. While the total expense recognized over the life of a lease is unchanged, the timing of expense recognition for finance leases results in higher expense recognition during the earlier years of the lease and lower expense during the later years of the lease. In addition to recording operating and financing right-of-use assets and lease liabilities, the Company also reclassified at adoption its intangible liability for its above market ground lease to the beginning right-of-use asset. See Note 3 for more information regarding the Company’s lease assets and liabilities. |
INVESTMENT IN HOTEL PROPERTIES
INVESTMENT IN HOTEL PROPERTIES | 6 Months Ended |
Jun. 30, 2022 | |
INVESTMENT IN HOTEL PROPERTIES | |
INVESTMENT IN HOTEL PROPERTIES | 3. INVESTMENT IN HOTEL PROPERTIES Investment in hotel properties as of June 30, 2022 and December 31, 2021 consisted of the following: June 30, December 31, 2022 2021 Land and land improvements $ 26,023,472 $ 20,034,309 Building and building improvements 182,503,766 144,883,150 Furniture, fixtures, and equipment 17,680,982 13,986,611 Finance ground lease assets 2,451,754 — Construction in progress 1,536,978 8,433 Investment in hotel properties, at cost 230,196,952 178,912,503 Less: accumulated depreciation (12,770,510) (9,487,728) Investment in hotel properties, net $ 217,426,442 $ 169,424,775 As of June 30, 2022, the Company owned fourteen hotel properties with an aggregate of 1,686 rooms located in nine states. Acquisitions of Hotel Properties The Company acquired three properties during the six months ended June 30, 2022 and four properties during the year ended December 31, 2021. Each of the Company’s hotel acquisitions to date have been determined to be asset acquisitions. The table below outlines the details of the properties acquired during the six months ended June 30, 2022. 2022 Acquisitions Number Date of Guest Purchase Transaction % Hotel Property Type Location Acquired Rooms Price Costs Total Interest Hampton Inn & Suites Limited-Service Fargo, ND January 18, 2022 90 $ 11,440,000 (1) $ 302,222 $ 11,742,222 100 % Courtyard by Marriott Select-Service El Paso, TX February 8, 2022 90 15,120,000 (2) 333,234 15,453,234 100 % Fairfield Inn & Suites Limited-Service Lakewood, CO March 29, 2022 142 18,800,000 (3) 390,753 19,190,753 100 % 322 $ 45,360,000 $ 1,026,209 $ 46,386,209 (1) Includes the issuance of $4,091,291 in Series T LP Units of the Operating Partnership. (2) Includes the issuance of $4,600,000 in Common Limited Partnership Units of the Operating Partnership. (3) Includes the issuance of $5,638,000 in Series T LP Units of the Operating Partnership. The table below outlines the details of the properties acquired during the year ended December 31, 2021. 2021 Acquisitions Number Date of Guest Purchase Transaction % Hotel Property Type Location Acquired Rooms Price Costs Total Interest Courtyard by Marriott Select-Service Aurora, CO February 4, 2021 141 $ 23,610,000 (1) $ 458,129 $ 24,068,129 100 % Holiday Inn Select-Service El Paso, TX May 12, 2021 175 10,300,000 (2) 361,019 10,661,019 100 % Hilton Garden Inn Select-Service Houston, TX August 3, 2021 182 19,910,000 (3) 918,353 20,828,353 100 % Sheraton Hotel Full-Service Northbrook, IL December 3, 2021 160 11,400,000 (4) 340,005 11,740,005 100 % 658 $ 65,220,000 $ 2,077,506 $ 67,297,506 (1) Includes the issuance of $6,742,757 in Series T LP Units of the Operating Partnership. (2) Includes the issuance of $2,100,000 in Series T LP Units of the Operating Partnership. (3) Includes the issuance of $6,910,000 in Series T LP Units of the Operating Partnership. (4) Includes the issuance of $6,179,000 in Series T LP Units and $1,521,000 in Common Limited Partnership Units of the Operating Partnership. Ten of the hotel properties owned by the Company as of June 30, 2022 are subject to a management agreement with NHS, LLC dba National Hospitality Services (“NHS”) with an initial term expiring on December 31 of the fifth full calendar year following the effective date of the agreement, which will automatically renew for successive five-year periods unless terminated earlier in accordance with its terms. The Southaven Property is subject to a management agreement with Vista Host Inc. (“Vista”) with an initial term expiring on February 21 of the fifth full calendar year following the effective date of the agreement. This agreement will automatically renew for two (2) successive five-year periods unless terminated earlier in accordance with its terms. The Houston Property and El Paso Airport Property are subject to a management agreement with Interstate Management Company, LLC (“Aimbridge”) with an initial term expiring on August 3 and February 8, respectively, of the third full calendar year following the effective date of the agreement. This agreement will automatically renew for additional successive terms of one year each unless terminated earlier in accordance with its terms. The Fargo Property is subject to a management agreement with KAJ Hospitality Inc. (“KAJ”) with an initial term of five years after its effective date, which automatically renews for successive one-year periods, unless terminated in accordance with its terms. Q2 2022 Year-to-Date Property Acquisitions Hampton Inn & Suites Fargo Medical Center – Fargo, North Dakota On January 18, 2022, the Operating Partnership acquired a Hampton Inn & Suites hotel property in Fargo, North Dakota (the “Fargo Property”) pursuant to an Amended and Restated Contribution Agreement (the “Fargo Amended Contribution Agreement”), dated as of the same date. The aggregate consideration under the Fargo Amended Contribution Agreement was $11.4 million plus closing costs of approximately $0.3 million, subject to adjustment as provided in the Fargo Amended Contribution Agreement. The consideration consists of a loan (the “Original Hampton Fargo Loan”) assumed by subsidiaries of the Operating Partnership with Legendary A-1 Bonds, LLC (the “Lender”), which is an affiliate of the Advisor which is owned by Norman Leslie and Corey Maple, each a director and executive officer of the Company and principal of the Advisor, in the amount of $7.2 million secured by the Fargo Property, the issuance by the Operating Partnership of approximately $4.1 million in Series T LP Units of the Operating Partnership, and the payment by the Operating Partnership of $150,000 in cash. The Series T LP Units will convert into Common LP Units of the Operating Partnership beginning 36 months, or in the event the Operating Partnership is then in the process of transacting a sale of the Operating Partnership’s assets or another significant capital event necessitating a conversion is then in process, after January 18, 2022, at which point the value will be calculated pursuant to the terms of an Amended and Restated Contribution Agreement, dated January 18, 2022. The number of Common LP Units to be issued to the contributor based on such conversion may be higher or lower than the initial valuation of the Series T LP Units. Accordingly, the aggregate purchase price used for the acquisition accounting noted in the tables above and below of $11.4 million, was determined to be the value assigned by a third-party appraisal, as the appraisal value was more reliably measurable. The assumed loan had a fixed interest rate of 7.0% per annum and matures on October 3, 2022, which could be extended by the Company for an additional one-year term upon satisfaction of certain conditions contained in the assumed loan agreement, including no then-existing event of default. On February 23, 2022, pursuant to the Business Loan Agreement, dated as of February 23, 2022 (the “New Loan Agreement”), the Company entered into a new $7.4 million loan with Western State Bank (the “New Lender”), which is secured by the Hampton Fargo (the “New Hampton Fargo Loan”). The New Lender is not affiliated with the Company or the Advisor. The New Hampton Fargo Loan is evidenced by a promissory note and has a fixed interest rate of 4.00% per annum. The New Hampton Fargo Loan matures five years after the effective date. The New Hampton Fargo Loan requires monthly payments of principal and interest, with the outstanding principal and interest due at maturity. The New Hampton Fargo Loan will move to monthly interest-only payments for 12 months once the PIP funds are placed on deposit with the New Lender and work on the PIP begins. The Company has the right to prepay all or a portion of the New Hampton Fargo Loan at any time without penalty. The Company used the proceeds of the New Hampton Fargo Loan to repay in full the Original Hampton Fargo Loan described above. The New Loan Agreement requires the maintenance of covenants concerning an annual debt service coverage ratio beginning for each fiscal year beginning December 31, 2023, the maintenance of a replacement reserve account beginning 30 days after loan origination and the monthly escrow for property taxes as further described in the New Loan Agreement. The New Loan Agreement contains customary events of default, including payment defaults, as further described therein. If an event of default occurs under the New Loan Agreement, the New Lender may accelerate the repayment of amounts outstanding under the New Loan Agreement and exercise other remedies subject, in certain instances, to the expiration of applicable cure periods. Pursuant to the New Loan Agreement, the Operating Partnership entered into a Guaranty (the “OP Guaranty”) with the New Lender to guarantee payment when due of the loan amount and the performance of the agreements of Borrower contained in the loan documents, as further described in the OP Guaranty. Further, Corey Maple, a director and executive officer of the Company, entered into a Guaranty (the “Maple Guaranty”) with the New Lender to guarantee payment, when due, of the loan amount and any additional amounts due by the Borrower under the loan documents at that time, as further described in the Maple Guaranty. In connection with the acquisition, the Company entered into a Management Agreement with KAJ Hospitality Inc. (“KAJ”) (the “KAJ Management Agreement”) to provide property management and hotel operations management services for the Fargo Property. The KAJ Management Agreement has an initial term of five years after its effective date, which automatically renews for successive one-year periods, unless terminated in accordance with its terms. Pursuant to the KAJ Management Agreement, the Company agrees to pay to KAJ a management fee equal to 3.0% of total revenues plus an accounting fee of $14.00 per room for accounting services, payable monthly. KAJ may also receive incentive management fees if certain performance metrics are achieved. The Company also reimburses KAJ for certain costs of operating the property incurred on behalf of the Company. All reimbursements are paid to KAJ at cost. T he KAJ Management Agreement may be terminated upon the occurrence of an Event of Default (as defined in the KAJ Management Agreement), subject in certain cases to applicable notice and cure periods as described in the KAJ Management Agreement. The Company may terminate the KAJ Management Agreement if certain performance metrics are not met by KAJ. The Company funded the acquisition of the Fargo Property with proceeds from its ongoing private offerings, Series T LP Units issued to the Contributor as described above, and an assumed loan secured by the Fargo Property. The Fargo Property is a 90-room property. Courtyard El Paso Airport – El Paso, Texas On February 8, 2022, the Operating Partnership acquired a Courtyard by Marriott hotel property in El Paso, Texas (the “El Paso Airport Property”) pursuant to an Amended and Restated Contribution Agreement (the “El Paso Airport Amended Contribution Agreement”), dated as of the same date. The aggregate consideration under the El Paso Airport Amended Contribution Agreement was $15.1 million plus closing costs of approximately $0.3 million, subject to adjustment as provided in the El Paso Airport Amended Contribution Agreement. The consideration consisted of a new loan entered into by subsidiaries of the Operating Partnership with Legendary A-1 Bonds, LLC (the “Lender”), which is an affiliate of the Advisor which is owned by Norman Leslie and Corey Maple, each a director and executive officer of the Company and principal of the Advisor (the “Original El Paso Airport Loan”), in the amount of $10.0 million secured by the El Paso Airport Property, the issuance by the Operating Partnership of approximately $4.6 million in Common Limited Units of the Operating Partnership, and the payment by the Operating Partnership of $620,000 in cash. The Original El Paso Airport Loan had a fixed interest rate of 7.0% per annum and matured on February 7, 2023, which could be extended by the Company for an additional one-year term upon satisfaction of certain conditions contained in the Original El Paso Airport Loan agreement, including no then-existing event of default. The Original El Paso Airport Loan requires monthly payments of interest-only throughout the term, with the outstanding principal and interest due at maturity. The Company had the right to prepay the Original El Paso Airport Loan in full at any time without a fee. The Original El Paso Airport Loan required Borrower to fund an insurance and tax reserve account at closing. On May 13, 2022, the proceeds of the New El Paso Airport Loan described below were used to refinance the Original El Paso Airport Loan, and all outstanding obligations under the Original El Paso Airport Loan were repaid in full without any fee or penalty and all commitments and guaranties in connection therewith have been terminated or released. On May 13, 2022, pursuant to the Business Loan Agreement, dated as of May 13, 2022 (the “New El Paso Airport Loan Agreement”), subsidiaries of the Operating Partnership entered into a new $10.0 million loan with Western Alliance Bank (the “New El Paso Airport Lender”), which is secured by the El Paso Airport Property (the “New El Paso Airport Loan”). The New El Paso Airport Lender is not affiliated with the Company or the Advisor. The New El Paso Airport Loan is evidenced by a promissory note and has a fixed interest rate of 6.01% per annum. The New El Paso Airport Loan matures five years after the effective date. The New El Paso Airport Loan requires 18 monthly interest-only payments followed by monthly payments of principal and interest, with the outstanding principal and interest due at maturity. The borrower has the right to prepay the entire New El Paso Airport Loan on certain permitted prepayment dates with a 30-day The New El Paso Airport Loan Agreement requires the maintenance of covenants concerning a quarterly debt service coverage ratio and a quarterly debt yield beginning for each fiscal quarter beginning June 30, 2023 through March 31, 2025. The New El Paso Airport Loan Agreement contains customary events of default, including payment defaults, as further described therein. If an event of default occurs under the New El Paso Airport Loan Agreement, the New El Paso Airport Lender may accelerate the repayment of amounts outstanding under the New El Paso Airport Loan Agreement and exercise other remedies subject, in certain instances, to the expiration of applicable cure periods. Pursuant to the New Loan Agreement, the Operating Partnership entered into a Guaranty (the “OP Guaranty”) with the New El Paso Airport Lender to guarantee payment when due of the loan amount and the performance of the agreements of borrower contained in the loan documents, as further described in the OP Guaranty. In connection with the acquisition, the Company entered into a Management Agreement with Aimbridge Hospitality, LLC (“Aimbridge”) (the “Aimbridge Management Agreement”) to provide property management and hotel operations management services for the El Paso Airport Property. The Aimbridge Management Agreement has an initial term of five years after its effective date, which automatically renews for successive one-year periods, unless terminated in accordance with its terms. Pursuant to the Aimbridge Management Agreement, the Company agrees to pay to Aimbridge a management fee equal to 3% of total revenues, an accounting fee of $3,000 for accounting services, payable monthly, which amount will increase annually by 3% on January 1 of each fiscal year beginning on January 1, 2023. Aimbridge will also receive additional fees of $2,550 per month for customized accounting services, revenue management and digital marketing, which amount will increase annually by 3% on January 1 of each fiscal year beginning on January 1, 2023. Aimbridge may also receive incentive management fees if certain performance metrics are achieved. The Company also reimburses Aimbridge for certain costs of operating the property incurred on behalf of the Company. All reimbursements are paid to Aimbridge at cost. T he Aimbridge Management Agreement may be terminated upon the occurrence of an Event of Default (as defined in the Aimbridge Management Agreement), subject in certain cases to applicable notice and cure periods as described in the Aimbridge Management Agreement. The Company may terminate the Aimbridge Management Agreement in connection with the sale of the El Paso Airport Property upon at least ninety days’ written notice to Aimbridge and the payment of a termination fee, the amount of which varies depending on the timing of such termination. The Company funded the acquisition of the El Paso Airport Property with proceeds from its ongoing private offerings, Common Limited Units issued to the Contributor as described above, and the Original El Paso Airport Loan secured by the El Paso Airport Property, which was subsequently replaced with the New El Paso Airport Loan described above. The El Paso Airport Property is a 90-room property. Fairfield Inn & Suites Denver Southwest Lakewood – Lakewood, Colorado On March 29, 2022, the Operating Partnership acquired a Fairfield Inn & Suites hotel property in Lakewood, Colorado (the “Lakewood Property”) pursuant to an Amended Contribution Agreement (the “Lakewood Amended Contribution Agreement”), dated as of March 22, 2022. The aggregate consideration under the Lakewood Amended Contribution Agreement was $19.4 million plus closing costs of approximately $0.4 million, subject to adjustment as provided in the Lakewood Amended Contribution Agreement. The consideration consists of a new loan (the “New Lakewood Loan Agreement”) entered into by subsidiaries of the Operating Partnership with Legendary A-1 Bonds, LLC (the “Lender”), which is an affiliate of the Advisor which is owned by Norman Leslie and Corey Maple, each a director and executive officer of the Company and principal of the Advisor, in the amount of $12.6 million secured by the Lakewood Property, the issuance by the Operating Partnership of approximately $6.2 million in Series T LP Units of the Operating Partnership, and the payment by the Operating Partnership of $552,000 in cash, the use and disbursement of, which is subject to the review and discretion of the Operating Partnership. The Series T LP Units will convert into Common LP Units of the Operating Partnership beginning 36 months, or in the event the Operating Partnership is then in the process of transacting a sale of the Operating Partnership’s assets or another significant capital event necessitating a conversion is then in process, up to 48 months, after March 29, 2022, at which point the value will be calculated pursuant to the terms of an Amended and Restated Contribution Agreement, dated March 29, 2022. The number of Common LP Units to be issued to the contributor based on such conversion may be higher or lower than the initial valuation of the Series T LP Units. Accordingly, the aggregate purchase price used for the acquisition accounting noted in the tables above and below of $18.8 million, was determined to be the value assigned by a third-party appraisal, as the appraisal value was more reliably measurable. The new loan has a fixed interest rate of 7.0% per annum and matures on March 28, 2023, which may be extended by us for an additional one-year term upon satisfaction of certain conditions contained in the New Lakewood Loan Agreement, including no then-existing event of default. The new loan requires monthly payments of interest-only throughout the term, with the outstanding principal and interest due at maturity. The Company has the right to prepay the new loan in full at any time without a fee. The new loan requires Borrower to fund an insurance and tax reserve account at closing. In addition to the $12.6 million loan, there is a $1.2 million loan guaranteed by RLC-VI Lakewood, LLC and Rockies Lodging Capital, LLC with a fixed interest rate of 7.0% per annum and matures on May 28, 2022 with the ability to extend to June 28, 2022. The amount not repaid as of June 28, 2022 (1) will offset the conversion value at a rate of 1.75:1 at the time of the conversion event, and (2) will be repaid in Common Limited Units at the conversion event in an amount as defined in the New Lakewood Loan Agreement, the conversion event as defined in the Lakewood Amended Contribution Agreement, and the Conversion Cap Rate, as defined in the Lakewood Amended Contribution Agreement, has increased from 8.25% to 8.75%. As of June 30, 2022, there was a $399,914 balance outstanding on this loan. In connection with the acquisition, the Company entered into a Management Agreement with NHS, LLC dba National Hospitality Services (“NHS”), an affiliate of the Advisor which is wholly-owned by Norman Leslie, a director and executive officer of the Company and a principal of the Advisor, to provide property management and hotel operations management services for the Lakewood Property. The agreement has an initial term expiring on December 31, 2027, which automatically renews for a period of five years on each successive five-year period, unless terminated in accordance with its terms. NHS earns a monthly base management fee for property management services equal to 3% of gross revenue, an accounting fee of $14.00 per room for accounting services, payable monthly, and an administrative fee equal to 0.60% of gross revenues for administrative and other services. The Company will also reimburse NHS for certain costs of operating the property incurred on behalf of the Company. All reimbursements are paid to NHS at cost, and the agreement can be terminated at any time without liquidated damages. The Company funded the acquisition of the Lakewood Property with proceeds from its ongoing private offerings, Series T LP Units issued to the Contributor as described above, and a new loan secured by the Lakewood Property. The Lakewood Property is a 142-room property and after receiving all necessary third-party approvals, the Lakewood Property will open for operation. The aggregate purchase price for the hotel properties acquired during the six months ended June 30, 2022 and the year ended December 31, 2021 were allocated as follows: June 30, December 31, 2022 2021 Land and land improvements $ 5,939,033 $ 9,694,077 Building and building improvements 37,254,411 58,503,137 Furniture, fixtures, and equipment 3,192,765 4,597,353 Total assets acquired 46,386,209 72,794,567 Above market ground lease (1) — (5,497,061) Total liabilities assumed — (5,497,061) Total purchase price (2) $ 46,386,209 $ 67,297,506 (1) The above market ground lease is recognized on the consolidated balance sheet within Other Liabilities as of December 31, 2021. See Above Market Ground Lease discussion below. (2) Total purchase price includes purchase price plus all transaction costs. Above Market Ground Lease On December 3, 2021, in connection with the purchase of the Northbrook Property, the Company recognized an above market ground lease liability of $5,497,061, which was recognized on the consolidated balance sheet within Other Liabilities. The Company assumed the ground lease 16 years into a 61-year lease maturing in 2067. The yearly base rent, paid monthly, increases annually by 3% on June 1 of each year. As of June 30, 2022, the Company’s finance lease had a discount rate of 7.75%. Upon adoption of ASU No. 2016-02 on January 1, 2022, the Company derecognized the above market ground lease liability by reclassifying it as a partial offset to the beginning right-of-use asset related to this financing lease. At adoption of the new standard, the Company recognized a lease liability of $7,975,757 and a right of use asset of $2,478,696, which included the derecognition of the above-market ground lease liability. For the six months ended June 30, 2022, the Company recognized interest expense of $310,605 and right-of-use amortization expense of $26,942 related to the finance lease. The following table reconciles the undiscounted cash flows for each of the next five years and total of the remaining years to the finance lease liability included in the Company’s consolidated balance sheet as of June 30, 2022. 2022 $ 220,647 2023 449,017 2024 462,487 2025 476,362 2026 490,653 Thereafter 39,754,268 Total finance lease payments 41,853,434 Interest (33,782,363) Present value of finance lease liabilities $ 8,071,071 |
DEBT
DEBT | 6 Months Ended |
Jun. 30, 2022 | |
DEBT | |
DEBT | 4. DEBT Revolving Line of Credit On February 10, 2020, the Company entered into a $5.0 million revolving line of credit. The revolving line of credit requires monthly payments of interest only, with all outstanding principal amounts being due and payable at maturity on February 10, 2021. On January 19, 2021, the revolving line of credit was amended to extend the maturity date to May 10, 2021. The revolving line of credit had a variable interest rate equal to the U.S. Prime Rate, plus 0.50%, resulting in an effective rate of 3.75% per annum as of June 30, 2021. On May 6, 2021, the revolving line of credit was amended to extend the maturity date to May 10, 2022 and on May 5, 2022, the revolving line of credit was amended to extend the maturity date to December 15, 2022. On May 6, 2021, the interest rate was amended to incorporate an interest rate floor equal to 4.00%. On May 5, 2022, the interest rate changed to 4.50% per annum and on June 15, 2022, the interest rate changed to 5.25% per annum. The interest rate as of June 30, 2022 was 5.25% per annum. The revolving line of credit is secured by the Company’s Cedar Rapids Property and Eagan Property, which are also subject to term loans with the same lender, and 100,000 Common LP Units of the Operating Partnership. The revolving line of credit includes cross-collateralization and cross-default provisions such that the existing mortgage loan agreements with respect to the Cedar Rapids Property and the Eagan Property, as well as future loan agreements that the Company may enter into with this lender, are cross-defaulted and cross-collateralized with each other. The revolving line of credit, including all cross-collateralized debt, is guaranteed by Corey Maple. As of June 30, 2022, there was no outstanding balance on the revolving line of credit. See Note 11. Mortgage Debt As of June 30, 2022, the Company had $133.6 million in outstanding mortgage debt secured by each of its fourteen properties, with maturity dates ranging from March 2023 to April 2029. Twelve of the loans have fixed interest rates ranging from 3.70% to 7.00%. One loan is a variable interest loan at a rate of LIBOR plus 6.0% per annum, provided that LIBOR shall not be less than 1.0%, resulting in an effective rate of 7.12% as of June 30, 2022. Another loan is a variable interest loan at a rate of LIBOR or an equivalent rate plus 6.25%, provided that the variable rate shall not be less than 0.75%, resulting in an effective rate of 7.06% as of June 30, 2022. Collectively, the weighted-average interest rate is 5.17%. The loans generally require monthly payments of principal and interest on an amortized basis, with certain loans allowing for an interest-only period up to 18 months following origination, and generally require a balloon payment due at maturity. As of June 30, 2022 and December 31, 2021, certain mortgage debt was guaranteed by the members of the Advisor. See Note 9 “Related Party Transactions” of the notes to the consolidated financial statements included as part of this Quarterly Report on Form 10-Q for additional information regarding debt that was guaranteed by members of the Advisor. Except as described below, the Company was either in compliance with all debt covenants or received a waiver of testing of its debt covenants as of June 30, 2022 and December 31, 2021. As of June 30, 2022, the Company was not in compliance with the required financial covenants under the terms of its promissory note secured by the Pineville Property and related loan documents (the “Pineville Loan”), which constitutes an event that puts the Company into a trigger period pursuant to the loan documents. The Company has requested and received a waiver of the financial covenants for period ending December 31, 2022. Except as described above for the Pineville Loan, the Company was in compliance with all debt covenants as of June 30, 2022. Paycheck Protection Program (“PPP”) Loans In April 2020, the Company entered into six unsecured promissory notes under the Paycheck Protection Program (the “PPP”), totaling $763,100 (the “Original PPP Loans”). The PPP was established under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), which was passed in March 2020, and is administered by the U.S. Small Business Administration (the “SBA”). The term of each Original PPP loan was two years, which could be extended to five years at the Company’s election. The interest rate on each PPP loan was 1.0% per annum, which was deferred for a period of time. In January 2021, the Company entered into six new unsecured promissory notes totaling $716,400, under the Second Draw Paycheck Protection Program (the “Second Draw PPP”) created by the Consolidated Appropriations Act, 2021 (the “CAA Act”), through Western State Bank. The term of each Second Draw PPP loan was five years. The interest rate on each Second Draw PPP loan was 1.0% per annum, which was deferred for the first sixteen months of the term of the loan. In February 2021, the Company, through its subsidiary LF3 Southaven TRS, LLC (“Southaven TRS”), entered into an unsecured promissory note under the PPP through Western State Bank. The amount of the PPP loan for Southaven TRS was $85,400. The term of the PPP loan was five years. The interest rate on the PPP loan was 1.0% per annum, which was deferred for the first sixteen months of the term of the loan. In April 2021, the Company, through its subsidiary Southaven TRS, entered into an unsecured promissory note under the Second Draw PPP created by the CAA Act, through Western State Bank (the “Southaven TRS Second Draw PPP”). The term of the Southaven Second Draw PPP loan was five years. The amount of the Southaven TRS Second Draw PPP loan was $119,500. The interest rate on the Southaven TRS Second Draw PPP loan was 1.0% per annum, which was deferred for the first sixteen months of the term of the loan. Under the terms of the CARES Act and the CAA Act, as applicable, PPP loan recipients and Second Draw PPP loan recipients can apply for, and be granted, forgiveness for all or a portion of such loans. Such forgiveness will be determined, subject to limitations and ongoing rulemaking by the SBA, based on the use of loan proceeds for payroll costs and mortgage interest, rent or utility costs, the maintenance of employee and compensation levels and certain other approved expenses. In February 2021, the Company applied for and received 100% forgiveness of all six Original PPP Loans. In June 2021, the Company received forgiveness on the full balance of the Second Draw PPP and Southaven TRS PPP loans. In August 2021, the Company received forgiveness on the full balance of the Southaven TRS Second Draw PPP loan. The following table sets forth the hotel properties securing the Company’s hotel mortgage debt and revolving line of credit as of June 30, 2022 and December 31, 2021. Interest Outstanding Outstanding Rate as of Balance as of Balance as of June 30, Maturity June 30, December 31, 2022 Date 2022 2021 Holiday Inn Express - Cedar Rapids (1) 5.33% 9/1/2024 $ 5,847,994 $ 5,858,134 Hampton Inn & Suites - Pineville 5.13% 6/6/2024 8,682,124 8,782,284 Hampton Inn - Eagan 4.60% 1/1/2025 9,171,018 9,277,193 Home2 Suites - Prattville 4.13% 8/1/2024 9,310,022 9,425,085 Home2 Suites - Lubbock 4.69% 10/6/2026 7,459,647 7,573,597 Fairfield Inn & Suites - Lubbock 4.93% 4/6/2029 9,049,012 9,125,908 Homewood Suites - Southaven 3.70% 3/3/2025 13,176,677 13,343,841 Courtyard by Marriott - Aurora (2)(3) 7.12% 2/5/2024 15,000,000 15,000,000 Holiday Inn - El Paso (3) 5.00% 5/15/2023 7,900,000 7,900,000 Hilton Garden Inn - Houston (4) 3.85% 9/2/2026 13,947,218 13,947,218 Sheraton - Northbrook (3)(5) 7.06% 12/5/2024 3,700,000 3,700,000 Hampton Inn - Fargo 4.00% 3/1/2027 7,362,481 — Courtyard by Marriott - El Paso (6) 6.01% 5/13/2027 9,990,000 — Fairfield Inn & Suites - Lakewood (3) 7.00% 3/29/2023 13,009,914 — Total Mortgage Debt 133,606,107 103,933,260 Premium on assumed debt, net 656,894 722,905 Deferred financing costs, net (2,288,682) (2,129,281) Net Mortgage 131,974,319 102,526,884 $5.0 million revolving line of credit (7) 5.25% 12/15/2022 — 600,000 Debt, net $ 131,974,319 $ 103,126,884 (1) Loan was interest-only through April 30, 2022 and is at a fixed rate of interest. (2) Variable interest rate equal to 30-day LIBOR plus 6.00% , provided that LIBOR shall not be less than 1.00% . (3) Loan is interest-only until maturity. (4) Loan is interest-only for the first 24 months after origination. (5) Variable interest rate equal to 30-day LIBOR or equivalent rate plus 6.25% , provided that LIBOR or equivalent rate shall not be less than 0.75% . (6) Loan is interest-only for the first 18 months after origination. (7) Variable interest rate equal to U.S. Prime Rate plus 0.50% . Future Minimum Payments As of June 30, 2022, the future minimum principal payments on the Company’s debt were as follows: 2022 $ 820,510 2023 22,726,642 2024 43,467,556 2025 22,137,806 2026 20,237,332 Thereafter 24,216,261 133,606,107 Premium on assumed debt, net 656,894 Deferred financing costs, net (2,288,682) $ 131,974,319 The $22.7 |
FAIR VALUE OF FINANCIAL INSTRUM
FAIR VALUE OF FINANCIAL INSTRUMENTS | 6 Months Ended |
Jun. 30, 2022 | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | |
FAIR VALUE OF FINANCIAL INSTRUMENTS | 5. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company’s financial instruments as of June 30, 2022 and December 31, 2021 consisted of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, lines of credit, and mortgage debt. With the exception of the Company’s mortgage debt, the carrying amounts of the financial instruments presented in the consolidated financial statements approximate their fair value as of June 30, 2022 and December 31, 2021. The fair value of the Company’s mortgage debt was estimated by discounting each loan’s future cash flows over the remaining term of the mortgage using current borrowing rates for debt instruments with similar terms and maturities, which are Level 3 inputs in the fair value hierarchy. As of June 30, 2022, the estimated fair value of the Company’s mortgage debt was $131.6 million, compared to the gross carrying value $133.6 million. As of December 31, 2021, the estimated fair value of the Company’s mortgage debt was $103.7 million, compared to the gross carrying value $103.9 million. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2022 | |
INCOME TAXES | |
INCOME TAXES | 6. INCOME TAXES The Company’s earnings (losses), other than those generated by the Company’s TRS, are not generally subject to federal corporate and state income taxes due to the Company’s REIT election. The Company paid $26,000 in federal and state income taxes for the period ended June 30, 2022 and did not pay any federal and state income taxes for the period ended June 30, 2021. The Company did not have any uncertain tax positions as of June 30, 2022 or December 31, 2021. The Company’s TRS generated a net operating loss (“NOL”) for the six months ended June 30, 2022 and the year ended December 31, 2021, which can be carried forward to offset future taxable income. As of June 30, 2022 and December 31, 2021, the Company had recorded net deferred tax assets of $2,887,183 and $2,464,768, respectively, primarily attributable to its NOLs generated in the current year and prior periods, net of temporary differences primarily related to deprecation. The Company’s NOLs will expire in 2038 through 2042 for state tax purposes and will not expire for federal tax purposes. As of June 30, 2022 and December 31, 2021, the Company had deferred tax assets attributable to NOL carryforwards for federal income tax purposes of $5.1 million and $4.2 million, respectively, and NOL carryforwards for state income tax purposes of $684,785 and $588,661, respectively. As of June 30, 2022, the tax years 2018 through 2021 remain subject to examination by the U.S. Internal Revenue Service (“IRS”) and various state tax jurisdictions. The CARES Act contains numerous income tax provisions, such as temporarily relaxing limitations on the deductibility of interest expense, accelerating depreciable lives of certain qualified building improvements, and allowing for NOL’s arising in tax years beginning after December 31, 2017 and before January 1, 2021 to be carried back to each of the preceding 5-year periods. In addition, for tax years beginning prior to 2021, the CARES Act removed the 80% absorption limitation previously enacted under the Tax Cuts and Jobs Act of 2017. The income tax aspects of the CARES Act are not expected to have a material impact on the Company’s financial statements. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2022 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | 7. RELATED PARTY TRANSACTIONS Legendary Capital REIT III, LLC The Advisor earns a one-time acquisition fee of up to 1.4% of the hotel purchase price including funds allocated for any PIP at the time of each hotel property acquisition, a financing fee of up to 1.4% of the hotel purchase price including funds allocated for any PIP at the time of closing the initial financing, and an annual asset management fee of up to 0.75% of the gross assets of the Company, which is payable on a monthly basis. The Advisor will also be paid a refinancing fee of up to 0.75% of the principal amount of any refinancing at the time of closing the refinancing, and a disposition fee equal to between 0.0% and 4.0% of the hotel sales price, payable at the closing of the disposition, and real estate commissions of up to 3.0% of the hotel purchase price in connection with the sale of a hotel property in which the Advisor or its affiliates provided substantial services, but in no event greater than one-half of the total commissions paid with respect to such property if a commission is paid to a third-party as well as the Advisor, and in no event will total commissions exceed 5.0% of the hotel sales price. Certain affiliates of the Advisor may receive an annual guarantee fee equal to 1.0% of the guaranty amount, payable on a monthly basis, for debt obligations of the hotel properties personally guaranteed by such affiliates. The Advisor may earn an annual subordinated performance fee equal to 20% of the distributions after the common stockholders and Operating Partnership limited partners (other than the Series B Limited Partnership Unit (“Series B LP Unit”) holders) have received a 6% cumulative, but not compounded, return per annum. Per the terms of the Operating Partnership’s operating agreement, the Advisor receives distributions from the Operating Partnership in connection with their ownership of non-voting Series B LP Units. The Advisor’s ownership of Series B LP Units is presented as non-controlling interest on the accompanying consolidated financial statements. In years other than the year of liquidation, after the Company’s common stockholders have received a 6% cumulative but not compounded return on their original capital contributions, the Advisor receives distributions equal to 5% of the total distributions made. In the year of liquidation, termination, merger or other cessation of the general partner, or the liquidation of the Operating Partnership, holders of the Series B LP Units shall be distributed an amount equal to 5% of the limited partners’ capital contributions after the common stockholders and the limited partners have received a return of their original capital contributions plus a 6% cumulative but not compounded return. In the year of liquidation, termination, merger or other cessation of the general partner, or the liquidation of the Operating Partnership holders of the Series B LP Units shall also be distributed an amount equal to 20% of the net proceeds from the sale of the properties, after the common stockholders and the limited partners have received a return of their original capital contributions plus a 6% cumulative but not compounded return from all distributions. The Advisor and its affiliates may be reimbursed by the Company for certain organization and offering expenses in connection with the Company’s securities offerings, including legal, printing, marketing and other offering related costs and expenses. Following the termination of the Offering, the Advisor will reimburse the Company for any such amounts incurred by the Company in excess of 15% of the gross proceeds of the Offering. In addition, the Company may pay directly or reimburse the Advisor and its affiliates for certain costs incurred in connection with its provision of services to the Company, including certain acquisition costs, financing costs, and sales and marketing costs, as well as an allocable share of general and administrative overhead costs. All reimbursements are paid to the Advisor and its affiliates at cost. Fees and reimbursements earned and payable to the Advisor and its affiliates, for the six months ended June 30, 2022 and 2021, were as follows: Incurred For the Six Months Ended June 30, 2022 2021 Fees: Acquisition fees $ 681,317 $ 474,740 Financing fees 916,346 474,740 Asset management fees 857,036 531,290 $ 2,454,699 $ 1,480,770 Reimbursements: Offering costs $ 1,239,977 $ 592,522 General and administrative 1,689,242 1,304,469 Sales and marketing 149,905 90,904 Acquisition costs 31,240 70,326 $ 3,110,364 $ 2,058,221 For three and six months ended June 30, 2022, the Operating Partnership recorded distributions payable to the Advisor in the amount of $81,949 and $160,180, respectively, in connection with the Advisor’s ownership of Series B LP Units. For the three and six months ended June 30, 2021, the Operating Partnership recorded distributions payable to the Advisor in the amount of $73,252 and $144,763, respectively. As of June 30, 2022 and December 31, 2021, the Company had distributions payable to the Advisor in the amount of $325,109 and $296,164, respectively. For the six months ended June 30, 2022 and 2021, the Company paid distributions The members of the Advisor personally guaranty certain loans of the Company and may receive a guarantee fee of up to 1.0% per annum of the guaranty amount. Corey Maple, is a guarantor of the Company’s loans secured by the hotel properties located in Prattville, Alabama, Southaven, Mississippi, and Fargo, North Dakota, which had original loan amounts of $9.6 million, $13.5 million, and $7.4 million, respectively, is a guarantor of 50% of the loan secured by the Houston Property, which had an original loan amount of $13.9 million, and is a guarantor of the Company’s $5.0 million line of credit which is secured by the hotel properties located in Cedar Rapids, Iowa and Eagan, Minnesota, and 100,000 Common LP Units of Lodging Fund REIT III OP, LP. Norman Leslie is a guarantor of the Company’s loan secured by the Company’s hotel property in Pineville, North Carolina, which had an original loan amount of $9.3 million. For the six months ended June 30, 2022 and for the year ended December 31, 2021, the Company accrued guarantee fees in the amount of $78,315 and $159,414 respectively to each Mr. Maple Mr. Leslie As of June 30, 2022 and December 31, 2021, the Company had amounts due and payable to the Advisor and its affiliates of $2,974,514 and $2,035,708, respectively, which is included in Due to related parties on the accompanying consolidated balance sheets. NHS, LLC dba National Hospitality Services (“NHS”) NHS earns a monthly base management fee for property management services, including overseeing the day-to-day operations of the hotel properties equal to 4% of gross revenue. NHS may also earn an accounting fee of $14.00 per room for accounting services, payable monthly, and an administrative fee equal to 0.60% of gross revenues for administrative and other services. The Company reimburses NHS for certain costs of operating the properties incurred on behalf of the Company. All reimbursements are paid to NHS at cost. NHS also earns a flat fee of $5,000 per hotel property for due diligence services, including analyzing, evaluating, and reporting on documentation and information received by sellers or contributors during the period of due diligence. Such fee is waived if, upon acquisition by us, NHS is selected as the management company for the hotel property. NHS is also reimbursed for actual out-of-pocket costs incurred in providing the due diligence services. Fees and reimbursements earned by NHS for the six months ended June 30, 2022 and 2021, and fees and reimbursements payable to NHS for the six months ended June 30, 2022 and year ended December 31, 2021, were as follows: Incurred Payable as of For the Six Months Ended June 30, June 30, December 31 2022 2021 2022 2021 Fees: Management fees $ 478,234 $ 287,179 $ 97,992 $ 66,407 Administrative fees 74,850 60,506 16,155 9,461 Accounting fees 84,286 44,919 15,162 12,726 $ 637,370 $ 392,604 $ 129,309 $ 88,594 Reimbursements $ 494,959 $ 205,648 $ 109,733 $ 119,638 One Rep Construction, LLC (“One Rep”) One Rep is a related party through common management and ownership, as Corey Maple, Norman Leslie , and David Ekman , each hold a 33.33% ownership interest in One Rep. One Rep is a construction management company which provided construction management services to the Company during 2022 and 2021 related to the renovation construction activities at certain hotel properties. For the services provided, One Rep is paid a construction management fee to 6% of the total project costs. The Company reimburses One Rep for certain costs incurred on behalf of the Company, and all reimbursements are paid to One Rep at cost. For the six months ended June 30, 2022 and the year ended December 31, 2021, the Company incurred $66,642 and $61,739 of construction management fees payable to One Rep, respectively. As of June 30, 2022 and December 31, 2021, the amounts outstanding and due to One Rep were $34,540 and $8,138 , respectively, which is included in due to related parties on the accompanying consolidated balance sheets. Legendary A-1 Bonds, LLC (“A-1 Bonds”) |
FRANCHISE AGREEMENTS
FRANCHISE AGREEMENTS | 6 Months Ended |
Jun. 30, 2022 | |
FRANCHISE AGREEMENTS | |
FRANCHISE AGREEMENTS | 8. FRANCHISE AGREEMENTS As of June 30, 2022 and December 31, 2021, all of the Company’s hotel properties were operated under franchise agreements with initial terms of 10 to 18 years. Franchise agreements allow the hotel properties to operate under the respective brands. Pursuant to the franchise agreements, the Company pays a royalty fee of 5% to 6% of room revenue, plus additional fees for marketing, central reservation systems and other franchisor costs. Certain hotels are also charged a program fee of generally between 3% and 4% of room revenue. The Company paid an initial fee of $50,000 to $175,000 at the time of entering into each franchise agreement which is being amortized over the term of each agreement. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 6 Months Ended |
Jun. 30, 2022 | |
STOCKHOLDERS' EQUITY | |
STOCKHOLDERS' EQUITY | 9. STOCKHOLDERS’ EQUITY The Company is authorized to issue 900,000,000 shares of common stock and 100,000,000 shares of preferred stock. Each share of common stock entitles the holder to one vote per share on all matters upon which stockholders are entitled to vote and to receive distributions as authorized by the Company’s board of directors. The Interval Common Stock described below do not have voting rights. The rights of the holders of shares of preferred stock may be defined at such time any series of preferred shares are issued. Common Stock Initial Offering On June 1, 2018, the Company commenced a private offering of shares of common stock, $0.01 par value per share, at a price of $10.00 per share, with a maximum offering of $100,000,000, which was increased to $150,000,000 in December 2021, to accredited investors only pursuant to a confidential private placement memorandum exempt from registration under the Securities Act of 1933, as amended. Dividend Reinvestment Plan The Company has adopted a dividend reinvestment plan (“DRIP”), which permits stockholders to reinvest their distributions back into the Company, purchasing shares of common stock at 95% of the then-current share net asset value (“NAV”). Distributions Distributions are determined by the board of directors based on the Company’s financial condition and other relevant factors. Distribution Net Cash Distributions Declared Per Distributions Paid (3) Flows Provided By Period Declared (1) Share (1) (2) Cash Reinvested Total (Used In) Operations First Quarter 2022 $ 1,556,308 $ 0.175 $ 933,464 $ 567,240 $ 1,500,704 $ (3,293,181) Second Quarter 2022 1,540,200 0.175 1,203,791 526,159 1,729,950 20,841 $ 3,096,508 $ 0.350 $ 2,137,255 $ 1,093,399 $ 3,230,654 $ (3,272,340) Distribution Net Cash Distributions Declared Per Distributions Paid (3) Flows Provided By Period Declared (1) Share (1) (2) Cash Reinvested Total (Used In) Operations First Quarter 2021 $ 1,430,216 $ 0.175 $ 246,084 $ 1,081,828 $ 1,327,912 $ (1,292,235) Second Quarter 2021 1,465,038 0.175 251,625 1,107,080 1,358,705 853,375 Third Quarter 2021 1,500,023 0.175 1,114,951 1,223,741 2,338,692 122,840 Fourth Quarter 2021 1,527,992 0.175 1,340,091 551,391 1,891,482 (732,378) $ 5,923,269 $ 0.700 $ 2,952,751 $ 3,964,040 $ 6,916,791 $ (1,048,398) (1) Distributions for the periods from January 1, 2021 through June 30, 2022 were based on daily record dates and were calculated based on stockholders of record each day during this period at a rate of $0.00191781 per share per day. Distributions for the periods from January 1, 2021 through March 31, 2021 were payable to each stockholder 30% in cash (or through the DRIP if then currently enrolled in the DRIP) and 70% in shares of common stock issued through the DRIP, or at the election of the stockholder, in shares of common stock valued at $10.00 per share. Distributions for the periods from April 1, 2021 through June 30, 2021 were payable to each stockholder 60% in cash (or through the DRIP if then currently enrolled in the DRIP) and 40% in shares of common stock issued through the DRIP, or at the election of the stockholder, in shares of common stock valued at $10.00 per share. Distributions for the period from July 1, 2021 through June 30, 2022 were payable to each stockholder as 100% in cash on a monthly basis of common stock valued at $10.00 per share. (2) Assumes share was issued and outstanding each day that was a record date for distributions during the period presented. (3) Beginning the second quarter of 2020 through the second quarter of 2021, distributions were paid on a quarterly basis. Beginning in the third quarter of 2021, distributions were paid on a monthly basis. In general, distributions for all record dates of a given month are paid on or about the tenth day of the following month. Share Repurchase Plan The board of directors has adopted a share repurchase plan that may enable its stockholders to have their shares repurchased in limited circumstances. In its sole discretion, the board of directors could choose to terminate or suspend the plan or to amend its provisions without stockholder approval. The repurchase plan may be reviewed and modified by the board of directors as it deems necessary in its sole discretion. The price at which the Company will repurchase shares is dependent on the amount of time the holder has owned the shares, and the then current value of the shares. There are several limitations on the Company’s ability to repurchase shares under the share repurchase plan, including, but not limited to, a limitation that during any calendar year, the maximum number of shares potentially eligible for repurchase can only be the number of shares that the Company could purchase with the amount of net proceeds from the sale of shares under the Company’s dividend reinvestment plan during the prior calendar year. The board of directors may, in its sole discretion, reject any request for repurchase and may, at any time and without stockholder approval, upon 10 business days’ written notice to the stockholders (i) amend, suspend or terminate its Share Repurchase Plan and (ii) increase or decrease the funding available for the repurchase of shares pursuant to our Share Repurchase Plan. The Company repurchased 121,921 shares, pursuant to repurchase requests received during the six months ended June 30, 2022, which represents an original investment of $1,219,207 for $1,214,053. The Company repurchased 88,088 shares, pursuant to repurchase requests received during the year ended December 31, 2021, which represents an original investment of $880,883 for $856,605. As of June 30, 2022, $575,879 of the redemption proceeds had not yet been paid and was included in other liabilities on the accompanying consolidated balance sheets. As of June 30, 2022, the Company had $1,856,279 available for eligible repurchases for the remainder of 2022 after accounting for the outstanding redemption proceeds not yet paid on June 30, 2022. Interval Common Stock Distributions Holders of shares of Interval Common Stock will be entitled to receive, when and as authorized by the board of directors of the Company and declared by the Company, distributions at a rate equal to 86% of the distribution rate for the Company’s common stock as authorized by the board of directors and declared by the Company. Distributions on the Interval Shares may be paid in cash, capital stock of the Company or a combination of cash and capital stock of the Company as determined by the board of directors and will be paid at such times as distributions are paid to the holders of common stock. Repurchase Plan The board of directors has adopted a repurchase plan for the Interval Common Stock (the “Repurchase Plan”). The Repurchase Plan is generally available to holders of Interval Common Stock who have held their shares of Interval Common Stock (“Interval Shares”) for at least 1 year. The Repurchase Plan provides that so long as the Repurchase Reserve (defined below) exists, the Company will repurchase up to the lesser of (i) 5% of the aggregate value of the Interval Shares (“Interval Shares Value”) on the last day of the same calendar quarter of the preceding year and (ii) 5% of the Interval Shares Value on the last day of the preceding calendar quarter. After the Repurchase Reserve has been exhausted, the Company will limit repurchases of Interval Shares to repurchases that can be made with the net proceeds from the dividend reinvestment plan for the Interval Shares received in the prior calendar year up to the lesser of (i) 1.25% per calendar quarter and (ii) 5% per calendar year of the Interval Shares Value. The limitations described in this paragraph are referred to as the “Repurchase Limitations.” The Company will establish a reserve (the “Repurchase Reserve”) of liquid assets in an amount equal to 20% of the aggregate gross proceeds from the Company’s private offering of Interval Shares, which will be comprised of cash and cash-like instruments, government securities, publicly traded REIT shares and other publicly traded securities (the “Reserve Assets”), but which is expected to primarily include publicly traded REIT shares. The Repurchase Reserve will be used solely to repurchase the Interval Shares. The board of directors may, but has no obligation to, increase the amount of the Repurchase Reserve at any time. The Company will have no obligation to restore any amounts resulting from a decline in value of the Reserve Assets. After the Repurchase Reserve has been exhausted, subject to the Repurchase Limitations, the Company will use only the net proceeds from the dividend reinvestment plan received in the prior calendar year to repurchase the Interval Shares. Subject to the Repurchase Limitations, on the applicable repurchase date, the Company will repurchase the Interval Shares timely submitted for repurchase for a price equal to the NAV per share of the Company’s common stock on such repurchase date as determined by the board of directors. The board of directors may, upon 10 days’ written notice to the holders of Interval Shares, amend, suspend or terminate the Repurchase Plan at any time, and such amendment, suspension or termination may be implemented immediately. Notwithstanding the foregoing, the Repurchase Plan may not be terminated prior to the date the Repurchase Reserve is exhausted. Interval Share Offering The Company offered up to 3,000,000 shares of Interval Common Stock in the Company’s ongoing private offering, which amount may be increased to up to 6,000,000 Interval Shares in the sole discretion of the board of directors. Except as otherwise provided in the offering memorandum, the initial purchase price for the Interval Shares is $10.00 per Interval Share, with Interval Shares purchased in the Company’s dividend reinvestment plan at an initial price of $9.50 per Interval Share. The Company’s board of directors allowed the Interval Share Offering to expire on March 31, 2022, and as of June 30, 2022, the Company had not issued or sold any shares of Interval Common Stock. Non-Controlling Interests The Operating Partnership currently has 4 classes of Limited Partner Units which include the Common LP Units, the Series B LP Units, the Series T LP Units and the GO Limited Units. The Series B LP Units are issued to the Advisor and entitle the Advisor to receive annual distributions and an incentive distribution based on the net proceeds received from the sale of the Projects (as defined below). Non-Controlling Interest – Series T LP Units The Series T LP Units are expected to be issued to persons who contribute their property interests in certain Projects to the Partnership in exchange for Series T LP Units. The Series T LP Units will have allocations and distributions as determined by the General Partner in its sole discretion at the time of issuance of the Series T LP Units, and any future distributions are dependent on the financial performance of the contributed real estate based on a mathematical formula. The Series T LP Units are eligible for conversion into Common LP Units beginning 36 months Non-Controlling Interest – Series GO LP Units Distributions The holders of Series GO LP Units will not receive any distributions from the Operating Partnership until after they have held their Series GO LP Units for a period of 18 months. Thereafter, the Series GO Limited Partners will receive the same distributions payable to the holders of the Common LP Units and GP Units (together with the Series GO LP Units and Interval Units, the “Participating Partnership Units”), other than with respect to proceeds received upon the sale or exchange of a property which are not reinvested in additional properties. Upon the sale of all or substantially all of the GP Units held by LF REIT III or any sale, exchange or merger of LF REIT III or the Operating Partnership (each, a “Termination Event”), or with respect to proceeds received upon the sale or exchange of a property which are not reinvested in additional properties, distributions will be made between the Series GO LP Units and the other Participating Partnership Units as follows: (i) first, to the Participating Partnership Units in proportion to their Partnership Units until the GP Units (the Common LP Units and the Interval Units) have received 70% of their original capital contributions (determined on a grossed-up basis) reduced by any prior distributions received in connection with the sale of a property in which the sale proceeds are not reinvested in additional properties; (ii) second, to the Participating Partnership Units in proportion to their Partnership Units until each Participating Partnership Unit has received a Participating Amount ($1.00 for any period after December 31, 2020, $2.00 for any period after December 31, 2021 and $3.00 for any period after December 31, 2022, determined as a singular determination and not a cumulative determination); (iii) third, to the Participating Partnership Units (other than the Series GO LP Units) in proportion to their Partnership Units until the GP Units have received any remaining unreturned original capital contributions; (iv) fourth, to the Series GO Limited Partners in proportion to their Series GO LP Units until the amount distributed to the Series GO Limited Partners per Series GO LP Unit is equal to the amount distributed to the Participating Partnership Units per Participating Partnership Unit (other than the Series GO Limited Partners) pursuant to (iii); and (v) thereafter, to the Participating Partnership Units in proportion to their Participating Partnership Units. GO Unit Offering On June 15, 2020, the Operating Partnership commenced a private offering of limited partnership units in the OP, designated as Series GO LP Units, with a maximum offering of $20,000,000, which may be increased to $30,000,000 in the sole discretion of LF REIT III as the General Partner of the Operating Partnership (the “GO Unit Offering”) to accredited investors only, pursuant to a confidential private placement memorandum exempt from registration under the Securities Act of 1933, as amended. The Series GO LP Units were being offered until the earlier of (i) the sale of $20,000,000 in Series GO LP Units (which could be increased to $30,000,000 in the Company’s sole discretion), (ii) June 14, 2022 or (iii) the Operating Partnership terminates the GO Unit Offering at an earlier date in its sole discretion. The Company’s board of directors terminated the GO Unit Offering as of February 14, 2022. The Company’s board of directors approved and ratified additional sales after February 14, 2022 in the GO Units Offering for sales which were pending as f that date. As of June 30, 2022, the Operating Partnership had issued and sold 3,125,041 Series GO LP Units and received aggregate proceeds of $21.5 million. Non-Controlling Interest – Series B LP Units Distributions Under the Operating Partnership Agreement, the Advisor, as the Series B Limited Partner, will receive from the Operating Partnership, distributions as follows: (a) for all years, an amount equal to 5.0% of the total of (i) the total distributions made to the Partners (other than the Series B Limited Partner) and (ii) the total distributions made to the Series B Limited Partner, after the Partners (other than the Series B Limited Partner) have received a 6.0% cumulative, but not compounded, return on their original capital contributions, and (b) for the year of liquidation or other cessation of the General Partner or the Partnership, an amount equal to 5.0% of the original capital contributions made by the Partners, after the Partners (other than the Series B Limited Partner) have received a return of their capital contributions plus a six percent (6%) cumulative, but not compounded return from all distributions. Series B LP Unit Offering As of June 30, 2022, the Operating Partnership has issued 1,000 Series B LP Units to the Advisor. Non-Controlling Interest – Common LP Units On December 3, 2021, the Operating Partnership commenced a private placement offering of its Common LP Units. As of June 30, 2022, the Operating Partnership had issued and sold 612,100 Common LP Units in connection with the Northbrook Property and the El Paso Airport Property acquisitions. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2022 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 10. COMMITMENTS AND CONTINGENCIES Impact of COVID-19 — continues, it may have long-term impacts on the Company’s financial condition, results of operations, and cash flows. Refer to Note 2 for further discussion of COVID-19. Legal Matters The SEC is conducting an investigation related to the Company’s reimbursement of and financial accounting for certain expenses incurred by the Advisor, as well as the adequacy of its disclosures related to those policies and practices. The Company is cooperating with the SEC and has produced documents and other information requested by the SEC. The Advisor has retained independent counsel and is also cooperating with the SEC inquiry. The Company remains committed to maintaining the highest standards for compliance with securities regulations and will continue to work with the SEC to address and resolve any questions or concerns that the SEC may raise. At this time, the Company is unable to estimate the cost of complying with the inquiry or its outcome. Property Acquisitions The seller of the Pineville Property may be entitled to additional cash consideration if the property exceeds certain performance criteria based on increases in the property’s net operating income (“NOI”) for a selected 12-month period of time. At any time during the period beginning April 1, 2021 through the date of the final NOI determination (on or about April 30, 2023), the seller of the property may make a one-time election to receive the additional consideration. The variable amount of the additional consideration, if any, is based on the excess of the property’s actual NOI over a base NOI for the applicable 12-month calculation period divided by the stated Cap Rate for such calculation period. As of June 30, 2022, no additional consideration had been paid to the seller of the Pineville Property, and no election to receive the additional consideration had been made. In November 2019, the Company entered into a purchase agreement, to acquire three hotel properties in Pennsylvania, from a third party group of sellers (collectively, the “PA Sellers”), for $46.9 million plus closing costs, subject to adjustment as provided in the purchase agreement. The Company has deposited a total of $1.5 million into escrow as earnest money (the “Earnest Money”) pending the closing or termination of the purchase agreement. In July 2020, the Company and the PA Sellers exchanged written notices of default with one another in accordance with the terms of the purchase agreement. The notice from each party was based on allegations that the other party failed to perform its obligations under the purchase agreement. On October 27, 2020, the PA Sellers filed a lawsuit against Lodging Fund REIT III OP, LP in the Supreme Court of Pennsylvania alleging breach of the purchase agreement. The PA Sellers seek the full amount of the Earnest Money and recovery of fees and expenses incurred in bringing the lawsuit. The lawsuit is in an early stage and the likelihood of any material loss in connection with the case cannot be determined at this time. As a result, no amount was recorded related to this matter as of June 30, 2022, the Earnest Money remained in escrow and is included in restricted cash on the accompanying consolidated balance sheets. Contribution Agreements Entered into During the Six Months Ended June 30, 2022 On February 1, 2022, the Operating Partnership and RLC V RIFC, LLC (the “RI Contributor”) entered into a Legendary Equity Preservation UPREIT (Pat. Pend.) Contribution Agreement (the “RI Contribution Agreement”), pursuant to which the RI Contributor agreed to contribute the 113-room Residence Inn by Marriott Fort Collins hotel in Fort Collins, Colorado (the “Fort Collins RI Property”) to the Operating Partnership. The RI Contributor is not affiliated with the Company or Legendary Capital REIT III, LLC, the Company’s external advisor. The aggregate consideration for the Fort Collins RI Hotel Property under the RI Contribution Agreement is $17,700,000 plus closing costs, subject to adjustment as provided in the RI Contribution Agreement. The majority of the consideration consists of the assumption or refinancing by the Operating Partnership of existing debt secured by the Fort Collins RI Hotel Property. The remaining consideration consists of the issuance by the Operating Partnership of Series T LP Units of the Operating Partnership. As required by the RI Contribution Agreement, the Operating Partnership deposited $100,000 into escrow as earnest money pending the closing or termination of the RI Contribution Agreement. Except in certain circumstances described in the RI Contribution Agreement, if the Operating Partnership fails to perform its obligations under the RI Contribution Agreement, it will forfeit the earnest money. On February 1, 2022, the Operating Partnership and RLC-IV CYFC, LLC (the “CY Contributor”) entered into a Legendary Equity Preservation UPREIT (Pat. Pend.) Contribution Agreement (the “CY Contribution Agreement”), pursuant to which the CY Contributor agreed to contribute the 112-room Courtyard by Marriott Fort Collins hotel in Fort Collins, Colorado (the “CY Hotel Property”) to the Operating Partnership. The CY Contributor is not affiliated with the Company or Legendary Capital REIT III, LLC, the Company’s external advisor. The aggregate consideration for the CY Hotel Property under the CY Contribution Agreement is $15,000,000 plus closing costs, subject to adjustment as provided in the CY Contribution Agreement. The majority of the consideration consists of the assumption or refinancing by the Operating Partnership of existing debt secured by the CY Hotel Property. The remaining consideration consists of the issuance by the Operating Partnership of Series T LP Units of the Operating Partnership. As required by the CY Contribution Agreement, the Operating Partnership deposited $100,000 into escrow as earnest money pending the closing or termination of the CY Contribution Agreement. Except in certain circumstances described in the CY Contribution Agreement, if the Operating Partnership fails to perform its obligations under the CY Contribution Agreement, it will forfeit the earnest money. On March 21, 2022, the Operating Partnership and Smith/Curry Hotel Group HH-Harris, LLC (the “Charlotte HGI Contributor”) entered into a Legendary Equity Preservation UPREIT (Pat. Pend.) Contribution Agreement (the “Charlotte HGI Contribution Agreement”), pursuant to which the Charlotte HGI Contributor agreed to contribute the 112-room Hilton Garden Charlotte North hotel in Charlotte, North Carolina (the “Charlotte HGI Hotel Property”) to the Operating Partnership. The Charlotte HGI Contributor is not affiliated with the Company or Legendary Capital REIT III, LLC, the Company’s external advisor. The aggregate consideration for the Charlotte HGI Hotel Property under the Charlotte HGI Contribution Agreement is $15,000,000 plus closing costs, subject to adjustment as provided in the Charlotte HGI Contribution Agreement. The majority of the consideration consists of the assumption or refinancing by the Operating Partnership of existing debt secured by the Charlotte HGI Hotel Property. The remaining consideration consists of the issuance by the Operating Partnership of Series T LP Units of the Operating Partnership and cash at closing. As required by the Charlotte HGI Contribution Agreement, the Operating Partnership deposited $100,000 into escrow as earnest money pending the closing or termination of the Charlotte HGI Contribution Agreement. Except in certain circumstances described in the Charlotte HGI Contribution Agreement, if the Operating Partnership fails to perform its obligations under the Charlotte HGI Contribution Agreement, it will forfeit the earnest money. On March 21, 2022, the Operating Partnership and Smith/Curry Hotel Group Pineville II, LLC (the “Pineville HGI Contributor”) entered into a Legendary Equity Preservation UPREIT (Pat. Pend.) Contribution Agreement (the “Pineville HGI Contribution Agreement”), pursuant to which the Pineville HGI Contributor agreed to contribute the 113-room Hilton Garden Pineville hotel in Pineville, North Carolina (the “Pineville HGI Hotel Property”) to the Operating Partnership. The Pineville HGI Contributor is not affiliated with the Company or Legendary Capital REIT III, LLC, the Company’s external advisor. The aggregate consideration for the Pineville HGI Hotel Property under the Pineville HGI Contribution Agreement is $10,700,000 plus closing costs, subject to adjustment as provided in the Pineville HGI Contribution Agreement. The majority of the consideration consists of the assumption or refinancing by the Operating Partnership of existing debt secured by the Pineville HGI Hotel Property. The remaining consideration consists of the issuance by the Operating Partnership of Series T LP Units of the Operating Partnership and cash at close. As required by the Pineville HGI Contribution Agreement, the Operating Partnership deposited $100,000 into escrow as earnest money pending the closing or termination of the Pineville HGI Contribution Agreement. Except in certain circumstances described in the Pineville HGI Contribution Agreement, if the Operating Partnership fails to perform its obligations under the Pineville HGI Contribution Agreement, it will forfeit the earnest money. On May 9, 2022, Lodging Fund REIT III OP, LP (the “Operating Partnership”), the operating partnership subsidiary of Lodging Fund REIT III, Inc. (the “Company”) and W&K Hotels, LLC (the “Manhattan FP Contributor”) entered into a Legendary Equity Preservation UPREIT (Pat. Pend.) Contribution Agreement (the “Manhattan FP Contribution Agreement”), pursuant to which the Manhattan FP Contributor agreed to contribute the 197-room Four Points by Sheraton Manhattan hotel in Manhattan, Kansas (the “Manhattan FP Hotel Property”) to the Operating Partnership. The Manhattan FP Contributor is not affiliated with the Company or Legendary Capital REIT III, LLC, the Company’s external advisor. The aggregate consideration for the Manhattan FP Hotel Property under the Manhattan FP Contribution Agreement is $8,400,000 plus closing costs, subject to adjustment as provided in the Manhattan FP Contribution Agreement. The majority of the consideration consists of the assumption or refinancing by the Operating Partnership of existing debt secured by the Manhattan FP Hotel Property. The remaining consideration consists of the issuance by the Operating Partnership of Series T Limited Units of the Operating Partnership and cash at closing. As required by the Manhattan FP Contribution Agreement, the Operating Partnership will deposit $50,000 into escrow as earnest money pending the closing or termination of the Manhattan FP Contribution Agreement. Except in certain circumstances described in the Manhattan FP Contribution Agreement, if the Operating Partnership fails to perform its obligations under the Manhattan FP Contribution Agreement, it will forfeit the earnest money. On May 9, 2022, Lodging Fund REIT III OP, LP (the “Operating Partnership”), the operating partnership subsidiary of Lodging Fund REIT III, Inc. (the “Company”) and W&K Hotels, LLC (the “Lawrence DT Contributor”) entered into a Legendary Equity Preservation UPREIT (Pat. Pend.) Contribution Agreement (the “Lawrence DT Contribution Agreement”), pursuant to which the Lawrence DT Contributor agreed to contribute the 192-room DoubleTree Hotel Lawrence hotel in Lawrence, Kansas (the “Lawrence DT Hotel Property”) to the Operating Partnership. The Lawrence DT Contributor is not affiliated with the Company or Legendary Capital REIT III, LLC, the Company’s external advisor. The aggregate consideration for the Lawrence DT Hotel Property under the Lawrence DT Contribution Agreement is $13,100,000 plus closing costs, subject to adjustment as provided in the Lawrence DT Contribution Agreement. The majority of the consideration consists of the assumption or refinancing by the Operating Partnership of existing debt secured by the Lawrence DT Hotel Property. The remaining consideration consists of the issuance by the Operating Partnership of Series T Limited Units of the Operating Partnership and cash at close. As required by the Lawrence DT Contribution Agreement, the Operating Partnership will deposit $50,000 into escrow as earnest money pending the closing or termination of the Lawrence DT Contribution Agreement. Except in certain circumstances described in the Lawrence DT Contribution Agreement, if the Operating Partnership fails to perform its obligations under the Lawrence DT Contribution Agreement, it will forfeit the earnest money. The Company is still conducting its diligence review with respect to each of these properties. These pending acquisitions are subject to its completion of satisfactory due diligence and other closing conditions. There can be no assurance the Company will complete any or all of these pending property contributions on the contemplated terms, or at all. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2022 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 11. SUBSEQUENT EVENTS Distributions Declared or Paid On July 7, 2022, the Company declared cash distributions totaling $358,880, DRIP distributions totaling $168,460, cash distributions totaling $35,706 for Common Limited Units of the Operating Partnership and cash distributions totaling $34,925 for Series GO LP Units of the Operating Partnership, at a daily rate of $0.00191781 per share of Common Stock in the Company, equivalent to an annualized rate of seven percent (7.00%) per share based on the Company’s current share net asset value of $10.00, for daily record dates June 1 through June 30, 2022 to holders of record on each calendar day of such period. The distribution declared for June 2022 was paid on July 11, 2022. On August 2, 2022, the Company declared cash distributions totaling $401,125, DRIP distributions totaling $136,106, cash distributions totaling $35,706 for Common Limited Units of the Operating Partnership and cash distributions totaling $44,624 for Series GO LP Units of the Operating Partnership, at a daily rate of $0.00191781 per share of Common Stock in the Company, equivalent to an annualized rate of seven percent (7.00%) per share based on the Company’s current share net asset value of $10.00, for daily record dates July 1 through July 31, 2022 to holders of record on each calendar day of such period. The distribution declared for July 2022 was paid on August 10, 2022. Recent Property Acquisitions Residence Inn by Marriott Fort Collins – Fort Collins, Colorado On August 3, 2022, the Operating Partnership acquired a Residence Inn by Marriott hotel property in Fort Collins, Colorado (the “Fort Collins RI Property”) pursuant to a Contribution Agreement dated as of February 1, 2022, as amended (the “Fort Collins RI Amended Contribution Agreement”). The aggregate consideration under the Fort Collins RI Amended Contribution Agreement is $17,700,000 plus closing costs, subject to adjustment as provided in the Fort Collins RI Amended Contribution Agreement. The consideration consists of the refinancing of the Contributor’s existing loan with a new loan (the “Fort Collins RI Loan”) by subsidiaries of the Operating Partnership with Legendary A-1 Bonds, LLC (the “Fort Collins RI Lender”), which is an affiliate of the Advisor which is owned by Norman Leslie and Corey Maple, each a director and executive officer of the Company and principal of the Advisor, in the amount of $11,500,000 secured by the Fort Collins RI Property, the issuance by the Operating Partnership of 560,369 Series T Limited Units of the Operating Partnership, and the payment of $596,310.09 by the Operating Partnership in cash at Closing for delinquent taxes, which amount is subject to 1.5 multiplier at time of conversion of the Series T Limited Units. The Series T Limited Units will convert into Common Limited Units of the Operating Partnership beginning 36 months, or at the option of the contributor, up to 48 months, after the closing, or upon the sale of the Fort Collins RI property or substantially all of the Operating Partnership’s assets, at which point . The Fort Collins RI Loan has a fixed interest rate of 7.0% per annum and is evidenced by three promissory notes in the amounts of $10,298,535 (“Tranche 1”), $700,000 (“Tranche 2”) and $501,465 (“Tranche 3”). The Fort Collins RI Lender was entitled to an origination fee of 1.75% of the Tranche 1 loan amount payable pursuant to the terms of the Fort Collins RI Amended Contribution Agreement. Each of Tranche 1 and Tranche 2 of the Fort Collins RI Loan matures August 2, 2023, which may be extended by the Company for an additional one-year term upon satisfaction of certain conditions contained in the loan agreement, including no then-existing event of default and, for Tranche 1 only, the payment of an extension fee of 1% of the full amount due under Tranche 1. Tranche 3 of the Fort Collins RI Loan matures August 2, 2028 with no extension option. Tranche 1 of the Fort Collins RI Loan requires monthly payments of interest-only throughout the term, with the outstanding principal and interest due at maturity. The Company has the right to prepay the Fort Collins RI Loan in full at any time upon prior notice to the Fort Collins RI Lender. Upon repayment of Tranche 1 at the maturity date, prepayment or otherwise, the Fort Collins RI Lender is entitled to an exit fee of 1.75% of the full amount due under Tranche 1 at the time of repayment. Tranche 2 of the Fort Collins RI Loan requires monthly payments of interest-only beginning six months after the date of the loan throughout the remaining term, with the outstanding principal and interest due at maturity. Any unpaid principal under Tranche 2 may be forgiven based on criteria to be negotiated between the borrower and the Fort Collins RI Lender. All monthly interest and principal payments on Tranche 3 of the Fort Collins RI Loan are deferred until a certain appraised value of the Fort Collins RI Property is reached, at which time all interest payments previously deferred shall be due and payable. If the required appraisal value is not attained prior to August 2, 2028, then the unpaid principal on Tranche 3 will be forgiven by the Fort Collins RI Lender. Pursuant to the Fort Collins RI Loan Agreement, the Operating Partnership entered into a Guaranty (the “OP Guaranty ”) with the Fort Collins RI Lender to guarantee payment when due of the loan amount and the performance of the agreements of borrower contained in the loan documents, as further described in the OP Guaranty. In connection with the acquisition, the Company entered into a management agreement with NHS, LLC dba National Hospitality Services (“NHS”), an affiliate of the Advisor which is wholly-owned by Norman Leslie, a director and executive officer of the Company and a principal of the Advisor, to provide property management and hotel operations management services for the Fort Collins RI Property. The agreement has an initial term expiring on December 31, 2027, which automatically renews for a period of five years on each successive five-year period, unless terminated in accordance with its terms. NHS earns a monthly base management fee for property management services equal to 2% of gross revenue, an accounting fee of $14.00 per room for accounting services, payable monthly, and an administrative fee equal to 0.60% of gross revenues for administrative and other services. The Company also reimburses NHS for certain costs of operating the property incurred on behalf of the Company. All reimbursements are paid to NHS at cost, and the agreement can be terminated at any time without liquidated damages. The Company funded the acquisition of the Fort Collins RI Property with proceeds from its ongoing private offering, Series T LP Units issued to the contributor as described above, and a new loan secured by the Fort Collins RI Property as described above. The Fort Collins RI Property is a 113 -room property. Hilton Garden Inn El Paso University – El Paso, Texas On August 10, 2022, the Operating Partnership acquired an equity and profits interest in High Desert Garden Holdings, LLC, a Delaware limited liability company (“HDGH”), the parent of the entity which holds a leasehold interest in a Hilton Garden Inn located in El Paso, Texas (the “El Paso HGI Hotel Property”) pursuant to a Reorganization and Membership Interest Purchase Agreement dated as of August 10, 2022 by and among the Operating Partnership, Roma Commercial, Inc., ASI Capital, LLC, and VB Hotel Group A, LLC and pursuant toa First Amendment to the Fourth Amended and Restated Operating Agreement of High Desert Garden Holdings, LLC (collectively and as amended (the “El Paso HGI Amended Agreements”)). High Desert Investors, LP, a Delaware limited partnership (“HDI”), a wholly-owned subsidiary of HDGH, holds a leasehold interest in real estate and the El Paso HGI Hotel Property located on such real estate. Pursuant to the El Paso HGI Amended Agreements, the Operating Partnership acquired a 24.9% membership interest in HDGH in exchange for a capital contribution of $3.2 million. The Operating Partnership has the unconditional right, at any time prior to December 31, 2027 and at its discretion, to acquire all membership interest in HDGH on the terms and conditions as provided in the El Paso HGI Amended Agreements. After paying any member loans, the Operating Partnership will receive 100% of distributions from operations, subject to annual cash distributions for members that existed before the El Paso HGI Amended Agreements (the “Prior Members”), which are entitled to up to 6.0% of the value of the Prior Member’s ownership percentage, depending upon the net operating income (“NOI”) of the El Paso HGI Hotel Property during each such applicable year. The Operating Partnership will fund any capital requirements for HDGH and has the option to fund such requirements by making a loan to HDGH at a 12% per annum interest rate. HDI is the borrower (“Borrower”) under a loan in the original principal amount of $14.4 million which is secured by HDI’s leasehold interest in the El Paso HGI Hotel Property and the real estate on which it is located. The loan has a fixed interest rate of 4.939% per annum and matures on August 6, 2025. In connection with the transactions effected through the El Paso HGI Amended Agreements, Corey Maple, a director and executive officer of the Company, entered into a guaranty with the lender to guarantee payment, when due, of the loan amount and the performance of agreements by Borrower contained in the loan documents, as further described in the guaranty, which is (i) a full recourse guarantee to the lender in certain circumstances, including the occurrence of certain events, including, without limitation, certain bankruptcy or insolvency proceedings involving the Borrower, and (ii) recourse guarantee limited to the payment of all losses, damages, costs, litigation, demands, suits, or other expenses actually incurred by the lender as a result of certain “bad boy” events, including fraud, intentional misrepresentation, willful misconduct or gross negligence in connection with the loan documents or the El Paso HGI Hotel Property, breach of representations, warranties, covenants or indemnities in the loan documents concerning environmental matters, material physical waste of the El Paso HGI Hotel Property, all as further described in the Guaranty. The Operating Partnership also entered into a completion guaranty with the lender regarding new property improvement plan obligations. In connection with the acquisition, HDI entered into a management agreement with Aimbridge Hospitality, LLC (“Aimbridge”) (the “El Paso HGI Aimbridge Management Agreement”), to provide property management and hotel operations management services for the El Paso HGI Hotel Property. The El Paso HGI Aimbridge Management Agreement has an initial term of 5 years after its effective date, which automatically renews for successive one-year periods, unless terminated in accordance with its terms. Pursuant to the El Paso HGI Aimbridge Management Agreement, HDI agrees to pay to Aimbridge a management fee equal to 3% of total revenues plus an accounting fee of $3,000 per month for accounting services, which amount will increase annually by 3% on January 1 of each fiscal year beginning on January 1, 2023. Aimbridge will also receive an additional accounting fee of $3,495 per month for customized accounting services, revenue management and digital marketing, which amount will increase annually by 3% on January 1 of each fiscal year beginning on January 1, 2022. Aimbridge may also receive incentive management fees if certain performance metrics are achieved. HDI also reimburses Aimbridge for certain costs of operating the property incurred on behalf of the Company. All reimbursements are paid to Aimbridge at cost. T he Aimbridge Management Agreement may be terminated upon the occurrence of an Event of Default (as defined in the Aimbridge Management Agreement), subject in certain cases to applicable notice and cure periods as described in the Aimbridge Management Agreement. HDI may terminate the Aimbridge Management Agreement in connection with the sale of the El Paso HGI Hotel Property upon at least ninety days’ written notice to Aimbridge and the payment of a termination fee, the amount of which varies depending on the timing of such termination. Properties Under Contract On August 5, 2022, the Operating Partnership and Wichita Airport Hospitality, LLC (the “Wichita HIEX Contributor”) entered into a Legendary Equity Preservation UPREIT (Pat. Pend.) Contribution Agreement (the “Wichita HIEX Contribution Agreement”), pursuant to which the Wichita HIEX Contributor agreed to contribute the 84-room Holiday Inn Express & Suites Wichita Airport hotel in Wichita, Kansas (the “Wichita HIEX Hotel Property”) to the Operating Partnership. The Wichita HIEX Contributor is not affiliated with the Company or Legendary Capital REIT III, LLC, the Company’s external advisor. The aggregate consideration for the Wichita HIEX Hotel Property under the Wichita HIEX Contribution Agreement is $7,400,000 plus closing costs, subject to adjustment as provided in the Wichita HIEX Contribution Agreement. The majority of the consideration consists of the assumption or refinancing by the Operating Partnership of existing debt secured by the Wichita HIEX Hotel Property. The remaining consideration consists of the issuance by the Operating Partnership of Series T LP Units of the Operating Partnership. As required by the Wichita HIEX Contribution Agreement, the Operating Partnership deposited $50,000 into escrow as earnest money pending the closing or termination of the Wichita HIEX Contribution Agreement. Except in certain circumstances described in the Wichita HIEX Contribution Agreement, if the Operating Partnership fails to perform its obligations under the Wichita HIEX Contribution Agreement, it will forfeit the earnest money. The Company is still conducting its diligence review with respect to this property. This pending acquisition is subject to its completion of satisfactory due diligence and other closing conditions. There can be no assurance the Company will complete this pending property contribution on the contemplated terms, or at all. New Revolving Line of Credit On August 9, 2022, the Operating Partnership entered into a $5.0 million revolving line of credit loan agreement (the “A-1 Line of Credit”) with Legendary A-1 Bonds, LLC (the “A-1 Lender”), which is an affiliate of the Advisor which is owned by Norman Leslie and Corey Maple, each a director and executive officer of the Company and principal of the Advisor. The A-1 Line of Credit requires monthly payments of interest only beginning September 1, 2022, with all outstanding principal and interest amounts being due and payable at maturity on December 31, 2022. The A-1 Line of Credit has a fixed interest rate of 7.0% per annum. Outstanding amounts under the A-1 Line of Credit may be prepaid in whole or in part without penalty. The A-1 Line of Credit is secured by 500,000 unissued Common LP Units of the Operating Partnership. As of August 11, 2022, $3.3 million has been advanced by the A-1 Lender under the A-1 Line of Credit. Share Repurchases On July 21, 2022, the Company paid the outstanding redemption proceeds related to the June 2022 redemption of 57,614 shares of common stock for $575,879 per the terms of the Share Repurchase Plan. Status of the Offering As of August 11, 2022, the Company’s private offering remained open for new investment, and since the inception of the offering the Company had issued and sold 9,561,096 shares of common stock, including 957,091 shares issued pursuant to the DRIP, resulting in the receipt of gross offering proceeds of $90.8 million. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2022 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation |
Use of Estimates | Use of Estimates During the first quarter of 2020, the global outbreak of COVID-19 was identified and has since spread to nearly every country and territory, including every state in the United States. The COVID-19 pandemic and the related governmental restrictions instituted to slow the spread of the virus continues to adversely impact many industries, with the travel and hospitality industries being particularly adversely affected. Although our hotel properties have remained open through the pandemic, our occupancy levels have been lower than historical levels. The outbreak could have a continued adverse impact on economic and market conditions and could trigger a continued slowdown in leisure and business travel, which is adversely impacting the travel and hospitality industries. Further, increasing labor costs and shortages, supply chain disruptions and related commodity and other price inflation resulting from the COVID-19 pandemic may cause an increase in renovation, construction and operating costs, may limit our access to critical operating supplies, and may continue to adversely affect our hotel operations and financial results. The fluidity of this situation precludes any prediction as to the ultimate adverse impact of COVID-19 on economic and market conditions. The Company believes the estimates and assumptions underlying the Company’s consolidated financial statements are reasonable and supportable based on the information available as of June 30, 2022, however uncertainty over the ultimate impact COVID-19, including the continued emergence of new strains of COVID-19, such as the Delta and Omicron variant, will have on the global economy generally, and the Company’s business in particular, makes any estimates and assumptions as of June 30, 2022 inherently less certain than they would be absent the current and potential impacts of COVID-19. The Company has taken significant measures to mitigate the negative financial and operational impacts of COVID-19 on the Company. The Company has made changes to our business and investment strategies that are expected to enhance the Company’s liquidity and reduce costs, including payment of distributions in stock, in part or in whole, pursuant to the DRIP, deferring most non-essential capital projects, obtaining waivers under and amendments to the Company’s credit agreements. |
Revenue Recognition | Revenue Recognition |
Investment in Hotel Properties | Investment in Hotel Properties The Company’s acquisitions generally consist of land, land improvements, buildings, building improvements, and furniture, fixtures and equipment (“FF&E”). The Company may also acquire intangible assets or liabilities related to in-place leases, management agreements, debt, and advanced bookings. For transactions determined to be asset acquisitions, the Company allocates the purchase price among the assets acquired and the liabilities assumed on a relative fair value basis at the date of acquisition. The Company determines the fair value of assets acquired and liabilities assumed with the assistance of third-party valuation specialists, using cash flow analysis as well as available market and cost data. The determination of fair value includes making numerous estimates and assumptions. The difference between the fair value and the face value of debt assumed in connection with an acquisition is recorded as a premium or discount and amortized to interest expense over the remaining term of the debt assumed. The valuation of assumed debt liabilities is based on our estimate of the current market rates for similar liabilities in effect at the acquisition date. The Company’s investments in hotel properties are carried at cost and are depreciated using the straight-line method over the estimated useful lives of 15 years for land improvements, 40 years for buildings and building improvements and three The Company assesses the carrying value of its hotel properties whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. The recoverability is measured by comparing the carrying amount of the property to the estimated future undiscounted cash flows of the property, which take into account current market conditions, including the impact of COVID-19, and the Company’s intent with respect to holding or disposing of the hotel properties. If the Company’s analysis indicates that the carrying value is not recoverable on an undiscounted cash flow basis, the Company will recognize an impairment loss for the amount by which the carrying value exceeds the fair value. The fair value is determined through various valuation techniques, including internally developed discounted cash flow models, comparable market transactions or third-party appraisals. The use of projected future cash flows is based on assumptions that are consistent with a market participant’s future expectations for the industry and the economy in general and the Company’s expected use of the underlying hotel properties. The assumptions and estimates related to the future cash flows and the capitalization rates are complex and subjective in nature. Changes in economic and operating conditions, including those occurring as a result of the impact of the COVID-19 pandemic, that occur subsequent to a current impairment analysis and the Company’s ultimate use of the hotel property could impact the assumptions and result in future impairment losses to the hotel properties. |
Advertising Costs | Advertising Costs |
Non-controlling Interest | Non-controlling Interest |
Cash and Cash Equivalents | Cash and Cash Equivalents |
Restricted Cash | Restricted Cash |
Accounts Receivable | Accounts Receivable |
Deferred Financing Costs | Deferred Financing Costs |
Offering Costs | Offering Costs |
Property Operations Expenses | Property Operations Expenses |
Property Management Fees | Property Management Fees |
Franchise Fees | Franchise Fees |
Acquisition Costs | Acquisition Costs |
Stock-Based Compensation | Stock-Based Compensation |
Net Loss Per Share of Common Stock | Net Loss Per Share of Common Stock |
Income Taxes | Income Taxes As a REIT, the Company is generally not subject to U.S. federal corporate income tax on the portion of taxable income that is distributed to stockholders. If the Company fails to qualify for taxation as a REIT in any taxable year, the Company will be subject to U.S. federal income taxes at regular corporate rates and it may not be able to qualify as a REIT for four subsequent taxable years. As a REIT, the Company may be subject to certain state and local taxes on its income and property, and to U.S. federal income and excise taxes on undistributed taxable income. Taxable income from non-REIT activities managed through the Company’s taxable REIT subsidiary (“TRS”) is subject to U.S. federal, state, and local income taxes at the applicable rates. The TRS accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax basis, and for net operating loss, capital loss and tax credit carryforwards. The deferred tax assets and liabilities are measured using the enacted income tax rates in effect for the year in which those temporary differences are expected to be realized or settled. The effect on the deferred tax assets and liabilities from a change in tax rates is recognized in earnings in the period when the new rate is enacted. However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of all available evidence, including the future reversals of existing taxable temporary differences, future projected taxable income and tax planning strategies. Valuation allowances are provided if, based upon the weight of the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company performs periodic reviews for any uncertain tax positions and, if necessary, will record the expected future tax consequences of uncertain tax positions in the consolidated financial statements. |
Fair Value Measurement | Fair Value Measurement Level 1 Level 2 Level 3 The Company’s estimates of fair value were determined using available market information and appropriate valuation methods. Considerable judgment is necessary to develop estimated fair value. The use of different market assumptions or estimation methods may have a material effect on the estimated fair value amounts. The Company classifies assets and liabilities in the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement. |
Accounting Standards Recently Adopted | Accounting Standards Recently Adopted In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, “Leases” (“ASU No. 2016-02”) (Topic 842), which replaces Leases (Topic 840), and sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). ASU No. 2016-02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right of use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance under Leases (Topic 840), for operating leases. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales type leases, direct financing leases and operating leases. The Company adopted this standard effective January 1, 2022, electing to recognize and measure its leases prospectively at the beginning of the period of adoption, without restating the presentation of periods prior to the effective date, which continue to be reported in accordance with the Company’s historical accounting policy. At adoption of the new standard, the Company recorded a right-of-use asset and lease liability for its Sheraton Northbrook, Illinois hotel property (the "Northbrook Property") ground lease measured at the estimated present value of the remaining minimum lease payments under the lease. The Company’s ground lease is classified as a financing lease under Topic 842. For this finance lease, effective January 1, 2022, the Company began recognizing depreciation and amortization expense and interest expense in the Company’s consolidated statements of operations instead of ground lease rent expense. While the total expense recognized over the life of a lease is unchanged, the timing of expense recognition for finance leases results in higher expense recognition during the earlier years of the lease and lower expense during the later years of the lease. In addition to recording operating and financing right-of-use assets and lease liabilities, the Company also reclassified at adoption its intangible liability for its above market ground lease to the beginning right-of-use asset. See Note 3 for more information regarding the Company’s lease assets and liabilities. |
INVESTMENT IN HOTEL PROPERTIES
INVESTMENT IN HOTEL PROPERTIES (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
INVESTMENT IN HOTEL PROPERTIES | |
Schedule of investment in hotel properties | June 30, December 31, 2022 2021 Land and land improvements $ 26,023,472 $ 20,034,309 Building and building improvements 182,503,766 144,883,150 Furniture, fixtures, and equipment 17,680,982 13,986,611 Finance ground lease assets 2,451,754 — Construction in progress 1,536,978 8,433 Investment in hotel properties, at cost 230,196,952 178,912,503 Less: accumulated depreciation (12,770,510) (9,487,728) Investment in hotel properties, net $ 217,426,442 $ 169,424,775 |
Schedule of acquisitions of hotel properties | 2022 Acquisitions Number Date of Guest Purchase Transaction % Hotel Property Type Location Acquired Rooms Price Costs Total Interest Hampton Inn & Suites Limited-Service Fargo, ND January 18, 2022 90 $ 11,440,000 (1) $ 302,222 $ 11,742,222 100 % Courtyard by Marriott Select-Service El Paso, TX February 8, 2022 90 15,120,000 (2) 333,234 15,453,234 100 % Fairfield Inn & Suites Limited-Service Lakewood, CO March 29, 2022 142 18,800,000 (3) 390,753 19,190,753 100 % 322 $ 45,360,000 $ 1,026,209 $ 46,386,209 (1) Includes the issuance of $4,091,291 in Series T LP Units of the Operating Partnership. (2) Includes the issuance of $4,600,000 in Common Limited Partnership Units of the Operating Partnership. (3) Includes the issuance of $5,638,000 in Series T LP Units of the Operating Partnership. The table below outlines the details of the properties acquired during the year ended December 31, 2021. 2021 Acquisitions Number Date of Guest Purchase Transaction % Hotel Property Type Location Acquired Rooms Price Costs Total Interest Courtyard by Marriott Select-Service Aurora, CO February 4, 2021 141 $ 23,610,000 (1) $ 458,129 $ 24,068,129 100 % Holiday Inn Select-Service El Paso, TX May 12, 2021 175 10,300,000 (2) 361,019 10,661,019 100 % Hilton Garden Inn Select-Service Houston, TX August 3, 2021 182 19,910,000 (3) 918,353 20,828,353 100 % Sheraton Hotel Full-Service Northbrook, IL December 3, 2021 160 11,400,000 (4) 340,005 11,740,005 100 % 658 $ 65,220,000 $ 2,077,506 $ 67,297,506 (1) Includes the issuance of $6,742,757 in Series T LP Units of the Operating Partnership. (2) Includes the issuance of $2,100,000 in Series T LP Units of the Operating Partnership. (3) Includes the issuance of $6,910,000 in Series T LP Units of the Operating Partnership. (4) Includes the issuance of $6,179,000 in Series T LP Units and $1,521,000 in Common Limited Partnership Units of the Operating Partnership. |
Schedule of aggregate purchase price for the hotel properties | June 30, December 31, 2022 2021 Land and land improvements $ 5,939,033 $ 9,694,077 Building and building improvements 37,254,411 58,503,137 Furniture, fixtures, and equipment 3,192,765 4,597,353 Total assets acquired 46,386,209 72,794,567 Above market ground lease (1) — (5,497,061) Total liabilities assumed — (5,497,061) Total purchase price (2) $ 46,386,209 $ 67,297,506 (1) The above market ground lease is recognized on the consolidated balance sheet within Other Liabilities as of December 31, 2021. See Above Market Ground Lease discussion below. (2) Total purchase price includes purchase price plus all transaction costs. |
Schedule of future minimum lease payments related to above market ground lease | 2022 $ 220,647 2023 449,017 2024 462,487 2025 476,362 2026 490,653 Thereafter 39,754,268 Total finance lease payments 41,853,434 Interest (33,782,363) Present value of finance lease liabilities $ 8,071,071 |
DEBT - (Tables)
DEBT - (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
DEBT | |
Schedule of debt outstanding | Interest Outstanding Outstanding Rate as of Balance as of Balance as of June 30, Maturity June 30, December 31, 2022 Date 2022 2021 Holiday Inn Express - Cedar Rapids (1) 5.33% 9/1/2024 $ 5,847,994 $ 5,858,134 Hampton Inn & Suites - Pineville 5.13% 6/6/2024 8,682,124 8,782,284 Hampton Inn - Eagan 4.60% 1/1/2025 9,171,018 9,277,193 Home2 Suites - Prattville 4.13% 8/1/2024 9,310,022 9,425,085 Home2 Suites - Lubbock 4.69% 10/6/2026 7,459,647 7,573,597 Fairfield Inn & Suites - Lubbock 4.93% 4/6/2029 9,049,012 9,125,908 Homewood Suites - Southaven 3.70% 3/3/2025 13,176,677 13,343,841 Courtyard by Marriott - Aurora (2)(3) 7.12% 2/5/2024 15,000,000 15,000,000 Holiday Inn - El Paso (3) 5.00% 5/15/2023 7,900,000 7,900,000 Hilton Garden Inn - Houston (4) 3.85% 9/2/2026 13,947,218 13,947,218 Sheraton - Northbrook (3)(5) 7.06% 12/5/2024 3,700,000 3,700,000 Hampton Inn - Fargo 4.00% 3/1/2027 7,362,481 — Courtyard by Marriott - El Paso (6) 6.01% 5/13/2027 9,990,000 — Fairfield Inn & Suites - Lakewood (3) 7.00% 3/29/2023 13,009,914 — Total Mortgage Debt 133,606,107 103,933,260 Premium on assumed debt, net 656,894 722,905 Deferred financing costs, net (2,288,682) (2,129,281) Net Mortgage 131,974,319 102,526,884 $5.0 million revolving line of credit (7) 5.25% 12/15/2022 — 600,000 Debt, net $ 131,974,319 $ 103,126,884 (1) Loan was interest-only through April 30, 2022 and is at a fixed rate of interest. (2) Variable interest rate equal to 30-day LIBOR plus 6.00% , provided that LIBOR shall not be less than 1.00% . (3) Loan is interest-only until maturity. (4) Loan is interest-only for the first 24 months after origination. (5) Variable interest rate equal to 30-day LIBOR or equivalent rate plus 6.25% , provided that LIBOR or equivalent rate shall not be less than 0.75% . (6) Loan is interest-only for the first 18 months after origination. (7) Variable interest rate equal to U.S. Prime Rate plus 0.50% . |
Schedule of future minimum principal payments | 2022 $ 820,510 2023 22,726,642 2024 43,467,556 2025 22,137,806 2026 20,237,332 Thereafter 24,216,261 133,606,107 Premium on assumed debt, net 656,894 Deferred financing costs, net (2,288,682) $ 131,974,319 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
Legendary Capital REIT III, LLC | |
Related Party Transactions | |
Schedule of fees and reimbursements incurred and payable | Incurred For the Six Months Ended June 30, 2022 2021 Fees: Acquisition fees $ 681,317 $ 474,740 Financing fees 916,346 474,740 Asset management fees 857,036 531,290 $ 2,454,699 $ 1,480,770 Reimbursements: Offering costs $ 1,239,977 $ 592,522 General and administrative 1,689,242 1,304,469 Sales and marketing 149,905 90,904 Acquisition costs 31,240 70,326 $ 3,110,364 $ 2,058,221 |
NHS | |
Related Party Transactions | |
Schedule of fees and reimbursements incurred and payable | Incurred Payable as of For the Six Months Ended June 30, June 30, December 31 2022 2021 2022 2021 Fees: Management fees $ 478,234 $ 287,179 $ 97,992 $ 66,407 Administrative fees 74,850 60,506 16,155 9,461 Accounting fees 84,286 44,919 15,162 12,726 $ 637,370 $ 392,604 $ 129,309 $ 88,594 Reimbursements $ 494,959 $ 205,648 $ 109,733 $ 119,638 |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 6 Months Ended |
Jun. 30, 2022 | |
STOCKHOLDERS' EQUITY | |
Schedule of dividend declared and paid | Distribution Net Cash Distributions Declared Per Distributions Paid (3) Flows Provided By Period Declared (1) Share (1) (2) Cash Reinvested Total (Used In) Operations First Quarter 2022 $ 1,556,308 $ 0.175 $ 933,464 $ 567,240 $ 1,500,704 $ (3,293,181) Second Quarter 2022 1,540,200 0.175 1,203,791 526,159 1,729,950 20,841 $ 3,096,508 $ 0.350 $ 2,137,255 $ 1,093,399 $ 3,230,654 $ (3,272,340) Distribution Net Cash Distributions Declared Per Distributions Paid (3) Flows Provided By Period Declared (1) Share (1) (2) Cash Reinvested Total (Used In) Operations First Quarter 2021 $ 1,430,216 $ 0.175 $ 246,084 $ 1,081,828 $ 1,327,912 $ (1,292,235) Second Quarter 2021 1,465,038 0.175 251,625 1,107,080 1,358,705 853,375 Third Quarter 2021 1,500,023 0.175 1,114,951 1,223,741 2,338,692 122,840 Fourth Quarter 2021 1,527,992 0.175 1,340,091 551,391 1,891,482 (732,378) $ 5,923,269 $ 0.700 $ 2,952,751 $ 3,964,040 $ 6,916,791 $ (1,048,398) (1) Distributions for the periods from January 1, 2021 through June 30, 2022 were based on daily record dates and were calculated based on stockholders of record each day during this period at a rate of $0.00191781 per share per day. Distributions for the periods from January 1, 2021 through March 31, 2021 were payable to each stockholder 30% in cash (or through the DRIP if then currently enrolled in the DRIP) and 70% in shares of common stock issued through the DRIP, or at the election of the stockholder, in shares of common stock valued at $10.00 per share. Distributions for the periods from April 1, 2021 through June 30, 2021 were payable to each stockholder 60% in cash (or through the DRIP if then currently enrolled in the DRIP) and 40% in shares of common stock issued through the DRIP, or at the election of the stockholder, in shares of common stock valued at $10.00 per share. Distributions for the period from July 1, 2021 through June 30, 2022 were payable to each stockholder as 100% in cash on a monthly basis of common stock valued at $10.00 per share. (2) Assumes share was issued and outstanding each day that was a record date for distributions during the period presented. (3) Beginning the second quarter of 2020 through the second quarter of 2021, distributions were paid on a quarterly basis. Beginning in the third quarter of 2021, distributions were paid on a monthly basis. In general, distributions for all record dates of a given month are paid on or about the tenth day of the following month. |
ORGANIZATION - (Details)
ORGANIZATION - (Details) | 6 Months Ended | ||||||
Jun. 30, 2022 USD ($) item segment $ / shares shares | Jun. 15, 2022 USD ($) | Jun. 01, 2022 $ / shares | Dec. 31, 2021 USD ($) $ / shares | Jun. 15, 2020 USD ($) | Apr. 29, 2020 USD ($) $ / shares shares | Jun. 01, 2018 USD ($) $ / shares | |
Organization | |||||||
Number of reportable segments | segment | 1 | ||||||
Number of voting classes of partnership units | item | 3 | ||||||
Number of non voting classes of partnership units | item | 3 | ||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | |||||
Share redemption proceeds, not yet paid, included in other liabilities | $ 575,879 | ||||||
Common LP Units | |||||||
Organization | |||||||
Value of outstanding units | $ 5,327,084 | $ 1,437,082 | |||||
Series T LP Units. | |||||||
Organization | |||||||
Time period after issuance, for the conversion of Series T LP Units in to Common LP Units | 36 months | ||||||
Value of outstanding units | $ 31,661,048 | 21,931,757 | |||||
Series GO LP Units | |||||||
Organization | |||||||
Value of outstanding units | $ 17,161,824 | 12,498,527 | |||||
Operating Partnership | Common LP Units | |||||||
Organization | |||||||
Number of outstanding partnership units | shares | 612,100 | ||||||
Number of issued partnership units | shares | 612,100 | ||||||
Operating Partnership | Series B Limited Partnership Units | |||||||
Organization | |||||||
Number of outstanding partnership units | shares | 1,000 | ||||||
Operating Partnership | Series T LP Units. | |||||||
Organization | |||||||
Number of outstanding partnership units | shares | 3,542,699 | ||||||
Operating Partnership | Series GO LP Units | |||||||
Organization | |||||||
Number of outstanding partnership units | shares | 3,125,041 | ||||||
Interval Common Stock | Operating Partnership | |||||||
Organization | |||||||
Number of outstanding partnership units | shares | 0 | ||||||
Private offering | |||||||
Organization | |||||||
Cumulative number of shares repurchased | shares | 274,199 | ||||||
Cumulative stock repurchased, original investment | $ 2,741,988 | ||||||
Cumulative stock repurchased under DRIP, original investment | $ 2,661,203 | ||||||
Private offering | Series GO LP Units | |||||||
Organization | |||||||
Maximum offering | $ 20,000,000 | $ 20,000,000 | |||||
Maximum offering per the sole discretion of the General Partner | $ 30,000,000 | $ 30,000,000 | |||||
Cumulative number of units issued since inception of the Offering | shares | 3,125,041 | ||||||
Cumulative gross proceeds from issuance of units since inception of the Offering | $ 21,500,000 | ||||||
Private offering | Interval Common Stock | |||||||
Organization | |||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | ||||||
Number of shares of common stock designated as non-voting shares of Interval Common Stock | shares | 7,000,000 | ||||||
Maximum offering | $ 30,000,000 | ||||||
Maximum offering per the sole discretion of the Company's board of directors | $ 60,000,000 | ||||||
Private offering | Common Stock | |||||||
Organization | |||||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.01 | $ 0.01 | |||||
Maximum offering | $ 150,000,000 | $ 100,000,000 | |||||
Cumulative number of shares issued | shares | 9,379,886 | ||||||
Cumulative number of shares issued pursuant to the DRIP | shares | 925,174 | ||||||
Cumulative proceeds from issuance of stock | $ 91,700,000 | ||||||
GO Unit Offering | Series GO LP Units | |||||||
Organization | |||||||
Cumulative number of units issued since inception of the Offering | shares | 3,125,041 | ||||||
Cumulative gross proceeds from issuance of units since inception of the Offering | $ 21,500,000 |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Cash and Cash Equivalents | ||
FDIC Insurance limit | $ 250,000 | |
Advertising Costs | ||
Advertising Expense | $ 608,779 | $ 426,669 |
Management Fees | ||
Management fees (as a percent) | 4% | |
Asset management fees (as a percent) | 0.75% | |
Acquisition Costs | ||
Acquisition fee (as a percent) | 1.40% | |
Stock-Based Compensation | ||
Stock-based compensation expense | $ 30,000 | $ 0 |
Land improvements | ||
Investment in Hotel Properties | ||
Estimated useful lives | 15 years | |
Building improvements | ||
Investment in Hotel Properties | ||
Estimated useful lives | 40 years | |
Furniture, fixtures, and equipment | Minimum | ||
Investment in Hotel Properties | ||
Estimated useful lives | 3 years | |
Furniture, fixtures, and equipment | Maximum | ||
Investment in Hotel Properties | ||
Estimated useful lives | 7 years |
INVESTMENT IN HOTEL PROPERTIE_2
INVESTMENT IN HOTEL PROPERTIES - Summary (Details) | Jun. 30, 2022 USD ($) state room property | Dec. 31, 2021 USD ($) |
Investment in hotel properties consisted of the following: | ||
Land and land improvements | $ 26,023,472 | $ 20,034,309 |
Building and building improvements | 182,503,766 | 144,883,150 |
Furniture, fixtures, and equipment | 17,680,982 | 13,986,611 |
Finance ground lease assets | 2,451,754 | |
Construction in progress | 1,536,978 | 8,433 |
Investment in hotel properties, at cost | 230,196,952 | 178,912,503 |
Less: accumulated depreciation | (12,770,510) | (9,487,728) |
Investment in hotel properties, net | $ 217,426,442 | $ 169,424,775 |
Other disclosures | ||
Number of hotel properties owned | property | 14 | |
Aggregate number of rooms in hotel properties | room | 1,686 | |
Number of states where hotel properties are owned | state | 9 |
INVESTMENT IN HOTEL PROPERTIE_3
INVESTMENT IN HOTEL PROPERTIES - Acquisitions (Details) | 6 Months Ended | 12 Months Ended | |||||||
Mar. 29, 2022 USD ($) room | Feb. 08, 2022 USD ($) room | Jan. 18, 2022 USD ($) room | Dec. 03, 2021 USD ($) room | Aug. 03, 2021 USD ($) room | May 12, 2021 USD ($) room | Feb. 04, 2021 USD ($) room | Jun. 30, 2022 USD ($) property room | Dec. 31, 2021 USD ($) room property | |
Acquisitions | |||||||||
Number of hotel properties acquired | property | 3 | 4 | |||||||
Number of guest rooms | room | 322 | 658 | |||||||
Purchase Price | $ 45,360,000 | $ 65,220,000 | |||||||
Transaction Costs | 1,026,209 | 2,077,506 | |||||||
Total | $ 46,386,209 | $ 67,297,506 | |||||||
Hampton Inn and Suites, Fargo Medical Center (the "Fargo Property") | |||||||||
Acquisitions | |||||||||
Number of guest rooms | room | 90 | ||||||||
Purchase Price | $ 11,440,000 | ||||||||
Transaction Costs | 302,222 | ||||||||
Total | $ 11,742,222 | ||||||||
Interest (as a percent) | 100% | ||||||||
Hampton Inn and Suites, Fargo Medical Center (the "Fargo Property") | Series T LP Units. | |||||||||
Acquisitions | |||||||||
Amount of units issued as consideration | $ 4,091,291 | ||||||||
Courtyard El Paso Airport, (the "El Paso Airport Property") | |||||||||
Acquisitions | |||||||||
Number of guest rooms | room | 90 | ||||||||
Purchase Price | $ 15,120,000 | ||||||||
Transaction Costs | 333,234 | ||||||||
Total | $ 15,453,234 | ||||||||
Interest (as a percent) | 100% | ||||||||
Courtyard El Paso Airport, (the "El Paso Airport Property") | Common LP Units | |||||||||
Acquisitions | |||||||||
Amount of units issued as consideration | $ 4,600,000 | ||||||||
Fairfield Inn & Suites (the "Lakewood Property") | |||||||||
Acquisitions | |||||||||
Number of guest rooms | room | 142 | ||||||||
Purchase Price | $ 18,800,000 | ||||||||
Transaction Costs | 390,753 | ||||||||
Total | $ 19,190,753 | ||||||||
Interest (as a percent) | 100% | ||||||||
Fairfield Inn & Suites (the "Lakewood Property") | Series T LP Units. | |||||||||
Acquisitions | |||||||||
Amount of units issued as consideration | $ 5,638,000 | ||||||||
Courtyard by Marriott (the "Aurora Property") | |||||||||
Acquisitions | |||||||||
Number of guest rooms | room | 141 | ||||||||
Purchase Price | $ 23,610,000 | ||||||||
Transaction Costs | 458,129 | ||||||||
Total | $ 24,068,129 | ||||||||
Interest (as a percent) | 100% | ||||||||
Courtyard by Marriott (the "Aurora Property") | Series T LP Units. | |||||||||
Acquisitions | |||||||||
Amount of units issued as consideration | $ 6,742,757 | ||||||||
Holiday Inn (the "EI Paso Property") | |||||||||
Acquisitions | |||||||||
Number of guest rooms | room | 175 | ||||||||
Purchase Price | $ 10,300,000 | ||||||||
Transaction Costs | 361,019 | ||||||||
Total | $ 10,661,019 | ||||||||
Interest (as a percent) | 100% | ||||||||
Holiday Inn (the "EI Paso Property") | Series T LP Units. | |||||||||
Acquisitions | |||||||||
Amount of units issued as consideration | $ 2,100,000 | ||||||||
Hilton Garden Inn (the "Houston Property") | |||||||||
Acquisitions | |||||||||
Number of guest rooms | room | 182 | ||||||||
Purchase Price | $ 19,910,000 | ||||||||
Transaction Costs | 918,353 | ||||||||
Total | $ 20,828,353 | ||||||||
Interest (as a percent) | 100% | ||||||||
Hilton Garden Inn (the "Houston Property") | Series T LP Units. | |||||||||
Acquisitions | |||||||||
Amount of units issued as consideration | $ 6,910,000 | ||||||||
Sheraton Hotel (the "Northbrook Property") | |||||||||
Acquisitions | |||||||||
Number of guest rooms | room | 160 | ||||||||
Purchase Price | $ 11,400,000 | ||||||||
Transaction Costs | 340,005 | ||||||||
Total | $ 11,740,005 | ||||||||
Interest (as a percent) | 100% | ||||||||
Sheraton Hotel (the "Northbrook Property") | Series T LP Units. | |||||||||
Acquisitions | |||||||||
Amount of units issued as consideration | $ 6,179,000 | ||||||||
Sheraton Hotel (the "Northbrook Property") | Common LP Units | |||||||||
Acquisitions | |||||||||
Amount of units issued as consideration | $ 1,521,000 |
INVESTMENT IN HOTEL PROPERTIE_4
INVESTMENT IN HOTEL PROPERTIES - Other (Details) | 6 Months Ended | 12 Months Ended | ||||||
May 13, 2022 USD ($) | Mar. 29, 2022 USD ($) room $ / room | Feb. 23, 2022 USD ($) | Feb. 08, 2022 USD ($) room | Jan. 18, 2022 USD ($) room $ / room | Jun. 30, 2022 USD ($) item room | Dec. 31, 2021 USD ($) room | Jun. 28, 2022 | |
Investment in Hotel Properties | ||||||||
Aggregate consideration | $ 46,386,209 | $ 67,297,506 | ||||||
Purchase Price | 45,360,000 | $ 65,220,000 | ||||||
Outstanding balance | $ 133,606,107 | |||||||
Number of guest rooms | room | 322 | 658 | ||||||
Series T LP Units. | ||||||||
Investment in Hotel Properties | ||||||||
Time period for the conversion of Series T LP Units in to Common LP Units | 36 months | |||||||
Courtyard El Paso Airport, (the "El Paso Airport Property") | ||||||||
Investment in Hotel Properties | ||||||||
Interest-only period | 18 months | |||||||
Western Alliance Bank | Courtyard El Paso Airport, (the "El Paso Airport Property") | ||||||||
Investment in Hotel Properties | ||||||||
Fixed interest rate (as a percent) | 6.01% | |||||||
Interest-only period | 18 months | |||||||
Prepayment period | 30 days | |||||||
Prepayment fees (as a percentage) | 1% | |||||||
Third party prepayment (as a percentage) | 0% | |||||||
Loan amount | $ 10,000,000 | |||||||
Term of loan | 5 years | |||||||
Hampton Inn and Suites, Fargo Medical Center (the "Fargo Property") | ||||||||
Investment in Hotel Properties | ||||||||
Aggregate consideration | $ 11,742,222 | |||||||
Purchase Price | $ 11,440,000 | |||||||
Number of guest rooms | room | 90 | |||||||
Hampton Inn and Suites, Fargo Medical Center (the "Fargo Property") | Series T LP Units. | ||||||||
Investment in Hotel Properties | ||||||||
Units issued or issuable | $ 4,091,291 | |||||||
Courtyard El Paso Airport, (the "El Paso Airport Property") | ||||||||
Investment in Hotel Properties | ||||||||
Aggregate consideration | $ 15,453,234 | |||||||
Purchase Price | $ 15,120,000 | |||||||
Number of guest rooms | room | 90 | |||||||
Courtyard El Paso Airport, (the "El Paso Airport Property") | Common LP Units | ||||||||
Investment in Hotel Properties | ||||||||
Units issued or issuable | $ 4,600,000 | |||||||
Fairfield Inn & Suites (the "Lakewood Property") | ||||||||
Investment in Hotel Properties | ||||||||
Aggregate consideration | $ 19,190,753 | |||||||
Purchase Price | $ 18,800,000 | |||||||
Number of guest rooms | room | 142 | |||||||
Fairfield Inn & Suites (the "Lakewood Property") | Series T LP Units. | ||||||||
Investment in Hotel Properties | ||||||||
Units issued or issuable | $ 5,638,000 | |||||||
Hampton Inn & Suites(the "Pineville Property") | ||||||||
Investment in Hotel Properties | ||||||||
Loan amount | $ 9,300,000 | |||||||
Fargo Amended Contribution Agreement | Hampton Inn and Suites, Fargo Medical Center (the "Fargo Property") | ||||||||
Investment in Hotel Properties | ||||||||
Purchase Price | 11,400,000 | |||||||
Closing costs | $ 300,000 | |||||||
Time period for the conversion of Series T LP Units in to Common LP Units | 36 months | |||||||
Asset acquisition, new loan | $ 7,200,000 | |||||||
Cash consideration | $ 150,000 | |||||||
Interest rate (as a percent) | 7% | |||||||
Term of loan | 1 year | |||||||
Fargo Amended Contribution Agreement | Hampton Inn and Suites, Fargo Medical Center (the "Fargo Property") | Series T LP Units. | ||||||||
Investment in Hotel Properties | ||||||||
Units issued or issuable | $ 4,100,000 | |||||||
New Loan Agreement | Hampton Inn and Suites, Fargo Medical Center (the "Fargo Property") | ||||||||
Investment in Hotel Properties | ||||||||
Loan amount | $ 7,400,000 | |||||||
Interest rate (as a percent) | 4% | |||||||
Term of loan | 5 years | |||||||
Period of interest-only payments, once the PIP funds are placed on deposit with the New Lender and work on the PIP begins | 12 months | |||||||
KAJ Management Agreement | Hampton Inn and Suites, Fargo Medical Center (the "Fargo Property") | ||||||||
Investment in Hotel Properties | ||||||||
Term of contractual agreement | 5 years | |||||||
Successive renewal term | 1 year | |||||||
Management fee expressed as a percentage of revenue | 3% | |||||||
Management fee, accounting service per room | $ / room | 14 | |||||||
El Paso Airport Amended Contribution Agreement | Courtyard El Paso Airport, (the "El Paso Airport Property") | ||||||||
Investment in Hotel Properties | ||||||||
Purchase Price | 15,100,000 | |||||||
Closing costs | 300,000 | |||||||
Asset acquisition, new loan | 10,000,000 | |||||||
Cash consideration | $ 620,000 | |||||||
Interest rate (as a percent) | 7% | |||||||
Additional maturity term | 1 year | |||||||
El Paso Airport Amended Contribution Agreement | Courtyard El Paso Airport, (the "El Paso Airport Property") | Common LP Units | ||||||||
Investment in Hotel Properties | ||||||||
Units issued or issuable | $ 4,600,000 | |||||||
Aimbridge Management Agreement | Courtyard El Paso Airport, (the "El Paso Airport Property") | ||||||||
Investment in Hotel Properties | ||||||||
Monthly accounting fee per the management agreement | $ 3,000 | |||||||
Annual percentage increase in accounting fee | 3% | |||||||
Additional monthly accounting fee | $ 2,550 | |||||||
Annual percentage increase in additional accounting fee | 3% | |||||||
Term of contractual agreement | 5 years | |||||||
Successive renewal term | 1 year | |||||||
Management fee expressed as a percentage of revenue | 3% | |||||||
Lakewood Amended Contribution Agreement | Fairfield Inn & Suites (the "Lakewood Property") | ||||||||
Investment in Hotel Properties | ||||||||
Purchase Price | 19,400,000 | |||||||
Closing costs | 400,000 | |||||||
Asset acquisition, new loan | 12,600,000 | |||||||
Units issued or issuable | 6,200,000 | |||||||
Cash consideration | $ 552,000 | |||||||
Interest rate (as a percent) | 7% | |||||||
Additional maturity term | 1 year | |||||||
Lakewood Amended Contribution Agreement | Fairfield Inn & Suites (the "Lakewood Property") | Minimum | ||||||||
Investment in Hotel Properties | ||||||||
Time period for the conversion of Series T LP Units in to Common LP Units | 36 months | |||||||
Lakewood Amended Contribution Agreement | Fairfield Inn & Suites (the "Lakewood Property") | Maximum | ||||||||
Investment in Hotel Properties | ||||||||
Time period for the conversion of Series T LP Units in to Common LP Units | 48 months | |||||||
NHS Management Agreement | ||||||||
Investment in Hotel Properties | ||||||||
Number of Properties Subject to Management Agreement | item | 10 | |||||||
Management agreement, number of renewal periods | item | 2 | |||||||
Management agreement, automatic renewal term | 5 years | |||||||
Successive renewal term | 1 year | |||||||
NHS Management Agreement | Fairfield Inn & Suites (the "Lakewood Property") | ||||||||
Investment in Hotel Properties | ||||||||
Renewal term of advisory agreement | 5 years | |||||||
Management fee expressed as a percentage of revenue | 3% | |||||||
Management fee, accounting service per room | $ / room | 14 | |||||||
Administrative fee expressed as a percentage of revenue | 0.60% | |||||||
Loan Guaranteed by RLC-VI Lakewood, LLC and Rockies Lodging Capital, LLC | Lakewood Amended Contribution Agreement | Fairfield Inn & Suites (the "Lakewood Property") | ||||||||
Investment in Hotel Properties | ||||||||
Loan amount | $ 1,200,000 | |||||||
Outstanding balance | $ 399,914 | |||||||
Interest rate (as a percent) | 7% | |||||||
Ratio used to determine the offset by Series T Units, in the event the loan is not repaid | 1.75 | |||||||
Conversion cap rate (as a percent) | 8.25% | 8.75% |
INVESTMENT IN HOTEL PROPERTIE_5
INVESTMENT IN HOTEL PROPERTIES - Purchase Price Allocation (Details) - USD ($) | Jun. 30, 2022 | Dec. 31, 2021 | Dec. 03, 2021 |
Acquisitions | |||
Land and Land Improvements | $ 26,023,472 | $ 20,034,309 | |
Building and building improvements | 182,503,766 | 144,883,150 | |
Furniture, fixtures, and equipment | 17,680,982 | 13,986,611 | |
Total Assets | 239,174,110 | 190,329,735 | |
Above market lease | $ 5,497,061 | ||
Asset Acquisitions 2022 | |||
Acquisitions | |||
Land and Land Improvements | 5,939,033 | ||
Building and building improvements | 37,254,411 | ||
Furniture, fixtures, and equipment | 3,192,765 | ||
Total Assets | 46,386,209 | ||
Total purchase price | $ 46,386,209 | ||
Asset Acquisitions 2021 | |||
Acquisitions | |||
Land and Land Improvements | 9,694,077 | ||
Building and building improvements | 58,503,137 | ||
Furniture, fixtures, and equipment | 4,597,353 | ||
Total Assets | 72,794,567 | ||
Above market lease | (5,497,061) | ||
Total liabilities assumed | (5,497,061) | ||
Total purchase price | $ 67,297,506 |
INVESTMENT IN HOTEL PROPERTIE_6
INVESTMENT IN HOTEL PROPERTIES - Lease (Details) - USD ($) | 6 Months Ended | ||
Dec. 03, 2021 | Jun. 30, 2022 | Jan. 01, 2022 | |
Above Market Ground Lease | |||
Above market ground lease liability at acquisition date | $ (5,497,061) | ||
Period of time that has expired on lease at time of acquisition | 16 years | ||
Lease Term | 61 years | ||
Yearly percentage increase in base rent | 3% | ||
Discount rate percentage | 7.75% | ||
Lease liability | $ 8,071,071 | ||
Right-of-use asset | 2,451,754 | ||
Finance lease, interest expense | 310,605 | ||
Right-of-use amortization expense | 26,942 | ||
Estimated future minimum lease payments related to the above market ground lease | |||
2022 | 220,647 | ||
2023 | 449,017 | ||
2024 | 462,487 | ||
2025 | 476,362 | ||
2026 | 490,653 | ||
Thereafter | 39,754,268 | ||
Total finance lease payments | 41,853,434 | ||
Interest | (33,782,363) | ||
Present value of finance lease liabilities | $ 8,071,071 | ||
Accounting Standards Update 2016-02 | Cumulative Effect, Period of Adoption, Adjusted Balance | |||
Above Market Ground Lease | |||
Lease liability | $ 7,975,757 | ||
Right-of-use asset | 2,478,696 | ||
Estimated future minimum lease payments related to the above market ground lease | |||
Present value of finance lease liabilities | $ 7,975,757 |
DEBT - Lines of Credit (Details
DEBT - Lines of Credit (Details) - Revolving line of credit - USD ($) | 6 Months Ended | |||||
Jun. 30, 2022 | Jun. 15, 2022 | May 05, 2022 | Feb. 10, 2022 | Jun. 30, 2021 | Feb. 10, 2020 | |
Debt | ||||||
Revolving line of credit | $ 5,000,000 | $ 5,000,000 | ||||
Partnership units pledged | 100,000 | |||||
Variable interest rate (as a percent) | 3.75% | |||||
Outstanding amount | $ 0 | |||||
Interest rate (as a percent) | 4% | |||||
Interest rate (as a percent) | 5.25% | 5.25% | 4.50% | |||
U.S. Prime Rate | ||||||
Debt | ||||||
Basis spread (as a percent) | 0.50% |
DEBT - Mortgage Debt and Loans
DEBT - Mortgage Debt and Loans (Details) | 1 Months Ended | 6 Months Ended | ||||
Apr. 30, 2021 USD ($) | Feb. 28, 2021 USD ($) loan | Jan. 31, 2021 USD ($) loan | Apr. 30, 2020 USD ($) loan | Jun. 30, 2022 USD ($) property loan | Dec. 31, 2021 USD ($) | |
Debt | ||||||
Outstanding balance | $ 133,606,107 | |||||
Mortgage Debt | ||||||
Debt | ||||||
Outstanding balance | $ 133,606,107 | $ 103,933,260 | ||||
Number of properties as security for mortgage debt | property | 14 | |||||
Fixed Rate Mortgage Loans | ||||||
Debt | ||||||
Number of loans with fixed interest rates | loan | 12 | |||||
Fixed Rate Mortgage Loans | Minimum | ||||||
Debt | ||||||
Fixed interest rate (as a percent) | 3.70% | |||||
Fixed Rate Mortgage Loans | Maximum | ||||||
Debt | ||||||
Fixed interest rate (as a percent) | 7% | |||||
Variable Rate Mortgage Loan One | LIBOR | ||||||
Debt | ||||||
Basis spread (as a percent) | 6% | |||||
Reference rate threshold (as a percent) | 1% | |||||
Number of variable interest rate loans | loan | 1 | |||||
Effective interest rate (as a percent) | 7.12% | |||||
Variable Rate Mortgage Loan Two | LIBOR | ||||||
Debt | ||||||
Basis spread (as a percent) | 6.25% | |||||
Reference rate threshold (as a percent) | 0.75% | |||||
Effective interest rate (as a percent) | 7.06% | |||||
Weighted-average interest rate (as a percent) | 5.17% | |||||
PPP Loans | ||||||
Debt | ||||||
Outstanding balance | $ 763,100 | |||||
Interest rate (as a percent) | 1% | |||||
Number of unsecured promissory notes | loan | 6 | |||||
Percentage of loan forgiven | 100% | |||||
Number of loans forgiven | loan | 6 | |||||
PPP Loans | Minimum | ||||||
Debt | ||||||
Term of loan | 2 years | |||||
PPP Loans | Maximum | ||||||
Debt | ||||||
Term of loan | 5 years | |||||
Second Draw PPP Loan | ||||||
Debt | ||||||
Outstanding balance | $ 716,400 | |||||
Term of loan | 5 years | |||||
Interest rate (as a percent) | 1% | |||||
Interest deferral period | 16 months | |||||
Number of unsecured promissory notes | loan | 6 | |||||
Southaven TRS PPP Loan | ||||||
Debt | ||||||
Principal amount | $ 85,400 | |||||
Term of loan | 5 years | |||||
Interest rate (as a percent) | 1% | |||||
Interest deferral period | 16 months | |||||
Southaven TRS Second Draw PPP Loan | ||||||
Debt | ||||||
Principal amount | $ 119,500 | |||||
Term of loan | 5 years | |||||
Interest rate (as a percent) | 1% | |||||
Interest deferral period | 16 months |
DEBT - Summary of Debt (Details
DEBT - Summary of Debt (Details) - USD ($) | 6 Months Ended | |||||
Jun. 30, 2022 | Jun. 15, 2022 | May 05, 2022 | Dec. 31, 2021 | Apr. 30, 2020 | Feb. 10, 2020 | |
Outstanding Debt: | ||||||
Outstanding balance | $ 133,606,107 | |||||
Premium on assumed debt, net | 656,894 | |||||
Deferred financing costs, net | (2,288,682) | |||||
Debt, net | 131,974,319 | $ 103,126,884 | ||||
Revolving line of credit | ||||||
Outstanding Debt: | ||||||
Line of credit | $ 5,000,000 | $ 5,000,000 | ||||
Interest rate (as a percent) | 5.25% | 5.25% | 4.50% | |||
Outstanding balance | 600,000 | |||||
Revolving line of credit | U.S. Prime Rate | ||||||
Outstanding Debt: | ||||||
Basis spread (as a percent) | 0.50% | |||||
Mortgage Debt | ||||||
Outstanding Debt: | ||||||
Outstanding balance | $ 133,606,107 | 103,933,260 | ||||
Premium on assumed debt, net | 656,894 | 722,905 | ||||
Deferred financing costs, net | (2,288,682) | (2,129,281) | ||||
Debt, net | $ 131,974,319 | 102,526,884 | ||||
Mortgage Debt | Revolving line of credit | ||||||
Outstanding Debt: | ||||||
Interest rate (as a percent) | 5.25% | |||||
PPP Loans | ||||||
Outstanding Debt: | ||||||
Interest rate (as a percent) | 1% | |||||
Outstanding balance | $ 763,100 | |||||
Holiday Inn Express (the "Cedar Rapids Property") | Mortgage Debt | ||||||
Outstanding Debt: | ||||||
Interest rate (as a percent) | 5.33% | |||||
Outstanding balance | $ 5,847,994 | 5,858,134 | ||||
Hampton Inn & Suites(the "Pineville Property") | Mortgage Debt | ||||||
Outstanding Debt: | ||||||
Interest rate (as a percent) | 5.13% | |||||
Outstanding balance | $ 8,682,124 | 8,782,284 | ||||
Hampton Inn (the "Eagan Property") | Mortgage Debt | ||||||
Outstanding Debt: | ||||||
Interest rate (as a percent) | 4.60% | |||||
Outstanding balance | $ 9,171,018 | 9,277,193 | ||||
Home2 Suites (the "Prattville Property") | Mortgage Debt | ||||||
Outstanding Debt: | ||||||
Interest rate (as a percent) | 4.13% | |||||
Outstanding balance | $ 9,310,022 | 9,425,085 | ||||
Home2 Suites (the "Lubbock Home2 Property") | Mortgage Debt | ||||||
Outstanding Debt: | ||||||
Interest rate (as a percent) | 4.69% | |||||
Outstanding balance | $ 7,459,647 | 7,573,597 | ||||
Fairfield Inn & Suites (the "Lubbock Home2 Property") | Mortgage Debt | ||||||
Outstanding Debt: | ||||||
Interest rate (as a percent) | 4.93% | |||||
Outstanding balance | $ 9,049,012 | 9,125,908 | ||||
Homewood Suites (the "Southaven Property") | Mortgage Debt | ||||||
Outstanding Debt: | ||||||
Interest rate (as a percent) | 3.70% | |||||
Outstanding balance | $ 13,176,677 | 13,343,841 | ||||
Courtyard by Marriott (the "Aurora Property") | LIBOR | ||||||
Outstanding Debt: | ||||||
Basis spread (as a percent) | 6% | |||||
Reference rate threshold (as a percent) | 1% | |||||
Courtyard by Marriott (the "Aurora Property") | Mortgage Debt | ||||||
Outstanding Debt: | ||||||
Interest rate (as a percent) | 7.12% | |||||
Outstanding balance | $ 15,000,000 | 15,000,000 | ||||
Holiday Inn (the "EI Paso Property") | ||||||
Outstanding Debt: | ||||||
Outstanding balance | $ 7,900,000 | |||||
Holiday Inn (the "EI Paso Property") | Mortgage Debt | ||||||
Outstanding Debt: | ||||||
Interest rate (as a percent) | 5% | |||||
Outstanding balance | $ 7,900,000 | 7,900,000 | ||||
Hilton Garden Inn (the "Houston Property") | ||||||
Outstanding Debt: | ||||||
Interest-only period | 24 months | |||||
Hilton Garden Inn (the "Houston Property") | Mortgage Debt | ||||||
Outstanding Debt: | ||||||
Interest rate (as a percent) | 3.85% | |||||
Outstanding balance | $ 13,947,218 | 13,947,218 | ||||
Sheraton Hotel (the "Northbrook Property") | LIBOR | ||||||
Outstanding Debt: | ||||||
Basis spread (as a percent) | 6.25% | |||||
Reference rate threshold (as a percent) | 0.75% | |||||
Sheraton Hotel (the "Northbrook Property") | Mortgage Debt | ||||||
Outstanding Debt: | ||||||
Interest rate (as a percent) | 7.06% | |||||
Outstanding balance | $ 3,700,000 | $ 3,700,000 | ||||
Hampton Inn and Suites, Fargo Medical Center (the "Fargo Property") | Mortgage Debt | ||||||
Outstanding Debt: | ||||||
Interest rate (as a percent) | 4% | |||||
Outstanding balance | $ 7,362,481 | |||||
Courtyard El Paso Airport, (the "El Paso Airport Property") | ||||||
Outstanding Debt: | ||||||
Interest-only period | 18 months | |||||
Courtyard El Paso Airport, (the "El Paso Airport Property") | Mortgage Debt | ||||||
Outstanding Debt: | ||||||
Interest rate (as a percent) | 6.01% | |||||
Outstanding balance | $ 9,990,000 | |||||
Fairfield Inn & Suites (the "Lakewood Property") | ||||||
Outstanding Debt: | ||||||
Outstanding balance | $ 13,000,000 | |||||
Fairfield Inn & Suites (the "Lakewood Property") | Mortgage Debt | ||||||
Outstanding Debt: | ||||||
Interest rate (as a percent) | 7% | |||||
Outstanding balance | $ 13,009,914 |
DEBT - Future Minimum Payments
DEBT - Future Minimum Payments (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2022 | Dec. 31, 2021 | |
Future minimum payments | ||
2022 | $ 820,510 | |
2023 | 22,726,642 | |
2024 | 43,467,556 | |
2025 | 22,137,806 | |
2026 | 20,237,332 | |
Thereafter | 24,216,261 | |
Total | 133,606,107 | |
Premium on assumed debt, net | 656,894 | |
Deferred financing costs, net | (2,288,682) | |
Debt, net | 131,974,319 | $ 103,126,884 |
Other disclosures | ||
Gross carrying value | 133,606,107 | |
Courtyard El Paso Airport, (the "El Paso Airport Property") | ||
Future minimum payments | ||
2023 | $ 7,900,000 | |
Other disclosures | ||
Debt Instrument, Interest-Only Period | 18 months | |
Fairfield Inn & Suites (the "Lakewood Property") | ||
Future minimum payments | ||
2023 | $ 13,000,000 | |
Total | 13,000,000 | |
Other disclosures | ||
Gross carrying value | 13,000,000 | |
Holiday Inn (the "EI Paso Property") | ||
Future minimum payments | ||
Total | 7,900,000 | |
Other disclosures | ||
Gross carrying value | $ 7,900,000 |
FAIR VALUE OF FINANCIAL INSTR_2
FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($) | Jun. 30, 2022 | Dec. 31, 2021 |
Fair value of financial instruments | ||
Gross carrying value | $ 133,606,107 | |
Mortgage Debt | ||
Fair value of financial instruments | ||
Fair value | 131,600,000 | $ 103,700,000 |
Gross carrying value | $ 133,606,107 | $ 103,933,260 |
INCOME TAXES - Narrative (Detai
INCOME TAXES - Narrative (Details) - USD ($) | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Income Taxes | |||
Income taxes paid | $ 26,000,000 | $ 0 | |
Uncertain tax positions | 0 | $ 0 | |
Net deferred tax assets | 2,887,183 | 2,464,768 | |
Federal | |||
Income Taxes | |||
NOL carryforwards | 5,100,000 | 4,200,000 | |
State | |||
Income Taxes | |||
NOL carryforwards | $ 684,785 | $ 588,661 |
RELATED PARTY TRANSACTIONS - Na
RELATED PARTY TRANSACTIONS - Narratives (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||||||
Jun. 30, 2022 USD ($) shares | Mar. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Sep. 30, 2021 USD ($) | Jun. 30, 2021 USD ($) shares | Mar. 31, 2021 USD ($) | Jun. 30, 2022 USD ($) $ / room $ / property shares | Jun. 30, 2021 USD ($) shares | Dec. 31, 2021 USD ($) | Feb. 10, 2020 USD ($) | |
Related Party Transactions | ||||||||||
Distributions Paid | $ 1,203,791 | $ 933,464 | $ 1,340,091 | $ 1,114,951 | $ 251,625 | $ 246,084 | $ 2,137,255 | $ 497,709 | $ 2,952,751 | |
Accrued guarantee fees | 787,036 | 787,036 | ||||||||
Reimbursements payable | $ 3,782,289 | 2,580,326 | $ 3,782,289 | 2,580,326 | ||||||
Advisor And Affiliates | ||||||||||
Related Party Transactions | ||||||||||
Guarantee fees (as a percent) | 1% | 1% | ||||||||
Reimbursements payable | $ 2,974,514 | 2,035,708 | $ 2,974,514 | 2,035,708 | ||||||
NHS | ||||||||||
Related Party Transactions | ||||||||||
Renewal term of advisory agreement | 5 years | |||||||||
Monthly base management fee (as a percent) | 4% | |||||||||
Accounting fee per room | $ / room | 14 | |||||||||
Administrative fee (as a percent) | 0.60% | |||||||||
Flat fee per property | $ / property | 5,000 | |||||||||
Corey Maple | ||||||||||
Related Party Transactions | ||||||||||
Accrued guarantee fees | 78,315 | 159,414 | $ 78,315 | 159,414 | ||||||
Norman Leslie | ||||||||||
Related Party Transactions | ||||||||||
Accrued guarantee fees | 78,315 | $ 159,414 | 78,315 | 159,414 | ||||||
Home2 Suites (the "Prattville Property") | Corey Maple | ||||||||||
Related Party Transactions | ||||||||||
Loan amount | 9,600,000 | 9,600,000 | ||||||||
Hampton Inn & Suites(the "Pineville Property") | ||||||||||
Related Party Transactions | ||||||||||
Loan amount | 9,300,000 | $ 9,300,000 | ||||||||
Hilton Garden Inn (the "Houston Property") | Corey Maple | ||||||||||
Related Party Transactions | ||||||||||
Related party loan guarantee percentage | 50 | |||||||||
Loan amount | 13,900,000 | $ 13,900,000 | ||||||||
Homewood Suites, Southhaven, Mississippi | Corey Maple | ||||||||||
Related Party Transactions | ||||||||||
Loan amount | 13,500,000 | 13,500,000 | ||||||||
Homewood Suites, Fargo, North Dakota | Corey Maple | ||||||||||
Related Party Transactions | ||||||||||
Loan amount | 7,400,000 | 7,400,000 | ||||||||
Revolving line of credit | ||||||||||
Related Party Transactions | ||||||||||
Revolving line of credit | $ 5,000,000 | $ 5,000,000 | $ 5,000,000 | |||||||
Revolving line of credit | Corey Maple | ||||||||||
Related Party Transactions | ||||||||||
Partnership units held as collateral | shares | 100,000 | 100,000 | ||||||||
Advisory Agreement | Legendary Capital REIT III, LLC | ||||||||||
Related Party Transactions | ||||||||||
Term of advisory agreement | 10 years | |||||||||
Acquisition fee (as a percent) | 1.40% | |||||||||
Financing fee (as a percent) | 1.40% | |||||||||
Asset management fee (as a percent) | 0.75% | |||||||||
Refinancing fee (as a percent) | 0.75% | |||||||||
Real estate commissions, maximum (as a percent) | 5% | |||||||||
Annual guarantee fee (as a percent) | 1% | |||||||||
Annual subordinated performance fee (as a percent) | 20% | |||||||||
Cumulative return (as a percent) | 6% | |||||||||
Distributions (as a percent) | 5% | |||||||||
Distributions as a percent of the limited partners' capital contributions in event of liquidation, termination, merger or other cessation (as a percent) | 5% | |||||||||
Distributions as a percent of net proceeds from sale of properties in event of liquidation, termination, merger or other cessation (as a percent) | 20% | |||||||||
Reimbursement after termination of the Offering (as a percent) | 15% | |||||||||
Distributions payable | $ 81,949 | $ 73,252 | $ 160,180 | 144,763 | ||||||
Advisory Agreement | Legendary Capital REIT III, LLC | Maximum | ||||||||||
Related Party Transactions | ||||||||||
Disposal fee (as a percent) | 4% | |||||||||
Real estate commissions (as a percent) | 3% | |||||||||
Advisory Agreement | Legendary Capital REIT III, LLC | Minimum | ||||||||||
Related Party Transactions | ||||||||||
Disposal fee (as a percent) | 0% | |||||||||
Advisory Agreement | Legendary Capital REIT III, LLC | Advisor And Affiliates | ||||||||||
Related Party Transactions | ||||||||||
Distributions payable | $ 325,109 | $ 296,164 | ||||||||
Advisory Agreement | Legendary Capital REIT III, LLC | Corey Maple | ||||||||||
Related Party Transactions | ||||||||||
Distributions Paid | $ 20,061 | $ 19,788 | ||||||||
Number of shares held by shareholders | shares | 57,319 | 57,319 | 57,319 | 57,319 | ||||||
Advisory Agreement | Legendary Capital REIT III, LLC | Norman Leslie | ||||||||||
Related Party Transactions | ||||||||||
Distributions Paid | $ 20,061 | $ 19,788 | ||||||||
Number of shares held by shareholders | shares | 57,319 | 57,319 | 57,319 | 57,319 |
RELATED PARTY TRANSACTIONS - Le
RELATED PARTY TRANSACTIONS - Legendary Capital (Details) - Advisor And Affiliates - USD ($) | 6 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Related Party Transactions | ||
Fees incurred | $ 2,454,699 | $ 1,480,770 |
Reimbursements incurred | 3,110,364 | 2,058,221 |
Acquisition Fees | ||
Related Party Transactions | ||
Fees incurred | 681,317 | 474,740 |
Financing Fees | ||
Related Party Transactions | ||
Fees incurred | 916,346 | 474,740 |
Asset Management Fees | ||
Related Party Transactions | ||
Fees incurred | 857,036 | 531,290 |
Offering Costs | ||
Related Party Transactions | ||
Reimbursements incurred | 1,239,977 | 592,522 |
General and Administrative | ||
Related Party Transactions | ||
Reimbursements incurred | 1,689,242 | 1,304,469 |
Sales and Marketing | ||
Related Party Transactions | ||
Reimbursements incurred | 149,905 | 90,904 |
Acquisition Costs | ||
Related Party Transactions | ||
Reimbursements incurred | $ 31,240 | $ 70,326 |
RELATED PARTY TRANSACTIONS - NH
RELATED PARTY TRANSACTIONS - NHS (Details) - NHS - USD ($) | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Dec. 31, 2021 | |
Related Party Transactions | |||
Fees incurred | $ 637,370 | $ 392,604 | |
Fees payable | 129,309 | $ 88,594 | |
Reimbursements incurred | 494,959 | 205,648 | |
Reimbursements payable | 109,733 | 119,638 | |
Management Fees. | |||
Related Party Transactions | |||
Fees incurred | 478,234 | 287,179 | |
Fees payable | 97,992 | 66,407 | |
Administrative Fees | |||
Related Party Transactions | |||
Fees incurred | 74,850 | 60,506 | |
Fees payable | 16,155 | 9,461 | |
Accounting Fees | |||
Related Party Transactions | |||
Fees incurred | 84,286 | $ 44,919 | |
Fees payable | $ 15,162 | $ 12,726 |
RELATED PARTY TRANSACTIONS - On
RELATED PARTY TRANSACTIONS - One Rep Construction, LLC (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2022 | Dec. 31, 2021 | |
Related Party Transactions | ||
Reimbursements payable | $ 3,782,289 | $ 2,580,326 |
One Rep Construction, LLC | ||
Related Party Transactions | ||
Construction management fee (as a percent) | 6% | |
Reimbursements payable | $ 34,540 | 8,138 |
One Rep Construction, LLC | Construction Management fees | ||
Related Party Transactions | ||
Fees payable | $ 66,642 | $ 61,739 |
Corey Maple | One Rep Construction, LLC | ||
Related Party Transactions | ||
Ownership interest by related party (as a percent) | 33.33% | |
Norman Leslie | One Rep Construction, LLC | ||
Related Party Transactions | ||
Ownership interest by related party (as a percent) | 33.33% | |
David Ekman | One Rep Construction, LLC | ||
Related Party Transactions | ||
Ownership interest by related party (as a percent) | 33.33% |
RELATED PARTY TRANSACTIONS - A-
RELATED PARTY TRANSACTIONS - A-1 Bonds (Details) - Legendary A-1 Bonds, LLC - USD ($) $ in Millions | Jun. 30, 2022 | Feb. 08, 2022 | Jan. 18, 2022 |
Courtyard El Paso Airport, (the "El Paso Airport Property") | |||
Related Party Transactions | |||
Loan amount | $ 10 | ||
Fairfield Inn & Suites (the "Lakewood Property") | |||
Related Party Transactions | |||
Loan amount | $ 13.1 | ||
Interest rate (as a percent) | 7% | ||
Hampton Inn and Suites, Fargo Medical Center (the "Fargo Property") | |||
Related Party Transactions | |||
Loan amount | $ 7.2 |
FRANCHISE AGREEMENTS - (Details
FRANCHISE AGREEMENTS - (Details) | 6 Months Ended |
Jun. 30, 2022 USD ($) | |
Maximum | |
Franchise Agreements | |
Initial term of franchise agreement | 18 years |
Royalty fee (as a percent) | 6% |
Program fee (as a percent) | 4% |
Initial franchise fee | $ 175,000 |
Minimum | |
Franchise Agreements | |
Initial term of franchise agreement | 10 years |
Royalty fee (as a percent) | 5% |
Program fee (as a percent) | 3% |
Initial franchise fee | $ 50,000 |
STOCKHOLDERS' EQUITY - Common S
STOCKHOLDERS' EQUITY - Common Stock (Details) | 6 Months Ended | ||||||
Jun. 30, 2022 Vote $ / shares shares | Jun. 01, 2022 $ / shares | Dec. 31, 2021 USD ($) $ / shares shares | Jun. 30, 2021 $ / shares | Mar. 31, 2021 $ / shares | Apr. 29, 2020 USD ($) $ / shares shares | Jun. 01, 2018 USD ($) $ / shares | |
Stockholders' Equity | |||||||
Common stock, shares authorized | shares | 900,000,000 | 900,000,000 | |||||
Preferred stock, shares authorized | shares | 100,000,000 | 100,000,000 | |||||
Common stock voting rights | Vote | 1 | ||||||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | |||||
Common stock, offering price | $ 10 | $ 10 | $ 10 | ||||
Percentage of current share net asset value | 95% | ||||||
Private offering | Interval Common Stock | |||||||
Stockholders' Equity | |||||||
Common stock, par value (in dollars per share) | $ 0.01 | ||||||
Common stock, offering price | $ 10 | ||||||
Maximum offering | $ | $ 30,000,000 | ||||||
Number of shares of common stock designated as non-voting shares of Interval Common Stock | shares | 7,000,000 | ||||||
Private offering | Common Stock | |||||||
Stockholders' Equity | |||||||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | |||||
Common stock, offering price | $ 10 | ||||||
Maximum offering | $ | $ 150,000,000 | $ 100,000,000 |
STOCKHOLDERS' EQUITY - Distribu
STOCKHOLDERS' EQUITY - Distributions (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | 18 Months Ended | |||||||
Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Dec. 31, 2021 | Jun. 30, 2022 | |
STOCKHOLDERS' EQUITY | |||||||||||
Distributions Declared | $ 1,540,200 | $ 1,556,308 | $ 1,527,992 | $ 1,500,023 | $ 1,465,038 | $ 1,430,216 | $ 3,096,508 | $ 5,923,269 | |||
Distribution Declared Per Share | $ 0.175 | $ 0.175 | $ 0.175 | $ 0.175 | $ 0.175 | $ 0.175 | $ 0.350 | $ 0.700 | |||
Distributions paid in cash | $ 1,203,791 | $ 933,464 | $ 1,340,091 | $ 1,114,951 | $ 251,625 | $ 246,084 | $ 2,137,255 | $ 497,709 | $ 2,952,751 | ||
Dividend paid under Dividend Reinvestment Plan | 526,159 | 567,240 | 551,391 | 1,223,741 | 1,107,080 | 1,081,828 | 1,093,399 | 3,964,040 | |||
Aggregate distributions | 1,729,950 | 1,500,704 | 1,891,482 | 2,338,692 | 1,358,705 | 1,327,912 | 3,230,654 | 6,916,791 | |||
Net Cash Flows Provided By (Used In) Operations | $ 20,841 | $ (3,293,181) | $ (732,378) | $ 122,840 | $ 853,375 | $ (1,292,235) | $ (3,272,340) | $ (438,860) | $ (1,048,398) | ||
Common stock dividends per share declared on daily rate basis | $ 0.00191781 | ||||||||||
Share price (in dollars per share) | $ 10 | $ 10 | $ 10 | $ 10 | $ 10 | $ 10 | $ 10 | ||||
Percentage of distribution in cash | 60% | 30% | 100% | ||||||||
Percentage of distribution in shares of common stock issued through DRIP | 40% | 70% |
STOCKHOLDERS' EQUITY - Share Re
STOCKHOLDERS' EQUITY - Share Repurchase Program (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2021 | Jun. 30, 2022 | Dec. 31, 2021 | |
Stockholders' Equity | |||||
Number of shares repurchased | 121,921 | 88,088 | |||
Stock repurchased, original investment | $ 1,219,207 | $ 880,883 | |||
Value of stock repurchased | $ 575,879 | $ 638,174 | $ 400,291 | 1,214,053 | $ 856,605 |
Share redemption proceeds, not yet paid, included in other liabilities | 575,879 | 575,879 | |||
Share repurchase plan, amount available for eligible repurchases | 1,856,279 | 1,856,279 | |||
Other Liabilities. | |||||
Stockholders' Equity | |||||
Accrued Share Repurchases | $ 575,879 | $ 575,879 |
STOCKHOLDERS' EQUITY - Interval
STOCKHOLDERS' EQUITY - Interval Common Stock (Details) - $ / shares | 6 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Mar. 31, 2021 | |
Stockholders' Equity | |||
Common stock, offering price | $ 10 | $ 10 | $ 10 |
Repurchase Plan | |||
Stockholders' Equity | |||
Minimum period of time holders of Interval Common Stock shares must be required to have held the Interval Common Stock shares to participate in the Repurchase Plan | 1 year | ||
Limit of repurchases of Interval Common Shares after Repurchase Reserve has been exhausted, percentage per calendar quarter | 1.25% | ||
Limit of repurchases of Interval Common Shares after Repurchase Reserve has been exhausted, percentage per calendar year of the Interval Shares Value | 5% | ||
Repurchase Reserve expressed as a percentage of the aggregate gross proceeds from the Company's private offering of Interval Shares | 20% | ||
Notice period | 10 days | ||
Repurchase Plan | Last day of same calendar quarter preceding year | |||
Stockholders' Equity | |||
Percentage of Aggregate Value of Interval Shares to be repurchased, threshold | 5% | ||
Repurchase Plan | Last day of preceding calendar quarter | |||
Stockholders' Equity | |||
Percentage of Aggregate Value of Interval Shares to be repurchased, threshold | 5% | ||
Interval Common Stock | |||
Stockholders' Equity | |||
Dividend rate (as a percent) | 86% | ||
Share price, dividend reinvestment plan (in dollars per share) | 9.50 | ||
Private offering | Interval Common Stock | |||
Stockholders' Equity | |||
Maximum number of shares authorized per the offering | 3,000,000 | ||
Maximum number of shares authorized per the offering at the sole direction of the Board of Directors | 6,000,000 | ||
Common stock, offering price | $ 10 |
STOCKHOLDERS' EQUITY - Noncontr
STOCKHOLDERS' EQUITY - Noncontrolling Interests (Details) - USD ($) | 6 Months Ended | |||
Jun. 30, 2022 | Jun. 15, 2022 | Dec. 31, 2021 | Jun. 15, 2020 | |
Series GO LP Units | ||||
Stockholders' Equity | ||||
Non-voting partnership units, holding period required before distributions will be paid | 18 months | |||
Specified percentage of original GP unit capital contributions | 70% | |||
Participating amount, any period after December 31, 2020 | $ 1 | |||
Participating amount, any period after December 31, 2021 | 2 | |||
Participating amount, any period after December 31, 2022 | $ 3 | |||
Value of outstanding units | $ 17,161,824 | $ 12,498,527 | ||
Series B LP Units | ||||
Stockholders' Equity | ||||
Value of outstanding units | $ (2,055,453) | (1,563,489) | ||
Distributions (as a percent) | 5% | |||
Cumulative return (as a percent) | 6% | |||
Percentage of original contributions (as percent) | 5% | |||
Series T LP Units. | ||||
Stockholders' Equity | ||||
Time period after issuance, for the conversion of Series T LP Units in to Common LP Units | 36 months | |||
Value of outstanding units | $ 31,661,048 | 21,931,757 | ||
Common LP Units | ||||
Stockholders' Equity | ||||
Value of outstanding units | $ 5,327,084 | $ 1,437,082 | ||
Operating Partnership | Series B LP Units | ||||
Stockholders' Equity | ||||
Number of issued partnership units | 1,000 | |||
Operating Partnership | Common LP Units | ||||
Stockholders' Equity | ||||
Number of issued partnership units | 612,100 | |||
Private offering | Series GO LP Units | ||||
Stockholders' Equity | ||||
Maximum offering | $ 20,000,000 | $ 20,000,000 | ||
Maximum offering per the sole discretion of the General Partner | $ 30,000,000 | $ 30,000,000 | ||
Cumulative number of units issued since inception of the Offering | 3,125,041 | |||
Cumulative gross proceeds from issuance of units since inception of the Offering | $ 21,500,000 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) | 6 Months Ended | 12 Months Ended | ||||
May 09, 2022 USD ($) room | Mar. 21, 2022 USD ($) room | Feb. 01, 2022 USD ($) room | Nov. 30, 2019 USD ($) property | Jun. 30, 2022 USD ($) room | Dec. 31, 2021 room | |
COMMITMENTS AND CONTINGENCIES | ||||||
Number of guest rooms | room | 322 | 658 | ||||
Legal matter | $ 0 | |||||
Pennsylvania Purchase Agreement | Pennsylvania Hotel Properties | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||
Escrow Deposit | $ 1,500,000 | |||||
Number of real estate properties to be acquired | property | 3 | |||||
Contractual consideration | $ 46,900,000 | |||||
Manhattan FP Contribution Agreement | Four Points by Sheraton Manhattan hotel in Manhattan, Kansas (the "Manhattan FP Hotel Property") | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||
Number of guest rooms | 197 | |||||
Escrow Deposit | $ 50,000 | |||||
Property under contract, aggregate consideration to be transferred | $ 8,400,000 | |||||
Lawrence DT Contribution Agreement | DoubleTree Hotel Lawrence hotel in Lawrence, Kansas (the "Lawrence DT Hotel Property") | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||
Number of guest rooms | room | 192 | |||||
Escrow Deposit | $ 50,000 | |||||
Property under contract, aggregate consideration to be transferred | $ 13,100,000 | |||||
RI Contribution Agreement | Residence Inn by Marriott Fort Collins, (the "RI Hotel Property") | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||
Number of guest rooms | room | 113 | |||||
Escrow Deposit | $ 100,000 | |||||
Property under contract, aggregate consideration to be transferred | $ 17,700,000 | |||||
CY Contribution Agreement | Courtyard by Marriott Fort Collins (the "CY Hotel Property") | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||
Number of guest rooms | room | 112 | |||||
Escrow Deposit | $ 100,000 | |||||
Property under contract, aggregate consideration to be transferred | $ 15,000,000 | |||||
Charlotte HGI Contribution Agreement | Hilton Garden Charlotte North (the "Charlotte HGI Hotel Property") | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||
Number of guest rooms | room | 112 | |||||
Escrow Deposit | $ 100,000 | |||||
Property under contract, aggregate consideration to be transferred | $ 15,000,000 | |||||
Pineville HGI Contribution Agreement | Hilton Garden, Pineville (the "Pineville HGI Hotel Property") | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||
Number of guest rooms | room | 113 | |||||
Escrow Deposit | $ 100,000 | |||||
Property under contract, aggregate consideration to be transferred | $ 10,700,000 |
SUBSEQUENT EVENTS - (Details)
SUBSEQUENT EVENTS - (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended | 18 Months Ended | |||||||||||||
Aug. 10, 2022 USD ($) shares | Aug. 05, 2022 USD ($) room | Aug. 03, 2022 USD ($) room $ / room | Aug. 02, 2022 USD ($) $ / shares | Jul. 21, 2022 USD ($) shares | Jul. 07, 2022 USD ($) $ / shares | Jun. 30, 2022 USD ($) $ / shares | Mar. 31, 2022 USD ($) | Jun. 30, 2021 USD ($) $ / shares | Mar. 31, 2021 USD ($) $ / shares | Jun. 30, 2022 USD ($) room $ / shares shares | Dec. 31, 2021 USD ($) room shares | Jun. 30, 2022 USD ($) $ / shares | Aug. 11, 2022 USD ($) shares | Jun. 15, 2022 | May 05, 2022 | Feb. 10, 2020 USD ($) | |
Subsequent Events | |||||||||||||||||
Cash distributions declared | $ 1,828,057 | $ 1,655,091 | $ 1,465,038 | $ 1,430,216 | |||||||||||||
Common stock dividends per share declared on daily rate basis | $ / shares | $ 0.00191781 | ||||||||||||||||
Share price (in dollars per share) | $ / shares | $ 10 | $ 10 | $ 10 | $ 10 | $ 10 | ||||||||||||
Aggregate consideration | $ 45,360,000 | $ 65,220,000 | |||||||||||||||
Number of guest rooms | room | 322 | 658 | |||||||||||||||
Number of shares repurchased | shares | 121,921 | 88,088 | |||||||||||||||
Residence Inn by Marriott Fort Collins, (the "RI Hotel Property") | Mortgage Debt | Tranche 1 | |||||||||||||||||
Subsequent Events | |||||||||||||||||
Loan amount | $ 10,298,535 | ||||||||||||||||
Residence Inn by Marriott Fort Collins, (the "RI Hotel Property") | Mortgage Debt | Tranche 2 | |||||||||||||||||
Subsequent Events | |||||||||||||||||
Loan amount | 700,000 | ||||||||||||||||
Residence Inn by Marriott Fort Collins, (the "RI Hotel Property") | Mortgage Debt | Tranche 3 | |||||||||||||||||
Subsequent Events | |||||||||||||||||
Loan amount | $ 501,465 | ||||||||||||||||
NHS Management Agreement | |||||||||||||||||
Subsequent Events | |||||||||||||||||
Successive renewal term | 1 year | ||||||||||||||||
Revolving line of credit | |||||||||||||||||
Subsequent Events | |||||||||||||||||
Interest rate (as a percent) | 5.25% | 5.25% | 5.25% | 5.25% | 4.50% | ||||||||||||
Revolving line of credit | $ 5,000,000 | $ 5,000,000 | $ 5,000,000 | $ 5,000,000 | |||||||||||||
Outstanding amount | $ 0 | $ 0 | $ 0 | ||||||||||||||
Revolving line of credit | Mortgage Debt | |||||||||||||||||
Subsequent Events | |||||||||||||||||
Interest rate (as a percent) | 5.25% | 5.25% | 5.25% | ||||||||||||||
Subsequent Event | |||||||||||||||||
Subsequent Events | |||||||||||||||||
Cash distributions declared | $ 401,125 | $ 358,880 | |||||||||||||||
DRIP distributions declared | $ 136,106 | $ 168,460 | |||||||||||||||
Common stock dividends per share declared on daily rate basis | $ / shares | $ 0.00191781 | $ 0.00191781 | |||||||||||||||
Annual dividend rate (as a percent) | 7% | 7% | |||||||||||||||
Share price (in dollars per share) | $ / shares | $ 10 | $ 10 | |||||||||||||||
Number of shares repurchased | shares | 57,614 | ||||||||||||||||
Payment of redemption proceeds | $ 575,879 | ||||||||||||||||
Subsequent Event | A-1 Line of Credit | |||||||||||||||||
Subsequent Events | |||||||||||||||||
Interest rate (as a percent) | 7% | ||||||||||||||||
Revolving line of credit | $ 5,000,000 | ||||||||||||||||
Outstanding amount | $ 3,300,000 | ||||||||||||||||
Subsequent Event | Residence Inn by Marriott Fort Collins, (the "RI Hotel Property") | Mortgage Debt | |||||||||||||||||
Subsequent Events | |||||||||||||||||
Interest rate (as a percent) | 7% | ||||||||||||||||
Origination fee (as a percent) | 1.75% | ||||||||||||||||
Subsequent Event | Residence Inn by Marriott Fort Collins, (the "RI Hotel Property") | Mortgage Debt | Tranche 1 | |||||||||||||||||
Subsequent Events | |||||||||||||||||
Extension fee (as percent) | 1% | ||||||||||||||||
Exit fee (as a percent) | 1.75% | ||||||||||||||||
Subsequent Event | Fort Collins RI Amended Contribution Agreement | Residence Inn by Marriott Fort Collins, (the "RI Hotel Property") | |||||||||||||||||
Subsequent Events | |||||||||||||||||
Aggregate consideration | $ 17,700,000 | ||||||||||||||||
Asset acquisition, new loan | 11,500,000 | ||||||||||||||||
Cash consideration | $ 596,310.09 | ||||||||||||||||
Number of guest rooms | room | 113 | ||||||||||||||||
Subsequent Event | El Paso HGI Amended Agreements | Hilton Garden Inn, El Paso Property (the "El Paso HGI Property") | |||||||||||||||||
Subsequent Events | |||||||||||||||||
Percentage of value of ownership interest of the prior members | 6% | ||||||||||||||||
Subsequent Event | El Paso HGI Amended Agreements | Hilton Garden Inn, El Paso Property (the "El Paso HGI Property") | HDGH | |||||||||||||||||
Subsequent Events | |||||||||||||||||
Member interest acquired in exchange for capital contributions (as a percent) | 24.90% | ||||||||||||||||
Capital contributions received | $ 3,200,000 | ||||||||||||||||
Percentage of distributions from operations to be received | 100% | ||||||||||||||||
Interest rate of loan, option (as a percent) | 12% | ||||||||||||||||
Subsequent Event | El Paso HGI Amended Agreements | Hilton Garden Inn, El Paso Property (the "El Paso HGI Property") | HDI | |||||||||||||||||
Subsequent Events | |||||||||||||||||
Loan principal amount, counterparty | $ 14,400,000 | ||||||||||||||||
Loan interest rate, counterparty | 4.939% | ||||||||||||||||
Subsequent Event | NHS Management Agreement | Residence Inn by Marriott Fort Collins, (the "RI Hotel Property") | |||||||||||||||||
Subsequent Events | |||||||||||||||||
Successive renewal term | 5 years | ||||||||||||||||
Management fee expressed as a percentage of revenue | 2% | ||||||||||||||||
Management fee, accounting service per room | $ / room | 14 | ||||||||||||||||
Administrative fee expressed as a percentage of revenue | 0.60% | ||||||||||||||||
Subsequent Event | Aimbridge Management Agreement | Hilton Garden Inn, El Paso Property (the "El Paso HGI Property") | |||||||||||||||||
Subsequent Events | |||||||||||||||||
Term of contractual agreement | 5 years | ||||||||||||||||
Management fee expressed as a percentage of revenue | 3% | ||||||||||||||||
Monthly accounting fee per the management agreement | $ 3,000 | ||||||||||||||||
Annual percentage increase in accounting fee | 3% | ||||||||||||||||
Additional monthly accounting fee | $ 3,495 | ||||||||||||||||
Annual percentage increase in additional accounting fee | 3% | ||||||||||||||||
Subsequent Event | Wichita HIEX Contribution Agreement | Holiday Inn Express & Suites (the "Wichita HIEX Hotel Property") | |||||||||||||||||
Subsequent Events | |||||||||||||||||
Number of guest rooms | room | 84 | ||||||||||||||||
Property under contract, aggregate consideration to be transferred | $ 7,400,000 | ||||||||||||||||
Escrow deposit | $ 50,000 | ||||||||||||||||
Subsequent Event | Common LP Units | |||||||||||||||||
Subsequent Events | |||||||||||||||||
Cash distributions declared for Operating Partnership units | $ 35,706 | $ 35,706 | |||||||||||||||
Subsequent Event | Common LP Units | A-1 Line of Credit | |||||||||||||||||
Subsequent Events | |||||||||||||||||
Debt, secured, number of units | shares | 500,000 | ||||||||||||||||
Subsequent Event | Series GO LP Units | |||||||||||||||||
Subsequent Events | |||||||||||||||||
Cash distributions declared for Operating Partnership units | $ 44,624 | $ 34,925 | |||||||||||||||
Subsequent Event | Series T LP Units. | Fort Collins RI Amended Contribution Agreement | Residence Inn by Marriott Fort Collins, (the "RI Hotel Property") | |||||||||||||||||
Subsequent Events | |||||||||||||||||
Amount of units issued as consideration | $ 560,369 | ||||||||||||||||
Subsequent Event | Private offering | Common Stock | |||||||||||||||||
Subsequent Events | |||||||||||||||||
Cumulative number of shares issued since inception of the Offering | shares | 9,561,096 | ||||||||||||||||
Cumulative number of shares issued pursuant to the DRIP | shares | 957,091 | ||||||||||||||||
Cumulative gross proceeds from issuance of stock since inception of the Offering | $ 90,800,000 |