Moody Closes National REITs Merger

By Scott Baltic, Contributing Editor

The merger of Moody National REIT II Inc. with Moody National REIT I Inc. has closed, REIT II announced. The merger of the two hotel REITs had reportedly been approved by more than 96 percent of REIT I’s stockholders.

Both REITs were sponsored by Moody National REIT Sponsor LLC, an affiliate of Moody National Cos., of Houston.

REIT II’s investment portfolio is now worth more than $450 million with select-service hotels under the major brands in major metro markets across the country, though somewhat concentrated in Texas.

“REIT I delivered income for its shareholders, paying an annual distribution of 8 percent for a span lasting approximately 6 years while maintaining the original invested capital and appreciating thereon,” Brett Moody, CEO & chairman of both REITs, said in a prepared statement. “In expanding its portfolio, REIT II will also continue to focus on delivering income along with asset preservation and appreciation.”

The Moody National REITs merger was first announced in September of last year.

The REIT II strategy reportedly focuses on acquisition of “stabilized, income-producing select-service hotel properties with premier brands,” such as Marriott, Hilton and Hyatt.

Combined portfolio

The prior REIT II portfolio comprised only the Residence Inn Austin University in Austin, Texas, and the Marriott SpringHill Suites Seattle Downtown.

The former REIT I portfolio consisted of 12 properties, seven of which are in Texas: Marriott TownePlace Suites Fort Worth Southwest/TCU; Hampton Inn, Austin; Marriott Residence Inn, Grapevine (metro Dallas–Fort Worth); Homewood Suites, The Woodlands (metro Houston); Homewood Suites Austin-South; Hilton Garden Inn Austin Northwest/Arboretum; and Hampton Inn Houston I-10W/Energy Corridor.

The remaining five are the Hampton Inn Great Valley (metro Philadelphia); Embassy Suites Nashville; Hyatt Place, North Charleston, S.C.; Hyatt Place, Germantown, Tenn.; and Marriott Courtyard, Lyndhurst, N.J.

Realigning price expectations

The national hospitality picture is a positive one, with 2017 expected to see the peak of this cycle in terms of new construction, while remaining below the peaks of earlier cycles, according to a Marcus & Millichap report.

The report nonetheless predicts that both hotel investors and sellers will realign their price expectations in view of a large number of new properties coming online this year (totaling about 140,000 rooms, or a 1.9 percent increase nationwide).