Webinar screen

Exceeding Expectations – Year End Summary

ORIGINALLY BROADCAST ON 12/08/2022
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Q&A from the Webinar:

Q: How exactly are investors paid? How is the initial investment returned?

  • Answer: Investors are paid with monthly distributions and a lump sum payment at the end of 3 years when we sell the hotels.

 

Q: How has inflation affected your business?

  • Answer: Since we already own the properties it doesn’t affect the REIT negatively.

 

Q: Can you invest through a Roth Ira? Or does it need to be traditional?

  • Answer: We only accept Self Directed IRAs.

 

Q: Are you still purchasing properties at attractive discounts?

  • Answer: Yes, we are always looking for attractive properties to purchase and add to the REIT.

 

Q: How has the Fed’s recent interest rate hikes affected your business?

  • Answer: As we acquire more hotels in the near future, we plan to take over the existing loan of the previous franchise owner rather than refinancing at higher interest rates.

 

Q: What is the minimum investment amount. How are returns paid? Quarterly?

  • Answer: The minimum investment amount is $5,000. Distributions are paid out monthly.

 

Q: Can we add money to the investments throughout the year?

  • Answer: Yes, you may reinvest at any time, through the KoreConX platform.

 

Q: What’s your outlook on continued recovery of the industry in 2023?

  • Answer: We are anticipating a annual distribution equal to if not higher than our 2022 annualized distribution of above 12%.

 

Q: Sorry, I missed the beginning…what are the fees? How to start/join?

  • Answer: There are zero fees, you can get started on our website.

 

Q: What else do investors get besides the monthly distribution?

  • Answer: A lump sum payment at the end of a 3-year holding period. This includes your initial investment plus profits from the sale of the hotels.

 

Q: Can we roll over profit?

  • Answer: No, you cannot roll over profit.

 

Q: What is the minimum investment?

  • Answer: The minimum investment amount is $5,000.

 

Q: How much debt does the REIT use to leverage the equity investment?

  • Answer: 60%

 

Q: How is this high interest rate environment affecting you and is the upcoming expected hike going to have a negative impact?

  • Answer: As we acquire more hotels in the near future, we plan to take over the existing loan of the previous franchise owner rather than refinancing at higher interest rates.

 

Q: You require a $5,000 minimum; the offering information states $500 minimum. How can I contact the companies that sell at the $500 minimum?

  • Answer: The minimum investment was raised from $500 to $5,000 on August 1st. I am not aware of any Hospitality REIT’s that offer a $500 minimum.

 

Q: What metrics are used for placing debt on the properties? (i.e. – LTV, DSCR etc)

  • Answer: DSCR and LTV

 

Q: What is the single largest investment you have in the fund?

  • Answer: Our largest individual investor has invested $750,000.

 

Q: What is the ticker symbol for the fund?

  • Answer: There is no ticker since we are a private company. We are not listed on the stock market.

 

Q: Are the hotels having trouble both adding employees and retaining them, like a lot of businesses these days?

  • Answer: No, actually the opposite. We pay above competitors to retain our employees.

 

Q: Will this presentation be accessible once it is complete?

  • Answer: Yes, we will send out an email and post it on the website.

 

Q: What is the minimum/maximum investment amount from self directed Ira?

  • Answer: There are no limits on the maximum investment.

 

Q: As a retiree, can I rollover some funds from my 401K without any taxes at the time of rollover?

  • Answer: You can invest directly through your 401k if it is “Self-Directed”. If not you would have to create a new Self-Directed IRA, rollover funds from your 401k into the new IRA, and then invest with the Self-Directed IRA.

 

Q: How do the returns compare to Publicly traded Hospitality REITs?

  • Answer: Of the 15 or so publicly traded REIT’s I looked at more than half had lost their investors money during 2022. The highest growth that I could find was 7.7%. We are currently at 12.04% for 2022.

 

Q: Can you re-invest your monthly dividend back into the fund every month to keep increasing your monthly dividend?

  • Answer: You can not automatically reinvest your monthly distributions; however; you can add on to your investment as often as you would like until the offering closes in the first quarter of 2023.

 

Q: How exactly are investors paid? How is the initial investment returned?

  • Answer: You will be paid via ACH deposit on the 15th of the month after your initial investment.

 

Q: Do I understand that your group not only owns but manages the properties? You mentioned your background from the industry- what about other members of the management team?

  • Answer: We’re based in Dallas, TX. We have 18 people in the office and the majority have been involved in the hotel industry for their entire career.

 

Q: What is the minimum investment amount?

  • Answer: The minimum investment amount is $5,000.

 

Q: Is the investment doing once or a continuous basis? What is the minimum amount and maximum amount to invest?

  • Answer: Distributions on your investment are paid monthly. Minimum is $5,000 there is no maximum investment.

 

Q: Are there any hotel benefits for investors?

  • Answer: Don’t Answer (Can’t advertise this)

 

Q: Must the IRA stay with its current Holder, or do you have an Equity Trust you work with?

  • Answer: The IRA can stay with the current holder as long as it is Self-Directed and the custodian allows Alternative Investments. Some companies such as Fidelity, TD Ameritrade, and Charles Schwab have additional restrictions when it comes to investing in alternative assets.

 

Q: Any consequences if any if investors decide to take their money at some point?

  • Answer: No, the consequences are loss of future profits. But this investment is an illiquid investment, meaning you can’t just sell you shares and get out of the investment.

 

Q: When do you anticipate shutting the REIT down and distributing capital?

  • Answer: We believe it will be around 2-3 years, then sell the hotels and distribute to investors.

 

Q: How often are the Financial Reports sent out?

  • Answer: Annual audited financials done by Grant Thorton

 

Q: How does depreciation of assets work?

  • Answer: IRS 1099, we depreciate our hotels on a 25-year schedule.

 

Q: What is the expected holding period for investors and how liquid is the fund?

  • Answer: 3 years, it is an illiquid investment; however, you can fill out an early liquidation request in the event of a medical of family emergency and liquidate early at fair market value. This must be approved by our CEO and is on a case by case basis.

 

Q: What hotel brands do you prefer? Why?

  • Answer: Marriott and Hilton. Because of their hotel consistency and brand loyalty programs.

 

Q: If we invest in the REIT and want to add additional money later, what is the minimum we need to invest?

  • Answer: The minimum investment is $5,000 once you are in the REIT you can add as little as 1 share ($10) to your investment until the offering closes in the first quarter of 2023.

 

Q: Are you outsourcing the management or running all hotels yourself?

  • Answer: Phoenix American Hospitality has its own Hotel Management company and we manage all of our own properties.

 

Q: I missed the beginning. Will a replay be sent out that explains this investment from beginning to end?

  • Answer: Yes, the Webinar recording has already been sent to all who registered for the Webinar.

 

Q: Is the fund applicable to non-accredited investors?

  • Answer: Yes, non-accredited investors are welcome to invest. The only stipulation is that non-accredited investors are not able to invest more than 10% of their net worth or annual income (whichever is higher) in an individual transaction.

 

Q: How is the investment returned? How are distributions paid to investors?

  • Answer: Monthly distributions. Capital will be returned once we sell the hotels.

 

Q: What is your optimum length of investment?

  • Answer: We believe the optimum length is 2 years, based on IRR.

 

Q: If we invest, we are committed for one year?

  • Answer: No, you can file for liquidation, but 2-3 years will be the best to see actual returns.

 

Q: How much capital are you looking to raise?

  • Answer: $50 million, we’ve committed $30 million, it will be closed in Q1 of 2023. The next fund will be $75 million.

 

Q: I invested on Nov 30th. I haven’t received approval yet. Does that mean I won’t get the distribution check for Dec 15th?

  • Answer: No, it is based off of the date that you filed your application.

 

Q: What’s the minimum/maximum participation or share cost?

  • Answer: Minimum investment is $5,000 there is no maximum investment.

 

Q: Is there a minimum amount of time your funds would have to stay in the fund?

  • Answer: 2-3 years

 

Q: Do investors receive any K-1’s?

  • Answer: No, this is not an LLC, it is a S-Corp and uses a 1099.

 

Q: Can you confirm the tax reporting? You said on a 1099. Not on a K-1?

  • Answer: 1099 tax form. Your distributions and profits are classified as passive income and subject to income taxes.

 

Q: What is the projected return rate for Jan next year?

  • Answer: Minimum of 10% annualized and up to 11.5%.

 

Q: Is the investment for a particular location or for Global portfolio?

  • Answer: We currently only own hotels in the U.S.

 

Q: If I invest $5,000 now, how much will it be worth in 3 years?

  • Answer: ~$8,000

 

Q: Can I increase my investment soon after my initial investment?

  • Answer: Yes, you many reinvest as many times as you’d like.

 

Q: How long is the approval process?

  • Answer: Usually around 5-7 days, but we normally get large waves of investors at the same time, so it can take longer.

 

Q: How/where do we start?

  • Answer: The investment process begins by going to our website, clicking on Learn More, then Invest Now. The application takes 5-10 minutes.

 

Q: I was sent a link before when you guys had investment started for $500.00 but it was blocked at first, unless I was doing something wrong couldn’t get in.

  • Answer: The minimum investment was increased from $500 to $5,000 on August 1st.

 

 

Q: If I invest through a self directed IRA and if you distribute monthly, will that be a taxable event for me?

  • Answer: It is not taxable until you withdraw your funds.

 

Q: Can we get a copy of the 2021 1099 to see the tax implications?

  • Answer: They are available on the EDGAR website.

 

Q: Will monthly distributions be sent before all capital is raised- before a program is closed out?

  • Answer: They are already being sent out every month.

 

Q: Current performance compared to 2018/2019?

  • Answer: We have seen a 5% growth in revenue compared to 2019.

 

Q: Do I have to transfer my investment out of my IRA? If so, I will be taxed on that money.

  • Answer: No, it is a non-taxable event.

 

Q: Will you be offering these debriefs on a monthly or quarterly basis?

  • Answer: Yes, we have webinars almost every month.

 

Q: Is it correct to say that there will be 2 distributions in Dec? Regular and bonus?

  • Answer: No, just one bonus distribution of 18%.

 

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