Q&A from the Webinar:
Q: Do we discuss P&L for each property?
- Yes, there is a formal review by our Investment Committee.
Q: Should your success continue through the fall and winter? Why?
- Yes, rather than operating hotels in ‘seasonal demand’ markets, we’ve placed ourselves in areas of year-round demand generation. And, keep in mind we acquired these hotels at an attractive, COVID price.
- People are continuing to travel despite economic uncertainty and raising gas prices.
Q: Is your success due to the type of hotels you buy? Their location? Internal management? What is the formula and is it sustainable?
- Combination of all—
- Select Service is more profitable. Less labor/ F&B (Vs Resort / Full-Service)
- Select Service Hotels rebound from down markets faster than motels or resorts. Too, we target hotels that may be improved using our management experience.
- Our Management Strategy (Revenue/Expenses)
- Location Markets with multiple demand generators:
- Business and Leisure
- For example, our Marriot Residence Inn in Cape Canaveral, FL has consistent occupancy for the next several years from NASA, SpaceX, Virgin Galactic, etc. with the over 40 rocket launches planned between now and April 2023. We are also right next to the port where Carnival Cruise, Norwegian Cruise, Royal Caribbean etc launch from bringing in consistent amount of leisure travelers.
- Select Service is more profitable. Less labor/ F&B (Vs Resort / Full-Service)
Q: Are there areas of the country you would not buy a PBS Hotel? Why?
- (CA – Legal/Tax Matters)
- Areas that higher than market labor costs.
Q: What we invest we get monthly dividend. Not equity in asset?
- You do get equity. The REIT is the equity partners.
Q: So for example, if you sell a property would we just get our dividend or also on the sale gain?
- Both, Return of your capital and profit at disposition & regular monthly dividends/distribution.
Q: What on average is CPOR?
- Cost per occupied room. Depends on product, but generally it is $51.49.
Q: Can this investment be from a Roth-IRA?
- Yes, you may use self-directed Roth-IRA, meaning that you are the custodian of your own IRA. Or you use one of the many custodial relationships we have.
Q: When will the fund be redeemed?
- The hold period on this offering is three years, perhaps two if the recovery pace continues.
Q: Would you receive a K1 or 1099?
- You would receive a 1099 tax form at the end of the year.
Q: How safe is this investment?
- It is secured by the real estate and the preferred investment structure. And it is a two-pronged investment that is not tied to stock market volatility. The 1st prong is monthly distributions that are paid based on the revenue the hotels in the portfolio generate. The 2nd prong is the sale of the real asset in three years. A conservative estimate of for total ROI is 20% per year averaged over three years.
Q: Has the change in interest rate affect your expected ROI?
- For our more recent acquisitions we have been able to take over the existing load of the property rather than refinancing at the higher interest rates. We plan to do this for all future acquisition to the portfolio.
Q: Since you own and operate these properties, what is your management fee and does that decrease from the monthly distributions?
- We take a smaller than industry standard management fee of 1%. Fortunately, this 1% is calculated AFTER monthly distributions have been paid out to our investors. It will not affect your distributions whatsoever.
