Real Assets, Real Dividends, Real Growth – Hotel Tour March 2023

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Q&A from the Webinar:

Q. New investors this month get a bonus dividend, does this exclude existing investors?

A. No, all new and existing investors receive the bonus distribution.

Q.  Are distributions reported on a 1099?

A. Yes, you will receive a 1099-DIV tax form at the end of each year.

Q. Is an increase in ADR primarily based on inflation, demand, or another factor?

A. ADR is based on many factors. Inflation is a factor, but we are also able to charge more per room since our hotels have been newly renovated.

Q. What criteria do you use to select hotels in your REIT?

A. We look for Marriott- and Hilton-brand Business Select hotels that have been profitable in the past. We want hotels that are less than 5 years old and are in areas with large amounts of business travel.

Q. What are the major concerns for the hospitality industry for 2023? Is this a good time to invest in the hospitality industry? What is the organization doing to retain employees?

A. This is the best time to invest in the hospitality market. The market hasn’t fully recovered from COVID so there is a lot of room for future growth. We pay above the current market wages for our employees, we believe that if we can retain our skilled employees with limited turnover it leads to more profitable properties.

Q. After you buy more hotels with the money being raised today – what kind of deals are out there?

A. There are still a lot of attractive deals in the market due to the “Trailing 12” of certain properties not having fully recovered from COVID. This allows us to acquire profitable hotels at lower prices.

Q. What’s the 10 year plan for PAH? This is my first investment and I’d like it to last/grow as I get deeper into retirement. 

A. We will continue to create new hospitality investment offerings for many years to come.

Q. How long have you been in existence? How do we trust this company versus others?

A. We have been in business since 2009. We are in full compliance with the SEC’s rules and regulations and we have an A+ rating with the Better Business Bureau.

Q. We travel frequently and enjoy Marriott Courtyards, but we’ve found that some have staffing problems (especially with their restaurants). How will a lack of staff affect the business?

A. We purchase Business Select hotels, the vast majority of which do not have attached restaurants or bars. We also pay our employees higher than the industry standard, so staffing has not been as much of an issue for us as it may be for other hotel owners.

Q. Where can investors view & follow financial statements and performance?

A. We send out monthly distribution statements to our investors and have quarterly investor webinars that update you on hotel performance.

Q. How are new investors getting the benefits if you bought the assets at COVID prices?

A. New investors will become shareholders in our REIT, which holds the 11 properties purchased at COVID-reduced prices. Your investment portfolio will include the 11 hotels we currently own as well as the 4-5 hotels we plan to purchase in 2023.

Q. When it comes time to sell the assets, how long will it take to liquidate? Are the investments returned after the final asset has been sold? When the number of assets is down to, for example, three, how will that affect monthly distributions?

A. We will put our hotels on the market after 2.5 years, with the expectation that it will take us about 6 months to sell these properties. Once properties are sold, you will be paid on a pro rata basis, meaning that you do not have to wait until the last hotel in the portfolio is sold before you receive your profits from the sale of the real estate. As hotels in the REIT begin to sell, the monthly distribution payments will most likely decrease until all hotels are sold.

Q. If an individual invests X dollars now and gets the bonus, will subsequent investments from the same investor receive bonuses as well? 

A. Yes, any subsequent investments will be entitled to the quarterly bonus distribution payment of the quarter during which the investment was made.