Moody National REIT II Lowers NAV Per Share and Dealer Manager Fees
The board of Moody National REIT II Inc., a publicly registered non-traded real estate investment trust, has approved an estimated net asset value per share of the company’s common stock as of December 31, 2017.
The board of Moody National REIT II Inc., a publicly registered non-traded real estate investment trust, has approved a $23.19 estimated net asset value per share of the company’s common stock as of December 31, 2017. The company also reduced the upfront dealer manager fees paid to the advisor with respect to the sale of Class A shares.
Class A, Class D, Class I and Class T shares will now be priced at $23.19 each with a new distribution rate of 7.56 percent. As previously reported by The DI Wire, Moody National Advisor II LLC, the REIT’s advisor, currently funds all selling commissions, dealer manager fees, and stockholder servicing fees.
Company shares had a previous net asset value of $25.04 per share as of December 31, 2016 and a 7.0 percent distribution rate.
In a letter to shareholders, the company explained that the NAV per share decrease was the result of two factors: one-time costs and expenses stemming from the recent merger with affiliated real estate investment trust Moody National REIT I, and franchisor-required property improvement programs at a number of properties owned by the company.
Moody National REIT II completed its merger with Moody National REIT I in September 2017 resulting in a combined portfolio of $489.7 million in assets, including 14 select service hotels under the Marriott, Hilton, and Hyatt brands and three notes receivable with a combined principal of $22.5 million.
The company also noted that the franchisor-required renovations resulted in short-term room displacements which impacted property revenues, and thus, affected the valuation of the properties. The company believes that the improvements, which will continue in 2018, will increase property values in the long-run.
In related Moody National REIT II news, the company amended its dealer manager agreement to reduce the fees paid to its advisor from 3.0 percent to 2.5 percent for the sale of Class A shares. The other terms of the agreement remain unchanged.
The REIT’s advisor performed the NAV valuation in accordance with Investment Program Association guidelines and engaged CBRE Inc. Valuation & Advisory Services and Kendall Realty Consulting Group LLC to provide property appraisals.
Moody National REIT II has raised more than $220 million in investor equity since breaking escrow in July 2015. The REIT is sponsored by Moody National REIT Sponsor, an affiliate of the Moody National Companies, a full-service commercial real estate company that includes mortgage, development, management, realty, title and insurance divisions. Founded in 1996, Moody National Companies has managed more than $2 billion in commercial real estate.
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