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Moody National REITs II and Moody National REIT I Enter into Stockholder Servicing Coordination Agreement

February 7, 2017

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Moody National REITs II and Moody National REIT I Enter into Stockholder Servicing Coordination Agreement

February 7, 2017 | by James Sprow | Blue Vault

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In connection with the merger of Moody National REITs I and II, the surviving Company has entered into a Stockholder Servicing Coordination Agreement, dated as of February 2, 2017, with Moody Securities, LLC which also serves as the dealer manager for the Company’s ongoing initial public offering. Pursuant to the Agreement, the Company will pay to Moody Securities stockholder servicing fees of up to $2.125 per share of the Company’s common stock issued as consideration in the REIT Merger. All Stockholder Servicing Fees paid to Moody Securities will be re-allowed to broker dealers that provide ongoing financial advisory services to Moody I stockholders, and that enter into participating broker dealer agreements with Moody Securities. The aggregate amount of Stockholder Servicing Fees will depend on the number of shares of the Company’s common stock issued as consideration in the REIT Merger, and could range from approximately $5,797,034 to $11,594,068, assuming that the maximum Stockholder Servicing Fee of $2.125 per share is paid. No Stockholder Servicing Fees will be paid with respect to any cash paid by the Company as consideration in the Mergers.

As previously disclosed, on November 16, 2016, Moody National REIT II, Inc. and Moody National REIT I, Inc. entered into an agreement and plan of merger. Subject to the terms and conditions of the Merger Agreement, (i) REIT I will merge with and into Merger Sub, with Merger Sub surviving the REIT Merger and continuing as a wholly owned subsidiary of the REIT II, and (ii) REIT II Operating Partnership will merge with and into REIT I Operating Partnership, with REIT I Operating Partnership being the surviving partnership. Under the terms of the merger, Moody National REIT II will pay gross consideration of $11.00 per share of REIT I’s common stock, provided that in no event will the net merger consideration payable to holders of REIT I common stock be less than $10.25 per share.  Moody National REIT I shares were originally offered at $10.00 per share in its IPO in 2009. As of February 6, 2017, REIT I owned 12 hotels with 1,595 rooms and REIT II owned two hotels with 346 rooms.

Moody National REIT II reported sales of $66.4 million in its offering of common stock during 2016 according to Blue Vault’s monthly REIT sales reports. It commenced its initial public offering of up to $1,100,000,000 in shares of common stock on January 20, 2015. As of January 4, 2017, it had received and accepted investors’ subscriptions for and issued 3,216,189 shares of common stock in the IPO, including 35,065 shares issued pursuant to the distribution reinvestment plan, resulting in gross offering proceeds of approximately $79,528,086.

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Gregory De Jong, CFP, Co-Founder of Paragon Advisors, LLC.
July 7, 2015

Blue Vault is just what advisors need to size up the different offerings in the nontraded REIT market. Just as importantly, it’s what the industry needs to encourage best practices among REITs.