10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)

☒          ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2023

OR

☐          TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition period from                to               

Commission file number: 000-56082

LODGING FUND REIT III, INC.

(Exact Name of Registrant as Specified in Its Charter)

Maryland	83-0556111
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
1635 43rd Street South, Suite 205 Fargo, North Dakota	58103
(Address of Principal Executive Offices)	(Zip Code)

(701) 630-6500

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:  None

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	N/A	N/A

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.01 par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☐ No ☒

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☐ No ☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.   ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.  ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The aggregate market value of the common stock held by non-affiliates of the registrant: No established market exists for the registrant’s shares of common stock. On June 1, 2018 the registrant launched its ongoing private offering of its shares of common stock, which shares are being offered at $10.00 per share, with discounts available for certain categories of purchasers. There were 9,787,922 shares of common stock held by non-affiliates as of June 30, 2023.

As of December 17, 2024, there were 10,009,663 outstanding shares of common stock of the registrant.

DOCUMENTS INCORPORATED BY REFERENCE

None.

Table of Contents

Part I
Item 1.	Business	3
Item 1A.	Risk Factors	10
Item 1B.	Unresolved Staff Comments	37
Item 1C.	Cybersecurity	37
Item 2.	Properties	38
Item 3.	Legal Proceedings	41
Item 4.	Mine Safety Disclosures	41
Part II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	41
Item 6.	[Reserved]	48
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	48
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	68
Item 8.	Financial Statements and Supplementary Data	69
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	69
Item 9A.	Controls and Procedures	69
Item 9B.	Other Information	70
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspection	71
Part III
Item 10.	Directors, Executive Officers and Corporate Governance	72
Item 11.	Executive Compensation	77
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	78
Item 13.	Certain Relationships and Related Transactions, and Director Independence	79
Item 14.	Principal Accountant Fees and Services	83
Part IV
Item 15.	Exhibits and Financial Statement Schedules	85
Item 16.	Form 10-K Summary	111
Signatures
Index to Consolidated Financial Statements		F-1
Report of Independent Registered Public Accounting Firm		F-2

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FORWARD-LOOKING STATEMENTS

Certain statements included in this Annual Report on Form 10-K are forward-looking statements. Those statements include statements regarding the intent, belief or current expectations of the Company and members of our management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as “may,” “will,” “should,” “expect,” “could,” “intend,” “anticipate,” “plan,” “estimate,” “believe,” “potential,” “continue,” “seek” or similar expressions. These statements include our plans and objectives for future operations, including plans and objectives relating to future growth and availability of funds, and are based on current expectations that involve numerous risks and uncertainties. Assumptions relating to these statements involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to accurately predict and many of which are beyond our control. Actual results may differ materially from those contemplated by such forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law.

For a discussion of some of the risks and uncertainties, although not all risks and uncertainties, that could cause actual results to differ materially from those presented in our forward-looking statements, see the risks identified in “Summary Risk Factors” below and under the section entitled “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K. All forward-looking statements should be read in light of the risks identified in “Summary Risk Factors” below and in Part I, Item 1A of this Annual Report on Form 10-K. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results.

SUMMARY RISK FACTORS

Our business faces significant risks and uncertainties. Set forth below is a summary list of the principal risk factors as of the date of the filing of this Annual Report on Form 10-K that could materially and adversely affect our business, financial condition, results of operations and cash flows. This summary highlights certain of the risks that are discussed further in this Annual Report but does not address all of the risks that we face. You should carefully review and consider the full discussion of our risk factors in the section entitled “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K.

Risks Related to Our Business

● Our business strategy depends significantly on achieving revenue and net income growth from anticipated increases in demand for hotel rooms, which will be adversely affected by weak economic conditions, high rates of inflation and travel-related concerns, and risks associated with the COVID-19 pandemic and other possible future pandemics and similar outbreaks. If demand does not increase or if demand weakens, our occupancy or revenues per available room may decline, making it more difficult for us to implement our business strategy and to meet any debt service obligations we have incurred and limiting our ability to pay distributions to our stockholders.

● Our advisor, Legendary Capital REIT III, LLC (the “Advisor”), its executive officers and other key personnel, the employees of Legendary Capital, LLC (the “Sponsor”), an affiliate of the Advisor as well as certain of our officers and directors, whose services are essential to the Company, may be involved in other business ventures, and will face a conflict in allocating their time and other resources between us and the other activities in which they are or may become involved. Failure of the Advisor, its executive officers and key personnel, the employees of the Sponsor, and our officers and directors to devote sufficient time or resources to our operations could result in reduced returns to our stockholders.

● We will pay certain prescribed fees and expenses to the Advisor and its affiliates regardless of the quality of services provided. These fees were not negotiated at arm’s length and therefore may be higher than fees payable to unaffiliated third parties for the same or similar services. Such fees may result in conflicts of interest between the Advisor and our stockholders due to the nature of the incentive fees and management fees.

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● We have paid distributions from proceeds from our ongoing private offering described below (the “Offering”) and, to the extent our board of directors declares future distributions, we may continue to fund distributions with Offering proceeds. We have not established a limit on the amount of proceeds from our Offering that we may use to fund distributions. To the extent we fund distributions from sources other than our cash flow from operations, we will have less funds available for investment and the overall return to our stockholders may be reduced. We may fund distributions from other sources such as borrowings, which may constitute a return of capital.

● If we are unable to raise substantial funds in our securities offerings, we may not be able to acquire a large portfolio of assets, which may cause the value of an investment in us to vary more widely with the performance of certain investments and cause our general and administrative expenses to constitute a greater percentage of our revenue.

● We may be unable to identify properties that meet our investment criteria in a timely manner or on acceptable terms, and may be unable to consummate investment opportunities that we identify, which could result in reduced returns or reduce the amount available for distributions to our stockholders.

● We have acquired, and intend to acquire, only hotel properties. As a result, we will only have limited diversification as to the type of property we own. In the event of an economic recession affecting the economies of the areas in which the properties are located or a decline in values in general, our financial performance could be materially and adversely affected, which may limit our ability to pay distributions to our stockholders.

● Although our board of directors has authorized management to pursue an exit strategy and position us for a sale or merger as early as 2025, there is no assurance that this process will result in the approval or completion of any specific transaction or outcome. Any potential transaction would be dependent on a number of factors that may be beyond our control, including, among other things, market conditions, industry trends, the interest of third parties in a potential transaction with us and the availability of financing to potential buyers on favorable terms. There can be no assurance that we will successfully implement our strategy, or that any potential transaction or other strategic alternative will result in stockholder liquidity or provide a return to stockholders that equals or exceeds our estimated value per share.

Risks Related to the Lodging Industry and Real Estate Industry

● We may be unable to dispose of our properties within any given period of time on advantageous terms or at all due to various factors, including weakness in our properties’ markets, unavailability of financing, changes in the financial condition of prospective purchasers or changes in general economic conditions, which could reduce our cash flow and limit our ability to make distributions to our stockholders.

● Adverse economic, business or real estate developments in our markets, as well as low consumer confidence, declines in corporate budgets, high rates of inflation, and decreases in personal discretionary spending levels, may adversely affect our financial performance and the value of our properties and may limited our ability to pay distributions to our stockholders.

● Competition for guests, including with other hotels, resorts and vacation rental marketplaces, may reduce our hotels’ revenues and profitability.

● The hospitality industry is seasonal in nature. In addition, the hospitality industry is cyclical and demand generally follows the general economy on a lagged basis. The seasonality and cyclicality of our industry may contribute to fluctuations in our results of operations and financial condition.

● We rely on management companies to operate our hotel properties, giving us less control than if we were managing the hotels ourselves. Further, NHS, LLC dba National Hospitality Services (“NHS”), the management company currently directly or indirectly managing nine of our existing hotel properties on a day-to-day basis, is an affiliate of Norman H. Leslie, a director and officer of the Company and a principal of the Advisor. This relationship may cause conflicts of interest between the Advisor and our stockholders.

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● Our success depends in part upon our management companies’ ability to attract, motivate and retain a sufficient number of qualified employees. Qualified individuals needed to fill these positions are in increasingly short supply in some areas. The inability to recruit and retain these individuals may adversely impact hotel operations and guest satisfaction, which could harm our business.

Risks Related to Debt Financing

● We have incurred significant debt in connection with our property acquisitions. Our use of leverage increases the risk of an investment in us. Our mortgage loans are collateralized by our hotel properties, which will put those investments at risk of forfeiture if we are unable to repay such debts. Principal and interest payments on these loans reduce the amount of money that would otherwise be available for distribution to our stockholders.

● Our ability to acquire, rehabilitate, renovate and manage our properties may be limited if we cannot obtain satisfactory financing, refinance or extend existing financing, which will depend on debt and capital markets conditions. In addition, we have loans with variable interest rates, and may incur additional variable rate debt in the future. Volatility in these markets could negatively impact such loans. Interest rates have increased and may continue to rise, though the timing and amount of any such future interest rate increases are uncertain. There can be no assurance that we will be able to obtain financing or refinance or extend existing financing on favorable terms, or at all.

Federal Income Tax Risks

● Failure to qualify as a REIT would reduce our net earnings available for investment or distribution to our stockholders.

PART I

Item 1. Business.

Overview

Lodging Fund REIT III, Inc. was formed on April 9, 2018, as a Maryland corporation for the primary purpose of acquiring a diversified portfolio of limited-service, select-service, full-service and extended-stay hotel properties (the “Projects”) located primarily in “America’s Heartland,” which we define as the geographic area from North Dakota to Texas and the Appalachian Mountains to the Rocky Mountains. We have elected to be taxed as a real estate investment trust, or REIT, beginning with the taxable year ended December 31, 2018, and we intend to continue to operate in such a manner. Where applicable in this Form 10-K, “we,” “our,” “us,” and “the Company” refers to Lodging Fund REIT III, Inc., Lodging Fund REIT III OP, LP, a Delaware limited partnership and our operating partnership (the “Operating Partnership”), and its subsidiaries except where the context otherwise requires.

We conduct substantially all our business and own substantially all real estate investments through the Operating Partnership. We are the sole general partner (the “General Partner”) of the Operating Partnership. We and the Operating Partnership are advised by Legendary Capital REIT III, LLC, a Delaware limited liability company (the “Advisor”) pursuant to an advisory agreement, as amended, under which the Advisor performs advisory services regarding acquisition, financing and disposition of the Projects and origination of any loans, and is responsible for managing, operating and maintaining the Projects and day-to-day management of the Company. The Advisor may, in its sole discretion, perform these duties through one or more affiliates. The Operating Partnership has issued 1,000 Series B Limited Partnership Units (“Series B LP Units”) to the Advisor as part of its compensation. See Part II Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Overview” for further details of the compensation to the Advisor.

Our Advisor is wholly-owned by Corey Maple, a director of the Company, and Norman Leslie, an officer and director of the Company. To facilitate our REIT structure, the Operating Partnership formed Lodging Fund REIT III TRS, Inc., a Delaware corporation (“Master TRS”), to act as the “master” taxable REIT subsidiary (“TRS”) entity. When we acquire a Project, the Master TRS forms a separate wholly-owned TRS to act as lessee of the Project (a “TRS Lessee”). That TRS Lessee will enter into a lease agreement with a wholly-owned subsidiary of the Operating Partnership to operate the

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Project. We have engaged National Hospitality Services (“NHS”) to manage eleven of the Projects acquired to date; however, we can engage and have engaged third party property management companies. NHS is wholly-owned by Norman Leslie, a director and executive officer of the Company and a principal of the Advisor. The Advisor has no direct employees. The employees of Legendary Capital, LLC (the “Sponsor”), an affiliate of the Advisor, provide services to the Company related to the negotiations of property acquisitions and financing, asset management, accounting, legal, investor relations, and all other administrative services.

Initial Offering

We are currently conducting an offering (the “Offering”) in shares of our common stock under a private placement to qualified purchasers who meet the definition of “accredited investors,” as provided in Regulation D of the Securities Act of 1933, as amended (the “Securities Act”). The Offering commenced on June 1, 2018 in an amount of up to $100,000,000 in shares of our common stock, which amount was increased to $150,000,000 in shares of our common stock in December 2021. The Offering will continue until the earlier of (i) the date when the maximum offering amount is sold, (ii) May 31, 2025, which may be extended by our board of directors in its sole discretion, or (iii) a decision by the Company to terminate the Offering. In addition to sales of common stock for cash, the Company has adopted a dividend reinvestment plan (“DRIP”), which permits stockholders to reinvest their distributions back into the Company. Except as otherwise provided in the offering memorandum, we are currently offering the shares in the private offering at an offering price of $10.57 per share, with shares purchased in our dividend reinvestment plan at an offering price of $10.04 per share. As of December 31, 2023, the Company had issued and sold 10,243,193 shares of common stock, including 1,167,594 shares attributable to our DRIP, and received aggregate proceeds of $100.2 million. After deductions for payments of selling commissions, marketing and diligence allowances, other wholesale selling costs and expenses, we received net offering proceeds of approximately $85.9 million. The net offering proceeds have been used principally to fund property acquisitions and pay distributions and debt service obligations. No public market exists for the shares of our common stock and none is expected to develop.

We have adopted a share repurchase plan that may enable our stockholders to have their shares repurchased in limited circumstances. In its sole discretion, the board of directors could choose to terminate or suspend the plan or to amend its provisions without stockholder approval. The repurchase plan may be reviewed and modified by the board of directors as it deems necessary in its sole discretion. As of December 31, 2023, we have repurchased 287,525 shares, which represents an original investment of $2,858,355 for $2,794,469. See Part II Item 5 “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities – Share Repurchase Plan”.

Interval Share Offering

On April 29, 2020, we classified and designated 7,000,000 shares of authorized but unissued common stock, $0.01 par value per share, as shares of “Interval Common Stock,” to be part of the Offering. The offering of the Interval Common Stock was a maximum offering of $30,000,000, which could be increased to $60,000,000 in the sole discretion of our board of directors, (the “Interval Share Offering”) to accredited investors only, pursuant to a confidential private placement memorandum exempt from registration under the Securities Act of 1933, as amended. Our board of directors allowed the Interval Share Offering to expire on March 31, 2022. We did not issue or sell any shares of Interval Common Stock in the Offering.

GO Unit Offering

On June 15, 2020, the Operating Partnership commenced a private offering of limited partnership units in the Operating Partnership, designated as Series Growth & Opportunity Limited Partner Units (“Series GO LP Units”), with a maximum offering of $20,000,000, which could be increased to $30,000,000 in our sole discretion as the General Partner of the Operating Partnership (the “GO Unit Offering”) to accredited investors only, pursuant to a confidential private placement memorandum exempt from registration under the Securities Act of 1933, as amended. The Series GO LP Units were being offered until the earlier of (i) the sale of $20,000,000 in Series GO LP Units (which could be increased to $30,000,000 in the Company’s sole discretion), (ii) June 14, 2022 or (iii) the Operating Partnership terminates the GO Unit Offering at an earlier date in its sole discretion. Our board of directors terminated the GO Unit Offering as of February 14, 2022. Our board of directors approved and ratified additional sales after February 14, 2022 in the GO Unit Offering for sales which

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were pending as of that date. As of December 31, 2023, the Operating Partnership had issued and sold 3,124,503 Series GO LP Units and received aggregate proceeds of $21.5 million. After deductions for payments of selling commissions, marketing and diligence allowances, other wholesale selling costs and expenses, and other offering expenses, we received net offering proceeds of approximately $19.4 million.

GO II Unit Offering

On April 7, 2023, the Operating Partnership commenced a private offering of limited partnership units in the OP, designated as Series Growth & Opportunity II Limited Partner Units (“Series GO II LP Units”), with a maximum offering of $30,000,000, which could be increased to $60,000,000 in the sole discretion of the Company as the General Partner of the Operating Partnership, (the “GO II Unit Offering”) to accredited investors only, pursuant to a confidential private placement memorandum exempt from registration under the Securities Act of 1933, as amended. The Series GO II LP Units are being offered until the earlier of (i) the sale of $30,000,000 in Series GO II LP Units (which could be increased to $60,000,000 in the Company’s sole discretion), (ii) March 31, 2024, which date may be extended for two 1-year extensions until March 31, 2026 in the sole discretion of the Operating Partnership or (iii) the Operating Partnership terminates the GO II Unit Offering at an earlier date in its sole discretion. On April 17, 2024, our board of directors extended the term of the GO II Unit Offering to March 31, 2025. As of December 31, 2023, the Operating Partnership had issued and sold 129,787 Series GO II LP Units and received gross aggregate proceeds of $1.0 million. After deductions for payments of selling commissions, marketing and diligence allowances, other wholesale selling costs and expenses, and other offering expenses, we received net offering proceeds of approximately $0.9 million.

Series T LP Units

The Operating Partnership may issue Series T LP Units from time to time to persons who contribute direct or indirect interests in real estate to the Operating Partnership. The Series T LP Units will have allocations and distributions that are dictated by the Partnership Agreement of the Operating Partnership and the applicable contribution agreement for the real estate. Certain Series T LP Units may have different allocations and distributions than other Series T LP Units. The amount of the allocations and distributions will be determined by the General Partner in its sole discretion at the time of issuance of the Series T LP Units and any future distributions are dependent on the financial performance of the contributed real estate based on a mathematical formula. The Series T LP Units are eligible for conversion into Common LP Units beginning 24 or 36 months, or longer in some instances, after their issuance and will automatically convert into Common LP Units upon other events as described in the Partnership Agreement of the Operating Partnership. The conversion of Series T LP Units into Common LP Units may vary with each issuance and is generally based on a formula that applies an applicable capitalization rate to the then-current trailing twelve months net operating income of the hotel property less the loan balance outstanding as of the contribution date as assumed by the Operating Partnership, and less other amounts incurred by the Operating Partnership including but not limited to certain closing costs, loan assumption fees and defeasance costs, property improvement plan (“PIP”) and capital expenditures, operating cash infused by the Operating Partnership, and any shortfall of certain minimum cumulative investment yield. There is no guarantee that the future financial performance of the contributed hotel property will be sufficient to result in the issuance of Common LP Units resulting from the application of the conversion formula applicable to the issuance of Series T LP Units at the time of conversion. As of December 31, 2023, the Company had recorded an aggregate value of $45.7 million to the Series T LP Units in connection with such property contributions. During the year ended December 31, 2023, the Company declared distributions of $0.2 million.

Common LP Units

On December 3, 2021, the Operating Partnership commenced a private placement offering of its Common LP Units. As of December 31, 2023, the Operating Partnership had issued and sold 612,100 Common LP Units, with a value of $10.00 per unit at the time of issuance, in connection with two property contributions.

Exit Strategy

On May 7, 2024, our board of directors authorized management to pursue an exit strategy and position the Company for a sale or merger of the Company in 2025, provided that the economic environment is conducive to such a transaction, and

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to prepare the Company’s portfolio of hotel properties for a transaction through strategic acquisitions and dispositions with the objective of maximizing profitability at the hotel property level.  There can be no assurances that we will achieve an exit strategy within the time period and in the manner anticipated. The process of exploring strategic alternatives and marketing our assets could be time consuming and disruptive to our business operations and could divert management’s attention from our business, and we could incur substantial expenses associated with identifying and evaluating potential transactions. Further, any potential transaction would be dependent on a number of factors that may be beyond our control, including, among other things, market conditions, industry trends, the interest of third parties in a potential transaction with us and the availability of financing to potential buyers on favorable terms. There can be no assurance that we will successfully implement our strategy, or that any potential transaction or other strategic alternative will result in stockholder liquidity or provide a return to stockholders that equals or exceeds our estimated value per share.

Independent Director Compensation

During 2022, we began compensating our independent directors with stock-based compensation as approved by and administered under the supervision of our Board of Directors. The awards are fully vested at issuance and we recognize stock-based compensation expense based on the award’s fair value at the grant date. On March 31, 2022, June 30, 2022, September 30, 2022 and December 31, 2022, we issued 500 shares of our common stock to each of our three independent directors and on March 31, 2023, June 30, 2023, September 30, 2023 and December 31, 2023, we issued 400 shares of our common stock to each of our two independent directors. For the years ended December 31, 2022 and 2023, we recognized stock-based compensation expense of $60,000 and $42,280. These grants were made in reliance upon an exemption from the registration requirements provided by Section 4(a)(2) of the Securities Act as the grants did not involve any public offering.

SEC Settlement

As previously disclosed, the Advisor and Corey R. Maple received a “Wells notice” from the SEC stating that the SEC staff had made a preliminary determination to recommend to the SEC that it bring an enforcement action against the Advisor and Mr. Maple alleging violations of securities laws in connection with the SEC’s investigation of the Company’s reimbursement of and financial accounting for certain expenses incurred by the Advisor as well as the adequacy of its disclosures related to those policies and practices. The Wells notice was neither a formal charge of wrongdoing nor a final determination that the Advisor or Mr. Maple has violated any law.

On August 28, 2023, the Advisor and Mr. Maple, without admitting or denying the findings, agreed to an administrative cease-and-desist order relating to Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933, as amended. A copy of the order can be found on the SEC’s website at https://www.sec.gov/files/litigation/admin/2023/33-11227.pdf. As part of the settlement, the Advisor agreed to pay disgorgement of $463,900, prejudgment interest of $85,432 and a civil monetary penalty of $225,000 and Mr. Maple agreed to pay a civil monetary penalty of $100,000. Additionally, the Advisor has undertaken to (a) retain a qualified independent consultant acceptable to the SEC, at the Advisor’s expense, within 60 days of the date of entry of the order to review the Advisor’s policies, procedures and controls regarding the proper allocation of expenses between the Advisor and the Company as provided in the order, (b) require the consultant to submit a report to the Advisor and the SEC staff within 120 days of the entry of the order with its findings and any recommendations for changes or improvements, and (c) adopt, implement and maintain all policies, procedures and practices recommended by

the consultant’s report within 120 days of receiving the report from the consultant. As of the date of this filing, each of these actions has been taken by the Advisor and Mr. Maple, as applicable, in accordance with the terms of the SEC order.

Our Investment Objectives and Operations

We have invested and intend to continue to invest primarily in 80 to 200 room limited-service, select-service, full-service and extended-stay hotel properties with strong mid-market brands in America’s Heartland. Our overall strategy is to purchase a diverse portfolio of hotels that presents a strong opportunity for both cash flow generation and capital appreciation. We will attempt to diversify our investment portfolio by geography, brand and asset opportunity type. Our target markets are metropolitan statistical areas in America’s Heartland with populations exceeding 250,000 that exhibit well-diversified business and leisure demand generators. We intend to focus mainly on well-known and established hotel brands, such as Marriott Hotels^®, Hilton^®, IHG and Hyatt^® and their affiliated “flags”, however, we may acquire lesser-

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known hotel brands where strategically appropriate. We will attempt to further diversify our investments based on three asset opportunity classes: “Stabilized” opportunities (steady historical performers), “Refresh” opportunities (needing capital expenditure or management upgrades) and “Value” opportunities (requiring significant upgrades and stabilization). We do not intend to add Value opportunities unless circumstances arise that would make it advantageous.

Our investment objectives are:

● to preserve, protect and return investor capital contributions;

● to pay regular cash distributions; and

● to realize appreciation in the value of our investments upon the ultimate sale of such investments.

There is no assurance that we will attain these objectives or that there will be any return of capital to investors. Investment results may vary substantially over time and from period to period. Our board of directors may, from time to time, change our investment objectives if it determines it is advisable and in the best interest of our stockholders.

Our Investment Strategy

Real Estate Portfolio

We acquired our first real estate property on November 30, 2018. As of December 31, 2023, our real estate portfolio consisted of nineteen Projects located in the following cities: Cedar Rapids, Iowa; Pineville, North Carolina; Eagan, Minnesota; Prattville, Alabama; Lubbock, Texas; Southaven, Mississippi; Aurora, Colorado; El Paso, Texas; Houston, Texas; Northbrook, Illinois; Fargo, North Dakota; Lakewood, Colorado; Fort Collins, Colorado; Charlotte, North Carolina; and Wichita, Kansas, referred to in this Form 10-K as the “Cedar Rapids Property,” the “Pineville Property,” the “Eagan Property,” the “Prattville Property,” the “Lubbock Home2 Property,” the “Lubbock Fairfield Property,” the “Southaven Property,” the “Aurora Property,” the “El Paso HI Property,” the “Houston Property,” the “Northbrook Property”; the “Fargo Property”; the “El Paso Airport Property”; the “Lakewood Property”; the “Fort Collins Property”; the “El Paso University Property”; the “Charlotte Property”; the “Pineville HGI Property”; and the “Wichita Property” respectively. We own an equity and profits interest in the parent of the entity which holds a leasehold interest in the El Paso University Property. See Part I, Item 2 “Properties” for a more detailed description of our real estate portfolio.

Real Estate Investments

We believe there is a significant inventory of hotel properties in our target markets that are of quality construction, in good locations with well-known brands and historical track records that meet our diversified portfolio parameters. We have targeted and plan to continue to target markets that have been historically strong from a demand and growth perspective. We also plan to focus on hotel properties that we anticipate will require relatively modest necessary capital improvements in the short term. Our intention is to build a diversified portfolio of hotel properties, complete certain property improvements and operate the individual hotel properties with a final goal of selling the entire portfolio in a single transaction.

The majority of our current hotel properties are, and we expect the majority of future hotel properties to be midscale hotels that do not provide full-service facilities to guests including the following types of franchised hotel properties:

● Limited-Service Hotels. Limited-service hotels offer limited facilities and amenities, typically without a full-service restaurant.

● Select-Service Hotels. Select-service hotels offer the fundamentals of limited-service properties together with a selection of services and amenities characteristic of full-service hotels. Generally, the additional amenities are restaurants and banquet facilities but on a less elaborate scale than one would find at full-service hotels.

● Full-Service Hotels. Full-service hotels offer restaurants, lounge facilities and meeting space as well as minimum service levels often including room service.

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● Extended-Stay Hotels. Extended-stay hotels typically focus on attracting guests for extended periods. These properties quote weekly rates and blend transient and long-term bookings.

By concentrating on top-quality institutional franchisors like Marriott Hotels^®, Hilton^®, IHG and Hyatt^® and their affiliated “flags”, we believe we can (i) command a Revenue Per Available Room, or “RevPAR”, premium over sub-market competitive sets, (ii) take advantage of the brands’ strong loyalty programs, (iii) utilize brand channels to deliver guests, (iv) enjoy the benefits of premier system standards, where the brands drive consistent quality, high service standards, innovative design and modern amenities across each respective flag, (v) benefit from effective brand segmentation where, through a wide range of hospitality choices within each brand family, each brand appeals to a broad range of travelers with differing levels of amenities and rates and (vi) utilize the brands’ institutional character to drive faster and stronger resale, financing flexibility and investor confidence. We will attempt to enter into minimum ten-year franchise agreements for each of our franchised hotel properties.

We generally have acquired a fee interest in hotel properties directly through special purpose entities which are generally wholly owned subsidiaries of our Operating Partnership. We may also make investments in certain hotel properties through joint ventures with third-party institutions, developers, operators, investors and other third parties as well as with affiliates of the Advisor. Such joint ventures may be leveraged with debt financing or unleveraged. We believe COVID-19 has created an environment favorable for acquisitions using a mechanism known as an Umbrella Partnership REIT (“UPREIT”), whereby the owner of the hotel property desires to exchange its hotel property for limited partnership interests in the Operating Partnership pursuant to an UPREIT contribution agreement. We have purchased hotel properties, and anticipate that we will purchase additional hotel properties, using the UPREIT model as they generally require less cash investment, while providing tax and other benefits to the property sellers, but we may also enter into purchase and sale agreements with the seller. As of the date of this filing, we acquired ten hotel properties pursuant to an UPREIT contribution agreement and have two properties under contract pursuant to an UPREIT contribution agreement. See Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Subsequent Events”.

We have financed and plan to continue to finance the purchase of hotel properties with proceeds from the Offering and loans obtained from third-party lenders and Legendary A-1 Bonds, LLC, an affiliate of the Advisor. We expect to use moderate leverage to enhance the total cash flow to our stockholders. We anticipate that the aggregate loan-to-value ratio for the Company will be between 35% and 65%. We will target a loan-to-value ratio for the hotel properties of between 35% and 70%, based on the purchase price of the hotel properties; however, we may obtain financing that is less than or higher than such loan-to-value ratio for an individual hotel property at the discretion of our board of directors. As of December 31, 2023, our aggregate loan-to-value ratio, based on the aggregate purchase price of the hotel properties, was approximately 57%. We will seek to obtain financing on the most favorable terms available. Loans are expected to be nonrecourse and will be secured by the applicable hotel property. In some cases, however, we have been, and in the future may be, required to enter into guarantees for the loans for certain non-recourse carve-outs.

We have obtained and may in the future obtain lines of credit or other financings, secured by one or more of the hotel properties, to provide financing for acquisitions, to fund property improvements and other capital expenditures, to make distributions, and for other purposes. In addition, we may borrow as necessary or advisable to ensure that we maintain our qualification as a REIT for federal income tax purposes. As of December 31, 2023, we had a $5.0 million line of credit with Western Bank, a $13.5 million line of credit with Legendary A-1 Bonds, LLC to provide immediate capital to fund acquisitions of the hotel properties and a $0.6 million dollar Line of Credit with NHS. As of December 31, 2022, we had a $5.0 million line of credit with Western Bank and a $10.0 million line of credit with Legendary A-1 Bonds, LLC to provide immediate capital to fund acquisitions of the hotel properties. As of December 31, 2023, we had $18.4 million outstanding on the lines of credit. As of December 31, 2022, we had $12.4 million outstanding on the line of credit.

As of December 31, 2023 and 2022, we had $180.2 million and $180.3 million, respectively, in outstanding mortgage debt secured by nineteen hotel properties, with maturity dates ranging from March 2024 to April 2029 and fixed and variable interest rates ranging from 3.70% to 12.85%. As of December 31, 2023 and 2022, the weighted-average interest rate was 6.24% and 5.74%, respectively. See Part II. Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Debt” for additional details.

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Our Disposition Strategy

Our initial plan was to hold and manage the hotel properties and our other investments for approximately five years following the termination of the Offering, although our board of directors has discretion to extend this holding period indefinitely. Our current intention, however, is to dispose of our entire portfolio as soon as practicable when market conditions are favorable, pursuant to the exit strategy authorized by our board of directors on May 7, 2024. Circumstances may arise, however, that make it more beneficial to sell one or more hotel properties on an individual basis. The Advisor will continually evaluate each hotel property’s performance based on economic and market conditions and our overall objectives to determine an appropriate time to sell the hotel properties in an effort to maximize total returns to our stockholders. The determination of when a particular hotel property should be sold or otherwise disposed of will be made by our board of directors, upon recommendation by our Advisor.

Human Capital

Lodging Fund REIT III, Inc. has no direct employees. The employees of the Sponsor, as an affiliate of the Advisor, perform substantially all of the services related to our asset management, accounting, legal, investor relations, and other administrative activities. The hotel management companies we engage to operate our hotels are responsible for hiring and maintaining the labor force at each of our hotels. Although we do not manage employees at our hotels, we are still subject to the many costs and risks generally associated with the labor at our hotels.

Competition

Our current hotel properties compete with numerous other hotels throughout the United States in addition to alternative lodging. During the COVID-19 pandemic and the recovery period, we believe that the markets in which our hotels are located, the proximity of our hotels to main transportation routes, hotel categories, and brand level enhanced safety protocols will provide a competitive advantage over other hotels.

The hotel business is management and marketing intensive. Our current hotel properties compete with other hotels throughout the United States for high quality management and marketing personnel. We believe that franchisors’ marketing scale and ability to manage group business have improved our hotels’ competitive position. However, there can be no assurance that our hotel properties will be able to continue to attract and retain employees with the requisite managerial and marketing skills.

Additionally, as a REIT, we compete for investment opportunities in the hospitality industry. As we acquire hotel properties to build our portfolio, we are in competition with other potential buyers for the same hotel properties, which may result in an increase in the amount we must pay to acquire a project or may limit the number of projects we are able to acquire. Other potential buyers may include other listed and non-listed REITs or private investors. These potential buyers may have substantially greater financial resources and experience than we do and may be able to accept more risk than we can prudently manage.

At the time we elect to dispose of our Projects, we may be in competition with sellers of similar hotel properties to locate suitable purchasers. This may result in a decrease in the amount we receive on the sale of a Project or may require us to defer the sale and increase our hold period on all or certain Projects.

Economic Dependency

We depend on the Advisor and its affiliates, including the Sponsor, to provide certain services essential to the Company, including asset management services, supervision of the management of the hotel properties, asset acquisition and disposition services, as well as other administrative responsibilities for the Company, including accounting services, legal, investor communications and investor relations. As a result of these relationships, we are dependent upon our Advisor and its affiliates.

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Governmental Regulation

Environmental

As an owner of real estate, we are subject to various environmental laws of federal, state, and local governments. Compliance with existing laws has not had a material adverse effect on our financial condition or results of operations, and management does not believe it will have such an impact in the future. However, we cannot predict the impact of unforeseen environmental contingencies or new or changed laws or regulations on properties we currently own, or on properties that may be acquired in the future.

Americans with Disabilities Act

Our hotel properties are subject to the Americans with Disabilities Act of 1990, as amended, and applicable regulations promulgated thereunder (the “ADA”). Under the ADA, “public accommodations” as defined by the ADA must meet certain federal requirements related to access and use by disabled persons. Although we believe our current hotel properties are in substantial compliance with the ADA, and we intend to acquire hotel properties that are substantially in compliance with the ADA, we may incur additional costs of complying with the ADA at the time of acquisition and from time to time in the future to remain in compliance. Also, non-compliance with the ADA may result in the imposition of fines or an award of damages to private litigants. The obligation to make readily achievable accommodations is an ongoing one, and we will continue to assess our properties and to make alterations as appropriate.

Industry Segments

Our current business consists of acquiring, managing, investing in and disposing of real estate assets. We internally evaluate all of our real estate assets as one industry segment and, accordingly, we do not report segment information.

Seasonality

Depending on a hotel property’s location and market, operations for the hotel may be seasonal in nature. This seasonality can be expected to cause fluctuations in our quarterly operating performance. Based on historic trends, for hotels located in non-resort markets, demand is generally lower in the winter months due to decreased travel and higher in the spring and summer months during the peak travel season. Accordingly, we generally would expect to have lower revenue, operating income and cash flow in the first and fourth quarters and higher revenue, operating income and cash flow in the second and third quarters.

Internet Address

Our website address is http://www.legendarycap.com.

Item 1A. Risk Factors.

In addition to the other information in this Annual Report on Form 10-K, the following risk factors should be considered carefully in evaluating our company and our business.

Risks Related to Owning Shares of Our Common Stock

The offering price for our shares of common stock in the Offering has been determined by us, and we cannot guarantee that it represents an accurate estimation of our enterprise value.

From inception of our Offering through December 31, 2022, the offering price for our shares of common stock in the Offering was $10.00 per share (ignoring purchase price discounts for certain purchasers), which was determined primarily by our board of directors and bore no relationship to any established criteria of value such as book value or earnings per share, or any combination thereof. Further, the price of our shares of common stock was not based on our past earnings, nor does that price necessarily reflect current market value for our assets. Our board of directors approved an estimated net asset value per share (“Share NAV”) of our assets as of December 31, 2022 and based on such Share NAV adjusted

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the offering price for our shares in the Offering to $10.57 per share, effective January 6, 2023.  The Share NAV was determined by our board of directors taking into account appraisals of the Company’s real estate properties and other factors deemed relevant by the board of directors.  The ordinary course of our business does not entail the valuation of businesses or securities, and therefore cannot guarantee that our estimation of the Share NAV will be an accurate estimation of our enterprise value. Further, we have not determined a new Share NAV since December 31, 2022 and, as a result, the current Share NAV and Offering price per share may not reflect an accurate estimation of the Company’s enterprise value.

Our shares of common stock have no public market, no public market is expected to develop, and consequently, it may be difficult for you to sell your shares.

There is no public trading market for our shares of common stock and we do not expect one to develop in the foreseeable future. The absence of a public market for our shares of common stock could impair your ability to sell your shares at a fair price or at all. In addition, the transfer of shares will be subject to additional limitations. Although our board of directors has adopted a share repurchase plan, there is no guarantee that such program will remain in place in its current form, and our board of directors may suspend, modify or terminate the share repurchase plan at any time. Consequently, you may have to hold your shares for an indefinite period of time because it may be difficult for you to sell your shares.

There are restrictions on transferring our shares of common stock, which may make your shares unattractive to prospective purchasers and may prevent you from selling them when you desire.

Transfer of your shares is restricted by applicable federal and state securities laws as well as the charter. The offering of our shares in the Offering has not been registered under federal securities laws or the securities laws of any other state. Each investor who purchases shares must represent that it is acquiring our shares of common stock for investment and not with a view to distribution or resale and that it understands our shares of common stock are not freely transferable. You may not sell, offer for sale, or transfer your shares in the absence of either an effective registration statement under the Securities Act and under applicable state securities laws, or an opinion of counsel satisfactory to our legal counsel that such transaction is exempt from registration under the Securities Act and under applicable state securities laws. These restrictions may make your shares unattractive to prospective purchasers and may reduce the price prospective investors are willing to pay for your shares, even if transfer of these shares is allowed by state and federal securities laws. Consequently, an investment in our shares of common stock should be considered only as a long-term investment for persons of adequate financial means who do not need liquidity.

There is no specified or guaranteed liquidation date for our shares of common stock.

There is no specified or guaranteed liquidity event or liquidation date for our shares of common stock. Accordingly, shares must be considered solely as long-term investments.

The actual value of shares that we repurchase under our share repurchase plan may be substantially less than what we pay.

Under our share repurchase plan, shares currently may be repurchased at varying prices depending on the number of years our shares of common stock have been held and whether the repurchases are sought upon a stockholder’s death. The repurchase price is based on the NAV on the date of repurchase and is not based on the price at which a stockholder initially purchased its shares. Stockholders may receive less than the price that they paid for their shares upon repurchase by us pursuant to the stock repurchase plan. The maximum price that may be paid under our program was $10.00 per share through December 31, 2022 and is currently $10.57 per share, which is the current Offering price of our shares of common stock in the Offering (ignoring purchase price discounts for certain purchasers). This repurchase price is likely to differ from the price at which a stockholder could resell its shares. Thus, when we repurchase shares at $10.57 per share, the actual value of our shares of common stock that we repurchase may be less, and the repurchase will be dilutive to our remaining stockholders. Even at lower repurchase prices, the actual value of our shares of common stock may be substantially less than what we pay and the repurchase may be dilutive to our remaining stockholders.

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Our stockholders have limited redemption rights.

Our share repurchase plan includes numerous restrictions that severely limit our stockholders’ ability to redeem their shares for cash should they require liquidity. See “Part II. Item 5 Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities – Share Repurchase Plan” for more information about the plan.

Our shares of common stock are being offered in reliance upon a private offering exemption under the Securities Act. If we should fail to comply with the requirements of such exemption, our stockholders would have the right to rescind their purchase of shares.

Our shares of common stock are being offered and will be sold to investors in reliance upon a private offering exemption from registration provided in the Securities Act. If we should fail to comply with the requirements of such exemption, our stockholders would have the right to rescind their purchase of their shares if they so desired. It is possible that one or more stockholders seeking rescission would succeed. This might also occur under applicable state securities laws and regulations in states where our shares of common stock will be offered without registration or qualification pursuant to a private offering or other exemption. If a number of stockholders were successful in seeking rescission, we would face severe financial demands that would adversely affect us as a whole and, consequently, the investment in our shares of common stock by the remaining stockholders.

Our board of directors may create additional classes of our securities.

Our board of directors has the authority under the charter to create and issue additional classes of securities and to designate the rights, preferences and privileges thereof, such as the Interval Common Stock. Our board of directors may in the future create one or more additional classes of securities having rights, preferences and privileges that are superior to and dilutive of our shares of common stock, including additional shares of common stock, preferred stock, warrants and options. This could reduce the amount of cash available for distribution from our operations and liquidation to our stockholders and increases the risk that our stockholders will not profit from their acquisition of shares or will lose their investment entirely. Our stockholders do not have any preemptive rights with respect to any equity which the Company may issue in the future. Preferred stock could also have the effect of delaying, deferring or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all of our assets) that might provide a premium price to holders of our shares of common stock.

Risks Related to Our Business

Our business strategy depends significantly on achieving revenue and net income growth from anticipated increases in demand for hotel rooms, which will be adversely affected by weak economic conditions, high rates of inflation and travel-related concerns, and risks associated with the COVID-19 pandemic and other possible future pandemics and similar outbreaks.

Our business strategy depends significantly on achieving revenue and net income growth from anticipated improvement in demand for hotel rooms. We cannot, however, provide any assurances that demand for hotel rooms will increase from current levels, or the time or extent of any demand growth that we do experience. If demand does not increase in the near future, or if demand weakens, our operating results and growth prospects could be adversely affected. The lodging industry has historically been closely linked to the performance of the general economy and thus, is sensitive to business and personal discretionary spending levels. Declines in consumer demand due to adverse general economic conditions can result from various events that are beyond our control, including the COVID-19 pandemic, terrorist attacks, wars, including the current conflict between Russia and Ukraine, travel-related health concerns, travel-related accidents, and unusual weather patterns and natural disasters such as tornados, hurricanes, or earthquakes.

During the years ended December 31, 2022 and 2023, inflation in the United States increased significantly and may to continue at an elevated level in the near-term. Beginning in 2022, in an effort to combat inflation and restore price stability, the Federal Reserve significantly raised its benchmark federal funds rate, which led to increases in interest rates in the credit markets. Though the Federal Reserve lowered the benchmark federal funds rate in September 2024, it may raise the federal funds rate in the future, which would likely lead to higher interest rates in the credit markets and the possibility of

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slowing economic growth and/or a recession. Additionally, U.S. government policies implemented to address inflation, including actions by the Federal Reserve to increase interest rates, could negatively impact consumer spending and adversely impact the broader economy, resulting in job losses for many of our residents.

Rising inflation could also have an adverse impact on our financing costs (either through near-term borrowings on our variable rate debt, including our credit facilities, or refinancing of existing debt at higher interest rates), and general and administrative expenses and property operating expenses, as these costs could increase at a rate higher than our rental and other revenue. To the extent our exposure to increases in interest rates is not eliminated through interest rate caps or other protection agreements, such increases may also result in higher debt service costs, which will adversely affect our cash flows. Historically, during periods of increasing interest rates, real estate valuations have generally decreased due to rising capitalization rates, which tend to move directionally with interest rates. Consequently, prolonged periods of higher interest rates may negatively impact the valuation of our real estate assets. Although the extent of any prolonged periods of higher interest rates remains unknown at this time, negative impacts to our cost of capital may adversely affect our future business plans and growth, at least in the near term.  Increased inflation may also have an adverse effect on our operating expenses, including, but not limited to, labor, supplies, repairs and maintenance, as these costs could increase at a rate higher than our revenues. Inflation could also have an adverse effect on consumer spending, which could impact occupancy levels at our hotel properties and, in turn, our own results of operations.

Also, the market and economic challenges created by the COVID-19 pandemic have adversely affected, and may continue to adversely affect, our returns and profitability and, as a result, our ability to pay distributions to our stockholders or to realize appreciation in the value of our properties. During 2022 and 2023, some of these challenges have improved. However, we cannot predict if and when the demand for our hotel properties will return to pre-outbreak levels of occupancy and pricing.  If the COVID-19 pandemic worsens, or if we experience another pandemic or epidemic in the future, any increases in unemployment, increasing labor costs and shortages, decreased capital spending, declines in consumer confidence, commodity and other price inflation, supply chain disruptions, or economic slowdowns or recessions that may result therefrom may cause sustained negative consumer or business sentiment and reduced demand for travel and lodging, and may cause an increase in renovation, construction and operating costs, and may limit our access to critical operating supplies, all of which would materially and adversely affect our business, financial performance and condition, operating results and cash flows.

Additionally, the management companies that operate our hotel properties may be limited in their ability to properly maintain the properties. Market fluctuations may affect our ability to obtain necessary funds for the operation of our hotels from current lenders or new borrowings. In addition, we may be unable to obtain financing for the acquisition of new hotels on satisfactory terms, or at all. Further, we have entered into agreements with lenders under our mortgage loans to provide for relief from certain obligations under the loan agreements, including deferral of payment obligations and covenant relief. If our financial condition and results of operation continue to be negatively affected beyond the terms of our existing lender accommodations, we may be unable to obtain further extensions of the payment obligations and covenant relief, and may be forced to make additional payments on the loans which could adversely affect our ability to pay distributions to our stockholders. Third-party reports relating to market studies or demographics we obtained prior to the COVID-19 virus outbreak for hotels we acquired or have identified for acquisition may no longer be accurate or complete. The occurrence of any of the foregoing events or any other related matters could materially and adversely affect our business, financial condition, results of operation and the overall value of our properties, and stockholders may lose all or a substantial portion of their investment in us.

We depend on the efforts and expertise of the Advisor and its officers and principals, whose continued service is not guaranteed.

We depend on the efforts and expertise of our officers, the Advisor and its principals to execute our business strategy. The loss of their services, and our inability to find suitable replacements, could have an adverse effect on our business and, in turn, any return to our stockholders.

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Our Advisor, its executive officers and other key personnel, the Sponsor’s employees and certain of our officers and directors will not devote their time and energies exclusively to us.

Our Advisor, its executive officers and other key personnel, the employees of the Sponsor, an affiliate of the Advisor, as well as certain of our officers and directors, whose services are essential to the Company, are, and will continue to be, involved in other business ventures, and will devote only such portion of their time to our affairs as they believe is appropriate to manage our affairs effectively. They will face a conflict in allocating their time and other resources between us and the other activities in which they are or may become involved. Failure of the Advisor, its executive officers and key personnel, the employees of the Sponsor, and our officers and directors to devote sufficient time or resources to our operations could result in reduced returns to our stockholders.

There is no assurance that we will satisfy our business objectives, which could limit our ability to make distributions and decrease the value of your investment.

There is no assurance that we will satisfy our business objectives. No assurance can be given that our stockholders will realize a substantial return, if any, on their purchase or that we will be able to make distributions to our stockholders. We may not be able to achieve our investment objectives, may make unwise decisions or may make decisions that are not in an investor’s best interests because of conflicts of interest. No assurance can be given that the Company will be able to acquire suitable investments or that the Company’s objectives will be achieved.

We own only hotel properties, which will limit the diversification of our investments.

As of December 31, 2023, we owned a portfolio of nineteen hotel properties, including the equity and profits interest in the parent of the entity which holds a leasehold interest in the El Paso University Property. We have no plans to acquire assets other than hotel properties, which limits the diversification of the type of properties we own. If we do not raise substantial funds in our securities offerings, we will be limited in the number and type of investments we and the Operating Partnership may make, which will result in a less diversified portfolio. We may not be able to acquire a large portfolio of assets, which may cause the value of an investment in us to experience more volatility due to the performance of certain investments and cause our general and administrative expenses to constitute a greater percentage of our revenue. In such event, the likelihood of our profitability being affected by the poor performance of any single investment will increase, which may limit our ability to pay distributions to our stockholders. A limited number of hotel properties may place a substantial portion of the funds invested in the same geographical location with the same property-related risks. In that case, the decline in a particular real estate market could substantially and adversely impact us. In the event of an economic recession affecting the economies of the areas in which the hotel properties are located, a decline in real estate values in general or the occurrence of any one of many other adverse circumstances, our financial performance could be materially and adversely affected.

Our investment policies are subject to revision from time to time at our board of directors’ discretion, which could diminish stockholder returns below expectations.

Our investment policies may be amended or revised from time to time at the discretion of our board of directors, without a vote of our stockholders. Such changes could result in investments that may not yield returns consistent with our stockholders’ expectations.

If we are unable to successfully manage our growth, our operating results and financial condition could be adversely affected.

Our ability to grow our business depends upon our agreements with the Operating Partnership and the Advisor, and the business acumen of the individuals managing each of these entities. If these agreements are terminated, we may not be able to hire and train sufficient personnel or develop management, information and operating systems suitable for our expected growth. If we are unable to manage any future growth effectively, our operating results and financial condition could be adversely affected.

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Our future growth and success depends on obtaining financing, and if we cannot secure financing on acceptable terms or at all, our growth may be limited.

The success of our growth strategy depends on access to capital through the use of excess cash flow, borrowings or subsequent issuances of our common stock or other securities. We will require significant capital to acquire, renovate, rehabilitate, operate, and make periodic capital improvements at the hotel properties. We may not be able to fund acquisitions, renovations or capital improvements solely from cash provided from our operating activities. To the extent required funds are not available from operations, we will need to obtain new or additional borrowings on satisfactory terms, which will depend on capital markets conditions. There is no assurance that we will be able to obtain the required financing for our hotel properties on favorable terms, or at all.

We may be unable to raise substantial funds in our securities offerings or to invest the proceeds of our securities offerings in a timely manner or on acceptable terms.

We may be unable to raise substantial funds in our securities offerings, which could limit our ability to acquire a large portfolio of diverse assets. We may be unable to invest the Offering proceeds on acceptable terms, or at all, which could delay stockholders from receiving an appropriate return on their investment and reduce the amount available for distribution to our stockholders. We cannot assure you that we will be able to identify properties that meet our investment criteria, that we will successfully consummate any investment opportunities we identify or that investments we may make will generate income or cash flow. Our failure to find suitable hotel properties to acquire in a timely manner or on acceptable terms could result in returns that are substantially below expectations or result in losses.

We have been delinquent in our SEC reporting obligations for over 12 months, and continue to be delinquent with respect to several Quarterly Reports on Form 10-Q. We cannot provide assurance that our business will not be materially adversely affected by our previous and potential future failures to file required periodic reports on a timely basis.

Despite the filing of this annual report on Form 10-K, we face a continuing risk that the SEC will initiate an administrative proceeding to suspend or revoke the registration of our common stock under the Exchange Act due to our previous failure to timely file our annual reports on Form 10-K and our continuing delinquent quarterly reports on Form 10-Q. There may be continued concern on the part of investors and employees about our financial condition and extended filing delay status, which may result in the loss of business opportunities, limitations on our ability to raise capital, and general reputational harm. Any of the foregoing could materially adversely affect our business, results of operations and financial condition.

We must rely on management companies that are eligible independent contractors to operate the hotel properties in order to qualify as a REIT and, as a result, we have less control than if we were operating the hotel properties directly.

In order for us to qualify as a REIT, management companies that are eligible independent contractors must operate the hotel properties. Each of the hotel properties will be owned by a direct subsidiary of the Operating Partnership, which will lease the hotel properties to the TRS Lessees. The TRS Lessees, in turn, will enter into management agreements with a management company to operate the hotel properties. While we expect to have some input into operating decisions for the hotel properties leased by our TRS Lessees and operated under such management agreements, we have less control than if we were managing the hotels ourselves. Even if we believe that our hotels are not being operated efficiently, we may not be able to require an operator to change the way it operates our hotels. If this is the case, we may decide to terminate the management agreement and potentially incur costs associated with the termination. Additionally, NHS, which manages most of our existing hotel properties, is an affiliate of a principal of the Advisor. As a result, the Advisor may have an incentive to not terminate the management agreement with NHS, even if the Advisor believes other operators may provide superior or more cost-effective services.

Our management agreements could adversely affect the sale or financing of the hotel properties and, as a result, our operating results and ability to make distributions to our stockholders could suffer.

We have entered into, and may continue to enter into, or acquire hotels subject to, management agreements that contain restrictive covenants. For example, the terms of some management agreements may restrict our ability to sell a hotel property unless, among other conditions, the purchaser is not a competitor of the operator and assumes the related management agreement. Also, the provisions of a long-term management agreement encumbering a hotel property may

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reduce the value of such hotel property. If we enter into or acquire hotel properties subject to any such management agreements, we may be precluded from taking actions that would otherwise be in our best interest or could cause us to incur substantial expense, which could adversely affect our operating results and our ability to make distributions to stockholders.

Our franchisors could cause us to expend additional funds on upgraded operating standards, which may reduce cash available for distribution to stockholders.

Our existing hotel properties are, and we expect future hotel properties will be, subject to franchise agreements, and we may become subject to the risks that result from concentrating the hotel properties in one or several hotel franchise brands. Our hotel operators will need to comply with operating standards and terms and conditions imposed by the franchisors of the hotel brands under which the hotel properties will operate. Pursuant to certain franchise agreements, certain upgrades are required every few years, and franchisors may also impose upgraded or new brand standards, which can add substantial expense for the affected hotel properties. The franchisors also may require us to make certain capital improvements to maintain the hotel properties in accordance with system standards, the cost of which can be substantial and may reduce cash available for distribution to our stockholders. Planned capital expenditures and upgrades may cost more and take longer to complete than expected as a result of increasing labor costs and shortages and other price inflation and shortages of materials due to supply chain challenges.

Our franchisors may cancel or fail to renew our existing franchise licenses, which could adversely affect our operating results and our ability to make distributions to stockholders.

Franchisors periodically inspect hotels to confirm adherence to their operating standards. We will rely on our operators to conform to the franchisors’ operating standards. The failure of a hotel property to maintain standards could result in the loss or cancellation of a franchise license. In addition, when the term of a franchise expires, the franchisor has no obligation to issue a new franchise. The loss of a franchise could have a material adverse effect on the operations or the underlying value of the affected hotel property because of the loss of associated name recognition, marketing support and centralized reservation systems provided by the franchisor. The loss of a franchise or adverse developments with respect to a franchise brand under which our hotels operate could also have a material adverse effect on our financial condition, results of operations and cash available for distribution to our stockholders.

Fluctuations in our financial performance, capital expenditure requirements and excess cash flow could adversely affect our ability to make and maintain distributions to our stockholders.

As a REIT, we are required to distribute at least 90% of our REIT taxable income each year to our stockholders (determined before the deduction for dividends paid and excluding any net capital gains). In the event of downturns in our operating results and financial performance or unanticipated capital improvements to the hotel properties (including capital improvements that may be required by franchisors), we may be unable to declare or pay distributions to our stockholders. The timing and amount of distributions are at the sole discretion of our board of directors, which considers, among other factors, our financial performance, debt service obligations, applicable debt covenants (if any), and capital expenditure requirements. Among the factors which could adversely affect our results of operations and distributions to stockholders are reductions in hotel revenues, increases in operating expenses at the hotels leased to our TRS Lessees and capital expenditures at the hotels, including capital expenditures required by the franchisors. We cannot assure you we will generate sufficient cash in order to continue to fund distributions.

We have not paid, and may not in the future pay, distributions solely from our cash flow from operations. To the extent we pay distributions from sources other than our cash flow from operations, the overall return to our stockholders may be reduced and subsequent investors will experience dilution.

We may not be able to pay distributions solely from our cash flow from operations, in which case distributions may be paid in whole or in part from other sources, including debt financing and proceeds from our Offering. There is no limit on the amount of distributions we may fund from sources other than from cash flow from operations. Distributions we paid through December 31, 2022 have been paid from proceeds from our Offering, and we expect that future distributions we may pay will not be made solely from our cash flow from operations. To the extent we fund distributions from sources other than our cash flow from operations, we will have less funds available for investment and the overall return to our stockholders may be reduced and subsequent investors will experience dilution.

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We have made, and may from time to time continue to make, distributions to our stockholders in the form of our common stock, which could result in stockholders incurring tax liability without receiving sufficient cash to pay such tax.

We have distributed, and we may in the future distribute, taxable dividends that are payable in cash or common stock. Taxable stockholders receiving such dividends will be required to include the full amount of the dividend as ordinary income to the extent of our current and accumulated earnings and profits for federal income tax purposes. As a result, stockholders may be required to pay income taxes with respect to such dividends in excess of the cash dividends received. Furthermore, with respect to certain non-U.S. stockholders, we may be required to withhold federal income tax with respect to such dividends, including in respect of all or a portion of such dividend that is payable in common stock.

We may be subject to various conflicts of interest due to the relationships among the Advisor, the Operating Partnership, NHS, One Rep Construction, LLC (“One Rep”), Legendary A-1 Bonds, LLC (“A-1 Bonds”) and their respective affiliates.

We pay certain prescribed fees and expenses to the Advisor and its affiliates regardless of the quality of services provided. These fees were not negotiated at arm’s length and therefore, may be higher than fees payable to unaffiliated third parties. The Advisory Agreement may result in a conflict of interest between the Advisor and our stockholders due to the Advisor’s receipt of certain incentive and management fees related to operating the Company. For example, the Advisor may earn increased management fees if a hotel property is retained, but it may be advantageous for our stockholders for such hotel property to be sold and the proceeds distributed. In addition, certain incentive fees are payable to the Advisor upon the sale or acquisition of a hotel property. This could incentivize the Advisor to acquire or dispose of hotel properties in instances where such acquisitions or dispositions are not in the best interests of our stockholders. Furthermore, NHS, the management company which operates many of our hotel properties and provides certain due diligence services related to property acquisitions, is an affiliate of Norman H. Leslie who is an officer of the Company and the Advisor. In addition, One Rep, the construction management company which provides construction oversight, project management and other related services, is owned by Corey Maple, Norman H. Leslie and David Ekman. In addition, A-1 Bonds a lender under one of our lines of credit and several loans secured by certain of our hotel properties, is an affiliate of Norman H. Leslie and Corey Maple. These relationships may be determined to cause conflicts of interest among the affected parties.

Our current hotel properties include, and our future hotel properties will likely include certain amenities for hotel guests that could increase the potential liabilities at the hotel properties.

Our current hotel properties include, and our future hotel properties will likely include, one or more amenities, such as swimming pools, exercise rooms, laundry facilities, business centers and rentable event rooms. Certain claims could arise in the event that a personal injury, death or injury to property should occur in, on, or around any of these improvements. There can be no assurance that particular risks pertaining to these improvements that are insured will continue to be insurable on an economical basis or that current levels of coverage will continue to be available. If a loss occurs that is partially or completely uninsured, we may lose all or part of our investment in the affected hotel property. We may also be liable for uninsured or underinsured personal injury, death or property damage claims. Liability in such cases may be unlimited but stockholders will not be personally liable.

Although we have authorized management to pursue an exit strategy and position the Company for a sale or merger, we can give no assurances regarding the consummation of any particular transaction or that we will be successful in executing such strategy or in creating additional stockholder value.

Although our board of directors has authorized management to pursue an exit strategy and position us for a sale or merger as early as 2025, there is no assurance that this process will result in the approval or completion of any specific transaction or outcome. Further, although we have begun the process of exploring strategic alternatives and marketing for sale our assets, there is no assurance that we will achieve an exit strategy within the proposed time period or in the manner anticipated. The process of exploring strategic alternatives and marketing our assets could be time-consuming and disruptive to our business operations and could divert management’s attention from our business, and we could incur substantial expenses associated with identifying and evaluating potential transactions. Further, any potential transaction would be dependent on a number of factors that may be beyond our control, including, among other things, market

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conditions, industry trends, the interest of third parties in a potential transaction with us and the availability of financing to potential buyers on favorable terms. Specifically, current general economic conditions, including high interest rates in a high inflation environment, may adversely impact the valuation of our assets and make it more difficult for potential purchasers to obtain acquisition financing on acceptable terms or at all. There can be no assurance that we will successfully implement our strategy, or that any potential transaction or other strategic alternative will result in stockholder liquidity or provide a return to stockholders that equals or exceeds our estimated value per share.

Risks Related to the Lodging Industry

The lodging industry has experienced significant declines and failure of the lodging industry to exhibit improvement may adversely affect our ability to execute our business strategy.

The performance of the lodging industry has historically been closely linked to the performance of the general economy and, specifically, growth in U.S. GDP. It is also sensitive to business and personal discretionary spending levels. Declines in corporate budgets and consumer demand due to adverse general economic conditions, including the effects of COVID-19, risks affecting or reducing travel patterns, lower consumer confidence or adverse political conditions can lower the revenues and profitability of the hotel properties and therefore, the net operating profits of our TRS Lessees. A substantial part of our business strategy is based on the anticipation that the lodging markets will experience improving economic fundamentals in the future. We cannot predict the extent to which the lodging industry will improve. In the event conditions in the industry do not improve, or if they deteriorate, our ability to execute our business strategy would be adversely affected, which could adversely affect our financial condition, results of operations and our ability to make distributions to our stockholders.

Competition for acquisitions may reduce the number of properties we can acquire.

We compete for hotel investment opportunities with competitors that may have a different tolerance for risk or have substantially greater financial resources than are available to us. This competition may generally limit the number of hotel properties that we are able to acquire and may also increase the bargaining power of hotel owners seeking to sell, making it more difficult for us to acquire hotel properties on attractive terms, or at all.

Competition for guests may lower our hotels’ revenues and profitability.

The limited-service, select-service, full-service and extended-stay segments of the hotel business are competitive. Our hotels compete on the basis of location, room rates and quality, service levels, reputation and reservation systems, among many other factors. Many competitors have substantially greater marketing and financial resources than our operators or us. New hotels create new competitors, in some cases without corresponding increases in demand for hotel rooms. The result in some cases may be lower revenue, which would result in lower cash available for distribution to stockholders.

The seasonality of the hotel industry may cause fluctuations in our quarterly revenues which may require us to borrow money to fund distributions to stockholders.

Some hotel properties have business that is seasonal in nature. This seasonality can be expected to cause quarterly fluctuations in revenues. Quarterly earnings may be adversely affected by factors outside our control, including weather conditions and poor economic factors. As a result, we may have to enter into short-term borrowings in order to offset these fluctuations in revenue and to make distributions to our stockholders.

The cyclical nature of the lodging industry may cause the return on our investments to be substantially less than we expect.

The lodging industry is cyclical in nature. Fluctuations in lodging demand and therefore, operating performance, are caused largely by general economic and local market conditions, which subsequently affects levels of business and leisure travel. Any increases in inflation may adversely affect consumer confidence, which could reduce consumer purchasing power and dampen consumer demand for lodging, and which may also increase or operating and renovation costs. In addition to general economic conditions, new hotel room supply can significantly affect the lodging industry’s performance and overbuilding has the potential to further exacerbate the negative impact. Room rates and occupancy tend to increase when demand growth exceeds supply growth. Decline in lodging demand, or a continued growth in lodging supply, could result

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in returns that are substantially below expectations or result in losses, which could have a material adverse effect on our business, financial condition, results of operations and our ability to make distributions to our stockholders.

The ongoing need for capital expenditures at our hotel properties may adversely affect our financial condition and limit our ability to make distributions to our stockholders.

Hotel properties have an ongoing need for renovations and other capital improvements, including replacements, from time to time, of furniture, fixtures and equipment. The franchisors of our hotels also require periodic capital improvements as a condition of keeping the franchise licenses. These capital improvements may give rise to the following risks:

● Possible environmental problems;

● Construction cost overruns and delays, particularly in light of supply chain disruption;

● Revenues may be reduced temporarily while rooms are out of service during construction;

● Possible shortage of available cash to fund capital improvements;

● Capital improvement financing may not be available on attractive terms;

● Market demand uncertainties or a loss of market demand after capital improvements have begun; and

● Disputes with franchisors/managers regarding compliance with relevant management/franchise agreements.

We have established, and intend to continue to establish, capital reserves in amounts we believe are necessary for the hotel properties. If we have insufficient capital reserves, we will be required to obtain financing from other sources to fund our capital expenditure requirements. There can be no assurance that sufficient financing will be available or, if available, will be available on economically feasible terms or on terms acceptable to us. Additional borrowing for capital needs and capital improvements will also increase our interest expense. The costs and expenses of all these capital improvements could adversely affect our financial condition and amounts available for distribution to our stockholders.

The increasing use of Internet travel intermediaries by consumers may adversely affect our profitability.

Some of our hotel rooms are booked through Internet travel intermediaries, including, but not limited to, Travelocity.com, Expedia.com and Priceline.com. As Internet bookings increase, these intermediaries may be able to obtain higher commissions, reduced room rates or other significant contract concessions from us and our management companies. Moreover, some of these Internet travel intermediaries are attempting to offer hotel rooms as a commodity, by increasing the importance of price and general indicators of quality (such as “three-star downtown hotel”) at the expense of brand identification. These intermediaries hope that consumers will eventually develop brand loyalties to their reservations system rather than to the hotel brands under which our properties are franchised. Although most of the business for our hotels is expected to be derived from traditional channels, if the amount of sales made through Internet intermediaries increases significantly, room revenues may flatten or decrease and our profitability may be adversely affected.

We and our hotel managers and franchisors rely on information technology in our operations, and any material failure, inadequacy, interruption, cyber-attack or security failure of that technology could harm our business.

We and our hotel managers and franchisors rely on information technology networks and systems, including the Internet, to process, transmit and store electronic information, and to manage or support a variety of business processes, including financial transactions and records, personal identifying information, reservations, billing and operating data. We rely on commercially available systems, software, tools and monitoring to provide security for processing, transmission and storage of confidential customer information, such as personally identifiable information, including information relating to financial accounts. Although we have taken steps, and plan to continue to take steps, to protect the security of our information systems and the data maintained in those systems, it is possible that our safety and security measures will not be able to prevent the systems’ improper functioning or damage, or the improper access or disclosure of personally identifiable information such as in the event of cyber-attacks. Cyber-attacks are expected to accelerate on a global basis in both frequency and magnitude as threat actors are becoming increasingly sophisticated in using techniques that circumvent controls, evade detection, and remove or obfuscate forensic evidence, which means that we and our third-party providers may be unable to detect, investigate, contain or recover from future attacks or incidents in a timely or effective manner.

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The rapid evolution and increased adoption of artificial intelligence technologies, but us or by third parties, may also heighten our cybersecurity risks by making cyberattacks more difficult to detect, contain and mitigate. Security breaches, including physical or electronic break-ins, computer viruses, attacks by hackers and similar breaches, can create system disruptions, shutdowns or unauthorized disclosure of confidential information. In addition, cybersecurity risk has increased as a result of global remote working dynamics for our customers, employees and third-party providers that present additional opportunities for threat actors to engage in social engineering and to exploit vulnerabilities in non-corporate networks. Many of the information systems and networks used to operate our lodging properties are managed by our third-party property managers or franchisors and are not under our control. Any failure to maintain proper function, security and availability of our information systems or the information networks managed by our third-party property managers or franchisors could interrupt our operations, result in delayed sales or bookings or lost guest reservations, damage our reputation, subject us to liability claims or regulatory penalties and could have a material adverse effect on our business, financial condition and results of operations.

Labor shortages and increased costs for labor could adversely affect our business and financial results.

Our success depends in part upon our management companies’ ability to attract, motivate and retain a sufficient number of qualified employees. Qualified individuals needed to fill these positions are in increasingly short supply in some areas, with such supply issues increasing to historical levels in 2022 and 2023. The inability to recruit and retain these individuals may adversely impact hotel operations and guest satisfaction, which could harm our business. Additionally, competition for qualified employees has required us to pay meaningfully higher wages to attract employees, and continued tightness in labor markets could result in continued escalation of labor costs.

Future terrorist attacks or changes in terror alert levels could adversely affect travel and hotel demand.

Recent world events including increased terrorist activities and the political and military responses of the targeted countries have created an air of uncertainty concerning security and the stability of the United States economy. Previous terrorist attacks and subsequent terrorist alerts have adversely affected the U.S. travel and hospitality industries over the past several years, often disproportionately to the effect on the overall economy. The impact that terrorist attacks in the U.S. or elsewhere could have on domestic and international travel and our business in particular cannot be determined but any such attacks or the threat of such attacks could have a material adverse effect on our business, our ability to finance our business, our ability to insure our properties and our results of operations and financial condition.

Competition, including with vacation rental online marketplaces, may reduce our hotels’ revenues and profitability.

In addition to competing with other hotels, our hotel businesses compete with resorts, motels, inns and vacation rentals in their geographic markets or customer segments, including facilities owned by local interests, individuals, national and international chains, institutions, investment and pension funds and real estate investment trusts (“REITs”). Competition in this industry generally is based on the attractiveness of the facility, location, level of service, quality of accommodations, amenities, food and beverage options, public spaces and other guest services, consistency of service, room rate, brand reputation and the ability to earn and redeem loyalty program points. Our principal competitors include other branded and independent hotel operating companies, national and international hotel brands and ownership companies, and independently owned vacation rentals, such as those listed on vacation rental online marketplaces. Increased demand for vacation rental online marketplaces and reduced demand for hotels could result in lower revenue and reduced cash availability for distribution to stockholders.

Adverse developments affecting the financial services industry may adversely affect our business, financial condition and results of operations.

Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, transactional counterparties or other companies in the financial services industry or the financial services industry generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future lead to market-wide liquidity problems. For example, on March 10, 2023, Silicon Valley Bank (now a division of First Citizens Bank) was closed by the California Department of Financial Protection and Innovation, which appointed the FDIC as receiver, which has been followed by the collapse of Signature Bank, Silvergate Capital Corp. and First

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Republic Bank. Other than one account at Signature Bank for one of our hotel properties, we do not currently have direct exposure to these financial institutions. If a depository institution in which we deposit funds is adversely impacted from conditions in the financial or credit markets or otherwise, it could impact access to our cash or cash equivalents and could adversely impact our financial condition. Our cash and cash equivalents balance exceeded federally insurable limits as of December 31, 2023. In addition, if any parties with whom we conduct business are unable to access funds pursuant to such instruments or lending arrangements with such a financial institution, such parties' ability to pay their obligations to us or to enter into new commercial arrangements requiring additional payments to us could be adversely affected. Although we assess our banking relationships as we believe necessary or appropriate, our access to funding sources and other credit arrangements in amounts adequate to finance or capitalize our current and projected future business operations could be significantly impaired by factors that affect us, the financial services industry or economy in general. These factors could include, among others, events such as liquidity constraints or failures, the ability to perform obligations under various types of financial, credit or liquidity agreements or arrangements, disruptions or instability in the financial services industry or financial markets, or concerns or negative expectations about the prospects for companies in the financial services industry.

General Risks Related to the Real Estate Industry

The hotel properties are subject to various risks associated with an investment in real estate.

The economic success of an investment in the Company will depend upon the results of the operations of the hotel properties, which are subject to those risks typically associated with an investment in real estate. Fluctuations in land values, occupancy levels, revenue and operating expenses can adversely affect operating results or render the sale or refinancing of the hotel properties difficult or unattractive. No assurance can be given that certain assumptions as to the future levels of occupancy of the hotel properties or future costs of operating the hotel properties will be accurate because such matters will depend on events and factors beyond our control. Such factors include, among others, occupancy levels, revenue and sales levels in the local areas where the hotel properties are located, adverse changes in local population trends, market conditions, neighborhood values, local economic and social conditions, supply and demand for property such as the hotel properties, competition from similar projects, interest rates, real estate tax rates, governmental rules, regulations and fiscal policies, including the effects of inflation and enactment of unfavorable real estate, environmental or zoning laws, hazardous material laws, uninsured losses and other risks.

Illiquidity of real estate investments could significantly impede our ability to liquidate our portfolio on advantageous terms or within any given period of time.

Because real estate investments are relatively illiquid and difficult to sell quickly, we have limited ability to vary our portfolio in response changes in economic and other conditions. Return of capital and realization of gains, if any, from an investment generally will occur upon disposition or refinance of the underlying hotel property. We may be unable to realize our investment objectives by sale, other disposition or refinance at attractive prices within any given period of time or may otherwise be unable to complete any exit strategy. In particular, these risks could arise from weakness in or even the lack of an established market for a hotel property, availability of financing, capitalization rates, changes in the financial condition or prospects of prospective purchasers, changes in national or international economic conditions, and changes in laws, regulations or fiscal policies of jurisdictions in which the hotel property is located. Further, we may be required to expend funds to correct defects or to make improvements before a hotel property can be sold. We cannot assure you that we will have funds available to correct those defects or to make those improvements. In addition, we may agree to lock-out provisions when acquiring a hotel property that materially restrict us from selling that hotel property for a period of time or impose other restrictions. Our inability to sell the hotel properties at the time and on the terms we desire could reduce our cash flow and limit our ability to make distributions to our stockholders.

Uninsured and underinsured losses could adversely affect our operating results and our ability to make distributions to our stockholders.

We maintain comprehensive insurance on each of our current hotel properties, and anticipate maintaining comprehensive insurance on future hotel properties, including liability, terrorism, fire and extended coverage, of the type and amount customarily obtained for or by hotel property owners. There can be no assurance that such coverage will continue to be available at reasonable rates, or at all. Various types of catastrophic losses, like earthquakes and floods and losses from

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toxic mold, terrorist activities and pandemic outbreaks may not be insurable or may not be insurable on reasonable economic terms. Lenders may require such insurance and failure to obtain such insurance could constitute a default under the loan agreements. Depending on our access to capital, liquidity and the value of the properties securing the affected loan in relation to the balance of the loan, a default could have a material adverse effect on our results of operations and ability to obtain future financing.

In the event of a substantial loss, insurance coverage may not be sufficient to cover the full current market value or replacement cost of the hotel property. Should an uninsured loss or a loss in excess of insured limits occur, we could lose all or a portion of the capital we invested in a hotel property, as well as the anticipated future revenue from that particular hotel property. In that event, we might nevertheless remain obligated for any mortgage debt or other financial obligations related to the hotel property. Inflation, changes in building codes and ordinances, environmental considerations and other factors might also keep us from using insurance proceeds to replace, rehabilitate or renovate a hotel after it has been damaged or destroyed. Under those circumstances, the insurance proceeds we receive might be inadequate to restore our economic position on the damaged or destroyed hotel property.

Noncompliance with environmental laws and governmental regulations could adversely affect our operating results and our ability to make distributions to stockholders.

Federal, state and local laws impose liability on a landowner for the release or the otherwise improper presence on the premises of hazardous materials or hazardous substances. This liability is without regard to fault for, or knowledge of, the presence of such materials or substances, subject to certain defenses. A landowner may be held liable for hazardous materials or substances brought onto the property before it acquired title and for hazardous materials or substances that are not discovered until after it sells the property. In addition, a landowner may be held liable for hazardous materials or substances that migrate from the property onto or beneath adjacent sites, as well as hazardous materials or substances from unknown or unidentified sources that may migrate from adjacent sites onto or beneath the property. Similar liability may occur under applicable state law. If any hazardous materials or substances are found within the real property underlying any of the hotel properties at any time, we could be held liable for cleanup costs, fines, penalties and other costs, and we may have little or no recourse against the sellers of the hotel properties. Furthermore, various court decisions have established that third parties may recover damages for injury caused by release of hazardous substances and for property contamination. Although we will attempt to obtain current environmental site assessments for the hotel properties prior to acquisition, we may not obtain such information. If losses arise from hazardous substance contamination that cannot be recovered from responsible parties, the financial viability of the hotel properties may be materially and adversely affected.

Compliance with the Americans with Disabilities Act of 1990, as amended, and applicable regulations promulgated thereunder (“ADA”) and other changes in governmental rules and regulations could substantially increase our cost of doing business and adversely affect our operating results and our ability to make distributions to our stockholders.

Our hotel properties are subject to the ADA. Under the ADA, “public accommodations” as defined by the ADA must meet certain federal requirements related to access and use by disabled persons. Although we believe our current hotel properties are in substantial compliance with the ADA, and we intend to acquire future hotel properties that are substantially in compliance with the ADA, we may incur additional costs of complying with the ADA at the time of acquisition and from time-to-time in the future to remain in compliance. A number of additional federal, state and local laws exist that also may require modifications to the hotel properties or restrict certain renovations with respect to access by disabled persons. A violation of the ADA could result in the imposition of fines by the federal government or an award of damages to private litigants, and attorneys’ fees may be awarded to a plaintiff claiming ADA violations. State and federal laws in this area are constantly evolving and could place a greater cost or burden on us. If we were required to expend unbudgeted funds to comply with the ADA or other applicable rules and regulations, our financial condition, results of operations, the market price of our shares of common stock and our ability to make distributions to our stockholders could be adversely affected. The obligation to make readily achievable accommodations is an ongoing one, and we will continue to assess our properties and to make alterations as appropriate.

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The hotel properties are subject to property taxes that may increase in the future, which could adversely affect our ability to make distributions to our stockholders.

The hotel properties are subject to real and personal property taxes. These taxes may increase as tax rates change and as the hotel properties are assessed or reassessed by taxing authorities, including upon acquisition. If property taxes increase, our financial condition, results of operations and our ability to make distributions to our stockholders could be materially and adversely affected. As the owner of the hotel properties, we are ultimately responsible for payment of the taxes to the applicable government authorities. If we fail to pay any such taxes, the applicable taxing authority may place a lien on the hotel property, and the hotel property could become subject to a tax sale.

The hotel properties may contain or develop harmful mold, which could lead to liability for adverse health effects and costs of remediating the problem.

Litigation and concern about indoor exposure to certain types of toxic molds have been increasing as the public becomes aware that exposure to mold can cause a variety of health effects and symptoms, including allergic reactions and respiratory problems. Toxic molds can be found almost anywhere; they can grow on virtually any organic substance, as long as moisture and oxygen are present. There are molds that can grow on wood, paper, carpet, foods and insulation. When excessive moisture accumulates in buildings or on building materials, mold growth will often occur, particularly if the moisture problem remains undiscovered or unaddressed. It is impossible to eliminate all molds and mold spores in the indoor environment. In warm or humid climates, the likelihood of toxic mold can be exacerbated by the necessity of indoor air conditioning year-round. The difficulty in discovering indoor toxic mold growth could lead to an increased risk of lawsuits by affected persons, and the risk that the cost to remediate toxic mold will exceed the value of the property. Because of attempts to exclude investigations, abatement and damage costs caused by toxic mold growth from certain liability provisions in insurance policies, there is no guarantee that insurance coverage for toxic mold will be available now or in the future.

Future changes in laws and regulations may adversely affect the resale value of real estate.

Future changes in land use and environmental laws and regulations, whether federal, state or local, may impose new restrictions on the development or use, and therefore the value, of real estate. The resale of real estate by us may be adversely affected by such regulations. In addition, cities and other municipalities may have different rules and regulations which may change from time to time, including retrofit ordinances, which may affect the capital needs of the hotel properties. Any such changes would need to be addressed by us, which would reduce our net income and the amount of cash available for distributions to our stockholders.

Certain sellers of hotel properties have made, and future sellers may only make, limited or no representations and warranties regarding the condition of the properties.

We have acquired, and may in the future acquire real estate from sellers who make only limited or no representations and warranties regarding the condition of such real estate, the presence of hazardous materials or hazardous substances within such real estate, the status of governmental approvals and entitlements for such real estate or other matters adversely affecting such real estate. We may not be able to pursue a claim for damages against such sellers except in limited circumstances. The extent of damages that we may incur as a result of such matters cannot be predicted but potentially could result in a significant adverse effect on the value of such real estate.

We may acquire hotel properties from affiliates of the Advisor.

We may acquire hotel properties from affiliates of the Advisor. Accordingly, notwithstanding that the purchase price will be based on a third-party appraisal, the purchase agreements for such hotel properties will not be negotiated on a third-party arm’s length basis. Some of the terms of the purchase agreements with affiliates of the Advisor may not be on market terms. The stockholders will not have approval rights with respect to the acquisition of hotel properties from affiliates.

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We may not obtain audited results of operations for the hotel properties prior to acquiring the hotel properties.

We may not obtain audited operating statements regarding the prior operations of the hotel properties prior to acquiring the hotel properties. We may rely on unaudited financial information provided by the sellers of the hotel properties. Thus, it is possible that information we relied on with respect to the acquisition of the hotel properties may not be accurate.

We may not obtain independent third-party appraisals or valuations of a hotel property before acquiring it and our valuation may not be accurate.

We have obtained independent third-party appraisals or valuations or other reports for some, but not all, of our current hotel properties before purchasing them and may not obtain independent third-party appraisals or valuations of a future hotel property, or other reports with respect to a future hotel property, before we invest in such hotel property. If we do not obtain such third-party appraisals or valuations, there can be no assurance that our valuation of a hotel property will be accurate or that a hotel property’s value will exceed its cost to us or that any sale or other disposition of such hotel property will result in a profit for us. Third-party appraisals and other reports may be prepared for lenders, in which case we typically will try to obtain a copy of such appraisals and reports for review, as well as reliance letters from the third-party preparers to allow us to rely on such appraisals and reports. To the extent we do not obtain such other reports or reliance letters before investing in a hotel property, the risk of investing in such hotel property may be increased.

If capitalization rates increase, the value of our assets may decrease and we may not be able to sell our assets at anticipated prices.

The value of commercial real estate is generally based on capitalization rates. Capitalization rates generally trend with interest rates. Consequently, if interest rates go up, so do capitalization rates. Interest rates and capitalization rates increased significantly during 2022 and 2023 but have decreased from these highs recently. If interest rates continue to rise in the future, it is likely that capitalization rates will also rise and, as a result, the value of real estate will decrease. If capitalization rates continue to increase, the hotel properties will likely achieve lower sales prices than anticipated, resulting in reduced returns.

Certain of the hotel properties in our current portfolio are, and future hotel properties may be, located in areas with increased risk of tornados, floods and other natural disasters and face risks associated with the direct and indirect physical effects of climate change, and we do not intend to obtain insurance to cover these natural disasters unless required by a lender.

Some of the hotel properties in our current portfolio are, and future hotel properties may be, located in areas in the United States that have increased risk of tornados, floods, earthquakes, hurricanes, high winds or wildfires. A tornado, flood, earthquake, hurricane, high winds or wildfire could cause structural damage to or destroy a hotel property. Over time, our hotels located in coastal markets and other areas that may be impacted by climate change are expected to experience increases in storm intensity and rising sea-levels, which may cause damage to our hotel properties. As a result, we could become subject to significant losses and/or repair costs. Other markets may experience prolonged variations in temperature or precipitation that may limit access to the water needed to operate our hotel properties or significantly increase energy costs, which may subject those properties to additional regulatory burdens, such as limitations on water usage or stricter energy efficiency standards. We do not intend to obtain wind, flood or earthquake insurance for the hotel properties unless required by a lender. We have obtained flood insurance for one of our hotels. It is possible that any such insurance, if obtained, will not be sufficient to pay for damage to any hotel property. Further, to the extent we do obtain insurance for such hotels, weather events and climate change may increase the cost of, or make unavailable, such property insurance, on terms we find acceptable in areas most vulnerable to such events.

We may not have control of hotel properties we acquire through joint ventures.

We may make some of our investments through joint ventures between the Company and both affiliated and non-affiliated parties. It is anticipated that, with respect to any such investment, we and the joint venture partner will have joint control over the management and operation of the hotel property. Thus, we will be dependent on the decisions made by our joint venture partner. Such joint venture partner may have objectives which are different than those of the Company.

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The presence of construction defects in newly or recently constructed hotel properties could adversely affect the financial performance of a hotel property.

Some of our current hotel properties are, and future hotel properties may be, newly or recently constructed. Newly constructed properties are sometimes subject to construction defects that only reveal themselves over time. If any of the hotel properties should become subject to any construction defect issues, we may have remedies under state law as well as under any warranties from the contractors for the construction work, provided that the warranties were assigned to such owner. If the warranties do not cover all the expenses associated with any construction defects that may arise, we could be liable for the expenses associated with correcting the construction defect. If work is required to cure any construction defects, reserves may not be sufficient to pay for such work. Accordingly, the presence of construction defects could adversely affect the financial performance of the hotel properties, we may be required to pay for all or part of the repair of such construction defects, which will reduce the cash flow from the hotel properties, and the return to our stockholders may be reduced.

Construction and rehabilitation at the hotel properties entails risks that are beyond our and any general contractor’s control, and the costs may exceed the funds available to us.

We have rehabilitated, renovated and made capital improvement at some of the hotel properties in our current portfolio, and expect to do so with future hotel properties. Hotel properties have an ongoing need for capital improvements and the franchisors of our hotels also require periodic capital improvements as a condition of keeping the franchise licenses. The construction of commercial real property is cyclical and is significantly affected by changes in national and local economic and other conditions, such as employment levels, availability of financing, interest rates and demand for commercial properties. Such uncertainties could adversely affect our performance. In addition, construction entails risks that are beyond our or any general contractor’s control. Completion of new construction, rehabilitation or redevelopment may be delayed or prevented, and costs of such capital improvements may be increased, by factors such as adverse weather, strikes or energy shortages, shortages or increased costs of labor and material for construction, delays in construction schedules, cost overruns, inflation, environmental, zoning, title or other legal matters and unknown contingencies, including any such factors caused by supply chain disruptions. Changes in construction plans and specifications, delays due to compliance with governmental requirements, increases in real estate taxes and other local government fees or imposition of fees not yet levied, or other delays could cause construction costs to exceed the amounts available from the Offering proceeds and any loans. In the event that construction costs exceed funds available, our ability to complete the work to be done on a development hotel property will depend upon our ability to supply additional funds. There can be no assurance that we will have adequate funds available for that purpose. Any delays in construction may have an adverse impact on our cash flow and long-term success.

We will be required to obtain the approval of various governmental authorities when rehabilitating and improving the hotel properties, which may result in delays and increased costs.

In rehabilitating and improving the hotel properties, we will be required to obtain the approval of various government authorities regulating such matters as permitted land uses and levels of density and the installation of utility services such as water and waste disposal. Governmental authorities have imposed impact fees as a means of defraying the cost of providing certain governmental services to developing areas and the amount of these fees has increased significantly during recent years. Many state laws require the use of specific construction materials which reduce the need for energy consuming heating and cooling systems. Local governments also, at times, declare moratoriums on the issuance of building permits and impose other restrictions in areas where sewage treatment facilities and other public facilities do not reach minimum standards. We will also be subject to a variety of federal, state and local statutes, ordinances, rules and regulations concerning protection of health and the environment. Such governmental regulation may result in delays, cause us to incur substantial compliance and other costs and prohibit or severely restrict development in certain regions or areas, which could have an adverse effect on our business and results of operations.

We may not discover defects in the hotel properties prior to acquisition.

Although we intend to perform due diligence on the hotel properties before we acquire them, there can be no assurance that all defects (including physical defects, title issues and financial issues) will be discovered prior to acquisition. In the

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event that a significant issue is not discovered with respect to a particular hotel property, our performance may be negatively impacted.

The hotel properties could become subject to condemnation actions.

The hotel properties or a portion of the hotel properties could become subject to an eminent domain or inverse condemnation action. Any such action could have a material adverse effect on the marketability of a hotel property or the amount of return on investment for our stockholders.

We may sustain losses resulting from litigation that is not completely covered by insurance.

We anticipate that litigation will occur in the ordinary course of our business. We intend to maintain adequate general liability insurance to cover such potential litigation which stems from the ordinary course of owning and operating the hotel properties; however, there can be no assurance that all losses will be covered. If a loss occurs that is partially or completely uninsured, we may lose all or part of our investment.

Risks Related to Debt Financing

We have obtained, and in the future likely will obtain, mortgage indebtedness and other borrowings, which increases our risk of loss due to potential foreclosures.

We have obtained, and expect in the future to obtain, loans to acquire the hotel properties and thus, the hotel properties will be leveraged. We may also obtain mortgage debt on hotel properties that we already own in order to obtain funds to acquire additional hotel properties, to fund property improvements and other capital expenditures, to make distributions and for other purposes. In addition, we may borrow as necessary or advisable to ensure that we maintain our qualification as a REIT for federal income tax purposes, including borrowings to satisfy the REIT requirement that we distribute at least 90% of our annual REIT taxable income (computed without regard to the dividends-paid deduction and excluding net capital gain) to our stockholders. We anticipate that the aggregate loan-to-value ratio for the Company will be between 35% and 65%. We will target a loan-to-value ratio for the hotel properties of between 35% and 70%, based on the purchase price of the hotel properties, however, we may obtain financing that is less than or higher than such loan-to-value ratio for an individual hotel property at the discretion of our board of directors. As of December 31, 2023, our aggregate loan-to-value ratio, based on the aggregate purchase price of the hotel properties, was approximately 57%. No assurance can be given that future cash flow will be sufficient to make the debt service payments on any loans and to cover all operating expenses. If the hotel properties’ revenues are insufficient to pay debt service and operating costs, we may be required to seek additional working capital. There can be no assurance that such additional funds will be available. In the event additional funds are not available, the lenders may foreclose on the hotel properties and our stockholders could lose their investment. In addition, the degree to which we are leveraged could have an adverse impact on us, including (i) increased vulnerability to adverse general economic and market conditions, (ii) impaired ability to expand and to respond to increased competition, (iii) impaired ability to obtain additional financing for future working capital, capital expenditures, general corporate or other purposes and (iv) requiring that a significant portion of cash provided by operating activities be used for the payment of debt obligations, thereby reducing funds available for distributions, operations and future business opportunities.

Restrictions on the availability of real estate financing, high interest rates and the cost of loans may make it difficult for us to finance or refinance the hotel properties.

Market fluctuations in real estate loans may affect the availability and cost of loans needed to acquire or refinance the hotel properties. There is no assurance that we will be able to obtain the required financing to acquire or refinance the hotel properties. Restrictions on the availability of real estate financing or high interest rates on real estate loans may also adversely affect our ability to sell the hotel properties. Interest rates have increased and may continue to rise, though the timing and amount of any such future interest rate increases are uncertain. As a result, the interest rates available for future real estate loans and refinancings may be higher than the current interest rates for such loans, which may have a material and adverse impact on the hotel properties and us.

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Some of our financing arrangements involve interest only loans and balloon payment obligations and an inability to prepay until shortly before maturity. These may, in the future, adversely affect our ability to make distributions.

Debt on some of our existing hotel properties require us, and debt on future hotel properties may also require us, to make interest only payments with a lump-sum or “balloon” payment at maturity. Our ability to make a balloon payment at maturity is uncertain and may depend upon our ability to obtain additional financing or to sell the hotel property. At the time the balloon payment is due, we may or may not be able to refinance the balloon payment on terms as favorable as the original loan or sell the hotel property at a price sufficient to make the balloon payment. Several of the loans obtained to acquire our existing hotel properties do not allow for prepayment until shortly before maturity and provide that any prepayment may require the payment of a prepayment fee. Consequently, we may not be able to take advantage of favorable changes in interest rates. The effect of a refinancing or sale could affect the rate of return to our stockholders and the projected time of disposition of the hotel properties. In addition, payments of principal and interest made to service our debts may leave us with insufficient cash to pay the distributions that we are required to pay to maintain our qualification as a REIT and/or avoid federal income tax.

Increases in interest rates could increase our interest costs and reduce our cash flows.

As of the date of this filing, we had a total of $34.3 million of variable rate notes payable, including our existing line of credit with Western State Bank, and it is anticipated that the loans we obtain in the future may have variable interest rates. Any increase in interest rates would increase our interest costs, which would reduce our cash flows and our ability to make distributions to our stockholders. An increase in interest rates could also affect our ability to refinance or extend existing financing on favorable terms, or at all. Beginning in 2022, in an effort to combat inflation and restore price stability, the Federal Reserve significantly raised its benchmark federal funds rate, which led to increases in interest rates in the credit markets. Interest rates may continue to rise, though the timing and amount of any such future interest rate increases are uncertain. In the event that the interest rate on any loan increases significantly, we may not have sufficient funds to pay the required interest payments. In such event, the continued ownership of the applicable hotel property may be threatened. In addition, if we need to repay existing debt during periods of rising interest rates, we could be required to liquidate one or more of our investments at times or on terms that may not permit realization of the maximum return on such investments. Increases in interest rates may cause our operations to suffer and the amount of distributions our stockholders receive and their overall return on investment may decline.

We have incurred, and may in the future incur, recourse debt or be liable for nonrecourse carve-outs and springing recourse events under the loans for the hotel properties, which may permit the lenders to proceed against our assets.

Although we attempt to obtain loans for the hotel properties that will be nonrecourse as to principal and interest, we have obtained and may in the future obtain recourse debt to finance our acquisitions. Further, lenders have required and may in the future require us to be personally liable for certain carve-outs and springing recourse events. In circumstances where personal liability attaches, the lender could proceed against our assets. If a lender successfully forecloses upon any of our assets, our ability to pay cash distributions to our stockholders will be reduced and our stockholders may lose part of their investment.

If we violate any restrictions on transfer imposed by lenders, the lender could have the right to declare the entire amount of the loan to be immediately due and payable.

Loans on our existing hotel properties restrict, and we anticipate that loans on future hotel properties will, restrict our ability to sell our interests in the hotel properties. The lenders may also impose restrictions on the transferability of our shares of common stock. Upon violation of the restrictions on transfer or encumbrance, a lender will have the right to declare the entire amount of the loan, including principal, interest, prepayment premiums and other charges, to be immediately due and payable. If the lender declares the loan to be immediately due and payable, we will have the obligation to immediately pay the loan in full, including applicable prepayment charges. If replacement financing is not found or the loan is not immediately paid in full, the lender may invoke its other remedies under the loan, which may include proceeding with a foreclosure that would cause us to lose our entire interest in the applicable hotel property.

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If we default on a loan, it could result in foreclosure of the hotel property, which could result the loss of all or a substantial portion of the investment we made in the hotel property.

Loans on our existing hotel properties include, and we anticipate that future loans will include, various actions by us that will cause an event of default under such loans, including, among others, the failure to pay required payments under the loan, the failure to pay taxes, the failure to maintain insurance, the assignment by an owner of a hotel property of an interest in such hotel property to a creditor, the bankruptcy of an owner of a hotel property, the filing of an action for partition or the transfer of an interest in a hotel property without lender’s consent. Additional events of default may be applicable to some or all of the loans. If we default under a loan for any reason, the lender may declare a default under the applicable loan, which could result in foreclosure by the lender on the applicable hotel property and the loss of all or a substantial portion of the investment we made in such hotel property.

The derivative financial instruments we use to hedge against interest rate fluctuations may not be successful in mitigating our risks associated with interest rates and could reduce the overall returns on our stockholders’ investment.

We are exposed to the effects of interest rate changes as a result of borrowings we use to maintain liquidity and to fund the acquisition, expansion and refinancing of the hotel properties and our operations. Our profitability and the value of our investment portfolio may be adversely affected during any period as a result of interest rate changes. We may choose to manage interest rate risk by maintaining a ratio of fixed rate, long-term debt such that floating rate exposure is kept at an acceptable level. We may utilize a variety of derivative financial instruments, including interest rate caps, floors and swap agreements, in order to hedge exposures and limit the effects of changes in interest rates on our operations, but no hedging strategy can protect us completely. When we use these types of derivatives to hedge the risk of interest-earning assets or interest-bearing liabilities, we may be subject to certain risks, including the risk that counterparties may fail to honor their obligations under these arrangements, these arrangements may not be effective in reducing our exposure to interest rate changes, and losses on a hedge position will reduce the funds available for the payment of distributions to our stockholders, and the losses may exceed the amount we invested in the instruments. These hedging agreements involve risks. We cannot assure you that our hedging strategy and the derivatives that we use will adequately offset the risk of interest rate volatility or that its hedging transactions will not result in losses. In addition, the use of such instruments may reduce the overall return on our investments. These instruments may also generate income that may not be treated as qualifying REIT income for purposes of the 75% or 95% REIT gross income tests.

Certain of the hotel properties and our other assets are cross-collateralized.

We have obtained a line of credit, and may obtain other debt financing, which require that our assets be cross-collateralized. No assurance can be given that future cash flow will be sufficient to make the debt service payments on our loans and to cover all operating expenses.

Risks Related to Our Organization and Structure

Our TRS Lessee structure subjects us to the risk of increased hotel operating expenses that could adversely affect our operating results and our ability to make distributions to our stockholders.

Our leases with our TRS Lessees require our TRS Lessees to pay the owners of the hotel properties (which are wholly-owned subsidiaries of the Operating Partnership) rent based, in part, on revenues from the hotel properties. Our operating risks include decreases in hotel property revenues and increases in operating expenses, which would adversely affect our TRS Lessees’ ability to pay rent due under the leases, including, but not limited to, increases in wage and benefit costs, repair and maintenance expenses, energy costs, property taxes, insurance costs and other operating expenses. As these rent payments will be a primary source of our revenue, any inability of our TRS Lessees to make such rent payments would likely have a significant adverse impact on our financial condition, results of operations and our ability to make distributions to our stockholders.

Our TRS structure increases our overall tax liability.

Our TRS Lessees are subject to federal, state and local income tax on their taxable income, which consists of the revenues from the hotel properties, net of the operating expenses for the hotel properties and rent payments to the Operating

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Partnership. Accordingly, although ownership of our TRS Lessees allows us to participate in the operating income from the hotel properties in addition to receiving rent, that operating income is fully subject to corporate income tax. The after-tax net income of our TRS Lessees will be available for distribution to us.

Our ownership of our TRSs is limited and our transactions with our TRSs will cause us to be subject to a 100% penalty tax on certain income or deductions if those transactions are not conducted on arm’s-length terms.

A REIT may own up to 100% of the stock of one or more TRSs. A TRS may hold assets and earn income that would not be qualifying assets or income if held or earned directly by a REIT, including gross operating income from hotels that are operated by eligible independent contractors pursuant to management agreements. Both the subsidiary and the REIT must jointly elect to treat the subsidiary as a TRS. A corporation of which a TRS directly or indirectly owns more than 35% of the voting power or value of the stock will automatically be treated as a TRS. Overall, no more than 20% of the value of a REIT’s gross assets may consist of stock or securities of one or more TRSs. In addition, the TRS rules limit the deductibility of interest paid or accrued by a TRS to its parent REIT to assure that the TRS is subject to an appropriate level of corporate taxation. The rules also impose a 100% excise tax on certain transactions between a TRS and its parent REIT that are not conducted on an arm’s-length basis. Our TRS entities are subject to federal, state and local income tax on their taxable income, and their after-tax net income is available for distribution, but is not required to be distributed to us. There can be no assurance that we will be able to comply with the 20% limitation or to avoid application of the 100% excise tax.

If our leases with our TRS Lessees are not respected as true leases for federal income tax purposes, we would not qualify as a REIT.

To qualify as a REIT, we are required to satisfy two gross income tests pursuant to which specified percentages of our gross income must be passive income, such as rent. For the rent paid pursuant to the leases with our TRS Lessees, which should constitute substantially all of our gross income, to qualify for purposes of the gross income tests, the leases must be respected as true leases for federal income tax purposes and must not be treated as service contracts, joint ventures or some other type of arrangement. We plan to structure our leases so that they will be respected as true leases for federal income tax purposes, but there can be no assurance that the Internal Revenue Service (“IRS”) will agree with this characterization or will not challenge this treatment, or that a court would not sustain such a challenge. If the leases were not respected as true leases for federal income tax purposes, we would not be able to satisfy either of the two gross income tests applicable to REITs and likely would fail to qualify for REIT status.

If our hotel operators do not qualify as “eligible independent contractors,” we would not qualify as a REIT.

Rent paid by a lessee that is a “related party tenant” of a REIT will not be qualifying income for purposes of the two gross income tests applicable to REITs. We will lease all of the hotel properties to our TRS Lessees. A TRS Lessee will not be treated as a “related party tenant,” and will not be treated as directly operating the hotel properties to the extent the hotel properties are operated by an “eligible independent contractor.”  If our hotel property operators do not qualify as “eligible independent contractors,” we would not qualify as a REIT. Each of the management companies that enters into a management agreement with our TRS Lessees must qualify as an “eligible independent contractor” under the REIT rules in order for the rent paid to us by our TRS Lessees to be qualifying income for our REIT income test requirements. In order to qualify as an eligible independent contractor, an operator must not own more than 35% of our outstanding shares (by value). In addition, if the operator is a corporation, not more than 35% of the total combined voting power of whose stock (or 35% of the total shares of all classes of whose stock), or, if the operator is not a corporation, not more than 35% of the interest in whose assets or net profits is owned, directly or indirectly, by one or more persons owning 35% or more of our shares of common stock. Complex ownership attribution rules apply for purposes of these 35% thresholds. Although we intend to monitor ownership of our shares of common stock by our hotel property operators and their owners, there can be no assurance that these ownership levels will not be exceeded.

The lease of the hotel properties to a TRS is subject to special requirements.

We may lease certain “qualified lodging facilities” to a TRS (or a limited liability company of which a TRS is a member). The TRS in turn will contract with a management company to operate the lodging facility operations at the hotels. The rents paid by a TRS in this structure would be treated as qualifying rents from real property for purposes of the REIT

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requirements only if (i) they are paid pursuant to an arm’s-length lease of a qualified lodging facility property and (ii) the operator qualifies as an “eligible independent contractor” with respect to the property. An operator will qualify as an eligible independent contractor if it meets certain ownership tests with respect to us, and if, at the time the operator enters into the management agreement, the operator is actively engaged in the trade or business of operating qualified lodging facility properties for any person who is not a related person to us or our TRSs. If any of the above conditions are not satisfied, then the rents will not be considered income from a qualifying source for purposes of the REIT rules, which could cause us to incur penalty taxes or to fail to qualify as a REIT.

The ability of our board of directors to revoke our REIT qualification without stockholder approval may cause adverse consequences to our stockholders.

Our board of directors may revoke or otherwise terminate our REIT election, without the approval of our stockholders, if it determines that it is no longer in our best interest to continue to qualify as a REIT. If we cease to qualify as a REIT, we would become subject to federal income tax on our taxable income and would no longer be required to distribute most of our taxable income to our stockholders, which may have adverse consequences on our total return to our stockholders.

The ability of our board of directors to change our major policies may not be in your best interest.

Our board of directors determines our major policies, including policies and guidelines relating to our acquisitions, leverage, financing, growth, operations and distributions to stockholders and our continued qualification as a REIT. Our board of directors may amend or revise these and other policies and guidelines from time to time without the vote or consent of our stockholders. Accordingly, our stockholders will have limited control over changes in our policies and those changes could adversely affect our financial condition, results of operations, the market price of our shares of common stock and our ability to make distributions to our stockholders.

We have not established a minimum distribution payment level and we may be unable to generate sufficient cash flows from our operations to make distributions to our stockholders at any time in the future.

We are generally required to distribute to our stockholders at least 90% of our REIT taxable income each year for us to qualify as a REIT under the Internal Revenue Code of 1986, as amended (the “Code”), which requirement we currently intend to satisfy. To the extent we satisfy the 90% distribution requirement but distribute less than 100% of our REIT taxable income, we will be subject to federal corporate income tax on our undistributed taxable income. We have not established a minimum distribution payment level, and our ability to make distributions to our stockholders may be adversely affected by the risk factors described herein. Subject to satisfying the requirements for REIT qualification, in general, we intend over time to make regular monthly distributions to our stockholders. Our board of directors has the sole discretion to determine the timing, form and amount of any distributions to our stockholders. Our board of directors makes determinations regarding distributions based upon factors that it deems relevant.

Among the factors that could impair our ability to make distributions to our stockholders are:

● our inability to realize attractive returns on our investments;

● unanticipated expenses that reduce our cash flow or non-cash earnings;

● decreases in the value of the underlying assets; and

● the fact that anticipated operating expense levels may not prove accurate, as actual results may vary from estimates.

As a result, no assurance can be given that we will be able to continue to make distributions to our stockholders or that the level of any distributions we do make to our stockholders will achieve a market yield or increase or even be maintained over time. Distributions could be dilutive to our financial results and may constitute a return of capital to our investors, which would have the effect of reducing each stockholder’s basis in its shares.

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If we are deemed to be an investment company under the Investment Company Act of 1940, our stockholders’ investment return may be reduced.

The Investment Company Act of 1940, as amended (the “Investment Company Act”) requires that any issuer that is beneficially owned by 100 or more persons and that owns certain securities be registered as required under the Investment Company Act. Pursuant to the Operating Partnership Agreement, we are solely responsible for the management and operation of the Operating Partnership and, as a result, our interest in the Operating Partnership has significant incidents of a true general partnership interest and does not fall within the definition of a “security” for purposes of the Investment Company Act. If our interest in the Operating Partnership is deemed to be a security or if the Operating Partnership fails to qualify for an exemption or exclusions from the Investment Company Act, we will be required to register under the Investment Company Act. In the event we are required to register under the Investment Company Act, the returns to our stockholders will likely be significantly reduced.

We will be subject to certain risks relating to the Operating Partnership’s acceptance of contributed property in exchange for limited partnership interests.

We intend to own all of our assets through the Operating Partnership. The Operating Partnership has accepted, and may in the future accept, contributions of property from certain persons in exchange for limited partnership interests in the Operating Partnership. The acceptance of persons as limited partners in the Operating Partnership involves certain risks including (i) entering into certain indemnification agreements with the contributing limited partners that would cause us to indemnify such persons for tax liability that may be incurred by the contributing limited partners related to the sale of the contributed property, (ii) the fact that the contributing limited partners will have certain voting rights with respect to the Operating Partnership and (iii) the need for the Operating Partnership to allocate debt to contributing limited partners.

We may need to modify our investment portfolio in the future in order to qualify as a REIT, which may adversely affect our performance.

If the market value or income potential of our qualifying real estate assets changes as compared to the market value or income potential of our non-qualifying assets, or if the market value or income potential of our assets that are considered “real estate-related assets” under the Investment Company Act or REIT qualification tests changes as compared to the market value or income potential of our assets that are not considered “real estate-related assets” under the Investment Company Act or REIT qualification tests, whether as a result of increased interest rates, prepayment rates or other factors, we may need to modify our investment portfolio in order to qualify as a REIT or maintain our exclusion from the definition of an investment company. If the decline in asset values or income occurs quickly, this may be especially difficult, if not impossible, to accomplish. This difficulty may be exacerbated by the illiquid nature of many of the assets that we intend to own. We may have to make investment decisions that we otherwise would not make absent REIT and Investment Company Act considerations.

Under Maryland law, our directors have limited liability if they perform their duties in good faith, in a manner he or she reasonably believes to be in our best interests, and with the care that an ordinarily prudent person in a like position would use under similar circumstances. We are required to indemnify our directors and officers to the maximum extent permitted under Maryland law.

Maryland law provides that a director will not have any liability in that capacity so long as he or she performs his or her duties in good faith, in a manner he or she reasonably believes to be in our best interests, and with the care that an ordinarily prudent person in a like position would use under similar circumstances. Our charter provides that to the maximum extent permitted by Maryland law, none of our present or former officers or directors will be liable to us or our stockholders for money damages. In addition, the charter and the bylaws require us to indemnify (including advancement of expenses) our directors and officers for actions taken by them in those capacities to the maximum extent permitted by Maryland law. As a result, we and our stockholders may have more limited rights against these persons than might otherwise exist under common law.

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Maryland law prohibits business combinations with certain interested stockholder and their affiliates unless otherwise approved by our board of directors, which could inhibit a change in control.

Certain provisions of the Maryland General Corporation Law applicable to us prohibit business combinations with (i) any person who beneficially owns, directly or indirectly, 10% or more of the voting power of our outstanding voting stock, which is referred to as an “interested stockholder,” (ii) an affiliate or associate of the Company who, at any time within the two-year period prior to the date in question, beneficially owned, directly or indirectly, 10% or more of the voting power of our then outstanding stock, which is also referred to as an interested stockholder or (iii) an affiliate of an interested stockholder. These prohibitions last for five years after the most recent date on which the interested stockholder became an interested stockholder. Thereafter, any business combination with the interested stockholder must be recommended by our board of directors and approved by the affirmative vote of at least 80% of the votes entitled to be cast by holders of our outstanding voting stock and two-thirds of the votes entitled to be cast by holders of shares of our voting stock other than shares held by the interested stockholder with whom or with whose affiliate the business combination is to be effected or held by an affiliate or associate of the interested stockholder. These requirements could have the effect of inhibiting a change in control even if a change in control were in our stockholders’ interest. These provisions of Maryland law do not apply, however, to business combinations that are approved or exempted by our board of directors prior to the time that someone becomes an interested stockholder.

Provisions contained in Maryland law that are reflected in our charter and bylaws may have anti-takeover effects, potentially preventing investors from receiving a “control premium” for their shares.

Provisions contained in our charter and bylaws, as well as Maryland corporate law, may have anti-takeover effects that delay, defer or prevent a takeover attempt, which may prevent our stockholder from receiving a “control premium” for their shares. For example, these provisions may defer or prevent tender offers for our common stock or purchases of large blocks of our common stock, thereby limiting the opportunities for our stockholders to receive a premium for their shares over then-prevailing market prices. These provisions include the following:

● Ownership limit. The ownership limit in our charter limits related investors including, among other things, any voting group, from acquiring no more than 9.8% of the value or number of the aggregate, whichever is more restrictive, of our then outstanding shares of common stock, and no more than 9.8% of the value of our then outstanding capital stock (which includes all of our common stock and preferred stock), without the consent of our board of directors.

● Preferred stock. Our charter authorizes our board of directors to issue preferred stock in one or more classes and to establish the preferences and rights of any class of preferred stock issued. These actions can be taken without soliciting stockholder approval.

● Maryland control share acquisition statute. Maryland law limits the voting rights of “control shares” of a corporation in the event of a “control share acquisition.”

Federal Income Tax Risks

If we sell a built-in gain asset within five years of the effective date of our REIT election, we may be subject to corporate-level tax on the built-in gain component.

Upon our conversion from an entity taxable as a corporation to a REIT, each asset held directly, or indirectly through a partnership, that had a fair market value in excess of its adjusted basis generally will be considered a “built-in gain asset.” This built-in gain component will be fixed as of the date of conversion to REIT status. If we sell a built-in gain asset within five years of the effective date of our REIT election, we will (subject to certain exceptions) be subject to a corporate-level tax on the built-in gain component. To the extent that we are required to pay federal, state and local taxes, we will have less cash available for distributions.

Failure to qualify as a REIT would reduce our net earnings available for investment or distribution.

Our qualification as a REIT will depend upon our ability to meet requirements regarding our organization and ownership, distributions of our income, the nature and diversification of our gross income (an annual test) and assets (tested as of the

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end of each calendar quarter) and other tests imposed by the Code. If we fail to qualify as a REIT for any taxable year after electing REIT status, we will be subject to federal income tax on our taxable income at corporate rates. In addition, we would generally be disqualified from treatment as a REIT for the four taxable years following the year of losing our REIT status. Losing our REIT status would reduce our net earnings available for investment or distributions to stockholders because of the additional tax liability. In addition, distributions to stockholders would no longer qualify for the dividends-paid deduction and we would no longer be required to make distributions. If this occurs, we might be required to borrow funds or liquidate some investments in order to pay the applicable tax.

Generally, ordinary dividends payable by REITs do not qualify for reduced U.S. federal income tax rates.

Currently, the maximum tax rate applicable to qualified dividend income payable to certain non-corporate U.S. stockholders, is 20%. Dividends payable by REITs, however, generally are not eligible for the reduced rates. REIT dividends that are not designated as qualified dividend income or capital gain dividends are taxable as ordinary income. Although this does not adversely affect the taxation of REITs or dividends payable by REITs, the more favorable rates applicable to regular corporate qualified dividend income could cause certain non-corporate investors to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends. Commencing with taxable years beginning on or after January 1, 2018 and continuing through 2025, non-corporate U.S. taxpayers may be entitled to claim a deduction in determining their taxable income of up to 20% of qualified REIT dividends (dividends other than capital gain dividends and dividends attributable to certain qualified dividend income received by us). In addition, Treasury Regulations impose a minimum holding period for the 20% deduction that was not set forth in the Code. Under the Treasury Regulations, in order for a REIT dividend with respect to a share of REIT stock to be treated as a qualified REIT dividend, the U.S. stockholder (i) must have held the share for more than 45 days during the 91-day period beginning on the date which is 45 days before the date on which such share becomes ex-dividend with respect to such dividend and (ii) cannot have been under an obligation to make related payments with respect to positions in substantially similar or related property, e.g., pursuant to a short sale. Prospective investors are urged to consult with their tax advisors regarding the effect of this change on their effective tax rate with respect to REIT dividends.

Even if we qualify as a REIT for federal income tax purposes, we may be subject to other tax liabilities that reduce our cash flow and our ability to make distributions to our stockholders.

Even if we qualify as a REIT for federal income tax purposes, we may still be subject to some federal, state and local taxes on our income or property. For example:

● In order to qualify as a REIT, we must distribute annually at least 90% of our taxable income to our stockholders (which is determined without regard to the dividends-paid deduction or net capital gain). To the extent that we satisfy the distribution requirement but distribute less than 100% of our REIT taxable income, we will be subject to federal corporate income tax on the undistributed income. We intend to make distributions to our stockholders to comply with the REIT requirements of the Code.

● We will be subject to a 4.0% nondeductible excise tax on the amount, if any, by which distributions we pay in any calendar year are less than the sum of 85% of our ordinary income, 95% of our capital gain net income and 100% of our undistributed income from prior years.

● If we have net income from the sale of foreclosure property that we hold primarily for sale to customers in the ordinary course of business or other non-qualifying income from foreclosure property, we must pay a tax on that income at the highest corporate income tax rate.

● If we sell an asset, other than foreclosure property, that we hold primarily for sale to customers in the ordinary course of business, our gain would be subject to the 100% “prohibited transaction” tax unless such sale were made by one of our taxable REIT subsidiaries or we qualified for a “safe harbor” under the Code.

● If we hold or acquire assets when we are taxable as a corporation prior to our qualification as a REIT, such assets when held by us as a REIT may be subject to tax if sold in the five-year period following the acquisition of such assets.

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The ownership limits that apply to REITs, as prescribed by the Code and by the charter, may inhibit market activity in our shares of common stock and restrict our business combination opportunities.

In order for us to qualify as a REIT, not more than 50% in value of our outstanding capital stock may be owned, directly or indirectly, by five or fewer individuals (as defined in the Code to include certain entities) at any time during the last half of each taxable year after the first year for which we elect to qualify as a REIT. Additionally, at least 100 persons must beneficially own our capital stock during at least 335 days of a taxable year (other than the first taxable year for which we elect to be taxed as a REIT). The charter, with certain exceptions, authorizes our board of directors to take such actions as are necessary and desirable to preserve our qualification as a REIT. The charter also provides that, unless exempted by the Board, no person may own more than 9.8% by value or number of shares, whichever is more restrictive, of our outstanding shares of common stock, or 9.8% by value or number of shares, whichever is more restrictive, of our outstanding capital stock. Our board of directors may, in its sole discretion, subject to such conditions as it may determine and the receipt of certain representations and undertakings, prospectively or retroactively, waive the ownership limit or establish a different limit on ownership, or excepted holder limit, for a particular stockholder if the stockholder’s ownership in excess of the ownership limit would not result in our being “closely held” under Code Section 856(h) or otherwise failing to qualify as a REIT. These ownership limits could delay or prevent a transaction or a change in control of the Company that might involve a premium price for our shares of common stock or otherwise be in the best interest of our stockholders.

REIT distribution requirements could adversely affect our ability to execute our business plan.

To qualify as a REIT, we must distribute to our stockholders each year 90% of our REIT taxable income (which is determined without regard to the dividends-paid deduction or net capital gain). Further, we must distribute 100% of our REIT taxable income in order to avoid a corporate level tax. From time to time, we may generate taxable income greater than our income for financial reporting purposes, or our taxable income may be greater than our cash flow available for distribution to our stockholders (for example, where a borrower defers the payment of interest in cash pursuant to a contractual right or otherwise). If we do not have other funds available in these situations, we could be required to borrow funds, sell investments at disadvantageous prices or find another alternative source of funds to make distributions sufficient to enable us to pay out enough of our taxable income to satisfy the REIT distribution requirement and to avoid corporate income tax and the 4.0% excise tax in a particular year. These alternatives could increase our costs or reduce our equity. Thus, compliance with the REIT requirements may hinder our ability to operate solely on the basis of maximizing profits.

Complying with REIT requirements may cause us to forego otherwise attractive opportunities or liquidate otherwise attractive investments.

To qualify as a REIT for federal income tax purposes, we must continually satisfy tests concerning, among other things, the sources of our income, the nature and diversification of our assets, the amounts we distribute to our stockholders and the ownership of our shares of common stock. In order to meet these tests, we may be required to forego investments we might otherwise make. Thus, compliance with the REIT requirements may hinder our performance. In particular, we must ensure that at the end of each calendar quarter, at least 75% of the value of our gross assets consists of cash, cash items, government securities and qualified real estate assets. The remainder of our investment in securities (other than government securities, securities that constitute qualified real estate assets and securities of our TRSs) generally cannot include more than 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer. In addition, in general, no more than 5% of the value of our gross assets (other than government securities, securities that constitute qualified real estate assets and securities of our TRSs) can consist of the securities of any one issuer, and no more than 20% of the value of our total gross assets can be represented by the securities of one or more TRSs. If we fail to comply with these requirements at the end of any calendar quarter, we must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification and suffering adverse tax consequences. As a result, we may be required to liquidate otherwise attractive investments. These actions could have the effect of reducing our income and amounts available for distribution to our stockholders.

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The tax on prohibited transactions will limit our ability to engage in transactions that would be treated as sales for federal income tax purposes.

A REIT’s net income from prohibited transactions is subject to a 100% tax. In general, prohibited transactions are sales or other dispositions of assets, other than foreclosure property, deemed held primarily for sale to customers in the ordinary course of business (subject to a safe harbor under the Code for certain sales). It may be possible to reduce the impact of the prohibited transaction tax by conducting certain activities through taxable REIT subsidiaries. However, to the extent that we engage in such activities through taxable REIT subsidiaries, the income associated with such activities may be subject to full corporate income tax.

Non-United States investors may be subject to FIRPTA on the sale of its shares if we are unable to qualify as a “domestically controlled” REIT.

A non-United States person disposing of a United States real property interest, including shares of a United States corporation whose assets consist principally of United States real property interests, is generally subject to a tax under the Foreign Investment in Real Property Tax Act, known as FIRPTA, on the gain recognized on the disposition of such interest. Note that “qualified foreign pension funds” and certain other qualified foreign stockholders may be generally exempt from FIRPTA. In addition, FIRPTA does not apply, however, to the disposition of shares in a REIT if the REIT is a “domestically controlled” REIT.  A REIT is a domestically controlled REIT if, at all times during a specified testing period (the continuous five-year period ending on the date of disposition or, if shorter, the entire period of the REIT’s existence), less than 50% in value of its shares is held directly or indirectly by non-United States holders. We cannot assure you that we will qualify as a domestically controlled REIT. Final Treasury regulations effective April 25, 2024 (the “Final Regulations”) modify the existing prior tax guidance relating to the manner in which we determine whether we are a domestically controlled REIT. These regulations provide a look through rule for our stockholders that are non-publicly traded partnerships, non-public REITs, non-public regulated investment companies, or domestic “C” corporations owned 50% or more directly or indirectly by foreign persons (“foreign-controlled domestic corporations”) and treat “qualified foreign pension funds” and “international organizations” as foreign persons for this purpose. The look-through rule in the Final Regulations applicable to foreign-controlled domestic corporations will not apply to a REIT for a period of up to ten years if the REIT is able to satisfy certain requirements during that time, including not undergoing a significant change in its ownership and not acquiring a significant amount of new U.S. real property interests, in each case since April 24, 2024, the date the Final Regulations were issued. If a REIT fails to satisfy such requirements during the ten-year period, the look-through rule in the Final Regulations applicable to foreign-controlled domestic corporations will apply to such REIT beginning on the day immediately following the date of such failure. We cannot predict when we will commence being subject to such look-through rule in the Final Regulations and we may not be able to satisfy the applicable requirements for the duration of the ten-year period. Prospective investors are urged to consult with their tax advisors regarding the application and impact of these rules. If we were to fail to qualify as a domestically controlled REIT, and if a separate exemption did not apply, gain realized by a non-United States investor on a sale of its shares would be subject to FIRPTA unless our shares of common stock were traded on an established securities market and the non-United States investor did not at any time during a specified testing period directly or indirectly own more than 10% of the value of our outstanding common stock.

Complying with the REIT requirements may limit our ability to hedge effectively.

The REIT provisions of the Code may limit our ability to hedge our assets and operations. Under these provisions, any income that we generate from transactions intended to hedge our interest rate, inflation and/or currency risks, including gain from the disposition of certain hedging transactions, will be excluded from gross income for purposes of the REIT 75% and 95% gross income tests if the instrument hedges (i) interest rate risk on liabilities incurred to carry or acquire real estate, (ii) risk of currency fluctuations with respect to any item of income or gain that would be qualifying income under the REIT 75% or 95% gross income tests or (iii) risks associated with the extinguishment of certain indebtedness or the disposition of certain property related to prior hedging transactions described in (i) or (ii) above and each such instrument is properly identified under applicable Treasury Regulations. Income from hedging transactions that do not meet these requirements will generally constitute nonqualifying income for purposes of both the REIT 75% and 95% gross income tests. As a result of these rules, we may have to limit our use of hedging techniques that might otherwise be advantageous, which could result in greater risks associated with interest rate or other changes than we would otherwise incur.

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If we were considered to actually or constructively pay a “preferential dividend” to certain of our stockholders, our status as a REIT could be adversely affected.

In order to qualify as a REIT, we must distribute annually to our stockholders at least 90% of our REIT taxable income, determined without regard to the deduction for dividends paid and excluding net capital gain. For so long as we are not a publicly offered REIT (defined below), in order for distributions to be counted as satisfying the annual distribution requirements for REITs, and to provide us with a REIT-level tax deduction, the distributions must not be “preferential dividends.” A dividend is generally not a preferential dividend if the distribution is pro rata among all outstanding shares of stock within a particular class, and in accordance with the preferences among different classes of stock as set forth in the REIT’s organizational documents. There is no de minimis exception with respect to preferential dividends. However, the preferential dividend rules do not apply to a “publicly offered REIT.”  A publicly offered REIT is defined as a REIT that is required to file annual and periodic reports with the SEC under the Securities and Exchange Act of 1934. We are required to file annual and periodic reports with the SEC.

Changes made to the U.S. tax laws could have a negative impact on our business.

The tax laws or regulations governing REITs or the administrative interpretations thereof may be amended at any time. We cannot predict if or when any new or amended law, regulation, or administrative interpretation will be adopted, promulgated, or become effective, and an such change may apply retroactively. Because the IRS, the U.S. Treasury Department and Congress frequently review federal income tax legislation, we cannot predict whether, when or to what extent new federal tax laws, regulations, interpretations or rulings will be adopted. We and our stockholders could be adversely affected by any such change in, or any new, U.S. federal income tax law, regulation or administrative interpretation.  Stockholders are urged to consult with their tax advisor with respect to the status of legislative, regulatory or administrative developments and proposals and their potential effect on an investment in our shares.

Retirement Plan Risks

If the fiduciary of an employee benefit plan fails to meet the fiduciary requirements and other standards under ERISA and the Code as a result of investment in our shares of common stock, the fiduciary could be subject to criminal and civil penalties.

Special considerations apply to (i) employee benefit plans subject to ERISA, (ii) plans, IRAs and other arrangements subject to Code Section 4975 (such as an individual retirement account (“IRA”)) and (iii) entities deemed under ERISA to hold the “plan assets” of any such employee benefit plans or plans that are investing in our shares of common stock. Fiduciaries investing the assets of such a plan in our shares of common stock should, among other things, consider the following:

● whether the investment is in accordance with the documents and instruments governing such plan;

● the definition of “plan assets” under ERISA and the impact thereof on the plan’s investment in the Company;

● whether the investment satisfies the diversification requirements of Section 404(a)(1)(C) of ERISA (or other applicable law);

● whether, under Section 404(a)(1)(B) of ERISA (or other applicable law), the investment is prudent, considering the nature of an investment in the Company and our compensation structure and the fact that there is not expected to be a market created in which our shares of common stock can be sold or otherwise disposed of;

● that we have a limited history of operations;

● whether we or any of our affiliates are a “party-in-interest” (within the meaning of Section 3(14) of ERISA) or “disqualified person” (within the meaning of Code Section 4975) with respect to the plan;

● the need to annually value our shares of common stock; and

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● whether an investment in the Company will cause the plan to recognize unrelated business taxable income.

With respect to the annual valuation requirements described above, we will provide an estimated value for our shares of common stock annually beginning after the Initial Valuation Date. We can make no claim whether such estimated value will or will not satisfy the applicable annual valuation requirements under ERISA and the Code. The Department of Labor or the IRS may determine that a plan fiduciary is required to take further steps to determine the value of our shares of common stock. In the absence of an appropriate determination of value, a plan fiduciary may be subject to damages, penalties or other sanctions.

Failure to satisfy the fiduciary standards of conduct and other applicable requirements of ERISA and the Code may result in the imposition of criminal and civil penalties and could subject the fiduciary to claims for damages or for equitable remedies. In addition, if an investment in our shares of common stock constitutes a prohibited transaction under ERISA or the Code, the fiduciary who authorized or directed the investment may be subject to the imposition of excise taxes with respect to the amount invested. In the case of a prohibited transaction involving an IRA owner, the IRA may loss its tax-exempt status and thus, the entire value of the IRA would be considered to be distributed and taxable to the IRA sponsor. Plan fiduciaries should consult with their own legal advisors before making an investment in our shares of common stock.

Item 1B. Unresolved Staff Comments.

None

Item 1C. Cybersecurity.

Risk Management and Strategy

We have developed and implemented a cybersecurity risk management policy intended to protect the confidentiality, integrity and availability of our critical systems and information. Our policy establishes the framework for managing cybersecurity risks and outlines the measures and protocols to protect our information systems. Our risk management and strategy is managed by our third-party IT Management Service Provider, Network Center, Inc. (“Network Center”) with oversight by our VP of Operations. Our policy applies to all employees, contractors, and all third-party partners who have access to our information systems. Our cybersecurity risk management policy is integrated into our overall enterprise risk management processes.

Our risk management policy includes continual monitoring by Network Center, as they manage our technical defenses. Risk assessments and penetration testing are performed on a quarterly basis to identify and mitigate potential threats. Procedures have been implemented for identifying, evaluating and addressing vulnerabilities. Additionally, vulnerability assessments are performed monthly by Network Center. An additional part of our risk management strategy is having a clear process for reporting cybersecurity incidents and the development and maintenance of an incident response plan to address and mitigate the impact of cybersecurity incidents.

A key component of our risk management and strategy surrounds data protection. We have implemented strict access controls for each individual employee to ensure only authorized personnel can access sensitive and confidential data. All digital communication is pre-screened for potentially malicious actions through a dedicated email security provider. For additional protection, we have implemented multi-factor authentication along with email encryption to ensure data is protected while at rest and in transit. We are also protected through a multilayered approach to security through the ESET Protection Platform, which provides formidable defense through cyber threat prevention, detection and response.

In addition, we provide regular cybersecurity training to all employees on a quarterly basis and conduct ongoing awareness programs to keep employees informed about cybersecurity best practices. Employees have been trained, enabling them to detect and report on any malicious intrusions or social engineering attempts to infiltrate our systems. They are also regularly trained, tested and reported on through KnowB4 spear-phishing email campaigns to ensure our training is effective.

We are fully insured for cyber risk through our insurance provider.

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Governance

Our board of directors is responsible for overseeing our policies and practices related to corporate governance including cybersecurity risks. On an annual basis, management receives a report from Operations Management on our cybersecurity threat risk, management processes, and strategies. In addition to annual meetings, our board of directors, management and Audit Committee are notified of any cybersecurity incident, its threat level and the response. The threat level and response are evaluated and documented in a report by Operations leadership and our IT Services Provider. Based on our board of directors and Audit Committee review of the incident report, they determine if the findings require disclosure to the SEC.

Our cyber security policies and procedures are reviewed and updated annually or as needed to address any emerging threats and changes in regulatory requirements.

To date, there have been no confirmed cyber security breaches, unauthorized intrusions or threats detected within our mainframe operating systems, our encrypted e-mail servers, or our advanced firewall protections, and we have not identified risks from known cybersecurity threats, that have materially affected or that are reasonably likely to materially affect our business. However, future incidents could have a material impact on our business strategy, results of operations or financial condition. For additional discussion of the risks posed by cybersecurity threats, see “Item 1A. Risk Factors – We and our hotel managers and franchisors rely on information technology in our operations, and any material failure, inadequacy, interruption, cyber-attack or security failure of that technology could harm our business.”  

Item 2. Properties.

Our principal executive offices are located at 1635 43rd Street South, Suite 205, Fargo, North Dakota 58103. Our telephone number is (701) 630-6500. We lease our offices from an unrelated third party.

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Hotel Properties

As of December 31, 2023, we consolidated nineteen hotel properties, consisting of eighteen hotels properties owned by us and an equity and profits interest in the parent of the entity which holds as leasehold interest in one hotel property. The following table provides summary information regarding the hotel properties owned by us as of December 31, 2023:

				Number
			Date	of Guest	Purchase			Transaction		Total		%
Hotel	Property Type	Location	Purchased	Rooms	Price			Costs		Purchase Price		Interest
Holiday Inn Express (the “Cedar Rapids Property)	Limited-Service	Cedar Rapids, IA	November 30, 2018	83	$	7,700,000		$	158,333	$	7,858,333	100	%
Hampton Inn & Suites (the “Pineville Property”)	Limited-Service	Pineville, NC	March 19, 2019	111		13,897,358	(1)​		303,744		14,201,102	100	%
Hampton Inn (the “Eagan Property”)	Limited-Service	Eagan, MN	June 19, 2019	122		13,950,000			278,333		14,228,333	100	%
Home2 Suites (the “Prattville Property”)	Extended-Stay	Prattville, AL	July 11, 2019	90		14,750,000			356,014		15,106,014	100	%
Home2 Suites (the “Lubbock Home2 Property”)	Extended-Stay	Lubbock, TX	December 30, 2019	100		14,150,000			284,776		14,434,776	100	%
Fairfield Inn & Suites (the "Lubbock Property")	Limited-Service	Lubbock, TX	January 8, 2020	101		15,150,000			496,431		15,646,431	100	%
Homewood Suites (the "Southaven Property")	Extended-Stay	Southaven, MS	February 21, 2020	99		20,500,000			445,090		20,945,090	100	%
Courtyard by Marriott (the "Aurora Property")	Select-Service	Aurora, CO	February 4, 2021	141		23,610,000			458,129		24,068,129	100	%
Holiday Inn (the "El Paso HI Property")	Select-Service	El Paso, TX	May 12, 2021	175		10,300,000			361,019		10,661,019	100	%
Hilton Garden Inn (the "Houston Property")	Select-Service	Houston, TX	August 3, 2021	182		19,910,000			918,353		20,828,353	100	%
Sheraton Hotel (the "Northbrook Property")	Full-Service	Northbrook, IL	December 3, 2021	160		11,400,000			340,005		11,740,005	100	%
Hampton Inn & Suites (the “Fargo Property”)	Limited-Service	Fargo, ND	January 18, 2022	90		11,440,000			302,222		11,742,222	100	%
Courtyard by Marriott (the "El Paso Airport Property")	Select-Service	El Paso, TX	February 8, 2022	90		15,120,000			333,234		15,453,234	100	%
Fairfield Inn & Suites (the "Lakewood Property")	Limited-Service	Lakewood, CO	March 29, 2022	142		18,800,000			862,117		19,662,117	100	%
Residence Inn (the "Fort Collins Property")	Extended-Stay	Fort Collins, CO	August 3, 2022	113		15,800,000			546,009		16,346,009	100	%
Hilton Garden Inn (the "Pineville HGI Property")	Select-Service	Pineville, NC	August 25, 2022	113		10,930,000			347,149		11,277,149	100	%
Hilton Garden Inn (the "Charlotte Property")	Select-Service	Charlotte, NC	August 25, 2022	112		15,440,000			416,387		15,856,387	100	%
Holiday Inn Express (the "Wichita Property")	Limited-Service	Wichita, KS	December 22, 2022	84		7,400,000			234,310		7,634,310	100	%
				2,108	$	260,247,358		$	7,441,655	$	267,689,013

(1) The seller of the Pineville Property was entitled to additional cash consideration if the property exceeds certain performance criteria based on increases in the property’s net operating income ("NOI") for one of the 12-month periods ending March 31, 2021, March 31, 2022, or March 31, 2023, as elected by the seller. The period to elect to receive additional compensation has passed with no election being made, as the seller did not elect the 12-month period ending March 31, 2021, March 31, 2022 or March 31, 2023.

In addition, on August 10, 2022, we acquired a 24.9% equity and profits interest in High Desert Garden Holdings, LLC, which is the parent of the entity which holds a leasehold interest in the Hilton Garden Inn, located in El Paso, Texas (the “El Paso University Property”) in exchange for a capital contribution of $3.2 million. The El Paso University Property is a select-service hotel with 153 guest rooms. See Note 3 “Investment In Hotel Properties” of the notes to the consolidated financial statements included as part of this Annual Report on Form 10-K for additional information regarding this transaction.

For a description of the debt associated with each of these hotel properties, see Part II. Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Debt.”

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Management Agreements

NHS Agreement

As of December 31, 2023, eleven of our hotel properties were subject to management agreements with NHS with an initial term expiring on December 31 of the fifth full calendar year following the effective date of the agreement. The agreement will automatically renew for successive five-year periods unless terminated earlier in accordance with its terms. The day-to-day operations of the Pineville Property was managed by Beacon IMG, Inc. (“Beacon”), an affiliate of the seller of the Pineville Property, pursuant to a sub-management agreement between NHS and Beacon until January 31, 2023, with HP Hotel Management taking over the day-to-day operations as of February 1, 2023.

Vista Host Agreement

As of December 31, 2023, our Southaven Property was subject to a management agreement with Vista Host Inc. (“Vista”) with an initial term expiring on February 21 of the fifth full calendar year following the effective date of the agreement. The agreement will automatically renew for two (2) successive five-year periods unless terminated earlier in accordance with its terms.

Aimbridge Agreement

As of December 31, 2023, each of our Houston Property, El Paso Airport Property and El Paso University Property was subject to a management agreement with Interstate Management Company, LLC (“Aimbridge”). The Aimbridge agreement for the Houston Property has an initial term expiring on August 3 of the third full calendar year following the effective date of the agreement. The agreement will automatically renew for additional successive terms of one year each unless terminated earlier in accordance with its terms. The Aimbridge agreement for the El Paso Airport Property and the El Paso University Property each has an initial five (5) year term and will automatically renew for one (1) year periods unless terminated earlier in accordance with its terms.

KAJ Agreement

As of December 31, 2023, each of the Fargo Property and the Wichita Property was subject to a management agreement with KAJ Hospitality Inc. (“KAJ”). Each KAJ agreement has an initial term of five years after its effective date, which automatically renews for successive one-year periods, unless terminated in accordance with its terms.

HP Agreement

As of December 31, 2023, the Charlotte Property and the Pineville HGI Property were each subject to a management agreement with HP Hotel Management, Inc. (“HP”). Each HP agreement has an initial term expiring three years after its effective date, which automatically renews for successive three-year periods, unless terminated in accordance with its terms. On February 1, 2023, HP assumed the management of the Pineville Property.

Franchise Agreements

As of December 31, 2023, all of our hotel properties were operated under franchise agreements with initial terms of 10 to 18 years. Franchise agreements allow the hotel properties to operate under the respective brands. Pursuant to the franchise agreements, we pay a royalty fee of 5% to 6% of room revenue, plus additional fees for marketing, central reservation systems and other franchisor costs. Certain hotels are also charged a program fee of generally between 3% and 4% of room revenue. We paid an initial fee of $50,000 to $175,000 at the time of entering into each franchise agreement which is being amortized over the term of each agreement.

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Item 3. Legal Proceedings.

We may from time to time be a party to legal proceedings which arise in the ordinary course of our business. See Note 12 “Commitments and Contingencies” of the notes to the consolidated financial statements included as part of this Annual Report on Form 10-K for a discussion of legal proceedings and governmental authority inquiries that were ongoing during the year ended December 31, 2023. Management is not aware of any current or pending legal proceedings to which we or any of our subsidiaries are a party or to which any of our property is subject, the outcome of which would, in management’s judgment based on information currently available, have a material adverse effect on our results of operations or financial condition, nor is management aware of any such legal proceedings contemplated by governmental authorities.

Item 4. Mine Safety Disclosures.

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information

No public market currently exists for our shares of common stock, and we currently have no plans to list our shares on a national securities exchange.

Share Valuation

We are not required to establish an updated net asset value of the Company (“Company NAV”) or an estimated net asset value per share (“Share NAV”) in accordance with FINRA Rules 5110 and 2231 as we are not conducting any public offering of our shares. The initial Share NAV was $10.00, the price at which we offered our shares in the Offering from the inception of the Offering through December 31, 2022, which was determined by our board of directors and bears no relationship to any established criteria of value such as book value or earnings per share, is not based on our past earnings, and does not reflect current market value for our assets. Our board of directors approved a revised Company NAV as of December 31, 2022, and a Share NAV of $10.57 per share effective January 6, 2023, determined by dividing the Company NAV by the number of then-outstanding shares of the Company’s common stock. The Company NAV and Share NAV were determined by our board of directors taking into account appraisals of the Company’s real estate properties and other factors deemed relevant to our board of directors. The Advisor administers our valuation policy and is responsible for the oversight of the valuation process, including the review and approval of the valuation and appraisal processes and methodologies used to determine our Company NAV and Share NAV, the consistency of the valuation and appraisal methodologies with real estate industry standards and practices, and the reasonableness of the assumptions used in the valuations and appraisals.

At any time that a new Company NAV is calculated as provided above prior to the termination of the Offering, we intend to adjust the Offering price of the shares in an amount equal to the Company NAV divided by the number of outstanding shares. Our board of directors will determine a new Share NAV at such times and in conjunction with our determination of the Company NAV, and we will report the new Share NAV to our stockholders.

Equity Compensation Plans

Our board of directors has approved the adoption of a phantom stock plan (the “Phantom Stock Plan”) for the Company. However, the specific terms of the Phantom Stock Plan have not yet been determined and approved by our board. We intend for the shares designated pursuant to the Phantom Stock Plan (the “Phantom Shares”) to be allocated to the Advisor, the TRS subsidiaries and NHS for distribution of the proceeds to their respective employees and service providers in accordance with their compensation plans, however, Corey Maple, Norman Leslie and Samuel Montgomery will not receive any Phantom Shares pursuant to the Phantom Stock Plan.

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Stockholder Information

As of December 17, 2024, we had 10,009,663 shares of our common stock outstanding, held by a total of 1,362 stockholders.

Distribution Information

During our Offering, when we may raise capital more quickly than we acquire income-producing assets, and from time to time after the Offering, we may not pay distributions solely from our cash flow from operating activities, in which case distributions may be paid in whole or in part from proceeds from the Offering or debt financing.

Distributions declared, distributions paid, and net cash flow used in operations during 2023 and 2022, aggregated by quarter, are as follows:

			Distribution								Net Cash
	Distributions		Declared Per		Distributions Paid (3)						Flows Provided By
Period	Declared (1)		Share (1) (2)		Cash		Reinvested		Total		(Used In) Operations
First Quarter 2023	$	1,779,846	$	0.175	$	1,424,802	$	395,820	$	1,820,622	$	264,655
Second Quarter 2023		1,794,077		0.175		1,317,166		384,772		1,701,938		3,484,371
Third Quarter 2023		1,816,105		0.175		1,344,743		381,033		1,725,776		2,285,665
Fourth Quarter 2023		1,826,402		0.175		1,433,319		335,912		1,769,231		(2,980,745)
	$	7,216,430	$	0.700	$	5,520,030	$	1,497,537	$	7,017,567	$	3,053,946
			Distribution								Net Cash
	Distributions		Declared Per		Distributions Paid (3)						Flows Provided By
Period	Declared (1)		Share (1) (2)		Cash		Reinvested		Total		(Used In) Operations
First Quarter 2022	$	1,556,308	$	0.175	$	933,464	$	567,240	$	1,500,704	$	(3,293,181)
Second Quarter 2022		1,540,200		0.175		1,203,791		526,159		1,729,950		20,841
Third Quarter 2022		1,821,829		0.175		1,094,353		452,923		1,547,276		2,268,982
Fourth Quarter 2022		1,762,398		0.175		1,234,969		433,293		1,668,262		(326,742)
	$	6,680,735	$	0.700	$	4,466,577	$	1,979,615	$	6,446,192	$	(1,330,100)

(1) Distributions for the period from January 1, 2022 through December 31, 2023 were payable to each stockholder as 100% in cash on a monthly basis.

(2) Assumes each share was issued and outstanding each day that was a record date for distributions during the period presented.

(3) Distributions for the period from January 1, 2022 through December 31, 2023 were paid on a monthly basis. Distributions for all record dates of a given month during such period were paid during the following month, except for the distributions declared for December 2023 which were paid in March 2024.

For the year ended December 31, 2023, we paid aggregate distributions of $7.0 million, including $5.5 million of distributions paid in cash and $1.5 million of distributions reinvested through our dividend reinvestment plan. For the year ended December 31, 2022, we paid aggregate distributions of $6.4 million, including $4.5 million of distributions paid in cash and $2.0 million of distributions reinvested through our dividend reinvestment plan. Our net loss for the years ended December 31, 2023 and 2022, was $13.4 million and $18.9 million, respectively. Net cash flows provided by or used in operations for the years ended December 31, 2023 and 2022, were $3.1 million provided by operations and $1.3 million used in operations, respectively. We funded 100% of our distributions paid, which includes cash distributions and distributions reinvested by stockholders, with proceeds from the Offering.

To the extent that we pay distributions from sources other than our cash flows from operating activities, we will have less funds available for the acquisition of real estate investments, the overall return to our stockholders may be reduced, and subsequent investors will experience dilution.

Going forward we expect our board of directors to continue to authorize and declare distributions, if at all, based on daily record dates. Distributions will be determined by our board of directors based on our financial condition and such other factors as our board of directors deems relevant, and may be paid in cash or in shares pursuant to the DRIP. Our board of directors has not pre-established a percentage rate of return for cash distributions or stock distributions to stockholders.

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We have not established a minimum distribution level, and our charter does not require that we make distributions to our stockholders.

Unregistered Sales of Equity Securities

Initial Offering

On June 1, 2018, we commenced an offering (the “Offering”) of up to $100,000,000 in shares of our common stock, which amount was increased to $150,000,000 in shares of our common stock in December 2021. We are offering these securities in reliance upon exemptions from the registration requirements provided by Section 4(a)(2) of the Securities Act and Regulation D under the Securities Act relating to sales not involving any public offering. The securities are being offered and sold only to purchasers who are “accredited investors,” as defined in Rule 501 of Regulation D of the Securities Act, and without the use of general solicitation, as that concept is embodied in Regulation D. In addition to sales of common stock for cash, we have adopted a dividend reinvestment plan, which permits stockholders to reinvest their distributions back into the Company. Except as otherwise provided in the offering memorandum, we are currently offering the shares in the private offering at an offering price of $10.57 per share, with shares purchased in our dividend reinvestment plan at an offering price of $10.04 per share.  During the year ended December 31, 2023, we sold 199,071 shares of common stock in the private offering, resulting in gross offering proceeds of approximately $2.0 million, in addition to 149,135 shares issued pursuant to our dividend reinvestment plan. During the year ended December 31, 2023, aggregate selling commissions of $0.1 million and marketing and diligence allowances and other wholesale selling costs and expenses of $1.3 million were paid in connection with the private offering. During the year ended December 31, 2022, we sold 1,186,019 shares of common stock in the private offering, resulting in gross offering proceeds of approximately $13.5 million, including 208,380 shares issued pursuant to our dividend reinvestment plan. During the year ended December 31, 2022, aggregate selling commissions of $0.6 million and marketing and diligence allowances and other wholesale selling costs and expenses of $1.5 million were paid in connection with the private offering.

GO Unit Offering

On June 15, 2020, we commenced a private placement offering of limited partnership units in our Operating Partnership, designated as Series GO LP Units, with a maximum offering of $20,000,000, which could be increased to $30,000,000 in the sole discretion of the Company, as the General Partner of the Operating Partnership, (the “GO Unit Offering”). The Series GO LP Units were being offered until the earlier of (i) the sale of $20,000,000 in Series GO LP Units (which could be increased to $30,000,000 in the Company’s sole discretion), (ii) June 14, 2022 or (iii) the Operating Partnership terminates the GO Unit Offering at an earlier date in its sole discretion. Our board of directors terminated the GO Unit Offering as of February 14, 2022. Our board of directors approved and ratified additional sales after February 14, 2022 in the GO Unit Offering for sales which were pending as of that date. The Operating Partnership was offering these securities in reliance upon exemptions from the registration requirements provided by Section 4(2) of the Securities Act and Regulation D under the Securities Act relating to sales not involving any public offering. The securities were being offered and sold only to purchasers who are “accredited investors,” as defined in Rule 501 of Regulation D of the Securities Act, and without the use of general solicitation, as that concept is embodied in Regulation D. Subject to restrictions on ownership in order to comply with rules governing real estate investment trusts and the terms of the partnership agreement of the Operating Partnership, each holder of Series GO LP Units (a “Series GO Limited Partner”) will have the right to exchange its Series GO LP Units for, at the option of the Operating Partnership, an equivalent number of shares of common stock of the Company (“Common Shares”), or cash equal to the fair market value of the Common Shares (the “Cash Amount”) which would have otherwise been received pursuant to such exchange. The exchange right is not available until all of the following have occurred (the “Exchange Date”):  (i) the Common Shares are listed on a national securities exchange, the sale of all or substantially all of the GP Units and Interval Units held by the Company or any sale, exchange or merger of the Company or the Operating Partnership or, as determined in the sole discretion of the Company, the occurrence of a similar event; (ii) the Series GO Limited Partner has held its Series GO LP Units for at least one year; (iii) the Common Shares to be issued pursuant to the redemption have been registered with the SEC and the registration statement has been declared effective, or an exemption from registration is available; and (iv) the exchange does not result in a violation of the shareholder ownership limitations set forth in the Company’s articles of incorporation. Notwithstanding the above, the Company may waive any of the requirements above in its sole discretion other than (ii) or (iv). During the year ended December 31, 2023, no Series GO LP Units were sold. During the year ended December 31, 2022, we sold and issued 910,329 Series GO LP Units in the GO Unit Offering, resulting in gross proceeds of $6.3

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million. During the year ended December 31, 2022, aggregate selling commissions of $0.4 million and marketing and diligence allowances and other wholesale selling costs and expenses of $0.1 million were paid in connection with the offering.

Series T LP Units

On June 15, 2020, the Operating Partnership established the Series T LP Units as a new series of limited partnership units in the Operating Partnership. The Operating Partnership may issue the Series T LP Units from time to time to persons who contribute direct or indirect interests in real estate to the Operating Partnership. During the year ended December 31, 2023, the Operating Partnership issued no Series T LP Units. During the year ended December 31, 2022, the Operating Partnership issued an aggregate of 2,559,737 Series T LP Units in connection with contributions of hotel properties on January 18, 2022, March 24, 2022, August 3, 2022, August 25, 2022 and December 22, 2022. These securities were issued in reliance upon exemptions from the registration requirements provided by Section 4(2) of the Securities Act and Regulation D under the Securities Act relating to sales not involving any public offering. The securities were offered and sold only to purchasers who are “accredited investors,” as defined in Rule 501 of Regulation D of the Securities Act. Subject to the terms of the partnership agreement of the Operating Partnership, each holder of Series T LP Units (a “Series T Limited Partner”) will have its Series T LP Units be eligible for conversion into Common LP Units beginning 24 or 36 months, or longer in some instances, after the issuance of the Series T LP Units, at which point the value will be calculated pursuant to the terms of the  partnership agreement of the Operating Partnership and the formula set forth in the contribution agreement between the Operating Partnership and the Series T Limited Partner. The number of Common LP Units to be issued to the contributor based on such conversion may be higher or lower than the initial valuation of the Series T LP Units. The Series T LP Units will also automatically convert into Common LP Units upon other events as described in the partnership agreement of the Operating Partnership at a rate based on a mathematical formula. Subject to restrictions on ownership in order to comply with rules governing real estate investment trusts and the terms of the partnership agreement of the Operating Partnership, each holder of Common LP Units will have the right to exchange its Common LP Units for, at the option of the Operating Partnership, an equivalent number of Common Shares or the Cash Amount which would have otherwise been received pursuant to such exchange. The exchange right is not available until the Exchange Date (as defined in the previous paragraph). Notwithstanding the above, the Company may waive any of the requirements of the Exchange Date described in the paragraph above in its sole discretion other than (ii) or (iv).

Common LP Units

On December 3, 2021, the Operating Partnership commenced a private placement offering of its Common LP Units. The Operating Partnership is offering these securities in reliance upon exemptions from the registration requirements provided by Section 4(2) of the Securities Act and Regulation D under the Securities Act relating to sales not involving any public offering. The securities are being offered and sold only to purchasers who are “accredited investors,” as defined in Rule 501 of Regulation D of the Securities Act. Subject to restrictions on ownership in order to comply with rules governing real estate investment trusts and the terms of the partnership agreement of the Operating Partnership, each holder of Common LP Units will have the right to exchange its Common LP Units for, at the option of the Operating Partnership, an equivalent number of Common Shares or the Cash Amount which would have otherwise been received pursuant to such exchange. The exchange right is not available until the Exchange Date (as defined above). Notwithstanding the above, the Company may waive any of the requirements described above in its sole discretion other than (ii) or (iv). During the year ended December 31, 2023, the Operating Partnership did not issue any Common LP Units. On February 8, 2022, the Operating Partnership issued 460,000 Common LP Units to a contributor of real estate to the Operating Partnership.

GO II Units Offering

On April 7, 2023, the Operating Partnership commenced a private placement offering of its Series GO II LP Units, with a maximum offering of $30,000,000, which could be increased to $60,000,000 in the sole discretion of LF REIT III as the General Partner of the Operating Partnership, (the “GO II Unit Offering”) to accredited investors only, pursuant to a confidential private placement memorandum exempt from registration under the Securities Act of 1933, as amended. The Series GO II LP Units are being offered until the earlier of (i) the sale of $30,000,000 in Series GO II LP Units (which could be increased to $60,000,000 in the Company’s sole discretion), (ii) March 31, 2024, which date may be extended for two 1-year extensions until March 31, 2026 in the sole discretion of the Operating Partnership or (iii) the Operating

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Partnership terminates the GO II Unit Offering at an earlier date in its sole discretion. Our board of directors extended the term of the GO II Unit Offering to March 31, 2025. The Operating Partnership is offering these securities in reliance upon exemptions from the registration requirements provided by Section 4(2) of the Securities Act and Regulation D under the Securities Act relating to sales not involving any public offering. The securities are being offered and sold only to purchasers who are “accredited investors,” as defined in Rule 501 of Regulation D of the Securities Act, and without the use of general solicitation, as that concept is embodied in Regulation D. Subject to restrictions on ownership in order to comply with rules governing real estate investment trusts and the terms of the partnership agreement of the Operating Partnership, each holder of Series GO II LP Units (a “Series GO II Limited Partner”) will have the right to exchange its Series GO II LP Units for, at the option of the Operating Partnership, an equivalent number of shares of common stock of the Company (“Common Shares”), or cash equal to the fair market value of the Common Shares (the “Cash Amount”) which would have otherwise been received pursuant to such exchange; provided, however, that until such time as the Series GO II LP Units have been allocated Net Income (including book-up income) such that their positive Capital Account balance is equal to the net asset value of the Company’s shares of common stock (the “Share NAV”), the exchange right will be limited and the Series GO II Limited Partners will only be entitled to receive a pro rata portion of a REIT Share equal to the positive Capital Account balance of the Series GO II LP Unit divided by the Share NAV. The exchange right is not available until all of the following have occurred (the “Exchange Date”):  (i) the Common Shares are listed on a national securities exchange, the sale of all or substantially all of the GP Units and Interval Units held by the Company or any sale, exchange or merger of the Company or the Operating Partnership or, as determined in the sole discretion of the Company, the occurrence of a similar event; (ii) the Series GO II Limited Partner has held its Series GO II LP Units for at least one year; (iii) the Common Shares to be issued pursuant to the redemption have been registered with the SEC and the registration statement has been declared effective, or an exemption from registration is available; and (iv) the exchange does not result in a violation of the shareholder ownership limitations set forth in the Company’s articles of incorporation. Notwithstanding the above, the Company may waive any of the requirements above in its sole discretion other than (ii) or (iv). During the year ended December 31, 2023, the Operating Partnership issued 129,787 Series GO II LP Units. During the year ended December 31, 2023, aggregate selling commissions were $3,370 and marketing and diligence allowances and other wholesale selling costs and expenses of $6,345 were paid in connection with the GO II Unit Offering.

Share Repurchase Plan

The board of directors has adopted a share repurchase plan that may enable our stockholders to have their shares repurchased in limited circumstances. In its sole discretion, the board of directors could choose to terminate or suspend the plan or to amend its provisions without stockholder approval. The repurchase plan may be reviewed and modified by the board of directors as it deems necessary in its sole discretion. The following discussion summarizes the principal terms of our share repurchase plan.

Repurchase Price

Under certain circumstances and subject to the death repurchase described below, the prices at which we will repurchase shares under our repurchase plan are as follows:

● For those shares held by the stockholder for at least one year, 92% of the current share NAV;

● For those shares held by the stockholder for at least two years, 96% of the current share NAV; and

● For those shares held by the stockholder for at least three years, 100% of the current share NAV.

For purposes of determining the time period a stockholder has held each share, the time period begins as of the date the stockholder acquired the share, provided that shares purchased by the stockholder pursuant to our dividend reinvestment plan will be deemed to have been acquired on the same date as the initial shares to which the dividend reinvestment plan shares relate. The board of directors may, in its sole discretion, reject any request for repurchase and may, upon notice to the stockholders, amend, suspend or terminate the repurchase program at any time.

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Limitations on Repurchase

There are several limitations on our ability to repurchase shares under our share repurchase plan:

● Unless the shares are being repurchased in connection with a stockholder’s death, we may not repurchase shares unless the stockholder has held the shares for at least one year.

● During any calendar year, we will repurchase only the number of shares that we could purchase with the amount of net proceeds from the sale of shares under our dividend reinvestment plan during the prior calendar year. However, we may increase or decrease the funding available for the repurchase of shares pursuant to our share repurchase plan upon 10 business days’ notice to our stockholders.

● During any calendar year, we will limit the total shares repurchased to no more than 5.0% of the weighted-average number of shares outstanding as of December 31 of the prior calendar year.

● We have no obligation to repurchase shares if the repurchase would violate the restrictions on distributions under Maryland law, which prohibits distributions that would cause a corporation to fail to meet statutory tests of solvency.

● We will not repurchase shares if the board of directors determines, in its sole discretion, that the repurchase price determined in accordance with the terms of our share repurchase plan exceeds the then current fair market value of the shares to be repurchased.

Procedures for Repurchase

We will repurchase shares within 21 days following the end of a calendar quarter. We must receive a written request for repurchase at least two business days before the end of the calendar quarter in order for us to repurchase a stockholder’s shares on the repurchase date. If we cannot repurchase all shares presented for repurchase in any quarter, we will attempt to honor repurchase requests on a pro rata basis. The board of directors may, in its sole discretion, reject any request for repurchase.

If we did not completely satisfy a stockholder’s repurchase request on a repurchase date because we did not receive the request in time, because of the limitations on repurchases set forth in our share repurchase plan or because of a suspension of our share repurchase plan, we would treat the unsatisfied portion of the repurchase request as a request for repurchase at the next repurchase date at which funds are available for repurchase unless the stockholder withdraws its request. Any stockholder may withdraw a repurchase request upon written notice to the program administrator if such notice is received at least two business days before the repurchase date.

All shares to be repurchased must be (i) fully transferable and not be subject to any liens or other encumbrances and (ii) free from any restrictions on transfer. If we determine that a lien or other encumbrance or restriction exists against the shares, we will not repurchase any such shares.

Neither we nor the board of directors will have any liability to any stockholder for any damages resulting from or related to the stockholder’s presentment of its shares. Further, stockholders will have complete responsibility for payment of all taxes, assessments and other applicable obligations and third-party costs resulting from or relating to our repurchase of shares. All repurchased shares shall be repurchased as treasury shares and may be made available for purchase to new or existing stockholders.

Special Repurchases—Death Repurchase

In the event of the death of a stockholder, we will, upon request and within six months from the date of the request, repurchase such stockholder’s shares regardless of the period the deceased stockholder has owned such shares at the following prices:

● 92% of the current share NAV if death occurs less than six months of the purchase;

● 96% of the current share NAV if death occurs from six months to one year of purchase; and

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● 100% of the current share NAV if death occurs after one year of purchase.

We will not be obligated to repurchase a deceased stockholder’s shares if more than two years have elapsed from the date of death.

Amendment, Suspension or Termination of Program and Notice

The board of directors may, at any time and without stockholder approval, upon 10 business days’ written notice to the stockholders (i) amend, suspend or terminate our share repurchase plan and (ii) increase or decrease the funding available for the repurchase of shares pursuant to our share repurchase plan.

Shares Repurchased

Pursuant to the terms of our Share Repurchase Plan, we will repurchase shares within 21 days following the end of a calendar quarter. During the year ended December 31, 2023, we repurchased no shares of our common stock.

Month	Total Number of Shares Repurchased		Average Price Paid Per Share		Approximate Dollar Value of Shares Available That May Yet Be Repurchased Under the Program
January 2023		—	$	—		(1)
February 2023		—	$	—		(1)
March 2023		—	$	—		(1)
Total		—
April 2023		—	$	—		(1)
May 2023		—	$	—		(1)
June 2023		—	$	—		(1)
Total		—
July 2023		—	$	—		(1)
August 2023		—	$	—		(1)
September 2023		—	$	—		(1)
Total		—
October 2023		—	$	—		(1)
November 2023		—	$	—		(1)
December 2023		—	$	—		(1)
Total		—
Year Ended December 31, 2023		—

^­​

⁽¹⁾ We limit the dollar value of shares that may be repurchased under the plan as described above. One of these limitations is that during each calendar year, our share repurchase plan limits the number of shares we may repurchase to those that we could purchase with the amount of the net proceeds from the sale of shares under our dividend reinvestment plan during the prior calendar year. However, we may increase or decrease the funding available for the repurchase of shares upon ten business days’ notice to our stockholders.

The above table is on a cash basis, but we record our shares repurchased, as described below, on an accrual basis. During the year ended December 31, 2023, we repurchased no shares of our common stock. During the year ended December 31, 2022 we repurchased 135,248 shares pursuant to repurchase requests received during the year ended December 31, 2022, which represents an original investment of $1,352,472, including $185,036 of DRIP shares, for $1,347,319. As of December 31, 2022, no redemption proceeds had not yet been paid and were included in other liabilities on the accompanying consolidated balance sheets included as part of this Annual Report on Form 10-K. Based on the repurchase limits described above, as of December 31, 2023 we had $1,931,014 available for eligible repurchases during 2024.

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Item 6. [Reserved]

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

A discussion regarding our financial condition and results of operations for year-end 2022 compared to year-end 2021 can be found in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as filed with the SEC on March 27, 2024 (“2022 Form 10-K”)

As used herein, the terms “we,” “our,” “us” and “the Company” refer to Lodging Fund REIT III, Inc., a Maryland corporation, Lodging Fund REIT III OP, LP, a Delaware limited partnership, which we refer to as the “Operating Partnership,” Lodging Fund REIT III TRS, Inc., a Delaware corporation, which we refer to as the “Master TRS” and their subsidiaries, except where the context otherwise requires. The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements of the Company and the notes thereto.

Overview

We were formed on April 9, 2018 as a Maryland corporation for the primary purpose of acquiring a diversified portfolio of hotel properties (the “Projects”) located primarily in America’s Heartland, which we define as the geographic area from North Dakota to Texas and the Appalachian Mountains to the Rocky Mountains. We have elected to be taxed as a real estate investment trust, or REIT, beginning with the taxable year ending December 31, 2018. We conduct substantially all of our business and own substantially all real estate investments through the Operating Partnership. We are the sole general partner of the Operating Partnership. We and the Operating Partnership are advised by the Advisor pursuant to an advisory agreement, as amended, under which the Advisor performs advisory services regarding acquisition, financing and disposition of the Projects and origination of any loans, and is responsible for managing, operating and maintaining the Projects and day-to-day management of the Company. The Advisor may, in its sole discretion, perform these duties through one or more affiliates. We have engaged NHS to manage the majority of the hotel properties acquired to date; however, we can engage third party property, and have done so in connection with several of our hotel properties acquired to date. NHS is wholly-owned by Norman Leslie, a director and executive officer of the Company and a principal of the Advisor. The Advisor has no direct employees. The employees of the Sponsor, an affiliate of the Advisor, provide services to the Company related to the negotiations of property acquisitions and financing, asset management, accounting, legal, investor relations, and all other administrative services.

We have invested and continue to invest primarily in 80 to 200 room limited service, select-service, full-service and extended stay hotel properties with strong mid-market brands in America’s Heartland. As of December 31, 2023, we consolidated 19 hotel properties, consisting of 18 hotel properties owned by us and an equity and profits interest in the parent of the entity which holds the leasehold interest in one hotel property, with an aggregate of 2,261 rooms located in 10 states. See Part I, Item 1, “Business” of this Annual Report on Form 10-K for more details on our investment objectives and strategy.

We have raised capital through several private offerings conducted by the Company and the Operating Partnership described below.

We are currently conducting an offering (the “Offering”) of shares of our common stock under a private placement to qualified purchasers who meet the definition of “accredited investors,” as provided in Regulation D of the Securities Act of 1933, as amended (the “Securities Act”). The Offering commenced on June 1, 2018 in an amount of up to $100,000,000 in shares of our common stock, which amount was increased to $150,000,000 in shares of our common stock in December 2021. The Offering will continue until the earlier of (i) the date when the maximum offering amount is sold, (ii) May 31, 2024, which may be extended by our board of directors in its sole discretion, or (iii) a decision by the Company to terminate the Offering. As of December 31, 2023, the Company had issued and sold 10,243,193 shares of common stock, including 1,167,594 shares attributable to our DRIP, and received aggregate proceeds of $100.2 million. After deductions for payments of selling commissions, marketing and diligence allowances, other wholesale selling costs and expenses, we received net offering proceeds of approximately $85.9 million. The net offering proceeds have been used principally to fund property acquisitions and pay distributions and debt service obligations. During the year ended December 31, 2023,

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we repurchased no shares of our common stock. No public market exists for the shares of our common stock, and none is expected to develop.

On April 29, 2020, we classified and designated 7,000,000 shares of authorized but unissued common stock, $0.01 par value per share, as shares of “Interval Common Stock,” to be part of the Offering. The offering of the Interval Common Stock was a maximum offering of $30,000,000, which could be increased to $60,000,000 in the sole discretion of our board of directors, (the “Interval Share Offering”) to accredited investors only, pursuant to a confidential private placement memorandum exempt from registration under the Securities Act of 1933, as amended. The Interval Share Offering was to continue until the earlier of (i) the date when $30,000,000 (or $60,000,000 if approved by our board of directors) is sold, (ii) March 31, 2022, or (iii) a decision by the Company to terminate the Interval Share Offering. Our board of directors allowed the Interval Share Offering to expire on March 31, 2022. We did not issue or sell any shares of Interval Common Stock in the Offering.

On June 15, 2020, the Operating Partnership commenced a private offering of limited partnership units in the Operating Partnership, designated as Series GO LP Units, with a maximum offering of $20,000,000, which could be increased to $30,000,000 in our sole discretion as the General Partner of the Operating Partnership (the “GO Unit Offering”) to accredited investors only, pursuant to a confidential private placement memorandum exempt from registration under the Securities Act of 1933, as amended. The Series GO LP Units were being offered until the earlier of (i) the sale of $20,000,000 in Series GO LP Units (which could be increased to $30,000,000 in the Company’s sole discretion), (ii) June 14, 2022 or (iii) the Operating Partnership terminates the GO Unit Offering at an earlier date in its sole discretion. Our board of directors terminated the GO Unit Offering as of February 14, 2022. Our board of directors approved and ratified additional sales after February 14, 2022 in the GO Unit Offering for sales which were pending as of that date. As of December 31, 2023, the Operating Partnership had issued and sold 3,124,503 Series GO LP Units and received aggregate proceeds of $21.5 million. After deductions for payments of selling commissions, marketing and diligence allowances, other wholesale selling costs and expenses, and other offering expenses, we received net offering proceeds of approximately $19.4 million.

The Operating Partnership may issue Series T LP Units or Common LP Units from time to time to persons who contribute direct or indirect interests in real estate to the Operating Partnership. The Series T LP Units will have allocations and distributions that are dictated by the Partnership Agreement of the Operating Partnership and the applicable contribution agreement for the real estate. Certain Series T LP Units may have different allocations and distributions than other Series T LP Units. The amount of the allocations and distributions will be determined by the General Partner in its sole discretion at the time of issuance of the Series T LP Units and any future distributions are dependent on the financial performance of the contributed real estate. The Series T LP Units are eligible for conversion into Common LP Units beginning 24 or 36 months, or longer in some instances, after their issuance and will automatically convert into Common LP Units upon a Termination Event as described in the Partnership Agreement of the Operating Partnership. The conversion of Series T LP Units into Common LP Units may vary with each issuance and is generally based on a formula that applies an applicable capitalization rate to the then current trailing twelve months net operating income of the hotel property less the loan balance outstanding as of the contribution date as assumed by the Operating Partnership, and less other amounts incurred by the Operating Partnership including but not limited to certain closing costs, loan assumption fees and defeasance costs, Property Improvement Plan (“PIP”) and capital expenditures, operating cash infused by the Operating Partnership, and any shortfall of certain minimum cumulative investment yield. There is no guarantee that the future financial performance of the contributed hotel property will be sufficient to result in the issuance of Common LP Units resulting from the application of the conversion formula applicable to the issuance Series T LP Units. As of December 31, 2023, the Company had issued an aggregate of 5,073,506 Series T LP Units and 612,100 Common LP Units in connection with such property contributions.

On December 3, 2021, the Operating Partnership commenced a private placement offering of its Common LP Units. As of December 31, 2023, the Operating Partnership had issued and sold 612,100 Common LP Units, with a value of $10.00 per unit, at the time of issuance, in connection with property contributions.

On April 7, 2023, the Operating Partnership commenced a private offering of the Series GO II LP Units, with a maximum offering of $30,000,000, which could be increased to $60,000,000 in the sole discretion of the Company as the General Partner of the Operating Partnership, (the “GO II Unit Offering”) to accredited investors only, pursuant to a confidential private placement memorandum exempt from registration under the Securities Act of 1933, as amended. The Series GO

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II LP Units are being offered until the earlier of (i) the sale of $30,000,000 in Series GO II LP Units (which could be increased to $60,000,000 in the Company’s sole discretion), (ii) March 31, 2024, which date may be extended for two 1-year extensions until March 31, 2026 in the sole discretion of the Operating Partnership or (iii) the Operating Partnership terminates the GO II Unit Offering at an earlier date in its sole discretion. On April 17, 2024, our board of directors extended the term of the GO II Unit Offering to March 31, 2025. As of December 31, 2023, the Operating Partnership had issued and sold 129,787 Series GO II LP Units and received gross aggregate proceeds of $1.0 million.

On May 7, 2024, our board of directors authorized management to pursue an exit strategy and position the Company for a sale or merger of the Company in 2025, provided that the economic environment is conducive to such a transaction, and to prepare the Company’s portfolio of hotel properties for a transaction through strategic acquisitions and dispositions with the objective of maximizing profitability at the hotel property level.  There can be no assurances that we will achieve an exit strategy within the time period and in the manner anticipated. The process of exploring strategic alternatives and marketing our assets could be time consuming and disruptive to our business operations and could divert management’s attention from our business, and we could incur substantial expenses associated with identifying and evaluating potential transactions. Further, any potential transaction would be dependent on a number of factors that may be beyond our control, including, among other things, market conditions, industry trends, the interest of third parties in a potential transaction with us and the availability of financing to potential buyers on favorable terms. There can be no assurance that we will successfully implement our strategy, or that any potential transaction or other strategic alternative will result in stockholder liquidity or provide a return to stockholders that equals or exceeds our estimated value per share.

Significant 2023 Events

SEC Settlement

As previously disclosed, the Advisor and Corey R. Maple received a “Wells notice” from the SEC stating that the SEC staff had made a preliminary determination to recommend to the SEC that it bring an enforcement action against the Advisor and Mr. Maple alleging violations of securities laws in connection with the SEC’s investigation of the Company’s reimbursement of and financial accounting for certain expenses incurred by the Advisor as well as the adequacy of its disclosures related to those policies and practices. The Wells notice was neither a formal charge of wrongdoing nor a final determination that the Advisor or Mr. Maple has violated any law.

On August 28, 2023, the Advisor and Mr. Maple, without admitting or denying the findings, agreed to an administrative cease-and-desist order relating to Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933, as amended. A copy of the order can be found on the SEC’s website at https://www.sec.gov/files/litigation/admin/2023/33-11227.pdf. As part of the settlement, the Advisor agreed to pay disgorgement of $463,900, prejudgment interest of $85,432 and a civil monetary penalty of $225,000 and Mr. Maple agreed to pay a civil monetary penalty of $100,000. Additionally, the Advisor has undertaken to (a) retain a qualified independent consultant acceptable to the SEC, at the Advisor’s expense, within 60 days of the date of entry of the order to review the Advisor’s policies, procedures and controls regarding the proper allocation of expenses between the Advisor and the Company as provided in the order, (b) require the consultant to submit a report to the Advisor and the SEC staff within 120 days of the entry of the order with its findings and any recommendations for changes or improvements, and (c) adopt, implement and maintain all policies, procedures and practices recommended by the consultant’s report within 120 days of receiving the report from the consultant. As of the date of this filing, each of these actions has been taken by the Advisor and Mr. Maple, as applicable, in accordance with the terms of the SEC order.

Resolution of Litigation with PA Sellers

Effective November 20, 2023, the Operating Partnership and Central PA Equities 17, LLC, Central PA Equities 19, LLC, and Springwood – FHP LP (collectively, the “PA Seller”) enter into a settlement agreement and general release of all claims (the “Settlement Agreement”) regarding the asset purchase agreement dated November 22, 2019 (as amended, the “Purchase Agreement”).  Pursuant to the Purchase Agreement, the Operating Partnership agreed to acquire the 108-room Fairfield Inn & Suites by Marriott hotel in Hershey, Pennsylvania, the 107-room Home2 Suites by Hilton hotel in York, Pennsylvania, and the 100-room Hampton Inn & Suites by Hilton hotel in York, Pennsylvania (collectively, the “Hotel Properties”) from the PA Seller for $46.9 million plus closing costs, subject to adjustment as provided in the Purchase

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Agreement. As required by the Purchase Agreement, the Operating Partnership deposited a total of $1.5 million into escrow as earnest money pending the closing or termination of the Purchase Agreement (the “Earnest Money Deposit”).

Pursuant to the Settlement Agreement, the PA Seller received $700,000 of the Earnest Money Deposit, and the Operating Partnership received $800,000 of the Earnest Money Deposit. Accrued interest on the Deposit was split between the parties with 7/15 of the total amount being paid to the PA Seller and 8/15 of the total amount being paid to the Operating Partnership. Incurred fees of the Escrow Agent were paid by the Operating Partnership in accordance with the Settlement Agreement. The Operating Partnership and all related entities are released and forever discharged from all claims related to or arising from the Purchase Agreement.

No Acquisitions

During the fiscal year ended December 31, 2023, we acquired no hotel properties.

Key 2022 Transactions

During the fiscal year ended December 31, 2022, we acquired seven hotel properties pursuant to contribution agreements and an equity and profits interest in the parent of the entity which holds the leasehold interest in one hotel property, with an aggregate of 897 rooms located in five states. The aggregate purchase price for the contribution agreements and equity and profits interest was $98.2 million, consisting of the issuance of Series T LP Units, Common LP Units, assumption or repayment of loans secured by the properties and payments of cash. The number of Common LP Units to be issued to each contributor based on the conversion of the Series T LP Units may be higher or lower than the initial valuation of the Series T LP Units. Accordingly, the aggregate purchase price was determined to be the value assigned by a third-party appraisal rather than the contractual purchase price, as the appraisal value was more reliably measurable.

Key Indicators of Operating Performance

In evaluating financial condition and operating performance, important indicators on which we focus are revenue measurements, such as occupancy, ADR and RevPAR, and expenses, such as property operations expenses, general and administrative expenses and other expenses described below. Occupancy is the total number of rooms occupied for the period divided by the total number of available rooms for the period. ADR is equal to the total gross room revenue divided by the total number of rooms rented for the period. RevPAR is equal to the total gross room revenue divided by the total number of available rooms for the period.

Market Outlook

The hospitality industry has been significantly impacted by the COVID-19 pandemic, which began in early 2020. The pandemic caused a sharp decline in occupancy and RevPAR in 2020 and early 2021. However, the recovery of demand in our hotels accelerated in the second, third and fourth quarters of 2021, led primarily by robust leisure demand. Demand continued to recover in 2022 and 2023. The outlook for the lodging industry in 2024 and the first half of 2025 remains cautiously optimistic, driven by strong leisure demand and a steady recovery in business travel. Upscale and Upper Midscale hotels are benefiting from cost-conscious travelers seeking value amid inflationary pressures. Industry trends include increased focus on sustainability, adoption of digital technologies, and enhanced guest experiences to compete with alternative accommodations like vacation rentals. While economic uncertainties and labor shortages pose challenges, the midscale segment is well-positioned to attract a broad customer base due to its affordability and evolving amenities. For the eleven hotel properties acquired prior to January 1, 2022, RevPAR in 2023 compared to 2022 improved 6% to $81.57 from $77.10 while occupancy remained static and ADR increased 6%. Business transient and group demand remains well below pre-pandemic levels in most markets, but such demand could increase if corporate travel increases. During the year ended December 31, 2023, inflation in the United States slowed from 2022 levels but is expected to continue at an elevated level in the near-term. Beginning in 2022, in an effort to combat inflation and restore price stability, the Federal Reserve significantly raised its benchmark federal funds rate, which led to increases in interest rates in the credit markets. Higher interest rates could have an adverse impact on our financing costs as well as general and administrative expenses and property operating expenses. Further, increasing labor costs and shortages, supply chain disruptions and related commodity and other price inflation may cause an increase in renovation, construction and

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operating costs, may limit our access to critical operating supplies, and may continue to adversely affect our hotel operations and financial results.

We cannot predict if and when the demand for our hotel properties will return to pre-outbreak levels of occupancy and pricing. Continued improvement in operating results will be dependent on continued strength in leisure travel and a recovery of business travel, as well as moderating inflation. In addition, if in the future there is a pandemic, epidemic or outbreak of another highly infectious or contagious disease or other health concern affecting states or regions in which we operate, we and our properties may be subject to similar risks and uncertainties as posed by COVID-19.

Liquidity and Capital Resources

Overview

Our short-term liquidity requirements consist primarily of funds necessary to pay our scheduled debt service, operating expenses, including payments to our Advisor and property managers, capital expenditures directly associated with our hotels, distributions to our stockholders and expenses related to implementing our exit strategy, to the extent market conditions are favorable to pursue such a strategy in the near-term. Our long-term liquidity requirements consist primarily of funds necessary to pay for the costs of acquiring additional hotels, renovations, and other capital expenditures that need to be made periodically to our hotels, scheduled debt payments, debt maturities, operating expenses, including payments to our Advisor and property managers, making distributions to our stockholders and continued expenses related to implementing our exit strategy if such implementation is delayed. We expect to meet our long-term liquidity requirements through various sources of capital, including cash provided by operations, borrowings, issuances of additional equity, including OP units, and proceeds from property dispositions. Our ability to incur additional debt is dependent upon a number of factors, including the state of the credit markets, our degree of leverage, the value of our unencumbered assets and borrowing restrictions imposed by existing lenders. Our ability to raise capital through the issuance of additional equity is also dependent on a number of factors including the current state of the capital markets, investor sentiment and intended use of proceeds. We may need to raise additional capital if we identify acquisition opportunities that meet our investment objectives and require liquidity in excess of existing cash balances. Our ability to raise funds through the issuance of equity securities depends on, among other things, general market conditions for hotel companies and REITs and market perceptions about us. The distribution rate for distributions declared during 2023 was equal to an annualized rate of 7.00% per share based on our initial offering price of $10.00. In an effort to conserve cash, our board of directors reduced the distribution rates for distributions beginning in April 2024 to annualized rates ranging from 3.50% to 5.00% per share based on our initial offering price of $10.00. See “—Subsequent Events” below for more information on 2024 distributions. Our board of directors will determine whether to authorize and declare distributions in such amounts or if at all based on our financial conditions and such other factors as our board of directors deems relevant.

On May 7, 2024, our board of directors authorized management to pursue an exit strategy and position the Company for a sale or merger of the Company as early as 2025, provided that the economic environment is conducive to such a transaction, and to prepare the Company’s portfolio of hotel properties for a transaction through strategic acquisitions and dispositions with the objective of maximizing profitability at the hotel property level. Expenses in the short- and long-term incurred in connection with such exit strategy will depend on the timing and extent of any efforts taken to implement the exit strategy.

We are dependent upon the net proceeds from our Offering and offerings of our Operating Partnership to conduct our proposed operations. The Offering will continue until the earlier of (i) the date when the maximum offering amount is sold, (ii) May 31, 2025, which may be extended by our board of directors in its sole discretion, or (iii) a decision by the Company to terminate the Offering. We had also used the net proceeds from the GO Unit Offering to conduct our operations. Our board of directors terminated the GO Unit Offering as of February 14, 2022. Our board of directors approved and ratified additional sales after February 14, 2022 in the GO Unit Offering for sales which were pending as of that date. We intend to obtain the capital required to make real estate and real estate-related investments and conduct our operations from the proceeds of our Offering and GO II Unit Offering and unused proceeds from the GO Unit Offering, from secured or unsecured financings from banks and other lenders and from any undistributed funds from our operations. As of December 31, 2023, we had raised approximately $100.2 million in gross offering proceeds from the sale of shares of our common stock in the Offering, approximately $21.5 million in gross offering proceeds from the sale of the Series GO LP Units in our GO Unit Offering and approximately $1.0 million in gross offering proceeds from the sale of the

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Series GO II LP Units in our GO II Unit Offering. If we are unable to raise substantial funds in the Offering and the Operating Partnership offerings, we will make fewer investments resulting in less diversification in terms of the type, number and size of investments we make and the value of an investment in us will fluctuate more significantly with the performance of the specific assets we acquire. There may be a delay between the sale of shares of our common stock and units and our purchase of assets, which could result in a delay in the benefits to our stockholders, if any, of returns generated from our investment operations. Further, we will have certain fixed operating expenses regardless of whether we are able to raise substantial funds in the Offering. Our inability to raise substantial funds would increase our fixed operating expenses as a percentage of gross income, reducing our net income and cash flow and limiting our ability to make distributions to our stockholders.

As of December 31, 2023, we consolidated nineteen hotel properties, consisting of eighteen hotel properties owned by us and an equity and profits interest in the parent of the entity which holds a leasehold interest in one hotel property. We acquired these investments with the proceeds from the sale of our common stock in the Offering, proceeds from the GO Unit Offering and debt financing and, for all but one of the properties acquired in 2022 and the equity and profits interest acquired in 2022, the issuance of Series T LP Units to the contributor as part of the consideration. Operating cash needs during the year ended December 31, 2023 were met through cash flow generated by these real estate investments and with proceeds from our Offering, the GO Unit Offering, and the GO II Unit Offering.

Our investments in real estate generate cash flow in the form of hotel room rentals and guest expenditures, which are reduced by operating expenditures, debt service payments and corporate general and administrative expenses. Each of our current properties is owned and future properties will be owned by a direct special purpose entity subsidiary of the Operating Partnership, which leases the properties to direct special purpose entity subsidiaries of the Master TRS, referred to as “TRS Lessees.” The TRS Lessees are or will be required to make rent payments to the owners of the properties pursuant to the lease agreements relating to each property. Such TRS Lessees’ ability to make rent payments to the owner subsidiaries and our liquidity, including our ability to make distributions to our stockholders, are dependent upon the TRS Lessees ability to generate cash flow from the operations of the hotel properties. The TRS Lessees are dependent upon the management companies with whom they have entered or will enter into management agreements with to operate the hotel properties.

Cash flow from operations from real estate investments will be primarily dependent upon the occupancy level and average daily rate, or “ADR”, of our portfolio, and how well we manage our expenditures.

We anticipate that our aggregate loan-to-value ratio will be between 35% and 65%, however, there can be no assurance that we will achieve this ratio. We will target a loan-to-value ratio for the Projects of between 35% and 70%, based on the purchase price of the Projects, however, we may obtain financing that is less than or higher than such loan-to-value ratio for an individual Project at the discretion of the board of directors. Though this is our estimated leverage, our charter does not limit us from incurring debt in excess of this amount. As of December 31, 2023, our aggregate loan-to-value ratio, based on the aggregate purchase price of the Projects, was approximately 57%.

In addition to making investments in accordance with our investment objectives and potential expenditures in connection with the implementation of our exit strategy, we expect to use capital resources to make certain payments to the Advisor and its affiliates and NHS. These payments include the various fees and expenses to be paid to the Advisor and its affiliates in connection with the selection, acquisition and management of Projects, as well as reimbursement of certain organization and other offering expenses described below. The Advisor earns a one-time acquisition fee of up to 1.4% of the hotel purchase price including funds allocated for any property improvement plan (“PIP”) at the time of each hotel property acquisition, a financing fee of up to 1.4% of the hotel purchase price including funds allocated for any PIP at the time of closing the initial financing, and an annual asset management fee of up to 0.75% of the gross assets of the Company, which is payable on a monthly basis. The Advisor may also be paid a refinancing fee of up to 0.75% of the principal amount of any refinancing at the time of closing the refinancing. The Advisor may also be paid a disposition fee equal to between 0.0% and 4.0% of the hotel sales price, payable at the closing of the disposition, which disposition fee in connection with a sale of all or substantially all of the Company’s assets, merger or similar transaction, shall be equal to between 0.0% and 4.0% of the gross consideration received (grossed up for liabilities of the Company), with the percentage dependent on the total return per share and timing of such transaction, payable at the closing of such sale, merger or transaction. The Advisor may also be paid real estate commissions of up to 3.0% of the hotel purchase price in connection with the sale of a hotel property in which the Advisor or its affiliates provided substantial services, but in no event greater than one-half of the

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total commissions paid with respect to such property if a commission is paid to a third-party as well as the Advisor, and in no event will total commissions exceed 5.0% of the hotel sales price. Certain affiliates of the Advisor may receive an annual guarantee fee equal to 1.0% of the guaranty amount, paid on a monthly basis, for debt obligations of the hotel properties personally guaranteed by such affiliates. The Advisor may earn an annual subordinated performance fee equal to 20% of the distributions after the common stockholders and Operating Partnership limited partners (other than the Series B LP Unit holders) have received a 6% cumulative, but not compounded, return per annum. Per the terms of the Operating Partnership’s operating agreement, the Advisor receives distributions from the Operating Partnership in connection with their ownership of non-voting Series B LP Units. The Advisor’s ownership of Series B LP Units is presented as non-controlling interest on the accompanying consolidated financial statements.

The Advisor and its affiliates may be reimbursed by us for certain organization and offering expenses in connection with the Offering, the GO Unit Offering and the GO II Unit Offering, including legal, printing, marketing and other offering-related costs and expenses. Following the termination of the Offering, the Advisor will reimburse us for any such amounts incurred by us in excess of 15% of the gross proceeds of the Offering. In addition, we may pay directly or reimburse the Advisor and its affiliates for certain costs incurred in connection with its provision of services to us, including certain acquisition costs, financing costs, and sales and marketing costs, as well as an allocable share of general and administrative overhead costs. All reimbursements are paid to the Advisor and its affiliates at cost.

NHS earns a monthly base management fee for property management services, including overseeing the day-to-day operations of the hotel properties for which it serves as the property manager, in an amount up to 4% of gross revenue. NHS may also earn a monthly accounting fee of $14.00 per room for accounting services, payable monthly, and an administrative fee equal to 0.60% of gross revenues for administrative and other services. We reimburse NHS for certain costs of operating the hotel properties incurred on our behalf. All reimbursements are paid to NHS at cost. NHS also earns a flat fee of $5,000 per hotel property for due diligence services, including analyzing, evaluating, and reporting on documentation and information received from sellers or contributors during the period of due diligence. Such fee is waived if, upon acquisition by us, NHS is selected as the management company for the hotel property. NHS is also reimbursed for actual out-of-pocket costs incurred in providing the due diligence services. As of December 31, 2023, NHS served as property manager for eleven of our hotel properties.

Our other hotel properties are managed by Vista Host Inc., Interstate Management Company, LLC (“Aimbridge”), KAJ Hospitality Inc.  and HP Hotel Management Inc. These management companies earn a base management fee in an amount between 2.0% and 3.0% of gross revenue, plus monthly accounting fees and in some cases a monthly fee for customized accounting services, revenue management and digital marketing. They also may earn an incentive management fee if certain performance metrics are achieved. We also reimburse the management companies for certain costs of operating the hotel properties on our behalf. All reimbursements are paid to such management companies at cost.

One Rep, a related party, provides construction oversight, project management, and other related services to the Company. For the services provided, One Rep is paid a construction management fee equal to 6% or 7% of the total project costs. The Company also reimburses One Rep for certain costs incurred on behalf of the Company, and all reimbursements are paid to One Rep at cost.

The franchise agreements for certain of our hotels require provide property improvement plans to cover, among other things, replacing and repairing furniture, fixtures and equipment at our hotels and other routine capital expenditures. As of December 31, 2023, we set aside $5.9 million for capital projects in property improvement funds, which are included in restricted cash.

We spent approximately $7.4 million on capital improvements at our operating hotels during the year ended December 31, 2023.

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Debt

Lines of Credit

Revolving Line of Credit – Western State Bank

On February 10, 2020, we entered into a $5.0 million revolving line of credit with Western State Bank (“Western Line of Credit”). The Western Line of Credit requires monthly payments of interest only, with all outstanding principal amounts being due and payable at maturity on February 10, 2021. On January 19, 2021, the Western Line of Credit was amended to extend the maturity date to May 10, 2021. The Western Line of Credit had a variable interest rate equal to the U.S. Prime Rate, plus 0.50%, resulting in an effective rate of 3.75% per annum as of March 31, 2021. On May 6, 2021, the Western Line of Credit was amended to extend the maturity date to May 10, 2022. On that date, the interest rate was also amended to incorporate an interest rate floor equal to 4.00%. On May 5, 2022, the Western Line of Credit was amended to extend the maturity date to December 15, 2022. On December 15, 2022, the Western Line of Credit was amended to extend the maturity to April 15, 2023. Additionally, through the amendment on December 15, 2022, the Western Line of Credit is secured by the Company’s Hampton Inn hotel property in Eagan, Minnesota, the Company’s Holiday Inn Express hotel property in Cedar Rapids, Iowa, the Company’s Hampton Inn hotel property in Fargo, North Dakota and limited partnership units of the Operating Partnership. On April 15, 2023, the Western Line of Credit was amended to extend the maturity to June 15, 2023. On July 31, 2023, the Western Line of Credit was amended to extend the maturity to September 15, 2023. This amendment also added an additional 200,000 limited partnership units of the Operating Partnership as collateral for the loan, for a total of 300,000 limited partnership units. On October 9, 2023, the Western Line of Credit was amended effective as of October 4, 2023, which extended the maturity date of the Western Line of Credit from September 15, 2023 to November 15, 2023. This amendment also reduced the maximum credit to $4.67 million and required the Operating Partnership to pay Western State Bank a principal curtailment of $0.3 million. On December 27, 2023, the Operating Partnership, the Company, Corey Maple, LF3 Fargo Med, LLC, LF3 Eagan, LLC, and LF3 Cedar Rapids, LLC entered into a Change in Terms Agreement in connection with the Western Line of Credit, which extended the maturity date of the Western Line of Credit from November 15, 2023 to April 30, 2024.

The interest rate as of December 31, 2023 was 9.50%. The Western Line of Credit is secured by our Cedar Rapids Property, Eagan Property, and Fargo Property which are also subject to term loans with the same lender, and 300,000 Common LP Units of the Operating Partnership. The Western Line of Credit includes cross-collateralization and cross-default provisions such that the existing mortgage loan agreements with respect to the Cedar Rapids Property, the Eagan Property, and the Fargo Property as well as future loan agreements that we may enter into with this lender, are cross-defaulted and cross-collateralized with each other. The Western Line of Credit, including all cross-collateralized debt, is guaranteed by Corey Maple. As of December 31, 2023, there was a $4.7 million balance outstanding on the Western Line of Credit. See “– Subsequent Events” below for a description of amendments to the Western Line of Credit subsequent to December 31, 2023.

Revolving Line of Credit – Legendary A-1 Bonds, LLC

On August 10, 2022, the Operating Partnership entered into a $5.0 million revolving line of credit loan agreement (the “A-1 Line of Credit”) with Legendary A-1 Bonds, LLC (“A-1 Bonds”), which is an affiliate of the Advisor which is owned by Norman Leslie, a director and officer of the Company and principal of the Advisor and Corey Maple, a director of the Company and principal of the Advisor. The A-1 Revolving Line of Credit requires monthly payments of interest only beginning September 1, 2022, with all outstanding principal and interest amounts being due and payable at maturity on December 31, 2022. On January 12, 2023, the A-1 Revolving Line of Credit was amended to increase the line of credit to $10.0 million, increased the number of Common LP Units of the Operating Partnership securing the A-1 Revolving Line of Credit to 1,000,000 unissued Common LP Units and extended the maturity date to December 31, 2023. The A-1 Revolving Line of Credit has a fixed interest rate of 7.00% per annum. Outstanding amounts under the A-1 Revolving Line of Credit may be prepaid in whole or in part without penalty. On April 18, 2023, the A-1 Revolving Line of Credit was amended to increase the line of credit to $13.3 million and increased the number of Common LP Units of the Operating Partnership securing the A-1 Revolving Line of Credit to 1,330,000 unissued Common LP Units. As of December 31, 2023, there was a $13.2 million balance outstanding on the A-1 Line of Credit. See “– Subsequent Events” below for a description of amendments to the A-1 Line of Credit subsequent to December 31, 2023.

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NHS Loan

On March 6, 2023, we entered into a $600,000 loan agreement (the “NHS Loan”) with NHS. The NHS Loan requires the payment of monthly interest beginning on April 6, 2023, with all outstanding principal and interest amounts being due and payable at maturity on July 6, 2023. The NHS Loan has a fixed interest rate of 7.0% per annum. Outstanding amounts under the NHS Loan may be prepaid in whole or in part without penalty. The NHS Loan is secured by 60,000 partnership units of the Operating Partnership. On December 28, 2023, we entered into a Change in Terms Agreement with the Operating Partnership and NHS in connection with the NHS Loan to extend the maturity date of the NHS Loan to January 31, 2024. This amendment also provided that in lieu of monthly interest payments, all accrued interest shall be due and payable on the maturity date with the full principal balance.

As of December 31, 2023, there was a $600,000 balance outstanding on the NHS Loan. See “– Subsequent Events” below for a description of amendments to the NHS Loan subsequent to December 31, 2023.

Mortgage Debt

As of December 31, 2023, we had $180.2 million in outstanding mortgage debt secured by each of our nineteen hotel properties, with maturity dates ranging from March 2024 to April 2029. Sixteen of the loans have fixed interest rates ranging from 3.70% to 7.00%. One loan is a variable interest loan at a rate of LIBOR plus 6.0% per annum, provided that LIBOR shall not be less than 1.0%, resulting in an effective rate of 11.46% as of December 31, 2023. Another loan is a variable interest loan at a rate of LIBOR or an equivalent rate plus 6.25% per annum, provided that the variable rate shall not be less than 0.75%, resulting in an effective rate of 11.71% as of December 31, 2023. Another loan is a variable interest loan at a rate of the 30-day secured overnight financing rate or an equivalent rate plus 6.25%, provided that the variable rate shall not be less than 10.00%, resulting in an effective rate of 11.60% as of December 31, 2023. Another loan is a variable interest loan at a rate of the 30-day secured overnight financing rate or an equivalent rate plus 7.50%, provided that the variable rate shall not be less than 10.00%, resulting in an effective rate of 12.85% as of December 31, 2023. Collectively, the weighted-average interest rate is 6.24%. The loans generally require monthly payments of principal and interest on an amortized basis, with certain loans allowing for an interest-only period following origination, and generally require a balloon payment due at maturity.  As of December 31, 2023 and December 31, 2022, certain mortgage debt was guaranteed by the members of the Advisor. See Note 9 “Related Party Transactions” of the notes to the consolidated financial statements included as part of this Annual Report on Form 10-K for additional information regarding debt that was guaranteed by members of the Advisor.

As of December 31, 2023, we were not in compliance with the required financial covenants under the terms of the promissory note secured by the Pineville Property and related loan documents (the “Pineville Loan”), which constitutes an event that puts us into a trigger period pursuant to the loan documents. On July 23, 2024, we sold the Pineville Property and no waiver of the financial covenants is needed. See “—Subsequent Events” below for a description of the sale of the Pineville Property subsequent to December 31, 2023. Except as described above for the Pineville Loan, we were in compliance with all debt covenants as of December 31, 2023.

Loan Refinancing and Loan Modification

On April 18, 2023, pursuant to the Loan Agreement, dated as of April 18, 2023 (the “New Fort Collins Loan Agreement”), LF3 RIFC, LLC and LF3 RIFC TRS LLC (collectively, the “Fort Collins Borrower”), subsidiaries of the Operating Partnership entered into a new $11.2 million loan with Access Point Financial, LLC (“Access Point”), which is secured by the Fort Collins Property (the “New Fort Collins Loan”). Access Point is not affiliated with the Company or the Advisor. The New Fort Collins Loan is evidenced by a promissory note and has a variable interest rate per annum equal to 30-day secured overnight financing rate plus 6.25%. The New Fort Collins Loan matures May 4, 2025, with the option for up to three one-year extensions if requirements are met, including certain required debt service coverage ratios and the payment of an extension fee. The New Fort Collins Loan requires monthly interest-only payments through May 4, 2025, followed by monthly payments of principal and interest through any extensions, with the outstanding principal and interest due at maturity. The Fort Collins Borrower has the right to prepay up to 10% of the outstanding principal amount of the New Fort Collins Loan on certain permitted prepayment dates with a 10-day notice. If prepaid during the first 25 months of the initial term, such a prepayment would include a prepayment fee equal to the sum of 24 months of interest payments that,

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but for the prepayment, would have been due and payable on the prepaid principal amount had a prepayment not occurred. When the Fort Collins Borrower pays the entire remaining principal balance, whether prepaid or on maturity, the Fort Collins Borrower will incur an exit fee of $112,000. The New Fort Collins Loan includes cross-default provisions such that a default under certain other agreements of the Fort Collins Borrower, the Guarantors described below and the property manager of the Fort Collins Property constitute a default under the New Fort Collins Loan. The Fort Collins Borrower used the proceeds of the New Fort Collins Loan to repay the original $11.5 million loan with A-1 Bonds which was secured by the Fort Collins Property, pursuant to a Loan Agreement, dated as of August 3, 2022.  The original loan was evidenced by three promissory notes in the amounts of $10,298,535 (“Tranche 1”), $700,000 (“Tranche 2”) and $501,465 (“Tranche 3”) and had a fixed interest rate of 7.0% per annum. On April 18, 2023, the proceeds of the New Fort Collins Loan were used to refinance the original loan, and the outstanding obligations under Tranche 1 were repaid in full and under Tranche 2 were forgiven. A 1.75% exit fee was paid on Tranche 1, and no penalty was incurred on Tranche 1 or Tranche 2. Tranche 3 remains an ongoing obligation, no longer secured by the Fort Collins Property, under the terms of the original loan and Tranche 3 promissory note. All guaranties in connection and collateral with respect to the original loan and Tranche 1, Tranche 2 and Tranche 3 promissory notes have been terminated or released, and all commitments with respect to the original loan and Tranche 1 and Tranche 2 promissory notes have been terminated or released.

Pursuant to the New Fort Collins Loan Agreement, Corey Maple and Norman Leslie entered into a Guaranty with Access Point to guarantee payment when due of the principal amount of indebtedness outstanding, including accrued interest and collection costs and expenses, and the performance of the agreements of the Fort Collins Borrower contained in the loan documents.

On May 15, 2023, LF3 El Paso, LLC and LF3 El Paso TRS LLC (collectively, the “El Paso HI Borrower”), subsidiaries of the Operating Partnership, the Operating Partnership and Corey R. Maple entered into a first loan modification agreement with EPH, which extended the maturity date to May 15, 2024. As a condition to the extension, the El Paso HI Borrower agreed to pay down $300,000 of the Holiday Inn El Paso Loan, modifying the principal outstanding balance to be $7.6 million. In addition, as a condition to the extension, the El Paso HI Borrower agreed to deposit $819,674 into an FF&E Reserve account held by EPH.

As an additional condition to the extension, the Operating Partnership and HD Sunland Park Property LLC (the “El Paso HI Contributor”) agreed to amend the Amended and Restated Contribution Agreement, dated as of May 12, 2021, to allow the Operating Partnership to offer the El Paso HI Contributor of the El Paso HI Property an adjustment in the conversion of Series T Limited Units to Common Limited Units or other financial adjustments if the Operating Partnership determines that the El Paso HI Contributor’s extension of the determination of the Series T value to 48 months after issuance to the El Paso HI Contributor may result in actual or possible financial or other loss or litigation.

See “– Subsequent Events” below for a description of changes to mortgage debt occurring subsequent to December 31, 2023.

Loan Guarantees

As of December 31, 2023, we have accrued a total of $1.2 million in guarantee payments due to certain affiliates of the Advisor that have provided personal guarantees on some of our debt obligations, which is included in accrued expense on the accompanying consolidated balance sheets. As of December 31, 2022, we had accrued a total of $0.9 million in guarantee payments due to certain affiliates of the Advisor that have provided personal guarantees on some of our debt obligations, which is included in accrued expense on the accompanying consolidated balance sheets.

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The following table sets forth the hotel properties securing each loan, the interest rate, maturity date, and the outstanding balance as of December 31, 2023 and 2022 for each of our mortgage debt obligations.

			Outstanding		Outstanding
			Balance as of		Balance as of
	Interest	Maturity	December 31,		December 31,
Hotel Property	Rate	Date	2023		2022
Holiday Inn Express - Cedar Rapids(1)	5.33%	9/1/2024	$	5,698,543	$	5,799,804
Hampton Inn & Suites - Pineville(2)	5.13%	6/6/2024		8,368,135		8,580,586
Hampton Inn - Eagan	4.60%	1/1/2025		8,839,737		9,063,528
Home2 Suites - Prattville(3)	4.13%	8/1/2024		8,984,688		9,199,041
Home2 Suites - Lubbock	4.69%	10/6/2026		7,103,138		7,343,948
Fairfield Inn & Suites - Lubbock	4.93%	4/6/2029		8,809,051		8,971,430
Homewood Suites - Southaven(4)	3.70%	3/3/2025		12,658,773		13,007,706
Courtyard by Marriott - Aurora(5)(6)	11.46%	2/5/2024(7)		15,000,000		15,000,000
Holiday Inn - El Paso(6)(8)	5.00%	5/15/2024(8)		7,600,000		7,900,000
Hilton Garden Inn - Houston(9)	3.85%	9/2/2026		13,852,705		13,947,217
Sheraton - Northbrook(6)(10)	11.71%	12/5/2024		4,026,202		3,766,639
Hampton Inn - Fargo(11)	4.00%	3/1/2027		7,095,283		7,275,480
Courtyard by Marriott - El Paso(12)(13)	6.01%	5/13/2027		9,975,072		9,990,000
Fairfield Inn & Suites - Lakewood(6)(14)	7.00%	3/28/2024		13,845,000		13,845,000
Residence Inn - Fort Collins(15)	11.60%	5/4/2025		11,200,000		11,500,000
Residence Inn - Fort Collins - CapEx(15)	12.85%	5/4/2025		1,875,000		—
Residence Inn - Fort Collins - A-1(15)(16)	7.00%	8/3/2028		501,465		—
Hilton Garden Inn - El Paso	4.94%	8/6/2025		12,341,759		12,613,869
Hilton Garden Inn - Pineville(17)	6.20%	8/25/2027		7,020,000		7,020,000
Hilton Garden Inn - Charlotte(17)	6.20%	8/25/2027		9,805,000		9,805,000
Holiday Inn Express - Wichita(12)	6.41%	12/21/2027		5,642,000		5,642,000
Total Mortgage Debt				180,241,551		180,271,248
Premium on assumed debt, net				203,135		221,082
Deferred financing costs, net				(2,574,861)		(3,193,939)
Net Mortgage			$	177,869,825	$	177,298,391

(1) Loan is interest-only through April 30, 2022 and is at a fixed rate of interest. The parties are working to finalize the extension documents as of the date of this filing.

(2) On July 23, 2024, the Hampton Inn & Suites Pineville was sold and the loan was repaid on the closing date. See “—Subsequent Events” below.

(3) On November 4, 2024, this loan was repaid in full and refinanced with a new loan secured by the Prattville Property. See “—Subsequent Events” below.

(4) On December 6, 2024, this loan was repaid in full and refinanced with a new loan secured by the Southaven Property. See Note 13 “Subsequent Events”.

(5) Variable interest rate equal to 30-day LIBOR plus 6.00%, provided that LIBOR shall not be less than 1.00%.

(6) Loan is interest-only until maturity.

(7) The Company has notified the lender of its intention to exercise the option under the loan agreement to extend the maturity date to February 5, 2025.

(8) On May 15, 2024, the maturity date was extended to November 15, 2024 and the interest rate was increased to 9.0%. See “—Subsequent Events” below.

(9) Loan is interest-only for the first 24 months after origination.

(10) Variable interest rate equal to 30-day LIBOR or equivalent rate plus 6.25%, provided that LIBOR or equivalent rate shall not be less than 0.75%.

(11) Proceeds of this loan were used to repay in full the original loan secured by the Fargo Property entered into on January 24, 2022 with A-1 Bonds.

(12) Loan is interest-only for the first 18 months after origination.

(13) Proceeds of this loan were used to repay in full the original loan secured by the El Paso Airport Property entered into on February 14, 2022 with A-1 Bonds.

(14) On March 27, 2024, this loan was repaid in full and refinanced with two new loans secured by the Lakewood Property and unissued common limited partnership units of the Operating Partnership. See “—Subsequent Events” below.

(15) On April 18, 2023, Tranche 1 and Tranche 2 were repaid in full and refinanced with a new loan secured by the Fort Collins Property.

(16) Tranche 3’s maturity date is August 2, 2028.

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(17) Loan is interest-only through February 25, 2024.

Employee Retention Credit (“ERC”)

Under the provisions of the CARES Act, and the subsequent extension of the CARES Act, the Company was eligible for a refundable Employee Retention Credit (“ERC”) subject to certain criteria. During 2021, the Company applied for and received a $0.8 million employee retention credit that is included in other income (expense) in the consolidated statements of operations. The Company received the funds from the ERC in April of 2023.

Cash Flows

The following table provides a breakdown of our net change in our cash, cash equivalents, and restricted cash:

	For the Years Ended December 31,
	2023		2022
Net cash provided by (used in) operating activities	$	3,053,946	$	(1,330,100)
Net cash used in investing activities		(7,489,926)		(55,481,343)
Net cash provided by financing activities		454,028		59,401,324
Net (decrease) increase in cash, cash equivalents and restricted cash	$	(3,981,952)	$	2,589,881

Cash Flows From Operating Activities

As of December 31, 2023, we owned eighteen hotel properties and an equity and profits interest in the parent of the entity which holds a leasehold interest in one hotel property, and during the year ended December 31, 2023, net cash provided by operating activities was $3.1 million. As of December 31, 2022, we owned eighteen hotel properties and an equity and profits interest in the parent of the entity which holds a leasehold interest in one hotel property, and net cash used in operating activities was $1.3 million. Our cash flows used in operating activities generally consist of the net cash generated by our hotel operations, partially offset by the cash paid for corporate expenses, certain acquisition-related expenses, property management fees, and other working capital changes. See “– Results of Operations” below for further discussion of our operating results for the years ended December 31, 2023 and 2022.

Cash Flows From Investing Activities

Net cash used in investing activities was $7.5 million for the year ended December 31, 2023, and primarily used for the improvements and additions to hotel properties. Net cash used in investing activities was $55.5 million for the year ended December 31, 2022, and primarily consisted of $50.9 million used for the acquisitions of hotel properties, $6.0 million used for the improvements and additions to hotel properties and $1.3 million provided from the acquisition of the VIE.

Cash Flows From Financing Activities

During the year ended December 31, 2023, net cash provided by financing activities was $0.5 million and consisted primarily of the following:

● $1.5 million of net cash provided by offering proceeds related to our Offering, including $1.0 million net cash related to the GO II Unit Offering, which was net of payments of commissions and other offering costs of $1.4 million;

● $6.3 million of net cash provided by debt financing as a result of proceeds from debt financing of $13.3 million and $6.8 million in draws on our line of credit, offset by principal payments on debt financing of $12.7 million, with $11.0 million related to the RIFC Property, $0.8 million in payments on our line of credit and payments of financing costs of $0.4 million; and

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● $7.4 million of net cash distributions, after giving effect to distributions reinvested by stockholders of $2.0 million.

During the year ended December 31, 2022, net cash provided by financing activities was $59.4 million and consisted primarily of the following:

● $14.0 million of net cash provided by offering proceeds related to our Offering, including $6.3 million net cash related to the Go Unit Offering, which was net of payments of commissions and other offering costs of $3.8 million, including $0.5 million related to the GO Unit Offering;

● $52.1 million of net cash provided by debt financing as a result of proceeds from debt financing of $63.8 million and $15.0 million in draws on our line of credit, offset by principal payments on debt financing of $21.0 million, with $7.2 million related to the Fargo Property and $10.0 million to the El Paso Airport Property, $3.3 million in payments on our line of credit and payments of financing costs of $2.5 million;

● $5.3 million of net cash distributions, after giving effect to distributions reinvested by stockholders of $2.0 million; and

● $1.3 million of cash payments for share redemptions under our share repurchase plan.

See Part II. Item 5. “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities – Distribution Information” for details regarding our distribution history as well as sources used to pay our distributions.

Results of Operations

We expect that revenue, operating expenses, maintenance costs, real estate taxes and insurance, interest expense and management fees will each increase in future periods as a result of anticipated future acquisitions of real estate investments. We also expect that revenue and operating expenses will increase in future periods as the industry recovers from the effects of COVID-19. However, future operating results could be impacted by changing market and industry factors, see “ – Market Outlook” above.

Our results of operations for the years ended December 31, 2023 and December 31, 2022 are not indicative of those expected in future periods, as we were actively raising capital through our Offering and the GO Unit Offering and acquiring hotel properties during 2022, and were actively raising capital through our Offering and the GO II Unit Offering during 2023. As of December 31, 2023 and 2022, we consolidated nineteen and eleven properties, respectively, for a full 12-month operating cycle.

In evaluating financial condition and operating performance, we believe Revenue per Available Room (“RevPAR”), which we calculate by dividing total gross room revenue by the total number of available rooms for the period, is a meaningful indicator of our performance because it measures the period-over-period change in room revenues for properties. We also believe occupancy and average daily rate (“ADR”), which are components of calculating RevPAR, are meaningful indicators of our performance. Occupancy, which we calculate by dividing occupied rooms by total rooms available, measures the utilization of a property’s available capacity. ADR which we calculate by dividing total gross room revenue by the total number of rooms rented for the period, measures average room price and is useful in assessing pricing levels.

Comparison of the year ended December 31, 2023 versus the year ended December 31, 2022

Revenue

Room revenues totaled $70.2 million and $50.3 million for the years ended December 31, 2023 and December 31, 2022, respectively. Other revenue, which consists primarily of hotel food and beverage revenues as well as revenues from other hotel services, was $4.7 million and $2.8 million for the years ended December 31, 2023 and December 31, 2022, respectively. Hotel occupancy, ADR, and RevPAR were 67.50%, $126.00, and $85.05, respectively, for the year ended December 31, 2023. Hotel occupancy, ADR, and RevPAR were 66.0%, $118.01, and $77.82, respectively, for the year ended December 31, 2022. For the eleven hotel properties acquired prior to January 1, 2022, hotel occupancy, ADR, and

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RevPAR were 66.13%, $123.35 and $87.57, respectively, for the year ended December 31, 2023. While occupancy remained relatively flat, the increases in ADR and RevPAR were primarily due to the ongoing recovery in lodging demand from the impacts of COVID-19 coupled with rising prices due to inflation.

Property Operations Expenses

Property operations expenses were $36.0 million and $26.0 million for the years ended December 31, 2023 and December 31, 2022, respectively. Property operations expenses consist primarily of hotel personnel costs, property taxes, insurance, repair and maintenance, and other costs of operating our hotel properties. The $10.0 million increase in property operations expenses was primarily due to inflation, increases in property taxes, and the eight property acquisitions throughout 2022 which were owned for the full 12-month operating period in 2023.

General and Administrative Expenses

General and administrative expenses were $10.5 million and $10.6 million for the years ended December 31, 2023 and December 31, 2022, respectively. General and administrative expenses consist primarily of administrative personnel costs, rent, professional fees and the cost of office supplies and equipment.

Sales and Marketing Expenses

Sales and marketing expenses were $4.9 million and $3.3 million for the years ended December 31, 2023 and December 31, 2022, respectively. Sales and marketing expenses consist primarily of sales and marketing personnel costs, hotel brand loyalty program costs, advertising and other marketing costs. The $1.6 million increase in sales and marketing expenses was primarily due to the addition of the Fargo Medical Center, El Paso Airport, Lakewood, Fort Collins, El Paso University, Charlotte North, Pineville HGI, and Wichita hotel properties throughout 2022 which were owned for the full 12-month operating period in 2023.

Franchise Fees

Franchise fees were $6.4 million and $4.8 million for the years ended December 31, 2023 and December 31, 2022, respectively. Franchise fees include the amortization of initial franchise fees, as well as monthly fees paid to franchisors for royalty, marketing, reservation fees and other related costs. The $1.6 million increase in franchise fees was primarily due to higher RevPAR due to the ongoing recovery in lodging demand from the impacts of COVID-19 and the addition of the Fargo Medical Center, El Paso Airport, Lakewood, Fort Collins, El Paso University, Charlotte North, Pineville HGI, and Wichita hotel properties throughout 2022 which were owned for the full 12-month operating period in 2023.

Management Fees

Management fees were $5.5 million and $4.2 million for the years ended December 31, 2023 and December 31, 2022, respectively. Management fees include asset management fees paid to the Advisor and management fees paid to property management service providers who manage the day-to-day operations of our hotel properties. Asset management fees paid to the Advisor increased by $0.6 million. We experienced increased management fees across our portfolio primarily due to higher RevPAR resulting from the ongoing recovery in lodging demand from the impacts of COVID-19.

Acquisition Expenses

Acquisition expenses were $1.3 million and $0.7 million for the years ended December 31, 2023 and December 31, 2022, respectively. Acquisition expenses include acquisition-related and due diligence costs that relate to a property that was not ultimately acquired, as well as costs related to hotel property acquisition activities that are not attributable to specific property acquisitions, along with any acquisition costs associated with the acquisition of a VIE. The increase in acquisition expenses is primarily due to pending acquisitions that were terminated in 2023.

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Depreciation

Depreciation expense was $10.2 million and $8.0 million for the years ended December 31, 2023 and December 31, 2022, respectively. The $2.2 million increase in depreciation expense was primarily due to the addition of the Fargo Medical Center, El Paso Airport, Lakewood, Fort Collins, El Paso University, Charlotte North, Pineville HGI, and Wichita hotel properties throughout 2022 which were owned for the full 12-month operating period in 2023.

Other Income, net

Other income was $1.0 million and $2.5 for the years ended December 31, 2023 and December 31, 2022, respectively. The change was primarily due to a gain recorded upon acquisition of the VIE in 2022.

Interest Expense

Interest expense was $14.6 million and $11.0 million for the years ended December 31, 2023 and December 31, 2022, respectively. The $3.6 million increase in interest expense was primarily due to the increase in hotel mortgage debt used to acquire the Fargo Medical Center, El Paso Airport, Lakewood, Fort Collins, El Paso University, Charlotte North, Pineville HGI, and Wichita hotel properties throughout 2022 and increased amounts outstanding under our lines of credit.

We expect that in future periods our interest expense will vary based on the amount of our borrowings, which will depend on the cost of borrowings, the amount of proceeds we raise in our Offering and our ability to identify and acquire hotel properties and real estate-related assets that meet our investment objectives or any disposals of hotel properties pursuant to our exit strategy.

Critical Accounting Estimates

Below is a discussion of the accounting estimates that management believes are or will be critical to our operations. We consider these estimates critical in that they involve significant management judgments and assumptions, require estimates about matters that are inherently uncertain and because they are important for understanding and evaluating our reported financial results. These judgments affect the reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities as of the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our financial statements. Additionally, other companies may utilize different estimates that may impact the comparability of our results of operations to those of companies in similar businesses.

Investment in Hotel Properties

We evaluate whether each hotel property acquisition should be accounted for as an asset acquisition or a business combination. If substantially all of the fair value of the gross assets acquired is concentrated in a single asset or a group of similar identifiable assets, then the transaction is considered to be an asset acquisition. All of our acquisitions since inception have been determined to be asset acquisitions. Transaction costs associated with asset acquisitions will be capitalized and transaction costs associated with business combinations will be expensed as incurred.

Our acquisitions generally consist of land, land improvements, buildings, building improvements, and furniture, fixtures and equipment (“FF&E”). We may also acquire intangible assets or liabilities related to in-place leases, management agreements, debt, and advanced bookings. For transactions determined to be asset acquisitions, we allocate the purchase price among the assets acquired and the liabilities assumed based on their respective fair values at the date of acquisition. For transactions determined to be business combination, we record the assets acquired and the liabilities assumed at their respective fair values at the date of acquisition. We determine the fair value by using market data and independent appraisals available to us and making numerous estimates and assumptions.

The difference between the relative fair value and the face value of debt assumed in connection with an acquisition is recorded as a premium or discount and amortized to interest expense over the remaining term of the debt assumed. The valuation of assumed liabilities is based on our estimate of the current market rates for similar liabilities in effect at the acquisition date.

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Our investments in hotel properties are carried at cost and are depreciated using the straight-line method over the estimated useful lives of 15 years for land improvements, 40 years for buildings and building improvements and 3 to 7 years for FF&E. Maintenance and repairs are expensed and major renewals or improvements to the hotel properties are capitalized.

We assess the carrying value of our hotel properties whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. The recoverability is measured by comparing the carrying amount to the estimated future undiscounted cash flows which take into account current market conditions and our intent with respect to holding or disposing of the hotel properties. If our analysis indicates that the carrying value is not recoverable on an undiscounted cash flow basis, we will recognize an impairment loss for the amount by which the carrying value exceeds the fair value. The fair value is determined through various valuation techniques, including internally developed discounted cash flow models, comparable market transactions or third-party appraisals.

The use of projected future cash flows is based on assumptions that are consistent with a market participant’s future expectations for the travel industry and the economy in general and our expected use of the underlying hotel properties. The assumptions and estimates related to the future cash flows and the capitalization rates are complex and subjective in nature. Changes in economic and operating conditions that occur subsequent to a current impairment analysis and our ultimate use of the hotel property could impact the assumptions and result in future impairment losses to the hotel properties.

Valuation of Variable Interest Entities

We use judgment when evaluating whether we have a controlling financial interest in an entity, including the assessment of the importance of rights and privileges of the partners based on voting rights, as well as financial interests in an entity that are not controllable through voting interests. If the entity is considered to be a variable interest entity (“VIE”), we use judgment in determining whether we are the primary beneficiary, and then consolidate those VIEs for which we have determined we are the primary beneficiary. If the entity in which we hold an interest does not meet the definition of a VIE, we evaluate whether we have a controlling financial interest through our voting interest in the entity. Changes to judgments used in evaluating our partnerships and other investments could materially affect our consolidated financial statements.

Fair Value Measurement

We establish fair value measures based on the fair value definition and hierarchy levels established by GAAP. These fair values are based on a three-tiered fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1     Observable inputs such as quoted prices in active markets.

Level 2     Directly or indirectly observable inputs, other than quoted prices in active markets.

Level 3     Unobservable inputs in which there is little or no market data, which require a reporting entity to develop its own assumptions.

Our estimates of fair value were determined using available market information and appropriate valuation methods. Considerable judgment is necessary to develop estimated fair value. The use of different market assumptions or estimation methods may have a material effect on the estimated fair value amounts. We classify assets and liabilities in the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement.

Off-Balance Sheet Arrangements

As of December 31, 2023 and 2022, we had no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Seasonality

Depending on a hotel’s location and market, operations for the hotel may be seasonal in nature. This seasonality can be expected to cause fluctuations in our quarterly operating performance. Based on historic trends, for hotels located in non-

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resort markets, demand is generally lower in the winter months due to decreased travel and higher in the spring and summer months during the peak travel season. Accordingly, excluding any impact from the COVID-19 pandemic, we generally would expect to have lower revenue, operating income and cash flow in the first and fourth quarters and higher revenue, operating income and cash flow in the second and third quarters.

Subsequent Events

A-1 Line of Credit Amendments

On March 27, 2024, the Operating Partnership, the Company and A-1 Bonds entered into a Fourth Amendment to the Revolving Line of Credit Loan Agreement (the “Fourth Amendment”) in connection with the A-1 Line of Credit. The Fourth Amendment extended the maturity date of the A-1 Line of Credit to December 31, 2024 and increased the A-1 Line of Credit to $15.5 million. Through the Fourth Amendment, the A-1 Line of Credit is secured by 1,550,000 unissued common limited partnership units of the Operating Partnership. In consideration of the extension of the maturity date, the Operating Partnership paid to the A-1 Lender an extension fee in the amount of $133,000. The Fourth Amended and Restated Promissory Note (the “Amended Promissory Note”) entered into by the Operating Partnership in connection with the Fourth Amendment provides that (i) the interest rate on the A-1 Line of Credit is increased to 14.5% per annum, and (ii) the A-1 Lender will receive an exit fee equal to 1.5% of the full amount due under the Line of Credit upon the earlier of (a) full repayment (whether on the maturity date or prior thereto or any other date), and (b) the maturity date. No other changes were made to the A-1 Line of Credit as a result of the Fourth Amendment or the Amended Promissory Note.

As of December 17, 2024, $15.5 million is outstanding under the A-1 Line of Credit.

Western Line of Credit Amendments

On May 10, 2024, the Operating Partnership, the Company, Corey Maple, LF3 Fargo Med, LLC, LF3 Eagan, LLC, and LF3 Cedar Rapids, LLC entered into a Change in Terms Agreement in connection with the Western Line of Credit, which extended the maturity date of the Western Line of Credit from April 30, 2024 to June 5, 2024. In addition, the Operating Partnership was required to make a principal payment in the amount of $250,000.

The Company and Western State Bank are working to finalize an extension of the Western Line of Credit as of the date of this filing, however there can be no assurance that an extension will be granted.

As of December 17, 2024, $4.1 million is outstanding under the Western Line of Credit.

NHS Loan

On August 21, 2024, the Company entered into a Change in Terms Agreement with the Operating Partnership and NHS in connection with the NHS Loan to extend the maturity date of the NHS Loan to September 30, 2025.

As of December 17, 2024, $0.6 million is outstanding under the NHS Loan.

Lakewood Loan Extension, Termination and New Loans

As previously disclosed, the subsidiaries of the Operating Partnership and A-1 Bonds entered into a loan agreement in the amount of $12.6 million secured by the Lakewood Property (the “Original Lakewood Loan”). Per the terms of the agreement, the subsidiaries of the Operating Partnership executed the option to extend the maturity date of the loan to March 28, 2024.

On March 27, 2024, the subsidiaries of the Operating Partnership entered into a new $12.0 million loan with Bluebird Credit EM LLC (the “New Lakewood Loan”) secured by the Lakewood Property. The New Lakewood Loan is evidenced by a promissory note and has an adjustable interest rate based on the SOFR Index plus 7.0% (increasing to 7.5% during the extension of the loan), with an initial interest rate of 12.327%; provided, however, in no event will the interest rate be adjusted to less than 11.0%. The maturity date of the New Lakewood Loan is October 5, 2025, with an option to extend the term for an additional 6 months through April 6, 2026, upon payment of a $60,000 extension fee and satisfaction of

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certain other conditions. The New Lakewood Loan requires monthly interest-only payments throughout the term, with the outstanding principal and interest due at maturity. The Borrower has the right to prepay the New Lakewood Loan in whole but not in part at any time, subject to a 30-day prior notice to the New Lakewood Lender and payment of an exit fee equal to $120,000 and a prepayment premium calculated pursuant to the terms of the New Lakewood Loan Agreement.

Pursuant to the New Lakewood Loan Agreement, Norman Leslie, a director and executive officer of the Company, entered into a Guaranty (the “New Lakewood Guaranty”) with the New Lakewood Lender to guarantee payment when due of the principal amount of indebtedness outstanding, including accrued interest and collection costs and expenses, as further described in the New Lakewood Guaranty.

Additionally, on March 27, 2024, the Operating Partnership entered into a new loan in an amount up to $4,896,801 (the “New A-1 Lakewood Loan”) with the A-1 Lender, an affiliate of the Company’s Advisor. The New A-1 Lakewood Loan is evidenced by a promissory note and has a fixed interest rate of 14.5% per annum and a maturity date of March 27, 2026. The New A-1 Lakewood Loan requires monthly interest-only payments throughout the term, with the outstanding principal and interest due at maturity. The Operating Partnership has the right to prepay the New A-1 Lakewood Loan in whole or in part without charge, penalty or premium. The A-1 Lender received an origination fee of $73,452 on the effective date of the New A-1 Lakewood Loan and will receive an exit fee equal to 1.5% of the full amount of the New A-1 Lakewood Loan upon the earlier of (a) full repayment (whether on the maturity date or prior thereto or any other date), and (b) the maturity date. Pursuant to a Pledge and Security Agreement entered into by the Company with the A-1 Lender, the New A-1 Lakewood Loan is secured by 489,680 unissued common limited partnership units of the Operating Partnership.

On March 27, 2024, the proceeds from the New Lakewood Loan and the New A-1 Lakewood Loan were used to refinance the Original Lakewood Loan, and the outstanding obligations under Original Lakewood Loan were repaid in full. At the closing of the refinancing, an unpaid extension fee in the amount of $138,450 was paid to the A-1 Lender under the Original Lakewood Loan which was due but not paid in connection with the prior March 2023 extension of the Original Lakewood Loan. All guaranties in connection and collateral with respect to the Original Lakewood Loan have been terminated or released, and all commitments with respect to the Original Lakewood Loan have been terminated or released.

El Paso HI Second Loan Modification

On May 15, 2024, the El Paso HI Borrower, the Operating Partnership and Corey R. Maple entered into a second loan modification agreement with EPH, which extended the maturity date to November 15, 2024. As a condition to the extension, the El Paso HI Borrower agreed to pay a $76,000 extension fee. With the second modification agreement, the El Paso HI Borrower is entitled to an additional six-month extension, if requested. In addition, the Holiday Inn El Paso Loan has a new interest rate of 9.00%.

Prattville Refinance

On November 4, 2024, the subsidiaries of the Operating Partnership (the “New Prattville Borrower”) entered into a new $11.0 million loan (the “New Prattville Loan”) with Independent Bank (the “New Prattville Lender”) secured by the Prattville Property. The New Prattville Loan is evidenced by a promissory note and has an adjustable interest rate that is the higher of (i) 4.85%, or (ii) the SOFR rate plus 3.0%, with an initial interest rate of 7.84%. The maturity date of the New Prattville Loan is November 4, 2029. The New Prattville Loan requires monthly interest-only payments for the first 24 months, principal payments in the amount of $15,200 plus interest for the remainder of the life of the loan and the outstanding principal balance due at maturity. There is no prepayment penalty or premium for prepayments of the principal under the New Prattville Loan, but if the prepayment is the result of a refinance with a financial institution other than the New Prattville Lender, the New Prattville Borrower must pay the New Prattville Lender an amount equal to 3.0% of the amount being prepaid if during the first year of the New Prattville Loan, an amount equal to 2.0% of the amount being prepaid if paid during the second year of the New Prattville Loan, and an amount equal to 1.0% of the amount being prepaid if paid during the third, fourth, or fifth years of the New Prattville Loan.

Pursuance to the New Prattville Loan Agreement, Norman Leslie, a director and executive officer of the Company, entered into a Guaranty (the “New Prattville Guaranty”) with the New Prattville Lender to guarantee payment when due of the

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principal amount of indebtedness outstanding, including accrued interest and collection costs and expenses, as further described in the New Prattville Guaranty.

On November 4, 2024, the proceeds from the New Prattville Loan were used to refinance the Original Prattville Loan, and the outstanding obligations under the Original Prattville Loan were repaid in full. All guarantees in connection and collateral with respect to the Original Prattville Loan have been terminated or released, and all commitments with respect to the Original Prattville Loan have been terminated or released.

Distributions Paid

On January 16, 2024, we declared cash distributions totaling $471,271 and DRIP distributions totaling $108,117, cash distributions totaling $35,706 for Common Limited Units of the Operating Partnership and cash distributions totaling $182,262 for Series GO LP Units of the Operating Partnership, at a daily rate of $0.00191781 per share of Common Stock in the Company, equivalent to an annualized rate of seven percent (7.00%) per share based on our initial offering price of $10.00, for daily record dates December 1 through December 31, 2023 to holders of record on each calendar day of such period. The distribution declared for December 2023 was paid on March 29, 2024.

On April 22, 2024, we declared cash distributions totaling $237,857 and DRIP distributions totaling $52,904, cash distributions totaling $17,853 for Common Limited Units of the Operating Partnership and cash distributions totaling $91,131 for Series GO LP Units of the Operating Partnership, at a daily rate of $0.000958905 per share of Common Stock in the Company, equivalent to an annualized rate of three and one half percent (3.50%) per share based on our initial offering price of $10.00, for daily record dates March 1 through March 31, 2024 to holders of record on each calendar day of such period. The distribution declared for March 2024 was paid on April 25, 2024.

On May 20, 2024, we declared cash distributions totaling $271,667 and DRIP distributions totaling $60,693, cash distributions totaling $20,403 for Common Limited Units of the Operating Partnership and cash distributions totaling $104,150 for Series GO LP Units of the Operating Partnership, at a daily rate of $0.001095890 per share of Common Stock in the Company, equivalent to an annualized rate of four percent (4.00%) per share based on our initial offering price of $10.00, for daily record dates April 1 through April 30, 2024 to holders of record on each calendar day of such period. The distribution declared for April 2024 was paid on May 23, 2024.

On June 18, 2024, we declared cash distributions totaling $311,181 and DRIP distributions totaling $62,992, cash distributions totaling $22,954 for Common Limited Units of the Operating Partnership and cash distributions totaling $117,169 for Series GO LP Units of the Operating Partnership, at a daily rate of $0.001232877 per share of Common Stock in the Company, equivalent to an annualized rate of four and one half percent (4.50%) per share based on our initial offering price of $10.00, for daily record dates May 1 through May 31, 2024 to holders of record on each calendar day of such period. The distribution declared for May 2024 was paid on June 20, 2024.

On July 19, 2024, we declared cash distributions totaling $345,775 and DRIP distributions totaling $70,312, cash distributions totaling $25,504 for Common Limited Units of the Operating Partnership and cash distributions totaling $130,186 for Series GO LP Units of the Operating Partnership, at a daily rate of $0.001366120 per share of Common Stock in the Company, equivalent to an annualized rate of five percent (5.00%) per share based on our initial offering price of $10.00, for daily record dates June 1 through June 30, 2024 to holders of record on each calendar day of such period. The distribution declared for June 2024 was paid on July 23, 2024.

On August 20, 2024, we declared cash distributions totaling $356,690 and DRIP distributions totaling $59,688, cash distributions totaling $25,504 for Common Limited Units of the Operating Partnership and cash distributions totaling $130,186 for Series GO LP Units of the Operating Partnership, at a daily rate of $0.001366120 per share of Common Stock in the Company, equivalent to an annualized rate of five percent (5.00%) per share based on our initial offering price of $10.00, for daily record dates July 1 through July 31, 2024 to holders of record on each calendar day of such period. The distribution declared for July 2024 was paid on August 20, 2024.

On September 26, 2024, we declared cash distributions totaling $353,107 and DRIP distributions totaling $63,549, cash distributions totaling $25,504 for Common Limited Units of the Operating Partnership and cash distributions totaling

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$130,186 for Series GO LP Units of the Operating Partnership, at a daily rate of $0.001366120 per share of Common Stock in the Company, equivalent to an annualized rate of five percent (5.00%) per share based on our initial offering price of $10.00, for daily record dates August 1 through August 31, 2024 to holders of record on each calendar day of such period. The distribution declared for August 2024 was paid on September 27, 2024.

Properties Under Contract

On April 15, 2024, the Operating Partnership and Stow Hotel Associates, LLC (the “Stow Contributor”) entered into a Legendary Equity Preservation UPREIT (Pat. Pend.) Contribution Agreement (the “Hampton Stow Contribution Agreement”) pursuant to which the Stow Contributor agreed to contribute the 84-room Hampton Stow hotel in Stow, Ohio to the Operating Partnership. The aggregate consideration for the Hampton Stow under the Hampton Stow Contribution Agreement is $10.2 million, with a majority of the consideration consisting of the assumption by the Operating Partnership of existing debt secured by the Hampton Stow and the remaining consideration consisting of the issuance by the Operating Partnership of Series T LP Units of the Operating Partnership. As required by the Hampton Stow Contribution Agreement, the Operating Partnership deposited $50,000 into an escrow as earnest money pending the closing or termination of the Hampton Stow Contribution Agreement. Except in certain circumstances described in the Hampton Stow Contribution Agreement, if the Operating Partnership fails to perform its obligations under the Hampton Stow Contribution Agreement, it will forfeit the earnest money.

On April 15, 2024, the Operating Partnership and the Stow Contributor entered into a Legendary Equity Preservation UPREIT (Pat. Pend.) Contribution Agreement (the “Staybridge Stow Contribution Agreement”) pursuant to which the Stow Contributor agreed to contribute the 92-room Staybridge Suites Akron-Stow-Cuyahoga Falls hotel in Stow, Ohio to the Operating Partnership. The aggregate consideration for the Staybridge Stow under the Staybridge Stow Contribution Agreement is $10.9 million, with a majority of the consideration consisting of the assumption by the Operating Partnership of existing debt secured by the Staybridge Stow and the remaining consideration consisting of the issuance by the Operating Partnership of Series T LP Units of the Operating Partnership and cash at closing. As required by the Staybridge Stow Contribution Agreement, the Operating Partnership deposited $50,000 into an escrow as earnest money pending the closing or termination of the Staybridge Stow Contribution Agreement. Except in certain circumstances described in the Staybridge Stow Contribution Agreement, if the Operating Partnership fails to perform its obligations under the Staybridge Stow Contribution Agreement, it will forfeit the earnest money.

The Company is still conducting its diligence review with respect to each of these properties. These pending acquisitions are subject to its completion of satisfactory due diligence and other closing conditions. There can be no assurance the Company will complete any or all of these pending property contributions on the contemplated terms, or at all.

Pineville Property Sold and Loan Repaid

On July 23, 2024, the Company sold the Pineville Property to an unaffiliated purchaser for $8,850,000 in cash, subject to customary prorations and adjustments. The mortgage loan secured by the Pineville Property was repaid in full at closing from sale proceeds. All guaranties in connection with such loan and collateral with respect to such loan have been terminated or released, and all commitments with respect to such loan have been terminated or released.

Agreement to Sell Pineville HGI Property and Charlotte Property

On December 2, 2024, we entered into an agreement to sell the Pineville HGI Property and the Charlotte Property. The agreement is subject to closing conditions. There can be no assurance we will complete any or all of these pending property dispositions on the contemplated terms, or at all.

Southaven Refinance

On December 6, 2024, the subsidiaries of the Operating Partnership (the “New Southaven Borrower”) entered into a new $18.0 million loan (the “New Southaven Loan”) with UBS AG. (the “New Southaven Lender”) secured by the Southaven Property. The New Southaven Loan is evidenced by a promissory note and has aa fixed interest rate that is equal to the five-year United States Treasury rate plus 3.58%, resulting in an interest rate of 7.77%. The maturity date of the New Southaven Loan is December 6, 2029. The New Southaven Loan requires monthly interest-only payments for the life of

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the loan, with the outstanding principal balance due at maturity. Prepayment is not permitted during the first year of the New Southaven Loan, but prepayment is permissible with certain stipulations laid out in the loan agreement.

On December 6, 2024, the proceeds from the New Southaven Loan were used to refinance the Original Southaven Loan, and the outstanding obligations under the Original Southaven Loan were repaid in full. All guarantees in connection and collateral with respect to the Original Southaven Loan have been terminated or released, and all commitments with respect to the Original Southaven Loan have been terminated or released.

Status of the Offering

Our board of directors extended the term of our Offering to May 31, 2025. As of the date of this filing, our private offering remained open for new investment, and since the inception of the offering we had issued and sold 10,297,188 shares of common stock, including 1,215,332 shares issued pursuant to the DRIP, resulting in the receipt of gross offering proceeds of $100.7 million.

Series T LP Units

The Operating Partnership did not issue any Series T LP Units subsequent to December 31, 2023 to the date of this filing.

Common LP Units

The Operating Partnership did not issue any Common LP Units subsequent to the year ended December 31, 2023 to the date of this filing.

GO II Unit Offering

On April 17, 2024, our Board of Directors extended the term of the GO II Unit Offering to March 31, 2025. The Operating Partnership has issued and sold 475,324 Series Go II LP Units, resulting in the receipt of gross offering proceeds of $3.6 million as of the date of this filing.

Exit Strategy

On May 7, 2024, our board of directors authorized management to pursue an exit strategy and position the Company for a sale or merger of the Company in 2025, provided that the economic environment is conducive to such a transaction, and to prepare the Company’s portfolio of hotel properties for a transaction through strategic acquisitions and dispositions with the objective of maximizing profitability at the hotel property level. There can be no assurances that we will achieve an exit strategy within the time period and in the manner anticipated. The process of exploring strategic alternatives and marketing our assets could be time consuming and disruptive to our business operations and could divert management’s attention from our business, and we could incur substantial expenses associated with identifying and evaluating potential transactions. Further, any potential transaction would be dependent on a number of factors that may be beyond our control, including, among other things, market conditions, industry trends, the interest of third parties in a potential transaction with us and the availability of financing to potential buyers on favorable terms. There can be no assurance that we will successfully implement our strategy, or that any potential transaction or other strategic alternative will result in stockholder liquidity or provide a return to stockholders that equals or exceeds our estimated value per share.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Quantitative and qualitative disclosures about market risk have been omitted as permitted under rules applicable to smaller reporting companies.

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Item 8. Financial Statements and Supplementary Data.

See the Index to Financial Statements at page F-1 of this report.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures.

Based on the evaluation of our disclosure controls and procedures (as defined in Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) required by Securities Exchange Act Rules 13a-15(b) or 15d-15(b), our Chief Executive Officer and our Chief Financial Officer have concluded that as of the end of the period covered by this report, our disclosure controls and procedures were not effective as of such date due to a material weakness in internal control over financial reporting, described below.

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Management’s Assessment of Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934, as amended. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP and includes those policies and procedures that: (1) pertain to maintenance of records that in reasonable detail accurately and fairly reflect our transactions and the dispositions of our assets; (2) provide reasonable assurance that our transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that our receipts and expenditures are being made only in accordance with appropriate authorizations; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use or disposition of our assets that could have a material effect on our financial statements.  Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness for future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In connection with the preparation of our Form 10-K, our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2023. In making that assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013). A material weakness is a deficiency, or a combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

As previously disclosed, in connection with the review of the Company’s consolidated financial statements for the quarter ended September 30, 2022, we identified a material weakness in our control environment related to the accounting treatment of an acquisition in August of 2022 of a controlling interest in an entity which holds the leasehold interest in a hotel property. We believe that this material weakness was a result of the misapplication of the GAAP accounting guidance. The material weakness did not result in any misstatements, material or otherwise, to the financial statements issued for the quarters ended March 31, 2022 or June 30, 2022. Solely due to this weakness, our management concluded that at December 31, 2023, the Company’s internal control over financial reporting was not effective.

Remediation

Subsequent to December 31, 2023, management has been implementing and continues to implement measures designed to ensure that control deficiencies contributing to the material weakness are remediated, such that these controls are designed, implemented, and operating effectively.  The remediation actions include consultation with external GAAP accounting experts on non-recurring, significant, or unusual transactions.  We believe that these actions will remediate the material weakness. The weakness will not be considered remediated, however, until the application controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.  We expect that the remediation of this material weakness will be completed prior to the end of 2024.

Changes in Internal Control Over Financial Reporting

During the year ended December 31, 2023, except for the material weakness noted above, no changes in our internal control over financial reporting occurred that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. The remediation plan described above was implemented subsequent to December 31, 2023.

Item 9B. Other Information.

None.

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Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

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PART III

Item 10. Directors, Executive Officers and Corporate Governance.

Executive Officers and Directors

The following table sets forth certain information about our executive officers and directors as of December 17, 2024.

Name and Address(1)	Position(s)	Age	Year First Became a Director	Class
Corey R. Maple	Chairman of the Board and Director	59	2018	Class I
Norman H. Leslie	President, Chief Executive Officer, Secretary, Chief Investment Officer, Treasurer, and Director	58	2018	Class II
Samuel C. Montgomery	Chief Financial Officer	42	n/a	n/a
Perry M. Rynders	Independent Director	66	2019	Class II
Jeffrey T. Leighton	Independent Director	54	2018	Class III
David G. Ekman	Director	63	2018	Class III

(1) The address of each named executive officer and director is 1635 43rd Street South, Suite 205, Fargo, North Dakota 58103.

Corey R. Maple

Corey R. Maple serves as Chairman of our board of directors and a director, positions he has held since April 2018. From April 2018 to May 2023, Mr. Maple served as the Company’s Chief Executive Officer and Secretary. He also served as the Chief Executive Officer and Secretary of the Advisor, positions he held from April 2018 to May 2023. Mr. Maple has also served as Managing Member of the Sponsor since 2018. In 1992, Mr. Maple served as manager of a branch office of Maier Engineering in St. Paul, Minnesota. In 1993, Mr. Maple and three partners purchased Maier from its principal, Gordon Maier. In 1996, Mr. Maple founded MiniMax Software Corp. to build engineering applications for the electric utility market. Also in 1996, Mr. Maple acquired a 100% interest in Maier by buying out the interests of his other three partners in the company. In 2005, MiniMax merged with Powel, ASA, a privately held Norwegian company. In 2006, Mr. Maple helped lead a successful public offering of the combined entity on the Oslo Bourse. Mr. Maple served as the President of U.S. operations and member of the board of directors for the next two years until the company was purchased by a Scandinavian conglomerate. In 2008, Mr. Maple founded Cordonco.com, an online transaction processing service. Also in 2008, Mr. Maple served as a founder of Lodging Opportunity Fund, an investment fund sponsored by an affiliate of our Advisor that purchased distressed, limited-service hotels, and currently serves as an officer and director of that entity. Mr. Maple also owns or has an interest in Seven Sisters Spirits, a large full-service liquor store near Detroit Lakes MN, and MapleTree LLC, an investment company. Mr. Maple holds a Bachelor of Science degree in Electrical Engineering from North Dakota State University. We believe that Mr. Maple’s experience as a founder of Lodging Opportunity Fund and his private board experience make him well qualified to serve as a member of our board of directors.

On August 28, 2023, Mr. Maple, the Advisor and an affiliated manager of another REIT sponsored by our Sponsor, Legacy Hospitality II, LLC (“Legacy”), agreed to an administrative cease-and-desist order filed by the Securities and Exchange Commission (the “SEC”) relating to matters previously discussed in our prior public filings and described more fully in Part II Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Subsequent Events – SEC Settlement” herein. A copy of the order can also be found on the SEC’s website at https://www.sec.gov/files/litigation/admin/2023/33-11227.pdf. The SEC’s order states that Mr. Maple, the Advisor and Legacy violated Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933, as amended, through the improper reimbursement of and financial accounting for certain expenses incurred by the Advisor and Legacy as well as the adequacy of disclosures to investors related to those policies and practices.  As part of the settlement, the Advisor agreed to pay disgorgement of $463,900, prejudgment interest of $85,431.50 and a civil monetary penalty of $225,000, Legacy agreed to disgorgement of $2,283,000, prejudgment interest of $4,359,012.67 and a civil monetary penalty of $1,150,000, and Mr. Maple agreed to pay a civil monetary penalty of $100,000. The Advisor, Legacy and Mr. Maple did not admit or

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deny the findings contained in the order, except that solely for purposes of exceptions to discharge set forth in Section 523 of the Bankruptcy Code, the findings in the order are true and admitted by Mr. Maple.  

Norman H. Leslie

Norman H. Leslie serves as Chief Executive Officer and Secretary of the Company, positions he has held since May 19, 2023.  In addition, he serves as the President of the Company, a position he has held since August 2019, and Chief Investment Officer, Treasurer and director of the Company, positions he has held since April 2018. Mr. Leslie also serves as the President, Chief Investment Officer and Treasurer of the Advisor, positions he has held since April 2018. Mr. Leslie has also served as the Managing Member of the Sponsor since 2018. Mr. Leslie has 33 years of real estate experience and has worked extensively in the hotel industry starting at the age of 13, working in his family’s roadside inn, where he developed an in-depth understanding of hotel operations. Mr. Leslie organized NHS, LLC (dba National Hospitality Services) in 2001. Today, NHS manages 48 hotels across the United States and is recognized as a Top 200 management company in the United States by size. NHS operates hotels franchised through IHG®, Marriott®, Hilton®, Hyatt®, Radisson®, Choice Hotels® and Wyndham®.  As co-founder of Bridge Hospitality LLC and other development companies, he was instrumental in the multiple new-build IHG and Marriott hotels in the United States. Mr. Leslie has also led the development of commercial properties including Grade A offices and retail centers in North Dakota. He was also a co-founder of Heritage Homes, a premiere homebuilder in the Fargo-Moorhead market.

Mr. Leslie co-founded Lodging Opportunity Fund LLLP, Lodging Opportunity Fund Real Estate Investment Trust, the Company and their corresponding sponsor entities. These entities acquired over 40 hotels between 2011 and today. Mr. Leslie served on the IHG Owners Association Global Board of Directors (2018-present) and was elected as Chair of the Board for 2022. He has served on the board of directors of the Fargo-Moorhead-West Fargo Chamber of Commerce, Ramada Inns National Association (RINA), and four Owner Association panels for IHG.

Mr. Leslie holds a Bachelor of Commerce Degree (Honors) from the University of Manitoba. We believe that Mr. Leslie’s significant experience in the real estate and hotel industry makes him well qualified to serve as a member of the Company’s board of directors.

Samuel C. Montgomery

Samuel C. Montgomery serves as Chief Financial Officer of the Company, a position he has held since October 2020. Mr. Montgomery also serves as Chief Operating Officer of our Sponsor, a position he has held since December 2016. Mr. Montgomery oversees every aspect of Legendary Capital’s operations. He is a certified public accountant in North Dakota, Florida and Tennessee and has more than a decade of experience serving asset managers in the REIT and private equity sectors. He spent the first six years of his career with Ernst & Young LLP, primarily with its Chicago, Illinois, financial services group. In this role, he served as a business advisor to several of the country’s largest REITs on tax consulting, mergers and acquisitions and public offerings. He also contributed to the growth of the company’s financial services practice with a rotation in Bangalore, India, to help develop Ernst & Young’s outsourced tax compliance functions for financial services clients. In 2011, Montgomery transferred to PricewaterhouseCoopers LLP, where he spent five years serving financial services clients primarily from the Tampa, Florida, office. As one of two individuals tasked with developing a financial services practice in western and central Florida, he helped broaden the footprint to cover the entire state. Upon relocating to Fargo, North Dakota in June 2016, Mr. Montgomery joined Eide Bailly LLP’s tax practice serving a variety of real estate clients. He holds a Bachelor’s degree in Business Administration-Accounting from the University of Miami and a Master’s degree in Taxation from Nova Southeastern University.

Perry M. Rynders

Perry M. Rynders is one of our independent directors and is the Chairman of the Audit Committee of our board of directors, positions he has held since April 2019. Mr. Rynders is also the Chairman of the Audit Committee of Lodging Opportunity Fund REIT, an affiliate of the Company. Mr. Rynders was the Chief Executive Officer and member of the Board of Governors of A'viands, LLC, a food services management company, from 2005 through September of 2014. In August of 2011, A'viands was sold to TrustHouse Services Group, LLC. In April of 2013, TrustHouse Services Group, LLC was sold to Elior, a publicly traded company out of France. Mr. Rynders continued as a consultant to A'viands, LLC through

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March of 2018. Mr. Rynders is a 50% owner, CEO and Chairman of the Board of Governors of Best Development Company, LLC. Best Development Company, LLC's primary asset is approximately 80 acres of land in Dakota County, MN which is currently farmed. Mr. Rynders is a 50% owner, CEO and Chairman of the Board of Governors of Best Holding Company, LLC. Best Holding Company, LLC's primary asset is a 30,000 square foot office building in Roseville, MN. Mr. Rynders is a 50% owner, CEO and Chairman of the Board of Governors of Best Investment Company II, LLC. Best Investment Company II, LLC's primary asset is an investment is Tamarack Aerospace Group, Inc. Mr. Rynders is also an investor in Lodging Opportunity Fund REIT, an affiliate of the Company. Mr. Rynders is a Certified Public Accountant (Inactive). We believe that Mr. Rynders experience as Chairman of the Audit Committee of Lodging Opportunity Fund REIT and other business experience make him well qualified to serve as a member of our board of directors and the Chairman of our Audit Committee.

Jeffrey T. Leighton

Jeffrey T. Leighton is one of our independent directors, a position he has held since August 2018. Jeffrey T. Leighton currently is Vice President and a board member of Leighton Media, a second-generation radio broadcast company. Mr. Leighton has spent most his life in Central Minnesota. Beginning in 1992 he worked as a financial advisor for American Express and attained a Series 7, 63 and 65 license for investments. In 1996, Mr. Leighton joined Leighton Broadcasting, now Leighton Media, as Sales Manager for their Detroit Lakes, Minnesota market and in 2003, he was promoted to Market Manager for this same market. Mr. Leighton has led the Company in its completion of two acquisitions within this market since 2010. Mr. Leighton served on the Essentia Health Foundation and was a driving force in its creation of the Business Relations committee. Mr. Leighton has also served in various positions with the Detroit Lakes Chamber of Commerce, Rotary and Health Resource Center. He holds a Bachelor of Arts degree in Finance and Marketing from The University of St. Thomas in St. Paul, Minnesota. We believe that Mr. Leighton’s finance and acquisitions experience makes him well qualified to serve as a member of our board of directors.

David G. Ekman

David G. Ekman is one of our directors, a position he has held since April 2018. He purchased a ComputerLand franchise in 1982 and later developed his own full-service computer company named Corporate Technologies in Fargo, North Dakota. In 1994, Mr. Ekman launched a regional Internet Service Provider (ISP) company, Corporate Communications, which was later sold. In 1999, Mr. Ekman merged his computer company with a voice and data company. The entity eventually became Multiband Subscriber Services, a field services company with over 3,000 U.S. employees, formerly listed on NASDAQ. Mr. Ekman ended his career as Multiband’s Chief Information Officer in January 2015 after the company’s sale. Mr. Ekman currently serves as President and founding partner of Bridge Hospitality, a company that performs hotel development and investment. Mr. Ekman is also a partner and President of One Rep Construction, an owners representative company for hotel construction and renovations. Additionally, he is co-owner of Travel Travel Fargo-Moorhead, Inc., a regional travel agency. Mr. Ekman has been involved with many associations and committees throughout his career including public company board of directors experience with Multiband. He currently serves on the Board of Trustees of the North Dakota State University Foundation, the NDSU Research and Technology Park board, the Sanford Medical Foundation board, and the Audit Committee of LOF-REIT, a non-registered, non-traded REIT sponsored by an affiliate of our Advisor. Mr. Ekman holds an Associate’s degree in agricultural business from University of Minnesota Crookston. He then transferred to North Dakota State University, majoring in agricultural economics. We believe that Mr. Ekman’s significant business experience, knowledge of the hospitality industry, and various boards membership makes him well qualified to serve as a member of our board of directors.

Board Composition

We currently have five seats on our board of directors. Pursuant to our charter, our board of directors is currently divided into three classes with staggered three-year terms. At each annual meeting of stockholders, the successors to directors whose terms then expire will be elected to serve from the time of election and qualification until the third annual meeting following election.  We did not hold an annual meeting of stockholders in 2023 and, as of the date of filing, we did not hold an annual meeting of stockholders in 2024.  As a result, all of our directors are continuing to serve because their

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successors have not yet been elected.  We anticipate that we will hold an annual meeting during 2025 to elect directors.  The board of directors is divided into three classes as follows:

● Class I directors. The sole Class I director is Corey R. Maple, whose term expires at the annual meeting of stockholders to be held in 2025 or until his successor is elected and qualified;

● Class II directors. The Class II directors are Norman H. Leslie and Perry M. Rynders.  The Class II directors’ terms were scheduled to expire at the annual meeting of stockholders in 2023, but since neither that meeting nor the annual meeting of stockholders in 2024 was held, the Class II directors’ terms will expire at the annual meeting of stockholders to be held in 2025 or until their successors are elected and qualified; and

● Class III directors. The Class III directors are David G. Ekman and Jeffrey T. Leighton, whose terms were scheduled to expire at the annual meeting of stockholders to be held in 2024, but since that meeting was not held, the Class III directors’ terms will expire at the annual meeting of stockholders to be held in 2025 or until their successors are elected and qualified.

Each director will serve for a term of three years, until his or her successor is duly elected and qualified; provided, that the Class II directors will serve a term expiring at the annual meeting of stockholders in 2026 and the Class III directors will serve a term expiring at the annual meeting of stockholders in 2027. There is no limit on the number of times a director may be elected to office.

Code of Conduct and Ethics

We have adopted a Code of Conduct and Ethics which applies to all of our officers and directors. The full text of our Code of Conduct and Ethics is posted on our website at https://legendarycap.com/sec-info/. If any substantive amendments are made to the Code of Conduct and Ethics or any waiver is granted, we intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding such amendment to, or waiver from, a provision of this Code of Conduct and Ethics by posting such information on our website, at the address and location specified above.

Audit Committee

The board of directors established an Audit Committee currently composed of two directors. Perry M. Rynders, an independent director, is the Chairman of the Audit Committee. Jeffrey Leighton, an independent director, is a member of the Audit Committee. The board of directors has determined that Mr. Rynders and Mr. Leighton are “financially literate,” and have “accounting or related financial management expertise,” as such qualifications are interpreted by the board of directors in its business judgment and has determined that Mr. Rynders and Mr. Leighton are each an "audit committee financial expert" as that term is defined by the SEC. The Audit Committee is responsible for the oversight of (i) our accounting and financial reporting processes, (ii) the integrity of our financial statements, (iii) our compliance with legal and regulatory requirements, and (iv) our independent registered public accounting firm’s qualifications, performance and independence. The audit committee fulfills these responsibilities primarily by carrying out the activities enumerated in the audit committee charter. The audit committee charter is available on our website at https://legendarycap.com/sec-info/. To assist the Audit Committee with its responsibilities, we created an advisory committee (the "Audit Advisory Committee"). Todd Fisher is currently the sole member of the Audit Advisory Committee. Mr. Rynders was a member of the Audit Advisory Committee prior to being appointed to the board of directors in April 2019.

Conflicts Committee

The board of directors established a conflicts committee of the board of directors (the “Conflicts Committee”) composed of all of the independent directors. The members of the Conflicts Committee are Jeffrey T. Leighton and Perry M. Rynders. The Conflicts Committee may act on any matter permitted under Maryland law. Both the board of directors and the Conflicts Committee must act upon those conflicts of interest matters that cannot be delegated to a committee under Maryland law. The Conflicts Committee may also retain its own legal and financial advisors at our expense when appropriate. Among the matters that the Conflicts Committee may act upon are the following:

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● the continuation, renewal or enforcement of our agreements with the Advisor and its affiliates, including the Advisory Agreement;

● specific known and disclosed conflicts including the approval of any management agreements between NHS, LLC dba National Hospitality Services (“NHS”) and the TRS subsidiaries who are lessees of the properties;

● transactions with affiliates;

● the offering of any of the Company’s securities;

● whether and when we seek to list our common stock on a national securities exchange;

● whether and when we seek to become self-managed; and

● whether and when we seek to sell the Company or substantially all of its assets.

In addition, all purchases and sales of hotel properties and third-party borrowings require the approval of at least a majority of the Conflicts Committee. The Conflicts Committee does not have a separate committee charter.

Nominating Committee

In April 2023, our board of directors established a nominating committee of the board of directors (the “Nominating Committee”), composed of all of the independent directors, as well as Corey R. Maple.  The current members of the Nominating Committee are Corey R. Maple, Jeffrey T. Leighton and Perry M. Rynders. The Nominating Committee is responsible for, among other things, assisting the board of directors in identifying individuals to become members of the board of directors and officers of the Company and providing recommendations to the board of directors for director nominees for the annual meeting of stockholders, filling director vacancies, and officers of the Company.

There have been no material changes to the procedures by which shareholders may recommend nominees to our board of directors since last disclosed to shareholders.

Delinquent Section 16(a) Reports

Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires executive officers, directors and persons who beneficially own any class of a company’s common stock, to file reports of ownership and changes in ownership with the SEC.  To our knowledge, based solely on a review of the copies of reports or written representations from such persons, we believe that our executive officers and directors have complied in a timely manner with all applicable Section 16(a) filing requirements for the year ended December 31, 2023 to the date of this filing except as follows:

● One Form 4 was filed on December 27, 2023 for Corey Maple to report the acquisition of Series GO II LP Units on December 22, 2023 and of Series GO LP Units on March 28, 2022. The Series GO LP Units were pending as of the closing of the offering on February 14, 2022 and the board of directors approved and ratified the sale as it was pending at the time of the offering closing. The report was untimely with respect to the disclosure of the acquisition of Series GO LP Units on March 28, 2022.

● One Form 4 was filed on March 19, 2024 for David Ekman to report the acquisition of shares on August 18, 2022. This report was untimely with respect to the disclosure of the acquisition of shares on August 18, 2022.

● One Form 4 was filed on July 29, 2024 for each of Jeffrey Leighton and Perry Rynders to report the acquisition of shares on June 30, 2024. These reports were untimely with respect to the disclosure of the acquisition of shares on June 30, 2024.

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● One Form 4 was filed on December 10, 2024 for David Ekman to report the acquisition of Series GO II LP Units on May 29, 2024. This report was untimely with respect to the disclosure of the acquisition of shares on May 29, 2024.

Item 11. Executive Compensation.

Compensation of Executive Officers

Our executive officers do not receive compensation directly from us for services rendered to us. Our executive officers are officers and/or employees of, or hold an indirect ownership interest in, the Advisor, and/or its affiliates, and our executive officers are compensated by these entities, in part, for their services to us. Samuel C. Montgomery, our Chief Financial Officer, is an employee of an affiliate of the Advisor and we reimburse the affiliate, at cost, for an allocated portion of his compensation to the extent he provides services to us. See Item 13 of this Annual Report on Form 10-K for the year ended December 31, 2023, “Certain Relationships and Related Transactions, and Director Independence” for a discussion of the fees and expense reimbursements paid to the Advisor and its affiliates. The Conflicts Committee will discharge the board of directors’ responsibilities relating to the compensation of our executives to the extent applicable.  

Compensation of Directors

If a director is also one of our executive officers or is otherwise affiliated with our Sponsor or Advisor, we do not pay any compensation to that person for services rendered as a director. Our current policy, effective as of March 31, 2022, is to pay $2,500 in cash and issue 500 shares of our common stock on the last day of each calendar quarter, valued at fair value at the date of issuance, to each independent director who is qualified and acting as an independent director on such date.  Prior to 2022, we paid our independent directors $500 for each regularly scheduled board of directors or board of directors committee meeting the director attended in person and $250 for each meeting the director attended virtually or by telephone. If there was a meeting of the board of directors and one or more board of directors committees in a single day, the fees were limited to $500 or $250 per day, as applicable. The members of the Audit Advisory Committee will receive the same pay described above for independent directors. In addition, effective as of March 31, 2022, the chairman of the Audit Committee will also receive $5,000 per year and $500 per calendar quarter as compensation for the additional duties performed as chairman of the Audit Committee.  The other members of the Audit Committee will receive $500 per calendar quarter as compensation for the additional duties performed as a member of the Audit Committee.  Prior to 2022, the chairman of the Audit Committee received $2,500 each year and $500 per Audit Committee meeting as compensation for the additional duties performed as chairman of the Audit Committee. This compensation policy may be modified by the board of directors from time to time.

We have provided below certain information regarding compensation earned by or paid to our directors during fiscal year 2023.

	Fees Earned or Paid in				All Other
Name	Cash in 2023(1)		Stock Awards(2)		Compensation(5)		Total
Corey R. Maple(3)	$	—	$	—	$	—	$	—
Norman H. Leslie(3)		—		—		—		—
David G. Ekman		—		—		—		—
Brian Hagen(4)		7,500		—		117		7,617
Jeffrey T. Leighton		21,500		21,140		1,892		44,532
Perry M. Rynders		31,500		21,140		1,892		54,532

(1) Fees Earned in 2023 or Paid in Cash include meeting fees earned in: (i) 2022 but paid or reimbursed in the first quarter of 2023 as follows: $31,500; and (ii) 2023 and paid in 2024 as follows: $21,750.

(2) Beginning in the first quarter of 2022, each independent member of the Board of Directors received 500 shares of our common stock every quarter, valued at fair value at the date of issuance. The fair value of the stock for all four quarters of 2023 was $10.57 per share as determined in accordance with FASB ASC Topic 718.

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(3) Directors who are also our executive officers do not receive compensation for services rendered as a director.

(4) Mr. Hagen subsequently retired from the board of directors as of February 28, 2023.

(5) Represents dividends paid on stock awards. Mr. Hagen received dividends in cash, and Messrs. Leighton and Rynders reinvested dividends pursuant to our dividend reinvestment plan.

Phantom Stock Plan

The board of directors has approved the adoption of a phantom stock plan (the "Phantom Stock Plan") for the Company. However, the specific terms of the Phantom Stock Plan have not yet been determined and approved by our board. The Company intends for the shares designated pursuant to the Phantom Stock Plan (the "Phantom Shares") to be allocated to the Advisor, the Company’s taxable REIT subsidiaries collectively and NHS for distribution of the proceeds to their respective employees and service providers in accordance with their compensation plans; however, none of Corey R. Maple, Norman H. Leslie or Samuel C. Montgomery will receive any Phantom Shares pursuant to the Phantom Stock Plan.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following table shows, as of December 17, 2024, the amount of our common stock beneficially owned (unless otherwise indicated) by any person who is known by us to be the beneficial owner of more than 5% of the outstanding shares of our common stock, and the amount of our common stock and Operating Partnership units beneficially owned (unless otherwise indicated) by (1) our directors, (2) our executive officers, and (3) all of our directors and executive officers as a group.

	Common Stock Beneficially Owned(2)			Common Stock, Series GO LP Units and Series GO II LP Units Beneficially Owned(2)				Series B Units Beneficially Owned (2)
Name and Address of Beneficial Owner (1)	Number of Shares		Percent(3)	Number of Shares and Units		Percent(4)	Percent(3)	Number of Units		Percent(5)
Ownership in Excess of 5% of Outstanding Common Stock
N/A
Directors and Executive Officers
Corey R. Maple	57,318.6		*	116,761.9	(6)​	*	1.17%	1,000.0	(9)​	100%
Norman H. Leslie	57,318.6		*	101,400.9	(7)​	*	1.01%	1,000.0	(9)​	100%
Samuel C. Montgomery	—		—	6,781.9	(8)​	*	*	—		—
David G. Ekman	3,039.8		*	13,212.6	(11)​	*	*	—		—
Jeffrey T. Leighton	17,785.6		*	17,785.6		*	*	—		—
Perry M. Rynders	5,867.3	(10)​	*	5,867.3		*	*	—		—
All directors and executive officers as a group	141,329.9		1.41%	261,810.2		1.92%	2.62%	1,000.0		100%

^*      Less than 1% of the outstanding shares of common stock

(1) The address of each named beneficial owner is 1635 43rd Street South, Suite 205, Fargo, North Dakota 58103.

(2) Beneficial ownership is determined in accordance with the rules of the SEC. Under SEC rules, a person is deemed to be a "beneficial owner" of a security if that person has or shares "voting power," which includes the power to vote, or to direct the voting of, such security, or "investment power," which includes the right to dispose of or to direct the disposition of such security. A person also is deemed to be a beneficial owner of any securities which that person has a right to acquire within 60 days. Except as otherwise indicated by footnote, and subject to community property laws where applicable, the persons named in the table above have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them. None of the shares or units is pledged as security.

(3) Based on a total of 10,009,663 shares of common stock issued and outstanding as of December 17, 2024.

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(4) Based on a total of 10,009,663 shares of common stock, 3,124,503 Series GO LP Units, and 475,324 Series GO II LP Units issued and outstanding as of December 17, 2024.

(5) Based on a total of 1,000.0 Series B partnership units of the Operating Partnership issued and outstanding as of December 17, 2024.

(6) Includes 15,361 Series GO LP Units and 44,082.3 Series GO II LP Units

(7) Includes 44,082.3 Series GO II LP Units

(8) Includes 6,781.9 Series GO II LP Units

(9) Includes 1,000.0 Series B partnership units of the Operating Partnership owned by Legendary Capital REIT III, LLC, which is owned and controlled by Messrs. Maple and Leslie.

(10) Mr. Rynders owns all shares through the Rynders Family Trust, with respect to which he shares voting and investment power with Leah K. Rynders, Trustee.

(11) Includes 10,172.8 Series GO II LP Units

Item 13. Certain Relationships and Related Transactions, and Director Independence.

Policy Regarding Transactions with Related Persons

The Conflicts Committee will review and approve all matters our board of directors believes may involve a conflict of interest, including all transactions between the Company and affiliates of the Company and the Advisor. If we decide to acquire a property in which the Advisor, one of our directors or their respective affiliates owns an interest, a majority of members of the Conflicts Committee must first make a determination that such transaction is fair and reasonable to us and the purchase price is no greater than the price of the property to the affiliated seller, unless there is substantial justification for the excess amount and such excess amount is reasonable. Notwithstanding the foregoing, in no event will we acquire any property from an affiliated seller at an amount in excess of its current appraised value as determined by an independent third-party appraiser.

In addition, our Code of Conduct and Ethics lists examples of types of transactions with related parties that would create prohibited conflicts of interest and requires our officers and directors to be conscientious of actual and potential conflicts of interest with respect to our interests and to seek to avoid such conflicts or handle such conflicts in an ethical manner at all times consistent with applicable law. Our executive officers and directors are required to report potential and actual conflicts to the Chairman of the Audit Committee.

Certain Transactions with Related Persons

The Conflicts Committee has reviewed the material transactions between our affiliates and us since January 1, 2022, as well as any such currently proposed material transactions. Set forth below is a description of such transactions.

Our Relationship with Legendary Capital REIT III, LLC. Substantially all of our business is managed by the Advisor and its affiliates, pursuant to the Advisory Agreement. The Advisor is co-owned by Corey R. Maple and Norman H. Leslie. The Company has no direct employees. The employees of Legendary Capital, LLC, our sponsor and an affiliate of the Advisor (the “Sponsor”), provide services to us related to the negotiations of property acquisitions and financing, asset management, accounting, legal, investor relations, and all other administrative services. Pursuant to the terms of the Advisory Agreement, the Advisor is entitled to specified fees upon the provision of certain services, including acquisition fees, asset management fees, debt financing and refinancing fees, and disposition fees and real estate commissions. We also reimburse the Advisor and its affiliates, at cost, for certain expenses incurred on our behalf, including offering expenses, acquisition expenses and operating expenses. The Advisory Agreement has a term of 10 years. Pursuant to the terms of the Operating Partnership’s operating agreement, the Advisor also receives distributions from the Operating Partnership in connection with its ownership of non-voting Series B Limited Partnership Units (“Series B LP Units”) in certain circumstances.

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We pay the Advisor a one-time acquisition fee of up to 1.4% of the hotel purchase price including funds allocated for any PIP at the time of each hotel property acquisition, and a financing fee of up to 1.4% of the hotel purchase price including funds allocated for any PIP at the time of closing the initial financing and a refinancing fee of up to 0.75% of the principal amount of any refinancing at the time of closing the refinancing. We also pay an annual asset management fee of up to 0.75% of the gross assets of the Company, which is payable on a monthly basis. We also pay a disposition fee equal to between 0.0% and 4.0% of the hotel sales price, payable at the closing of the disposition, which disposition fee in connection with a sale of all or substantially all of the Company’s assets, merger or similar transaction, shall be equal to between 0.0% and 4.0% of the gross consideration received (grossed up for liabilities of the Company), with the percentage dependent on the total return per share and timing of such transaction, payable at the closing of such sale, merger or transaction. We may also pay real estate commissions of up to 3.0% of the hotel purchase price in connection with the sale of a hotel property in which the Advisor or its affiliates provided substantial services, but in no event greater than one half of the total commissions paid with respect to such property if a commission in paid to a third party as well as the Advisor, and in no event will total commissions exceed 5.0% of the hotel sales price. Certain affiliates of the Advisor may receive an annual guarantee fee equal to 1.0% of the guaranty, paid on a monthly basis, for debt obligations of the hotel properties personally guaranteed by such affiliates. The Advisor may also receive an annual subordinated performance fee equal to 20% of the distributions after the common stockholders and Operating Partnership limited partners (other than the Series B LP Unit holders) have received a 6% cumulative, but not compounded, return per annum.

Per the terms of the Operating Partnership’s operating agreement, the Advisor receives distributions from the Operating Partnership in connection with its ownership of non-voting Series B LP Units. In years other than the year of liquidation, after the Company’s common stockholders have received a 6% cumulative but not compounded return on their original capital contributions, the Advisor receives distributions equal to 5% of the total distributions made. In the year of liquidation, termination, merger or other cessation of the general partner, or the liquidation of the Operating Partnership, holders of the Series B LP Units shall be distributed an amount equal to 5% of the limited partner’s capital contributions after the common stockholders and the limited partners have received a return of their capital contributions plus a 6% cumulative but not compounded return. In the year of liquidation, termination, merger or other cessation of the general partner, or the liquidation of the Operating Partnership, holders of the Series B LP Units shall also be distributed an amount equal to 20% of the net proceeds from the sale of the properties, after the common stockholders and the limited partners have received a return of their original capital contributions plus a 6% cumulative but not compounded return from all distributions.

The Advisor and its affiliates may be reimbursed by the Company for certain organization and offering expenses in connection with the Company’s securities offerings, including legal, printing, marketing and other offering-related costs and expenses. Following the termination of the Offering, the Advisor will reimburse the Company for any such amounts incurred by the Company in excess of 15% of the gross proceeds of the Offering. In addition, the Company may pay directly or reimburse the Advisor and its affiliates for certain costs incurred in connection with its provision of services to the Company, including certain acquisition costs, financing costs, and sales and marketing costs, as well as an allocable share of general and administrative overhead costs. All reimbursements are paid to the Advisor and its affiliates at cost.

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Fees and reimbursements earned and payable to the Advisor and its affiliates for the nine months ended September 30, 2024 and the years ended December 31, 2023 and 2022, were as follows:

	Incurred
	For the Nine Months Ended September 30,		For the Years Ended December 31,
	2024		2023		2022
Fees:
Acquisition fees	$	—	$	—	$	1,626,599
Financing fees		90,000		84,000		1,861,628
Asset management fees		1,859,445		2,488,100		1,918,321
Performance fees		—		195,874		181,541
	$	1,949,445	$	2,767,974	$	5,588,089
Reimbursements:
Offering costs	$	1,457,772	$	1,935,023	$	2,256,081
General and administrative		2,557,423		3,258,648		3,640,108
Sales and marketing		42,755		144,421		321,821
Acquisition costs		87,158		185,115		67,051
Other		113,982		—		—
	$	4,259,090	$	5,523,207	$	6,285,061

For the nine months ended September 30, 2024 and the years ended December 31, 2023 and 2022, the Operating Partnership recognized distributions payable to the Advisor in the amount of $118,232, $360,821 and $334,417, respectively, in connection with the Advisor’s ownership of Series B LP Units.

Samuel C. Montgomery, the Company’s Chief Financial Officer, is an employee of the Sponsor, and the Company reimburses the Sponsor, at cost, for an allocated portion of his compensation to the extent he provides services to the Company. For the nine months ended September 30, 2024 and the years ended December 31, 2023 and 2022, the total amount of executive compensation expenses reimbursed by the Company for Samuel C. Montgomery was $0.1 million, $0.1 million and $0.1 million, respectively. For the nine months ended September 30, 2024 and the years ended December 31, 2023 and 2022, the Company paid Corey Maple and Norman Leslie distributions in the amount of $16,240 in connection with their ownership of 57,319 shares, $40,123 in connection with their ownership of 57,319 shares, and $40,123 in connection with their ownership of 57,319 shares, respectively, each, of the Company’s common stock. Additionally, for the nine months ended September 30, 2024 and the years ended December 31, 2023 and 2022, the Company paid Corey Maple distributions in amount of $4,532, $1,994 and $0, respectively, in connection with his ownership of 15,361 Series GO LP Units.

Our Relationship with NHS, LLC dba National Hospitality Services. NHS is wholly-owned by Norman Leslie, a director and executive officer of the Company and a principal of the Advisor. NHS provides property management and hotel operations management services for certain of the Company’s hotel properties, pursuant to individual management agreements. The agreements have an initial term expiring on December 31st of the fifth full calendar year following the effective date of the agreement, which automatically renews for a period of five years on each successive five-year period, unless terminated in accordance with its terms.

NHS earns a monthly base management fee for property management services, including overseeing the day-to-day operations of the hotel properties, generally equal to 4% of gross revenue. NHS also earns an accounting fee of $14.00 per room for accounting services, payable monthly, and an administrative fee equal to 0.60% of gross revenues for administrative and other services. The Company reimburses NHS for certain costs of operating the properties incurred on behalf of the Company. All reimbursements are paid to NHS at cost.

NHS also earns a flat fee of $5,000 per hotel property for due diligence services, including analyzing, evaluating, and reporting on documentation and information received by sellers or contributors during the period of due diligence. Such

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fee is waived if, upon acquisition by us, NHS is selected as the management company for the hotel property. NHS is also reimbursed for actual out-of-pocket costs incurred in providing the due diligence services.

Fees and reimbursements earned and payable to NHS, for the nine months ended September 30, 2024 and the years ended December 31, 2023 and 2022, were as follows:

	Incurred						Payable as of
	For the Nine Months Ended September 30,		For the Years Ended December 31,				September 30,		December 31,
	2024		2023		2022		2024		2023		2022
Fees:
Management fees	$	733,760	$	1,073,723	$	1,071,385	$	43,383	$	186,298	$	145,733
Administrative fees		79,514		119,613		184,101		3,268		20,962		22,791
Accounting fees		100,344		159,896		195,096		4,080		32,220		31,164
	$	913,618	$	1,353,232	$	1,450,582	$	50,731	$	239,480	$	199,688
Reimbursements	$	400,025	$	810,723	$	1,273,180	$	16,680	$	216,595	$	143,009

On March 6, 2023, we entered into a $600,000 loan agreement (the “NHS Loan”) with NHS. The NHS Loan requires the payment of monthly interest beginning on April 6, 2023, with all outstanding principal and interest amounts being due and payable at maturity on July 6, 2023. The NHS Loan has a fixed interest rate of 7.0% per annum. Outstanding amounts under the NHS Loan may be prepaid in whole or in part without penalty. The NHS Loan is secured by 60,000 partnership units of the Operating Partnership. On December 28, 2023, we entered into a Change in Terms Agreement with the Operating Partnership and NHS in connection with the NHS Loan to extend the maturity date of the NHS Loan to January 31, 2024. This amendment also provided that in lieu of monthly interest payments, all accrued interest shall be due and payable on the maturity date with the full principal balance. On August 21, 2024, the Company entered into a Change in Terms Agreement with the Operating Partnership and NHS in connection with the NHS Loan to extend the maturity date of the NHS Loan to September 30, 2025.

Our Relationship with One Rep Construction, LLC (“One Rep”). One Rep is a related party through common management and ownership, as Corey Maple, Norman Leslie, and David Ekman, each hold a 33.33% ownership interest in One Rep. One Rep is a construction management company which provided construction management services to the Company during 2024, 2023 and 2022 related to the renovation construction activities at certain hotel properties. For the services provided, One Rep is paid a construction management fee equal to 6% or 7% of the total project costs. The Company reimburses One Rep for certain costs incurred on behalf of the Company, and all reimbursements are paid to One Rep at cost. For the nine months ended September 30, 2024 and the years ended December 31, 2023 and 2022, the Company incurred $9,302, $191,803 and $258,037 of construction management fees and reimbursements payable to One Rep, respectively. As of September 30, 2024, December 31, 2023 and December 31, 2022, the amounts outstanding and due to One Rep were $42,661, $34,856 and $33,947, respectively.

Our Relationship with Legendary A-1 Bonds, LLC (“A-1 Bonds”). A-1 Bonds is an affiliate of the Advisor which is owned by Mr. Leslie, a director and executive officer of the Company and principal of the Advisor, and Mr. Maple, a director of the Company and principal of the Advisor. During the year ended December 31, 2022, A-1 Bonds made loans with an aggregate principal amount of $42.5 million to subsidiaries of the Company secured by 4 hotel properties, of which $28.2 million was subsequently paid off. During the nine months ended September 30, 2024, A-1 Bonds made a loan in connection with one hotel property with an aggregate principal amount of $4.9 million secured by Common LP Units of the Operating Partnership with an interest rate of 14.5% per annum. On August 9, 2022, the Company entered into a $5.0 million revolving line of credit with A-1 Bonds, which line of credit was increased to $7.5 million, $10.0 million, $13.3 million, and $15.5 million as of December 15, 2022, January 12, 2023, April 18, 2023 and March 27, 2024, respectively. The A-1 line of credit currently has an interest rate of 14.5% per annum.

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As of December 31, 2023 and December 17, 2024, $13.2 million and $15.5 million, respectively, was outstanding under the A-1 Line of Credit.

Loan Guarantees. The members of the Advisor personally guaranty certain loans of the Company and may receive a guarantee fee of up to 1.0% per annum of the guaranty amount. Since January 1, 2022, Corey Maple has agreed to be a guarantor of the Company’s loans secured by the hotel properties located in Fargo, North Dakota, El Paso, Texas, Wichita, Kansas, and Fort Collins, Colorado, which had original loan amounts of $7.4 million, $14.4 million, $5.6 million, and $11.2 million, respectively. Mr. Maple remains a guarantor of several additional Company loans entered into prior to January 1, 2022. Since January 1, 2022, Mr. Leslie agreed to be a guarantor of the Company’s loans secured by the Company’s hotel properties in Fort Collins, Colorado Lakewood, Colorado, and Prattville, Alabama which had original loan amounts of $11.2 million, $12.0 million, and $11.0 million respectively. Mr. Leslie was a guarantor of the Company’s loan secured by the Company’s hotel property in Pineville, North Carolina, which had an original loan amount of $9.3 million.  That loan was repaid in full and the guaranty terminated on July 23, 2024. For the nine months ended September 30, 2024 and the years ended December 31, 2023 and 2022, the Company accrued guarantee fees in the amount of $93,783, $151,765 and $155,676 respectively to each of Mr. Maple and Mr. Leslie. The total amount accrued of $1.2 million and $0.9 million remained unpaid as of December 31, 2023 and December 31, 2022, respectively.

Currently Proposed Transactions. There are no currently proposed transactions in which we were or are to be a participant and the amount involved exceeded $120,000 and in which any related person had or will have a direct or indirect material interest.

Director Independence

Two members of our board of directors, Jeffrey T. Leighton and Perry M. Rynders, are “independent” as defined by the rules of the New York Stock Exchange. The New York Stock Exchange standards provide that to qualify as an independent director, in addition to satisfying certain bright-line criteria, the board of directors must affirmatively determine that a director has no material relationship with us (either directly or as a partner, stockholder or officer of an organization that has a relationship with us). The board of directors has affirmatively determined that Jeffrey T. Leighton and Perry M. Rynders each satisfies the New York Stock Exchange independence standards. Neither of these directors has ever served as (or is related to) an employee of ours or any of our predecessors or acquired companies (if applicable) or received or earned any compensation from us or any such entities except for compensation directly related to service as a director of us. Therefore, we believe that both of these directors are independent directors. Accordingly, all of the members of the Audit Committee and the Conflicts Committee are “independent” as defined by the New York Stock Exchange.

Item 14. Principal Accountant Fees and Services.

Independent Registered Public Accounting Firm

During the year ended December 31, 2022, Deloitte & Touche LLP (“Deloitte”) served as our independent registered public accounting firm and provided certain tax and other services. Deloitte had served as our independent registered public accounting firm since our formation. On October 24, 2023, based on the approval of our Audit Committee, we dismissed Deloitte as the Company’s independent registered public accounting firm, effective as of that date. The report issued by Deloitte on the Company’s financial statements for the fiscal years ended December 31, 2021 and 2020 did not contain any adverse opinion or disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles. Deloitte did not issue a report on the Company’s financial statements for the fiscal year ended December 31, 2022.  On October 24, 2023, based on the approval of our Audit Committee, the Company engaged Marcum LLP (“Marcum”), a nationally recognized accounting firm, as the Company’s new independent registered public accounting firm.  Marcum has audited the financial statements included in this Annual Report on Form 10-K for the years ended December 31, 2023 and 2022.

The Audit Committee reviewed the audit and non-audit services performed by Deloitte and Marcum, as well as the fees charged for such services. In its review of the non-audit service fees, the Audit Committee considered whether the provision of such services is compatible with maintaining the auditor’s independence.

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Pre-Approval Policies

In order to ensure that the provision of such services does not impair the independent registered public accounting firm’s independence, the Audit Committee charter imposes a duty on the Audit Committee to pre-approve all auditing services performed for us by our independent registered public accounting firm, as well as all permitted non-audit services. In determining whether or not to pre-approve services, the Audit Committee considers whether the service is a permissible service under the rules and regulations promulgated by the SEC. The Audit Committee may, in its discretion, delegate to one or more of its members the authority to pre-approve any audit or non-audit services to be performed by our independent registered public accounting firm, provided any such approval is presented to and approved by the full Audit Committee at its next scheduled meeting.

For the years ended December 31, 2023 and 2022, all services rendered by Deloitte and Marcum were pre-approved in accordance with the policies and procedures described above.  

Principal Independent Registered Public Accounting Firm Fees

Fees Paid to Independent Registered Public Accounting Firm

The aggregate fees billed to us for professional accounting services, including the audit of our annual financial statements for the years ended December 31, 2023 and 2022, by Marcum are set forth in the table below.

	2023		2022
Fees:
Audit fees	$	566,500	$	612,800
Audit-related fees		20,082		62,902
Tax fees		100,116		81,151
All other fees		—		—
Total	$	686,698	$	756,853

For purposes of the preceding table, Marcum’s professional fees are classified as follows:

● Audit fees – These are fees for professional services performed for the audit of our annual financial statements and the required review of quarterly financial statements and other procedures performed by Deloitte and Marcum in order for them to be able to form an opinion on our consolidated financial statements. These fees also cover services that are normally provided by independent registered public accounting firms in connection with statutory and regulatory filings or engagements.

● Audit-related fees – These are fees for assurance and related services that traditionally are performed by independent registered public accounting firms that are reasonably related to the performance of the audit or review of our financial statements, such as due diligence related to acquisitions and dispositions, attestation services that are not required by statute or regulation, subscription to an online accounting research tool and internal control reviews and consultation concerning financial accounting and reporting standards.

● Tax fees – These are fees for all professional services performed by professional staff in our independent registered public accounting firm’s tax division, except those services related to the audit of our financial statements. These include fees for tax compliance, tax planning and tax advice, including federal, state and local issues. Services may also include assistance with tax audits and appeals before the U.S. Internal Revenue Service (the “IRS”) and similar state and local agencies, as well as federal, state and local tax issues related to due diligence.

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PART IV

Item 15. Exhibits and Financial Statement Schedules.

(a) Financial Statement Schedules

See the Index to Financial Statements at page F-1 of this report.

The following financial statement schedule is included herein at page F-43 of this report:

Schedule III – Real Estate Assets and Accumulated Depreciation

(b) Exhibits

Exhibit No.	Description
3.1	Articles of Amendment and Restatement, dated as of June 1, 2018 (incorporated by reference to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q filed May 14, 2020)
3.2	Articles Supplementary for Interval Common Stock (incorporated by reference to Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q filed May 14, 2020)
3.3	Bylaws, dated of as April 9, 2018, as amended by Amendment No. 1 dated as of November 12, 2019 (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed November 12, 2019)
3.4	Limited Partnership Agreement of the Operating Partnership, dated as of April 11, 2018 (incorporated by reference to Exhibit 3.3 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
3.5	First Amendment to Limited Partnership Agreement of the Operating Partnership, effective as of April 29, 2020 (incorporated by reference to Exhibit 10.17 to the Company’s Quarterly Report on Form 10-Q filed May 14, 2020)
3.6	Amended and Restated Limited Partnership Agreement of the Operating Partnership, effective as of June 15, 2020 (incorporated by reference to Exhibit 10.12 to the Company’s Quarterly Report on Form 10-Q filed August 14, 2020)
3.7	First Amendment to the Amended and Restated Limited Partnership Agreement of the Operating Partnership, effective as of February 4, 2021 (incorporated by reference to Exhibit 3.7 to the Company’s Annual Report on Form 10-K filed March 31, 2021)
3.8	Second Amendment to the Amended and Restated Limited Partnership Agreement of the Operating Partnership, effective as of May 12, 2021 (incorporated by reference to Exhibit 3.5 to the Company's Quarterly Report on Form 10-Q filed August 13, 2021)
3.9	Third Amendment to the Amended and Restated Limited Partnership Agreement of the Operating Partnership, effective as of August 3, 2021 (incorporated by reference to Exhibit 3.6 to the Company's Quarterly Report on Form 10-Q filed August 13, 2021)
3.10	Fourth Amendment to the Amended and Restated Limited Partnership Agreement of the Operating Partnership, effective as of December 3, 2021 (incorporated by reference to Exhibit 3.10 to the Company’s Annual Report on Form 10-K filed March 31, 2022)

85

3.11	Fifth Amendment to the Amended and Restated Limited Partnership Agreement of the Operating Partnership, effective as of January 18, 2022 (incorporated by reference to Exhibit 3.11 to the Company’s Annual Report on Form 10-K filed March 31, 2022)
3.12	Sixth Amendment to the Amended and Restated Limited Partnership Agreement of the Operating Partnership, effective as of March 24, 2022 (incorporated by reference to Exhibit 3.12 to the Company’s Annual Report on Form 10-K filed March 31, 2022)
3.13	Seventh Amendment to the Amended and Restated Limited Partnership Agreement of the Operating Partnership, effective as of March 29, 2022 (incorporated by reference to Exhibit 3.13 to the Company's Quarterly Report on Form 10-Q filed March 27, 2024)
3.14	Eighth Amendment to the Amended and Restated Limited Partnership Agreement of the Operating Partnership, effective as of August 3, 2022 (incorporated by reference to Exhibit 3.14 to the Company's Quarterly Report on Form 10-Q filed March 27, 2024)
3.15	Ninth Amendment to the Amended and Restated Limited Partnership Agreement of the Operating Partnership, effective as of August 25, 2022 (incorporated by reference to Exhibit 3.15 to the Company's Quarterly Report on Form 10-Q filed March 27, 2024)
3.16	Tenth Amendment to the Amended and Restated Limited Partnership Agreement of the Operating Partnership, effective as of August 25, 2022 (incorporated by reference to Exhibit 3.16 to the Company's Quarterly Report on Form 10-Q filed March 27, 2024)
3.17	Eleventh Amendment to the Amended and Restated Limited Partnership Agreement of the Operating Partnership, effective as of December 22, 2022 (incorporated by reference to Exhibit 3.17 to the Company’s Annual Report on Form 10-K filed March 27, 2024)
3.18	Twelfth Amendment to the Amended and Restated Limited Partnership Agreement of the Operating Partnership, effective as of January 10, 2023 (incorporated by reference to Exhibit 3.18 to the Company’s Annual Report on Form 10-K filed March 27, 2024)
3.19	Thirteenth Amendment to the Amended and Restated Limited Partnership Agreement of Lodging Fund REIT III OP, LP, effective as of April 7, 2023 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed April 13, 2023)
4.1	Dividend Reinvestment Plan of the Registrant (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
4.2	Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934, as amended (incorporated by reference to Exhibit 4.2 to the Company’s Annual Report on Form 10-K filed March 25, 2020)
10.1	Amended and Restated Advisory Agreement among the Registrant, the Operating Partnership and the Advisor, effective as of June 1, 2018 (incorporated by reference to Exhibit 10.1 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.2	Form of Management Agreement with NHS dba National Hospitality Services (incorporated by reference to Exhibit 10.2 to the Company’s Registration Statement on Form 10 filed August 8, 2019)

86

10.3	Form of TRS Lease Agreement (incorporated by reference to Exhibit 10.3 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.6	Business Loan Agreement for the Cedar Rapids Property with Western State Bank, dated March 5, 2019 (incorporated by reference to Exhibit 10.6 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.7	Promissory Note issued to Western State Bank relating to the Cedar Rapids Property, dated March 5, 2019 (incorporated by reference to Exhibit 10.7 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.8	Mortgage relating to the Cedar Rapids Property, dated March 5, 2019 (incorporated by reference to Exhibit 10.8 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.9	Assignment of Rents relating to the Cedar Rapids Property, dated March 5, 2019 (incorporated by reference to Exhibit 10.9 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.10.1	Commercial Security Agreement (Fixtures) relating to the Cedar Rapids Property, dated March 5, 2019 (incorporated by reference to Exhibit 10.10.1 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.10.2	Commercial Security Agreement (Inventory) relating to the Cedar Rapids Property, dated March 5, 2019 (incorporated by reference to Exhibit 10.10.2 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.10.3	Commercial Security Agreement (Franchise) relating to the Cedar Rapids Property, dated March 5, 2019 (incorporated by reference to Exhibit 10.10.3 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.11.1	Commercial Guaranty relating to the Cedar Rapids Property, dated March 5, 2019 (incorporated by reference to Exhibit 10.11.1 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.11.2	Commercial Guaranty relating to the Cedar Rapids Property, dated March 5, 2019 (incorporated by reference to Exhibit 10.11.2 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.12.1	Agreement to Provide Insurance (Property) relating to the Cedar Rapids Property, dated March 5, 2019 (incorporated by reference to Exhibit 10.12.1 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.12.2	Agreement to Provide Insurance (Fixtures) relating to the Cedar Rapids Property, dated March 5, 2019 (incorporated by reference to Exhibit 10.12.2 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.12.3	Agreement to Provide Insurance (Franchise) relating to the Cedar Rapids Property, dated March 5, 2019 (incorporated by reference to Exhibit 10.12.3 to the Company’s Registration Statement on Form 10 filed August 8, 2019)

87

10.15	Business Loan Agreement with Western State Bank relating to the Eagan Property, dated June 19, 2019 (incorporated by reference to Exhibit 10.15 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.16	Promissory Note issued to Western State Bank relating to the Eagan Property, dated June 19, 2019 (incorporated by reference to Exhibit 10.16 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.17	Mortgage to Western State Bank relating to the Eagan Property, dated June 19, 2019 (incorporated by reference to Exhibit 10.17 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.18	Assignment of Rents relating to the Eagan Property, dated June 19, 2019 (incorporated by reference to Exhibit 10.18 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.19.1	Commercial Security Agreement (Fixtures) relating to the Eagan Property, dated June 19, 2019 (incorporated by reference to Exhibit 10.19.1 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.19.2	Commercial Security Agreement (Inventory) relating to the Eagan Property, dated June 19, 2019 (incorporated by reference to Exhibit 10.19.2 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.19.3	Commercial Security Agreement (Franchise) relating to the Eagan Property, dated June 19, 2019 (incorporated by reference to Exhibit 10.19.3 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.20.1	Commercial Guaranty relating to the Eagan Property, dated June 19, 2019 (incorporated by reference to Exhibit 10.20.1 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.20.2	Commercial Guaranty relating to the Eagan Property, dated June 19, 2019 (incorporated by reference to Exhibit 10.20.2 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.21	Agreements to Provide Insurance relating to the Eagan Property, dated June 19, 2019 (incorporated by reference to Exhibit 10.21 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.23	Asset Purchase Agreement for the purchase of the Cedar Rapids Property, dated as of October 11, 2018 (incorporated by reference to Exhibit 10.23 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.24	First Amendment to Asset Purchase Agreement for the Cedar Rapids Property, dated as of November 13, 2018 (incorporated by reference to Exhibit 10.24 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.25	Second Amendment to Asset Purchase Agreement for the Cedar Rapids Property, effective as of November 20, 2018 (incorporated by reference to Exhibit 10.25 to the Company’s Registration Statement on Form 10 filed August 8, 2019)

88

10.26	Assignment of Agreement for Sale and Purchase of the Cedar Rapids Property, dated as of November 28, 2018 (incorporated by reference to Exhibit 10.26 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.38	Hotel Purchase and Sale Agreement for the purchase of the Eagan Property, dated as of April 10, 2019 (incorporated by reference to Exhibit 10.38 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.39	First Amendment to Hotel Purchase and Sale Agreement for the purchase of the Eagan Property, dated as of May 1, 2019 (incorporated by reference to Exhibit 10.39 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.40	Second Amendment to Hotel Purchase and Sale Agreement for the purchase of the Eagan Property, dated as of June 3, 2019 (incorporated by reference to Exhibit 10.40 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.41	Assignment of Hotel Purchase and Sale Agreement for the purchase of the Eagan Property, dated on or as of June 19, 2019 (incorporated by reference to Exhibit 10.41 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.42	Sale and Purchase Agreement for the purchase of the Prattville Property, dated as of May 9, 2019 (incorporated by reference to Exhibit 10.42 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.43	First Amendment to Sale and Purchase Agreement for the Prattville Property, effective as of June 28, 2019 (incorporated by reference to Exhibit 10.43 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
10.45	Agreement of Purchase and Sale for the purchase of the Lubbock Home2 Suites, dated as of July 26, 2019 (incorporated by reference to Exhibit 10.12 to the Company’s Quarterly Report on Form 10-Q filed November 13, 2019)
10.46	First Amendment to the Agreement of Purchase and Sale for the Purchase of the Lubbock Home2 Suites, dated as of September 11, 2019 (incorporated by reference to Exhibit 10.13 to the Company’s Quarterly Report on Form 10-Q filed November 13, 2019)
10.47	Reinstatement and Second Amendment to the Agreement of Purchase and Sale for the purchase of the Lubbock Home2 Suites, dated as of October 1, 2019 (incorporated by reference to Exhibit 10.14 to the Company’s Quarterly Report on Form 10-Q filed November 13, 2019)
10.48	Assignment of Agreement of Purchase and Sale for the purchase of the Lubbock Home2 Suites, dated as of December 26, 2019 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed December 31, 2019)
10.49	Agreement of Purchase and Sale for the Purchase of the Lubbock Fairfield Inn & Suites, dated as of July 26, 2019 (incorporated by reference to Exhibit 10.15 to the Company’s Quarterly Report on Form 10-Q filed November 13, 2019)
10.50	First Amendment to the Agreement of Purchase and Sale for the purchase of the Lubbock Fairfield Inn & Suites, dated as of September 11, 2019 (incorporated by reference to Exhibit 10.16 to the Company’s Quarterly Report on Form 10-Q filed November 13, 2019)

89

10.51	Reinstatement and Second Amendment to the Agreement of Purchase and Sale for the Purchase of the Lubbock Fairfield Inn & Suites, dated as of October 1, 2019 (incorporated by reference to Exhibit 10.17 to the Company’s Quarterly Report on Form 10-Q filed November 13, 2019)
10.52	Assignment of Agreement of Purchase and Sale for the purchase of the Lubbock Fairfield Inn & Suites, dated as of December 26, 2019 (incorporated by reference to Exhibit 10.52 to the Company’s Annual Report on Form 10-K filed March 25, 2020)
10.53.1	Asset Purchase Agreement for the Southaven Homewood Suites, effective as of November 5, 2019 (incorporated by reference to Exhibit 10.53.1 to the Company’s Annual Report on Form 10-K filed March 25, 2020)
10.53.2	First Amendment to Purchase Agreement for the Southaven Homewood Suites, effective as of January 3, 2020 (incorporated by reference to Exhibit 10.53.2 to the Company’s Annual Report on Form 10-K filed March 25, 2020)
10.53.3	Second Amendment to Purchase Agreement for the Southaven Homewood Suites, dated as of January 31, 2020 (incorporated by reference to Exhibit 10.53.3 to the Company’s Annual Report on Form 10-K filed March 25, 2020)
10.54.1	Assumption Agreement relating to the Lubbock Home2 Suites loan, dated as of December 30, 2019 (incorporated by reference to Exhibit 10.54.1 to the Company’s Annual Report on Form 10-K filed March 25, 2020)
10.54.2	Joinder by and Agreement of New Indemnitor relating to the Lubbock Home2 Suites, effective as of December 30, 2019 (incorporated by reference to Exhibit 10.54.2 to the Company’s Annual Report on Form 10-K filed March 25, 2020)
10.54.3	Assignment and Subordination of Management Agreement relating to the Lubbock Home2 Suites, dated as of December 30, 2019 (incorporated by reference to Exhibit 10.54.3 to the Company’s Annual Report on Form 10-K filed March 25, 2020)
10.54.4	Promissory Note relating to the Lubbock Home2 Suites, dated as of October 4, 2016 (incorporated by reference to Exhibit 10.54.4 to the Company’s Annual Report on Form 10-K filed March 25, 2020)
10.54.5	Loan Agreement relating to the Lubbock Home2 Suites, dated as of October 4, 2016 (incorporated by reference to Exhibit 10.54.5 to the Company’s Annual Report on Form 10-K filed March 25, 2020)
10.54.6	Deed of Trust relating to the Lubbock Home2 Suites, dated as of October 4, 2016 (incorporated by reference to Exhibit 10.54.6 to the Company’s Annual Report on Form 10-K filed March 25, 2020)
10.54.7	Assignment of Leases and Rents relating to the Lubbock Home2 Suites, dated as of October 4, 2016 (incorporated by reference to Exhibit 10.54.7 to the Company’s Annual Report on Form 10-K filed March 25, 2020)
10.54.8	Guaranty of Recourse Obligations relating to the Lubbock Home2 Suites, dated as of October 4, 2016 (incorporated by reference to Exhibit 10.54.8 to the Company’s Annual Report on Form 10-K filed March 25, 2020)

90

10.55.1	Consent, Amendment and Assumption Agreement relating to the Lubbock Fairfield Inn loan, dated as of January 8, 2020 (incorporated by reference to Exhibit 10.55.1 to the Company’s Annual Report on Form 10-K filed March 25, 2020)
10.55.2	Promissory Note relating to the Lubbock Fairfield Inn, dated as of April 4, 2019 (incorporated by reference to Exhibit 10.55.2 to the Company’s Annual Report on Form 10-K filed March 25, 2020)
10.55.3	Loan Agreement relating to the Lubbock Fairfield Inn, dated as of April 4, 2019 (incorporated by reference to Exhibit 10.55.3 to the Company’s Annual Report on Form 10-K filed March 25, 2020)
10.55.4	Assignment of Leases and Rents relating to the Lubbock Fairfield Inn, dated as of April 4, 2019 (incorporated by reference to Exhibit 10.55.4 to the Company’s Annual Report on Form 10-K filed March 25, 2020)
10.55.5	Deed of Trust relating to the Lubbock Fairfield Inn, dated as of January 8, 2020 (incorporated by reference to Exhibit 10.55.5 to the Company’s Annual Report on Form 10-K filed March 25, 2020)
10.55.6	Guaranty of Recourse Obligations relating to the Lubbock Fairfield Inn, dated as of January 8, 2020 (incorporated by reference to Exhibit 10.55.6 to the Company’s Annual Report on Form 10-K filed March 25, 2020)
10.55.7	Environmental Indemnity Agreement relating to the Lubbock Fairfield Inn, dated as of January 8, 2020 (incorporated by reference to Exhibit 10.55.7 to the Company’s Annual Report on Form 10-K filed March 25, 2020)
10.55.8	Acknowledgement of Property Manager and Borrower relating to the Lubbock Fairfield Inn, dated as of January 8, 2020 (incorporated by reference to Exhibit 10.55.8 to the Company’s Annual Report on Form 10-K filed March 25, 2020)
10.56.1	Business Loan Agreement for Revolving Line of Credit with Western State Bank, dated February 10, 2020 (incorporated by reference to Exhibit 10.3.1 to the Company’s Quarterly Report on Form 10-Q filed May 14, 2020)
10.56.2	Promissory Note issued to Western State Bank, dated February 10, 2020 (incorporated by reference to Exhibit 10.3.2 to the Company’s Quarterly Report on Form 10-Q filed May 14, 2020)
10.56.3	Mortgage granted to Western State Bank relating to the Cedar Rapids Property, dated February 10, 2020  (incorporated by reference to Exhibit 10.56.3 to the Company’s Annual Report on Form 10-K filed March 25, 2020)
10.56.4	Mortgage granted to Western State Bank relating to the Eagan Property, dated February 10, 2020 (incorporated by reference to Exhibit 10.56.4 to the Company’s Annual Report on Form 10-K filed March 25, 2020)
10.56.5	Assignment of Rents granted to Western State Bank relating to the Cedar Rapids Property, dated February 10, 2020  (incorporated by reference to Exhibit 10.56.5 to the Company’s Annual Report on Form 10-K filed March 25, 2020)

91

10.56.6	Assignment of Rents granted to Western State Bank relating to the Eagan Property, dated February 10, 2020 (incorporated by reference to Exhibit 10.56.6 to the Company’s Annual Report on Form 10-K filed March 25, 2020)
10.56.7	Commercial Security Agreement relating to the Cedar Rapids Property, dated February 10, 2020 (incorporated by reference to Exhibit 10.56.7 to the Company’s Annual Report on Form 10-K filed March 25, 2020)
10.56.8	Commercial Security Agreement relating to the Eagan Property, dated February 10, 2020 (incorporated by reference to Exhibit 10.56.8 to the Company’s Annual Report on Form 10-K filed March 25, 2020)
10.56.10	Commercial Guaranty by Corey R. Maple to Western State Bank, dated February 10, 2020 (incorporated by reference to Exhibit 10.56.10 to the Company’s Annual Report on Form 10-K filed March 25, 2020)
10.56.11	Commercial Guaranty by the Registrant to Western State Bank, dated February 10, 2020 (incorporated by reference to Exhibit 10.56.11 to the Company’s Annual Report on Form 10-K filed March 25, 2020)
10.56.13	Agreement to Provide Insurance relating to the Eagan Property, dated February 10, 2020 (incorporated by reference to Exhibit 10.56.13 to the Company’s Annual Report on Form 10-K filed March 25, 2020)
10.58.1	Loan Agreement with Wells Fargo Bank, National Association, relating to the Southaven Homewood Suites, dated as of February 21, 2020 (incorporated by reference to Exhibit 10.58.1 to the Company’s Annual Report on Form 10-K filed March 25, 2020)
10.58.2	Term Loan Note issued to Wells Fargo Bank, National Association, relating to the Southaven Homewood Suites, dated as of February 21, 2020 (incorporated by reference to Exhibit 10.58.2 to the Company’s Annual Report on Form 10-K filed March 25, 2020)
10.58.3	Security Agreement relating to the Southaven Homewood Suites, dated as of February 21, 2020 (incorporated by reference to Exhibit 10.58.3 to the Company’s Annual Report on Form 10-K filed March 25, 2020)
10.58.4	Environmental Indemnity Agreement by the subsidiary borrowers and Corey R. Maple relating to the Southaven Homewood Suites, dated as of February 21, 2020 (incorporated by reference to Exhibit 10.58.4 to the Company’s Annual Report on Form 10-K filed March 25, 2020)
10.58.5	Deed of Trust relating to the Southaven Homewood Suites, dated as of February 21, 2020 (incorporated by reference to Exhibit 10.58.5 to the Company’s Annual Report on Form 10-K filed March 25, 2020)
10.58.6	Guaranty by Corey R. Maple relating to the Southaven Homewood Suites, dated as of February 21, 2020 (incorporated by reference to Exhibit 10.58.6 to the Company’s Annual Report on Form 10-K filed March 25, 2020)
10.59	Hotel Management Agreement between LF Southaven TRS, LLC and Vista Host Inc. relating to the Southaven Homewood Suites, dated as of February 21, 2020 (incorporated by reference to Exhibit 10.59 to the Company’s Annual Report on Form 10-K filed March 25, 2020)

92

10.66.1	Change in Terms Agreement with Western State Bank, dated April 17, 2020, relating to the loan dated March 5, 2019 related to the Cedar Rapids Property (incorporated by reference to Exhibit 10.13.1 to the Company’s Quarterly Report on Form 10-Q filed May 14, 2020)
10.66.2	Modification of Mortgage, dated April 17, 2020 relating to the mortgage dated March 5, 2019 related to the Cedar Rapids Property (incorporated by reference to Exhibit 10.13.2 to the Company’s Quarterly Report on Form 10-Q filed May 14, 2020)
10.67.1	Change in Terms Agreement with Western State Bank, dated April 17, 2020, relating to the loan dated June 19, 2019 related to the Eagan Property (incorporated by reference to Exhibit 10.14.1 to the Company’s Quarterly Report on Form 10-Q filed May 14, 2020)
10.67.2	Modification of Mortgage, dated April 17, 2020 relating to the mortgage dated June 19, 2019 related to the Eagan Property (incorporated by reference to Exhibit 10.14.2 to the Company’s Quarterly Report on Form 10-Q filed May 14, 2020)
10.68	Forbearance Agreement with Wells Fargo Bank, National Association, dated as of April 22, 2020 and effective as of May 1, 2020, relating to the loan dated July 11, 2019 related to the Prattville Property (incorporated by reference to Exhibit 10.15 to the Company’s Quarterly Report on Form 10-Q filed May 14, 2020)
10.69	Forbearance Agreement with Wells Fargo Bank, National Association, dated as of April 22, 2020 and effective as of May 1, 2020, relating to the loan dated February 21, 2020 related to the Southaven Property (incorporated by reference to Exhibit 10.16 to the Company’s Quarterly Report on Form 10-Q filed May 14, 2020)
10.74	Form of Services Agreement with One Rep Construction (incorporated by reference to Exhibit 10.17 to the Company’s Quarterly Report on Form 10-Q filed August 14, 2020)
10.75	First Amendment to Management Agreement, dated August 14, 2020, by and among the Company, LF3 Prattville TRS, LLC and NHS LLC dba National Hospitality Services (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed November 12, 2020)
10.76	Amended and Restated Term Loan Note issued to Wells Fargo Bank, National Association, relating to the Southaven Property, dated as of August 14, 2020 (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q filed November 12, 2020)
10.77	First Amendment to Loan Agreement with Wells Fargo Bank, National Association, relating to the Southaven Property, dated as of August 14, 2020 (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q filed November 12, 2020)
10.78	First Amendment to Guaranty between Corey R. Maple and Wells Fargo Bank, National Association, relating to the Southaven Property, dated as of August 14, 2020 (incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q filed November 12, 2020)
10.79	Amended and Restated Term Loan Note issued to Wells Fargo Bank, National Association, relating to the Prattville Property, dated as of August 14, 2020 (incorporated by reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q filed November 12, 2020)

93

10.80	First Amendment to Loan Agreement with Wells Fargo Bank, National Association, relating to the Prattville Property, dated as of August 14, 2020 (incorporated by reference to Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q filed November 12, 2020)
10.81	First Amendment to Guaranty between Corey R. Maple and Wells Fargo Bank, National Association, relating to the Prattville Property, dated as of August 14, 2020 (incorporated by reference to Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q filed November 12, 2020)
10.82	First Amendment to Guaranty between Corey R. Maple and Wells Fargo Bank, National Association, relating to the Prattville Property, dated as of August 14, 2020 (incorporated by reference to Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q filed November 12, 2020)
10.83	First Amendment to Contribution Agreement, dated as of November 30, 2020, by and between the Operating Partnership and LN Hospitality Denver, LLC for the Aurora Property (incorporated by reference to Exhibit 10.83 to the Company’s Annual Report on Form 10-K filed March 31, 2021)
10.84	Amended and Restated Contribution Agreement, dated as of January 29, 2021, by and between the Operating Partnership and LN Hospitality Denver, LLC for the Aurora Property (incorporated by reference to Exhibit 10.84 to the Company’s Annual Report on Form 10-K filed March 31, 2021)
10.85.1	Loan Agreement by and among LF3 Aurora, LLC, LF3 Aurora TRS, LLC and Access Point Financial, LLC, relating to the Aurora Property, dated as of February 4, 2021 (incorporated by reference to Exhibit 10.85.1 to the Company’s Annual Report on Form 10-K filed March 31, 2021)
10.85.2	Promissory Note issued by LF3 Aurora, LLC and LF3 Aurora TRS, LLC to Access Point Financial, LLC, relating to the Aurora Property, dated as of February 4, 2021 (incorporated by reference to Exhibit 10.85.2 to the Company’s Annual Report on Form 10-K filed March 31, 2021)
10.85.3	Fee and Leasehold Deed of Trust and Security Agreement by and among LF3 Aurora, LLC, LF3 Aurora TRS, LLC and Access Point Financial, LLC, relating to the Aurora Property, dated as of February 4, 2021 (incorporated by reference to Exhibit 10.85.3 to the Company’s Annual Report on Form 10-K filed March 31, 2021)
10.85.4	Guaranty Agreement, by and among Access Point Financial, LLC, LF3 Aurora, LLC, LF3 Aurora TRS, LLC and the Company, relating to the Aurora Property, dated as of February 4, 2021 (incorporated by reference to Exhibit 10.85.4 to the Company’s Annual Report on Form 10-K filed March 31, 2021)
10.85.5	Environmental Indemnity Agreement, by and among LF3 Aurora, LLC, LF3 Aurora TRS, LLC, and the Company, to Access Point Financial, LLC, relating to the Aurora Property, dated as of February 4, 2021 (incorporated by reference to Exhibit 10.85.5 to the Company’s Annual Report on Form 10-K filed March 31, 2021)
10.85.6	Assignment of Leases and Rents by and among LF3 Aurora, LLC, LF3 Aurora TRS, LLC and Access Point Financial, LLC, relating to the Aurora Property, dated as of February 4, 2021 (incorporated by reference to Exhibit 10.85.6 to the Company’s Annual Report on Form 10-K filed March 31, 2021)

94

10.85.7	Agreement for Subordination of Payments to Related Parties by and among LF3 Aurora, LLC, LF3 Aurora TRS, LLC and Access Point Financial, LLC, relating to the Aurora Property, dated as of February 4, 2021 (incorporated by reference to Exhibit 10.85.7 to the Company’s Annual Report on Form 10-K filed March 31, 2021)
10.85.8	Pledge Agreement by and between Lodging Fund REIT III OP, LP and Access Point Financial, LLC relating to LF3 Aurora, LLC and the Aurora Property, dated as of February 4, 2021 (incorporated by reference to Exhibit 10.85.8 to the Company’s Annual Report on Form 10-K filed March 31, 2021)
10.85.9	Pledge Agreement by and between Lodging Fund REIT III TRS, Inc. and Access Point Financial, LLC relating to LF3 Aurora TRS, LLC and the Aurora Property, dated as of February 4, 2021 (incorporated by reference to Exhibit 10.85.9 to the Company’s Annual Report on Form 10-K filed March 31, 2021)
10.85.10	Acknowledgement of CoPACE Assessment by and between LN Hospitality Denver, LLC and LF3 Aurora, LLC to Twain Funding I, LLC, relating to the Aurora Property, dated as of February 3, 2021 (incorporated by reference to Exhibit 10.85.10 to the Company’s Annual Report on Form 10-K filed March 31, 2021)
10.86	Contribution Agreement, dated as of January 8, 2021, by and between the Operating Partnership and HD Sunland Park Property LLC for the El Paso Property (incorporated by reference to Exhibit 10.86 to the Company’s Annual Report on Form 10-K filed March 31, 2021)
10.87	Change in Terms Agreement for Revolving Line of Credit with Western State Bank, dated as of January 19, 2021 (incorporated by reference to Exhibit 10.87 to the Company’s Annual Report on Form 10-K filed March 31, 2021)
10.95	Contribution Agreement, dated as of February 17, 2021, by and between the Operating Partnership and Houston-Hotel Partners, LLC and Houston Land Partners, LLC for the Houston Hilton Garden Inn Property (incorporated by reference to Exhibit 10.95 to the Company’s Annual Report on Form 10-K filed March 31, 2021)
10.96	Form of Services Agreement with NHS dba National Hospitality Services (incorporated by reference to Exhibit 10.96 to the Company’s Annual Report on Form 10-K filed March 31, 2021)
10.97	Letter Agreement between Midland Loan Services, LF3 Lubbock Expo, LLC and LF3 Lubbock Expo TRS, LLC regarding the Lubbock Fairfield Inn loan, dated as of March 2, 2021 (incorporated by reference to Exhibit 10.97 to the Company’s Annual Report on Form 10-K filed March 31, 2021)
10.99	Limited Consent and Waiver Agreement, dated February 16, 2021 between Wells Fargo Bank, National Association, LF3 Prattville, LLC, LF3 Prattville TRS, LLC, and Corey R. Maple regarding the Prattville Property loan (incorporated by reference to Exhibit 10.99 to the Company’s Annual Report on Form 10-K filed March 31, 2021)
10.100	Limited Consent and Waiver Agreement, dated February 16, 2021 between Wells Fargo Bank, National Association, LF3 Southaven, LLC, LF3 Southaven TRS, LLC, and Corey R. Maple regarding the Southaven Property loan (incorporated by reference to Exhibit 10.100 to the Company’s Annual Report on Form 10-K filed March 31, 2021)

95

10.101	Consent to PPP Loan Agreement, dated March 5, 2021 between Wells Fargo Bank, National Association, LF3 Lubbock Expo, LLC, Lodging Fund REIT III, Inc., and Lodging Fund REIT III OP, LP regarding to the Lubbock Fairfield Inn loan (incorporated by reference to Exhibit 10.101 to the Company’s Annual Report on Form 10-K filed March 31, 2021)
10.103	Amended and Restated Contribution Agreement, dated as of April 1, 2021, by and between the Operating Partnership and Houston-Hotel Partners, LLC and Houston Land Partners, LLC for the Houston Hilton Garden Inn Property (incorporated by reference to Exhibit 10.20 to the Company’s Quarterly Report on Form 10-Q filed May 17, 2021)
10.104	First Amendment to Contribution Agreement dated as of April 28, 2021, by and between the Operating Partnership and HD Sunland Park Property LLC for the El Paso Property (incorporated by reference to Exhibit 10.21 to the Company's Quarterly Report on Form 10-Q filed May 17, 2021)
10.105	Change in Terms Agreement for Revolving Line of Credit with Western State Bank, dated as of May 6, 2021 (incorporated by reference to Exhibit 10.22 to the Company's Quarterly Report on Form 10-Q filed May 17, 2021)
10.106	Amended and Restated Contribution Agreement, dated as of May 12, 2021, by and between the Operating Partnership and HD Sunland Park Property LLC for the El Paso Property (incorporated by reference to Exhibit 10.23 to the Company's Quarterly Report on Form 10-Q filed May 17, 2021)
10.107	Loan Agreement between LF3 El Paso, LLC, LF3 El Paso TRS, LLC, and EPH Development Fund LLC, relating to the El Paso Property, dated as of May 12, 2021 (incorporated by reference to Exhibit 10.24 to the Company's Quarterly Report on Form 10-Q filed May 17, 2021)
10.108	Special Warranty Deed between HD Sunland Park Property LLC and LF3 El Paso, LLC, relating to the EL Paso Property, dated as of May 12, 2021 (incorporated by reference to Exhibit 10.25 to the Company's Quarterly Report on Form 10-Q filed May 17, 2021)
10.109	Continuing Guaranty by Lodging Fund REIT III OP, LP in favor of EPH Development Fund LLC, relating to the El Paso Property, dated as of May 12, 2021 (incorporated by reference to Exhibit 10.26 to the Company's Quarterly Report on Form 10-Q filed May 17, 2021)
10.110	Assignment, Consent and Subordination of Management Agreement by and among LF3 El Paso, LLC, LF3 El Paso TRS, LLC, Elevation Hotel Management, LLC and EPH Development Fund LLC, relating to the El Paso Property, dated as of May 12, 2021 (incorporated by reference to Exhibit 10.27 to the Company's Quarterly Report on Form 10-Q filed May 17, 2021)
10.111	Assignment and Assumption of Management Agreement, by and between HD Sunland Park Property, LLC and LF3 El Paso TRS, LLC, and LF3 El Paso, LLC, relating to the El Paso Property, dated as of May 12, 2021 (incorporated by reference to Exhibit 10.28 to the Company's Quarterly Report on Form 10-Q filed May 17, 2021)
10.112	Environmental Indemnity Agreement by LF3 El Paso, LLC and LF3 El Paso TRS, LLC in favor of EPH Development Fund LLC, relating to the El Paso Property, dated as of May 12, 2021 (incorporated by reference to Exhibit 10.29 to the Company's Quarterly Report on Form 10-Q filed May 17, 2021)

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10.113	Loan Assumption Agreement by and among HD Sunland Park Property, L.L.C., LF3 El Paso, LLC, LF3 El Paso TRS, LLC, and EPH Development Fund LLC, relating to the El Paso Property, dated as of May 12, 2021 (incorporated by reference to Exhibit 10.30 to the Company's Quarterly Report on Form 10-Q filed May 17, 2021)
10.114	Carve Out Guaranty by Corey R. Maple in favor of EPH Development Fund LLC, relating to the El Paso Property, dated as of May 12, 2021 (incorporated by reference to Exhibit 10.31 to the Company's Quarterly report on Form 10-Q filed August 13, 2021)
10.115	Deposit Account Control Agreement by and among LF3 El Paso TRS, LLC, EPH Development Fund LLC and Wells Fargo Bank, National Association, relating to the El Paso Property, dated as of May 12, 2021 (incorporated by reference to Exhibit 10.32 to the Company's Quarterly Report on Form 10-Q filed August 13, 2021)
10.116	Continuing Guaranty by Lodging Fund REIT III OP, LP in favor of EPH Development Fund LLC, relating to the El Paso Property, dated as of May 12, 2021 (as amended) (incorporated by reference to Exhibit 10.33 to the Company's Quarterly Report on Form 10-Q filed August 13, 2021)
10.117	Second Amendment to the Contribution Agreement dated as of June 18, 2021, by and between the Operating Partnership and Houston-Hotel Partners, LLC and Houston Land Partners, LLC for the Houston Hilton Garden Inn Property (incorporated by reference to Exhibit 10.34 to the Company's Quarterly Report on Form 10-Q filed August 13, 2021)
10.118	Hotel Management Agreement between HD Sunland Park Property, L.L.C. and Elevation Hotel Management, L.L.C., relating to the El Paso Property, dated as of November 29, 2018 (incorporated by reference to Exhibit 10.35 to the Company's Quarterly Report on Form 10-Q filed August 13, 2021)
10.119	First Amendment to the Hotel Management Agreement between HD Sunland Park Property, L.L.C. and Elevation Hotel Management, L.L.C., relating to the El Paso Property, dated as of December 19, 2020 (incorporated by reference to Exhibit 10.36 to the Company's Quarterly Report on Form 10-Q filed August 13, 2021)
10.120	First Amendment to the Contribution Agreement dated as of May 28, 2021, by and between the Operating Partnership and HCNA Enterprises, Inc. for the Corpus Christi Fairfield Inn Property (incorporated by reference to Exhibit 10.37 to the Company's Quarterly Report on Form 10-Q filed August 13, 2021)
10.121	First Amendment to the Contribution Agreement dated as of May 18, 2021, by and between the Operating Partnership and Houston-Hotel Partners, LLC and Houston Land Partners, LLC for the Houston Hilton Garden Inn Property (incorporated by reference to Exhibit 10.38 to the Company's Quarterly Report on Form 10-Q filed August 13, 2021)
10.122	Second Amended and Restated Contribution Agreement, dated as of August 3, 2021, by and between the Operating Partnership and Houston-Hotel Partners, LLC and Houston Land Partners, LLC for the Houston Hilton Garden Inn Property (incorporated by reference to Exhibit 10.39 to the Company's Quarterly Report on Form 10-Q filed August 13, 2021)

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10.123	Loan Agreement between LF3 Houston, LLC, LF3 Houston TRS, LLC, and Legendary A-1 Bonds, LLC relating to the Houston Hilton Garden Inn Property, dated as of August 3, 2021 (incorporated by reference to Exhibit 10.40 to the Company's Quarterly Report on Form 10-Q filed August 13, 2021)
10.124	Continuing Guaranty by Lodging Fund REIT III, OP, LP in favor of Legendary A-1 Bonds, LLC, relating to the Houston Hilton Garden Inn, dated as of August 3, 2021 (incorporated by reference to Exhibit 10.41 to the Company's Quarterly Report on Form 10-Q filed August 13, 2021)
10.125	Assignment of Leases and Rents by LF3 Houston, LLC and LF3 Houston TRS, LLC in favor of Legendary A-1 Bonds, LLC, relating to the Houston Hilton Garden Inn, dated as of August 3, 2021 (incorporated by reference to Exhibit 10.42 to the Company's Quarterly Report on Form 10-Q filed August 13, 2021)
10.126	Deed of Trust, Security Agreement and Financing Statement by LF3 Houston, LLC and LF3 Houston TRS, LLC in favor of Legendary A-1 Bonds, LLC, relating to the Houston Hilton Garden Inn, dated as of August 3, 2021 (incorporated by reference to Exhibit 10.43 to the Company's Quarterly Report on Form 10-Q filed August 13, 2021)
10.127	Environmental Indemnity Agreement by LF3 Houston, LLC and LF3 Houston TRS, LLC in favor of Legendary A-1 Bonds, LLC, relating to the Houston Hilton Garden Inn, dated as of August 3, 2021 (incorporated by reference to Exhibit 10.44 to the Company's Quarterly Report on Form 10-Q filed August 13, 2021)
10.128	Management Agreement by and between LF3 Houston TRS, LLC and Interstate Management Company, LLC, relating to the Houston Hilton Garden Inn, dated as of August 3, 2021 (incorporated by reference to Exhibit 10.45 to the Company's Quarterly Report on Form 10-Q filed August 13, 2021)
10.129	Third Amendment to the Contribution Agreement dated as of July 2, 2021, by and between the Operating Partnership and Houston-Hotel Partners, LLC and Houston Land Partners, LLC for the Houston Hilton Garden Inn Property (incorporated by reference to Exhibit 10.46 to the Company's Quarterly Report on Form 10-Q filed August 13, 2021)
10.130	Promissory Note issued by LF3 Houston, LLC and LF3 Houston TRS, LLC in favor of Legendary A-1 Bonds, LLC relating to the Houston Hilton Garden Inn Property, dated as of August 3, 2021 (incorporated by reference to Exhibit 10.47 to the Company's Quarterly Report on Form 10-Q filed August 13, 2021)
10.131	Business Loan Agreement between LF3 Houston, LLC and LF3 Houston TRS, LLC and Choice Financial Group relating to the Houston Hilton Garden Inn Property, dated as of September 2, 2021 (incorporated by reference to Exhibit 10.48 to the Company's Quarterly Report on Form 10-Q filed November 12, 2021)
10.132	Promissory Note between LF3 Houston, LLC and LF3 Houston TRS, LLC and Choice Financial Group, relating to the Houston Hilton Garden Inn Property, dated as of September 2, 2021 (incorporated by reference to Exhibit 10.49 to the Company's Quarterly Report on Form 10-Q filed November 12, 2021)

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10.133	Commercial Guaranty by Lodging Fund REIT III OP, LP in favor of Choice Financial Group, relating to the Houston Hilton Garden Inn Property, dated as of September 2, 2021 (incorporated by reference to Exhibit 10.50 to the Company's Quarterly Report on Form 10-Q filed November 12, 2021)
10.134	Commercial Guaranty by Corey Maple in favor of Choice Financial Group, relating to the Houston Hilton Garden Inn Property, dated as of September 2, 2021 (incorporated by reference to Exhibit 10.51 to the Company's Quarterly Report on Form 10-Q filed November 12, 2021)
10.135	Deed of Trust by LF3 Houston, LLC and LF3 Houston TRS, LLC in favor of Choice Financial Group, relating to the Houston Hilton Garden Inn, dated as of September 2, 2021 (incorporated by reference to Exhibit 10.52 to the Company's Quarterly Report on Form 10-Q filed November 12, 2021)
10.136	Agreement to Provide Insurance between LF3 Houston, LLC and LF3 Houston TRS, LLC in favor of Choice Financial Group, relating to the Houston Hilton Garden Inn, dated as of September 2, 2021 (incorporated by reference to Exhibit 10.53 to the Company's Quarterly Report on Form 10-Q filed November 12, 2021)
10.137	Contribution Agreement dated as of September 20, 2021, by and between the Operating Partnership and APF – Northbrook LLC for the Northbrook Property (incorporated by reference to Exhibit 10.54 to the Company's Quarterly Report on Form 10-Q filed November 12, 2021)
10.138	First Amendment to the Contribution Agreement dated as of October 4, 2021, by and between the Operating Partnership and APF – Northbrook LLC for the Northbrook Property (incorporated by reference to Exhibit 10.55 to the Company's Quarterly Report on Form 10-Q filed November 12, 2021)
10.139	Contribution Agreement dated as of August 24, 2021, by and between the Operating Partnership and High Desert Investors, LP for the HGI El Paso Property (incorporated by reference to Exhibit 10.56 to the Company's Quarterly Report on Form 10-Q filed November 12, 2021)
10.140	Contribution Agreement dated as of September 14, 2021, by and between the Operating Partnership and Agassiz Hospitality, LLC for the Fargo Property (incorporated by reference to Exhibit 10.57 to the Company's Quarterly Report on Form 10-Q filed November 12, 2021)
10.141	First Amendment to the Contribution Agreement dated as of October 8, 2021, by and between the Operating Partnership and Agassiz Hospitality, LLC for the Fargo Property (incorporated by reference to Exhibit 10.58 to the Company's Quarterly Report on Form 10-Q filed November 12, 2021)
10.142	Contribution Agreement dated October 20, 2021, by and between the Operating Partnership and ELP MC Venture, LLC for the Courtyard El Paso Property (incorporated by reference to Exhibit 10.59 to the Company's Quarterly Report on Form 10-Q filed November 12, 2021)
10.143	Letter Agreement dated as of October 20, 2021, by and between the Operating Partnership and ELP MC Venture, LLC for the Courtyard El Paso Property (incorporated by reference to Exhibit 10.60 to the Company's Quarterly Report on Form 10-Q filed November 12, 2021)

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10.145	First Amendment to the Continuing Guaranty by Lodging Fund REIT III OP, LP in favor of EPH Development Fund LLC, relating to the El Paso Property, dated as of May 12, 2021 (incorporated by reference to Exhibit 10.62 to the Company's Quarterly Report on Form 10-Q filed November 12, 2021)
10.146	Amended & Restated Contribution Agreement by and between the Operating Partnership and APF – Northbrook LLC for the Northbrook Property, dated as of December 3, 2021 (incorporated by reference to Exhibit 10.146 to the Company’s Annual Report on Form 10-K filed March 31, 2022)
10.147	Loan Agreement by and between LF3 Northbrook, LLC, LF3 Northbrook TRS, LLC and Access Point Financial, LLC, dated as of November 24, 2021 (effective as of December 3, 2021) (incorporated by reference to Exhibit 10.147 to the Company’s Annual Report on Form 10-K filed March 31, 2022)
10.148	Promissory Note by LF3 Northbrook, LLC and LF3 Northbrook TRS, LLC in favor of Access Point Financial, LLC, dated as of December 3, 2021 (incorporated by reference to Exhibit 10.148 to the Company’s Annual Report on Form 10-K filed March 31, 2022)
10.149	Guaranty Agreement by the Operating Partnership in favor of Access Point Financial, LLC related to the Sheraton Northbrook Loan, dated as of December 3, 2021 (incorporated by reference to Exhibit 10.149 to the Company’s Annual Report on Form 10-K filed March 31, 2022)
10.150	Contribution Agreement by and between the Operating Partnership and RLC-VI Lakewood, LLC for the Fairfield Inn & Suites Denver Southwest Lakewood, dated as of December 30, 2021 (incorporated by reference to Exhibit 10.150 to the Company’s Annual Report on Form 10-K filed March 31, 2022)
10.151	Amended & Restated Contribution Agreement by and between the Operating Partnership and Agassiz Hospitality, LLC for the Fargo Property, dated as of January 18, 2022 (incorporated by reference to Exhibit 10.151 to the Company’s Annual Report on Form 10-K filed March 31, 2022)
10.152	Management Agreement by and between LF3 Fargo Med TRS, LLC and KAJ Hospitality Inc., relating to the Fargo Property, dated as of January 18, 2022 (incorporated by reference to Exhibit 10.152 to the Company’s Annual Report on Form 10-K filed March 31, 2022)
10.155	Contribution Agreement by and between the Operating Partnership and RLC V RIFC, LLC for the Residence Inn by Marriott Fort Collins, dated as of February 1, 2022 (incorporated by reference to Exhibit 10.155 to the Company’s Annual Report on Form 10-K filed March 31, 2022)
10.156	Contribution Agreement by and between the Operating Partnership and RLC-IV CYFC, LLC for the Courtyard by Marriott Fort Collins, dated as of February 1, 2022 (incorporated by reference to Exhibit 10.156 to the Company’s Annual Report on Form 10-K filed March 31, 2022)
10.157	Amended & Restated Contribution Agreement by and between the Operating Partnership and ELP MC Ventures, LLC related to the El Paso Airport Property, dated as of February 8, 2022 (incorporated by reference to Exhibit 10.157 to the Company’s Annual Report on Form 10-K filed March 31, 2022)
10.158	Management Agreement by and between LF3 El Paso Airport TRS, LLC and Aimbridge Hospitality, LLC related to the El Paso Airport Property, dated as of February 8, 2022 (incorporated by reference to Exhibit 10.158 to the Company’s Annual Report on Form 10-K filed March 31, 2022)

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10.162	Side Letter Agreement by and between Lodging Fund REIT III, Inc., Lodging Fund REIT III OP, LP, APF – Northbrook LLC, and APF – REO, LLC related to the Sheraton Northbrook Loan, dated as of October 19, 2021 (effective as of December 3, 2021) (incorporated by reference to Exhibit 10.162 to the Company’s Annual Report on Form 10-K filed March 31, 2022)
10.163	Assignment of Leases and Rents by and between LF3 Northbrook, LLC, LF3 Northbrook TRS, LLC and Access Point Financial, LLC related to the Sheraton Northbrook Loan, dated as of December 3, 2021 (incorporated by reference to Exhibit 10.163 to the Company’s Annual Report on Form 10-K filed March 31, 2022)
10.164	Environmental Indemnity Agreement by and between LF3 Northbrook, LLC, LF3 Northbrook TRS, LLC, the Operating Partnership, and Access Point Financial, LLC related to the Sheraton Northbrook Loan, dated as of December 3, 2021 (incorporated by reference to Exhibit 10.164 to the Company’s Annual Report on Form 10-K filed March 31, 2022)
10.165	Leasehold Mortgage and Security Agreement by and between LF3 Northbrook, LLC, LF3 Northbrook TRS, LLC and Access Point Financial, LLC related to the Sheraton Northbrook Loan, dated as of December 3, 2021 (incorporated by reference to Exhibit 10.165 to the Company’s Annual Report on Form 10-K filed March 31, 2022)
10.166	Pledge Agreement by and between LF3 Northbrook TRS, LLC and Access Point Financial, LLC related to the Sheraton Northbrook Loan, dated as of December 3, 2021 (incorporated by reference to Exhibit 10.166 to the Company’s Annual Report on Form 10-K filed March 31, 2022)
10.167	Pledge Agreement by and between the Operating Partnership and Access Point Financial, LLC related to the Sheraton Northbrook Loan, dated as of December 3, 2021 (incorporated by reference to Exhibit 10.167 to the Company’s Annual Report on Form 10-K filed March 31, 2022)
10.168	Subordination and Attornment Agreement by and between LF3 Northbrook TRS, LLC and Access Point Financial, LLC related to the Sheraton Northbrook Loan, dated as of December 3, 2021 (incorporated by reference to Exhibit 10.168 to the Company’s Annual Report on Form 10-K filed March 31, 2022)
10.170	Assignment of Rents by and between LF3 Fargo Med, LLC and Western State Bank related to the Fargo Hampton Refinance, dated as of February 23, 2022 (incorporated by reference to Exhibit 10.170 to the Company’s Annual Report on Form 10-K filed March 31, 2022)
10.171	Mortgage by and between LF3 Fargo Med, LLC and Western State Bank related to the Fargo Hampton Refinance, dated as of February 23, 2022 (incorporated by reference to Exhibit 10.171 to the Company’s Annual Report on Form 10-K filed March 31, 2022)
10.172	Business Loan Agreement by and between LF3 Fargo Med TRS, LLC, LF3 Fargo Med, LLC and Western State Bank related to the Fargo Hampton Refinance, dated as of February 23, 2022 (incorporated by reference to Exhibit 10.172 to the Company’s Annual Report on Form 10-K filed March 31, 2022)
10.173	Promissory Note by and between LF3 Fargo Med TRS, LLC, LF3 Fargo Med, LLC and Western State Bank related to the Fargo Hampton Refinance, dated as of February 23, 2022 (incorporated by reference to Exhibit 10.173 to the Company’s Annual Report on Form 10-K filed March 31, 2022)
10.174	Commercial Guaranty by and between Lodging Fund REIT III TRS, Inc. and Western State Bank related to the Fargo Hampton Refinance, dated as of February 23, 2022 (incorporated by reference to Exhibit 10.174 to the Company’s Annual Report on Form 10-K filed March 31, 2022)

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10.175	Commercial Guaranty by and between Lodging Fund REIT III OP, LP and Western State Bank related to the Fargo Hampton Refinance, dated as of February 23, 2022 (incorporated by reference to Exhibit 10.175 to the Company’s Annual Report on Form 10-K filed March 31, 2022)
10.176	Commercial Guaranty by and between Corey Maple and Western State Bank related to the Fargo Hampton Refinance, dated as of February 23, 2022 (incorporated by reference to Exhibit 10.176 to the Company’s Annual Report on Form 10-K filed March 31, 2022)
10.177	Commercial Security Agreement by and between LF3 Fargo Med TRS, LLC, LF3 Fargo Med, LLC and Western State Bank related to the Fargo Hampton Refinance, dated as of February 23, 2022 (incorporated by reference to Exhibit 10.177 to the Company’s Annual Report on Form 10-K filed March 31, 2022)
10.178	Contribution Agreement by and between the Operating Partnership and Smith/Curry Hotel Group Pineville II, LLC for the Hilton Garden Pineville, dated as of March 21, 2022 (incorporated by reference to Exhibit 10.178 to the Company’s Annual Report on Form 10-K filed March 31, 2022)
10.182	First Amendment to the Contribution Agreement by and between the Operating Partnership and RLC-VI Lakewood, LLC for the Fairfield Inn & Suites Denver Southwest Lakewood, dated as of February 23, 2022 (incorporated by reference to Exhibit 10.182 to the Company’s Annual Report on Form 10-K filed March 31, 2022)
10.183	Second Amendment to the Contribution Agreement by and between the Operating Partnership and RLC-VI Lakewood, LLC for the Fairfield Inn & Suites Denver Southwest Lakewood, dated as of March 3, 2022 (incorporated by reference to Exhibit 10.183 to the Company’s Annual Report on Form 10-K filed March 31, 2022)
10.184	Third Amendment to the Contribution Agreement by and between the Operating Partnership and RLC-VI Lakewood, LLC for the Fairfield Inn & Suites Denver Southwest Lakewood, dated as of March 15, 2022 (incorporated by reference to Exhibit 10.184 to the Company’s Annual Report on Form 10-K filed March 31, 2022)
10.185	Contribution Agreement by and between the Operating Partnership and Smith/Curry Hotel Group HH-Harris, LLC for the Hilton Garden Charlotte North, dated as of March 21, 2022 (incorporated by reference to Exhibit 10.185 to the Company’s Annual Report on Form 10-K filed March 31, 2022)
10.192	Fourth Amendment to the Contribution Agreement by and between the Operating Partnership and RLC-VI Lakewood, LLC for the Fairfield Inn & Suites Denver Southwest Lakewood, dated as of March 24, 2022 (incorporated by reference to Exhibit 10.192 to the Company’s Annual Report on Form 10-K filed March 31, 2022)

10.193	Change in Terms by and between the Operating Partnership and Western State Bank related to the revolving line of credit loan agreement, dated as of May 5, 2022 (incorporated by reference to Exhibit 10.193 to the Company’s Quarterly Report on Form 10-Q filed May 16, 2022)
10.196	Agreement of Sublease by and between FCL Founders Drive, LLC and Northbrook Hotel Group L.P. regarding the Northbrook Sheraton, dated as of January 24, 2007 (incorporated by reference to Exhibit 10.196 to the Company’s Quarterly Report on Form 10-Q filed May 16, 2022)
10.197	Assignment of Ground Lease by and between BSPRT Northbrook, LLC and APF – Northbrook, LLC regarding the Northbrook Sheraton, dated as of October 28, 2020 (incorporated by reference to Exhibit 10.197 to the Company’s Quarterly Report on Form 10-Q filed May 16, 2022)

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10.198	First Amendment to Amended and Restated Declaration by and between Five Seasons Country Club of Northbrook, Inc., Willow Festival LLC, North Shore Ice Arena, LLC, Meadow Ridge Condominium Association, Northbrook Greens Condominium Association, and Riverpark Office Condominium Association regarding the Northbrook Sheraton, dated as of December 31, 2008 (incorporated by reference to Exhibit 10.198 to the Company’s Quarterly Report on Form 10-Q filed May 16, 2022)
10.199	Special Amendment to Amended and Restated Declaration by and between Society of the Divine Word and Divine Word Techny Community Corporation regarding the Northbrook Sheraton, dated as of July 11, 2019 (incorporated by reference to Exhibit 10.199 to the Company’s Quarterly Report on Form 10-Q filed May 16, 2022)
10.200	Declaration by FCL Founders Drive, LLC regarding the Northbrook Sheraton, dated as of August 3, 2006 (incorporated by reference to Exhibit 10.200 to the Company’s Quarterly Report on Form 10-Q filed May 16, 2022)
10.201	Amended and Restated Declaration by Society of the Divine Word and Divine Word Techny Community Corporation regarding the Northbrook Sheraton, dated September 15, 2005 (incorporated by reference to Exhibit 10.201 to the Company’s Quarterly Report on Form 10-Q filed May 16, 2022)
10.202	Loan Agreement by and between LF3 El Paso Airport, LLC, LF3 El Paso Airport TRS, LLC and Western Alliance Bank related to the El Paso Airport Property, dated as of May 13, 2022 (incorporated by reference to Exhibit 10.202 to the Company’s Quarterly Report on Form 10-Q filed May 16, 2022)
10.203	Guaranty by the Operating Partnership for the benefit of Western Alliance Bank related to the El Paso Airport Property, dated as of May 13, 2022 (incorporated by reference to Exhibit 10.203 to the Company’s Quarterly Report on Form 10-Q filed May 16, 2022)
10.204	Operating Lease Subordination Agreement by and between LF3 El Paso Airport, LLC, LF3 El Paso Airport TRS, LLC and Western Alliance Bank related to the El Paso Airport Property, dated as of May 13, 2022 (incorporated by reference to Exhibit 10.204 to the Company’s Quarterly Report on Form 10-Q filed May 16, 2022)
10.205	Deed of Trust by and between LF3 El Paso Airport, LLC and Western Alliance Bank related to the El Paso Airport Property, dated as of May 13, 2022 (incorporated by reference to Exhibit 10.205 to the Company’s Quarterly Report on Form 10-Q filed May 16, 2022)
10.206	Security Agreement by and between LF3 El Paso Airport, LLC, LF3 El Paso Airport TRS, LLC and Western Alliance Bank related to the El Paso Airport Property, dated as of May 13, 2022 (incorporated by reference to Exhibit 10.206 to the Company’s Quarterly Report on Form 10-Q filed May 16, 2022)
10.207	Term Loan Note by and between LF3 El Paso Airport, LLC, LF3 El Paso Airport TRS, LLC and Western Alliance Bank related to the El Paso Airport Property, dated as of May 13, 2022 (incorporated by reference to Exhibit 10.207 to the Company’s Quarterly Report on Form 10-Q filed May 16, 2022)

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10.208	Assignment of Management Agreement by and between LF3 El Paso Airport TRS, LLC, Aimbridge Hospitality, LLC and Western Alliance Bank related to the El Paso Airport Property, dated as of May 13, 2022 (incorporated by reference to Exhibit 10.208 to the Company’s Quarterly Report on Form 10-Q filed May 16, 2022)
10.209	Environmental Indemnity Agreement by and between LF3 El Paso Airport, LLC, LF3 El Paso Airport TRS, LLC and Western Alliance Bank related to the El Paso Airport Property, dated as of May 13, 2022 (incorporated by reference to Exhibit 10.209 to the Company’s Quarterly Report on Form 10-Q filed May 16, 2022)
10.210	First Amendment to Contribution Agreement by and between the Operating Partnership and RLC V RIFC, LLC for the Residence Inn by Marriott Fort Collins, dated as of March 24, 2022 (incorporated by reference to Exhibit 10.210 to the Company’s Quarterly Report on Form 10-Q filed May 16, 2022)
10.211	Second Amendment to Contribution Agreement by and between the Operating Partnership and RLC V RIFC, LLC for the Residence Inn by Marriott Fort Collins, dated as of April 29, 2022 (incorporated by reference to Exhibit 10.211 to the Company’s Quarterly Report on Form 10-Q filed May 16, 2022)
10.212	First Amendment to Contribution Agreement by and between the Operating Partnership and RLC V RIFC, LLC for the Residence Inn by Marriott Fort Collins, dated as of May 10, 2022 (incorporated by reference to Exhibit 10.212 to the Company’s Quarterly Report on Form 10-Q filed May 16, 2022)
10.213	First Amendment to Contribution Agreement by and between the Operating Partnership and RLC-IV CYFC, LLC for the Courtyard by Marriott Fort Collins, dated as of March 24, 2022 (incorporated by reference to Exhibit 10.213 to the Company’s Quarterly Report on Form 10-Q filed May 16, 2022)
10.214	Second Amendment to Contribution Agreement by and between the Operating Partnership and RLC-IV CYFC, LLC for the Courtyard by Marriott Fort Collins, dated as of April 29, 2022 (incorporated by reference to Exhibit 10.214 to the Company’s Quarterly Report on Form 10-Q filed May 16, 2022)
10.215	Third Amendment to Contribution Agreement by and between the Operating Partnership and RLC-IV CYFC, LLC for the Courtyard by Marriott Fort Collins, dated as of May 10, 2022 (incorporated by reference to Exhibit 10.215 to the Company’s Quarterly Report on Form 10-Q filed May 16, 2022)
10.216	Fourth Amendment to Contribution Agreement by and between the Operating Partnership and RLC-IV CYFC, LLC for the Courtyard by Marriott Fort Collins, dated as of June 8, 2022 (incorporated by reference to Exhibit 10.216 to the Company’s Quarterly Report on Form 10-Q filed August 11, 2022)
10.217	Fifth Amendment to Contribution Agreement by and between the Operating Partnership and RLC-IV CYFC, LLC for the Courtyard by Marriott Fort Collins, dated as of August 3, 2022 (incorporated by reference to Exhibit 10.217 to the Company’s Quarterly Report on Form 10-Q filed August 11, 2022)
10.219	Loan Agreement by and among LF3 RIFC, LLC, LF3 RIFC TRS, LLC, and Legendary A-1 Bonds, LLC related to the Residence Inn Fort Collins Property, dated as of August 3, 2022 (incorporated

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by reference to Exhibit 10.219 to the Company’s Quarterly Report on Form 10-Q filed August 11, 2022)

10.222	Tranche 3 Promissory Note by LF3 RIFC, LLC, LF3 RIFC TRS, LLC, and Legendary A-1 Bonds, LLC related to the Residence Inn Fort Collins Property, dated as of August 3, 2022 (incorporated by reference to Exhibit 10.222 to the Company’s Quarterly Report on Form 10-Q filed August 11, 2022)
10.227	Contribution Agreement by and between the Operating Partnership and Wichita Airport Hospitality, LLC for the Holiday Inn Express & Suites Wichita Airport, dated as of August 5, 2022 (incorporated by reference to Exhibit 10.227 to the Company’s Quarterly Report on Form 10-Q filed August 11, 2022)
10.228	Loan Agreement for Revolving Line of Credit by and among Lodging Fund REIT III OP, LP and Legendary A-1 Bonds, LLC, dated August 9, 2022 (incorporated by reference to Exhibit 10.228 to the Company’s Quarterly Report on Form 10-Q filed August 11, 2022)
10.229	Promissory Note by Lodging Fund REIT III OP, LP and Legendary A-1 Bonds, LLC, dated August 9, 2022 (incorporated by reference to Exhibit 10.229 to the Company’s Quarterly Report on Form 10-Q filed August 11, 2022)
10.230	First Amendment to Contribution Agreement by and between the Operating Partnership and Smith/Curry Hotel Group HH-Harris, LLC, for the Charlotte Property, dated as of June 8, 2022 (incorporated by reference to Exhibit 10.230 to the Company’s Quarterly Report on Form 10-Q filed March 27, 2024)
10.231	First Amendment to Contribution Agreement by and between the Operating Partnership and Smith/Curry Hotel Group Pineville II, LLC, for the Pineville HGI Property, dated as of June 8, 2022 (incorporated by reference to Exhibit 10.231 to the Company’s Quarterly Report on Form 10-Q filed March 27, 2024)
10.232	Loan Agreement by and among Western Alliance Bank and LF3 Charlotte, LLC and LF Charlotte TRS, LLC related to the Charlotte Property, dated as of August 25, 2022 (incorporated by reference to Exhibit 10.232 to the Company’s Quarterly Report on Form 10-Q filed March 27, 2024)
10.233	Term Loan Note made by LF3 Charlotte, LLC and LF3 Charlotte TRS, LLC for the benefit of Western Alliance Bank, related to the Charlotte Property, dated as of August 25, 2022 (incorporated by reference to Exhibit 10.233 to the Company’s Quarterly Report on Form 10-Q filed March 27, 2024)
10.234	DLOC Note made by LF3 Charlotte, LLC and LF3 Charlotte TRS, LLC for the benefit of Western Alliance Bank, related to the Charlotte Property, dated as of August 25, 2022 (incorporated by reference to Exhibit 10.234 to the Company’s Quarterly Report on Form 10-Q filed March 27, 2024)
10.235	Guaranty by the Operating Partnership for the benefit of Western Alliance Bank, related to the Charlotte Property, dated as of August 25, 2022 (incorporated by reference to Exhibit 10.235 to the Company’s Quarterly Report on Form 10-Q filed March 27, 2024)
10.236	Guaranty by F3 Pineville 2, LLC and LF3 Pineville 2 TRS, LLC for the benefit of Western Alliance Bank, related to the Charlotte Property, dated as of August 25, 2022 (incorporated by reference to Exhibit 10.236 to the Company’s Quarterly Report on Form 10-Q filed March 27, 2024)

105

10.237	Loan Agreement by and among Western Alliance Bank and LF3 Pineville 2, LLC and LF Pineville 2 TRS, LLC related to the Pineville HGI Property, dated as of August 25, 2022 (incorporated by reference to Exhibit 10.237 to the Company’s Quarterly Report on Form 10-Q filed March 27, 2024)
10.238	Term Loan Note made by LF3 Pineville 2, LLC and LF3 Pineville 2 TRS, LLC for the benefit of Western Alliance Bank, related to the Pineville HGI Property, dated as of August 25, 2022 (incorporated by reference to Exhibit 10.238 to the Company’s Quarterly Report on Form 10-Q filed March 27, 2024)
10.239	DLOC Note made by LF3 Pineville 2, LLC and LF3 Pineville 2 TRS, LLC for the benefit of Western Alliance Bank, related to the Pineville HGI Property, dated as of August 25, 2022 (incorporated by reference to Exhibit 10.239 to the Company’s Quarterly Report on Form 10-Q filed March 27, 2024)
10.240	Guaranty by the Operating Partnership for the benefit of Western Alliance Bank, related to the Pineville HGI Property, dated as of August 25, 2022 (incorporated by reference to Exhibit 10.240 to the Company’s Quarterly Report on Form 10-Q filed March 27, 2024)
10.241	Guaranty by LF3 Charlotte, LLC and LF3 Charlotte TRS, LLC for the benefit of Western Alliance Bank, related to the Pineville HGI Property, dated as of August 25, 2022 (incorporated by reference to Exhibit 10.241 to the Company’s Quarterly Report on Form 10-Q filed March 27, 2024)
10.242	Deed of Trust made by LF3 Charlotte, LLC and LF3 Charlotte TRS, LLC for the benefit of Western Alliance Bank, related to the Charlotte Property, dated as of August 25, 2022 (incorporated by reference to Exhibit 10.242 to the Company’s Quarterly Report on Form 10-Q filed March 27, 2024)
10.243	Deed of Trust made by LF3 Pineville 2, LLC and LF3 Pineville 2 TRS, LLC for the benefit of Western Alliance Bank, related to the Pineville HGI Property, dated as of August 25, 2022 (incorporated by reference to Exhibit 10.243 to the Company’s Quarterly Report on Form 10-Q filed March 27, 2024)
10.244	Environmental Indemnity Agreement between Western Alliance Bank and LF3 Charlotte, LLC and LF3 Charlotte TRS, LLC, related to the Charlotte Property, dated as of August 25, 2022 (incorporated by reference to Exhibit 10.244 to the Company’s Quarterly Report on Form 10-Q filed March 27, 2024)
10.245	Environmental Indemnity Agreement between Western Alliance Bank and LF3 Pineville 2, LLC and LF3 Pineville 2 TRS, LLC, related to the Pineville HGI Property, dated as of August 25, 2022 (incorporated by reference to Exhibit 10.245 to the Company’s Quarterly Report on Form 10-Q filed March 27, 2024)
10.246	Management Agreement between LF3 Charlotte TRS, LLC and HP Hotel Management, Inc. related to the Charlotte Property, dated as of August 25, 2022 (incorporated by reference to Exhibit 10.246 to the Company’s Quarterly Report on Form 10-Q filed March 27, 2024)
10.247	Management Agreement between LF3 Pineville 2 TRS, LLC and HP Hotel Management, Inc. related to the Pineville HGI Property, dated as of August 25, 2022 (incorporated by reference to Exhibit 10.247 to the Company’s Quarterly Report on Form 10-Q filed March 27, 2024)
10.248	Loan Modification and Reinstatement Agreement among Wilmington Trust, National Association, as Trustee, High Desert Investors, LP, the Operating Partnership, the original indemnitors, and

106

	Corey R. Maple, related to the El Paso University Property, dated as of August 10, 2022 (incorporated by reference to Exhibit 10.248 to the Company’s Quarterly Report on Form 10-Q filed March 27, 2024)
10.249	Reorganization and Membership Interest Purchase Agreement between Lodging Fund REIT III OP, LP and High Desert Investors, LP, dated as of August 10, 2022 (incorporated by reference to Exhibit 10.249 to the Company’s Quarterly Report on Form 10-Q filed March 27, 2024)
10.250	Amended and Restated Guaranty of Recourse Obligations by Corey R. Maple for the benefit of Wilmington Trust, National Association, as Trustee, related to the El Paso University Property, dated as of August 10, 2022 (incorporated by reference to Exhibit 10.250 to the Company’s Quarterly Report on Form 10-Q filed March 27, 2024)
10.251	Amended and Restated Environmental Indemnity Agreement by Corey R. Maple and High Desert Investors, LP in favor of Wilmington Trust, National Association, as Trustee, related to the El Paso University Property, dated as of August 10, 2022 (incorporated by reference to Exhibit 10.251 to the Company’s Quarterly Report on Form 10-Q filed March 27, 2024)
10.252	First Amendment to Fourth Amended and Restated Limited Liability Company Operating Agreement of High Desert Garden Holdings, LLC, between ASI Capital, LLC, High Desert Hospitality, LP, High Desert Hospitality, LLC, Roma Commercial, Inc., VB Hotel Group A, LLC, and the Operating Partnership, related to the El Paso HGI Hotel Property, dated as of August 10, 2022 (incorporated by reference to Exhibit 10.252 to the Company’s Quarterly Report on Form 10-Q filed March 27, 2024)
10.253	Membership Interest Transfer Agreement between Roma Commercial, Inc., ASI Capital, LLC, VB Hotel Group A, LLC, and the Operating Partnership, related to the El Paso HGI Hotel Property, dated as of August 10, 2022 (incorporated by reference to Exhibit 10.253 to the Company’s Quarterly Report on Form 10-Q filed March 27, 2024)
10.254	Completion Guaranty Agreement by the Operating Partnership for the benefit of Wilmington Trust, N.A., related to the El Paso HGI Hotel Property, dated as of August 10, 2022 (incorporated by reference to Exhibit 10.254 to the Company’s Quarterly Report on Form 10-Q filed March 27, 2024)
10.255	Security Agreement made by LF3 Charlotte, LLC and LF3 Charlotte TRS, LLC for the benefit of Western Alliance Bank, related to the Charlotte HGI Hotel Property, dated as of August 25, 2022 (incorporated by reference to Exhibit 10.255 to the Company’s Quarterly Report on Form 10-Q filed March 27, 2024)
10.256	Security Agreement made by LF3 Pineville 2, LLC and LF3 Pineville 2 TRS, LLC for the benefit of Western Alliance Bank, related to the Pineville HGI Hotel Property, dated as of August 25, 2022 (incorporated by reference to Exhibit 10.256 to the Company’s Quarterly Report on Form 10-Q filed March 27, 2024)
10.257	Assignment, Consent and Subordination Regarding Management Agreement, among LF3 Charlotte TRS, LLC, Western Alliance Bank, and HP Hotel Management, Inc., related to the Charlotte HGI Hotel Property, dated as of August 25, 2022 (incorporated by reference to Exhibit 10.257 to the Company’s Quarterly Report on Form 10-Q filed March 27, 2024)
10.258	Assignment, Consent and Subordination Regarding Management Agreement, among LF3 Pineville 2 TRS, LLC, Western Alliance Bank, and HP Hotel Management, Inc., related to the Pineville HGI

107

	Hotel Property, dated as of August 25, 2022 (incorporated by reference to Exhibit 10.258 to the Company’s Quarterly Report on Form 10-Q filed March 27, 2024)
10.259	Change in Terms Agreement for Revolving Line of Credit with Western State Bank, dated as of December 15, 2022 (incorporated by reference to Exhibit 10.259 to the Company’s Annual Report on Form 10-K filed March 27, 2024)
10.260	Amendment to Loan Agreement for Revolving Line of Credit with A-1 Legendary Bonds, LLC, dated as of December 22, 2022 (incorporated by reference to Exhibit 10.260 to the Company’s Annual Report on Form 10-K filed March 27, 2024)
10.261	Second Amendment to Contribution Agreement between the Operating Partnership and Wichita Airport Hospitality LLC for the Wichita Property, dated as of December 21, 2022 (incorporated by reference to Exhibit 10.261 to the Company’s Annual Report on Form 10-K filed March 27, 2024)
10.262	Business Loan Agreement between LF3 Wichita Airport, LLC, LF3 Wichita Airport TRS, LLC and Choice Financial Group dated as of December 21, 2022 (incorporated by reference to Exhibit 10.262 to the Company’s Annual Report on Form 10-K filed March 27, 2024)
10.263	Promissory Note issued to Choice Financial Group in connection with the Wichita Property, dated as of December 21, 2022 (incorporated by reference to Exhibit 10.263 to the Company’s Annual Report on Form 10-K filed March 27, 2024)
10.264	Mortgage related to the Wichita Property, dated as of December 21, 2022 (incorporated by reference to Exhibit 10.264 to the Company’s Annual Report on Form 10-K filed March 27, 2024)
10.265	Assignment of Rents related to the Wichita Property, dated as of December 21, 2022 (incorporated by reference to Exhibit 10.265 to the Company’s Annual Report on Form 10-K filed March 27, 2024)
10.266	Guaranty by Corey Maple related to the Wichita Property, dated as of December 21, 2022 (incorporated by reference to Exhibit 10.266 to the Company’s Annual Report on Form 10-K filed March 27, 2024)
10.267	Guaranty by the Operating Partnership related to the Wichita Property, dated as of December 21, 2022 (incorporated by reference to Exhibit 10.267 to the Company’s Annual Report on Form 10-K filed March 27, 2024)
10.268	Management Agreement with KAJ Hospitality, Inc. related to the Wichita Property (incorporated by reference to Exhibit 10.267 to the Company’s Annual Report on Form 10-K filed March 27, 2024)
10.269	Amendment to Loan Agreement for Revolving Line of Credit with A-1 Legendary Bonds, LLC, dated as of January 12, 2023 (incorporated by reference to Exhibit 10.269 to the Company’s Annual Report on Form 10-K filed March 27, 2024)
10.271	Loan Agreement between the Operating Partnership and NHS, LLC dba National Hospitality Services, dated as of March 6, 2023 (incorporated by reference to Exhibit 10.271 to the Company’s Annual Report on Form 10-K filed March 27, 2024)

108

10.272	Amendment to Loan Agreement for Revolving Line of Credit with A-1 Legendary Bonds, LLC, dated as of April 18, 2023 (incorporated by reference to Exhibit 10.272 to the Company’s Annual Report on Form 10-K filed March 27, 2024)
10.273	Change in Terms Agreement for Revolving Line of Credit with Western State Bank, dated as of April 15, 2023 (incorporated by reference to Exhibit 10.273 to the Company’s Annual Report on Form 10-K filed March 27, 2024)
10.274	Loan Agreement between LF3 RIFC, LLC, LF3 RIFC TRS, LLC and Access Point Financial, LLC regarding the Ft. Collins Property, dated as of April 18, 2023 (incorporated by reference to Exhibit 10.274 to the Company’s Annual Report on Form 10-K filed March 27, 2024)
10.275	Promissory Note issued to Access Point Financial, LLC related to the Ft. Collins Property, dated as of April 18, 2023 (incorporated by reference to Exhibit 10.275 to the Company’s Annual Report on Form 10-K filed March 27, 2024)
10.276	Guaranty of Payment, Carry and Completion between Corey Maple, Norman Leslie and Access Point Financial, LLC, dated as of April 18, 2023 (incorporated by reference to Exhibit 10.276 to the Company’s Annual Report on Form 10-K filed March 27, 2024
10.277	Loan Modification Agreement between LF3 El Paso, LLC, LF3 El Paso TRS LLC, the Operating Partnership, Corey Maple and EPH Development Fund LLC, dated as of May 15, 2023 relating to the El Paso HI Property (incorporated by reference to Exhibit 10.276 to the Company’s Annual Report on Form 10-K filed March 27, 2024
10.278	Amendment to the Amended and Restated Contribution Agreement regarding the El Paso HI Property (incorporated by reference to Exhibit 10.278 to the Company’s Annual Report on Form 10-K filed March 27, 2024)
10.279	Change in Terms Agreement for Revolving Line of Credit with Western State Bank, dated as of July 31, 2023 (incorporated by reference to Exhibit 10.279 to the Company’s Annual Report on Form 10-K filed March 27, 2024)
10.280	Change in Terms Agreement for Revolving Line of Credit with Western State Bank, dated as of October 9, 2023 (incorporated by reference to Exhibit 10.280 to the Company’s Annual Report on Form 10-K filed March 27, 2024)
10.281	Change in Terms Agreement for Revolving Line of Credit with Western State Bank, dated as of December 27, 2023 (incorporated by reference to Exhibit 10.281 to the Company’s Annual Report on Form 10-K filed March 27, 2024)
10.282	Change in Terms Agreement for Loan Agreement with NHS, LLC dba National Hospitality Services, dated as of December 28, 2023 (incorporated by reference to Exhibit 10.282 to the Company’s Annual Report on Form 10-K filed March 27, 2024)
10.283	Fourth Amendment to the Revolving Line of Credit Loan Agreement between the Operating Partnership and Legendary A-1 Bonds, LLC, dated as of March 27, 2024 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed April 2, 2024)

109

10.284	Fourth Amended and Restated Promissory Note entered into by the Operating Partnership in favor of Legendary A-1 Bonds, LLC, dated as of March 27, 2024 (incorporated by reference to Exhibit 10.10 to the Company’s Current Report on Form 8-K filed April 5, 2024)
10.285	Loan Agreement between the Borrower and Bluebird Credit EM LLC, dated as of March 27, 2024 (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed April 2, 2024)
10.286	Promissory Note entered into by Borrower in favor of Bluebird Credit EM LLC, dated as of March 27, 2024 (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed April 2, 2024)
10.287	Pledge and Security Agreement entered into by the Operating Partnership in favor of Bluebird Credit EM LLC, dated as of March 27, 2024 (incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed April 2, 2024)
10.288	Pledge and Security Agreement entered into by Lodging Fund REIT III TRS, Inc. in favor of Bluebird Credit EM LLC, dated as of March 27, 2024 (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed April 2, 2024)
10.289	Guaranty of Payment Norman H. Leslie for the benefit of Bluebird Credit EM LLC, dated as of March 27, 2024 (incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed April 2, 2024)
10.290	Loan Agreement between the Operating Partnership and Legendary A-1 Bonds, LLC, dated as of March 27, 2024 (incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K filed April 2, 2024)
10.291	Promissory Note entered into by the Operating Partnership in favor of Legendary A-1 Bonds, LLC, dated as of March 27, 2024 (incorporated by reference to Exhibit 10.8 to the Company’s Current Report on Form 8-K filed April 2, 2024)
10.292	Pledge and Security Agreement entered into by the Company in favor of the Legendary A-1 Bonds, LLC, dated as of March 27, 2024 (incorporated by reference to Exhibit 10.9 to the Company’s Current Report on Form 8-K filed April 2, 2024)
10.293*	Second Loan Modification Agreement between LF3 El Paso, LLC, LF3 El Paso TRS LLC, the Operating Partnership, Corey Maple and EPH Development Fund LLC, dated as of May 15, 2024 relating to the El Paso HI Property
10.294*	Guaranty of Payment by Norman H. Leslie for the benefit of Independent Bank, dated as of November 4, 2024
21.1*	Subsidiaries of the Registrant
31.1*	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1**	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002

110

99.1	Share Repurchase Plan of the Registrant (incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form 10 filed August 8, 2019)
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed herewith.

** Furnished herewith.

Item 16. Form 10-K Summary.

None.

111

INDEX TO FINANCIAL STATEMENTS

LODGING FUND REIT III, INC. & SUBSIDIARIES

Reports of Independent Registered Public Accounting Firm (PCAOB ID 668)	F-2
Consolidated Financial Statements
Balance Sheets as of December 31, 2023 and 2022	F-4
Statements of Operations for the years ended December 31, 2023 and 2022	F-5
Statements of Changes in Stockholders’ Equity for the years ended December 31, 2023 and 2022	F-6
Statements of Cash Flows for the years ended December 31, 2023 and 2022	F-7
Notes to the Consolidated Financial Statements	F-8
Schedule III – Real Estate and Accumulated Depreciation as of December 31, 2023	F-43

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of

Lodging Fund REIT III, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Lodging Fund REIT III, Inc. and subsidiaries (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations, changes in stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2023, and the related notes and the schedule listed in the Index at Item 15 (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Marcum llp

We have served as the Company’s auditor since 2023.

New York, NY
December 17, 2024

F-2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

LODGING FUND REIT III, INC.

CONSOLIDATED BALANCE SHEETS

	December 31,		December 31,
	2023		2022
Assets
Investment in hotel properties, net of accumulated depreciation and amortization of $27,469,450 and $17,458,998	$	287,347,479	$	290,217,642
Cash and cash equivalents		3,052,937		6,193,449
Restricted cash		9,891,392		10,732,832
Accounts receivable, net		1,466,879		1,468,732
Franchise fees, net		2,190,058		2,363,114
Prepaid expenses and other assets		1,825,589		1,409,993
Total Assets (variable interest entities - $22,649,498 and $24,924,626)	$	305,774,334	$	312,385,762
Liabilities and Equity
Debt, net	$	196,297,771	$	189,678,547
Finance lease liabilities		13,106,110		13,026,849
Accounts payable		3,877,980		3,034,148
Accrued expenses		7,808,118		5,853,519
Distributions payable		1,012,279		678,867
Due to related parties		11,164,605		6,277,432
Other liabilities		4,203,421		4,843,854
Total liabilities (variable interest entities - $17,392,077 and $18,390,067)		237,470,284		223,393,216
Commitments and contingencies (See Note 12)
Equity
Preferred stock, $0.01 par value, 100,000,000 shares authorized; no shares issued and outstanding		—		—
Common stock, $0.01 par value, 900,000,000 shares authorized; 9,955,668 and 9,607,463 shares issued and outstanding		99,556		96,074
Additional paid-in capital		97,285,211		93,798,070
Accumulated deficit		(86,154,207)		(67,239,693)
Total stockholders' equity		11,230,560		26,654,451
Non-controlling interest – Series B LP Units		(3,869,459)		(2,841,056)
Non-controlling interest – Series GO LP Units		10,933,302		14,688,392
Non-controlling interest – Series GO II LP Units		765,162		—
Non-controlling interest – Series T LP Units		45,524,201		45,739,120
Non-controlling interest – Common LP Units		3,720,284		4,751,639
Total equity		68,304,050		88,992,546
Total Liabilities and Equity	$	305,774,334	$	312,385,762

See accompanying notes to consolidated financial statements.

F-4

LODGING FUND REIT III, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

	For the Years Ended December 31,
	2023		2022
Revenues
Room revenue	$	70,159,314	$	50,335,176
Other revenue		4,655,893		2,794,118
Total revenue		74,815,207		53,129,294
Expenses
Property operations		35,917,331		25,985,687
General and administrative		10,535,465		10,577,266
Sales and marketing		4,850,551		3,318,003
Franchise fees		6,440,997		4,849,226
Management fees		5,504,088		4,204,291
Acquisition expense		1,333,267		729,545
Depreciation and amortization		10,233,637		8,049,377
Total expenses		74,815,336		57,713,395
Other Income (Expense)
Other income, net		992,009		2,530,374
Interest expense		(14,621,824)		(11,011,008)
Total other expense		(13,629,815)		(8,480,634)
Net Loss Before Income Taxes		(13,629,944)		(13,064,735)
Income tax (expense) benefit		254,344		(5,845,015)
Net Loss		(13,375,600)		(18,909,750)
Net loss attributable to non-controlling interest - Series B LP Units		(667,582)		(943,150)
Net loss attributable to non-controlling interest - Series GO LP Units		(2,119,797)		(3,101,944)
Net loss attributable to non-controlling interest - Series GO II LP Units		(94,246)		—
Net loss attributable to non-controlling interest - Common LP Units		(602,887)		(882,217)
Net Loss Attributable to Common Stockholders	$	(9,891,088)	$	(13,982,439)
Basic and Diluted Net Loss Per Share of Common Stock	$	(1.01)	$	(1.54)
Weighted-average Shares of Common Stock Outstanding, Basic and Diluted		9,793,775		9,071,919

See accompanying notes to consolidated financial statements.

F-5

LODGING FUND REIT III, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

	Common Stock
				Additional				Total		Non-controlling Interest
		Par		Paid-In		Accumulated		Stockholders'		Series B		Series GO		Series GO 2		Series T		Common		Total
	Shares	Value		Capital		Deficit		Equity		LP Units		LP Units		LP Units		LP Units		LP Units		Equity
Balance at December 31, 2021	8,348,310	$	83,481	$	81,655,994	$	(43,586,952)	$	38,152,523	$	(1,563,489)	$	12,498,527	$	—	$	21,931,757	$	1,437,082	$	72,456,400
Issuance of common stock	1,180,020		11,801		11,450,572		—		11,462,373		—		—		—		—		—		11,462,373
Issuance of stock-based compensation	6,000		60		59,940		—		60,000		—		—		—		—		—		60,000
Issuance of GO Units	—		—		—		—		—		—		6,275,891		—		—		—		6,275,891
Issuance of T Units	—		—		—		—		—		—		—		—		23,807,363		—		23,807,363
Issuance of Common LP Units	—		—		—		—		—		—		—		—		—		4,600,000		4,600,000
Offering costs	—		—		—		(3,323,984)		(3,323,984)		—		(476,643)		—		—		—		(3,800,627)
Distributions declared ($0.70 per share)	—		—		—		(6,346,318)		(6,346,318)		(334,417)		(507,439)		—		—		(403,226)		(7,591,400)
Distributions reinvested	208,381		2,084		1,977,531		—		1,979,615		—		—		—		—		—		1,979,615
Redemptions	(135,248)		(1,352)		(1,345,967)		—		(1,347,319)		—		—		—		—		—		(1,347,319)
Net loss	—		—		—		(13,982,439)		(13,982,439)		(943,150)		(3,101,944)		—		—		(882,217)		(18,909,750)
Balance at December 31, 2022	9,607,463	$	96,074	$	93,798,070	$	(67,239,693)	$	26,654,451	$	(2,841,056)	$	14,688,392	$	—	$	45,739,120	$	4,751,639	$	88,992,546
Issuance of common stock	195,071		1,951		1,948,855		—		1,950,806		—		—		—		—		—		1,950,806
Issuance of stock-based compensation	4,000		40		42,240		—		42,280		—		—		—		—		—		42,280
Issuance of GO II Units	—		—		—		—		—		—		—		956,863		—		—		956,863
Offering costs	—		—		—		(2,167,817)		(2,167,817)		—		(2,665)		(97,455)		—		—		(2,267,937)
Distributions declared ($0.70 per share)	—		—		—		(6,855,609)		(6,855,609)		(360,821)		(1,632,628)		—		(214,919)		(428,468)		(9,492,445)
Distributions reinvested	149,134		1,491		1,496,046		—		1,497,537		—		—		—		—		—		1,497,537
Net loss	—		—		—		(9,891,088)		(9,891,088)		(667,582)		(2,119,797)		(94,246)		—		(602,887)		(13,375,600)
Balance at December 31, 2023	9,955,668	$	99,556	$	97,285,211	$	(86,154,207)	$	11,230,560	$	(3,869,459)	$	10,933,302	$	765,162	$	45,524,201	$	3,720,284	$	68,304,050

See accompanying notes to consolidated financial statements.

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LODGING FUND REIT III, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Years Ended December 31,
	2023		2022
Cash Flows from Operating Activities:
Net loss	$	(13,375,600)	$	(18,909,750)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
Depreciation		9,973,925		7,995,492
Stock-based compensation expense		42,280		60,000
Amortization		1,479,464		1,526,442
Gain on extinguishment of debt		(700,000)		—
Loss on disposal of fixed assets		126,452		28,466
Gain on acquisition of VIE		—		(3,810,081)
Deferred tax assets, net		(273,162)		5,755,669
Change in operating assets and liabilities:
Accounts receivable		1,853		(551,394)
Franchise fees		—		(1,050,000)
Prepaid expenses and other assets		(415,596)		593,085
Increase in finance lease liability		79,261		188,920
Accounts payable		745,566		1,285,156
Accrued expenses		1,954,599		2,923,389
Due to related parties		3,782,175		3,503,397
Other liabilities		(367,271)		(868,891)
Net cash provided by (used in) operating activities		3,053,946		(1,330,100)
Cash Flows from Investing Activities:
Acquisitions of hotel properties		—		(50,865,357)
Cash and restricted cash acquired in consolidation of VIE		—		1,342,428
Improvements and additions to hotel properties		(7,489,926)		(5,958,414)
Net cash used in investing activities		(7,489,926)		(55,481,343)
Cash Flows from Financing Activities:
Proceeds from mortgage debt		13,334,615		63,832,375
Proceeds from lines of credit		6,801,651		15,030,156
Principal payments on mortgage debt		(12,664,312)		(21,047,086)
Principal payments on lines of credit		(753,861)		(3,250,000)
Payments of deferred financing costs		(445,565)		(2,481,549)
Proceeds from issuance of common stock		1,950,806		11,462,373
Proceeds from issuance of GO Units		—		6,275,891
Proceeds from issuance of GO II Units		956,863		—
Payments of offering costs		(1,363,010)		(3,815,080)
Payments for shares redeemed		—		(1,347,319)
Distributions paid		(7,363,159)		(5,258,437)
Net cash provided by financing activities		454,028		59,401,324
Net change in cash, cash equivalents, and restricted cash		(3,981,952)		2,589,881
Beginning Cash, Cash Equivalents, and Restricted Cash		16,926,281		14,336,400
Ending Cash, Cash Equivalents, and Restricted Cash	$	12,944,329	$	16,926,281

See accompanying notes to consolidated financial statements.

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LODGING FUND REIT III, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

	For the Years Ended December 31,
	2023		2022
Supplemental Disclosure of Cash Flow Information:
Interest paid	$	10,977,385	$	7,586,812
Income taxes paid	$	18,992	$	42,158
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Issuance of T Units for Fargo Property	$	—	$	4,091,291
Issuance of T Units for Lakewood Property	$	—	$	5,638,000
Issuance of Common LP Units for El Paso Airport Property	$	—	$	4,600,000
Issuance of T Units for Fort Collins Property	$	—	$	3,703,690
Issuance of T Units for Pineville HGI Property	$	—	$	2,729,211
Issuance of T Units for Charlotte Property	$	—	$	6,427,546
Issuance of T Units for Wichita Property	$	—	$	1,217,625
Debt assumed for acquisition of Fargo Property	$	—	$	7,198,709
Debt issued for acquisition of Fort Collins Property	$	—	$	11,500,000
Offering costs included in accounts payable	$	98,266	$	(38,024)
Offering costs included in due to related parties	$	806,661	$	23,570
Distributions included in due to related parties	$	298,337	$	170,138
Reinvested distributions	$	1,497,537	$	1,979,615
Initial ASC 842 adoption of right-of-use asset	$	—	$	2,478,696
Reconciliation of Cash, Cash Equivalents, and Restricted Cash:
Cash and cash equivalents, beginning of period	$	6,193,449	$	7,866,401
Restricted cash, beginning of period		10,732,832		6,469,999
Cash, cash equivalents, and restricted cash, beginning of period	$	16,926,281	$	14,336,400
Cash and cash equivalents, end of period	$	3,052,937	$	6,193,449
Restricted cash, end of period		9,891,392		10,732,832
Cash, cash equivalents, and restricted cash, end of period	$	12,944,329	$	16,926,281

See accompanying notes to consolidated financial statements.

LODGING FUND REIT III, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  ORGANIZATION

Lodging Fund REIT III, Inc. (“LF REIT III”), was formed on April 9, 2018 as a Maryland corporation. LF REIT III, together with its subsidiaries (the “Company”), was formed for the principal purpose of acquiring, through purchase or contribution, direct or indirect ownership interests in a diverse portfolio of limited-service, select-service, full-service and extended-stay hotel properties located primarily in “America’s Heartland,” which the Company defines as the geographic area from North Dakota to Texas and the Appalachian Mountains to the Rocky Mountains. LF REIT III has elected to be treated as a real estate investment trust, or REIT, for federal income tax purposes beginning with the taxable year ended December 31, 2018. The Company’s business activities are directed and managed by Legendary Capital REIT III, LLC (the “Advisor”) and its affiliates, which are related parties through common management, pursuant to the Amended and Restated Advisory Agreement (the “Advisory Agreement”), dated June 1, 2018. The Company has no foreign operations or assets and its operating structure includes only one operating and reportable segment.

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Substantially all of the Company’s assets and liabilities are held by, and substantially all of its operations are conducted through, Lodging Fund REIT III OP, LP (the “Operating Partnership,” or “OP”), a subsidiary of LF REIT III. The OP has three voting classes of partnership units, Common General Partnership Units (“GP Units”), Interval Units and Common Limited Partnership Units (“Common LP Units”), and four classes of non-voting partnership units, Series B Limited Partnership Units (“Series B LP Units”), Series Growth & Opportunity (“GO”) Limited Partnership Units (“Series GO LP Units”), Series Growth & Opportunity II (“GO II”) Limited Partner Units (“Series GO II LP Units”) and Series T Limited Partnership Units (“Series T LP Units”). LF REIT III was the sole general partner of the OP, as of December 31, 2023 and 2022. As of December 31, 2023, there were 612,100 outstanding Common LP Units, no outstanding Interval Units, there were 1,000 outstanding Series B LP Units, all of which were owned by the Advisor, 3,124,503 Series GO LP Units, 129,787 Series GO II LP Units and 5,073,506 Series T LP Units.

On June 1, 2018, the Company commenced a private offering of shares of common stock, $0.01 par value per share, with a maximum offering of $100,000,000, which was increased to $150,000,000 in shares of the Company’s common stock in December 2021 (the “Offering”). The Offering is to accredited investors only, pursuant to a confidential private placement memorandum exempt from registration under the Securities Act of 1933, as amended. In addition to sales of common shares for cash, the Company has adopted a dividend reinvestment plan (“DRIP”), which permits stockholders to reinvest their distributions back into the Company. As of December 31, 2023, the Company had issued and sold 10,243,193 shares of common stock, including 1,167,594 shares attributable to the DRIP, and received aggregate proceeds of $100.2 million. As of December 31, 2023, the Company had repurchased 287,525 shares, which represents an original investment of $2,858,355 for $2,794,469 under the Company’s Share Repurchase Plan. As of December 31, 2023, all of the redemption proceeds have been paid.

On April 29, 2020, the Company classified and designated 7,000,000 shares of authorized but unissued common stock, $0.01 par value per share, as shares of “Interval Common Stock,” to be part of the Offering. The offering of the Interval Common Stock was a maximum offering of $30,000,000, which could be increased to $60,000,000 in the sole discretion of the Company’s board of directors, (the “Interval Share Offering”) to accredited investors only, pursuant to a confidential private placement memorandum exempt from registration under the Securities Act of 1933, as amended. The Company’s board of directors allowed the Interval Share Offering to expire on March 31, 2022. The Company did not issue or sell any shares of Interval Common Stock in the Offering.

On June 15, 2020, the Operating Partnership commenced a private offering of limited partnership units in the OP, designated as Series GO LP Units, with a maximum offering of $20,000,000, which could be increased to $30,000,000 in the sole discretion of LF REIT III as the General Partner of the Operating Partnership (the “GO Unit Offering”) to accredited investors only, pursuant to a confidential private placement memorandum exempt from registration under the Securities Act of 1933, as amended. The Series GO LP Units were being offered until the earlier of (i) the sale of $20,000,000 in Series GO LP Units (which could be increased to $30,000,000 in the Company’s sole discretion), (ii) June 14, 2022 or (iii) the Operating Partnership terminates the GO Unit Offering at an earlier date in its sole discretion. The Company’s board of directors terminated the GO Unit Offering as of February 14, 2022. The Company’s board of directors approved and ratified additional sales after February 14, 2022 in the GO Unit Offering for sales which were pending as of that date. As of December 31, 2023, the Operating Partnership had issued and sold 3,124,503 Series GO LP Units and received aggregate proceeds of $21.5 million.

The Operating Partnership may issue Series T LP Units from time to time to persons who contribute direct or indirect interests in real estate to the Operating Partnership. The Series T LP Units will have allocations and distributions that are dictated by the Partnership Agreement of the Operating Partnership and the applicable contribution agreement for the real estate. Certain Series T LP Units may have different allocations and distributions than other Series T LP Units. The amount of the allocations and distributions will be determined by the General Partner in its sole discretion at the time of issuance of the Series T LP Units and any future distributions are dependent on the financial performance of the contributed real estate based on a mathematical formula. The Series T LP Units are eligible for conversion into Common LP Units beginning 24 or 36 months, or longer in some instances, after their issuance and will automatically convert into Common LP Units upon other events as described in the Partnership Agreement of the Operating Partnership. The conversion of Series T LP Units into Common LP Units may vary with each issuance and is generally based on a formula that applies an applicable capitalization rate to the then-current trailing twelve months net operating income of the hotel property less the loan balance outstanding as of the contribution date as assumed by the Operating Partnership, and less other amounts

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incurred by the Operating Partnership including but not limited to certain closing costs, loan assumption fees and defeasance costs, property improvement plan (“PIP”) and capital expenditures, operating cash infused by the Operating Partnership, and any shortfall of certain minimum cumulative investment yield. There is no guarantee that the future financial performance of the contributed hotel property will be sufficient to result in the issuance of Common LP Units resulting from the application of the conversion formula applicable to the issuance of Series T LP Units at the time of the conversion. As of December 31, 2023, the Company had recorded an aggregate value of $45.7 million to the Series T LP Units in connection with such property contributions. During the year ended December 31, 2023, the Company declared distributions of $0.2 million for the Series T LP Units.

On December 3, 2021, the Operating Partnership commenced a private placement offering of its Common LP Units. As of December 31, 2023, the Operating Partnership had issued and sold 612,100 Common LP Units, with a value of $10.00

per unit at the time of issuance, in connection with property contributions.

On April 7, 2023, the Operating Partnership commenced a private offering of limited partnership units in the OP, designated as Series Growth & Opportunity II Limited Partner Units (“Series GO II LP Units”), with a maximum offering of $30,000,000, which could be increased to $60,000,000 in the sole discretion of LF REIT III as the General Partner of the Operating Partnership, (the “GO II Unit Offering”) to accredited investors only, pursuant to a confidential private placement memorandum exempt from registration under the Securities Act of 1933, as amended. The Series GO II LP Units are offered at a purchase price equal to 75% of the NAV of the Company’s common stock. The Series GO II LP Units are being offered until the earlier of (i) the sale of $30,000,000 in Series GO II LP Units (which could be increased to $60,000,000 in the Company’s sole discretion), (ii) March 31, 2024, which date may be extended for two 1-year extensions until March 31, 2026 in the sole discretion of the Operating Partnership or (iii) the Operating Partnership terminates the GO II Unit Offering at an earlier date in its sole discretion. As of December 31, 2023, the Operating Partnership had issued and sold 129,787 Series GO II LP Units and received gross aggregate proceeds of $1.0 million. See Note 13 “Subsequent Events” of the notes to the consolidated financial statements included as part of this Annual Report on Form 10-K for information regarding the extension of the GO II Unit Offering.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation— The accompanying consolidated financial statements and related notes have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the SEC applicable to annual financial information. The consolidated financial statements include the accounts of LF REIT III, the OP, its wholly-owned subsidiaries and entities in which the Company has a controlling financial interest, including variable interest entities (“VIEs”) where the Company is the primary beneficiary. The determination of a controlling financial interest is based upon the terms of the governing agreements of the respective entities, including the evaluation of the rights held by other interests. If the entity is considered to be a VIE, the Company determines whether the Company is the primary beneficiary, and then consolidates those VIEs for which the Company has determined that the Company is the primary beneficiary. If the entity in which the Company holds an interest does not meet the definition of a VIE, the Company evaluates whether the Company has a controlling financial interest through the Company’s voting interest in the entity. The Company consolidates entities when the Company owns more than 50 percent of the voting shares of a company or otherwise has a controlling financial interest. References in these financial statements to the net (loss) income attributable to stockholders do not include non-controlling interests, which represent the outside ownership interests of the Company’s consolidated, non-wholly owned entities and are presented separately in the consolidated financial statements. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates—The preparation of the Company’s consolidated financial statements and the accompanying notes in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities and the amounts of contingent assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition—Revenues consist of amounts derived from hotel operations, including room sales and other hotel revenues, and are presented on a disaggregated basis in the Company’s consolidated statements of operations. These revenues are recorded net of any sales and occupancy taxes collected from the hotel guests. All revenues are recorded on

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an accrual basis as they are earned. Any cash received prior to a guest’s arrival is recorded as an advance deposit from the guest and recognized as revenue at the time of the guest’s occupancy at the hotel property.

Investment in Hotel Properties—The Company evaluates whether each hotel property acquisition should be accounted for as an asset acquisition or a business combination. If substantially all of the fair value of the gross assets acquired is concentrated in a single asset or a group of similar identifiable assets, then the transaction is considered to be an asset acquisition. All of the Company’s acquisitions since inception have been determined to be asset acquisitions. Transaction costs associated with asset acquisitions are capitalized and transaction costs associated with business combinations would be expensed as incurred.

The Company’s acquisitions generally consist of land, land improvements, buildings, building improvements, and furniture, fixtures and equipment (“FF&E”). The Company may also acquire intangible assets or liabilities related to in-place leases, management agreements, debt, and advanced bookings. For transactions determined to be asset acquisitions, the Company allocates the purchase price among the assets acquired and the liabilities assumed on a relative fair value basis at the date of acquisition. The Company determines the fair value of assets acquired and liabilities assumed with the assistance of third-party valuation specialists, using cash flow analysis as well as available market and cost data. The determination of fair value includes making numerous estimates and assumptions.

The difference between the fair value and the face value of debt assumed in connection with an acquisition is recorded as a premium or discount and amortized to interest expense over the remaining term of the debt assumed. The valuation of assumed debt liabilities is based on our estimate of the current market rates for similar liabilities in effect at the acquisition date.

The Company’s investments in hotel properties are carried at cost and are depreciated using the straight-line method over the estimated useful lives of 15 years for land improvements, 40 years for buildings and building improvements and 3 to 7 years for FF&E. Maintenance and repair costs are expensed in the period incurred and major renewals or improvements to the hotel properties are capitalized.

The Company assesses the carrying value of its hotel properties whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. The recoverability is measured by comparing the carrying amount of the property to the estimated future undiscounted cash flows of the property, which take into account current market conditions, and the Company’s intent with respect to holding or disposing of the hotel properties. If the Company’s analysis indicates that the carrying value is not recoverable on an undiscounted cash flow basis, the Company will recognize an impairment loss for the amount by which the carrying value exceeds the fair value. The fair value is determined through various valuation techniques, including internally developed discounted cash flow models, comparable market transactions or third-party appraisals.

The use of projected future cash flows is based on assumptions that are consistent with a market participant’s future expectations for the industry and the economy in general and the Company’s expected use of the underlying hotel properties. The assumptions and estimates related to the future cash flows and the capitalization rates are complex and subjective in nature. Changes in economic and operating conditions that occur subsequent to a current impairment analysis and the Company’s ultimate use of the hotel property could impact the assumptions and result in future impairment losses to the hotel properties.

Advertising Costs—The Company expenses advertising costs as incurred. These costs represent the expense for franchise advertising and reservation systems under the terms of the hotel management and franchise agreements and expenses that are directly attributable to advertising and promotion. Advertising expense was $2.6 million and $1.5 million for the years ended December 31, 2023 and 2022, respectively, and is included in sales and marketing in the consolidated statements of operations.

Non-controlling Interest—Non-controlling interests represent the portion of equity in a subsidiary held by owners other than the Company. Non-controlling interests are reported in the consolidated balance sheets within equity, separate from stockholders’ equity. Revenue and expenses attributable to both the Company and the non-controlling interests are reported in the consolidated statements of operations, with net income or loss attributable to non-controlling interests reported separately from net income or loss attributable to the Company.

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Cash and Cash Equivalents—Cash and cash equivalents include cash in bank accounts as well as highly liquid investments with an original maturity of three months or less. The Company deposits cash with several high-quality financial institutions. These deposits are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”) up to an insurance limit of $250,000. At times, the Company’s cash and cash equivalents may exceed federally insured levels.

Restricted Cash—Restricted cash primarily consists of earnest money deposits related to hotel property acquisitions, as well as certain funds maintained in escrow accounts to fund future payments for insurance, property tax obligations, and reserves for future capital expenditures, as required by our debt agreements.

Accounts Receivable—Accounts receivable consist primarily of receivables due from hotel guests for room stays and meeting and banquet room rentals, which are uncollateralized customer obligations. Management determines the likelihood of collectability of receivables on an individual customer basis, based on the amount of time the balance has been outstanding, likelihood of collecting, and the customer’s current economic status. The carrying amount of the accounts receivables is reduced by an allowance for credit losses that reflects management’s best estimate of the amounts that will not be collected.

Deferred Financing Costs—Deferred financing costs represent origination fees, legal fees, and other costs associated with obtaining financing. Deferred financing costs are presented on the consolidated balance sheets as a direct deduction from the carrying amount of the related debt liability. These costs are amortized to interest expense over the terms of the respective financing agreements using the straight-line method, which approximates the effective interest method. The Company expenses unamortized deferred financing costs when the associated financing agreement is refinanced or repaid before maturity unless certain criteria are met that would allow for the carryover of such costs to the refinanced agreement. Costs incurred in connection with potential financial transactions that are not completed are expensed in the period in which it is determined the financing will not be completed.

Offering Costs—The Company has incurred certain costs related directly to the Company’s private offerings consisting of, among other costs, commissions, legal, due diligence costs, printing, marketing, filing fees, postage, data processing fees, and other offering related costs. These costs are capitalized and recorded as a reduction of equity proceeds on the accompanying consolidated balance sheets.

Property Operations Expenses—Property operations expenses consist of expenses related to room rental, food and beverage sales, telephone usage, and other miscellaneous service costs, as well as all costs of operating the Company’s hotel properties such as building repairs, maintenance, property taxes, utilities, and other related costs.

Property Management Fees—Property management fees include expenses incurred for management services provided for the day-to-day operations of our hotel properties, which are generally charged at a rate of 4% of gross revenues. Property management fees also include asset management fees, which may be charged at an annual rate of up to 0.75% of gross assets and are paid to the Advisor.

Franchise Fees—The Company pays initial fees related to hotel franchise rights prior to acquiring a hotel property. The fees are included in prepaid expenses and other assets until the time the related hotel property is acquired. Initial franchise fees related to hotel properties that are acquired are amortized on a straight-line basis over the life of the agreement. Initial franchise fees related to hotel properties that are not acquired are refunded to the Company, net of any associated fees, and any fees are expensed as incurred. Franchise fees on the accompanying consolidated statements of operations include the amortization of initial franchise fees, as well as monthly fees paid to franchisors for royalty, marketing, and reservation fees and other related costs.

Acquisition Costs—The Company incurs costs during the review of potential hotel property acquisitions including legal fees, environmental reviews, market studies, financial advisory services, and other professional service fees. If the Company does complete a property acquisition, an acquisition fee of up to 1.4% is charged by the Advisor, based on the purchase price of the property plus any estimated PIP costs. For transactions determined to be asset acquisitions, these costs are capitalized as part of the overall cost of the project. For transactions determined to be business combinations, these costs would be expensed in the period incurred. Acquisition-related and acquisition due diligence costs that relate to a property that is not acquired, are expensed and included in acquisition costs on the accompanying consolidated statements of operations. Prior to the ultimate determination of whether a property will be acquired or not, acquisition-related and

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acquisition due diligence costs are recorded as, and included in, prepaid expenses and other assets on the accompanying consolidated balance sheets.

Net Loss Per Share of Common Stock—Basic net loss per common share is computed based upon the weighted average number of shares outstanding during the period. Diluted net loss per common share is calculated after giving effect to all potential common shares that were dilutive and outstanding for the period. Basic and diluted net loss per common share were the same for the periods presented.

Stock-Based Compensation—During 2022, the Company began compensating its independent directors with stock-based compensation as approved by and administered under the supervision of our Board of Directors. The awards are fully vested at issuance and the Company recognizes stock-based compensation expense based on the award’s fair value at the grant date. Compensation expense related to stock awards is determined on the grant date based on the offering price of our common stock and is charged to earnings when issued. Stock-based compensation expense was $42,280 and $60,000 for the years ended December 31, 2023 and 2022, respectively, and is included in general and administrative expense in the consolidated statements of operations.

Income Taxes—The Company has elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement that it distribute at least 90% of its REIT taxable income, subject to certain adjustments and excluding any net capital gain, to stockholders. The Company’s intention is to adhere to the REIT qualification requirements and to maintain its qualification for taxation as a REIT.

As a REIT, the Company is generally not subject to U.S. federal corporate income tax on the portion of taxable income that is distributed to stockholders. If the Company fails to qualify for taxation as a REIT in any taxable year, the Company will be subject to U.S. federal income taxes at regular corporate rates and it may not be able to qualify as a REIT for four subsequent taxable years. As a REIT, the Company may be subject to certain state and local taxes on its income and property, and to U.S. federal income and excise taxes on undistributed taxable income. Taxable income from non-REIT activities managed through the Company’s taxable REIT subsidiary (“TRS”) is subject to U.S. federal, state, and local income taxes at the applicable rates.

The TRS accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax basis, and for net operating loss, capital loss and tax credit carryforwards. The deferred tax assets and liabilities are measured using the enacted income tax rates in effect for the year in which those temporary differences are expected to be realized or settled. The effect on the deferred tax assets and liabilities from a change in tax rates is recognized in earnings in the period when the new rate is enacted. However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of all available evidence, including the future reversals of existing taxable temporary differences, future projected taxable income and tax planning strategies. Valuation allowances are provided if, based upon the weight of the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company performs periodic reviews for any uncertain tax positions and, if necessary, will record the expected future tax consequences of uncertain tax positions in the consolidated financial statements.

Fair Value Measurement—The Company establishes fair value measures based on the fair value definition and hierarchy levels established by GAAP. These fair values are based on a three-tiered fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1—Observable inputs such as quoted prices in active markets.

Level 2—Directly or indirectly observable inputs, other than quoted prices in active markets.

Level 3—Unobservable inputs in which there is little or no market data, which require a reporting entity to develop its own assumptions.

The Company’s estimates of fair value were determined using available market information and appropriate valuation methods. Considerable judgment is necessary to develop estimated fair value. The use of different market assumptions or

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estimation methods may have a material effect on the estimated fair value amounts. The Company classifies assets and liabilities in the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement.

Accounting Standards Update—The Company, as an emerging growth company, has elected to use the extended transition period which allows us to defer the adoption of new or revised accounting standards. This allows the Company to adopt new or revised accounting standards as of the effective date for non-public business entities.

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, “Leases” (“ASU No. 2016-02”) (Topic 842), which replaces Leases (Topic 840), and sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). ASU No. 2016-02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance under Leases (Topic 840), for operating leases. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales type leases, direct financing leases and operating leases. The Company adopted this standard effective January 1, 2022, electing to recognize and measure its leases prospectively at the beginning of the period of adoption, without restating the presentation of periods prior to the effective date, which continue to be reported in accordance with the Company’s historical accounting policy.

At adoption of the new standard, the Company recorded a right-of-use asset and lease liability for its Sheraton Northbrook, Illinois hotel property (the "Northbrook Property") ground lease measured at the estimated present value of the remaining minimum lease payments under the lease. The Company’s ground lease is classified as a financing lease under Topic 842. For this finance lease, effective January 1, 2022, the Company began recognizing depreciation and amortization expense and interest expense in the Company’s consolidated statements of operations instead of ground lease rent expense. While the total expense recognized over the life of a lease is unchanged, the timing of expense recognition for finance leases results in higher expense recognition during the earlier years of the lease and lower expense during the later years of the lease. In addition to recording operating and financing right-of-use assets and lease liabilities, the Company also reclassified at adoption its intangible liability for its above market ground lease to the beginning right-of-use asset. See Note 3 for more information regarding the Company’s lease assets and liabilities.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU No. 2016-13”), which requires that entities use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowance for credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU No. 2016-13 will be effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted ASU No. 2016-13 using the modified retrospective approach and the adoption did not have a material impact on the Company’s consolidated financial statements.

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, to improve reportable segment disclosure requirements through enhanced disclosures about significant segment expenses. The ASU is effective for annual reporting periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the ASU to determine its impact on the Company’s segment disclosures.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The standard requires additional disclosures about income taxes, including specific categories in the rate reconciliation and disaggregated information on income taxes paid and income from continuing operations. The standard also eliminates the requirement to disclose an estimated range of the reasonably possible change in unrecognized tax benefits in the next 12 months. The Company is still evaluating the level of disclosure that will be required. This standard is to be applied on a prospective basis and is effective for annual periods beginning after December 15, 2024, with early adoption permitted.

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3.  INVESTMENT IN HOTEL PROPERTIES

Investment in hotel properties as of December 31, 2023 and 2022 consisted of the following:

	December 31,		December 31,
	2023		2022
Land and land improvements	$	32,655,286	$	32,650,698
Building and building improvements		245,132,662		241,278,409
Furniture, fixtures, and equipment		23,850,758		21,884,508
Right-of-use asset - ground lease		7,081,156		7,286,984
Construction in progress		6,097,067		4,576,041
Investment in hotel properties, at cost		314,816,929		307,676,640
Less: accumulated depreciation		(27,469,450)		(17,458,998)
Investment in hotel properties, net	$	287,347,479	$	290,217,642

As of December 31, 2023, the Company consolidated nineteen hotel properties, consisting of eighteen hotel properties owned by the Company and an equity and profits interest in the parent of the entity which holds a leasehold interest in one hotel property, with an aggregate of 2,261 rooms located in eleven states.

On August 10, 2022, the Company consolidated a variable interest entity (“VIE”) that owns one hotel in El Paso, Texas (the “El Paso University Property”). The Company is the primary beneficiary of this VIE as the Company has the power to direct the activities that most significantly affect its economic performance. Additionally, the Company has the obligation to absorb its losses and the right to receive benefits that could be significant to it. Accordingly, the Company initially recognized the VIE’s assets, liabilities, and noncontrolling interest at fair value. The Company’s condensed consolidated balance sheet includes the following assets and liabilities of this entity:

	December 31,		December 31,
	2023		2022
Assets
Investment in hotel properties, net of accumulated depreciation of $1,281,612 and $471,491	$	21,194,229	$	22,036,289
Cash and cash equivalents		163,501		493,056
Restricted cash		851,290		2,173,237
Accounts receivable, net		412,856		154,976
Prepaid expenses and other assets		27,622		67,068
Total Assets	$	22,649,498	$	24,924,626
Liabilities
Debt, net	$	12,086,033	$	12,244,068
Finance lease liability		4,750,889		4,862,172
Accounts payable		143,030		182,692
Accrued expenses		109,897		445,763
Other liabilities		302,228		655,372
Total liabilities	$	17,392,077	$	18,390,067

Acquisitions of Hotel Properties

The Company did not acquire any properties during the year ended December 31, 2023. The Company acquired seven properties and an equity and profits interest in the parent of the entity which holds a leasehold interest in one hotel property during the year ended December 31, 2022. Each of the Company’s hotel acquisitions to date have been determined to be asset acquisitions.  The table below outlines the details of the properties acquired during the year ended December 31, 2022.

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2022 Acquisitions
				Number
			Date	of Guest	Purchase			Transaction				%
Hotel	Property Type	Location	Acquired	Rooms	Price			Costs		Total		Interest
Hampton Inn & Suites (the “Fargo Property”)	Limited-Service	Fargo, ND	January 18, 2022	90	$	11,440,000	(1)	$	302,222	$	11,742,222	100	%
Courtyard by Marriott (the "El Paso Airport Property")	Select-Service	El Paso, TX	February 8, 2022	90		15,120,000	(2)		333,234		15,453,234	100	%
Fairfield Inn & Suites (the "Lakewood Property")	Limited-Service	Lakewood, CO	March 29, 2022	142		18,800,000	(3)		862,117		19,662,117	100	%
Residence Inn (the "Fort Collins Property")	Extended-Stay	Fort Collins, CO	August 3, 2022	113		15,800,000	(4)		546,009		16,346,009	100	%
Hilton Garden Inn (the "Pineville HGI Property")	Select-Service	Pineville, NC	August 25, 2022	113		10,930,000	(5)		347,149		11,277,149	100	%
Hilton Garden Inn (the "Charlotte Property")	Select-Service	Charlotte, NC	August 25, 2022	112		15,440,000	(6)		416,387		15,856,387	100	%
Holiday Inn (the "Wichita Property")	Limited-Service	Wichita, KS	December 22, 2022	84		7,400,000	(7)		234,310		7,634,310	100	%
				744	$	94,930,000		$	3,041,428	$	97,971,428

(1) Includes the issuance of $4,091,291 in Series T LP Units of the Operating Partnership.

(2) Includes the issuance of $4,600,000 in Common Limited Partnership Units of the Operating Partnership.

(3) Includes the issuance of $5,638,000 in Series T LP Units of the Operating Partnership.

(4) Includes the issuance of $3,703,690 in Series T LP Units of the Operating Partnership.

(5) Includes the issuance of $2,729,211 in Series T LP Units of the Operating Partnership.

(6) Includes the issuance of $6,427,546 in Series T LP Units of the Operating Partnership.

(7) Includes the issuance of $1,217,625 in Series T LP Units of the Operating Partnership.

In addition, on August 10, 2022, the Company acquired a 24.9% equity and profits interest in High Desert Garden Holdings, LLC, which is the parent of the entity which holds a leasehold interest in the Hilton Garden Inn, located in El Paso, Texas (the “El Paso University Property”) in exchange for a capital contribution of $3.2 million. The El Paso University Property is a select-service hotel with 153 guest rooms. See “—2022 Business Combinations” below for additional information regarding this transaction.

The allocation of the aggregate purchase price in accordance with GAAP guidance prescribed in ASC Topic 805, Business Combinations, of the assets and liabilities acquired at their relative fair values of their acquisition dates, is as follows:

	For the Years Ended December 31,
	2023		2022
Land and land improvements	$	—	$	12,538,514
Building and building improvements		—		79,702,403
Furniture, fixtures, and equipment		—		5,730,511
Total assets acquired		—		97,971,428
Assumed mortgage debt		—		7,198,709
Net purchase price	$	—	$	90,772,719

All acquisitions completed during the year ended December 31, 2022 were considered asset acquisitions under ASC 805.

Eleven of the hotel properties owned by the Company as of December 31, 2023 are subject to management agreements with NHS, LLC dba National Hospitality Services (“NHS”) with an initial term expiring on December 31 of the fifth full calendar year following the effective date of the agreement, which will automatically renew for successive five-year periods unless terminated earlier in accordance with its terms. NHS is wholly-owned by Norman Leslie, a director and executive officer of the Company and a principal of the Advisor. The Pineville Property was being managed on a day-to-day basis by Beacon IMG, Inc. (“Beacon”), an affiliate of the seller of the Pineville Property, pursuant to a sub-management agreement. On February 1, 2023, day-to-day management was transferred to HP Hotel Management, Inc.

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The Southaven Property is subject to a management agreement with Vista Host Inc. (“Vista”) with an initial term expiring on February 21 of the fifth full calendar year following the effective date of the agreement. The agreement will automatically renew for two (2) successive five-year periods unless terminated earlier in accordance with its terms. The Houston Property, El Paso Airport Property and El Paso University Property are subject to a management agreement with Interstate Management Company, LLC (“Aimbridge”). The Aimbridge agreement for the Houston Property has an initial term expiring on August 3 of the third full calendar year following the effective date of the agreement. The agreement will automatically renew for additional successive terms of one year each unless terminated earlier in accordance with its terms. The Aimbridge agreement for the El Paso Airport Property and the El Paso University Property each has an initial five (5) year term and will automatically renew for one (1) year periods unless terminated earlier in accordance with its terms. The Charlotte Property and the Pineville HGI Property are each subject to a management agreement with HP Hotel Management, Inc. (“HP”). Each HP agreement has an initial term expiring three years after its effective date, which automatically renews for successive three-year periods, unless terminated in accordance with its terms. The Fargo Property and the Wichita Property are each subject to a management agreement with KAJ Hospitality Inc. Each KAJ agreement has an initial term of five years after its effective date, which automatically renews for successive one-year periods, unless terminated in accordance with its terms. The seller of the Pineville Property, an affiliate of Beacon, was entitled to additional cash consideration if the property exceeds certain performance criteria based on increases in the property’s net operating income (“NOI”) for a selected 12-month period of time. At any time during the period beginning April 1, 2021 through the date of the final NOI determination (on or about April 30, 2023), the seller of the property could have made a one-time election to receive the additional consideration. The variable amount of the additional consideration, if any, was based on the excess of the property’s actual NOI over a base NOI for the applicable 12-month calculation period divided by the stated cap rate for such calculation period. As of December 31, 2023, no amounts were owed or paid to the seller of the Pineville Property, and no election to receive the additional consideration had been made. As of the date of this filing, the period to elect to receive additional consideration has passed with no election being made.

2022 Acquisitions

Hampton Inn & Suites Fargo Medical Center – Fargo, North Dakota

On January 18, 2022, the Operating Partnership acquired a Hampton Inn & Suites hotel property in Fargo, North Dakota (the “Fargo Property”) for contractual consideration comprised of $7.2 million in debt, $150,000 in cash and the issuance of $4.1 million in Series T LP Units of the Operating Partnership. The Series T LP Units will convert into Common LP Units of the Operating Partnership beginning 36 months, or in the event the Operating Partnership is then in the process of transacting a sale of the Operating Partnership’s assets or another significant capital event necessitating a conversion is then in process, after January 18, 2022, at which point the value will be calculated pursuant to the terms of an Amended and Restated Contribution Agreement, dated January 18, 2022. The number of Common LP Units to be issued to the contributor based on such conversion may be higher or lower than the initial valuation of the Series T LP Units. Accordingly, the aggregate purchase price used for the acquisition accounting noted in the tables above and below of $11.4 million, was determined to be the value assigned by a third-party appraisal, as the appraisal value was more reliably measurable.

Courtyard El Paso Airport – El Paso, Texas

On February 8, 2022, the Operating Partnership acquired a Courtyard by Marriott hotel property in El Paso, Texas (the “El Paso Airport Property”) for contractual consideration comprised of $10.0 million in debt, $620,000 in cash and the issuance of $4.6 million in Common LP Units.

Fairfield Inn & Suites Denver Southwest Lakewood – Lakewood, Colorado

On March 29, 2022, the Operating Partnership acquired a Fairfield Inn & Suites hotel property in Lakewood, Colorado (the “Lakewood Property”) for contractual consideration of $12.6 million in debt, $552,000 in cash and approximately $6.2 million in Series T LP Units of the Operating Partnership. The Series T LP Units will convert into Common LP Units of the Operating Partnership beginning 36 months, or in the event the Operating Partnership is then in the process of transacting a sale of the Operating Partnership’s assets or another significant capital event necessitating a conversion is then in process, up to 48 months, after March 29, 2022, at which point the value will be calculated pursuant to the terms of an Amended and Restated Contribution Agreement, dated March 29, 2022. The number of Common LP Units to be

F-17

issued to the contributor based on such conversion may be higher or lower than the initial valuation of the Series T LP Units. Accordingly, the aggregate purchase price used for the acquisition accounting noted in the tables above and below of $18.8 million, was determined to be the value assigned by a third-party appraisal, as the appraisal value was more reliably measurable.

Residence Inn by Marriott Fort Collins – Fort Collins, Colorado

On August 3, 2022, the Operating Partnership acquired a Residence Inn by Marriott hotel property in Fort Collins, Colorado (the “Fort Collins Property”) for contractual consideration comprised of $11.5 million in debt, the issuance of 560,369 Series T LP Units of the Operating Partnership, and approximately $600,000 in cash at closing. The Series T Limited Units will convert into Common Limited Units of the Operating Partnership beginning 36 months, or at the option of the contributor, up to 48 months, after the closing, or upon the sale of the Fort Collins RI property or substantially all of the Operating Partnership’s assets, at which point the value will be calculated pursuant to the terms of the Fort Collins RI Amended Contribution Agreement. The number of Common LP Units to be issued to the contributor based on such conversion may be higher or lower than the initial valuation of the Series T LP Units. Accordingly, the aggregate purchase price used for the acquisition accounting noted in the tables above and below of $15.8 million, was determined to be the value assigned by a third-party appraisal, as the appraisal value was more reliably measurable.

Hilton Garden Charlotte North – Charlotte, North Carolina

On August 25, 2022, the Operating Partnership acquired a Hilton Garden Inn hotel property in Charlotte, North Carolina (the “Charlotte Property”) for contractual consideration comprised of the payoff of the existing loan secured by the Charlotte Property in the amount of $8.7 million, refinanced with a new term loan by subsidiaries of the Operating Partnership with Western Alliance Bank (the “Charlotte HGI Lender”) in the original principal amount of $9.8 million secured by the Charlotte Property (the “Charlotte HGI Loan Agreement”), the issuance by the Operating Partnership of 598,755 Series T Limited Units of the Operating Partnership, and the payment by the Operating Partnership of $0.4 million in cash. The Series T LP Units will convert into Common Limited Units of the Operating Partnership beginning 24 months after the closing. The number of Common Limited Units to be issued to the Contributor upon conversion will be calculated pursuant to the terms of the Charlotte HGI Contribution Agreement, which may be higher or lower than the initial valuation of the Series T LP Units. Accordingly, the aggregate purchase price used for the acquisition accounting noted in the tables above and below of $15.4 million, was determined to be the value assigned by a third-party appraisal, as the appraisal value was more reliably measurable.

Hilton Garden Pineville – Pineville, North Carolina

On August 25, 2022, the Operating Partnership acquired a Hilton Garden Inn hotel property in Pineville, North Carolina (the “Pineville HGI Property”) for contractual consideration comprised of the payoff of the existing loan secured by the Pineville HGI in the amount of $7.8 million, refinanced with a new $7.0 million loan by subsidiaries of the Operating Partnership with Western Alliance Bank (the “Pineville HGI Lender”) secured by the Pineville HGI (the “Pineville HGI Loan Agreement”), the issuance by the Operating Partnership of 249,921 Series T Limited Units of the Operating Partnership, and the payment by the Operating Partnership of $0.4 million in cash. The Series T Limited Units will convert into Common Limited Units of the Operating Partnership beginning 24 months after the closing. The number of Common Limited Units to be issued to the Contributor upon conversion will be calculated pursuant to the terms of the Pineville HGI Contribution Agreement, which may be higher or lower than the initial valuation of the Series T LP Units. Accordingly, the aggregate purchase price used for the acquisition accounting noted in the tables above and below of $10.9 million, was determined to be the value assigned by a third-party appraisal, as the appraisal value was more reliably measurable.

Holiday Inn Express & Suites - Wichita Airport

On December 22, 2022, the Operating Partnership acquired a Holiday Inn Express & Suites hotel property in Wichita, Kansas (the “Wichita Property”) for contractual consideration comprised of the origination of a new loan by subsidiaries of the Operating Partnership with Choice Financial Group (the “Wichita HIEX Lender”) for $5.6 million, secured by the Wichita Property the issuance by the Operating Partnership of 121,762 Series T Limited Units of the Operating Partnership, and the payment by the Operating Partnership of $0.5 million in cash, a portion of which was used to pay off the portion

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of the Wichita Contributor’s existing loan not covered by the proceeds of the new loan with the Wichita HIEX Lender. The Series T Limited Units will convert into Common Limited Units of the Operating Partnership 36 months after the closing. The number of Common Limited Units to be issued to the Wichita Contributor upon conversion will be calculated pursuant to the terms of the Pineville HGI Contribution Agreement, which may be higher or lower than the initial valuation of the Series T LP Units. Accordingly, the aggregate purchase price used for the acquisition accounting noted in the tables above and below of $7.4 million, was determined to be the value assigned by a third-party appraisal, as the appraisal value was more reliably measurable.

2022 Business Combinations

Hilton Garden Inn El Paso University – El Paso, Texas

On August 10, 2022, the Operating Partnership acquired an equity and profits interest in High Desert Garden Holdings, LLC, a Delaware limited liability company (“HDGH”), the parent of the entity which holds a leasehold interest in a Hilton Garden Inn located in El Paso, Texas (the “El Paso University Property”) pursuant to a Reorganization and Membership Interest Purchase Agreement dated as of August 10, 2022 by and among the Operating Partnership, Roma Commercial, Inc., ASI Capital, LLC, and VB Hotel Group A, LLC and pursuant to a First Amendment to the Fourth Amended and Restated Operating Agreement of High Desert Garden Holdings, LLC (collectively and as amended (the “El Paso University Amended Agreements”)). High Desert Investors, LP, a Delaware limited partnership (“HDI”), a wholly-owned subsidiary of HDGH, holds a leasehold interest in real estate and the El Paso University Property located on such real estate.

Pursuant to the El Paso University Amended Agreements, the Operating Partnership acquired a 24.9% membership interest in HDGH in exchange for a capital contribution of $3.2 million. The Operating Partnership has the unconditional right, at any time prior to December 31, 2027 and at its discretion, to acquire all membership interest in HDGH on the terms and conditions as provided in the El Paso University Amended Agreements. After paying any member loans, the Operating Partnership will receive 100% of distributions from operations, subject to annual cash distributions for members that existed before the El Paso University Amended Agreements (the “Prior Members”), which are entitled to up to 6.0% of the value of the Prior Member’s ownership percentage, depending upon the net operating income (“NOI”) of the El Paso University Hotel Property during each such applicable year. The Operating Partnership will fund any capital requirements for HDGH and has the option to fund such requirements by making a loan to HDGH at a 12% per annum interest rate. HDI is the borrower (“Borrower”) under a loan in the original principal amount of $14.4 million which is secured by HDI’s leasehold interest in the El Paso University Property and the real estate on which it is located. The loan has a fixed interest rate of 4.939% per annum and matures on August 6, 2025. In connection with the transactions effected through the El Paso University Amended Agreements, Corey Maple, a director and executive officer of the Company, entered into a guaranty with the lender to guarantee payment, when due, of the loan amount and the performance of agreements by Borrower contained in the loan documents, as further described in the guaranty.

The Company accounted for this transaction as a business combination in accordance with GAAP guidance prescribed in ASC Topic 805, Business Combination. As such, the Company recognized a gain for the difference between the sum of the fair value of any consideration paid, the fair value of the noncontrolling interest, and the net fair value of identifiable assets and liabilities of the VIE. The assets of the Company’s VIE are only available to settle the obligation of this entity. The Company has expensed all transaction costs as an acquisition expense on the Company’s Consolidated Statement of Operations amounting to $571,198. The fair value of the investment in the hotel was determined by an independent appraisal and debt was determined by calculating the present value of the principal and interest payments, using discount rates that best reflect current market interest rates for financings with similar characteristics and credit quality, and assuming the loan is outstanding through its maturity. The fair values were based on estimated cash flow projections that utilize appropriate discount rates and available market information. Such inputs were categorized as Level 3, as defined in the GAAP fair value hierarchy. Level 3 valuations incorporate subjective judgements and consider assumptions that are not observable in the market.

F-19

In connection with this transaction, the Company allocated the purchase price of HDGH based on the estimated fair value of assets acquired and liabilities assumed as follows:

	August 10,
	2022
Assets
Building	$	16,700,000
Furniture, fixtures & equipment		900,000
Right-of-use asset - ground lease		4,862,172
Cash and cash equivalents		36,790
Restricted cash		1,305,636
Accounts receivable, net		168,974
Prepaid expenses and other assets		107,291
Total Assets	$	24,080,863
Liabilities
Debt	$	12,781,084
Finance lease liability		4,862,172
Accounts payable		237,636
Accrued expenses		1,970,554
Other liabilities		419,336
Total liabilities	$	20,270,782
Assets in excess of liabilities (gain on acquisition of VIE)	$	3,810,081

Northbrook Property Above Market Ground Lease

On December 3, 2021, in connection with the purchase of the Northbrook Property, the Company recorded an above market ground lease liability of $5,497,061, which was recognized on the consolidated balance sheet within Other Liabilities. The Company assumed the ground lease 15 years into a 61-year lease maturing in 2067. The yearly base rent, paid monthly, increases 3% every year through maturity. As of December 31, 2023, the Company’s finance lease had a discount rate of 7.75%.

Upon adoption of ASU No. 2016-02 on January 1, 2022, the Company derecognized the above market ground lease liability by reclassifying it as a partial offset to the beginning right-of-use asset related to this financing lease. At adoption of the new standard, the Company recognized a lease liability of $7,975,757 and a right-of-use asset of $2,478,696, which included the derecognition of the above-market ground lease liability. For the year ended December 31, 2023, the Company recognized interest expense of $639,561 and right-of-use amortization expense of $53,885 related to the finance lease.

El Paso University Property Ground Lease

On August 10, 2022, in connection with the El Paso University Property, the Company recognized a finance lease liability of $4,862,172 and a right-of-use asset of $4,862,172 related to a ground lease assumed. The Company assumed the ground lease with a remaining term of 32 years, maturing in 2054. Annual rentals are comprised of a base rent due at the beginning of the year plus, if applicable, a percent of revenue in excess of the base rent. The annual base rent is adjusted every five years by an average of a percent of the annual revenue in preceding years. If revenue remains below the previous five-year base rent, then there is no change to base rent. As of December 31, 2023, the finance lease had a discount rate of 9.00%.

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The following table reconciles the undiscounted cash flows for each of the next five years and total of the remaining years to the finance lease liability included in the Company’s consolidated balance sheet as of December 31, 2023.

2024	$	610,237
2025		624,112
2026		645,791
2027		660,511
2028		675,672
Thereafter		43,341,125
Total finance lease payments		46,557,448
Interest		(33,451,338)
Present value of finance lease liabilities	$	13,106,110

4.  PREPAID EXPENSES AND OTHER ASSETS

Prepaid expenses and other assets consisted of the following:

	December 31,		December 31,
	2023		2022
Franchise fees(1)	$	—	$	150,000
Acquisition costs		—		485,304
Insurance		941,582		389,656
Other		884,007		385,033
	$	1,825,589	$	1,409,993

(1) Prepaid franchise fees paid in 2022 in relation to Sheraton Albuquerque Airport, terminated in 2023.

5.  ACCRUED EXPENSES

Accrued expenses consisted of the following:

	December 31,		December 31,
	2023		2022
Property taxes	$	3,040,984	$	3,215,458
Interest		3,504,989		1,585,813
Other		1,262,145		1,052,248
	$	7,808,118	$	5,853,519

6.  DEBT

Lines of Credit

Revolving Line of Credit - Western State Bank

On February 10, 2020, the Company entered into a $5.0 million revolving line of credit with Western State Bank (“Western Line of Credit”). The Western Line of Credit requires monthly payments of interest only, with all outstanding principal amounts being due and payable at maturity on February 10, 2021. On January 19, 2021, the Western Line of Credit was amended to extend the maturity date to May 10, 2021. The Western Line of Credit had a variable interest rate equal to the U.S. Prime Rate, plus 0.50%. On May 6, 2021, the Western Line of Credit was amended to extend the maturity date to May 10, 2022. On that date, the interest rate was also amended to incorporate an interest rate floor equal to 4.00%. On May 5, 2022, the Western Line of Credit was amended to extend the maturity date to December 15, 2022. On December 15, 2022, the Western Line of Credit was amended to extend the maturity to April 15, 2023. Additionally, through the

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amendment on December 15, 2022, the Western Line of Credit is secured by the Company’s Hampton Inn hotel property in Eagan, Minnesota, the Company’s Holiday Inn Express hotel property in Cedar Rapids, Iowa, the Company’s Hampton Inn hotel property in Fargo, North Dakota and limited partnership units of the Operating Partnership. On April 15, 2023, the Western Line of Credit was amended to extend the maturity to June 15, 2023. On July 31, 2023, the Western Line of Credit was amended to extend the maturity to September 15, 2023. This amendment also added an additional 200,000 limited partnership units of the Operating Partnership as collateral for the loan, for a total of 300,000 limited partnership units. On October 9, 2023, the Western Line of Credit was amended effective as of October 4, 2023, which extended the maturity date of the Western Line of Credit from September 15, 2023 to November 15, 2023. This amendment also reduced the maximum credit to $4.67 million and required the Operating Partnership to pay Western State Bank a principal curtailment of $0.3 million. On December 27, 2023, the Operating Partnership, the Company, Corey Maple, LF3 Fargo Med, LLC, LF3 Eagan, LLC, and LF3 Cedar Rapids, LLC entered into a Change in Terms Agreement in connection with the Western Line of Credit, which extended the maturity date of the Western Line of Credit from November 15, 2023 to April 30, 2024.

The interest rate as of December 31, 2023 was 9.50%. The Western Line of Credit is secured by our Cedar Rapids Property, Eagan Property, and Fargo Property which are also subject to term loans with the same lender, and 300,000 Common LP Units of the Operating Partnership. The Western Line of Credit includes cross-collateralization and cross-default provisions such that the existing mortgage loan agreements with respect to the Cedar Rapids Property, the Eagan Property, and the Fargo Property as well as future loan agreements that we may enter into with this lender, are cross-defaulted and cross-collateralized with each other. The Western Line of Credit, including all cross-collateralized debt, is guaranteed by Corey Maple. As of December 31, 2023, there was a $4.7 million balance outstanding on the Western Line of Credit. See Note 13 “Subsequent Events” of the notes to the consolidated financial statements included as part of this Annual Report on Form 10-K for a description of amendments to the Western Line of Credit subsequent to December 31, 2023.

Revolving Line of Credit – Legendary A-1 Bonds, LLC

On August 10, 2022, the Operating Partnership entered into a $5.0 million revolving line of credit loan agreement (the “A-1 Line of Credit”) with Legendary A-1 Bonds, LLC (“A-1 Bonds”), which is an affiliate of the Advisor which is owned by Norman Leslie, a director and officer of the Company and principal of the Advisor and Corey Maple, a director of the Company and principal of the Advisor. The A-1 Revolving Line of Credit requires monthly payments of interest only beginning September 1, 2022, with all outstanding principal and interest amounts being due and payable at maturity on December 31, 2022. On January 12, 2023, the A-1 Revolving Line of Credit was amended to increase the line of credit to $10.0 million, increased the number of Common LP Units of the Operating Partnership securing the A-1 Revolving Line of Credit to 1,000,000 unissued Common LP Units and extended the maturity date to December 31, 2023. The A-1 Revolving Line of Credit has a fixed interest rate of 7.00% per annum. Outstanding amounts under the A-1 Revolving Line of Credit may be prepaid in whole or in part without penalty. On April 18, 2023, the A-1 Revolving Line of Credit was amended to increase the line of credit to $13.3 million and increased the number of Common LP Units of the Operating Partnership securing the A-1 Revolving Line of Credit to 1,330,000 unissued Common LP Units.  As of December 31, 2023, there was a $13.2 million balance outstanding on the A-1 Line of Credit. See Note 13 “Subsequent Events” of the notes to the consolidated financial statements included as part of this Annual Report on Form 10-K for a description of amendments to the A-1 Line of Credit subsequent to December 31, 2023.

Mortgage Debt

As of December 31, 2023, the Company had $180.2 million in outstanding mortgage debt secured by each of their nineteen hotel properties, with maturity dates ranging from March 2024 to April 2029. Sixteen of the loans have fixed interest rates ranging from 3.70% to 7.00%. One loan is a variable interest loan at a rate of LIBOR plus 6.0% per annum, provided that LIBOR shall not be less than 1.0%, resulting in an effective rate of 11.46% as of December 31, 2023. Another loan is a variable interest loan at a rate of LIBOR or an equivalent rate plus 6.25% per annum, provided that the variable rate shall not be less than 0.75%, resulting in an effective rate of 11.71% as of December 31, 2023. Another loan is a variable interest loan at a rate of the 30-day secured overnight financing rate or an equivalent rate plus 6.25%, provided that the variable rate shall not be less than 10.00%, resulting in an effective rate of 11.60% as of December 31, 2023. Another loan is a variable interest loan at a rate of the 30-day secured overnight financing rate or an equivalent rate plus 7.50%, provided that the variable rate shall not be less than 10.00%, resulting in an effective rate of 12.85% as of December 31, 2023.

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Collectively, the weighted-average interest rate is 6.24%. The loans generally require monthly payments of principal and interest on an amortized basis, with certain loans allowing for an interest-only period following origination, and generally require a balloon payment due at maturity. As of December 31, 2023 and December 31, 2022, certain mortgage debt was guaranteed by the members of the Advisor. See Note 9 “Related Party Transactions” of the notes to the consolidated financial statements included as part of this Annual Report on Form 10-K for additional information regarding debt that was guaranteed by members of the Advisor. As part of the consolidated outstanding mortgage debt above, the owner of the leasehold interest in the El Paso University Property is the borrower under a $14.4 million loan secured by the lease hold interest in the El Paso University Property, Corey Maple entered into a guaranty and environmental indemnity in connection with the loan.  The loan has a fixed interest rate of 4.94% per annum and matures on August 6, 2025.

Fort Collins Loan Refinancing

On April 18, 2023, pursuant to the Loan Agreement, dated as of April 18, 2023 (the “New Fort Collins Loan Agreement”), LF3 RIFC, LLC and LF3 RIFC TRS LLC (collectively, the “Fort Collins Borrower”), subsidiaries of the Operating Partnership entered into a new $11.2 million loan with Access Point Financial, LLC (“Access Point”), which is secured by the Fort Collins Property (the “New Fort Collins Loan”). Access Point is not affiliated with the Company or the Advisor. The New Fort Collins Loan is evidenced by a promissory note and has a variable interest rate per annum equal to 30-day secured overnight financing rate plus 6.25%. The New Fort Collins Loan matures May 4, 2025, with the option for up to three one-year extensions if requirements are met, including certain required debt service coverage ratios and the payment of an extension fee. The New Fort Collins Loan requires monthly interest-only payments through May 4, 2025, followed by monthly payments of principal and interest through any extensions, with the outstanding principal and interest due at maturity. The Fort Collins Borrower has the right to prepay up to 10% of the outstanding principal amount of the New Fort Collins Loan on certain permitted prepayment dates with a 10-day notice. If prepaid during the first 25 months of the initial term, such a prepayment would include a prepayment fee equal to the sum of 24 months of interest payments that, but for the prepayment, would have been due and payable on the prepaid principal amount had a prepayment not occurred. When the Fort Collins Borrower pays the entire remaining principal balance, whether prepaid or on maturity, the Fort Collins Borrower will incur an exit fee of $112,000. The New Fort Collins Loan includes cross-default provisions such that a default under certain other agreements of the Fort Collins Borrower, the Guarantors described below and the property manager of the Fort Collins Property constitute a default under the New Fort Collins Loan. The Fort Collins Borrower used the proceeds of the New Fort Collins Loan to repay the original $11.5 million loan with A-1 Bonds which was secured by the Fort Collins Property, pursuant to a Loan Agreement, dated as of August 3, 2022. The original loan was evidenced by three promissory notes in the amounts of $10,298,535 (“Tranche 1”), $700,000 (“Tranche 2”) and $501,465 (“Tranche 3”) and had a fixed interest rate of 7.0% per annum. On April 18, 2023, the proceeds of the New Fort Collins Loan were used to refinance the original loan, and the outstanding obligations under Tranche 1 were repaid in full and under Tranche 2 were forgiven. A 1.75% exit fee was paid on Tranche 1, and no penalty was incurred on Tranche 1 or Tranche 2. Tranche 3 remains an ongoing obligation, no longer secured by the Fort Collins Property, under the terms of the original loan and Tranche 3 promissory note. All guaranties in connection and collateral with respect to the original loan and Tranche 1, Tranche 2 and Tranche 3 promissory notes have been terminated or released, and all commitments with respect to the original loan and Tranche 1 and Tranche 2 promissory notes have been terminated or released.

Pursuant to the New Fort Collins Loan Agreement, Corey Maple and Norman Leslie entered into a Guaranty with Access Point to guarantee payment when due of the principal amount of indebtedness outstanding, including accrued interest and collection costs and expenses, and the performance of the agreements of the Fort Collins Borrower contained in the loan documents.

On May 2, 2023, pursuant to the Equipment Loan and Security Agreement, dated as of May 2, 2023 (the “Fort Collins CAPEX Agreement”), LF3 RIFC TRS, LLC (the “Fort Collins CAPEX Borrower”), a subsidiary of the Operating Partnership entered into a new $1.9 million loan with Access Point, which is secured by furnishings, fixtures and equipment at the Fort Collins Property, as defined within the Fort Collins CAPEX Agreement (the “Fort Collins CAPEX Loan”). The Fort Collins CAPEX Loan is evidenced by a promissory note and has a variable interest rate per annum equal to 30-day secured overnight financing rate plus 7.50%. The Fort Collins CAPEX Loan matures on the earlier of (a) May 4, 2030 or (b) the maturity date of the New Fort Collins Loan described above, as extended by the Fort Collins Borrower or as accelerated by lender pursuant to such loan’s terms. The Fort Collins CAPEX Loan requires interest-only payments through May 4, 2025, followed by monthly payments of principal and interest through any extension, with the outstanding

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principal and interest due at maturity. The Fort Collins CAPEX Borrower has the right to prepay the outstanding principal amount in full following the interest only period upon payment of a prepayment fee equal to 1.0% of the outstanding balance of the Fort Collins CAPEX Loan.

El Paso HI Loan Modification

LF3 El Paso, LLC and LF3 El Paso TRS LLC (collectively, the “El Paso HI Borrower”), subsidiaries of the Operating Partnership, entered into a $7.9 million loan (the “Holiday Inn El Paso Loan”) with EPH Development Fund LLC (“EPH”), secured by the El Paso HI Property, pursuant to a loan agreement, dated as of May 12, 2021. The Holiday Inn El Paso Loan had a maturity date of May 15, 2023.

On May 15, 2023, the El Paso HI Borrower, the Operating Partnership and Corey R. Maple entered into a first loan modification agreement with EPH, which extended the maturity date to May 15, 2024. As a condition to the extension, the El Paso HI Borrower agreed to pay down $300,000 of the Holiday Inn El Paso Loan, modifying the principal outstanding balance to be $7.6 million. In addition, as a condition to the extension, the El Paso HI Borrower agreed to deposit $819,674 into an FF&E Reserve account held by EPH.

As an additional condition to the extension, the Operating Partnership and HD Sunland Park Property LLC (the “El Paso HI Contributor”) agreed to amend the Amended and Restated Contribution Agreement, dated as of May 12, 2021, to allow the Operating Partnership to offer the El Paso HI Contributor of the El Paso HI Property an adjustment in the conversion of Series T Limited Units to Common Limited Units or other financial adjustments if the Operating Partnership determines that the El Paso HI Contributor’s extension of the determination of the Series T value to 48 months after issuance to the El Paso HI Contributor may result in actual or possible financial or other loss or litigation.

See Note 13 “Subsequent Events” of the notes to the consolidated financial statements included as part of this Annual Report on Form 10-K for a description of changes to mortgage debt occurring subsequent to December 31, 2023.

As of December 31, 2023, the Company was not in compliance with the required financial covenants under the terms of its promissory note secured by the Pineville Property and related loan documents (the “Pineville Loan”), which constitutes an event that puts the Company into a trigger period pursuant to the loan documents. On July 23, 2024, the Company sold the Pineville Property and no waiver of the financial covenants is needed. Except as described above, the Company was in compliance with all debt covenants as of December 31, 2023. See Note 13 “Subsequent Events” of the notes to the consolidated financial statements included as part of this Annual Report on Form 10-K for a description of the sale of the Pineville Property subsequent to December 31, 2023.

F-24

The following table sets forth the hotel properties securing each loan, the interest rate, maturity date, and the outstanding balance as of December 31, 2023 and 2022 for each of the Company’s mortgage debt obligations.

	Interest		Outstanding		Outstanding
	Rate as of		Balance as of		Balance as of
	December 31,	Maturity	December 31,		December 31,
	2023	Date	2023		2022
Holiday Inn Express - Cedar Rapids(1)	5.33%	9/1/2024	$	5,698,543	$	5,799,804
Hampton Inn & Suites - Pineville(2)	5.13%	6/6/2024		8,368,135		8,580,586
Hampton Inn - Eagan	4.60%	1/1/2025		8,839,737		9,063,528
Home2 Suites - Prattville(3)	4.13%	8/1/2024		8,984,688		9,199,041
Home2 Suites - Lubbock	4.69%	10/6/2026		7,103,138		7,343,948
Fairfield Inn & Suites - Lubbock	4.93%	4/6/2029		8,809,051		8,971,430
Homewood Suites - Southaven(4)	3.70%	3/3/2025		12,658,773		13,007,706
Courtyard by Marriott - Aurora(5)(6)	11.46%	2/5/2024(7)		15,000,000		15,000,000
Holiday Inn - El Paso(6)(8)	5.00%	5/15/2024(8)		7,600,000		7,900,000
Hilton Garden Inn - Houston(9)	3.85%	9/2/2026		13,852,705		13,947,217
Sheraton - Northbrook(6)(10)	11.71%	12/5/2024		4,026,202		3,766,639
Hampton Inn - Fargo(11)	4.00%	3/1/2027		7,095,283		7,275,480
Courtyard by Marriott - El Paso(12)(13)	6.01%	5/13/2027		9,975,072		9,990,000
Fairfield Inn & Suites - Lakewood(6)(14)	7.00%	3/28/2024		13,845,000		13,845,000
Residence Inn - Fort Collins(15)	11.60%	5/4/2025		11,200,000		—
Residence Inn - Fort Collins - CapEx(15)	12.85%	5/4/2025		1,875,000		—
Residence Inn - Fort Collins - A-1(15)(16)	7.00%	8/3/2028		501,465		11,500,000
Hilton Garden Inn - El Paso	4.94%	8/6/2025		12,341,759		12,613,869
Hilton Garden Inn - Pineville(17)	6.20%	8/25/2027		7,020,000		7,020,000
Hilton Garden Inn - Charlotte(17)	6.20%	8/25/2027		9,805,000		9,805,000
Holiday Inn Express - Wichita(12)	6.41%	12/21/2027		5,642,000		5,642,000
Total Mortgage Debt				180,241,551		180,271,248
Premium on assumed debt, net				203,135		221,082
Deferred financing costs, net				(2,574,861)		(3,193,939)
Net Mortgage				177,869,825		177,298,391
$5.0 million revolving line of credit - Western(18)	9.50%	4/15/2024(20)		4,651,139		5,000,000
$13.3 million revolving line of credit - A-1 Bonds(19)	7.00%	12/31/2023(19)		13,176,807		7,380,156
$0.6 million loan - NHS	7.00%	1/31/2024(21)		600,000		—
Total Lines of Credit				18,427,946		12,380,156
Debt, net			$	196,297,771	$	189,678,547

(1) Loan is interest-only through April 30, 2022 and is at a fixed rate of interest. The parties are working to finalize the extension documents as of the date of this filing.

(2) On July 23, 2024, the Hampton Inn & Suites Pineville was sold and the loan was repaid on the closing date. See Note 13 “Subsequent Events.”

(3) On November 4, 2024, this loan was repaid in full and refinanced with a new loan secured by the Prattville Property. See Note 13 “Subsequent Events”.

(4) On December 6, 2024, this loan was repaid in full and refinanced with a new loan secured by the Southaven Property. See Note 13 “Subsequent Events”.

F-25

(5) Variable interest rate equal to 30-day LIBOR plus 6.00%, provided that LIBOR shall not be less than 1.00%.

(6) Loan is interest-only until maturity.

(7) The Company has notified the lender of its intention to exercise the option under the loan agreement to extend the maturity date to February 5, 2025.

(8) On May 15, 2024, the maturity date was extended to November 15, 2024 and the interest rate was increased to 9.0%. See Note 13 “Subsequent Events.”

(9) Loan is interest-only for the first 24 months after origination.

(10) Variable interest rate equal to 30-day LIBOR or equivalent rate plus 6.25%, provided that LIBOR or equivalent rate shall not be less than 0.75%.

(11) Proceeds of this loan were used to repay in full the original loan secured by the Fargo Property entered into on January 24, 2022 with A-1 Bonds.

(12) Loan is interest-only for the first 18 months after origination.

(13) Proceeds of this loan were used to repay in full the original loan secured by the El Paso Airport Property entered into on February 14, 2022 with A-1 Bonds.

(14) On March 27, 2024, this loan was repaid in full and refinanced with two new loans secured by the Lakewood Property and unissued common limited partnership units of the Operating Partnership. See Note 13 “Subsequent Events.”

(15) On April 18, 2023, Tranche 1 and Tranche 2 were repaid in full and refinanced with a new loan secured by the Fort Collins Property.

(16) Tranche 3’s maturity date is August 2, 2028.

(17) Loan is interest-only through February 25, 2024.

(18) Variable interest rate equal to U.S. Prime plus 0.50%

(19) On March 27, 2024, this line of credit was increased to $15.5 million and the maturity date was extended to December 31, 2024. See Note 13 “Subsequent Events.”

(20) On May 10, 2024, the maturity date was extended to June 5, 2024. The Company and Western State Bank are working to finalize an extension of this line of credit as of the date of this filing. See Note 13 “Subsequent Events.”

(21) On August 21, 2024, the maturity date was extended to September 30, 2025. See Note 13 “Subsequent Events.”

Future Minimum Payments

As of December 31, 2023, the future minimum principal payments on the Company’s debt were as follows:

2024	$	69,392,481
2025		62,574,437
2026		20,686,104
2027		37,441,359
2028		708,616
Thereafter		7,866,500
		198,669,497
Premium on assumed debt, net		203,135
Deferred financing costs, net		(2,574,861)
	$	196,297,771

The $69.4 million of future minimum principal payments due in 2024 includes the maturities of the mortgage debt secured individually by the Lakewood Property, El Paso Property, Pineville Property, Prattville Property and Northbrook Property, as well as the maturities of the Western Line of Credit, the A-1 Bonds Line of Credit and the NHS Line of Credit. See Note 13 “Subsequent Events” of the notes to the consolidated financial statements included as part of this Annual Report on Form 10-K for a description of changes to mortgage debt occurring subsequent to December 31, 2023.

F-26

7.  FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company’s financial instruments as of December 31, 2023 and 2022 consisted of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, lines of credit, and mortgage debt. With the exception of the Company’s mortgage debt, the carrying amounts of the financial instruments presented in the consolidated financial statements approximate their fair value as of December 31, 2023 and 2022. The fair value of the Company’s mortgage debt was estimated by discounting each loan’s future cash flows over the remaining term of the mortgage using an estimate of current borrowing rates for debt instruments with similar terms and maturities, which are Level 3 inputs in the fair value hierarchy. As of December 31, 2023, the estimated fair value of the Company’s mortgage debt was $178.5 million, compared to the gross carrying value $180.2 million. As of December 31, 2022, the estimated fair value of the Company’s mortgage debt was $175.8 million, compared to the gross carrying value $180.3 million.

8.  INCOME TAXES

The Company’s earnings (losses), other than those generated by the Company’s TRS, are not generally subject to federal corporate and state income taxes due to the Company’s REIT election. The Company did not pay any federal and state income taxes for the periods ended December 31, 2023 and 2022. The Company did not have any uncertain tax positions as of December 31, 2023 and 2022, respectively. For the years ended December 31, 2023 and 2022, all distributions paid were determined to be 100% returns of capital contributions.

The Company’s TRS generated a net operating loss (“NOL”) for the year ended December 31, 2023 and the year ended December 31, 2022, which can be carried forward to offset future taxable income. As of December 31, 2023, the Company has recognized a full valuation allowance against its deferred tax assets of $8.7 million, resulting in a net deferred tax liability of $3.0 million. As of December 31, 2022, the Company had recorded a net deferred tax liability of $3.3 million, primarily attributable to its NOLs generated in the current year and prior periods, net of temporary differences primarily related to deprecation. The net deferred tax liability is recognized on the consolidated balance sheet within Other Liabilities. The Company’s NOLs will expire in 2038-2042 for state tax purposes and will not expire for federal tax purposes. As of December 31, 2023 and 2022, the Company had deferred tax assets attributable to NOL carryforwards for federal income tax purposes of $7.1 million and $6.3 million, respectively, and NOL carryforwards for state income tax purposes of $1.6 million and $1.0 million, respectively. The Company recorded a valuation allowance of $1.4 million and $7.3 million against the deferred tax asset in 2023 and 2022, respectively. As of December 31, 2023, the tax years 2019 through 2022 remain subject to examination by the U.S. Internal Revenue Service (“IRS”) and various state tax jurisdictions.

The CARES Act contains numerous income tax provisions, such as temporarily relaxing limitations on the deductibility of interest expense, accelerating depreciable lives of certain qualified building improvements, and allowing for NOL’s arising in tax years beginning after December 31, 2017 and before January 1, 2021 to be carried back to each of the preceding 5-year periods. In addition, for tax years beginning prior to 2021, the CARES Act removed the 80% absorption limitation previously enacted under the Tax Cuts and Jobs Act of 2017. The income tax aspects of the CARES Act are not expected to have a material impact on the Company’s financial statements.

The components of the Company’s income tax (expense) benefit are as follows:

	For the Years Ended December 31,
	2023		2022
Federal:
Deferred	$	402,080	$	(5,047,228)
State:
Current		—		(89,346)
Deferred		(147,736)		(708,441)
Income tax (expense)/benefit	$	254,344	$	(5,845,015)

F-27

The provision for income taxes is derived from the income tax expense that is determined by applying the applicable U.S. statutory federal income tax rate to pretax income as a result of the following differences:

	For the Years Ended December 31,
	2023		%	2022		%
Expected income tax benefit at U.S. Federal statutory rate	$	1,247,366	-21.0%	$	2,743,594	-21.0%
Tax impact of REIT election		-	0.0%		(614,966)	4.7%
Expected tax benefit at TRS		1,247,366	-21.0%		2,128,628	-16.3%
Valuation Allowance		(1,009,839)			(7,314,530)
Gross tax (expense)/benefit		237,527			(5,185,902)
State income tax expense, net		42,874	-0.7%		(89,346)	0.7%
Temporary differences - deprecation		-	0.0%		(569,767)	4.4%
Permanent differences		(26,057)	0.4%		-	0.0%
Income tax (expense)/benefit	$	254,344	-4.3%	$	(5,845,015)	44.7%

As of December 31, 2023 and 2022, the Company’s deferred tax assets and liabilities consisted of the following:

	December 31,
	2023		2022
Deferred Tax Assets:
Net operating loss carryforwards - Federal	$	7,089,135	$	6,265,111
Net operating loss carryforwards - State		1,598,579		1,049,419
Valuation Allowance		(8,687,714)		(7,314,530)
		-		-
Deferred Tax Liabilities:
Tax FF&E basis less than book basis - Federal		(2,462,213)		(2,864,293)
Tax FF&E basis less than book basis - State		(555,222)		(426,608)
		(3,017,435)		(3,290,901)
Deferred tax (liabilities)/assets, net	$	(3,017,435)	$	(3,290,901)

9.  RELATED PARTY TRANSACTIONS

Legendary Capital REIT III, LLC—Substantially all of the Company’s business is managed by the Advisor and its affiliates, pursuant to the Advisory Agreement. The Advisor is owned by Corey R. Maple and Norman H. Leslie. The Company has no direct employees. The employees of Legendary Capital, LLC (the “Sponsor”), an affiliate of the Advisor, provide services to the Company related to the negotiations of property acquisitions and financing, asset management, accounting, legal, investor relations, and all other administrative services. The Company reimburses the Advisor and its affiliates, at cost, for certain expenses incurred on behalf of the Company, as described in more detail below. The Advisory Agreement has a term of 10 years, ending in December 2028.

The Advisor earns a one-time acquisition fee of up to 1.4% of the hotel purchase price including funds allocated for any PIP at the time of each hotel property acquisition, a financing fee of up to 1.4% of the hotel purchase price including funds allocated for any PIP at the time of closing the initial financing, and an annual asset management fee of up to 0.75% of the gross assets of the Company, which is payable on a monthly basis. The Advisor will also be paid a refinancing fee of up to 0.75% of the principal amount of any refinancing at the time of closing the refinancing. The Advisor will also be paid  a disposition fee equal to between 0.0% and 4.0% of the hotel sales price, payable at the closing of the disposition, which disposition fee in connection with a sale of all or substantially all of the Company’s assets, merger or similar transaction, shall be equal to between 0.0% and 4.0% of the gross consideration received (grossed up for liabilities of the Company), with the percentage dependent on the total return per share and timing of such transaction, payable at the closing of such sale, merger or transaction. The Advisor may also be paid real estate commissions of up to 3.0% of the hotel purchase

F-28

price in connection with the sale of a hotel property in which the Advisor or its affiliates provided substantial services, but in no event greater than one-half of the total commissions paid with respect to such property if a commission is paid to a third-party as well as the Advisor, and in no event will total commissions exceed 5.0% of the hotel sales price. Certain affiliates of the Advisor may receive an annual guarantee fee equal to 1.0% of the guaranty amount, paid on a monthly basis, for debt obligations of the hotel properties personally guaranteed by such affiliates. The Advisor may earn an annual subordinated performance fee equal to 20% of the distributions after the common stockholders and Operating Partnership limited partners (other than the Series B Limited Partnership Unit (“Series B LP Unit”) holders) have received a 6% cumulative, but not compounded, return per annum.

Per the terms of the Operating Partnership’s operating agreement, the Advisor receives distributions from the Operating Partnership in connection with their ownership of non-voting Series B LP Units. The Advisor’s ownership of Series B LP Units is presented as non-controlling interest on the accompanying consolidated financial statements. In years other than the year of liquidation, after the Company’s common stockholders have received a 6% cumulative but not compounded return on their original capital contributions, the Advisor receives distributions equal to 5% of the total distributions made. In the year of liquidation, termination, merger or other cessation of the general partner, or the liquidation of the Operating Partnership, holders of the Series B LP Units shall be distributed an amount equal to 5% of the limited partners’ capital contributions after the common stockholders and the limited partners have received a return of their original capital contributions plus a 6% cumulative but not compounded return. In the year of liquidation, termination, merger or other cessation of the general partner, or the liquidation of the Operating Partnership holders of the Series B LP Units shall also be distributed an amount equal to 20% of the net proceeds from the sale of the properties, after the common stockholders and the limited partners have received a return of their original capital contributions plus a 6% cumulative but not compounded return from all distributions.

The Advisor and its affiliates may be reimbursed by the Company for certain organization and offering expenses in connection with the Company’s securities offerings, including legal, printing, marketing and other offering-related costs and expenses. Following the termination of the Offering, the Advisor will reimburse the Company for any such amounts incurred by the Company in excess of 15% of the gross proceeds of the Offering. In addition, the Company may pay directly or reimburse the Advisor and its affiliates for certain costs incurred in connection with its provision of services to the Company, including certain acquisition costs, financing costs, and sales and marketing costs as well as an allocable share of general and administrative overhead costs. All reimbursements are paid to the Advisor and its affiliates at cost.

Fees and reimbursements earned and payable to the Advisor and its affiliates, for the years ended December 31, 2023 and 2022, were as follows:

	Incurred
	For the Years Ended December 31,
	2023		2022
Fees:
Acquisition fees	$	—	$	1,626,599
Financing fees		84,000		1,861,628
Asset management fees		2,488,100		1,918,321
Performance fees		195,874		181,541
	$	2,767,974	$	5,588,089
Reimbursements:
Offering costs	$	1,935,023	$	2,256,081
General and administrative		3,258,648		3,640,108
Sales and marketing		144,421		321,821
Acquisition costs		185,115		67,051
	$	5,523,207	$	6,285,061

For the years ended December 31, 2023 and 2022, the Operating Partnership recognized distributions payable to the Advisor in the amount of $360,821 and $334,417 respectively, in connection with the Advisor’s ownership of Series B LP Units. For the years ended December 31, 2023 and 2022, the Company paid distributions in the amount of $40,123 and

F-29

$40,123 respectively, to Corey Maple and Norman Leslie in connection with their ownership of 57,319 shares each, of the Company’s common stock. For the years ended December 31, 2023 and 2022, the Company paid Corey Maple distributions in an amount of $4,352 and $1,994, respectively, in connection with his ownership of 15,361 Series GO LP Units.

The members of the Advisor personally guaranty certain loans of the Company and may receive a guarantee fee of up to 1.0% per annum of the guaranty amount. As of December 31, 2023, Corey Maple, is a guarantor of the Company’s loans secured by the hotel properties located in Prattville, Alabama, Southaven, Mississippi and Fargo, North Dakota, which had original loan amounts of $9.6 million, $13.5 million and $7.4 million respectively, is a guarantor of 50% of the loan secured by the Houston Property, which had an original loan amount of $13.9 million, is a guarantor of the Company’s line of credit in the original amount of $5.0 million which is secured by the hotel properties located in Cedar Rapids, Iowa, Eagan, Minnesota, and Fargo, North Dakota, and 300,000 Common LP Units of Lodging Fund REIT III OP, LP, and is a guarantor of the Company’s loans secured by the El Paso University Property located in El Paso, Texas, and is a guarantor of 50% of the loan secured by the hotel property in Wichita, Kansas, which had original loan amounts of $14.4 million and $5.6 million respectively. Norman Leslie is a guarantor of the Company’s loan secured by the Company’s hotel property in Pineville, North Carolina, which had an original loan amount of $9.3 million. For the years ended December 31, 2023 and 2022, the Company accrued guarantee fees in the amount of $151,765 and $155,676 respectively to each Mr. Maple and Mr. Leslie. The total amount accrued of $1.2 million remained unpaid at December 31, 2023 and is included in Due to Related Party on the accompanying consolidated balance sheet. See Note 13, “Subsequent Events,” for a  description of additional guarantees entered into subsequent to December 31, 2023.

As of December 31, 2023 and 2022, the Company had amounts due and payable to the Advisor and its affiliates of $10.6 million and $5.6 million respectively, which is included in due to related parties on the accompanying consolidated balance sheets.

NHS, LLC dba National Hospitality Services—NHS is wholly-owned by Norman Leslie, a director and executive officer of the Company and a principal of the Advisor. NHS provides property management and hotel operations management services for the Company’s hotel properties, pursuant to individual management agreements. The agreements have an initial term expiring on December 31 of the fifth full calendar year following the effective date of the agreement, which automatically renews for a period of five years on each successive five-year period, unless terminated in accordance with its terms.

NHS earns a monthly base management fee for property management services, including overseeing the day-to-day operations of the hotel properties, equal to up to 4% of gross revenue. NHS may also earn an accounting fee of $14.00 per room for accounting services, payable monthly, and an administrative fee equal to 0.60% of gross revenues for administrative and other services. The Company reimburses NHS for certain costs of operating the properties incurred on behalf of the Company. All reimbursements are paid to NHS at cost.

NHS also earns a flat fee of $5,000 per hotel property for due diligence services, including analyzing, evaluating, and reporting on documentation and information received by sellers or contributors during the period of due diligence. Such fee is waived if, upon acquisition by us, NHS is selected as the management company for the hotel property. NHS is also reimbursed for actual out-of-pocket costs incurred in providing the due diligence services.

On March 6, 2023, the Company entered into a $600,000 loan agreement (the “NHS Loan”) with NHS. The NHS Loan requires the payment of monthly interest beginning on April 6, 2023, with all outstanding principal and interest amounts being due and payable at maturity on July 6, 2023. On December 28, 2023, the Company entered into a Change in Terms Agreement with the Operating Partnership and NHS in connection with the NHS Loan to extend the maturity date of the NHS Loan to January 31, 2024. This amendment also provided that in lieu of monthly interest payments, all accrued interest shall be due and payable on the maturity date with the full principal balance. The NHS Loan has a fixed interest rate of 7.0% per annum. Outstanding amounts under the NHS Loan may be prepaid in whole or in part without penalty. The NHS Loan is secured by 60,000 partnership units of the Operating Partnership.

As of December 31, 2023, there was a $600,000 balance outstanding on the NHS Loan. See Note 13 “Subsequent Events” for an additional transaction with NHS occurring subsequent to December 31, 2023.

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Fees and reimbursements earned and payable to, NHS for the years ended December 31, 2023 and 2022, were as follows:

	Incurred				Payable as of
	For the Years Ended December 31,				December 31,		December 31,
	2023		2022		2023		2022
Fees:
Management fees	$	1,073,723	$	1,071,385	$	186,298	$	145,733
Administrative fees		119,613		184,101		20,962		22,791
Accounting fees		159,896		195,096		32,220		31,164
	$	1,353,232	$	1,450,582	$	239,480	$	199,688
Reimbursements	$	810,723	$	1,273,180	$	216,595	$	143,009

One Rep Construction, LLC (“One Rep”)—One Rep is a related party through common management and ownership, as Corey Maple, Norman Leslie, and David Ekman, each hold a 33.33% ownership interest in One Rep. One Rep is a construction management company which provided construction management services to the Company during 2023 and 2022 related to the renovation construction activities at certain hotel properties. For the services provided, One Rep is paid a construction management fee equal to 6% or 7% of the total project costs. The Company reimburses One Rep for certain costs incurred on behalf of the Company, and all reimbursements are paid to One Rep at cost. For the years ended December 31, 2023 and 2022, the Company incurred $191,803 and $258,037 of construction management fees and reimbursements payable to One Rep, respectively. As of December 31, 2023 and 2022, the amounts outstanding and due to One Rep were $34,856 and $33,947 respectively, which is included in due to related parties on the accompanying consolidated balance sheets.

Legendary A-1 Bonds, LLC (“A-1 Bonds”) – A-1 Bonds is an affiliate of the Advisor which is owned by Mr. Leslie a director and executive officer of the Company and principal of the Advisor and Mr. Maple a director of the Company and principal of the Advisor. During the year ended December 31, 2023, A-1 Bonds made no new loans to subsidiaries of the Company. During the year ended December 31, 2022, A-1 Bonds made loans with an aggregate principal amount of $42.5 million to subsidiaries of the Company secured by 4 hotel properties, of which $28.2 million was subsequently paid off prior to the date of this filing. On August 9, 2022, the Company entered into a $5.0 million revolving line of credit with A-1 Bonds, LLC (the “A-1 Revolving Line of Credit”). The A-1 Revolving Line of Credit requires monthly payments of interest only beginning September 1, 2022, with all outstanding principal and interest amounts being due and payable at maturity on December 31, 2022. On January 12, 2023, the A-1 Revolving Line of Credit was amended to increase the line of credit to $10.0 million, increased the number of Common LP Units of the Operating Partnership securing the A-1 Revolving Line of Credit to 1,000,000 unissued Common LP Units and extended the maturity date to December 31, 2023. On April 18, 2023, the A-1 Revolving Line of Credit was amended to increase the line of credit to $13.3 million and increased the number of Common LP Units of the Operating Partnership securing the A-1 Revolving Line of Credit to 1,330,000 unissued Common LP Units. The A-1 Revolving Line of Credit has a fixed interest rate of 7.00% per annum. Outstanding amounts under the A-1 Revolving Line of Credit may be prepaid in whole or in part without penalty. As of December 31, 2023, there was a $13.2 million balance outstanding on the A-1 Revolving Line of Credit. See Note 4, “Debt- Lines of Credit & Loans”. See Note 13 “Subsequent Events” for additional loans made by A-1 Bonds and amendments to existing loans made by A-1 Bonds occurring subsequent to December 31, 2023.

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10.  FRANCHISE AGREEMENTS

As of December 31, 2023 and 2022, all of the Company’s hotel properties were operated under franchise agreements with initial terms of 10 to 18 years. Franchise agreements allow the hotel properties to operate under the respective brands. Pursuant to the franchise agreements, the Company pays a royalty fee of 5% to 6% of room revenue, plus additional fees for marketing, central reservation systems and other franchisor costs. Certain hotels are also charged a program fee of generally between 3% and 4% of room revenue. The Company paid an initial fee of $50,000 to $175,000 at the time of entering into each franchise agreement which is being amortized over the term of each agreement.

11.  STOCKHOLDERS’ EQUITY

The Company is authorized to issue 900,000,000 shares of common stock and 100,000,000 shares of preferred stock. Each share of common stock entitles the holder to one vote per share on all matters upon which stockholders are entitled to vote and to receive distributions as authorized by the Company’s board of directors. The Interval Common Stock described below do not have voting rights. The rights of the holders of shares of preferred stock may be defined at such time any series of preferred shares are issued.

Common Stock

Initial Offering

On June 1, 2018, the Company commenced a private offering of shares of common stock, $0.01 par value per share, at a price of $10.00 per share, with a maximum offering of $100,000,000, which was increased to $150,000,000 in December 2021, to accredited investors only pursuant to a confidential private placement memorandum exempt from registration under the Securities Act of 1933, as amended.

Dividend Reinvestment Plan

The Company has adopted a dividend reinvestment plan (“DRIP”), which permits stockholders to reinvest their distributions back into the Company, purchasing shares of common stock at 95% of the then-current share net asset value (“NAV”).

Distributions

Distributions are determined by the board of directors based on the Company’s financial condition and other relevant factors.

			Distribution								Net Cash
	Distributions		Declared Per		Distributions Paid (3)						Flows Provided By
Period	Declared (1)		Share (1) (2)		Cash		Reinvested		Total		(Used In) Operations
First Quarter 2023	$	1,779,846	$	0.175	$	1,424,802	$	395,820	$	1,820,622	$	264,655
Second Quarter 2023		1,794,077		0.175		1,317,166		384,772		1,701,938		3,484,371
Third Quarter 2023		1,816,105		0.175		1,344,743		381,033		1,725,776		2,285,665
Fourth Quarter 2023		1,826,402		0.175		1,433,319		335,912		1,769,231		(2,980,745)
	$	7,216,430	$	0.700	$	5,520,030	$	1,497,537	$	7,017,567	$	3,053,946
			Distribution								Net Cash
	Distributions		Declared Per		Distributions Paid (3)						Flows Provided By
Period	Declared (1)		Share (1) (2)		Cash		Reinvested		Total		(Used In) Operations
First Quarter 2022	$	1,556,308	$	0.175	$	933,464	$	567,240	$	1,500,704	$	(3,293,181)
Second Quarter 2022		1,540,200		0.175		1,203,791		526,159		1,729,950		20,841
Third Quarter 2022		1,821,829		0.175		1,094,353		452,923		1,547,276		2,268,982
Fourth Quarter 2022		1,762,398		0.175		1,234,969		433,293		1,668,262		(326,742)
	$	6,680,735	$	0.700	$	4,466,577	$	1,979,615	$	6,446,192	$	(1,330,100)

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(1) Distributions for the period from January 1, 2022 through December 31, 2023 were payable to each stockholder as 100% in cash on a monthly basis.

(2) Assumes each share was issued and outstanding each day that was a record date for distributions during the period presented.

(3) Distributions for the period from January 1, 2022 through December 31, 2023 were paid on a monthly basis. Distributions for all record dates of a given month during such period were paid during the following month, except for the distributions declared for December 2023 which were paid in March 2024.

Share Repurchase Plan

The board of directors has adopted a share repurchase plan that may enable its stockholders to have their shares repurchased in limited circumstances. In its sole discretion, the board of directors could choose to terminate or suspend the plan or to amend its provisions without stockholder approval. The repurchase plan may be reviewed and modified by the board of directors as it deems necessary in its sole discretion. The price at which the Company will repurchase shares is dependent on the amount of time the holder has owned the shares, and the then current value of the shares. There are several limitations on the Company’s ability to repurchase shares under the share repurchase plan, including, but not limited to, a limitation that during any calendar year, the maximum number of shares potentially eligible for repurchase can only be the number of shares that the Company could purchase with the amount of net proceeds from the sale of shares under the Company’s dividend reinvestment plan during the prior calendar year. The board of directors may, in its sole discretion, reject any request for repurchase and may, at any time and without stockholder approval, upon 10 business days’ written notice to the stockholders (i) amend, suspend or terminate its share repurchase plan and (ii) increase or decrease the funding available for the repurchase of shares pursuant to our share repurchase plan. The Company repurchased no shares during the year ended December 31, 2023. The Company repurchased 135,248 shares pursuant to repurchase requests received during the year ended December 31, 2022, which represented an original investment of $1,352,472 for $1,347,319. As of December 31, 2023, all redemption proceeds had been paid. As of December 31, 2023, the Company had $1,931,014 available for eligible repurchases in all of 2023.

Update to Offering Price and Share NAV

The Company’s board of directors approved a revised NAV of the Company’s assets as of December 31, 2022. As a result, the price per share of the Company’s common stock, $0.01 par value per share (each, a “Share”), in the Offering and the Share NAV were adjusted from $10.00 to $10.57 effective January 6, 2023. The issue price of the Common LP Unit and the Series T LP Unit of the Operating Partnership also increased to $10.57. The Offering price was determined by the board of directors taking into account appraisals of the Company’s real estate properties and other factors deemed relevant by the board of directors. The board of directors has not determined the NAV of the Company’s assets since December 31, 2022. As a result, the current Share NAV and Offering price per Share may not reflect an accurate estimation of the Company’s enterprise value. The Company makes no representations, whether express or implied, as to the value of the Shares offered in the Offering. In the event the Offering price per Share is increased or decreased, the number of Shares subject to the Offering will be adjusted to reflect such change and the maximum offering amount will remain unchanged.

Interval Common Stock

Distributions

Holders of shares of Interval Common Stock will be entitled to receive, when and as authorized by the board of directors of the Company and declared by the Company, distributions at a rate equal to 86% of the distribution rate for the Company’s common stock as authorized by the board of directors and declared by the Company. Distributions on the Interval Shares may be paid in cash, capital stock of the Company or a combination of cash and capital stock of the Company as determined by the board of directors and will be paid at such times as distributions are paid to the holders of common stock.

Repurchase Plan

The board of directors has adopted a repurchase plan for the Interval Common Stock (the “Repurchase Plan”). The Repurchase Plan is generally available to holders of Interval Common Stock who have held their shares of Interval Common Stock (“Interval Shares”) for at least one year. The Repurchase Plan provides that so long as the Repurchase Reserve (defined below) exists, the Company will repurchase up to the lesser of (i) 5% of the aggregate value of the Interval Shares (“Interval Shares Value”) on the last day of the same calendar quarter of the preceding year and (ii) 5% of

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the Interval Shares Value on the last day of the preceding calendar quarter. After the Repurchase Reserve has been exhausted, the Company will limit repurchases of Interval Shares to repurchases that can be made with the net proceeds from the dividend reinvestment plan for the Interval Shares received in the prior calendar year up to the lesser of (i) 1.25% per calendar quarter and (ii) 5% per calendar year of the Interval Shares Value. The limitations described in this paragraph are referred to as the “Repurchase Limitations.”

The Company will establish a reserve (the “Repurchase Reserve”) of liquid assets in an amount equal to 20% of the aggregate gross proceeds from the Company’s private offering of Interval Shares, which will be comprised of cash and cash-like instruments, government securities, publicly traded REIT shares and other publicly traded securities (the “Reserve Assets”), but which is expected to primarily include publicly traded REIT shares. The Repurchase Reserve will be used solely to repurchase the Interval Shares. The board of directors may, but has no obligation to, increase the amount of the Repurchase Reserve at any time. The Company will have no obligation to restore any amounts resulting from a decline in value of the Reserve Assets. After the Repurchase Reserve has been exhausted, subject to the Repurchase Limitations, the Company will use only the net proceeds from the dividend reinvestment plan received in the prior calendar year to repurchase the Interval Shares. Subject to the Repurchase Limitations, on the applicable repurchase date, the Company will repurchase the Interval Shares timely submitted for repurchase for a price equal to the NAV per share of the Company’s common stock on such repurchase date as determined by the board of directors.

The board of directors may, upon 10 days’ written notice to the holders of Interval Shares, amend, suspend or terminate the Repurchase Plan at any time, and such amendment, suspension or termination may be implemented immediately. Notwithstanding the foregoing, the Repurchase Plan may not be terminated prior to the date the Repurchase Reserve is exhausted.

Interval Share Offering

The Company was offering up to 3,000,000 shares of Interval Common Stock in the Company’s ongoing private offering, which amount may be increased to up to 6,000,000 Interval Shares in the sole discretion of the board of directors. Except as otherwise provided in the offering memorandum, the initial purchase price for the Interval Shares is $10.00 per Interval Share, with Interval Shares purchased in the Company’s dividend reinvestment plan at an initial price of $9.50 per Interval Share. The Company’s board of directors allowed the Interval Share Offering to expire on March 31, 2022. The Company did not issue or sell any shares of Interval Common Stock.

Non-Controlling Interests

As of December 31, 2023, the Operating Partnership had five classes of Limited Partner Units which included the Common LP Units, the Series B LP Units, the Series T LP Units, the Series GO LP Units and the Series GO II LP Units. The Series B LP Units are issued to the Advisor and entitle the Advisor to receive annual distributions and an incentive distribution based on the net proceeds received from the sale of the Projects (as defined below).

Non-Controlling Interest – Series T LP Units

The Series T LP Units are expected to be issued to persons who contribute their property interests in certain Projects to the Partnership in exchange for Series T LP Units. The Series T LP Units will have allocations and distributions as determined by the General Partner in its sole discretion at the time of issuance of the Series T LP Units, and any future distributions are dependent on the financial performance of the contributed real estate based on a mathematical formula. The Series T LP Units are eligible for conversion into Common LP Units beginning 24 or 36 months, or longer in some instances, after their issuance and will automatically convert into Common LP Units upon other events. There is no guarantee that the future financial performance of the contributed hotel property will be sufficient to result in the issuance of Common LP Units resulting from the application of the conversion formula applicable to the issuance of the Series T LP Units at the time of conversion. As of December 31, 2023, the Company had recorded an aggregate value of $45.7 million to the Series T LP Units in connection with such property contributions. During the year ended December 31, 2023, the Company declared distributions of $0.2 million.

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Non-Controlling Interest – Series GO LP Units

Distributions

The holders of Series GO LP Units will not receive any distributions from the Operating Partnership until after they have held their Series GO LP Units for a period of 18 months. Thereafter, the Series GO Limited Partners will receive the same distributions payable to the holders of the Common LP Units and GP Units (together with the Series GO LP Units and Interval Units, the “Participating Partnership Units”), other than with respect to proceeds received upon the sale or exchange of a property which are not reinvested in additional properties.

Upon the sale of all or substantially all of the GP Units held by LF REIT III or any sale, exchange or merger of LF REIT III or the Operating Partnership (each, a “Termination Event”), or with respect to proceeds received upon the sale or exchange of a property which are not reinvested in additional properties, distributions will be made between the Series GO LP Units and the other Participating Partnership Units as follows: (i) first, to the Participating Partnership Units in proportion to their Partnership Units until the GP Units (the Common LP Units and the Interval Units) have received 70% of their original capital contributions (determined on a grossed-up basis) reduced by any prior distributions received in connection with the sale of a property in which the sale proceeds are not reinvested in additional properties; (ii) second, to the Participating Partnership Units in proportion to their Partnership Units until each Participating Partnership Unit has received a Participating Amount ($1.00 for any period after December 31, 2020, $2.00 for any period after December 31, 2021 and $3.00 for any period after December 31, 2022, determined as a singular determination and not a cumulative determination); (iii) third, to the Participating Partnership Units (other than the Series GO LP Units) in proportion to their Partnership Units until the GP Units have received any remaining unreturned original capital contributions; (iv) fourth, to the Series GO Limited Partners in proportion to their Series GO LP Units until the amount distributed to the Series GO Limited Partners per Series GO LP Unit is equal to the amount distributed to the Participating Partnership Units per Participating Partnership Unit (other than the Series GO Limited Partners) pursuant to (iii); and (v) thereafter, to the Participating Partnership Units in proportion to their Participating Partnership Units.

GO Unit Offering

On June 15, 2020, the Operating Partnership commenced a private offering of limited partnership units in the OP, designated as Series GO LP Units, with a maximum offering of $20,000,000, which could be increased to $30,000,000 in the sole discretion of LF REIT III as the General Partner of the Operating Partnership (the “GO Unit Offering”) to accredited investors only, pursuant to a confidential private placement memorandum exempt from registration under the Securities Act of 1933, as amended. The Series GO LP Units were being offered until the earlier of (i) the sale of $20,000,000 in Series GO LP Units (which could be increased to $30,000,000 in the Company’s sole discretion), (ii) June 14, 2022 or (iii) the Operating Partnership terminates the GO Unit Offering at an earlier date in its sole discretion. The Company’s board of directors terminated the GO Unit Offering as of February 14, 2022. The Company’s board of directors approved and ratified additional sales after February 14, 2022 in the GO Units Offering for sales which were pending as of that date. As of December 31, 2023, the Operating Partnership had issued and sold 3,124,503 Series GO LP Units and received aggregate proceeds of $21.5 million.

Non-Controlling Interest – Series B LP Units

Distributions

Under the Operating Partnership Agreement, the Advisor, as the Series B Limited Partner, will receive, from the Operating Partnership, distributions as follows: (a) for all years, an amount equal to 5.0% of the total of (i) the total distributions made to the Partners (other than the Series B Limited Partner) and (ii) the total distributions made to the Series B Limited Partner, after the Partners (other than the Series B Limited Partner) have received a 6.0% cumulative, but not compounded, return on their original capital contributions, and (b) for the year of liquidation or other cessation of the General Partner or the Partnership, an amount equal to 5.0% of the original capital contributions made by the Partners, after the Partners (other than the Series B Limited Partner) have received a return of their capital contributions plus a six percent (6%) cumulative, but not compounded return from all distributions.

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Series B LP Unit Offering

As of December 31, 2023, the Operating Partnership has issued 1,000 Series B LP Units to the Advisor.

Non-Controlling Interest – Common LP Units

On December 3, 2021, the Operating Partnership commenced a private placement offering of its Common LP Units. As of December 31, 2023, the Operating Partnership had issued and sold 612,100 Common LP Units, with a value of $10.00 per unit at the time of issuance, in connection with the Northbrook Property acquisition and El Paso Airport Property acquisition.

Non-Controlling Interest – Series GO II LP Units

Distributions

The holders of Series GO II LP Units will not receive any distributions from the Operating Partnership until after they have held their Series GO II LP Units for a period of 18 months. Thereafter, the Series GO II Limited Partners will receive the same distributions payable to the holders of the Common LP Units, the Series GO LP Units and GP Units (together with the Series GO II LP Units and Interval Units, the “Participating Partnership Units”), other than with respect to proceeds received upon the sale or exchange of a property which are not reinvested in additional properties provided, however, that upon any event in which capital is distributed to the Participating Partnership Units, the Series GO II LP Units will only be distributed an amount equal to their positive Capital Account balances. Once the Series GO II LP Units have received income allocations of Net Income (including book-up income) such that their Capital Accounts are equal to the other Participating Partnership Units, distributions will be made in proportion to their Units.

Upon the sale of all or substantially all of the GP Units held by LF REIT III or any sale, exchange or merger of LF REIT III or the Operating Partnership (each, a “Termination Event”), or with respect to proceeds received upon the sale or exchange of a property which are not reinvested in additional properties, distributions will be made between the Series GO LP Units and the other Participating Partnership Units (including the Series GO II LP Units) as follows: (i) first, to the Participating Partnership Units in proportion to their Partnership Units until the GP Units (the Common LP Units and the Interval Units) have received 70% of their original capital contributions (determined on a grossed-up basis) reduced by any prior distributions received in connection with the sale of a property in which the sale proceeds are not reinvested in additional properties; (ii) second, to the Participating Partnership Units in proportion to their Partnership Units until each Participating Partnership Unit has received a Participating Amount ($1.00 for any period after December 31, 2020, $2.00 for any period after December 31, 2021 and $3.00 for any period after December 31, 2022, determined as a singular determination and not a cumulative determination); (iii) third, to the Participating Partnership Units (other than the Series GO LP Units) in proportion to their Partnership Units until the GP Units have received any remaining unreturned original capital contributions; (iv) fourth, to the Series GO Limited Partners in proportion to their Series GO LP Units until the amount distributed to the Series GO Limited Partners per Series GO LP Unit is equal to the amount distributed to the Participating Partnership Units per Participating Partnership Unit (other than the Series GO Limited Partners) pursuant to (iii); and (v) thereafter, to the Participating Partnership Units in proportion to their Participating Partnership Units.

GO II Unit Offering

On April 7, 2023, the Operating Partnership commenced a private offering of limited partnership units in the OP, designated as Series GO II LP Units, with a maximum offering of $30,000,000, which could be increased to $60,000,000 in the sole discretion of LF REIT III as the General Partner of the Operating Partnership, (the “GO II Unit Offering”) to accredited investors only, pursuant to a confidential private placement memorandum exempt from registration under the Securities Act of 1933, as amended. The purchase price of the Series GO II LP Units in the offering is equal to 75% of the Share NAV and, based on the current Share NAV, is $7.93 per Series GO II LP Unit. The Series GO II LP Units will be specially allocated all Net Income (including book up income) in proportion to the 25% issue price shortfall, until the positive Capital Account balance of each Series GO II LP Unit is equal to the Share NAV. As a result, the issuance of the Series GO II LP Units will be dilutive to the General Partner Units and therefore, to the shares of common stock of the Company. The Series GO II LP Units are being offered until the earlier of (i) the sale of $30,000,000 in Series GO II LP

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Units (which could be increased to $60,000,000 in the Company’s sole discretion), (ii) March 31, 2024, which date may be extended for two 1-year extensions until March 31, 2026 in the sole discretion of the Operating Partnership or (iii) the Operating Partnership terminates the GO II Unit Offering at an earlier date in its sole discretion. As of December 31, 2023, the Operating Partnership had issued and sold 129,787 Series GO II LP Units and received aggregate proceeds of $1.0 million. See Note 13 “Subsequent Events” for information regarding the extension of the GO II Unit Offering.

12.  COMMITMENTS AND CONTINGENCIES

Legal Matters — From time to time, the Company may become party to legal proceedings that arise in the ordinary course of its business. After consulting with legal counsel, management is not aware of any legal proceedings of which the outcome is probable or reasonably possible to have a material adverse effect on the Company’s results of operations, cash flows or financial condition, which would require accrual or disclosure of the contingency and possible range of loss, other than the matter described below.

On September 12, 2022, the Advisor and Corey R. Maple received a “Wells notice” from the SEC stating that the SEC staff had made a preliminary determination to recommend to the SEC that it bring an enforcement action against the Advisor and Mr. Maple alleging violations of securities laws in connection with the SEC’s investigation of the Company’s reimbursement of and financial accounting for certain expenses incurred by the Advisor as well as the adequacy of its disclosures related to those policies and practices. The Wells notice was neither a formal charge of wrongdoing nor a final determination that the Advisor or Mr. Maple has violated any law.

The Advisor and Corey R. Maple agreed to a settlement with the SEC in connection with the action described above on August 28, 2023, in which the Advisor agreed to pay disgorgement of $463,900 to the Company.

Property Acquisitions

The seller of the Pineville Property was entitled to additional cash consideration if the property exceeds certain performance criteria based on increases in the property’s net operating income (“NOI”) for a selected 12-month period of time. At any time during the period beginning April 1, 2021 through the date of the final NOI determination (on or about April 30, 2023), the seller of the property could have made a one-time election to receive the additional consideration. The variable amount of the additional consideration, if any, was based on the excess of the property’s actual NOI over a base NOI for the applicable 12-month calculation period divided by the stated cap rate for such calculation period. As of December 31, 2022, no additional consideration had been paid to the seller of the Pineville Property, and no election to receive the additional consideration had been made. As of the date of this filing, the period to elect to receive additional consideration has passed with no election being made.

In November 2019, the Company entered into a purchase agreement, to acquire three hotel properties in Pennsylvania, from a third party group of sellers (collectively, the “PA Sellers”), for $46.9 million plus closing costs, subject to adjustment as provided in the purchase agreement. The Company has deposited a total of $1.5 million into escrow as earnest money (the “Earnest Money”) pending the closing or termination of the purchase agreement. In July 2020, the Company and the PA Sellers exchanged written notices of default with one another in accordance with the terms of the purchase agreement. The notice from each party was based on allegations that the other party failed to perform its obligations under the purchase agreement. On October 27, 2020, the PA Sellers filed a lawsuit against Lodging Fund REIT III OP, LP in the Supreme Court of Pennsylvania alleging breach of the purchase agreement. The PA Sellers sought the full amount of the Earnest Money and recovery of fees and expenses incurred in bringing the lawsuit.

Effective November 20, 2023, the Operating Partnership and the PA Seller entered into a settlement agreement and general release of all claims (the “Settlement Agreement”) regarding the asset purchase agreement dated November 22, 2019. Pursuant to the Settlement Agreement, the PA Seller received $700,000 of the Earnest Money Deposit, and the Operating Partnership received $800,000 of the Earnest Money Deposit. Accrued interest on the Deposit was split between the parties with 7/15 of the total amount being paid to the PA Seller and 8/15 of the total amount being paid to the Operating Partnership. Incurred fees of the Escrow Agent were paid by the Operating Partnership in accordance with the Settlement Agreement. The Operating Partnership and all related entities are released and forever discharged from all claims related to or arising from the Purchase Agreement.

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Contribution Agreements Entered into or Terminated During the Year Ended December 31, 2023

On January 31, 2023, the Operating Partnership and CS Real Estate Holding LLC (the “College Station Voco Contributor”) entered into a Legendary Equity Preservation UPREIT (Pat. Pend.) Contribution Agreement (the “College Station Voco Contribution Agreement”), pursuant to which the College Station Voco Contributor agreed to contribute the 166-room Aggieland Boutique Hotel in College Station, Texas, which the Operating Partnership intends to convert into a Voco by IHG (the “College Station Voco Hotel Property”) to the Operating Partnership. The College Station Voco Contributor is not affiliated with the Company or Legendary Capital REIT III, LLC, the Company’s external advisor. The aggregate consideration for the College Station Voco Hotel Property under the College Station Voco Contribution Agreement is $18,500,000 plus closing costs, subject to adjustment as provided in the College Station Voco Contribution Agreement. The majority of the consideration consists of the assumption or refinancing by the Operating Partnership of existing debt secured by the College Station Voco Hotel Property. The remaining consideration consists of the issuance by the Operating Partnership of Series T Limited Units of the Operating Partnership and cash at closing. As required by the College Station Voco Contribution Agreement, the Operating Partnership will deposit $50,000 into escrow as earnest money pending the closing or termination of the College Station Voco Contribution Agreement. Except in certain circumstances described in the College Station Voco Contribution Agreement, if the Operating Partnership fails to perform its obligations under the College Station Voco Contribution Agreement, it will forfeit the earnest money. The Company terminated the College Station Voco Contribution Agreement on June 13, 2023. The earnest money deposit was fully refunded to the Operating Partnership.

On April 23, 2023, the Operating Partnership terminated the Legendary Equity Preservation UPREIT (Pat. Pend.) Contribution Agreement entered into on August 16, 2022 in connection with the contribution of the 276-room Sheraton Hotel Albuquerque Airport in Albuquerque, New Mexico. Upon termination, $300,000 of the total earnest money deposit was returned to the Operating Partnership.

13.  SUBSEQUENT EVENTS

A-1 Line of Credit Amendments

On March 27, 2024, the Operating Partnership, the Company and A-1 Bonds entered into a Fourth Amendment to the Revolving Line of Credit Loan Agreement (the “Fourth Amendment”) in connection with the A-1 Line of Credit. The Fourth Amendment extended the maturity date of the A-1 Line of Credit to December 31, 2024 and increased the A-1 Line of Credit to $15.5 million. Through the Fourth Amendment, the A-1 Line of Credit is secured by 1,550,000 unissued common limited partnership units of the Operating Partnership. In consideration of the extension of the maturity date, the Operating Partnership paid to the A-1 Lender an extension fee in the amount of $133,000. The Fourth Amended and Restated Promissory Note (the “Amended Promissory Note”) entered into by the Operating Partnership in connection with the Fourth Amendment provides that (i) the interest rate on the A-1 Line of Credit is increased to 14.5% per annum, and (ii) the A-1 Lender will receive an exit fee equal to 1.5% of the full amount due under the Line of Credit upon the earlier of (a) full repayment (whether on the maturity date or prior thereto or any other date), and (b) the maturity date. No other changes were made to the A-1 Line of Credit as a result of the Fourth Amendment or the Amended Promissory Note.

As of December 17, 2024, $15.5 million is outstanding under the A-1 Line of Credit.

Western Line of Credit Amendments

On May 10, 2024, the Operating Partnership, the Company, Corey Maple, LF3 Fargo Med, LLC, LF3 Eagan, LLC, and LF3 Cedar Rapids, LLC entered into a Change in Terms Agreement in connection with the Western Line of Credit, which extended the maturity date of the Western Line of Credit from April 30, 2024 to June 5, 2024. In addition, the Operating Partnership was required to make a principal payment in the amount of $250,000.

F-38

The Company and Western State Bank are working to finalize an extension of the Western Line of Credit as of the date of this filing, however there can be no assurance that an extension will be granted.

As of December 17, 2024, $4.1 million is outstanding under the Western Line of Credit.

NHS Loan

On August 21, 2024, the Company entered into a Change in Terms Agreement with the Operating Partnership and NHS in connection with the NHS Loan to extend the maturity date of the NHS Loan to September 30, 2025.

As of December 17, 2024, $0.6 million is outstanding under the NHS Loan.

Lakewood Loan Extension, Termination and New Loans

As previously disclosed, the subsidiaries of the Operating Partnership and A-1 Bonds entered into a loan agreement in the amount of $12.6 million secured by the Lakewood Property (the “Original Lakewood Loan”). Per the terms of the agreement, the subsidiaries of the Operating Partnership executed the option to extend the maturity date of the loan to March 28, 2024.

On March 27, 2024, the subsidiaries of the Operating Partnership entered into a new $12.0 million loan with Bluebird Credit EM LLC (the “New Lakewood Loan”) secured by the Lakewood Property. The New Lakewood Loan is evidenced by a promissory note and has an adjustable interest rate based on the SOFR Index plus 7.0% (increasing to 7.5% during the extension of the loan), with an initial interest rate of 12.327%; provided, however, in no event will the interest rate be adjusted to less than 11.0%. The maturity date of the New Lakewood Loan is October 5, 2025, with an option to extend the term for an additional 6 months through April 6, 2026, upon payment of a $60,000 extension fee and satisfaction of certain other conditions. The New Lakewood Loan requires monthly interest-only payments throughout the term, with the outstanding principal and interest due at maturity. The Borrower has the right to prepay the New Lakewood Loan in whole but not in part at any time, subject to a 30-day prior notice to the New Lakewood Lender and payment of an exit fee equal to $120,000 and a prepayment premium calculated pursuant to the terms of the New Lakewood Loan Agreement.

Pursuant to the New Lakewood Loan Agreement, Norman Leslie, a director and executive officer of the Company, entered into a Guaranty (the “New Lakewood Guaranty”) with the New Lakewood Lender to guarantee payment when due of the principal amount of indebtedness outstanding, including accrued interest and collection costs and expenses, as further described in the New Lakewood Guaranty.

Additionally, on March 27, 2024, the Operating Partnership entered into a new loan in an amount up to $4,896,801 (the “New A-1 Lakewood Loan”) with the A-1 Lender, an affiliate of the Company’s Advisor. The New A-1 Lakewood Loan is evidenced by a promissory note and has a fixed interest rate of 14.5% per annum and a maturity date of March 27, 2026. The New A-1 Lakewood Loan requires monthly interest-only payments throughout the term, with the outstanding principal and interest due at maturity. The Operating Partnership has the right to prepay the New A-1 Lakewood Loan in whole or in part without charge, penalty or premium. The A-1 Lender received an origination fee of $73,452 on the effective date of the New A-1 Lakewood Loan and will receive an exit fee equal to 1.5% of the full amount of the New A-1 Lakewood Loan upon the earlier of (a) full repayment (whether on the maturity date or prior thereto or any other date), and (b) the maturity date. Pursuant to a Pledge and Security Agreement entered into by the Company with the A-1 Lender, the New A-1 Lakewood Loan is secured by 489,680 unissued common limited partnership units of the Operating Partnership.

On March 27, 2024, the proceeds from the New Lakewood Loan and the New A-1 Lakewood Loan were used to refinance the Original Lakewood Loan, and the outstanding obligations under Original Lakewood Loan were repaid in full. At the closing of the refinancing, an unpaid extension fee in the amount of $138,450 was paid to the A-1 Lender under the Original Lakewood Loan which was due but not paid in connection with the prior March 2023 extension of the Original Lakewood Loan. All guaranties in connection and collateral with respect to the Original Lakewood Loan have been terminated or released, and all commitments with respect to the Original Lakewood Loan have been terminated or released.

F-39

El Paso HI Second Loan Modification

On May 15, 2024, the El Paso HI Borrower, the Operating Partnership and Corey R. Maple entered into a second loan modification agreement with EPH, which extended the maturity date to November 15, 2024. As a condition to the extension, the El Paso HI Borrower agreed to pay a $76,000 extension fee. With the second modification agreement, the El Paso HI Borrower is entitled to an additional six-month extension, if requested. In addition, the Holiday Inn El Paso Loan has a new interest rate of 9.00%.

Prattville Refinance

On November 4, 2024, the subsidiaries of the Operating Partnership (the “New Prattville Borrower”) entered into a new $11.0 million loan (the “New Prattville Loan”) with Independent Bank (the “New Prattville Lender”) secured by the Prattville Property. The New Prattville Loan is evidenced by a promissory note and has an adjustable interest rate that is the higher of (i) 4.85%, or (ii) the SOFR rate plus 3.0%, with an initial interest rate of 7.84%. The maturity date of the New Prattville Loan is November 4, 2029. The New Prattville Loan requires monthly interest-only payments for the first 24 months, principal payments in the amount of $15,200 plus interest for the remainder of the life of the loan and the outstanding principal balance due at maturity. There is no prepayment penalty or premium for prepayments of the principal under the New Prattville Loan, but if the prepayment is the result of a refinance with a financial institution other than the New Prattville Lender, the New Prattville Borrower must pay the New Prattville Lender an amount equal to 3.0% of the amount being prepaid if during the first year of the New Prattville Loan, an amount equal to 2.0% of the amount being prepaid if paid during the second year of the New Prattville Loan, and an amount equal to 1.0% of the amount being prepaid if paid during the third, fourth, or fifth years of the New Prattville Loan.

Pursuance to the New Prattville Loan Agreement, Norman Leslie, a director and executive officer of the Company, entered into a Guaranty (the “New Prattville Guaranty”) with the New Prattville Lender to guarantee payment when due of the principal amount of indebtedness outstanding, including accrued interest and collection costs and expenses, as further described in the New Prattville Guaranty.

On November 4, 2024, the proceeds from the New Prattville Loan were used to refinance the Original Prattville Loan, and the outstanding obligations under the Original Prattville Loan were repaid in full. All guarantees in connection and collateral with respect to the Original Prattville Loan have been terminated or released, and all commitments with respect to the Original Prattville Loan have been terminated or released.

Distributions Paid

On January 16, 2024, the Company declared cash distributions totaling $471,271 and DRIP distributions totaling $108,117, cash distributions totaling $35,706 for Common Limited Units of the Operating Partnership and cash distributions totaling $182,262 for Series GO LP Units of the Operating Partnership, at a daily rate of $0.00191781 per share of Common Stock in the Company, equivalent to an annualized rate of seven percent (7.00%) per share based on the Company’s initial offering price of $10.00, for daily record dates December 1 through December 31, 2023 to holders of record on each calendar day of such period. The distribution declared for December 2023 was paid on March 29, 2024.

On April 22, 2024, the Company declared cash distributions totaling $237,857 and DRIP distributions totaling $52,904, cash distributions totaling $17,853 for Common Limited Units of the Operating Partnership and cash distributions totaling $91,131 for Series GO LP Units of the Operating Partnership, at a daily rate of $0.000958905 per share of Common Stock in the Company, equivalent to an annualized rate of three and one half percent (3.50%)per share based on the Company’s initial offering price of $10.00, for daily record dates March 1 through March 31, 2024 to holders of record on each calendar day of such period. The distribution declared for March 2024 was paid on April 25, 2024.

On May 20, 2024, the Company declared cash distributions totaling $271,667 and DRIP distributions totaling $60,693, cash distributions totaling $20,403 for Common Limited Units of the Operating Partnership and cash distributions totaling $104,150 for Series GO LP Units of the Operating Partnership, at a daily rate of $0.001095890 per share of Common Stock in the Company, equivalent to an annualized rate of four percent (4.00%) per share based on the Company’s initial offering price of $10.00, for daily record dates April 1 through April 30, 2024 to holders of record on each calendar day of such period. The distribution declared for April 2024 was paid on May 23, 2024.

F-40

On June 18, 2024, the Company declared cash distributions totaling $311,181 and DRIP distributions totaling $62,992, cash distributions totaling $22,954 for Common Limited Units of the Operating Partnership and cash distributions totaling $117,169 for Series GO LP Units of the Operating Partnership, at a daily rate of $0.001232877 per share of Common Stock in the Company, equivalent to an annualized rate of four and one half percent (4.50%) per share based on the Company’s initial offering price of $10.00, for daily record dates May 1 through May 31, 2024 to holders of record on each calendar day of such period. The distribution declared for May 2024 was paid on June 20, 2024.

On July 19, 2024, the Company declared cash distributions totaling $345,775 and DRIP distributions totaling $70,312, cash distributions totaling $25,504 for Common Limited Units of the Operating Partnership and cash distributions totaling $130,186 for Series GO LP Units of the Operating Partnership, at a daily rate of $0.001366120 per share of Common Stock in the Company, equivalent to an annualized rate of five percent (5.00%) per share based on the Company’s initial offering price of $10.00, for daily record dates June 1 through June 30, 2024 to holders of record on each calendar day of such period. The distribution declared for June 2024 was paid on July 23, 2024.

On August 20, 2024, the Company declared cash distributions totaling $356,690 and DRIP distributions totaling $59,688, cash distributions totaling $25,504 for Common Limited Units of the Operating Partnership and cash distributions totaling $130,186 for Series GO LP Units of the Operating Partnership, at a daily rate of $0.001366120 per share of Common Stock in the Company, equivalent to an annualized rate of five percent (5.00%) per share based on the Company’s initial offering price of $10.00, for daily record dates July 1 through July 31, 2024 to holders of record on each calendar day of such period. The distribution declared for July 2024 was paid on August 20, 2024.

On September 26, 2024, the Company declared cash distributions totaling $353,107 and DRIP distributions totaling $63,549, cash distributions totaling $25,504 for Common Limited Units of the Operating Partnership and cash distributions totaling $130,186 for Series GO LP Units of the Operating Partnership, at a daily rate of $0.001366120 per share of Common Stock in the Company, equivalent to an annualized rate of five percent (5.00%) per share based on the Company’s initial offering price of $10.00, for daily record dates August 1 through August 31, 2024 to holders of record on each calendar day of such period. The distribution declared for August 2024 was paid on September 27, 2024.

Properties Under Contract

On April 15, 2024, the Operating Partnership and Stow Hotel Associates, LLC (the “Stow Contributor”) entered into a Legendary Equity Preservation UPREIT (Pat. Pend.) Contribution Agreement (the “Hampton Stow Contribution Agreement”) pursuant to which the Stow Contributor agreed to contribute the 84-room Hampton Stow hotel in Stow, Ohio to the Operating Partnership. The aggregate consideration for the Hampton Stow under the Hampton Stow Contribution Agreement is $10.2 million, with a majority of the consideration consisting of the assumption by the Operating Partnership of existing debt secured by the Hampton Stow and the remaining consideration consisting of the issuance by the Operating Partnership of Series T LP Units of the Operating Partnership. As required by the Hampton Stow Contribution Agreement, the Operating Partnership deposited $50,000 into an escrow as earnest money pending the closing or termination of the Hampton Stow Contribution Agreement. Except in certain circumstances described in the Hampton Stow Contribution Agreement, if the Operating Partnership fails to perform its obligations under the Hampton Stow Contribution Agreement, it will forfeit the earnest money.

On April 15, 2024, the Operating Partnership and the Stow Contributor entered into a Legendary Equity Preservation UPREIT (Pat. Pend.) Contribution Agreement (the “Staybridge Stow Contribution Agreement”) pursuant to which the Stow Contributor agreed to contribute the 92-room Staybridge Suites Akron-Stow-Cuyahoga Falls hotel in Stow, Ohio to the Operating Partnership. The aggregate consideration for the Staybridge Stow under the Staybridge Stow Contribution Agreement is $10.9 million, with a majority of the consideration consisting of the assumption by the Operating Partnership of existing debt secured by the Staybridge Stow and the remaining consideration consisting of the issuance by the Operating Partnership of Series T LP Units of the Operating Partnership and cash at closing. As required by the Staybridge Stow Contribution Agreement, the Operating Partnership deposited $50,000 into an escrow as earnest money pending the closing or termination of the Staybridge Stow Contribution Agreement. Except in certain circumstances described in the Staybridge Stow Contribution Agreement, if the Operating Partnership fails to perform its obligations under the Staybridge Stow Contribution Agreement, it will forfeit the earnest money.

F-41

The Company is still conducting its diligence review with respect to each of these properties. These pending acquisitions are subject to its completion of satisfactory due diligence and other closing conditions. There can be no assurance the Company will complete any or all of these pending property contributions on the contemplated terms, or at all.

Pineville Property Sold and Loan Repaid

On July 23, 2024, the Company sold the Pineville Property to an unaffiliated purchaser for $8,850,000 in cash, subject to customary prorations and adjustments. The mortgage loan secured by the Pineville Property was repaid in full at closing from sale proceeds. All guaranties in connection with such loan and collateral with respect to such loan have been terminated or released, and all commitments with respect to such loan have been terminated or released.

Agreement to Sell Pineville HGI Property and Charlotte Property

On December 2, 2024, the Company entered into an agreement to sell the Pineville HGI Property and the Charlotte Property. The agreement is subject to closing conditions. There can be no assurance the Company will complete any or all of these pending property dispositions on the contemplated terms, or at all.

Southaven Refinance

On December 6, 2024, the subsidiaries of the Operating Partnership (the “New Southaven Borrower”) entered into a new $18.0 million loan (the “New Southaven Loan”) with UBS AG. (the “New Southaven Lender”) secured by the Southaven Property. The New Southaven Loan is evidenced by a promissory note and has aa fixed interest rate that is equal to the five-year United States Treasury rate plus 3.58%, resulting in an interest rate of 7.77%. The maturity date of the New Southaven Loan is December 6, 2029. The New Southaven Loan requires monthly interest-only payments for the life of the loan, with the outstanding principal balance due at maturity. Prepayment is not permitted during the first year of the New Southaven Loan, but prepayment is permissible with certain stipulations laid out in the loan agreement.

On December 6, 2024, the proceeds from the New Southaven Loan were used to refinance the Original Southaven Loan, and the outstanding obligations under the Original Southaven Loan were repaid in full. All guarantees in connection and collateral with respect to the Original Southaven Loan have been terminated or released, and all commitments with respect to the Original Southaven Loan have been terminated or released.

Status of the Offering

Our board of directors extended the term of the Offering to May 31, 2025. As of the date of this filing, the Company’s private offering remained open for new investment, and since the inception of the offering the Company had issued and sold 10,297,188 shares of common stock, including 1,215,332 shares issued pursuant to the DRIP, resulting in the receipt of gross offering proceeds of $100.7 million.

Series T LP Units

The Operating Partnership did not issue any Series T LP Units subsequent to the year ended December 31, 2023 to the date of this filing.

Common LP Units

The Operating Partnership did not issue any Common LP Units subsequent to the year ended December 31, 2023 to the date of this filing.

GO II Unit Offering

On April 17, 2024, our Board of Directors extended the term of the GO II Unit Offering to March 31, 2025. The Operating Partnership has issued and sold 475,324 Series Go II LP Units, resulting in the receipt of gross offering proceeds of $3.6 million as of the date of this filing.

F-42

******

LODGING FUND REIT III, INC. - SCHEDULE III

Real Estate and Accumulated Depreciation

As of December 31, 2023

									Costs
									Capitalized
									Subsequent to
					Initial Cost				Acquisition		Gross Amounts at End of Year
							Building,		Building,				Building,
					Land and		Building		Building		Land and		Building
	Date	Number			Land		Improvements		Improvements		Land		Improvements				Accumulated		Depreciable
Description	Acquired	of Rooms	Encumbrances		Improvements		and FF&E		and FF&E		Improvements		and FF&E		Total(1)		Depreciation		Lives
Holiday Inn Express - Cedar Rapids, IA	Nov - 2018	83	$	5,698,543	$	1,536,966	$	6,321,367	$	915,799	$	1,547,077	$	7,237,166	$	8,784,243	$	(1,553,790)	3 - 40 yrs.
Hampton Inn & Suites - Pineville, NC	Mar - 2019	111		8,368,135		2,014,533		12,327,740		1,477,299		2,014,533		13,805,039		15,819,572		(2,296,516)	3 - 40 yrs.
Hampton Inn - Eagan, MN	Jun - 2019	122		8,839,737		1,691,813		12,536,520		324,808		1,691,813		12,861,328		14,553,141		(2,314,893)	3 - 40 yrs.
Home2 Suites - Prattville, AL	Jul - 2019	90		8,984,688		1,691,954		13,414,060		222,875		1,691,954		13,636,935		15,328,889		(2,117,682)	3 - 40 yrs.
Home2 Suites - Lubbock, TX	Dec - 2019	100		7,103,138		803,229		13,906,502		1,597,023		803,229		15,503,525		16,306,754		(2,152,794)	3 - 40 yrs.
Fairfield Inn & Suites - Lubbock, TX	Jan - 2020	101		8,809,051		982,934		15,261,162		86,269		982,934		15,347,431		16,330,365		(2,499,482)	3 - 40 yrs.
Homewood Suites - Southaven, MS	Feb - 2020	99		12,658,773		1,593,232		19,351,858		194,792		1,593,232		19,546,650		21,139,882		(2,575,350)	3 - 40 yrs.
Courtyard by Marriott - Aurora, CO	Feb - 2021	141		15,000,000		4,400,098		19,668,031		293,531		4,400,098		19,961,562		24,361,660		(2,125,843)	3 - 40 yrs.
Holiday Inn - El Paso, TX	May - 2021	175		7,600,000		1,747,553		8,913,467		3,046,445		1,747,553		11,959,912		13,707,465		(1,282,211)	3 - 40 yrs.
Hilton Garden Inn - Houston, TX	Aug - 2021	182		13,852,705		3,168,376		17,659,977		4,942,105		3,168,376		22,602,082		25,770,460		(1,533,401)	3 - 40 yrs.
Sheraton Hotel - Northbrook, IL	Dec - 2021	160		4,026,202		2,856,747		16,859,016		186,966		2,856,747		17,045,982		19,902,729		(1,068,615)	3 - 40 yrs.
Hampton Inn & Suites - Fargo, ND	Jan - 2022	90		7,095,283		2,041,684		9,700,538		449,057		2,041,684		10,149,595		12,191,279		(582,671)	3 - 40 yrs.
Courtyard by Marriott - El Paso, TX	Feb - 2022	90		9,975,072		1,856,428		13,596,806		138,644		1,856,428		13,735,450		15,591,878		(968,812)	3 - 40 yrs.
Fairfield Inn & Suites - Lakewood, CO	Mar - 2022	142		13,845,000		2,091,051		17,571,066		414,511		2,091,051		17,985,577		20,076,628		(1,066,158)	3 - 40 yrs.
Residence Inn - For Collins, Co	Aug - 2022	113		13,576,465		2,402,288		13,943,721		1,167,021		2,402,288		15,110,742		17,513,030		(594,116)	3 - 40 yrs.
Hilton Garden Inn - El Paso, TX	Aug - 2022	153		12,341,759		4,862,172		17,600,000		13,669		4,862,172		17,613,669		22,475,841		(1,281,612)	3 - 40 yrs.
Hilton Garden Inn - Pineville, NC	Aug - 2022	113		7,020,000		1,891,718		9,385,430		64,681		1,891,718		9,450,112		11,341,830		(514,862)	3 - 40 yrs.
Hilton Garden inn - Charlotte, NC	Aug - 2022	112		9,805,000		1,622,610		14,233,777		52,041		1,622,610		14,285,818		15,908,428		(685,096)	3 - 40 yrs.
Holiday Inn Express - Wichita Property	Dec - 2022	84		5,642,000		632,735		7,001,575		78,545		632,735		7,080,120		7,712,855		(255,546)	3 - 40 yrs.
		2,261	$	180,241,551	$	39,888,121	$	259,252,614	$	15,666,081	$	39,898,232	$	274,918,695	$	314,816,929	$	(27,469,450)

(1)The aggregate cost for federal income tax purposes is approximately $314.2 million at December 31, 2023 (unaudited).

Investment in Real Estate:	2023		2022
Balance at beginning of period	$	307,676,640	$	178,912,503
Acquisitions		-		120,433,600
Improvements		7,140,289		8,330,537
Balance at end of period	$	314,816,929	$	307,676,640
Accumulated Depreciation:	2023		2022
Balance at beginning of period	$	(17,458,998)	$	(9,487,728)
Depreciation expense		(10,054,083)		(7,995,492)
Asset write-offs		43,631		24,222
Balance at end of period	$	(27,469,450)	$	(17,458,998)

F-43

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	LODGING FUND REIT III, INC.
Date: December 17, 2024	By:	/s/ Norman H. Leslie
		Norman H. Leslie
		President, Chief Executive Officer, Secretary, Chief Investment Officer, Treasurer and Director
		(principal executive officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated and on the dates indicated.

Date	Name and Title
December 17, 2024	/s/ Norman H. Leslie
	Norman H. Leslie, President, Chief Executive Officer, Secretary, Chief Investment Officer, Treasurer and Director (principal executive officer)
December 17, 2024	/s/ Samuel C. Montgomery
	Samuel C. Montgomery, Chief Financial Officer (principal financial officer and principal accounting officer)
December 17, 2024	/s/ Corey R. Maple
	Corey R. Maple, Chairman of the Board and Director
December 17, 2024	/s/ David G. Ekman
	David G. Ekman, Director
December 17, 2024	/s/ Jeffrey T. Leighton
	Jeffrey T. Leighton, Director
December 17, 2024	/s/ Perry Rynders
	Perry Rynders, Director

EX-10.293

Ex10.293

SECOND LOAN MODIFICATION AGREEMENT

THISSECOND LOAN MODIFICATION AGREEMENT (this"Agreement") isentered intoasofMay 15, 2024 (the"Effective Date"), by and between EPHDevelopment Fund LLC, a Delaware limited liability company (together with its successors and/or assigns, "Lender") and LF3 ElPaso,LLC, a Delaware limited liability company ("SPE Owner") and LF3 ElPaso TRS, LLC, a Delaware limited liability company ("TRS Lessee"; collectively with SPE Owner, "Borrower"), Lodging FundREITIII OP,LLC,aDelaware limited partnership("Guarantor"), and Corey R. Maple, an individual ("Guarantor (Individual)").

RECITALS

A.Borrower is indebted to Lender under a loan (the "Loan") made pursuant to that certainLoanAgreement (the"Loan Agreement"), datedasofMay12,2021,asevidenced bythat certain Promissory Note dated May 12, 2021 (aka "Schedule 1 Form of Amended and Restated Promissory Note dated May 12, 2021," executed by SPEOwner)(together with allamendments, modifications and/or supplements thereto and substitutions therefor are hereinafter collectively referred toas the"Note") made by SPEOwner intheoriginal principal amount of Seven Million

Nine Hundred Thousand and No/100 Dollars ($7,900,000.00)and payable to Lender. The Loan waslatermodifiedpursuantio thatcertainFirstLoanModificationAgreementbetweentheparties dated May 15,2023 ("First Modification"). The Note is evidenced and secured by, among other things(ineachcase,asamended,modifiedand/orsupplementedasofthedatehereof)thatcertain

MemorandumofLoanAssumptionAgreement, datedasofMay12,2021(the"Memorandum"), between BorrowerandLender.Allcapitalized terms nototherwise defined herein shallhavethe meaning provided inthe Loan Agreement.

B.Inconnection with theLoan, Guarantor executed theContinuing Guaranty, dated asofMay12,2021,whichwasamendedpursuanttotheFirstAmendmenttoContinuingGuaranty ofevendate therewith (as so amended the"Continuing Guaranty"), and Guarantor (Individual) executed the Continuing Guaranty (Carve Out), dated as of May 12, 2021 (the "Guaranty (Recourse)"), in each case in favor of Lender. For purposes of this Agreement, Continuing Guaranty and Guaranty (Recourse) are hereinafter collectively referred toasthe"Guaranties".

C.TheLoanAgreement, theNote,theMemorandum, theGuaranties and any and all other documents, agreements and instruments evidencing, governing, securing or otherwise executed in connection with the Loan, in each case executed prior to the date hereof (and not heretofore releasedor reconveyed)are referred to herein as the "Existing Loan Documents".

D.TheNoteisdueand payable ontheMaturity DateofMay 15,2024.Nonetheless, Borrower and Lender have agreed to extend the Maturity Date to November 15, 2024 ("Extension") pursuant to the terms and conditions setforth inthis Agreement.

D.Borrower and Lender desire to modify the Loan and Existing Loan Documentsupon thete1ms and conditions contained herein.

NOW, THEREFORE,forgoodandvaluableconsideration,thereceiptandsufficiency of which arehereby aclmowledged, each oftheundersignedagrees asfollows:

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AGREEMENT

1.MODIFICATION OF LOAN. Asof theEffective Dateand subject totheconditions of this Agreement, Borrower and Lender agree asfollows:

1.1Maturity Date, The "Maturity Date" (and "Stated Maturity Date") shall be amended to mean November 15, 2024 (also referred to inthe Loan Agreement as the Extended Stated Maturity Date).

1.2Extension Fee. As a condition to the extension of the Maturity Date set forth herein, Borrower agrees to pay an extension fee equal to one (1) point based upon the existing balance oftheLoan (suchamount beingequal to$76,000) together with reimbursement oflegal and documentation fees and costs associated with this Agreement ("Extension Fee"). The Extension Fee shall beapplicable to the outstandingbalance oftheLoan.

1.3Interest Rate. Throughout the duration of this Agreement, the Loan and any amounts owed thereunder shall bear an interest rate equal to nine percent (9%) ("Extension Interest Rate"). AllotherpaymenttermswithintheLoanDocumentsshallremainunchangedand in full force and effect.

1.4 Extension Option. LenderacknowledgesthatBorrowershallbeentitledtoone

(1) additional extension option of six (6) months at then current market interest rate to be determinedbyLender,provided thatundernocircumstancesshalltheinterestratefortheextension optionbelessthanninepercent(9%)("Extension Option"). BorrowermayexerciseitsExtension Optionbymakingapaymentofone(1)pointontheexistingbalanceoftheLoanplusanadditional payment ofOneMillionand·No/100 Dollars ($1,000,000) inthef01mofaloanpaydown, which shall be directly applicable tothe outstanding Loan amount.

1.5Affirmation of Existing Loan Documents. Except asexpressly modified by this Agreement, each and every covenant, warranty and other provision of the Existing Loan Documents shall remain infullforceandeffect.This Agreement isnot intended and shall in no wayactasanovationoftheLoanorarelease,relinquishment,alterationorreissueoftheliensand security interests securing the payment of the Note.Upon full execution and delivery of this Agreement and satisfaction ofthe conditions precedent setforth inSection 3 of this Agreement, this Agreement shall become one of the Loan Documents.

1.6Default. Anydefault by Borrower initsobligations underthis Agreement or any breachbyBorrowerofanyrepresentationsorwarrantiescontainedhereinshallconstituteadefault under theterms of the Note and the Deed of Trust.

2.CONDITIONS TO MODIFICATION. The following are conditions precedent to the modification of the Loan under this Agreement.If any of the following conditions shall not be satisfied on or before the date that is two (2) Business Days after the date hereof, then without limitation onLender's rights and remedies at law orinequity, atLender's option thisAgreement orany portion hereof shall beof nofurther force or effect.

2.1No Defaults. No Default shall have occurred under this Agreement, theExisting LoanDocuments,anyencumbranceaffectingtheproperty encumberedbytheDeedofTrust(the

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"Property") (whether junior or senior), or under any other agreement to which Borrower and Lender are parties, and no event has occurred that with notice or lapse of time or both would constitute adefault under any ofthem. Execution ofthisAgreement shallserveasnotice byboth parties thatthere are no known Defaults under theExisting Loan Documents as of the Effective Date, except for the Mechanic's Lien referenced herein in Section 2.3, which must be cured to Lender's satisfaction as oftheEffective Date asspecified in Section 2.3.

2.2Costs and Expenses. Borrower shall havepaidany and allotherfeesandcharges incurred inconnection withthis Agreement, including, without limitation, reasonable attorneys' fees and fees and expenses relating to the examination of title, title insurance premiums, and recording costs, documentary, transfer orother similar taxes and revenue stamps.

2.3Mechanic's Lien. On April 12, 2024, Borrower received notice of a Mechanic's Lien Affidavit and claim filed by JIVG Enterprises, LLC d/b/a Technical Building Services ("Technical Building Services") under Document number 20240025771 for One Hundred Fourteen Thousand One Hundred and Eighty and No/100 Dollars ($114,180.00) ("Mechanic's Lien"). TheMechanic's LienisevidenceofaDefaultbyBorrower. Borrower hereby agrees,that to induce Lender to enter into this Agreement, Borrower shall either (i) pay Technical Building Services the entirety of the amount owed under the Mechanic's Lien and provide Lender with proofofpayment, whereupon Borrowershallhave fifteen(15)daysto obtainafull release ofthe Mechanic's Lien; or (ii) make payment to Lender of the entirety of the amount owed under the Mechanic's Lien plus an additional fivepercent of thetotal amount owed to Technical Building Services (approximately $5,709) as of theEffective Date.

3. RELEASE AND WAIVERS

3.1Release. Asofthedatehereofand asoftheEffective Date,each ofBorrower and Guarantor, foritself anditssuccessors andassigns (collectively, the"Borrower Parties") hereby fullyandforeverreleases,dischargesandacquitsLenderanditsparent,andeachoftheirrespective affiliates,subsidiaries,successorsandassigns,andtheofficers,directors,employees andagentsof each (collectively,the "Lender Parties"), of and from and against any and all claims, demands, obligations, duties,liabilities, damages, expenses, indebtedness, debts,breaches ofcontract, duty or relationship, acts, omissions, misfeasance, malfeasance, causes of action, sums of money, accounts, compensation, contracts, controversies,promises, damages, costs, losses and remedies therefor, choses inaction,rights ofindemnity orliability ofanytype, kind, nature, description or character whatsoever, andirrespective ofhow,whyorbyreasonofwhatfacts,whether!mownor unknown,whetherliquidatedorunliquidated(collectively,"Claims") whichanyofsuchBorrower Parties may now have, or heretofore have had against any of said persons, firms or entities, by reason of, arising out of or based upon conduct, events or occurrences onor before theEffective Daterelating to:(i)the Loan ortheProperty; (ii)the review, approval or disapproval of any and all documents, instruments, projections, estimates, plans, specifications, drawings and all other items submitted toLender inconnection withtheLoanor theProperty; (iii)thedisbursementsof funds under the Loan; (iv) the amendment or modification of the Loan made pursuant to this Agreement; (v)Lender's acts, statements, conduct, representations and omissions made in connection with the Loan and any amendment or modification relating thereto; or (vi) any fact, matter, transaction or event relating thereto, whether!mown or unknown.Notwithstanding the provisionsoftheprecedingparagraph,nothingcontainedhereinshallbedeemedareleaseof

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Lender'sobligationsunder this Agreementor of Lender's obligationsunder the ExistingLoan Documents, as modified, totheextent first arising after the Effective Date.

3.2Non-Reliance. EachoftheBorrower Parties hereby acknowledges thatithas not relied upon any representationofany kindmade by Lender inmaking the foregoing release.

3.3No Transfer of Claims. EachoftheBorrowerPartiesrepresentsandwarrantsthat ithasnotheretoforeassignedortransferred, orpurported toassignortotransfer,toanypersonor entityanymatter released hereunder oranyportionthereoforinteresttherein, andsuchBorrower Party agrees to indemnify, defend and hold the parties set forth hereinabove harmless from and againstanyandallclaims basedonorarising outofany suchassignment ortransfer orpurported assignment or transfer.

3.4No Admission of Liability. It is hereby further understood and agreed that the acceptance of delivery of this release by the parties released hereby shall not be deemed or construed as an admission of liability of any nature whatsoever arising from or related to the subject of the within release.

3.5Advice of Counsel. Each of the Borrower Parties hereby agrees, represents and warrants that it has had advice of counsel of its own choosing in negotiations for and the preparation of this Agreement, including the foregoing release and waivers, that it has read the provisions of this Agreement, including the foregoing release and waivers, that it has had the foregoing release and waivers fully explained by such counsel, and that it is fully aware of its contents and legal effect.

4. REPRESENTATIONS AND WARRANTIES.

4.1Borrower's Representations. BorrowerherebyrepresentsandwarrantstoLender as of thedate hereof and as of theEffective Dateeachof the following:

(a)Litigation. Except as disclosed toLender in writing, there are no claims, actions, suits or proceedings, pending or to Borrower's actual knowledge threatened,atlaworinequity,beforeanycourtorcommission, agency orinstrumentality, against or affecting (a)Borrower, whichwould materially adversely affect the ability of Borrower toperformits obligations under theLoan, this Agreement ortheExisting Loan Documents or (b) the Property.

(b)Conflicts. Neither theexecution and delivery by Borrower ofthis Agreement or any ofthe documents required to beexecuted by Borrower hereunder, nor theperformance by Borrower ofits obligations hereunder or thereunder, will (a)conflict with,orresult inabreach of,anyoftheterms,conditions orprovisions ofany law,ruleor regulation applicable to Borrower or any order, injunction or decree of any court or governmental instrumentality or of any bond, debenture, note, mortgage, deed of trust, indenture, agreement orotherinstrument towhichBorrower isnowaparty orby whichit maybebound,orconstitute adefaultthereunder, or(b)resultinthecreationorimposition ofanyclaim,lien,securityinterest,chargeorotherencumbrance ofanynaturewhatsoever uponanyproperty ofBorrower pursuanttotheterms ofanysuchagreement orinstrument.

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(c)Consents. Neither theexecution and delivery by Borrower ofthis Agreement, nor the performance by Borrower of its obligations hereunder requires the consent, authorization or approval of, the giving of notice to, or the registration with, or the taking of any other action in respect of, any federal, state or foreign governmental authority or agency, pursuant to any law, rule or regulation applicable to Borrower or pursuanttoanyorder,injunction ordecreeofanysuchauthorityoragency,anycreditor of Borrower, or any other person or entity.

(d)Authority. Borrower has all requisite power and authority to perform the terms of this Agreement.

(e)Defaults. Noeventhasoccurredandiscontinuing,andnocondition exists, which constitutes or which after notice or lapse of time, or both, would constitute anEventofDefaultorDefaultundertheExisting LoanDocuments andallrepresentations and warranties are true and correct as if made asof the date hereof.

(f)Principal. Borroweracknowledgesthattheprincipalbalanceofthe Note asof the date hereof (prior to payment contemplated hereunder) is$7,900,000.

4.2Guarantor's Covenants and Representations. Guarantor and Guarantor (Individual)eachherebyreaffirmsitsobligationsunderitsrespectiveguarantyandrepresents and warrants to Lender as of thedate hereof and as of theEffective Date each of thefollowing:

(a)Litigation. Except as disclosed to Lender in writing, there are no claims, actions, suits or proceedings, pending or to such guarantor's actual knowledge threatened, atlaworinequity, beforeanycourtorcommission, agency orinstrumentality, againstoraffecting (a)suchguarantor,whichwould materially adversely affecttheability ofsuchguarantortoperformitsobligationsundertheLoan,thisAgreementortheExisting Loan Documentsor (b) the Property.

(b)Conflicts. Neithertheexecutionanddelivery bysuchguarantor of this Agreement or any of the documents required to be executed by such guarantor hereunder, nor the performance by such guarantor of its obligations hereunder or thereunder, will (a)conflict with, or result in abreachof, any of the terms, conditions or provisions of any law, rule or regulation applicable to such guarantor or any order, injunction or decree of any court or governmental instrumentality or of any bond, debenture,note,mortgage,deedoftrust,indenture,agreementorotherinstrumenttowhich such guarantor is now a party or by which it may be bound, or constitute a default thereunder, or (b)result inthe creation or imposition of any claim, lien, security interest, chargeorotherencumbranceofanynaturewhatsoeveruponanypropertyofsuchguarantor pursuant to the terms of any such agreement orinstrument.

(c)Consents. Neithertheexecutionanddelivery bysuchguarantor of this Agreement, nor the performance by such guarantor of its obligations hereunder requirestheconsent,authorizationorapprovalof,thegivingofnoticeto,ortheregistration with, or the taking of any other action in respect of, any federal, state or foreign governmentalauthorityor agency,pursuantto anylaw,ruleor regulationapplicableto

Ex10.293

suchguarantororpursuanttoanyorder,injunctionor decreeofanysuchauthorityor agency, any creditor of such guarantor, or any other person or entity.

(d)Authority. Suchguarantor hasallrequisite powerandauthorityto perform the terms of this Agreement.

4.3Accuracy of Representations. Neither this Agreement, nor any document, certificate or statement referred to herein or furnished to Lender by Borrower or Guarantor or Guarantor(Individual)pursuantheretocontainsanyuntruestatementofamaterialfactoromitsto state a material fact.

5. MISCELLANEOUS PROVISIONS.

5.1Waiver. No failure on Lender's part at any time to require the performance by Borrower of any term of this Agreement shallin any way affect Lender's rights to enforce such term, nor shall any waiver by Lender of any term hereof be taken or held to be a waiver of any other term hereof or of any breach or subsequent breach hereof.Borrower waives any defense arisingby reason of any disabilityorother defense ofany other person obligated withrespect to

theLoan,orbyreasonofthecessationfromanycausewhatsoeveroft'heliabilityofBorroweror

anyothersuchperson.

5.2Expenses. Borrower will pay and holdLender harmless against any liability for thepaymentofallout-of-pocketexpenses,incurred byLender inconnection withthepreparation andexecutionofthisAgreement,Lender's performance ofandcompliance withtheterms hereof, the procuring of title insurance, collection efforts, and the enforcement of Lender's rights and remedies hereunder.

5.3Confidentiality. Borrower shall keep the terms of this Agreement strictly confidential andshall not disclose orpermit itsemployees or agents to disclose theterms of this Agreement (except for reasonably necessary disclosures to such party's respective attorneys, accountants and representativesor as may be required by law).

5.4Sole Parties. ThisAgreement ismadeexclusively forthe benefitofandsolelyfor theprotectionofLender,Borrower, GuarantorandGuarantor(Individual), andnootherpersonor persons shall have the right to enforce the provisions hereof by action or legal proceedings or otherwise.

5.5Binding Effect and Amendment. This Agreement shall be binding upon the parties hereto and their successors and permitted.This Agreement may be amended, altered or changed only by aninstrument inwriting signed by both parties.

5.6Interpretation. Whenever thecontext sorequires, allwords used inthe singular willbeconstruedtohavebeenusedintheplural,andviceversa,andeachgender willincludeany other gender.The headings used in this Agreement are inserted solely for the convenience of reference and arenot part of, nor intended togovern, limit oraidintheconstruction of, any term or provision hereof.

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5.7

Agreement.

Applicable Law.Section9.19oftheLoanAgreementshallapplytothis

5.8Counterparts. This Agreement may beexecuted inoneormorecounterparts, each of which shallbeanoriginal, but allofwhich shall constitute one and thesame instrument.

5.9Further Assurances. Fromtime totime,eachparty will execute anddeliver in recordableform,ifnecessary,suchfurtherinstruments andwilltakesuchotheractionastheother partyreasonably may requestinordertodischargeandperformtheirobligations andagreements under this Agreement.

5.10 Time of Essence. TimeisoftheessenceinthisAgreement.

5.11Entire Agreement. This Agreement, the Existing Loan Documents and the exhibits attachedthereto constitute theentire agreement ofBorrower and Lenderconcerningthe transactions contemplated by this Agreement and supersede and cancel any and all previous negotiations,arrangements, agreements, understandingsorletters ofinterest orintent.

5.12References to Loan Documents. Allreferences totheNote,theLoanAgreement or to other Existing Loan Documents shall be deemed to refer tothe same, as amended by this Agreement.IntheeventofaconflictbetweenthisAgreementandtheExistingLoanDocuments, this Agreementwill prevail.

5.13Assignment. Borrower,GuarantorandGuarantor(individual)maynotassignany rights or obligations under this Agreement.

[Signaturepagefollows]

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IN WITNESS WHEREOF, theundersigned doherebyexecutethisAgreement asofthe day and date set forth above.

BORROWER:

LF3 El Paso, LLC, aDelawarelimitedliabilitycompany By: Lodging Fund REIT III OP, LP, a Delaware limited

partnership,itssolemember

By:LodgingFundREITIII,Inc.,aMaryland corporation, its general partner

By: /s/ Samuel C. Montgomery

Name: Samuel C. Montgomery

Title: Chief Operating Officer

LF3 El Paso TRS, LLC, aDelawarelimitedliability company

By:LodgingFundREITIIITRS,Inc.,aDelaware corporation, its sole member

By: /s/ Samuel C. Montgomery

Name: Samuel C. Montgomery

Title: Chief Operating Officer

[signatures continue1

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GUARANTOR:

Lodging Fund REIT III OP, LP, aDelawarelimited partnership, its sole member

By:LodgingFundREITIII,Inc.,aMarylandcorporation, its

generalpartner

By: /s/ Samuel C. Montgomery

Name: Samuel C. Montgomery

Title: Chief Operating Officer

GUARANTOR (INDIVIDUAL):

/s/ Corey R. Maple

Corey R. Maple, an individual

[signatures continue]

EXHIBIT 10.293

LENDER:

EPH Development Fnnd LLC, aDelawarelimited liability company

By:. /s/ Ken Okamoto​ ​

KenOkamoto,AuthorizedSignatory

1

EX-10.294

Ex10.294

LIMITED GUARANTY AGREEMENT

(Norman H. Leslie)

THIS LIMITED GUARANTY AGREEMENT ("Guaranty") isentered intoasofthe 4thday of November, 2024 by and between Norman H. Leslie ("Guarantor") and Independent Bank, a Tennessee state banking corporation.

Statement of Guaranty.Inconsideration of credit being givenorto begiven, advances made or to be made, or extended or to be extended to LF3 Prattville, LLC, a Delaware limited liability company, and LF3 Prattville TRS, LLC, a Delaware limited liability company (collectively, the "Borrower") byIndependent Bank,oritssuccessors, endorsees, transferees, andassigns(allof which arehereinafter collectively referred toasthe"Bank"), and subject tothetermsand conditions hereof, Guarantor absolutely and unconditionallyguarantees toBankthefulland promptpayment when due (whether atscheduled maturity, acceleration, demand or otherwise) ofany obligation ofthat certain promissory note, dated of evendate, inthe original principal amount of $10,985,000.00 ("Note"), or pursuant toanydocument, instrument, deedoftrust,security agreement, environmentalindemnity or other agreement executed in connection therewith (collectively,"Loan Documents"), or pursuant to any extension, modification, or renewal of the Note or the Loan Documents, together with all expenses, including, butnotlimitedto,reasonable attorneys' andexperts' fees,amounts paidbyBank toanyFranchisor inconnection with,butnotlimited to,thecuring ofanydefaults byBank onbehalf of Borrower as Franchisee or the assumption by Bank of any Franchise Agreementwith respect to the Property, incurred by Bank incollecting orendeavoring to collect such indebtedness or any part thereof, inprotecting any collateral for such indebtedness, in assuming any obligations of Borrower under any Franchise Agreement, and in enforcing this Guaranty (all of which are hereinafter collectivelyreferred to as the"Indebtedness").Guarantoracknowledgesand agreesthat he receives amaterial benefitfromBorrower andtheLoan,andthatthereissufficient andadequate consideration for the obligations undertaken by Guarantor hereunder.

Limitation of Liability.The liability of Guarantor hereunder is limited to 50% of any principal, interest, collection costs, attorneys' fees orother losses, charges andexpenses of whatever nature becoming due or incurred by Bank in connection with the Indebtedness as of the date Bank accepts Guarantor's payment made under this Guaranty.

Obligations of Guarantor.Guarantor agrees that if any of the Indebtedness is not paid by Borrower in accordance with the terms of the Note or Loan Documents, Guarantor will pay Bank upondemand thefull amount oftheIndebtedness upon whichdefault hasoccurred, uptotheamount specified inthe section "Limitation ofLiability" above, and such payment will become the primary and direct obligation of Guarantor.

Other Agreements.Theliability ofGuarantor hereunder isindependent of,andinadditionto, anyotherguaranty or agreementby Guarantor orany other party atany timeineffectastoall orany part of the Indebtedness, and Guarantor's obligations hereunder may be enforced regardless of any such other guaranty or agreement.

Joint and Several Liability.If more than one Guarantor hasexecuted thisGuaranty, orother guaranty agreement, theobligations andliabilities ofall Guarantors with respect totheIndebtedness shall be joint and several subject to the limitations of liability of each Guarantor as set forth in the applicable Guaranty agreement.Bankshallbeauthorized andempowered toinstituteproceedingsin

Ex10.294

laworinequity againsteachGuarantor,oranyoneormoreofthem,without joining Borrower or any other guarantor.

Waiver of Notice.Guarantor waivesnoticeofacceptanceofthisGuarantyandofthecreation, renewal, modification, consolidation orextension ofany ofthe Indebtedness and theacceleration of maturity ofany ofthe Indebtedness.Guarantor also waives presentment, demand, notice of protest, notice of dishonor and all other demands and notices in connection with the delivery, acceptance, performance, defaultorendorsement ofanyoftheIndebtedness orofthisGuaranty.Notwithstanding theforegoing, theLender shall make commercially reasonable efforts, initssolediscretion, tonotify Guarantor of the above.

Waiver of Indemnity.Guarantor waives any and all claims, rights or remedies, including rightsofindemnity, which Guarantor may noworhereafter haveagainst Borrower arising outofthis Guaranty, including, without limitation, any and allclaims, rights of subrogation, reimbursement or any other actions or suits against Borrower seeking to recover from Borrower payment for any amountspaid by Guarantor under thisGuaranty, whether ornot suchclaim,rightorremedy arisesin equity, under contract, by statute, under common law, or otherwise.Notwithstandingtheforegoing, the above waiver shall only apply to indemnification of the Guarantor by the Borrower and shall terminate once theIndebtedness ispaid tothe Lender infull.The above shall not beinterpreted asa waiver of any other indemnificationrights the Guarantor may have unrelated tothe Borrower orthe Indebtedness.

Repayment by Bank.IntheeventBankisrequired atanytimetorefundorrepaytoanyperson for any reason any sums collected by Bank on account of the Indebtedness, including, without limitation, sums repaid to a trustee in bankruptcy or otherwise as a result of an avoided preferential transfer orfraudulent conveyance, Guarantor agreesthatallsuchsumswill besubjecttothetermsof this Guaranty and that Bank will be entitled to recover such sums from Guarantor.

Rights of Bank.WithoutfurtherauthorizationfromornoticetoGuarantor, Bankmay(i)alter, compromise, accelerate, extend or modify the time or manner of payment of the Indebtedness, (ii) extend,modify oramendthetermsandconditionsofanyinstrumentevidencingtheIndebtedness,or

(iii)grant credit to Borrowerfrom timetotime.Bank isexpresslyauthorizedto(1) waive any right itmay have torequire additional collateral; (2)surrender orrelease collateral held by it;(3)take any actionsundertheFranchiseAgreement,cureanydefaultsbyBorrowerthereunder, oranyassumption thereof;and(4)substitute anycollateral held byitforothercollateral oflikekindorofanykind.The obligations of Guarantorhereunder and the rights of Bank protectedhereby shall not be diminished or in any manner affected by (a) Bank's failure to accelerate the maturity of the Indebtedness upon default by Borrower; (b) Bank's failure to exercise its rights with regard to any collateral; (c) the extension of the maturity of the Indebtedness; (d) the renewal or modification of any instrument evidencing the Indebtedness; (e) Bank's failure to attempt collection of the Indebtedness by legal proceedingsorotherwise orbyproceedingsinanymanneragainstBorrowerorthecollateral securing theIndebtedness; (t)any determination thatany disposition ofcollateral securing theIndebtedness is commercially unreasonable; (g)anydeterminationthatanyevidenceoftheIndebtedness executed by Borrower isnotgenuine orthat any oftheIndebtedness isnotthelegal, valid and binding obligation of Borrower; (h) any defenses which Borrower may have as to any of the Indebtedness, including, without limitation, failure of consideration, breach of warranty, statute of limitations, accord and satisfaction,andusury;or(i)anyotheractoromissionofBankwhichchangesthescopeof

Ex10.294

Guarantor's risk, except such acts or omissions in bad faith.Furthermore, Bank shall have the exclusive righttodetermine how,whenand whatapplication ofpaymentsandcredits,ifany,shall be made on the Indebtedness, or any part thereof, and shall be under no obligation, at any time, tofirst resort to, make demand on, file claim against, or exhaust its remedies against Borrower, any other guarantor, or other persons or corporations, their properties or estates, or to resort to or exhaust its remediesagainstany collateral, security, property,liensorotherrightswhatsoever.Bank may,atany time,makedemandforpaymenton,orbringsuitagainst,Borrower, Guarantor oranyotherguarantor, and may compromise with any other guarantor for such sums or on such terms as it may see fit and release any other guarantor from all further liability to Bank hereunder, without thereby impairing Bank's rights inany respect todemand, suefor and collect the balance of the Indebtednessfrom any other entity liable thereon, including Guarantor.

Credit Investigation.Guarantor agrees that Bank has not made any representation as to Borrower's financial condition or creditworthiness upon which Guarantor has relied in any way and that Guarantor has made and will continue to make an independent investigation and appraisal of Borrower's financial condition and creditworthiness.

Financial Statements.ForsolongasthisGuaranty isineffect,Guarantor willdelivertoBank such financial information and documentation reflecting his financial condition as the Bank may require.

Incorporation by Reference.Guarantor agrees that the terms, conditions, agreements and stipulations in all instruments evidencing or securing the Indebtedness,now or hereafter executed, areor will become part of this Guaranty and are hereby ratified, adopted and confirmed.

Governing Law.ThisGuaranty will begoverned byandconstrued according tothelawofthe stateofTennessee.Guarantor consentsandsubmitstothejurisdiction andvenueofanyjudicial court inShelby County,Tennessee withrespecttotheenforcementofthisGuarantyandagreesthatservice ofprocess byany judicialofficerorbyregistered orcertified mailwillestablish personal jurisdiction over Guarantor.

Assignment by Bank.ThisGuaranty isassignablebyBank,andanyassignment hereoforany transferorassignment ofany instrument evidencing orsecuring theIndebtedness willoperatetovest in such assignee all rights and powers of Bank under this Guaranty.

Entire Agreement.ThisGuaranty constitutes theentireagreement betweenthepartiesandno amendment hereto will beeffective unless it isinwriting andsigned by allthe parties.No courseof dealing or oral agreement may be used tosupplement, modify or amend the terms of this Guaranty.

Binding Effect.The provisions of this Guaranty will be binding upon Guarantor and Guarantor's successors, heirs,legalrepresentativesandassigns,andwill inure tothebenefitofBank, itssuccessors, legal representativesand assigns.ThisGuaranty will, innoevent, beimpaired by the death or dissolution of any Guarantor or of Borrower.

Severability.If any provision inthis Guaranty isheld invalid, suchinvalidity will notaffect the validity or enforceability of the remaining provisions hereof.

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Captions.The captions in this Guarantyare for reference purposes only and are notpart of this Guaranty.

[SIGNATUREANDACKNOWLEDGMENTPAGEFOLLOWS]

EXHIBIT 10.293

IN WITNESSWHEREOF,Guarantorhas executed this Guaranty on the day andyear first written above.

GUARANTOR:

NormanH.Leslie

/s/ Norman H. Leslie

STATEOFNorth Dakota

COUNTYOFCass

PERSONALLYappeared before me, the undersignedauthority in and for the county and stateaforesaidonthis31stdayofOctober,2024,withinmyjurisdiction, Norman H.Leslie, to me known to be the person described in and who executed the foregoing instrument, and acknowledged that he executed the same for the purposes therein contained.

WITNESSmyhandandseal,atoffice,this_31st dayofOctober,2024.

/s/ Jennifer Moum

Notary Public

My Commission expires:April 25, 2026

1

EX-21.1

EXHIBIT 21.1

Subsidiaries of the Registrant

Name	Jurisdiction of Incorporation
Lodging Fund REIT III OP, LP	Delaware
Lodging Fund REIT III TRS, Inc.	Delaware
LF3 Cedar Rapids, LLC	Delaware
LF3 Cedar Rapids TRS, LLC	Delaware
LF3 Pineville, LLC	Delaware
LF3 Pineville TRS, LLC	Delaware
LF3 Eagan, LLC	Delaware
LF3 Eagan TRS, LLC	Delaware
LF3 Prattville, LLC	Delaware
LF3 Prattville TRS, LLC	Delaware
LF3 Lubbock Casa, LLC	Delaware
LF3 Lubbock Casa TRS, LLC	Delaware
LF3 Lubbock Expo, LLC	Delaware
LF3 Lubbock Expo TRS, LLC	Delaware
LF3 Southaven, LLC	Delaware
LF3 Southaven TRS, LLC	Delaware
LF3 Aurora, LLC	Delaware
LF3 Aurora TRS, LLC LF3 El Paso, LLC LF3 El Paso TRS, LLC LF3 Houston, LLC LF3 Houston TRS, LLC LF3 Northbrook, LLC LF3 Northbrook TRS, LLC LF3 Fargo Med, LLC LF3 Fargo Med TRS, LLC LF3 El Paso Airport, LLC LF3 El Paso Airport TRS, LLC LF3 Lakewood, LLC LF3 Lakewood TRS, LLC LF3 RIFC, LLC LF3 RIFC TRS, LLC LF3 Pineville 2, LLC LF3 Pineville 2 TRS, LLC LF3 Charlotte, LLC LF3 Charlotte TRS, LLC LF3 Wichita, LLC LF3 Wichita TRS, LLC High Desert Garden Holdings, LLC	Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware Delaware

1

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. SECTION 350)

I, Norman H. Leslie, certify that:

1. I have reviewed this annual report on Form 10-K of Lodging Fund REIT III, Inc. (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant, as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: December 17, 2024

/s/ Norman H. Leslie

Norman H. Leslie, President, Chief Executive Officer,

Secretary, Chief Investment Officer and Treasurer

(principal executive officer)

1

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 (18 U.S.C. SECTION 350)

I, Samuel C. Montgomery, certify that:

1. I have reviewed this annual report on Form 10-K of Lodging Fund REIT III, Inc. (the “registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant, as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: December 17, 2024

/s/ Samuel C. Montgomery

Samuel C. Montgomery, Chief Financial Officer

(principal financial officer)

1

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Certification of Chief Executive Officer and Chief Financial Officer

In connection with the Annual Report on Form 10-K of Lodging Fund REIT III, Inc. (the “Company”) for the year ended December 31, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Norman H. Leslie, as the Chief Executive Officer of the Company, and Samuel C. Montgomery, as the Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to his or her knowledge, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: December 17, 2024

/s/ Norman H. Leslie

Norman H. Leslie, Chief Executive Officer, President, Secretary, Chief Investment Officer and Treasurer

(principal executive officer)

/s/ Samuel C. Montgomery

Samuel C. Montgomery, Chief Financial Officer

(principal financial officer)

1

XML

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 17, 2024	Jun. 30, 2023
Document and Entity Information
Document Type	10-K
Document Annual Report	true
Document Period End Date	Dec. 31, 2023
Document Transition Report	false
Entity File Number	000-56082
Entity Registrant Name	LODGING FUND REIT III, INC.
Entity Incorporation, State or Country Code	MD
Entity Tax Identification Number	83-0556111
Entity Address, Address Line One	1635 43rd Street South, Suite 205
Entity Address, City or Town	Fargo
Entity Address, State or Province	ND
Entity Address, Postal Zip Code	58103
City Area Code	701
Local Phone Number	630-6500
Title of 12(b) Security	None
No Trading Symbol Flag	true
Security Exchange Name	NONE
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	No
Entity Interactive Data Current	No
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
ICFR Auditor Attestation Flag	false
Document Financial Statement Error Correction [Flag]	false
Entity Shell Company	false
Entity Public Float			$ 0
Entity Common Stock, Shares Outstanding		10,009,663
Auditor Firm ID	668
Auditor Name	Marcum llp
Auditor Location	New York, NY
Entity Central Index Key	0001745032
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	FY
Amendment Flag	false

XML

CONSOLIDATED BALANCE SHEETS - USD ($)	Dec. 31, 2023	Dec. 31, 2022
Assets
Investment in hotel properties, net of accumulated depreciation and amortization of $27,729,163 and $17,512,882	$ 287,347,479	$ 290,217,642
Cash and cash equivalents	3,052,937	6,193,449
Restricted cash	9,891,392	10,732,832
Accounts receivable, net	1,466,879	1,468,732
Franchise fees, net	2,190,058	2,363,114
Prepaid expenses and other assets	1,825,589	1,409,993
Total Assets (variable interest entities - $22,649,498 and $24,924,626)	305,774,334	312,385,762
Liabilities and Equity
Debt, net	196,297,771	189,678,547
Finance lease liabilities	13,106,110	13,026,849
Accounts payable	3,877,980	3,034,148
Accrued expenses	7,808,118	5,853,519
Distributions payable	1,012,279	678,867
Total liabilities (variable interest entities - $17,392,077 and $18,390,067)	237,470,284	223,393,216
Commitments and contingencies (See Note 12)
Equity
Preferred stock, $0.01 par value, 100,000,000 shares authorized; no shares issued and outstanding
Common stock, $0.01 par value, 900,000,000 shares authorized; 9,955,668 and 9,607,463 shares issued and outstanding	99,556	96,074
Additional paid-in capital	97,285,211	93,798,070
Accumulated deficit	(86,154,207)	(67,239,693)
Total stockholders' equity	11,230,560	26,654,451
Total equity	68,304,050	88,992,546
Total Liabilities and Equity	305,774,334	312,385,762
Related Party
Liabilities and Equity
Other liabilities	11,164,605	6,277,432
Nonrelated Party
Liabilities and Equity
Other liabilities	4,203,421	4,843,854
Series B LP Units
Equity
Non-controlling interest	(3,869,459)	(2,841,056)
Series GO LP Units
Equity
Non-controlling interest	10,933,302	14,688,392
Series GO II LP Units
Equity
Non-controlling interest	765,162
Series T LP Units
Equity
Non-controlling interest	45,524,201	45,739,120
Common LP Units
Equity
Non-controlling interest	$ 3,720,284	$ 4,751,639

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Dec. 31, 2023	Dec. 31, 2022
Accumulated depreciation	$ 27,469,450	$ 17,458,998
Assets	305,774,334	312,385,762
Liabilities	$ 237,470,284	$ 223,393,216
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	100,000,000	100,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	900,000,000	900,000,000
Common stock, shares issued	9,955,668	9,955,668
Common stock, shares outstanding	9,607,463	9,607,463
Variable interest entities
Accumulated depreciation	$ 1,281,612	$ 471,491
Assets	22,649,498	24,924,626
Liabilities	$ 17,392,077	$ 18,390,067

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Revenues
Total revenue	$ 74,815,207	$ 53,129,294
Expenses
Property operations	35,917,331	25,985,687
General and administrative	10,535,465	10,577,266
Sales and marketing	4,850,551	3,318,003
Franchise fees	6,440,997	4,849,226
Management fees	5,504,088	4,204,291
Acquisition expense	1,333,267	729,545
Depreciation and amortization	10,233,637	8,049,377
Total expenses	74,815,336	57,713,395
Other Income (Expense)
Other income, net	992,009	2,530,374
Interest expense	(14,621,824)	(11,011,008)
Total other expense	(13,629,815)	(8,480,634)
Net Loss Before Income Taxes	(13,629,944)	(13,064,735)
Income tax (expense) benefit	254,344	(5,845,015)
Net Loss	(13,375,600)	(18,909,750)
Net Loss Attributable to Common Stockholders	$ (9,891,088)	$ (13,982,439)
Basic Net Loss Per Share of Common Stock (in dollars per share)	$ (1.01)	$ (1.54)
Diluted Net Loss Per Share of Common Stock (in dollars per share)	$ (1.01)	$ (1.54)
Weighted-average Shares of Common Stock Outstanding, Basic (in shares)	9,793,775	9,071,919
Weighted-average Shares of Common Stock Outstanding, Diluted (in shares)	9,793,775	9,071,919
Series B LP Units
Other Income (Expense)
Net loss attributable to non-controlling interest	$ (667,582)	$ (943,150)
Series GO LP Units
Other Income (Expense)
Net loss attributable to non-controlling interest	(2,119,797)	(3,101,944)
Series GO II LP Units
Other Income (Expense)
Net loss attributable to non-controlling interest	(94,246)
Common LP Units
Other Income (Expense)
Net loss attributable to non-controlling interest	(602,887)	(882,217)
Room revenue
Revenues
Total revenue	70,159,314	50,335,176
Other revenue
Revenues
Total revenue	$ 4,655,893	$ 2,794,118

XML

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($)	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Total Stockholder's Equity	Non-controlling Interest Series B LP Units	Non-controlling Interest Series GO LP Units	Non-controlling Interest Series GO II LP Units	Non-controlling Interest Series T LP Units	Non-controlling Interest Common LP Units	Total
Balance - Beginning at Dec. 31, 2021	$ 83,481	$ 81,655,994	$ (43,586,952)	$ 38,152,523	$ (1,563,489)	$ 12,498,527		$ 21,931,757	$ 1,437,082	$ 72,456,400
Balance - Beginning (in shares) at Dec. 31, 2021	8,348,310
Issuance of common stock	$ 11,801	11,450,572		11,462,373						11,462,373
Issuance of common stock (in shares)	1,180,020
Issuance of stock-based compensation	$ 60	59,940		60,000						60,000
Issuance of stock-based compensation (in shares)	6,000
Issuance of GO Units						6,275,891				6,275,891
Issuance of T Units								23,807,363		23,807,363
Issuance of Common LP Units									4,600,000	4,600,000
Offering costs			(3,323,984)	(3,323,984)		(476,643)				(3,800,627)
Distributions declared ($0.70 per share)			(6,346,318)	(6,346,318)	(334,417)	(507,439)			(403,226)	(7,591,400)
Distributions reinvested	$ 2,084	1,977,531		1,979,615						1,979,615
Distributions reinvested (in shares)	208,381
Redemptions	$ (1,352)	(1,345,967)		(1,347,319)						$ (1,347,319)
Redemptions (in shares)	(135,248)									(135,248)
Net loss			(13,982,439)	(13,982,439)	(943,150)	(3,101,944)			(882,217)	$ (18,909,750)
Balance - Ending at Dec. 31, 2022	$ 96,074	93,798,070	(67,239,693)	26,654,451	(2,841,056)	14,688,392		45,739,120	4,751,639	88,992,546
Balance - Ending (in shares) at Dec. 31, 2022	9,607,463
Issuance of common stock	$ 1,951	1,948,855		1,950,806						1,950,806
Issuance of common stock (in shares)	195,071
Issuance of stock-based compensation	$ 40	42,240		42,280						42,280
Issuance of stock-based compensation (in shares)	4,000
Issuance of GO II Units							$ 956,863			956,863
Offering costs			(2,167,817)	(2,167,817)		(2,665)	(97,455)			(2,267,937)
Distributions declared ($0.70 per share)			(6,855,609)	(6,855,609)	(360,821)	(1,632,628)		(214,919)	(428,468)	(9,492,445)
Distributions reinvested	$ 1,491	1,496,046		1,497,537						$ 1,497,537
Distributions reinvested (in shares)	149,134
Redemptions (in shares)										0
Net loss			(9,891,088)	(9,891,088)	(667,582)	(2,119,797)	(94,246)		(602,887)	$ (13,375,600)
Balance - Ending at Dec. 31, 2023	$ 99,556	$ 97,285,211	$ (86,154,207)	$ 11,230,560	$ (3,869,459)	$ 10,933,302	$ 765,162	$ 45,524,201	$ 3,720,284	$ 68,304,050
Balance - Ending (in shares) at Dec. 31, 2023	9,955,668

XML

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Distributions declared (in dollars per share)	$ 0.70	$ 0.70

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Cash Flows from Operating Activities:
Net loss	$ (13,375,600)	$ (18,909,750)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
Depreciation	9,973,925	7,995,492
Stock-based compensation expense	42,280	60,000
Amortization	1,479,464	1,526,442
Gain on extinguishment of debt	(700,000)
Loss on disposal of fixed assets	126,452	28,466
Gain on acquisition of VIE		(3,810,081)
Deferred tax assets, net	(273,162)	5,755,669
Change in operating assets and liabilities:
Accounts receivable	1,853	(551,394)
Franchise fees		(1,050,000)
Prepaid expenses and other assets	(415,596)	593,085
Increase in finance lease liability	79,261	188,920
Accounts payable	745,566	1,285,156
Accrued expenses	1,954,599	2,923,389
Due to related parties	3,782,175	3,503,397
Other liabilities	(367,271)	(868,891)
Net cash provided by (used in) operating activities	3,053,946	(1,330,100)
Cash Flows from Investing Activities:
Acquisitions of hotel properties		(50,865,357)
Cash and restricted cash acquired in consolidation of VIE		1,342,428
Improvements and additions to hotel properties	(7,489,926)	(5,958,414)
Net cash used in investing activities	(7,489,926)	(55,481,343)
Cash Flows from Financing Activities:
Proceeds from mortgage debt	13,334,615	63,832,375
Proceeds from lines of credit	6,801,651	15,030,156
Principal payments on mortgage debt	(12,664,312)	(21,047,086)
Principal payments on lines of credit	(753,861)	(3,250,000)
Payments of deferred financing costs	(445,565)	(2,481,549)
Proceeds from issuance of common stock	1,950,806	11,462,373
Proceeds from issuance of GO Units		6,275,891
Proceeds from issuance of GO II Units	956,863
Payments of offering costs	(1,363,010)	(3,815,080)
Payments for shares redeemed		(1,347,319)
Distributions paid	(7,363,159)	(5,258,437)
Net cash provided by financing activities	454,028	59,401,324
Net change in cash, cash equivalents, and restricted cash	(3,981,952)	2,589,881
Beginning Cash, Cash Equivalents, and Restricted Cash	16,926,281	14,336,400
Ending Cash, Cash Equivalents, and Restricted Cash	12,944,329	16,926,281
Supplemental Disclosure of Cash Flow Information:
Interest paid	10,977,385	7,586,812
Income taxes paid	18,992	42,158
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Offering costs included in accounts payable	98,266	(38,024)
Offering costs included in due to related parties	806,661	23,570
Distributions included in due to related parties	298,337	170,138
Reinvested distributions	1,497,537	1,979,615
Initial ASC 842 adoption of right-of-use asset		2,478,696
Reconciliation of Cash, Cash Equivalents, and Restricted Cash:
Cash and cash equivalents, beginning of period	6,193,449	7,866,401
Restricted cash, beginning of period	10,732,832	6,469,999
Beginning Cash, Cash Equivalents, and Restricted Cash	16,926,281	14,336,400
Cash and cash equivalents, end of period	3,052,937	6,193,449
Restricted cash, end of period	9,891,392	10,732,832
Ending Cash, Cash Equivalents, and Restricted Cash	$ 12,944,329	16,926,281
Hampton Inn and Suites, Fargo Medical Center (the "Fargo Property")
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Issuance of T Units		4,091,291
Debt assumed for acquisition		7,198,709
Fairfield Inn & Suites (the "Lakewood Property")
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Issuance of T Units		5,638,000
Residence Inn, The Fort Collins Property
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Issuance of T Units		3,703,690
Debt issued for acquisition		11,500,000
Hilton Garden Inn (the "Pineville HGI Property")
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Issuance of T Units		2,729,211
Hilton Garden Inn (the "Charlotte Property")
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Issuance of T Units		6,427,546
Holiday Inn Wichita Property [Member]
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Issuance of T Units		1,217,625
Common LP Units | Courtyard El Paso Airport, (the "El Paso Airport Property")
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Issuance of T Units		$ 4,600,000

XML

ORGANIZATION

12 Months Ended

Dec. 31, 2023

ORGANIZATION

ORGANIZATION

1.  ORGANIZATION

Lodging Fund REIT III, Inc. (“LF REIT III”), was formed on April 9, 2018 as a Maryland corporation. LF REIT III, together with its subsidiaries (the “Company”), was formed for the principal purpose of acquiring, through purchase or contribution, direct or indirect ownership interests in a diverse portfolio of limited-service, select-service, full-service and extended-stay hotel properties located primarily in “America’s Heartland,” which the Company defines as the geographic area from North Dakota to Texas and the Appalachian Mountains to the Rocky Mountains. LF REIT III has elected to be treated as a real estate investment trust, or REIT, for federal income tax purposes beginning with the taxable year ended December 31, 2018. The Company’s business activities are directed and managed by Legendary Capital REIT III, LLC (the “Advisor”) and its affiliates, which are related parties through common management, pursuant to the Amended and Restated Advisory Agreement (the “Advisory Agreement”), dated June 1, 2018. The Company has no foreign operations or assets and its operating structure includes only one operating and reportable segment.

Substantially all of the Company’s assets and liabilities are held by, and substantially all of its operations are conducted through, Lodging Fund REIT III OP, LP (the “Operating Partnership,” or “OP”), a subsidiary of LF REIT III. The OP has three voting classes of partnership units, Common General Partnership Units (“GP Units”), Interval Units and Common Limited Partnership Units (“Common LP Units”), and four classes of non-voting partnership units, Series B Limited Partnership Units (“Series B LP Units”), Series Growth & Opportunity (“GO”) Limited Partnership Units (“Series GO LP Units”), Series Growth & Opportunity II (“GO II”) Limited Partner Units (“Series GO II LP Units”) and Series T Limited Partnership Units (“Series T LP Units”). LF REIT III was the sole general partner of the OP, as of December 31, 2023 and 2022. As of December 31, 2023, there were 612,100 outstanding Common LP Units, no outstanding Interval Units, there were 1,000 outstanding Series B LP Units, all of which were owned by the Advisor, 3,124,503 Series GO LP Units, 129,787 Series GO II LP Units and 5,073,506 Series T LP Units.

On June 1, 2018, the Company commenced a private offering of shares of common stock, $0.01 par value per share, with a maximum offering of $100,000,000, which was increased to $150,000,000 in shares of the Company’s common stock in December 2021 (the “Offering”). The Offering is to accredited investors only, pursuant to a confidential private placement memorandum exempt from registration under the Securities Act of 1933, as amended. In addition to sales of common shares for cash, the Company has adopted a dividend reinvestment plan (“DRIP”), which permits stockholders to reinvest their distributions back into the Company. As of December 31, 2023, the Company had issued and sold 10,243,193 shares of common stock, including 1,167,594 shares attributable to the DRIP, and received aggregate proceeds of $100.2 million. As of December 31, 2023, the Company had repurchased 287,525 shares, which represents an original investment of $2,858,355 for $2,794,469 under the Company’s Share Repurchase Plan. As of December 31, 2023, all of the redemption proceeds have been paid.

On April 29, 2020, the Company classified and designated 7,000,000 shares of authorized but unissued common stock, $0.01 par value per share, as shares of “Interval Common Stock,” to be part of the Offering. The offering of the Interval Common Stock was a maximum offering of $30,000,000, which could be increased to $60,000,000 in the sole discretion of the Company’s board of directors, (the “Interval Share Offering”) to accredited investors only, pursuant to a confidential private placement memorandum exempt from registration under the Securities Act of 1933, as amended. The Company’s board of directors allowed the Interval Share Offering to expire on March 31, 2022. The Company did not issue or sell any shares of Interval Common Stock in the Offering.

On June 15, 2020, the Operating Partnership commenced a private offering of limited partnership units in the OP, designated as Series GO LP Units, with a maximum offering of $20,000,000, which could be increased to $30,000,000 in the sole discretion of LF REIT III as the General Partner of the Operating Partnership (the “GO Unit Offering”) to accredited investors only, pursuant to a confidential private placement memorandum exempt from registration under the Securities Act of 1933, as amended. The Series GO LP Units were being offered until the earlier of (i) the sale of $20,000,000 in Series GO LP Units (which could be increased to $30,000,000 in the Company’s sole discretion), (ii) June 14, 2022 or (iii) the Operating Partnership terminates the GO Unit Offering at an earlier date in its sole discretion. The Company’s board of directors terminated the GO Unit Offering as of February 14, 2022. The Company’s board of directors approved and ratified additional sales after February 14, 2022 in the GO Unit Offering for sales which were pending as of that date. As of December 31, 2023, the Operating Partnership had issued and sold 3,124,503 Series GO LP Units and received aggregate proceeds of $21.5 million.

The Operating Partnership may issue Series T LP Units from time to time to persons who contribute direct or indirect interests in real estate to the Operating Partnership. The Series T LP Units will have allocations and distributions that are dictated by the Partnership Agreement of the Operating Partnership and the applicable contribution agreement for the real estate. Certain Series T LP Units may have different allocations and distributions than other Series T LP Units. The amount of the allocations and distributions will be determined by the General Partner in its sole discretion at the time of issuance of the Series T LP Units and any future distributions are dependent on the financial performance of the contributed real estate based on a mathematical formula. The Series T LP Units are eligible for conversion into Common LP Units beginning 24 or 36 months, or longer in some instances, after their issuance and will automatically convert into Common LP Units upon other events as described in the Partnership Agreement of the Operating Partnership. The conversion of Series T LP Units into Common LP Units may vary with each issuance and is generally based on a formula that applies an applicable capitalization rate to the then-current trailing twelve months net operating income of the hotel property less the loan balance outstanding as of the contribution date as assumed by the Operating Partnership, and less other amounts

incurred by the Operating Partnership including but not limited to certain closing costs, loan assumption fees and defeasance costs, property improvement plan (“PIP”) and capital expenditures, operating cash infused by the Operating Partnership, and any shortfall of certain minimum cumulative investment yield. There is no guarantee that the future financial performance of the contributed hotel property will be sufficient to result in the issuance of Common LP Units resulting from the application of the conversion formula applicable to the issuance of Series T LP Units at the time of the conversion. As of December 31, 2023, the Company had recorded an aggregate value of $45.7 million to the Series T LP Units in connection with such property contributions. During the year ended December 31, 2023, the Company declared distributions of $0.2 million for the Series T LP Units.

On December 3, 2021, the Operating Partnership commenced a private placement offering of its Common LP Units. As of December 31, 2023, the Operating Partnership had issued and sold 612,100 Common LP Units, with a value of $10.00

per unit at the time of issuance, in connection with property contributions.

On April 7, 2023, the Operating Partnership commenced a private offering of limited partnership units in the OP, designated as Series Growth & Opportunity II Limited Partner Units (“Series GO II LP Units”), with a maximum offering of $30,000,000, which could be increased to $60,000,000 in the sole discretion of LF REIT III as the General Partner of the Operating Partnership, (the “GO II Unit Offering”) to accredited investors only, pursuant to a confidential private placement memorandum exempt from registration under the Securities Act of 1933, as amended. The Series GO II LP Units are offered at a purchase price equal to 75% of the NAV of the Company’s common stock. The Series GO II LP Units are being offered until the earlier of (i) the sale of $30,000,000 in Series GO II LP Units (which could be increased to $60,000,000 in the Company’s sole discretion), (ii) March 31, 2024, which date may be extended for two 1-year extensions until March 31, 2026 in the sole discretion of the Operating Partnership or (iii) the Operating Partnership terminates the GO II Unit Offering at an earlier date in its sole discretion. As of December 31, 2023, the Operating Partnership had issued and sold 129,787 Series GO II LP Units and received gross aggregate proceeds of $1.0 million. See Note 13 “Subsequent Events” of the notes to the consolidated financial statements included as part of this Annual Report on Form 10-K for information regarding the extension of the GO II Unit Offering.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2023

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation— The accompanying consolidated financial statements and related notes have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the SEC applicable to annual financial information. The consolidated financial statements include the accounts of LF REIT III, the OP, its wholly-owned subsidiaries and entities in which the Company has a controlling financial interest, including variable interest entities (“VIEs”) where the Company is the primary beneficiary. The determination of a controlling financial interest is based upon the terms of the governing agreements of the respective entities, including the evaluation of the rights held by other interests. If the entity is considered to be a VIE, the Company determines whether the Company is the primary beneficiary, and then consolidates those VIEs for which the Company has determined that the Company is the primary beneficiary. If the entity in which the Company holds an interest does not meet the definition of a VIE, the Company evaluates whether the Company has a controlling financial interest through the Company’s voting interest in the entity. The Company consolidates entities when the Company owns more than 50 percent of the voting shares of a company or otherwise has a controlling financial interest. References in these financial statements to the net (loss) income attributable to stockholders do not include non-controlling interests, which represent the outside ownership interests of the Company’s consolidated, non-wholly owned entities and are presented separately in the consolidated financial statements. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates—The preparation of the Company’s consolidated financial statements and the accompanying notes in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities and the amounts of contingent assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition—Revenues consist of amounts derived from hotel operations, including room sales and other hotel revenues, and are presented on a disaggregated basis in the Company’s consolidated statements of operations. These revenues are recorded net of any sales and occupancy taxes collected from the hotel guests. All revenues are recorded on

an accrual basis as they are earned. Any cash received prior to a guest’s arrival is recorded as an advance deposit from the guest and recognized as revenue at the time of the guest’s occupancy at the hotel property.

Investment in Hotel Properties—The Company evaluates whether each hotel property acquisition should be accounted for as an asset acquisition or a business combination. If substantially all of the fair value of the gross assets acquired is concentrated in a single asset or a group of similar identifiable assets, then the transaction is considered to be an asset acquisition. All of the Company’s acquisitions since inception have been determined to be asset acquisitions. Transaction costs associated with asset acquisitions are capitalized and transaction costs associated with business combinations would be expensed as incurred.

The Company’s acquisitions generally consist of land, land improvements, buildings, building improvements, and furniture, fixtures and equipment (“FF&E”). The Company may also acquire intangible assets or liabilities related to in-place leases, management agreements, debt, and advanced bookings. For transactions determined to be asset acquisitions, the Company allocates the purchase price among the assets acquired and the liabilities assumed on a relative fair value basis at the date of acquisition. The Company determines the fair value of assets acquired and liabilities assumed with the assistance of third-party valuation specialists, using cash flow analysis as well as available market and cost data. The determination of fair value includes making numerous estimates and assumptions.

The difference between the fair value and the face value of debt assumed in connection with an acquisition is recorded as a premium or discount and amortized to interest expense over the remaining term of the debt assumed. The valuation of assumed debt liabilities is based on our estimate of the current market rates for similar liabilities in effect at the acquisition date.

The Company’s investments in hotel properties are carried at cost and are depreciated using the straight-line method over the estimated useful lives of 15 years for land improvements, 40 years for buildings and building improvements and 3 to 7 years for FF&E. Maintenance and repair costs are expensed in the period incurred and major renewals or improvements to the hotel properties are capitalized.

The Company assesses the carrying value of its hotel properties whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. The recoverability is measured by comparing the carrying amount of the property to the estimated future undiscounted cash flows of the property, which take into account current market conditions, and the Company’s intent with respect to holding or disposing of the hotel properties. If the Company’s analysis indicates that the carrying value is not recoverable on an undiscounted cash flow basis, the Company will recognize an impairment loss for the amount by which the carrying value exceeds the fair value. The fair value is determined through various valuation techniques, including internally developed discounted cash flow models, comparable market transactions or third-party appraisals.

The use of projected future cash flows is based on assumptions that are consistent with a market participant’s future expectations for the industry and the economy in general and the Company’s expected use of the underlying hotel properties. The assumptions and estimates related to the future cash flows and the capitalization rates are complex and subjective in nature. Changes in economic and operating conditions that occur subsequent to a current impairment analysis and the Company’s ultimate use of the hotel property could impact the assumptions and result in future impairment losses to the hotel properties.

Advertising Costs—The Company expenses advertising costs as incurred. These costs represent the expense for franchise advertising and reservation systems under the terms of the hotel management and franchise agreements and expenses that are directly attributable to advertising and promotion. Advertising expense was $2.6 million and $1.5 million for the years ended December 31, 2023 and 2022, respectively, and is included in sales and marketing in the consolidated statements of operations.

Non-controlling Interest—Non-controlling interests represent the portion of equity in a subsidiary held by owners other than the Company. Non-controlling interests are reported in the consolidated balance sheets within equity, separate from stockholders’ equity. Revenue and expenses attributable to both the Company and the non-controlling interests are reported in the consolidated statements of operations, with net income or loss attributable to non-controlling interests reported separately from net income or loss attributable to the Company.

Cash and Cash Equivalents—Cash and cash equivalents include cash in bank accounts as well as highly liquid investments with an original maturity of three months or less. The Company deposits cash with several high-quality financial institutions. These deposits are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”) up to an insurance limit of $250,000. At times, the Company’s cash and cash equivalents may exceed federally insured levels.

Restricted Cash—Restricted cash primarily consists of earnest money deposits related to hotel property acquisitions, as well as certain funds maintained in escrow accounts to fund future payments for insurance, property tax obligations, and reserves for future capital expenditures, as required by our debt agreements.

Accounts Receivable—Accounts receivable consist primarily of receivables due from hotel guests for room stays and meeting and banquet room rentals, which are uncollateralized customer obligations. Management determines the likelihood of collectability of receivables on an individual customer basis, based on the amount of time the balance has been outstanding, likelihood of collecting, and the customer’s current economic status. The carrying amount of the accounts receivables is reduced by an allowance for credit losses that reflects management’s best estimate of the amounts that will not be collected.

Deferred Financing Costs—Deferred financing costs represent origination fees, legal fees, and other costs associated with obtaining financing. Deferred financing costs are presented on the consolidated balance sheets as a direct deduction from the carrying amount of the related debt liability. These costs are amortized to interest expense over the terms of the respective financing agreements using the straight-line method, which approximates the effective interest method. The Company expenses unamortized deferred financing costs when the associated financing agreement is refinanced or repaid before maturity unless certain criteria are met that would allow for the carryover of such costs to the refinanced agreement. Costs incurred in connection with potential financial transactions that are not completed are expensed in the period in which it is determined the financing will not be completed.

Offering Costs—The Company has incurred certain costs related directly to the Company’s private offerings consisting of, among other costs, commissions, legal, due diligence costs, printing, marketing, filing fees, postage, data processing fees, and other offering related costs. These costs are capitalized and recorded as a reduction of equity proceeds on the accompanying consolidated balance sheets.

Property Operations Expenses—Property operations expenses consist of expenses related to room rental, food and beverage sales, telephone usage, and other miscellaneous service costs, as well as all costs of operating the Company’s hotel properties such as building repairs, maintenance, property taxes, utilities, and other related costs.

Property Management Fees—Property management fees include expenses incurred for management services provided for the day-to-day operations of our hotel properties, which are generally charged at a rate of 4% of gross revenues. Property management fees also include asset management fees, which may be charged at an annual rate of up to 0.75% of gross assets and are paid to the Advisor.

Franchise Fees—The Company pays initial fees related to hotel franchise rights prior to acquiring a hotel property. The fees are included in prepaid expenses and other assets until the time the related hotel property is acquired. Initial franchise fees related to hotel properties that are acquired are amortized on a straight-line basis over the life of the agreement. Initial franchise fees related to hotel properties that are not acquired are refunded to the Company, net of any associated fees, and any fees are expensed as incurred. Franchise fees on the accompanying consolidated statements of operations include the amortization of initial franchise fees, as well as monthly fees paid to franchisors for royalty, marketing, and reservation fees and other related costs.

Acquisition Costs—The Company incurs costs during the review of potential hotel property acquisitions including legal fees, environmental reviews, market studies, financial advisory services, and other professional service fees. If the Company does complete a property acquisition, an acquisition fee of up to 1.4% is charged by the Advisor, based on the purchase price of the property plus any estimated PIP costs. For transactions determined to be asset acquisitions, these costs are capitalized as part of the overall cost of the project. For transactions determined to be business combinations, these costs would be expensed in the period incurred. Acquisition-related and acquisition due diligence costs that relate to a property that is not acquired, are expensed and included in acquisition costs on the accompanying consolidated statements of operations. Prior to the ultimate determination of whether a property will be acquired or not, acquisition-related and

acquisition due diligence costs are recorded as, and included in, prepaid expenses and other assets on the accompanying consolidated balance sheets.

Net Loss Per Share of Common Stock—Basic net loss per common share is computed based upon the weighted average number of shares outstanding during the period. Diluted net loss per common share is calculated after giving effect to all potential common shares that were dilutive and outstanding for the period. Basic and diluted net loss per common share were the same for the periods presented.

Stock-Based Compensation—During 2022, the Company began compensating its independent directors with stock-based compensation as approved by and administered under the supervision of our Board of Directors. The awards are fully vested at issuance and the Company recognizes stock-based compensation expense based on the award’s fair value at the grant date. Compensation expense related to stock awards is determined on the grant date based on the offering price of our common stock and is charged to earnings when issued. Stock-based compensation expense was $42,280 and $60,000 for the years ended December 31, 2023 and 2022, respectively, and is included in general and administrative expense in the consolidated statements of operations.

Income Taxes—The Company has elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement that it distribute at least 90% of its REIT taxable income, subject to certain adjustments and excluding any net capital gain, to stockholders. The Company’s intention is to adhere to the REIT qualification requirements and to maintain its qualification for taxation as a REIT.

As a REIT, the Company is generally not subject to U.S. federal corporate income tax on the portion of taxable income that is distributed to stockholders. If the Company fails to qualify for taxation as a REIT in any taxable year, the Company will be subject to U.S. federal income taxes at regular corporate rates and it may not be able to qualify as a REIT for four subsequent taxable years. As a REIT, the Company may be subject to certain state and local taxes on its income and property, and to U.S. federal income and excise taxes on undistributed taxable income. Taxable income from non-REIT activities managed through the Company’s taxable REIT subsidiary (“TRS”) is subject to U.S. federal, state, and local income taxes at the applicable rates.

The TRS accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax basis, and for net operating loss, capital loss and tax credit carryforwards. The deferred tax assets and liabilities are measured using the enacted income tax rates in effect for the year in which those temporary differences are expected to be realized or settled. The effect on the deferred tax assets and liabilities from a change in tax rates is recognized in earnings in the period when the new rate is enacted. However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of all available evidence, including the future reversals of existing taxable temporary differences, future projected taxable income and tax planning strategies. Valuation allowances are provided if, based upon the weight of the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company performs periodic reviews for any uncertain tax positions and, if necessary, will record the expected future tax consequences of uncertain tax positions in the consolidated financial statements.

Fair Value Measurement—The Company establishes fair value measures based on the fair value definition and hierarchy levels established by GAAP. These fair values are based on a three-tiered fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1—Observable inputs such as quoted prices in active markets.

Level 2—Directly or indirectly observable inputs, other than quoted prices in active markets.

Level 3—Unobservable inputs in which there is little or no market data, which require a reporting entity to develop its own assumptions.

The Company’s estimates of fair value were determined using available market information and appropriate valuation methods. Considerable judgment is necessary to develop estimated fair value. The use of different market assumptions or

estimation methods may have a material effect on the estimated fair value amounts. The Company classifies assets and liabilities in the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement.

Accounting Standards Update—The Company, as an emerging growth company, has elected to use the extended transition period which allows us to defer the adoption of new or revised accounting standards. This allows the Company to adopt new or revised accounting standards as of the effective date for non-public business entities.

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, “Leases” (“ASU No. 2016-02”) (Topic 842), which replaces Leases (Topic 840), and sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). ASU No. 2016-02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance under Leases (Topic 840), for operating leases. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales type leases, direct financing leases and operating leases. The Company adopted this standard effective January 1, 2022, electing to recognize and measure its leases prospectively at the beginning of the period of adoption, without restating the presentation of periods prior to the effective date, which continue to be reported in accordance with the Company’s historical accounting policy.

At adoption of the new standard, the Company recorded a right-of-use asset and lease liability for its Sheraton Northbrook, Illinois hotel property (the "Northbrook Property") ground lease measured at the estimated present value of the remaining minimum lease payments under the lease. The Company’s ground lease is classified as a financing lease under Topic 842. For this finance lease, effective January 1, 2022, the Company began recognizing depreciation and amortization expense and interest expense in the Company’s consolidated statements of operations instead of ground lease rent expense. While the total expense recognized over the life of a lease is unchanged, the timing of expense recognition for finance leases results in higher expense recognition during the earlier years of the lease and lower expense during the later years of the lease. In addition to recording operating and financing right-of-use assets and lease liabilities, the Company also reclassified at adoption its intangible liability for its above market ground lease to the beginning right-of-use asset. See Note 3 for more information regarding the Company’s lease assets and liabilities.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU No. 2016-13”), which requires that entities use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowance for credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU No. 2016-13 will be effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted ASU No. 2016-13 using the modified retrospective approach and the adoption did not have a material impact on the Company’s consolidated financial statements.

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, to improve reportable segment disclosure requirements through enhanced disclosures about significant segment expenses. The ASU is effective for annual reporting periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the ASU to determine its impact on the Company’s segment disclosures.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The standard requires additional disclosures about income taxes, including specific categories in the rate reconciliation and disaggregated information on income taxes paid and income from continuing operations. The standard also eliminates the requirement to disclose an estimated range of the reasonably possible change in unrecognized tax benefits in the next 12 months. The Company is still evaluating the level of disclosure that will be required. This standard is to be applied on a prospective basis and is effective for annual periods beginning after December 15, 2024, with early adoption permitted.

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INVESTMENT IN HOTEL PROPERTIES

12 Months Ended

Dec. 31, 2023

INVESTMENT IN HOTEL PROPERTIES

INVESTMENT IN HOTEL PROPERTIES

3.  INVESTMENT IN HOTEL PROPERTIES

Investment in hotel properties as of December 31, 2023 and 2022 consisted of the following:

	December 31,		December 31,
	2023		2022
Land and land improvements	$	32,655,286	$	32,650,698
Building and building improvements		245,132,662		241,278,409
Furniture, fixtures, and equipment		23,850,758		21,884,508
Right-of-use asset - ground lease		7,081,156		7,286,984
Construction in progress		6,097,067		4,576,041
Investment in hotel properties, at cost		314,816,929		307,676,640
Less: accumulated depreciation		(27,469,450)		(17,458,998)
Investment in hotel properties, net	$	287,347,479	$	290,217,642

As of December 31, 2023, the Company consolidated nineteen hotel properties, consisting of eighteen hotel properties owned by the Company and an equity and profits interest in the parent of the entity which holds a leasehold interest in one hotel property, with an aggregate of 2,261 rooms located in eleven states.

On August 10, 2022, the Company consolidated a variable interest entity (“VIE”) that owns one hotel in El Paso, Texas (the “El Paso University Property”). The Company is the primary beneficiary of this VIE as the Company has the power to direct the activities that most significantly affect its economic performance. Additionally, the Company has the obligation to absorb its losses and the right to receive benefits that could be significant to it. Accordingly, the Company initially recognized the VIE’s assets, liabilities, and noncontrolling interest at fair value. The Company’s condensed consolidated balance sheet includes the following assets and liabilities of this entity:

	December 31,		December 31,
	2023		2022
Assets
Investment in hotel properties, net of accumulated depreciation of $1,281,612 and $471,491	$	21,194,229	$	22,036,289
Cash and cash equivalents		163,501		493,056
Restricted cash		851,290		2,173,237
Accounts receivable, net		412,856		154,976
Prepaid expenses and other assets		27,622		67,068
Total Assets	$	22,649,498	$	24,924,626
Liabilities
Debt, net	$	12,086,033	$	12,244,068
Finance lease liability		4,750,889		4,862,172
Accounts payable		143,030		182,692
Accrued expenses		109,897		445,763
Other liabilities		302,228		655,372
Total liabilities	$	17,392,077	$	18,390,067

Acquisitions of Hotel Properties

The Company did not acquire any properties during the year ended December 31, 2023. The Company acquired seven properties and an equity and profits interest in the parent of the entity which holds a leasehold interest in one hotel property during the year ended December 31, 2022. Each of the Company’s hotel acquisitions to date have been determined to be asset acquisitions.  The table below outlines the details of the properties acquired during the year ended December 31, 2022.

2022 Acquisitions
				Number
			Date	of Guest	Purchase			Transaction				%
Hotel	Property Type	Location	Acquired	Rooms	Price			Costs		Total		Interest
Hampton Inn & Suites (the “Fargo Property”)	Limited-Service	Fargo, ND	January 18, 2022	90	$	11,440,000	(1)	$	302,222	$	11,742,222	100	%
Courtyard by Marriott (the "El Paso Airport Property")	Select-Service	El Paso, TX	February 8, 2022	90		15,120,000	(2)		333,234		15,453,234	100	%
Fairfield Inn & Suites (the "Lakewood Property")	Limited-Service	Lakewood, CO	March 29, 2022	142		18,800,000	(3)		862,117		19,662,117	100	%
Residence Inn (the "Fort Collins Property")	Extended-Stay	Fort Collins, CO	August 3, 2022	113		15,800,000	(4)		546,009		16,346,009	100	%
Hilton Garden Inn (the "Pineville HGI Property")	Select-Service	Pineville, NC	August 25, 2022	113		10,930,000	(5)		347,149		11,277,149	100	%
Hilton Garden Inn (the "Charlotte Property")	Select-Service	Charlotte, NC	August 25, 2022	112		15,440,000	(6)		416,387		15,856,387	100	%
Holiday Inn (the "Wichita Property")	Limited-Service	Wichita, KS	December 22, 2022	84		7,400,000	(7)		234,310		7,634,310	100	%
				744	$	94,930,000		$	3,041,428	$	97,971,428

(1) Includes the issuance of $4,091,291 in Series T LP Units of the Operating Partnership.

(2) Includes the issuance of $4,600,000 in Common Limited Partnership Units of the Operating Partnership.

(3) Includes the issuance of $5,638,000 in Series T LP Units of the Operating Partnership.

(4) Includes the issuance of $3,703,690 in Series T LP Units of the Operating Partnership.

(5) Includes the issuance of $2,729,211 in Series T LP Units of the Operating Partnership.

(6) Includes the issuance of $6,427,546 in Series T LP Units of the Operating Partnership.

(7) Includes the issuance of $1,217,625 in Series T LP Units of the Operating Partnership.

In addition, on August 10, 2022, the Company acquired a 24.9% equity and profits interest in High Desert Garden Holdings, LLC, which is the parent of the entity which holds a leasehold interest in the Hilton Garden Inn, located in El Paso, Texas (the “El Paso University Property”) in exchange for a capital contribution of $3.2 million. The El Paso University Property is a select-service hotel with 153 guest rooms. See “—2022 Business Combinations” below for additional information regarding this transaction.

The allocation of the aggregate purchase price in accordance with GAAP guidance prescribed in ASC Topic 805, Business Combinations, of the assets and liabilities acquired at their relative fair values of their acquisition dates, is as follows:

	For the Years Ended December 31,
	2023		2022
Land and land improvements	$	—	$	12,538,514
Building and building improvements		—		79,702,403
Furniture, fixtures, and equipment		—		5,730,511
Total assets acquired		—		97,971,428
Assumed mortgage debt		—		7,198,709
Net purchase price	$	—	$	90,772,719

All acquisitions completed during the year ended December 31, 2022 were considered asset acquisitions under ASC 805.

Eleven of the hotel properties owned by the Company as of December 31, 2023 are subject to management agreements with NHS, LLC dba National Hospitality Services (“NHS”) with an initial term expiring on December 31 of the fifth full calendar year following the effective date of the agreement, which will automatically renew for successive five-year periods unless terminated earlier in accordance with its terms. NHS is wholly-owned by Norman Leslie, a director and executive officer of the Company and a principal of the Advisor. The Pineville Property was being managed on a day-to-day basis by Beacon IMG, Inc. (“Beacon”), an affiliate of the seller of the Pineville Property, pursuant to a sub-management agreement. On February 1, 2023, day-to-day management was transferred to HP Hotel Management, Inc.

The Southaven Property is subject to a management agreement with Vista Host Inc. (“Vista”) with an initial term expiring on February 21 of the fifth full calendar year following the effective date of the agreement. The agreement will automatically renew for two (2) successive five-year periods unless terminated earlier in accordance with its terms. The Houston Property, El Paso Airport Property and El Paso University Property are subject to a management agreement with Interstate Management Company, LLC (“Aimbridge”). The Aimbridge agreement for the Houston Property has an initial term expiring on August 3 of the third full calendar year following the effective date of the agreement. The agreement will automatically renew for additional successive terms of one year each unless terminated earlier in accordance with its terms. The Aimbridge agreement for the El Paso Airport Property and the El Paso University Property each has an initial five (5) year term and will automatically renew for one (1) year periods unless terminated earlier in accordance with its terms. The Charlotte Property and the Pineville HGI Property are each subject to a management agreement with HP Hotel Management, Inc. (“HP”). Each HP agreement has an initial term expiring three years after its effective date, which automatically renews for successive three-year periods, unless terminated in accordance with its terms. The Fargo Property and the Wichita Property are each subject to a management agreement with KAJ Hospitality Inc. Each KAJ agreement has an initial term of five years after its effective date, which automatically renews for successive one-year periods, unless terminated in accordance with its terms. The seller of the Pineville Property, an affiliate of Beacon, was entitled to additional cash consideration if the property exceeds certain performance criteria based on increases in the property’s net operating income (“NOI”) for a selected 12-month period of time. At any time during the period beginning April 1, 2021 through the date of the final NOI determination (on or about April 30, 2023), the seller of the property could have made a one-time election to receive the additional consideration. The variable amount of the additional consideration, if any, was based on the excess of the property’s actual NOI over a base NOI for the applicable 12-month calculation period divided by the stated cap rate for such calculation period. As of December 31, 2023, no amounts were owed or paid to the seller of the Pineville Property, and no election to receive the additional consideration had been made. As of the date of this filing, the period to elect to receive additional consideration has passed with no election being made.

2022 Acquisitions

Hampton Inn & Suites Fargo Medical Center – Fargo, North Dakota

On January 18, 2022, the Operating Partnership acquired a Hampton Inn & Suites hotel property in Fargo, North Dakota (the “Fargo Property”) for contractual consideration comprised of $7.2 million in debt, $150,000 in cash and the issuance of $4.1 million in Series T LP Units of the Operating Partnership. The Series T LP Units will convert into Common LP Units of the Operating Partnership beginning 36 months, or in the event the Operating Partnership is then in the process of transacting a sale of the Operating Partnership’s assets or another significant capital event necessitating a conversion is then in process, after January 18, 2022, at which point the value will be calculated pursuant to the terms of an Amended and Restated Contribution Agreement, dated January 18, 2022. The number of Common LP Units to be issued to the contributor based on such conversion may be higher or lower than the initial valuation of the Series T LP Units. Accordingly, the aggregate purchase price used for the acquisition accounting noted in the tables above and below of $11.4 million, was determined to be the value assigned by a third-party appraisal, as the appraisal value was more reliably measurable.

Courtyard El Paso Airport – El Paso, Texas

On February 8, 2022, the Operating Partnership acquired a Courtyard by Marriott hotel property in El Paso, Texas (the “El Paso Airport Property”) for contractual consideration comprised of $10.0 million in debt, $620,000 in cash and the issuance of $4.6 million in Common LP Units.

Fairfield Inn & Suites Denver Southwest Lakewood – Lakewood, Colorado

On March 29, 2022, the Operating Partnership acquired a Fairfield Inn & Suites hotel property in Lakewood, Colorado (the “Lakewood Property”) for contractual consideration of $12.6 million in debt, $552,000 in cash and approximately $6.2 million in Series T LP Units of the Operating Partnership. The Series T LP Units will convert into Common LP Units of the Operating Partnership beginning 36 months, or in the event the Operating Partnership is then in the process of transacting a sale of the Operating Partnership’s assets or another significant capital event necessitating a conversion is then in process, up to 48 months, after March 29, 2022, at which point the value will be calculated pursuant to the terms of an Amended and Restated Contribution Agreement, dated March 29, 2022. The number of Common LP Units to be

issued to the contributor based on such conversion may be higher or lower than the initial valuation of the Series T LP Units. Accordingly, the aggregate purchase price used for the acquisition accounting noted in the tables above and below of $18.8 million, was determined to be the value assigned by a third-party appraisal, as the appraisal value was more reliably measurable.

Residence Inn by Marriott Fort Collins – Fort Collins, Colorado

On August 3, 2022, the Operating Partnership acquired a Residence Inn by Marriott hotel property in Fort Collins, Colorado (the “Fort Collins Property”) for contractual consideration comprised of $11.5 million in debt, the issuance of 560,369 Series T LP Units of the Operating Partnership, and approximately $600,000 in cash at closing. The Series T Limited Units will convert into Common Limited Units of the Operating Partnership beginning 36 months, or at the option of the contributor, up to 48 months, after the closing, or upon the sale of the Fort Collins RI property or substantially all of the Operating Partnership’s assets, at which point the value will be calculated pursuant to the terms of the Fort Collins RI Amended Contribution Agreement. The number of Common LP Units to be issued to the contributor based on such conversion may be higher or lower than the initial valuation of the Series T LP Units. Accordingly, the aggregate purchase price used for the acquisition accounting noted in the tables above and below of $15.8 million, was determined to be the value assigned by a third-party appraisal, as the appraisal value was more reliably measurable.

Hilton Garden Charlotte North – Charlotte, North Carolina

On August 25, 2022, the Operating Partnership acquired a Hilton Garden Inn hotel property in Charlotte, North Carolina (the “Charlotte Property”) for contractual consideration comprised of the payoff of the existing loan secured by the Charlotte Property in the amount of $8.7 million, refinanced with a new term loan by subsidiaries of the Operating Partnership with Western Alliance Bank (the “Charlotte HGI Lender”) in the original principal amount of $9.8 million secured by the Charlotte Property (the “Charlotte HGI Loan Agreement”), the issuance by the Operating Partnership of 598,755 Series T Limited Units of the Operating Partnership, and the payment by the Operating Partnership of $0.4 million in cash. The Series T LP Units will convert into Common Limited Units of the Operating Partnership beginning 24 months after the closing. The number of Common Limited Units to be issued to the Contributor upon conversion will be calculated pursuant to the terms of the Charlotte HGI Contribution Agreement, which may be higher or lower than the initial valuation of the Series T LP Units. Accordingly, the aggregate purchase price used for the acquisition accounting noted in the tables above and below of $15.4 million, was determined to be the value assigned by a third-party appraisal, as the appraisal value was more reliably measurable.

Hilton Garden Pineville – Pineville, North Carolina

On August 25, 2022, the Operating Partnership acquired a Hilton Garden Inn hotel property in Pineville, North Carolina (the “Pineville HGI Property”) for contractual consideration comprised of the payoff of the existing loan secured by the Pineville HGI in the amount of $7.8 million, refinanced with a new $7.0 million loan by subsidiaries of the Operating Partnership with Western Alliance Bank (the “Pineville HGI Lender”) secured by the Pineville HGI (the “Pineville HGI Loan Agreement”), the issuance by the Operating Partnership of 249,921 Series T Limited Units of the Operating Partnership, and the payment by the Operating Partnership of $0.4 million in cash. The Series T Limited Units will convert into Common Limited Units of the Operating Partnership beginning 24 months after the closing. The number of Common Limited Units to be issued to the Contributor upon conversion will be calculated pursuant to the terms of the Pineville HGI Contribution Agreement, which may be higher or lower than the initial valuation of the Series T LP Units. Accordingly, the aggregate purchase price used for the acquisition accounting noted in the tables above and below of $10.9 million, was determined to be the value assigned by a third-party appraisal, as the appraisal value was more reliably measurable.

Holiday Inn Express & Suites - Wichita Airport

On December 22, 2022, the Operating Partnership acquired a Holiday Inn Express & Suites hotel property in Wichita, Kansas (the “Wichita Property”) for contractual consideration comprised of the origination of a new loan by subsidiaries of the Operating Partnership with Choice Financial Group (the “Wichita HIEX Lender”) for $5.6 million, secured by the Wichita Property the issuance by the Operating Partnership of 121,762 Series T Limited Units of the Operating Partnership, and the payment by the Operating Partnership of $0.5 million in cash, a portion of which was used to pay off the portion

of the Wichita Contributor’s existing loan not covered by the proceeds of the new loan with the Wichita HIEX Lender. The Series T Limited Units will convert into Common Limited Units of the Operating Partnership 36 months after the closing. The number of Common Limited Units to be issued to the Wichita Contributor upon conversion will be calculated pursuant to the terms of the Pineville HGI Contribution Agreement, which may be higher or lower than the initial valuation of the Series T LP Units. Accordingly, the aggregate purchase price used for the acquisition accounting noted in the tables above and below of $7.4 million, was determined to be the value assigned by a third-party appraisal, as the appraisal value was more reliably measurable.

2022 Business Combinations

Hilton Garden Inn El Paso University – El Paso, Texas

On August 10, 2022, the Operating Partnership acquired an equity and profits interest in High Desert Garden Holdings, LLC, a Delaware limited liability company (“HDGH”), the parent of the entity which holds a leasehold interest in a Hilton Garden Inn located in El Paso, Texas (the “El Paso University Property”) pursuant to a Reorganization and Membership Interest Purchase Agreement dated as of August 10, 2022 by and among the Operating Partnership, Roma Commercial, Inc., ASI Capital, LLC, and VB Hotel Group A, LLC and pursuant to a First Amendment to the Fourth Amended and Restated Operating Agreement of High Desert Garden Holdings, LLC (collectively and as amended (the “El Paso University Amended Agreements”)). High Desert Investors, LP, a Delaware limited partnership (“HDI”), a wholly-owned subsidiary of HDGH, holds a leasehold interest in real estate and the El Paso University Property located on such real estate.

Pursuant to the El Paso University Amended Agreements, the Operating Partnership acquired a 24.9% membership interest in HDGH in exchange for a capital contribution of $3.2 million. The Operating Partnership has the unconditional right, at any time prior to December 31, 2027 and at its discretion, to acquire all membership interest in HDGH on the terms and conditions as provided in the El Paso University Amended Agreements. After paying any member loans, the Operating Partnership will receive 100% of distributions from operations, subject to annual cash distributions for members that existed before the El Paso University Amended Agreements (the “Prior Members”), which are entitled to up to 6.0% of the value of the Prior Member’s ownership percentage, depending upon the net operating income (“NOI”) of the El Paso University Hotel Property during each such applicable year. The Operating Partnership will fund any capital requirements for HDGH and has the option to fund such requirements by making a loan to HDGH at a 12% per annum interest rate. HDI is the borrower (“Borrower”) under a loan in the original principal amount of $14.4 million which is secured by HDI’s leasehold interest in the El Paso University Property and the real estate on which it is located. The loan has a fixed interest rate of 4.939% per annum and matures on August 6, 2025. In connection with the transactions effected through the El Paso University Amended Agreements, Corey Maple, a director and executive officer of the Company, entered into a guaranty with the lender to guarantee payment, when due, of the loan amount and the performance of agreements by Borrower contained in the loan documents, as further described in the guaranty.

The Company accounted for this transaction as a business combination in accordance with GAAP guidance prescribed in ASC Topic 805, Business Combination. As such, the Company recognized a gain for the difference between the sum of the fair value of any consideration paid, the fair value of the noncontrolling interest, and the net fair value of identifiable assets and liabilities of the VIE. The assets of the Company’s VIE are only available to settle the obligation of this entity. The Company has expensed all transaction costs as an acquisition expense on the Company’s Consolidated Statement of Operations amounting to $571,198. The fair value of the investment in the hotel was determined by an independent appraisal and debt was determined by calculating the present value of the principal and interest payments, using discount rates that best reflect current market interest rates for financings with similar characteristics and credit quality, and assuming the loan is outstanding through its maturity. The fair values were based on estimated cash flow projections that utilize appropriate discount rates and available market information. Such inputs were categorized as Level 3, as defined in the GAAP fair value hierarchy. Level 3 valuations incorporate subjective judgements and consider assumptions that are not observable in the market.

In connection with this transaction, the Company allocated the purchase price of HDGH based on the estimated fair value of assets acquired and liabilities assumed as follows:

	August 10,
	2022
Assets
Building	$	16,700,000
Furniture, fixtures & equipment		900,000
Right-of-use asset - ground lease		4,862,172
Cash and cash equivalents		36,790
Restricted cash		1,305,636
Accounts receivable, net		168,974
Prepaid expenses and other assets		107,291
Total Assets	$	24,080,863
Liabilities
Debt	$	12,781,084
Finance lease liability		4,862,172
Accounts payable		237,636
Accrued expenses		1,970,554
Other liabilities		419,336
Total liabilities	$	20,270,782
Assets in excess of liabilities (gain on acquisition of VIE)	$	3,810,081

Northbrook Property Above Market Ground Lease

On December 3, 2021, in connection with the purchase of the Northbrook Property, the Company recorded an above market ground lease liability of $5,497,061, which was recognized on the consolidated balance sheet within Other Liabilities. The Company assumed the ground lease 15 years into a 61-year lease maturing in 2067. The yearly base rent, paid monthly, increases 3% every year through maturity. As of December 31, 2023, the Company’s finance lease had a discount rate of 7.75%.

Upon adoption of ASU No. 2016-02 on January 1, 2022, the Company derecognized the above market ground lease liability by reclassifying it as a partial offset to the beginning right-of-use asset related to this financing lease. At adoption of the new standard, the Company recognized a lease liability of $7,975,757 and a right-of-use asset of $2,478,696, which included the derecognition of the above-market ground lease liability. For the year ended December 31, 2023, the Company recognized interest expense of $639,561 and right-of-use amortization expense of $53,885 related to the finance lease.

El Paso University Property Ground Lease

On August 10, 2022, in connection with the El Paso University Property, the Company recognized a finance lease liability of $4,862,172 and a right-of-use asset of $4,862,172 related to a ground lease assumed. The Company assumed the ground lease with a remaining term of 32 years, maturing in 2054. Annual rentals are comprised of a base rent due at the beginning of the year plus, if applicable, a percent of revenue in excess of the base rent. The annual base rent is adjusted every five years by an average of a percent of the annual revenue in preceding years. If revenue remains below the previous five-year base rent, then there is no change to base rent. As of December 31, 2023, the finance lease had a discount rate of 9.00%.

The following table reconciles the undiscounted cash flows for each of the next five years and total of the remaining years to the finance lease liability included in the Company’s consolidated balance sheet as of December 31, 2023.

2024	$	610,237
2025		624,112
2026		645,791
2027		660,511
2028		675,672
Thereafter		43,341,125
Total finance lease payments		46,557,448
Interest		(33,451,338)
Present value of finance lease liabilities	$	13,106,110

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PREPAID EXPENSES AND OTHER ASSETS

12 Months Ended

Dec. 31, 2023

PREPAID EXPENSES AND OTHER ASSETS

PREPAID EXPENSES AND OTHER ASSETS

4.  PREPAID EXPENSES AND OTHER ASSETS

Prepaid expenses and other assets consisted of the following:

	December 31,		December 31,
	2023		2022
Franchise fees(1)	$	—	$	150,000
Acquisition costs		—		485,304
Insurance		941,582		389,656
Other		884,007		385,033
	$	1,825,589	$	1,409,993

(1) Prepaid franchise fees paid in 2022 in relation to Sheraton Albuquerque Airport, terminated in 2023.

XML

ACCRUED EXPENSES

12 Months Ended

Dec. 31, 2023

ACCRUED EXPENSES

ACCRUED EXPENSES

5.  ACCRUED EXPENSES

Accrued expenses consisted of the following:

	December 31,		December 31,
	2023		2022
Property taxes	$	3,040,984	$	3,215,458
Interest		3,504,989		1,585,813
Other		1,262,145		1,052,248
	$	7,808,118	$	5,853,519

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DEBT

12 Months Ended

Dec. 31, 2023

DEBT

DEBT

6.  DEBT

Lines of Credit

Revolving Line of Credit - Western State Bank

On February 10, 2020, the Company entered into a $5.0 million revolving line of credit with Western State Bank (“Western Line of Credit”). The Western Line of Credit requires monthly payments of interest only, with all outstanding principal amounts being due and payable at maturity on February 10, 2021. On January 19, 2021, the Western Line of Credit was amended to extend the maturity date to May 10, 2021. The Western Line of Credit had a variable interest rate equal to the U.S. Prime Rate, plus 0.50%. On May 6, 2021, the Western Line of Credit was amended to extend the maturity date to May 10, 2022. On that date, the interest rate was also amended to incorporate an interest rate floor equal to 4.00%. On May 5, 2022, the Western Line of Credit was amended to extend the maturity date to December 15, 2022. On December 15, 2022, the Western Line of Credit was amended to extend the maturity to April 15, 2023. Additionally, through the

amendment on December 15, 2022, the Western Line of Credit is secured by the Company’s Hampton Inn hotel property in Eagan, Minnesota, the Company’s Holiday Inn Express hotel property in Cedar Rapids, Iowa, the Company’s Hampton Inn hotel property in Fargo, North Dakota and limited partnership units of the Operating Partnership. On April 15, 2023, the Western Line of Credit was amended to extend the maturity to June 15, 2023. On July 31, 2023, the Western Line of Credit was amended to extend the maturity to September 15, 2023. This amendment also added an additional 200,000 limited partnership units of the Operating Partnership as collateral for the loan, for a total of 300,000 limited partnership units. On October 9, 2023, the Western Line of Credit was amended effective as of October 4, 2023, which extended the maturity date of the Western Line of Credit from September 15, 2023 to November 15, 2023. This amendment also reduced the maximum credit to $4.67 million and required the Operating Partnership to pay Western State Bank a principal curtailment of $0.3 million. On December 27, 2023, the Operating Partnership, the Company, Corey Maple, LF3 Fargo Med, LLC, LF3 Eagan, LLC, and LF3 Cedar Rapids, LLC entered into a Change in Terms Agreement in connection with the Western Line of Credit, which extended the maturity date of the Western Line of Credit from November 15, 2023 to April 30, 2024.

The interest rate as of December 31, 2023 was 9.50%. The Western Line of Credit is secured by our Cedar Rapids Property, Eagan Property, and Fargo Property which are also subject to term loans with the same lender, and 300,000 Common LP Units of the Operating Partnership. The Western Line of Credit includes cross-collateralization and cross-default provisions such that the existing mortgage loan agreements with respect to the Cedar Rapids Property, the Eagan Property, and the Fargo Property as well as future loan agreements that we may enter into with this lender, are cross-defaulted and cross-collateralized with each other. The Western Line of Credit, including all cross-collateralized debt, is guaranteed by Corey Maple. As of December 31, 2023, there was a $4.7 million balance outstanding on the Western Line of Credit. See Note 13 “Subsequent Events” of the notes to the consolidated financial statements included as part of this Annual Report on Form 10-K for a description of amendments to the Western Line of Credit subsequent to December 31, 2023.

Revolving Line of Credit – Legendary A-1 Bonds, LLC

On August 10, 2022, the Operating Partnership entered into a $5.0 million revolving line of credit loan agreement (the “A-1 Line of Credit”) with Legendary A-1 Bonds, LLC (“A-1 Bonds”), which is an affiliate of the Advisor which is owned by Norman Leslie, a director and officer of the Company and principal of the Advisor and Corey Maple, a director of the Company and principal of the Advisor. The A-1 Revolving Line of Credit requires monthly payments of interest only beginning September 1, 2022, with all outstanding principal and interest amounts being due and payable at maturity on December 31, 2022. On January 12, 2023, the A-1 Revolving Line of Credit was amended to increase the line of credit to $10.0 million, increased the number of Common LP Units of the Operating Partnership securing the A-1 Revolving Line of Credit to 1,000,000 unissued Common LP Units and extended the maturity date to December 31, 2023. The A-1 Revolving Line of Credit has a fixed interest rate of 7.00% per annum. Outstanding amounts under the A-1 Revolving Line of Credit may be prepaid in whole or in part without penalty. On April 18, 2023, the A-1 Revolving Line of Credit was amended to increase the line of credit to $13.3 million and increased the number of Common LP Units of the Operating Partnership securing the A-1 Revolving Line of Credit to 1,330,000 unissued Common LP Units.  As of December 31, 2023, there was a $13.2 million balance outstanding on the A-1 Line of Credit. See Note 13 “Subsequent Events” of the notes to the consolidated financial statements included as part of this Annual Report on Form 10-K for a description of amendments to the A-1 Line of Credit subsequent to December 31, 2023.

Mortgage Debt

As of December 31, 2023, the Company had $180.2 million in outstanding mortgage debt secured by each of their nineteen hotel properties, with maturity dates ranging from March 2024 to April 2029. Sixteen of the loans have fixed interest rates ranging from 3.70% to 7.00%. One loan is a variable interest loan at a rate of LIBOR plus 6.0% per annum, provided that LIBOR shall not be less than 1.0%, resulting in an effective rate of 11.46% as of December 31, 2023. Another loan is a variable interest loan at a rate of LIBOR or an equivalent rate plus 6.25% per annum, provided that the variable rate shall not be less than 0.75%, resulting in an effective rate of 11.71% as of December 31, 2023. Another loan is a variable interest loan at a rate of the 30-day secured overnight financing rate or an equivalent rate plus 6.25%, provided that the variable rate shall not be less than 10.00%, resulting in an effective rate of 11.60% as of December 31, 2023. Another loan is a variable interest loan at a rate of the 30-day secured overnight financing rate or an equivalent rate plus 7.50%, provided that the variable rate shall not be less than 10.00%, resulting in an effective rate of 12.85% as of December 31, 2023.

Collectively, the weighted-average interest rate is 6.24%. The loans generally require monthly payments of principal and interest on an amortized basis, with certain loans allowing for an interest-only period following origination, and generally require a balloon payment due at maturity. As of December 31, 2023 and December 31, 2022, certain mortgage debt was guaranteed by the members of the Advisor. See Note 9 “Related Party Transactions” of the notes to the consolidated financial statements included as part of this Annual Report on Form 10-K for additional information regarding debt that was guaranteed by members of the Advisor. As part of the consolidated outstanding mortgage debt above, the owner of the leasehold interest in the El Paso University Property is the borrower under a $14.4 million loan secured by the lease hold interest in the El Paso University Property, Corey Maple entered into a guaranty and environmental indemnity in connection with the loan.  The loan has a fixed interest rate of 4.94% per annum and matures on August 6, 2025.

Fort Collins Loan Refinancing

On April 18, 2023, pursuant to the Loan Agreement, dated as of April 18, 2023 (the “New Fort Collins Loan Agreement”), LF3 RIFC, LLC and LF3 RIFC TRS LLC (collectively, the “Fort Collins Borrower”), subsidiaries of the Operating Partnership entered into a new $11.2 million loan with Access Point Financial, LLC (“Access Point”), which is secured by the Fort Collins Property (the “New Fort Collins Loan”). Access Point is not affiliated with the Company or the Advisor. The New Fort Collins Loan is evidenced by a promissory note and has a variable interest rate per annum equal to 30-day secured overnight financing rate plus 6.25%. The New Fort Collins Loan matures May 4, 2025, with the option for up to three one-year extensions if requirements are met, including certain required debt service coverage ratios and the payment of an extension fee. The New Fort Collins Loan requires monthly interest-only payments through May 4, 2025, followed by monthly payments of principal and interest through any extensions, with the outstanding principal and interest due at maturity. The Fort Collins Borrower has the right to prepay up to 10% of the outstanding principal amount of the New Fort Collins Loan on certain permitted prepayment dates with a 10-day notice. If prepaid during the first 25 months of the initial term, such a prepayment would include a prepayment fee equal to the sum of 24 months of interest payments that, but for the prepayment, would have been due and payable on the prepaid principal amount had a prepayment not occurred. When the Fort Collins Borrower pays the entire remaining principal balance, whether prepaid or on maturity, the Fort Collins Borrower will incur an exit fee of $112,000. The New Fort Collins Loan includes cross-default provisions such that a default under certain other agreements of the Fort Collins Borrower, the Guarantors described below and the property manager of the Fort Collins Property constitute a default under the New Fort Collins Loan. The Fort Collins Borrower used the proceeds of the New Fort Collins Loan to repay the original $11.5 million loan with A-1 Bonds which was secured by the Fort Collins Property, pursuant to a Loan Agreement, dated as of August 3, 2022. The original loan was evidenced by three promissory notes in the amounts of $10,298,535 (“Tranche 1”), $700,000 (“Tranche 2”) and $501,465 (“Tranche 3”) and had a fixed interest rate of 7.0% per annum. On April 18, 2023, the proceeds of the New Fort Collins Loan were used to refinance the original loan, and the outstanding obligations under Tranche 1 were repaid in full and under Tranche 2 were forgiven. A 1.75% exit fee was paid on Tranche 1, and no penalty was incurred on Tranche 1 or Tranche 2. Tranche 3 remains an ongoing obligation, no longer secured by the Fort Collins Property, under the terms of the original loan and Tranche 3 promissory note. All guaranties in connection and collateral with respect to the original loan and Tranche 1, Tranche 2 and Tranche 3 promissory notes have been terminated or released, and all commitments with respect to the original loan and Tranche 1 and Tranche 2 promissory notes have been terminated or released.

Pursuant to the New Fort Collins Loan Agreement, Corey Maple and Norman Leslie entered into a Guaranty with Access Point to guarantee payment when due of the principal amount of indebtedness outstanding, including accrued interest and collection costs and expenses, and the performance of the agreements of the Fort Collins Borrower contained in the loan documents.

On May 2, 2023, pursuant to the Equipment Loan and Security Agreement, dated as of May 2, 2023 (the “Fort Collins CAPEX Agreement”), LF3 RIFC TRS, LLC (the “Fort Collins CAPEX Borrower”), a subsidiary of the Operating Partnership entered into a new $1.9 million loan with Access Point, which is secured by furnishings, fixtures and equipment at the Fort Collins Property, as defined within the Fort Collins CAPEX Agreement (the “Fort Collins CAPEX Loan”). The Fort Collins CAPEX Loan is evidenced by a promissory note and has a variable interest rate per annum equal to 30-day secured overnight financing rate plus 7.50%. The Fort Collins CAPEX Loan matures on the earlier of (a) May 4, 2030 or (b) the maturity date of the New Fort Collins Loan described above, as extended by the Fort Collins Borrower or as accelerated by lender pursuant to such loan’s terms. The Fort Collins CAPEX Loan requires interest-only payments through May 4, 2025, followed by monthly payments of principal and interest through any extension, with the outstanding

principal and interest due at maturity. The Fort Collins CAPEX Borrower has the right to prepay the outstanding principal amount in full following the interest only period upon payment of a prepayment fee equal to 1.0% of the outstanding balance of the Fort Collins CAPEX Loan.

El Paso HI Loan Modification

LF3 El Paso, LLC and LF3 El Paso TRS LLC (collectively, the “El Paso HI Borrower”), subsidiaries of the Operating Partnership, entered into a $7.9 million loan (the “Holiday Inn El Paso Loan”) with EPH Development Fund LLC (“EPH”), secured by the El Paso HI Property, pursuant to a loan agreement, dated as of May 12, 2021. The Holiday Inn El Paso Loan had a maturity date of May 15, 2023.

On May 15, 2023, the El Paso HI Borrower, the Operating Partnership and Corey R. Maple entered into a first loan modification agreement with EPH, which extended the maturity date to May 15, 2024. As a condition to the extension, the El Paso HI Borrower agreed to pay down $300,000 of the Holiday Inn El Paso Loan, modifying the principal outstanding balance to be $7.6 million. In addition, as a condition to the extension, the El Paso HI Borrower agreed to deposit $819,674 into an FF&E Reserve account held by EPH.

As an additional condition to the extension, the Operating Partnership and HD Sunland Park Property LLC (the “El Paso HI Contributor”) agreed to amend the Amended and Restated Contribution Agreement, dated as of May 12, 2021, to allow the Operating Partnership to offer the El Paso HI Contributor of the El Paso HI Property an adjustment in the conversion of Series T Limited Units to Common Limited Units or other financial adjustments if the Operating Partnership determines that the El Paso HI Contributor’s extension of the determination of the Series T value to 48 months after issuance to the El Paso HI Contributor may result in actual or possible financial or other loss or litigation.

See Note 13 “Subsequent Events” of the notes to the consolidated financial statements included as part of this Annual Report on Form 10-K for a description of changes to mortgage debt occurring subsequent to December 31, 2023.

As of December 31, 2023, the Company was not in compliance with the required financial covenants under the terms of its promissory note secured by the Pineville Property and related loan documents (the “Pineville Loan”), which constitutes an event that puts the Company into a trigger period pursuant to the loan documents. On July 23, 2024, the Company sold the Pineville Property and no waiver of the financial covenants is needed. Except as described above, the Company was in compliance with all debt covenants as of December 31, 2023. See Note 13 “Subsequent Events” of the notes to the consolidated financial statements included as part of this Annual Report on Form 10-K for a description of the sale of the Pineville Property subsequent to December 31, 2023.

The following table sets forth the hotel properties securing each loan, the interest rate, maturity date, and the outstanding balance as of December 31, 2023 and 2022 for each of the Company’s mortgage debt obligations.

	Interest		Outstanding		Outstanding
	Rate as of		Balance as of		Balance as of
	December 31,	Maturity	December 31,		December 31,
	2023	Date	2023		2022
Holiday Inn Express - Cedar Rapids(1)	5.33%	9/1/2024	$	5,698,543	$	5,799,804
Hampton Inn & Suites - Pineville(2)	5.13%	6/6/2024		8,368,135		8,580,586
Hampton Inn - Eagan	4.60%	1/1/2025		8,839,737		9,063,528
Home2 Suites - Prattville(3)	4.13%	8/1/2024		8,984,688		9,199,041
Home2 Suites - Lubbock	4.69%	10/6/2026		7,103,138		7,343,948
Fairfield Inn & Suites - Lubbock	4.93%	4/6/2029		8,809,051		8,971,430
Homewood Suites - Southaven(4)	3.70%	3/3/2025		12,658,773		13,007,706
Courtyard by Marriott - Aurora(5)(6)	11.46%	2/5/2024(7)		15,000,000		15,000,000
Holiday Inn - El Paso(6)(8)	5.00%	5/15/2024(8)		7,600,000		7,900,000
Hilton Garden Inn - Houston(9)	3.85%	9/2/2026		13,852,705		13,947,217
Sheraton - Northbrook(6)(10)	11.71%	12/5/2024		4,026,202		3,766,639
Hampton Inn - Fargo(11)	4.00%	3/1/2027		7,095,283		7,275,480
Courtyard by Marriott - El Paso(12)(13)	6.01%	5/13/2027		9,975,072		9,990,000
Fairfield Inn & Suites - Lakewood(6)(14)	7.00%	3/28/2024		13,845,000		13,845,000
Residence Inn - Fort Collins(15)	11.60%	5/4/2025		11,200,000		—
Residence Inn - Fort Collins - CapEx(15)	12.85%	5/4/2025		1,875,000		—
Residence Inn - Fort Collins - A-1(15)(16)	7.00%	8/3/2028		501,465		11,500,000
Hilton Garden Inn - El Paso	4.94%	8/6/2025		12,341,759		12,613,869
Hilton Garden Inn - Pineville(17)	6.20%	8/25/2027		7,020,000		7,020,000
Hilton Garden Inn - Charlotte(17)	6.20%	8/25/2027		9,805,000		9,805,000
Holiday Inn Express - Wichita(12)	6.41%	12/21/2027		5,642,000		5,642,000
Total Mortgage Debt				180,241,551		180,271,248
Premium on assumed debt, net				203,135		221,082
Deferred financing costs, net				(2,574,861)		(3,193,939)
Net Mortgage				177,869,825		177,298,391
$5.0 million revolving line of credit - Western(18)	9.50%	4/15/2024(20)		4,651,139		5,000,000
$13.3 million revolving line of credit - A-1 Bonds(19)	7.00%	12/31/2023(19)		13,176,807		7,380,156
$0.6 million loan - NHS	7.00%	1/31/2024(21)		600,000		—
Total Lines of Credit				18,427,946		12,380,156
Debt, net			$	196,297,771	$	189,678,547

(1) Loan is interest-only through April 30, 2022 and is at a fixed rate of interest. The parties are working to finalize the extension documents as of the date of this filing.

(2) On July 23, 2024, the Hampton Inn & Suites Pineville was sold and the loan was repaid on the closing date. See Note 13 “Subsequent Events.”

(3) On November 4, 2024, this loan was repaid in full and refinanced with a new loan secured by the Prattville Property. See Note 13 “Subsequent Events”.

(4) On December 6, 2024, this loan was repaid in full and refinanced with a new loan secured by the Southaven Property. See Note 13 “Subsequent Events”.

(5) Variable interest rate equal to 30-day LIBOR plus 6.00%, provided that LIBOR shall not be less than 1.00%.

(6) Loan is interest-only until maturity.

(7) The Company has notified the lender of its intention to exercise the option under the loan agreement to extend the maturity date to February 5, 2025.

(8) On May 15, 2024, the maturity date was extended to November 15, 2024 and the interest rate was increased to 9.0%. See Note 13 “Subsequent Events.”

(9) Loan is interest-only for the first 24 months after origination.

(10) Variable interest rate equal to 30-day LIBOR or equivalent rate plus 6.25%, provided that LIBOR or equivalent rate shall not be less than 0.75%.

(11) Proceeds of this loan were used to repay in full the original loan secured by the Fargo Property entered into on January 24, 2022 with A-1 Bonds.

(12) Loan is interest-only for the first 18 months after origination.

(13) Proceeds of this loan were used to repay in full the original loan secured by the El Paso Airport Property entered into on February 14, 2022 with A-1 Bonds.

(14) On March 27, 2024, this loan was repaid in full and refinanced with two new loans secured by the Lakewood Property and unissued common limited partnership units of the Operating Partnership. See Note 13 “Subsequent Events.”

(15) On April 18, 2023, Tranche 1 and Tranche 2 were repaid in full and refinanced with a new loan secured by the Fort Collins Property.

(16) Tranche 3’s maturity date is August 2, 2028.

(17) Loan is interest-only through February 25, 2024.

(18) Variable interest rate equal to U.S. Prime plus 0.50%

(19) On March 27, 2024, this line of credit was increased to $15.5 million and the maturity date was extended to December 31, 2024. See Note 13 “Subsequent Events.”

(20) On May 10, 2024, the maturity date was extended to June 5, 2024. The Company and Western State Bank are working to finalize an extension of this line of credit as of the date of this filing. See Note 13 “Subsequent Events.”

(21) On August 21, 2024, the maturity date was extended to September 30, 2025. See Note 13 “Subsequent Events.”

Future Minimum Payments

As of December 31, 2023, the future minimum principal payments on the Company’s debt were as follows:

2024	$	69,392,481
2025		62,574,437
2026		20,686,104
2027		37,441,359
2028		708,616
Thereafter		7,866,500
		198,669,497
Premium on assumed debt, net		203,135
Deferred financing costs, net		(2,574,861)
	$	196,297,771

The $69.4 million of future minimum principal payments due in 2024 includes the maturities of the mortgage debt secured individually by the Lakewood Property, El Paso Property, Pineville Property, Prattville Property and Northbrook Property, as well as the maturities of the Western Line of Credit, the A-1 Bonds Line of Credit and the NHS Line of Credit. See Note 13 “Subsequent Events” of the notes to the consolidated financial statements included as part of this Annual Report on Form 10-K for a description of changes to mortgage debt occurring subsequent to December 31, 2023.

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FAIR VALUE OF FINANCIAL INSTRUMENTS

12 Months Ended

Dec. 31, 2023

FAIR VALUE OF FINANCIAL INSTRUMENTS

FAIR VALUE OF FINANCIAL INSTRUMENTS

7.  FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company’s financial instruments as of December 31, 2023 and 2022 consisted of cash and cash equivalents, restricted cash, accounts receivable, accounts payable, lines of credit, and mortgage debt. With the exception of the Company’s mortgage debt, the carrying amounts of the financial instruments presented in the consolidated financial statements approximate their fair value as of December 31, 2023 and 2022. The fair value of the Company’s mortgage debt was estimated by discounting each loan’s future cash flows over the remaining term of the mortgage using an estimate of current borrowing rates for debt instruments with similar terms and maturities, which are Level 3 inputs in the fair value hierarchy. As of December 31, 2023, the estimated fair value of the Company’s mortgage debt was $178.5 million, compared to the gross carrying value $180.2 million. As of December 31, 2022, the estimated fair value of the Company’s mortgage debt was $175.8 million, compared to the gross carrying value $180.3 million.

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INCOME TAXES

12 Months Ended

Dec. 31, 2023

INCOME TAXES

INCOME TAXES

8.  INCOME TAXES

The Company’s earnings (losses), other than those generated by the Company’s TRS, are not generally subject to federal corporate and state income taxes due to the Company’s REIT election. The Company did not pay any federal and state income taxes for the periods ended December 31, 2023 and 2022. The Company did not have any uncertain tax positions as of December 31, 2023 and 2022, respectively. For the years ended December 31, 2023 and 2022, all distributions paid were determined to be 100% returns of capital contributions.

The Company’s TRS generated a net operating loss (“NOL”) for the year ended December 31, 2023 and the year ended December 31, 2022, which can be carried forward to offset future taxable income. As of December 31, 2023, the Company has recognized a full valuation allowance against its deferred tax assets of $8.7 million, resulting in a net deferred tax liability of $3.0 million. As of December 31, 2022, the Company had recorded a net deferred tax liability of $3.3 million, primarily attributable to its NOLs generated in the current year and prior periods, net of temporary differences primarily related to deprecation. The net deferred tax liability is recognized on the consolidated balance sheet within Other Liabilities. The Company’s NOLs will expire in 2038-2042 for state tax purposes and will not expire for federal tax purposes. As of December 31, 2023 and 2022, the Company had deferred tax assets attributable to NOL carryforwards for federal income tax purposes of $7.1 million and $6.3 million, respectively, and NOL carryforwards for state income tax purposes of $1.6 million and $1.0 million, respectively. The Company recorded a valuation allowance of $1.4 million and $7.3 million against the deferred tax asset in 2023 and 2022, respectively. As of December 31, 2023, the tax years 2019 through 2022 remain subject to examination by the U.S. Internal Revenue Service (“IRS”) and various state tax jurisdictions.

The CARES Act contains numerous income tax provisions, such as temporarily relaxing limitations on the deductibility of interest expense, accelerating depreciable lives of certain qualified building improvements, and allowing for NOL’s arising in tax years beginning after December 31, 2017 and before January 1, 2021 to be carried back to each of the preceding 5-year periods. In addition, for tax years beginning prior to 2021, the CARES Act removed the 80% absorption limitation previously enacted under the Tax Cuts and Jobs Act of 2017. The income tax aspects of the CARES Act are not expected to have a material impact on the Company’s financial statements.

The components of the Company’s income tax (expense) benefit are as follows:

	For the Years Ended December 31,
	2023		2022
Federal:
Deferred	$	402,080	$	(5,047,228)
State:
Current		—		(89,346)
Deferred		(147,736)		(708,441)
Income tax (expense)/benefit	$	254,344	$	(5,845,015)

The provision for income taxes is derived from the income tax expense that is determined by applying the applicable U.S. statutory federal income tax rate to pretax income as a result of the following differences:

	For the Years Ended December 31,
	2023		%	2022		%
Expected income tax benefit at U.S. Federal statutory rate	$	1,247,366	-21.0%	$	2,743,594	-21.0%
Tax impact of REIT election		-	0.0%		(614,966)	4.7%
Expected tax benefit at TRS		1,247,366	-21.0%		2,128,628	-16.3%
Valuation Allowance		(1,009,839)			(7,314,530)
Gross tax (expense)/benefit		237,527			(5,185,902)
State income tax expense, net		42,874	-0.7%		(89,346)	0.7%
Temporary differences - deprecation		-	0.0%		(569,767)	4.4%
Permanent differences		(26,057)	0.4%		-	0.0%
Income tax (expense)/benefit	$	254,344	-4.3%	$	(5,845,015)	44.7%

As of December 31, 2023 and 2022, the Company’s deferred tax assets and liabilities consisted of the following:

	December 31,
	2023		2022
Deferred Tax Assets:
Net operating loss carryforwards - Federal	$	7,089,135	$	6,265,111
Net operating loss carryforwards - State		1,598,579		1,049,419
Valuation Allowance		(8,687,714)		(7,314,530)
		-		-
Deferred Tax Liabilities:
Tax FF&E basis less than book basis - Federal		(2,462,213)		(2,864,293)
Tax FF&E basis less than book basis - State		(555,222)		(426,608)
		(3,017,435)		(3,290,901)
Deferred tax (liabilities)/assets, net	$	(3,017,435)	$	(3,290,901)

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RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2023

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

9.  RELATED PARTY TRANSACTIONS

Legendary Capital REIT III, LLC—Substantially all of the Company’s business is managed by the Advisor and its affiliates, pursuant to the Advisory Agreement. The Advisor is owned by Corey R. Maple and Norman H. Leslie. The Company has no direct employees. The employees of Legendary Capital, LLC (the “Sponsor”), an affiliate of the Advisor, provide services to the Company related to the negotiations of property acquisitions and financing, asset management, accounting, legal, investor relations, and all other administrative services. The Company reimburses the Advisor and its affiliates, at cost, for certain expenses incurred on behalf of the Company, as described in more detail below. The Advisory Agreement has a term of 10 years, ending in December 2028.

The Advisor earns a one-time acquisition fee of up to 1.4% of the hotel purchase price including funds allocated for any PIP at the time of each hotel property acquisition, a financing fee of up to 1.4% of the hotel purchase price including funds allocated for any PIP at the time of closing the initial financing, and an annual asset management fee of up to 0.75% of the gross assets of the Company, which is payable on a monthly basis. The Advisor will also be paid a refinancing fee of up to 0.75% of the principal amount of any refinancing at the time of closing the refinancing. The Advisor will also be paid  a disposition fee equal to between 0.0% and 4.0% of the hotel sales price, payable at the closing of the disposition, which disposition fee in connection with a sale of all or substantially all of the Company’s assets, merger or similar transaction, shall be equal to between 0.0% and 4.0% of the gross consideration received (grossed up for liabilities of the Company), with the percentage dependent on the total return per share and timing of such transaction, payable at the closing of such sale, merger or transaction. The Advisor may also be paid real estate commissions of up to 3.0% of the hotel purchase

price in connection with the sale of a hotel property in which the Advisor or its affiliates provided substantial services, but in no event greater than one-half of the total commissions paid with respect to such property if a commission is paid to a third-party as well as the Advisor, and in no event will total commissions exceed 5.0% of the hotel sales price. Certain affiliates of the Advisor may receive an annual guarantee fee equal to 1.0% of the guaranty amount, paid on a monthly basis, for debt obligations of the hotel properties personally guaranteed by such affiliates. The Advisor may earn an annual subordinated performance fee equal to 20% of the distributions after the common stockholders and Operating Partnership limited partners (other than the Series B Limited Partnership Unit (“Series B LP Unit”) holders) have received a 6% cumulative, but not compounded, return per annum.

Per the terms of the Operating Partnership’s operating agreement, the Advisor receives distributions from the Operating Partnership in connection with their ownership of non-voting Series B LP Units. The Advisor’s ownership of Series B LP Units is presented as non-controlling interest on the accompanying consolidated financial statements. In years other than the year of liquidation, after the Company’s common stockholders have received a 6% cumulative but not compounded return on their original capital contributions, the Advisor receives distributions equal to 5% of the total distributions made. In the year of liquidation, termination, merger or other cessation of the general partner, or the liquidation of the Operating Partnership, holders of the Series B LP Units shall be distributed an amount equal to 5% of the limited partners’ capital contributions after the common stockholders and the limited partners have received a return of their original capital contributions plus a 6% cumulative but not compounded return. In the year of liquidation, termination, merger or other cessation of the general partner, or the liquidation of the Operating Partnership holders of the Series B LP Units shall also be distributed an amount equal to 20% of the net proceeds from the sale of the properties, after the common stockholders and the limited partners have received a return of their original capital contributions plus a 6% cumulative but not compounded return from all distributions.

The Advisor and its affiliates may be reimbursed by the Company for certain organization and offering expenses in connection with the Company’s securities offerings, including legal, printing, marketing and other offering-related costs and expenses. Following the termination of the Offering, the Advisor will reimburse the Company for any such amounts incurred by the Company in excess of 15% of the gross proceeds of the Offering. In addition, the Company may pay directly or reimburse the Advisor and its affiliates for certain costs incurred in connection with its provision of services to the Company, including certain acquisition costs, financing costs, and sales and marketing costs as well as an allocable share of general and administrative overhead costs. All reimbursements are paid to the Advisor and its affiliates at cost.

Fees and reimbursements earned and payable to the Advisor and its affiliates, for the years ended December 31, 2023 and 2022, were as follows:

	Incurred
	For the Years Ended December 31,
	2023		2022
Fees:
Acquisition fees	$	—	$	1,626,599
Financing fees		84,000		1,861,628
Asset management fees		2,488,100		1,918,321
Performance fees		195,874		181,541
	$	2,767,974	$	5,588,089
Reimbursements:
Offering costs	$	1,935,023	$	2,256,081
General and administrative		3,258,648		3,640,108
Sales and marketing		144,421		321,821
Acquisition costs		185,115		67,051
	$	5,523,207	$	6,285,061

For the years ended December 31, 2023 and 2022, the Operating Partnership recognized distributions payable to the Advisor in the amount of $360,821 and $334,417 respectively, in connection with the Advisor’s ownership of Series B LP Units. For the years ended December 31, 2023 and 2022, the Company paid distributions in the amount of $40,123 and

$40,123 respectively, to Corey Maple and Norman Leslie in connection with their ownership of 57,319 shares each, of the Company’s common stock. For the years ended December 31, 2023 and 2022, the Company paid Corey Maple distributions in an amount of $4,352 and $1,994, respectively, in connection with his ownership of 15,361 Series GO LP Units.

The members of the Advisor personally guaranty certain loans of the Company and may receive a guarantee fee of up to 1.0% per annum of the guaranty amount. As of December 31, 2023, Corey Maple, is a guarantor of the Company’s loans secured by the hotel properties located in Prattville, Alabama, Southaven, Mississippi and Fargo, North Dakota, which had original loan amounts of $9.6 million, $13.5 million and $7.4 million respectively, is a guarantor of 50% of the loan secured by the Houston Property, which had an original loan amount of $13.9 million, is a guarantor of the Company’s line of credit in the original amount of $5.0 million which is secured by the hotel properties located in Cedar Rapids, Iowa, Eagan, Minnesota, and Fargo, North Dakota, and 300,000 Common LP Units of Lodging Fund REIT III OP, LP, and is a guarantor of the Company’s loans secured by the El Paso University Property located in El Paso, Texas, and is a guarantor of 50% of the loan secured by the hotel property in Wichita, Kansas, which had original loan amounts of $14.4 million and $5.6 million respectively. Norman Leslie is a guarantor of the Company’s loan secured by the Company’s hotel property in Pineville, North Carolina, which had an original loan amount of $9.3 million. For the years ended December 31, 2023 and 2022, the Company accrued guarantee fees in the amount of $151,765 and $155,676 respectively to each Mr. Maple and Mr. Leslie. The total amount accrued of $1.2 million remained unpaid at December 31, 2023 and is included in Due to Related Party on the accompanying consolidated balance sheet. See Note 13, “Subsequent Events,” for a  description of additional guarantees entered into subsequent to December 31, 2023.

As of December 31, 2023 and 2022, the Company had amounts due and payable to the Advisor and its affiliates of $10.6 million and $5.6 million respectively, which is included in due to related parties on the accompanying consolidated balance sheets.

NHS, LLC dba National Hospitality Services—NHS is wholly-owned by Norman Leslie, a director and executive officer of the Company and a principal of the Advisor. NHS provides property management and hotel operations management services for the Company’s hotel properties, pursuant to individual management agreements. The agreements have an initial term expiring on December 31 of the fifth full calendar year following the effective date of the agreement, which automatically renews for a period of five years on each successive five-year period, unless terminated in accordance with its terms.

NHS earns a monthly base management fee for property management services, including overseeing the day-to-day operations of the hotel properties, equal to up to 4% of gross revenue. NHS may also earn an accounting fee of $14.00 per room for accounting services, payable monthly, and an administrative fee equal to 0.60% of gross revenues for administrative and other services. The Company reimburses NHS for certain costs of operating the properties incurred on behalf of the Company. All reimbursements are paid to NHS at cost.

NHS also earns a flat fee of $5,000 per hotel property for due diligence services, including analyzing, evaluating, and reporting on documentation and information received by sellers or contributors during the period of due diligence. Such fee is waived if, upon acquisition by us, NHS is selected as the management company for the hotel property. NHS is also reimbursed for actual out-of-pocket costs incurred in providing the due diligence services.

On March 6, 2023, the Company entered into a $600,000 loan agreement (the “NHS Loan”) with NHS. The NHS Loan requires the payment of monthly interest beginning on April 6, 2023, with all outstanding principal and interest amounts being due and payable at maturity on July 6, 2023. On December 28, 2023, the Company entered into a Change in Terms Agreement with the Operating Partnership and NHS in connection with the NHS Loan to extend the maturity date of the NHS Loan to January 31, 2024. This amendment also provided that in lieu of monthly interest payments, all accrued interest shall be due and payable on the maturity date with the full principal balance. The NHS Loan has a fixed interest rate of 7.0% per annum. Outstanding amounts under the NHS Loan may be prepaid in whole or in part without penalty. The NHS Loan is secured by 60,000 partnership units of the Operating Partnership.

As of December 31, 2023, there was a $600,000 balance outstanding on the NHS Loan. See Note 13 “Subsequent Events” for an additional transaction with NHS occurring subsequent to December 31, 2023.

Fees and reimbursements earned and payable to, NHS for the years ended December 31, 2023 and 2022, were as follows:

	Incurred				Payable as of
	For the Years Ended December 31,				December 31,		December 31,
	2023		2022		2023		2022
Fees:
Management fees	$	1,073,723	$	1,071,385	$	186,298	$	145,733
Administrative fees		119,613		184,101		20,962		22,791
Accounting fees		159,896		195,096		32,220		31,164
	$	1,353,232	$	1,450,582	$	239,480	$	199,688
Reimbursements	$	810,723	$	1,273,180	$	216,595	$	143,009

One Rep Construction, LLC (“One Rep”)—One Rep is a related party through common management and ownership, as Corey Maple, Norman Leslie, and David Ekman, each hold a 33.33% ownership interest in One Rep. One Rep is a construction management company which provided construction management services to the Company during 2023 and 2022 related to the renovation construction activities at certain hotel properties. For the services provided, One Rep is paid a construction management fee equal to 6% or 7% of the total project costs. The Company reimburses One Rep for certain costs incurred on behalf of the Company, and all reimbursements are paid to One Rep at cost. For the years ended December 31, 2023 and 2022, the Company incurred $191,803 and $258,037 of construction management fees and reimbursements payable to One Rep, respectively. As of December 31, 2023 and 2022, the amounts outstanding and due to One Rep were $34,856 and $33,947 respectively, which is included in due to related parties on the accompanying consolidated balance sheets.

Legendary A-1 Bonds, LLC (“A-1 Bonds”) – A-1 Bonds is an affiliate of the Advisor which is owned by Mr. Leslie a director and executive officer of the Company and principal of the Advisor and Mr. Maple a director of the Company and principal of the Advisor. During the year ended December 31, 2023, A-1 Bonds made no new loans to subsidiaries of the Company. During the year ended December 31, 2022, A-1 Bonds made loans with an aggregate principal amount of $42.5 million to subsidiaries of the Company secured by 4 hotel properties, of which $28.2 million was subsequently paid off prior to the date of this filing. On August 9, 2022, the Company entered into a $5.0 million revolving line of credit with A-1 Bonds, LLC (the “A-1 Revolving Line of Credit”). The A-1 Revolving Line of Credit requires monthly payments of interest only beginning September 1, 2022, with all outstanding principal and interest amounts being due and payable at maturity on December 31, 2022. On January 12, 2023, the A-1 Revolving Line of Credit was amended to increase the line of credit to $10.0 million, increased the number of Common LP Units of the Operating Partnership securing the A-1 Revolving Line of Credit to 1,000,000 unissued Common LP Units and extended the maturity date to December 31, 2023. On April 18, 2023, the A-1 Revolving Line of Credit was amended to increase the line of credit to $13.3 million and increased the number of Common LP Units of the Operating Partnership securing the A-1 Revolving Line of Credit to 1,330,000 unissued Common LP Units. The A-1 Revolving Line of Credit has a fixed interest rate of 7.00% per annum. Outstanding amounts under the A-1 Revolving Line of Credit may be prepaid in whole or in part without penalty. As of December 31, 2023, there was a $13.2 million balance outstanding on the A-1 Revolving Line of Credit. See Note 4, “Debt- Lines of Credit & Loans”. See Note 13 “Subsequent Events” for additional loans made by A-1 Bonds and amendments to existing loans made by A-1 Bonds occurring subsequent to December 31, 2023.

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FRANCHISE AGREEMENTS

12 Months Ended

Dec. 31, 2023

FRANCHISE AGREEMENTS

FRANCHISE AGREEMENTS

10.  FRANCHISE AGREEMENTS

As of December 31, 2023 and 2022, all of the Company’s hotel properties were operated under franchise agreements with initial terms of 10 to 18 years. Franchise agreements allow the hotel properties to operate under the respective brands. Pursuant to the franchise agreements, the Company pays a royalty fee of 5% to 6% of room revenue, plus additional fees for marketing, central reservation systems and other franchisor costs. Certain hotels are also charged a program fee of generally between 3% and 4% of room revenue. The Company paid an initial fee of $50,000 to $175,000 at the time of entering into each franchise agreement which is being amortized over the term of each agreement.

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STOCKHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2023

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

11.  STOCKHOLDERS’ EQUITY

The Company is authorized to issue 900,000,000 shares of common stock and 100,000,000 shares of preferred stock. Each share of common stock entitles the holder to one vote per share on all matters upon which stockholders are entitled to vote and to receive distributions as authorized by the Company’s board of directors. The Interval Common Stock described below do not have voting rights. The rights of the holders of shares of preferred stock may be defined at such time any series of preferred shares are issued.

Common Stock

Initial Offering

On June 1, 2018, the Company commenced a private offering of shares of common stock, $0.01 par value per share, at a price of $10.00 per share, with a maximum offering of $100,000,000, which was increased to $150,000,000 in December 2021, to accredited investors only pursuant to a confidential private placement memorandum exempt from registration under the Securities Act of 1933, as amended.

Dividend Reinvestment Plan

The Company has adopted a dividend reinvestment plan (“DRIP”), which permits stockholders to reinvest their distributions back into the Company, purchasing shares of common stock at 95% of the then-current share net asset value (“NAV”).

Distributions

Distributions are determined by the board of directors based on the Company’s financial condition and other relevant factors.

			Distribution								Net Cash
	Distributions		Declared Per		Distributions Paid (3)						Flows Provided By
Period	Declared (1)		Share (1) (2)		Cash		Reinvested		Total		(Used In) Operations
First Quarter 2023	$	1,779,846	$	0.175	$	1,424,802	$	395,820	$	1,820,622	$	264,655
Second Quarter 2023		1,794,077		0.175		1,317,166		384,772		1,701,938		3,484,371
Third Quarter 2023		1,816,105		0.175		1,344,743		381,033		1,725,776		2,285,665
Fourth Quarter 2023		1,826,402		0.175		1,433,319		335,912		1,769,231		(2,980,745)
	$	7,216,430	$	0.700	$	5,520,030	$	1,497,537	$	7,017,567	$	3,053,946
			Distribution								Net Cash
	Distributions		Declared Per		Distributions Paid (3)						Flows Provided By
Period	Declared (1)		Share (1) (2)		Cash		Reinvested		Total		(Used In) Operations
First Quarter 2022	$	1,556,308	$	0.175	$	933,464	$	567,240	$	1,500,704	$	(3,293,181)
Second Quarter 2022		1,540,200		0.175		1,203,791		526,159		1,729,950		20,841
Third Quarter 2022		1,821,829		0.175		1,094,353		452,923		1,547,276		2,268,982
Fourth Quarter 2022		1,762,398		0.175		1,234,969		433,293		1,668,262		(326,742)
	$	6,680,735	$	0.700	$	4,466,577	$	1,979,615	$	6,446,192	$	(1,330,100)

(1) Distributions for the period from January 1, 2022 through December 31, 2023 were payable to each stockholder as 100% in cash on a monthly basis.

(2) Assumes each share was issued and outstanding each day that was a record date for distributions during the period presented.

(3) Distributions for the period from January 1, 2022 through December 31, 2023 were paid on a monthly basis. Distributions for all record dates of a given month during such period were paid during the following month, except for the distributions declared for December 2023 which were paid in March 2024.

Share Repurchase Plan

The board of directors has adopted a share repurchase plan that may enable its stockholders to have their shares repurchased in limited circumstances. In its sole discretion, the board of directors could choose to terminate or suspend the plan or to amend its provisions without stockholder approval. The repurchase plan may be reviewed and modified by the board of directors as it deems necessary in its sole discretion. The price at which the Company will repurchase shares is dependent on the amount of time the holder has owned the shares, and the then current value of the shares. There are several limitations on the Company’s ability to repurchase shares under the share repurchase plan, including, but not limited to, a limitation that during any calendar year, the maximum number of shares potentially eligible for repurchase can only be the number of shares that the Company could purchase with the amount of net proceeds from the sale of shares under the Company’s dividend reinvestment plan during the prior calendar year. The board of directors may, in its sole discretion, reject any request for repurchase and may, at any time and without stockholder approval, upon 10 business days’ written notice to the stockholders (i) amend, suspend or terminate its share repurchase plan and (ii) increase or decrease the funding available for the repurchase of shares pursuant to our share repurchase plan. The Company repurchased no shares during the year ended December 31, 2023. The Company repurchased 135,248 shares pursuant to repurchase requests received during the year ended December 31, 2022, which represented an original investment of $1,352,472 for $1,347,319. As of December 31, 2023, all redemption proceeds had been paid. As of December 31, 2023, the Company had $1,931,014 available for eligible repurchases in all of 2023.

Update to Offering Price and Share NAV

The Company’s board of directors approved a revised NAV of the Company’s assets as of December 31, 2022. As a result, the price per share of the Company’s common stock, $0.01 par value per share (each, a “Share”), in the Offering and the Share NAV were adjusted from $10.00 to $10.57 effective January 6, 2023. The issue price of the Common LP Unit and the Series T LP Unit of the Operating Partnership also increased to $10.57. The Offering price was determined by the board of directors taking into account appraisals of the Company’s real estate properties and other factors deemed relevant by the board of directors. The board of directors has not determined the NAV of the Company’s assets since December 31, 2022. As a result, the current Share NAV and Offering price per Share may not reflect an accurate estimation of the Company’s enterprise value. The Company makes no representations, whether express or implied, as to the value of the Shares offered in the Offering. In the event the Offering price per Share is increased or decreased, the number of Shares subject to the Offering will be adjusted to reflect such change and the maximum offering amount will remain unchanged.

Interval Common Stock

Distributions

Holders of shares of Interval Common Stock will be entitled to receive, when and as authorized by the board of directors of the Company and declared by the Company, distributions at a rate equal to 86% of the distribution rate for the Company’s common stock as authorized by the board of directors and declared by the Company. Distributions on the Interval Shares may be paid in cash, capital stock of the Company or a combination of cash and capital stock of the Company as determined by the board of directors and will be paid at such times as distributions are paid to the holders of common stock.

Repurchase Plan

The board of directors has adopted a repurchase plan for the Interval Common Stock (the “Repurchase Plan”). The Repurchase Plan is generally available to holders of Interval Common Stock who have held their shares of Interval Common Stock (“Interval Shares”) for at least one year. The Repurchase Plan provides that so long as the Repurchase Reserve (defined below) exists, the Company will repurchase up to the lesser of (i) 5% of the aggregate value of the Interval Shares (“Interval Shares Value”) on the last day of the same calendar quarter of the preceding year and (ii) 5% of

the Interval Shares Value on the last day of the preceding calendar quarter. After the Repurchase Reserve has been exhausted, the Company will limit repurchases of Interval Shares to repurchases that can be made with the net proceeds from the dividend reinvestment plan for the Interval Shares received in the prior calendar year up to the lesser of (i) 1.25% per calendar quarter and (ii) 5% per calendar year of the Interval Shares Value. The limitations described in this paragraph are referred to as the “Repurchase Limitations.”

The Company will establish a reserve (the “Repurchase Reserve”) of liquid assets in an amount equal to 20% of the aggregate gross proceeds from the Company’s private offering of Interval Shares, which will be comprised of cash and cash-like instruments, government securities, publicly traded REIT shares and other publicly traded securities (the “Reserve Assets”), but which is expected to primarily include publicly traded REIT shares. The Repurchase Reserve will be used solely to repurchase the Interval Shares. The board of directors may, but has no obligation to, increase the amount of the Repurchase Reserve at any time. The Company will have no obligation to restore any amounts resulting from a decline in value of the Reserve Assets. After the Repurchase Reserve has been exhausted, subject to the Repurchase Limitations, the Company will use only the net proceeds from the dividend reinvestment plan received in the prior calendar year to repurchase the Interval Shares. Subject to the Repurchase Limitations, on the applicable repurchase date, the Company will repurchase the Interval Shares timely submitted for repurchase for a price equal to the NAV per share of the Company’s common stock on such repurchase date as determined by the board of directors.

The board of directors may, upon 10 days’ written notice to the holders of Interval Shares, amend, suspend or terminate the Repurchase Plan at any time, and such amendment, suspension or termination may be implemented immediately. Notwithstanding the foregoing, the Repurchase Plan may not be terminated prior to the date the Repurchase Reserve is exhausted.

Interval Share Offering

The Company was offering up to 3,000,000 shares of Interval Common Stock in the Company’s ongoing private offering, which amount may be increased to up to 6,000,000 Interval Shares in the sole discretion of the board of directors. Except as otherwise provided in the offering memorandum, the initial purchase price for the Interval Shares is $10.00 per Interval Share, with Interval Shares purchased in the Company’s dividend reinvestment plan at an initial price of $9.50 per Interval Share. The Company’s board of directors allowed the Interval Share Offering to expire on March 31, 2022. The Company did not issue or sell any shares of Interval Common Stock.

Non-Controlling Interests

As of December 31, 2023, the Operating Partnership had five classes of Limited Partner Units which included the Common LP Units, the Series B LP Units, the Series T LP Units, the Series GO LP Units and the Series GO II LP Units. The Series B LP Units are issued to the Advisor and entitle the Advisor to receive annual distributions and an incentive distribution based on the net proceeds received from the sale of the Projects (as defined below).

Non-Controlling Interest – Series T LP Units

The Series T LP Units are expected to be issued to persons who contribute their property interests in certain Projects to the Partnership in exchange for Series T LP Units. The Series T LP Units will have allocations and distributions as determined by the General Partner in its sole discretion at the time of issuance of the Series T LP Units, and any future distributions are dependent on the financial performance of the contributed real estate based on a mathematical formula. The Series T LP Units are eligible for conversion into Common LP Units beginning 24 or 36 months, or longer in some instances, after their issuance and will automatically convert into Common LP Units upon other events. There is no guarantee that the future financial performance of the contributed hotel property will be sufficient to result in the issuance of Common LP Units resulting from the application of the conversion formula applicable to the issuance of the Series T LP Units at the time of conversion. As of December 31, 2023, the Company had recorded an aggregate value of $45.7 million to the Series T LP Units in connection with such property contributions. During the year ended December 31, 2023, the Company declared distributions of $0.2 million.

Non-Controlling Interest – Series GO LP Units

Distributions

The holders of Series GO LP Units will not receive any distributions from the Operating Partnership until after they have held their Series GO LP Units for a period of 18 months. Thereafter, the Series GO Limited Partners will receive the same distributions payable to the holders of the Common LP Units and GP Units (together with the Series GO LP Units and Interval Units, the “Participating Partnership Units”), other than with respect to proceeds received upon the sale or exchange of a property which are not reinvested in additional properties.

Upon the sale of all or substantially all of the GP Units held by LF REIT III or any sale, exchange or merger of LF REIT III or the Operating Partnership (each, a “Termination Event”), or with respect to proceeds received upon the sale or exchange of a property which are not reinvested in additional properties, distributions will be made between the Series GO LP Units and the other Participating Partnership Units as follows: (i) first, to the Participating Partnership Units in proportion to their Partnership Units until the GP Units (the Common LP Units and the Interval Units) have received 70% of their original capital contributions (determined on a grossed-up basis) reduced by any prior distributions received in connection with the sale of a property in which the sale proceeds are not reinvested in additional properties; (ii) second, to the Participating Partnership Units in proportion to their Partnership Units until each Participating Partnership Unit has received a Participating Amount ($1.00 for any period after December 31, 2020, $2.00 for any period after December 31, 2021 and $3.00 for any period after December 31, 2022, determined as a singular determination and not a cumulative determination); (iii) third, to the Participating Partnership Units (other than the Series GO LP Units) in proportion to their Partnership Units until the GP Units have received any remaining unreturned original capital contributions; (iv) fourth, to the Series GO Limited Partners in proportion to their Series GO LP Units until the amount distributed to the Series GO Limited Partners per Series GO LP Unit is equal to the amount distributed to the Participating Partnership Units per Participating Partnership Unit (other than the Series GO Limited Partners) pursuant to (iii); and (v) thereafter, to the Participating Partnership Units in proportion to their Participating Partnership Units.

GO Unit Offering

On June 15, 2020, the Operating Partnership commenced a private offering of limited partnership units in the OP, designated as Series GO LP Units, with a maximum offering of $20,000,000, which could be increased to $30,000,000 in the sole discretion of LF REIT III as the General Partner of the Operating Partnership (the “GO Unit Offering”) to accredited investors only, pursuant to a confidential private placement memorandum exempt from registration under the Securities Act of 1933, as amended. The Series GO LP Units were being offered until the earlier of (i) the sale of $20,000,000 in Series GO LP Units (which could be increased to $30,000,000 in the Company’s sole discretion), (ii) June 14, 2022 or (iii) the Operating Partnership terminates the GO Unit Offering at an earlier date in its sole discretion. The Company’s board of directors terminated the GO Unit Offering as of February 14, 2022. The Company’s board of directors approved and ratified additional sales after February 14, 2022 in the GO Units Offering for sales which were pending as of that date. As of December 31, 2023, the Operating Partnership had issued and sold 3,124,503 Series GO LP Units and received aggregate proceeds of $21.5 million.

Non-Controlling Interest – Series B LP Units

Distributions

Under the Operating Partnership Agreement, the Advisor, as the Series B Limited Partner, will receive, from the Operating Partnership, distributions as follows: (a) for all years, an amount equal to 5.0% of the total of (i) the total distributions made to the Partners (other than the Series B Limited Partner) and (ii) the total distributions made to the Series B Limited Partner, after the Partners (other than the Series B Limited Partner) have received a 6.0% cumulative, but not compounded, return on their original capital contributions, and (b) for the year of liquidation or other cessation of the General Partner or the Partnership, an amount equal to 5.0% of the original capital contributions made by the Partners, after the Partners (other than the Series B Limited Partner) have received a return of their capital contributions plus a six percent (6%) cumulative, but not compounded return from all distributions.

Series B LP Unit Offering

As of December 31, 2023, the Operating Partnership has issued 1,000 Series B LP Units to the Advisor.

Non-Controlling Interest – Common LP Units

On December 3, 2021, the Operating Partnership commenced a private placement offering of its Common LP Units. As of December 31, 2023, the Operating Partnership had issued and sold 612,100 Common LP Units, with a value of $10.00 per unit at the time of issuance, in connection with the Northbrook Property acquisition and El Paso Airport Property acquisition.

Non-Controlling Interest – Series GO II LP Units

Distributions

The holders of Series GO II LP Units will not receive any distributions from the Operating Partnership until after they have held their Series GO II LP Units for a period of 18 months. Thereafter, the Series GO II Limited Partners will receive the same distributions payable to the holders of the Common LP Units, the Series GO LP Units and GP Units (together with the Series GO II LP Units and Interval Units, the “Participating Partnership Units”), other than with respect to proceeds received upon the sale or exchange of a property which are not reinvested in additional properties provided, however, that upon any event in which capital is distributed to the Participating Partnership Units, the Series GO II LP Units will only be distributed an amount equal to their positive Capital Account balances. Once the Series GO II LP Units have received income allocations of Net Income (including book-up income) such that their Capital Accounts are equal to the other Participating Partnership Units, distributions will be made in proportion to their Units.

Upon the sale of all or substantially all of the GP Units held by LF REIT III or any sale, exchange or merger of LF REIT III or the Operating Partnership (each, a “Termination Event”), or with respect to proceeds received upon the sale or exchange of a property which are not reinvested in additional properties, distributions will be made between the Series GO LP Units and the other Participating Partnership Units (including the Series GO II LP Units) as follows: (i) first, to the Participating Partnership Units in proportion to their Partnership Units until the GP Units (the Common LP Units and the Interval Units) have received 70% of their original capital contributions (determined on a grossed-up basis) reduced by any prior distributions received in connection with the sale of a property in which the sale proceeds are not reinvested in additional properties; (ii) second, to the Participating Partnership Units in proportion to their Partnership Units until each Participating Partnership Unit has received a Participating Amount ($1.00 for any period after December 31, 2020, $2.00 for any period after December 31, 2021 and $3.00 for any period after December 31, 2022, determined as a singular determination and not a cumulative determination); (iii) third, to the Participating Partnership Units (other than the Series GO LP Units) in proportion to their Partnership Units until the GP Units have received any remaining unreturned original capital contributions; (iv) fourth, to the Series GO Limited Partners in proportion to their Series GO LP Units until the amount distributed to the Series GO Limited Partners per Series GO LP Unit is equal to the amount distributed to the Participating Partnership Units per Participating Partnership Unit (other than the Series GO Limited Partners) pursuant to (iii); and (v) thereafter, to the Participating Partnership Units in proportion to their Participating Partnership Units.

GO II Unit Offering

On April 7, 2023, the Operating Partnership commenced a private offering of limited partnership units in the OP, designated as Series GO II LP Units, with a maximum offering of $30,000,000, which could be increased to $60,000,000 in the sole discretion of LF REIT III as the General Partner of the Operating Partnership, (the “GO II Unit Offering”) to accredited investors only, pursuant to a confidential private placement memorandum exempt from registration under the Securities Act of 1933, as amended. The purchase price of the Series GO II LP Units in the offering is equal to 75% of the Share NAV and, based on the current Share NAV, is $7.93 per Series GO II LP Unit. The Series GO II LP Units will be specially allocated all Net Income (including book up income) in proportion to the 25% issue price shortfall, until the positive Capital Account balance of each Series GO II LP Unit is equal to the Share NAV. As a result, the issuance of the Series GO II LP Units will be dilutive to the General Partner Units and therefore, to the shares of common stock of the Company. The Series GO II LP Units are being offered until the earlier of (i) the sale of $30,000,000 in Series GO II LP

Units (which could be increased to $60,000,000 in the Company’s sole discretion), (ii) March 31, 2024, which date may be extended for two 1-year extensions until March 31, 2026 in the sole discretion of the Operating Partnership or (iii) the Operating Partnership terminates the GO II Unit Offering at an earlier date in its sole discretion. As of December 31, 2023, the Operating Partnership had issued and sold 129,787 Series GO II LP Units and received aggregate proceeds of $1.0 million. See Note 13 “Subsequent Events” for information regarding the extension of the GO II Unit Offering.

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COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2023

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

12.  COMMITMENTS AND CONTINGENCIES

Legal Matters — From time to time, the Company may become party to legal proceedings that arise in the ordinary course of its business. After consulting with legal counsel, management is not aware of any legal proceedings of which the outcome is probable or reasonably possible to have a material adverse effect on the Company’s results of operations, cash flows or financial condition, which would require accrual or disclosure of the contingency and possible range of loss, other than the matter described below.

On September 12, 2022, the Advisor and Corey R. Maple received a “Wells notice” from the SEC stating that the SEC staff had made a preliminary determination to recommend to the SEC that it bring an enforcement action against the Advisor and Mr. Maple alleging violations of securities laws in connection with the SEC’s investigation of the Company’s reimbursement of and financial accounting for certain expenses incurred by the Advisor as well as the adequacy of its disclosures related to those policies and practices. The Wells notice was neither a formal charge of wrongdoing nor a final determination that the Advisor or Mr. Maple has violated any law.

The Advisor and Corey R. Maple agreed to a settlement with the SEC in connection with the action described above on August 28, 2023, in which the Advisor agreed to pay disgorgement of $463,900 to the Company.

Property Acquisitions

The seller of the Pineville Property was entitled to additional cash consideration if the property exceeds certain performance criteria based on increases in the property’s net operating income (“NOI”) for a selected 12-month period of time. At any time during the period beginning April 1, 2021 through the date of the final NOI determination (on or about April 30, 2023), the seller of the property could have made a one-time election to receive the additional consideration. The variable amount of the additional consideration, if any, was based on the excess of the property’s actual NOI over a base NOI for the applicable 12-month calculation period divided by the stated cap rate for such calculation period. As of December 31, 2022, no additional consideration had been paid to the seller of the Pineville Property, and no election to receive the additional consideration had been made. As of the date of this filing, the period to elect to receive additional consideration has passed with no election being made.

In November 2019, the Company entered into a purchase agreement, to acquire three hotel properties in Pennsylvania, from a third party group of sellers (collectively, the “PA Sellers”), for $46.9 million plus closing costs, subject to adjustment as provided in the purchase agreement. The Company has deposited a total of $1.5 million into escrow as earnest money (the “Earnest Money”) pending the closing or termination of the purchase agreement. In July 2020, the Company and the PA Sellers exchanged written notices of default with one another in accordance with the terms of the purchase agreement. The notice from each party was based on allegations that the other party failed to perform its obligations under the purchase agreement. On October 27, 2020, the PA Sellers filed a lawsuit against Lodging Fund REIT III OP, LP in the Supreme Court of Pennsylvania alleging breach of the purchase agreement. The PA Sellers sought the full amount of the Earnest Money and recovery of fees and expenses incurred in bringing the lawsuit.

Effective November 20, 2023, the Operating Partnership and the PA Seller entered into a settlement agreement and general release of all claims (the “Settlement Agreement”) regarding the asset purchase agreement dated November 22, 2019. Pursuant to the Settlement Agreement, the PA Seller received $700,000 of the Earnest Money Deposit, and the Operating Partnership received $800,000 of the Earnest Money Deposit. Accrued interest on the Deposit was split between the parties with 7/15 of the total amount being paid to the PA Seller and 8/15 of the total amount being paid to the Operating Partnership. Incurred fees of the Escrow Agent were paid by the Operating Partnership in accordance with the Settlement Agreement. The Operating Partnership and all related entities are released and forever discharged from all claims related to or arising from the Purchase Agreement.

Contribution Agreements Entered into or Terminated During the Year Ended December 31, 2023

On January 31, 2023, the Operating Partnership and CS Real Estate Holding LLC (the “College Station Voco Contributor”) entered into a Legendary Equity Preservation UPREIT (Pat. Pend.) Contribution Agreement (the “College Station Voco Contribution Agreement”), pursuant to which the College Station Voco Contributor agreed to contribute the 166-room Aggieland Boutique Hotel in College Station, Texas, which the Operating Partnership intends to convert into a Voco by IHG (the “College Station Voco Hotel Property”) to the Operating Partnership. The College Station Voco Contributor is not affiliated with the Company or Legendary Capital REIT III, LLC, the Company’s external advisor. The aggregate consideration for the College Station Voco Hotel Property under the College Station Voco Contribution Agreement is $18,500,000 plus closing costs, subject to adjustment as provided in the College Station Voco Contribution Agreement. The majority of the consideration consists of the assumption or refinancing by the Operating Partnership of existing debt secured by the College Station Voco Hotel Property. The remaining consideration consists of the issuance by the Operating Partnership of Series T Limited Units of the Operating Partnership and cash at closing. As required by the College Station Voco Contribution Agreement, the Operating Partnership will deposit $50,000 into escrow as earnest money pending the closing or termination of the College Station Voco Contribution Agreement. Except in certain circumstances described in the College Station Voco Contribution Agreement, if the Operating Partnership fails to perform its obligations under the College Station Voco Contribution Agreement, it will forfeit the earnest money. The Company terminated the College Station Voco Contribution Agreement on June 13, 2023. The earnest money deposit was fully refunded to the Operating Partnership.

On April 23, 2023, the Operating Partnership terminated the Legendary Equity Preservation UPREIT (Pat. Pend.) Contribution Agreement entered into on August 16, 2022 in connection with the contribution of the 276-room Sheraton Hotel Albuquerque Airport in Albuquerque, New Mexico. Upon termination, $300,000 of the total earnest money deposit was returned to the Operating Partnership.

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SUBSEQUENT EVENTS

12 Months Ended

Dec. 31, 2023

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

13.  SUBSEQUENT EVENTS

A-1 Line of Credit Amendments

On March 27, 2024, the Operating Partnership, the Company and A-1 Bonds entered into a Fourth Amendment to the Revolving Line of Credit Loan Agreement (the “Fourth Amendment”) in connection with the A-1 Line of Credit. The Fourth Amendment extended the maturity date of the A-1 Line of Credit to December 31, 2024 and increased the A-1 Line of Credit to $15.5 million. Through the Fourth Amendment, the A-1 Line of Credit is secured by 1,550,000 unissued common limited partnership units of the Operating Partnership. In consideration of the extension of the maturity date, the Operating Partnership paid to the A-1 Lender an extension fee in the amount of $133,000. The Fourth Amended and Restated Promissory Note (the “Amended Promissory Note”) entered into by the Operating Partnership in connection with the Fourth Amendment provides that (i) the interest rate on the A-1 Line of Credit is increased to 14.5% per annum, and (ii) the A-1 Lender will receive an exit fee equal to 1.5% of the full amount due under the Line of Credit upon the earlier of (a) full repayment (whether on the maturity date or prior thereto or any other date), and (b) the maturity date. No other changes were made to the A-1 Line of Credit as a result of the Fourth Amendment or the Amended Promissory Note.

As of December 17, 2024, $15.5 million is outstanding under the A-1 Line of Credit.

Western Line of Credit Amendments

On May 10, 2024, the Operating Partnership, the Company, Corey Maple, LF3 Fargo Med, LLC, LF3 Eagan, LLC, and LF3 Cedar Rapids, LLC entered into a Change in Terms Agreement in connection with the Western Line of Credit, which extended the maturity date of the Western Line of Credit from April 30, 2024 to June 5, 2024. In addition, the Operating Partnership was required to make a principal payment in the amount of $250,000.

The Company and Western State Bank are working to finalize an extension of the Western Line of Credit as of the date of this filing, however there can be no assurance that an extension will be granted.

As of December 17, 2024, $4.1 million is outstanding under the Western Line of Credit.

NHS Loan

On August 21, 2024, the Company entered into a Change in Terms Agreement with the Operating Partnership and NHS in connection with the NHS Loan to extend the maturity date of the NHS Loan to September 30, 2025.

As of December 17, 2024, $0.6 million is outstanding under the NHS Loan.

Lakewood Loan Extension, Termination and New Loans

As previously disclosed, the subsidiaries of the Operating Partnership and A-1 Bonds entered into a loan agreement in the amount of $12.6 million secured by the Lakewood Property (the “Original Lakewood Loan”). Per the terms of the agreement, the subsidiaries of the Operating Partnership executed the option to extend the maturity date of the loan to March 28, 2024.

On March 27, 2024, the subsidiaries of the Operating Partnership entered into a new $12.0 million loan with Bluebird Credit EM LLC (the “New Lakewood Loan”) secured by the Lakewood Property. The New Lakewood Loan is evidenced by a promissory note and has an adjustable interest rate based on the SOFR Index plus 7.0% (increasing to 7.5% during the extension of the loan), with an initial interest rate of 12.327%; provided, however, in no event will the interest rate be adjusted to less than 11.0%. The maturity date of the New Lakewood Loan is October 5, 2025, with an option to extend the term for an additional 6 months through April 6, 2026, upon payment of a $60,000 extension fee and satisfaction of certain other conditions. The New Lakewood Loan requires monthly interest-only payments throughout the term, with the outstanding principal and interest due at maturity. The Borrower has the right to prepay the New Lakewood Loan in whole but not in part at any time, subject to a 30-day prior notice to the New Lakewood Lender and payment of an exit fee equal to $120,000 and a prepayment premium calculated pursuant to the terms of the New Lakewood Loan Agreement.

Pursuant to the New Lakewood Loan Agreement, Norman Leslie, a director and executive officer of the Company, entered into a Guaranty (the “New Lakewood Guaranty”) with the New Lakewood Lender to guarantee payment when due of the principal amount of indebtedness outstanding, including accrued interest and collection costs and expenses, as further described in the New Lakewood Guaranty.

Additionally, on March 27, 2024, the Operating Partnership entered into a new loan in an amount up to $4,896,801 (the “New A-1 Lakewood Loan”) with the A-1 Lender, an affiliate of the Company’s Advisor. The New A-1 Lakewood Loan is evidenced by a promissory note and has a fixed interest rate of 14.5% per annum and a maturity date of March 27, 2026. The New A-1 Lakewood Loan requires monthly interest-only payments throughout the term, with the outstanding principal and interest due at maturity. The Operating Partnership has the right to prepay the New A-1 Lakewood Loan in whole or in part without charge, penalty or premium. The A-1 Lender received an origination fee of $73,452 on the effective date of the New A-1 Lakewood Loan and will receive an exit fee equal to 1.5% of the full amount of the New A-1 Lakewood Loan upon the earlier of (a) full repayment (whether on the maturity date or prior thereto or any other date), and (b) the maturity date. Pursuant to a Pledge and Security Agreement entered into by the Company with the A-1 Lender, the New A-1 Lakewood Loan is secured by 489,680 unissued common limited partnership units of the Operating Partnership.

On March 27, 2024, the proceeds from the New Lakewood Loan and the New A-1 Lakewood Loan were used to refinance the Original Lakewood Loan, and the outstanding obligations under Original Lakewood Loan were repaid in full. At the closing of the refinancing, an unpaid extension fee in the amount of $138,450 was paid to the A-1 Lender under the Original Lakewood Loan which was due but not paid in connection with the prior March 2023 extension of the Original Lakewood Loan. All guaranties in connection and collateral with respect to the Original Lakewood Loan have been terminated or released, and all commitments with respect to the Original Lakewood Loan have been terminated or released.

El Paso HI Second Loan Modification

On May 15, 2024, the El Paso HI Borrower, the Operating Partnership and Corey R. Maple entered into a second loan modification agreement with EPH, which extended the maturity date to November 15, 2024. As a condition to the extension, the El Paso HI Borrower agreed to pay a $76,000 extension fee. With the second modification agreement, the El Paso HI Borrower is entitled to an additional six-month extension, if requested. In addition, the Holiday Inn El Paso Loan has a new interest rate of 9.00%.

Prattville Refinance

On November 4, 2024, the subsidiaries of the Operating Partnership (the “New Prattville Borrower”) entered into a new $11.0 million loan (the “New Prattville Loan”) with Independent Bank (the “New Prattville Lender”) secured by the Prattville Property. The New Prattville Loan is evidenced by a promissory note and has an adjustable interest rate that is the higher of (i) 4.85%, or (ii) the SOFR rate plus 3.0%, with an initial interest rate of 7.84%. The maturity date of the New Prattville Loan is November 4, 2029. The New Prattville Loan requires monthly interest-only payments for the first 24 months, principal payments in the amount of $15,200 plus interest for the remainder of the life of the loan and the outstanding principal balance due at maturity. There is no prepayment penalty or premium for prepayments of the principal under the New Prattville Loan, but if the prepayment is the result of a refinance with a financial institution other than the New Prattville Lender, the New Prattville Borrower must pay the New Prattville Lender an amount equal to 3.0% of the amount being prepaid if during the first year of the New Prattville Loan, an amount equal to 2.0% of the amount being prepaid if paid during the second year of the New Prattville Loan, and an amount equal to 1.0% of the amount being prepaid if paid during the third, fourth, or fifth years of the New Prattville Loan.

Pursuance to the New Prattville Loan Agreement, Norman Leslie, a director and executive officer of the Company, entered into a Guaranty (the “New Prattville Guaranty”) with the New Prattville Lender to guarantee payment when due of the principal amount of indebtedness outstanding, including accrued interest and collection costs and expenses, as further described in the New Prattville Guaranty.

On November 4, 2024, the proceeds from the New Prattville Loan were used to refinance the Original Prattville Loan, and the outstanding obligations under the Original Prattville Loan were repaid in full. All guarantees in connection and collateral with respect to the Original Prattville Loan have been terminated or released, and all commitments with respect to the Original Prattville Loan have been terminated or released.

Distributions Paid

On January 16, 2024, the Company declared cash distributions totaling $471,271 and DRIP distributions totaling $108,117, cash distributions totaling $35,706 for Common Limited Units of the Operating Partnership and cash distributions totaling $182,262 for Series GO LP Units of the Operating Partnership, at a daily rate of $0.00191781 per share of Common Stock in the Company, equivalent to an annualized rate of seven percent (7.00%) per share based on the Company’s initial offering price of $10.00, for daily record dates December 1 through December 31, 2023 to holders of record on each calendar day of such period. The distribution declared for December 2023 was paid on March 29, 2024.

On April 22, 2024, the Company declared cash distributions totaling $237,857 and DRIP distributions totaling $52,904, cash distributions totaling $17,853 for Common Limited Units of the Operating Partnership and cash distributions totaling $91,131 for Series GO LP Units of the Operating Partnership, at a daily rate of $0.000958905 per share of Common Stock in the Company, equivalent to an annualized rate of three and one half percent (3.50%)per share based on the Company’s initial offering price of $10.00, for daily record dates March 1 through March 31, 2024 to holders of record on each calendar day of such period. The distribution declared for March 2024 was paid on April 25, 2024.

On May 20, 2024, the Company declared cash distributions totaling $271,667 and DRIP distributions totaling $60,693, cash distributions totaling $20,403 for Common Limited Units of the Operating Partnership and cash distributions totaling $104,150 for Series GO LP Units of the Operating Partnership, at a daily rate of $0.001095890 per share of Common Stock in the Company, equivalent to an annualized rate of four percent (4.00%) per share based on the Company’s initial offering price of $10.00, for daily record dates April 1 through April 30, 2024 to holders of record on each calendar day of such period. The distribution declared for April 2024 was paid on May 23, 2024.

On June 18, 2024, the Company declared cash distributions totaling $311,181 and DRIP distributions totaling $62,992, cash distributions totaling $22,954 for Common Limited Units of the Operating Partnership and cash distributions totaling $117,169 for Series GO LP Units of the Operating Partnership, at a daily rate of $0.001232877 per share of Common Stock in the Company, equivalent to an annualized rate of four and one half percent (4.50%) per share based on the Company’s initial offering price of $10.00, for daily record dates May 1 through May 31, 2024 to holders of record on each calendar day of such period. The distribution declared for May 2024 was paid on June 20, 2024.

On July 19, 2024, the Company declared cash distributions totaling $345,775 and DRIP distributions totaling $70,312, cash distributions totaling $25,504 for Common Limited Units of the Operating Partnership and cash distributions totaling $130,186 for Series GO LP Units of the Operating Partnership, at a daily rate of $0.001366120 per share of Common Stock in the Company, equivalent to an annualized rate of five percent (5.00%) per share based on the Company’s initial offering price of $10.00, for daily record dates June 1 through June 30, 2024 to holders of record on each calendar day of such period. The distribution declared for June 2024 was paid on July 23, 2024.

On August 20, 2024, the Company declared cash distributions totaling $356,690 and DRIP distributions totaling $59,688, cash distributions totaling $25,504 for Common Limited Units of the Operating Partnership and cash distributions totaling $130,186 for Series GO LP Units of the Operating Partnership, at a daily rate of $0.001366120 per share of Common Stock in the Company, equivalent to an annualized rate of five percent (5.00%) per share based on the Company’s initial offering price of $10.00, for daily record dates July 1 through July 31, 2024 to holders of record on each calendar day of such period. The distribution declared for July 2024 was paid on August 20, 2024.

On September 26, 2024, the Company declared cash distributions totaling $353,107 and DRIP distributions totaling $63,549, cash distributions totaling $25,504 for Common Limited Units of the Operating Partnership and cash distributions totaling $130,186 for Series GO LP Units of the Operating Partnership, at a daily rate of $0.001366120 per share of Common Stock in the Company, equivalent to an annualized rate of five percent (5.00%) per share based on the Company’s initial offering price of $10.00, for daily record dates August 1 through August 31, 2024 to holders of record on each calendar day of such period. The distribution declared for August 2024 was paid on September 27, 2024.

Properties Under Contract

On April 15, 2024, the Operating Partnership and Stow Hotel Associates, LLC (the “Stow Contributor”) entered into a Legendary Equity Preservation UPREIT (Pat. Pend.) Contribution Agreement (the “Hampton Stow Contribution Agreement”) pursuant to which the Stow Contributor agreed to contribute the 84-room Hampton Stow hotel in Stow, Ohio to the Operating Partnership. The aggregate consideration for the Hampton Stow under the Hampton Stow Contribution Agreement is $10.2 million, with a majority of the consideration consisting of the assumption by the Operating Partnership of existing debt secured by the Hampton Stow and the remaining consideration consisting of the issuance by the Operating Partnership of Series T LP Units of the Operating Partnership. As required by the Hampton Stow Contribution Agreement, the Operating Partnership deposited $50,000 into an escrow as earnest money pending the closing or termination of the Hampton Stow Contribution Agreement. Except in certain circumstances described in the Hampton Stow Contribution Agreement, if the Operating Partnership fails to perform its obligations under the Hampton Stow Contribution Agreement, it will forfeit the earnest money.

On April 15, 2024, the Operating Partnership and the Stow Contributor entered into a Legendary Equity Preservation UPREIT (Pat. Pend.) Contribution Agreement (the “Staybridge Stow Contribution Agreement”) pursuant to which the Stow Contributor agreed to contribute the 92-room Staybridge Suites Akron-Stow-Cuyahoga Falls hotel in Stow, Ohio to the Operating Partnership. The aggregate consideration for the Staybridge Stow under the Staybridge Stow Contribution Agreement is $10.9 million, with a majority of the consideration consisting of the assumption by the Operating Partnership of existing debt secured by the Staybridge Stow and the remaining consideration consisting of the issuance by the Operating Partnership of Series T LP Units of the Operating Partnership and cash at closing. As required by the Staybridge Stow Contribution Agreement, the Operating Partnership deposited $50,000 into an escrow as earnest money pending the closing or termination of the Staybridge Stow Contribution Agreement. Except in certain circumstances described in the Staybridge Stow Contribution Agreement, if the Operating Partnership fails to perform its obligations under the Staybridge Stow Contribution Agreement, it will forfeit the earnest money.

The Company is still conducting its diligence review with respect to each of these properties. These pending acquisitions are subject to its completion of satisfactory due diligence and other closing conditions. There can be no assurance the Company will complete any or all of these pending property contributions on the contemplated terms, or at all.

Pineville Property Sold and Loan Repaid

On July 23, 2024, the Company sold the Pineville Property to an unaffiliated purchaser for $8,850,000 in cash, subject to customary prorations and adjustments. The mortgage loan secured by the Pineville Property was repaid in full at closing from sale proceeds. All guaranties in connection with such loan and collateral with respect to such loan have been terminated or released, and all commitments with respect to such loan have been terminated or released.

Agreement to Sell Pineville HGI Property and Charlotte Property

On December 2, 2024, the Company entered into an agreement to sell the Pineville HGI Property and the Charlotte Property. The agreement is subject to closing conditions. There can be no assurance the Company will complete any or all of these pending property dispositions on the contemplated terms, or at all.

Southaven Refinance

On December 6, 2024, the subsidiaries of the Operating Partnership (the “New Southaven Borrower”) entered into a new $18.0 million loan (the “New Southaven Loan”) with UBS AG. (the “New Southaven Lender”) secured by the Southaven Property. The New Southaven Loan is evidenced by a promissory note and has aa fixed interest rate that is equal to the five-year United States Treasury rate plus 3.58%, resulting in an interest rate of 7.77%. The maturity date of the New Southaven Loan is December 6, 2029. The New Southaven Loan requires monthly interest-only payments for the life of the loan, with the outstanding principal balance due at maturity. Prepayment is not permitted during the first year of the New Southaven Loan, but prepayment is permissible with certain stipulations laid out in the loan agreement.

On December 6, 2024, the proceeds from the New Southaven Loan were used to refinance the Original Southaven Loan, and the outstanding obligations under the Original Southaven Loan were repaid in full. All guarantees in connection and collateral with respect to the Original Southaven Loan have been terminated or released, and all commitments with respect to the Original Southaven Loan have been terminated or released.

Status of the Offering

Our board of directors extended the term of the Offering to May 31, 2025. As of the date of this filing, the Company’s private offering remained open for new investment, and since the inception of the offering the Company had issued and sold 10,297,188 shares of common stock, including 1,215,332 shares issued pursuant to the DRIP, resulting in the receipt of gross offering proceeds of $100.7 million.

Series T LP Units

The Operating Partnership did not issue any Series T LP Units subsequent to the year ended December 31, 2023 to the date of this filing.

Common LP Units

The Operating Partnership did not issue any Common LP Units subsequent to the year ended December 31, 2023 to the date of this filing.

GO II Unit Offering

On April 17, 2024, our Board of Directors extended the term of the GO II Unit Offering to March 31, 2025. The Operating Partnership has issued and sold 475,324 Series Go II LP Units, resulting in the receipt of gross offering proceeds of $3.6 million as of the date of this filing.

******

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SCHEDULE III - Real Estate and Accumulated Depreciation

12 Months Ended

Dec. 31, 2023

SCHEDULE III - Real Estate and Accumulated Depreciation

SCHEDULE III - Real Estate and Accumulated Depreciation

Real Estate and Accumulated Depreciation

As of December 31, 2023

									Costs
									Capitalized
									Subsequent to
					Initial Cost				Acquisition		Gross Amounts at End of Year
							Building,		Building,				Building,
					Land and		Building		Building		Land and		Building
	Date	Number			Land		Improvements		Improvements		Land		Improvements				Accumulated		Depreciable
Description	Acquired	of Rooms	Encumbrances		Improvements		and FF&E		and FF&E		Improvements		and FF&E		Total(1)		Depreciation		Lives
Holiday Inn Express - Cedar Rapids, IA	Nov - 2018	83	$	5,698,543	$	1,536,966	$	6,321,367	$	915,799	$	1,547,077	$	7,237,166	$	8,784,243	$	(1,553,790)	3 - 40 yrs.
Hampton Inn & Suites - Pineville, NC	Mar - 2019	111		8,368,135		2,014,533		12,327,740		1,477,299		2,014,533		13,805,039		15,819,572		(2,296,516)	3 - 40 yrs.
Hampton Inn - Eagan, MN	Jun - 2019	122		8,839,737		1,691,813		12,536,520		324,808		1,691,813		12,861,328		14,553,141		(2,314,893)	3 - 40 yrs.
Home2 Suites - Prattville, AL	Jul - 2019	90		8,984,688		1,691,954		13,414,060		222,875		1,691,954		13,636,935		15,328,889		(2,117,682)	3 - 40 yrs.
Home2 Suites - Lubbock, TX	Dec - 2019	100		7,103,138		803,229		13,906,502		1,597,023		803,229		15,503,525		16,306,754		(2,152,794)	3 - 40 yrs.
Fairfield Inn & Suites - Lubbock, TX	Jan - 2020	101		8,809,051		982,934		15,261,162		86,269		982,934		15,347,431		16,330,365		(2,499,482)	3 - 40 yrs.
Homewood Suites - Southaven, MS	Feb - 2020	99		12,658,773		1,593,232		19,351,858		194,792		1,593,232		19,546,650		21,139,882		(2,575,350)	3 - 40 yrs.
Courtyard by Marriott - Aurora, CO	Feb - 2021	141		15,000,000		4,400,098		19,668,031		293,531		4,400,098		19,961,562		24,361,660		(2,125,843)	3 - 40 yrs.
Holiday Inn - El Paso, TX	May - 2021	175		7,600,000		1,747,553		8,913,467		3,046,445		1,747,553		11,959,912		13,707,465		(1,282,211)	3 - 40 yrs.
Hilton Garden Inn - Houston, TX	Aug - 2021	182		13,852,705		3,168,376		17,659,977		4,942,105		3,168,376		22,602,082		25,770,460		(1,533,401)	3 - 40 yrs.
Sheraton Hotel - Northbrook, IL	Dec - 2021	160		4,026,202		2,856,747		16,859,016		186,966		2,856,747		17,045,982		19,902,729		(1,068,615)	3 - 40 yrs.
Hampton Inn & Suites - Fargo, ND	Jan - 2022	90		7,095,283		2,041,684		9,700,538		449,057		2,041,684		10,149,595		12,191,279		(582,671)	3 - 40 yrs.
Courtyard by Marriott - El Paso, TX	Feb - 2022	90		9,975,072		1,856,428		13,596,806		138,644		1,856,428		13,735,450		15,591,878		(968,812)	3 - 40 yrs.
Fairfield Inn & Suites - Lakewood, CO	Mar - 2022	142		13,845,000		2,091,051		17,571,066		414,511		2,091,051		17,985,577		20,076,628		(1,066,158)	3 - 40 yrs.
Residence Inn - For Collins, Co	Aug - 2022	113		13,576,465		2,402,288		13,943,721		1,167,021		2,402,288		15,110,742		17,513,030		(594,116)	3 - 40 yrs.
Hilton Garden Inn - El Paso, TX	Aug - 2022	153		12,341,759		4,862,172		17,600,000		13,669		4,862,172		17,613,669		22,475,841		(1,281,612)	3 - 40 yrs.
Hilton Garden Inn - Pineville, NC	Aug - 2022	113		7,020,000		1,891,718		9,385,430		64,681		1,891,718		9,450,112		11,341,830		(514,862)	3 - 40 yrs.
Hilton Garden inn - Charlotte, NC	Aug - 2022	112		9,805,000		1,622,610		14,233,777		52,041		1,622,610		14,285,818		15,908,428		(685,096)	3 - 40 yrs.
Holiday Inn Express - Wichita Property	Dec - 2022	84		5,642,000		632,735		7,001,575		78,545		632,735		7,080,120		7,712,855		(255,546)	3 - 40 yrs.
		2,261	$	180,241,551	$	39,888,121	$	259,252,614	$	15,666,081	$	39,898,232	$	274,918,695	$	314,816,929	$	(27,469,450)

(1)The aggregate cost for federal income tax purposes is approximately $314.2 million at December 31, 2023 (unaudited).

Investment in Real Estate:	2023		2022
Balance at beginning of period	$	307,676,640	$	178,912,503
Acquisitions		-		120,433,600
Improvements		7,140,289		8,330,537
Balance at end of period	$	314,816,929	$	307,676,640
Accumulated Depreciation:	2023		2022
Balance at beginning of period	$	(17,458,998)	$	(9,487,728)
Depreciation expense		(10,054,083)		(7,995,492)
Asset write-offs		43,631		24,222
Balance at end of period	$	(27,469,450)	$	(17,458,998)

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Pay vs Performance Disclosure - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Pay vs Performance Disclosure
Net Income (Loss)	$ (9,891,088)	$ (13,982,439)

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Insider Trading Arrangements	3 Months Ended
	Dec. 31, 2023
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2023

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

Basis of Presentation and Principles of Consolidation— The accompanying consolidated financial statements and related notes have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the SEC applicable to annual financial information. The consolidated financial statements include the accounts of LF REIT III, the OP, its wholly-owned subsidiaries and entities in which the Company has a controlling financial interest, including variable interest entities (“VIEs”) where the Company is the primary beneficiary. The determination of a controlling financial interest is based upon the terms of the governing agreements of the respective entities, including the evaluation of the rights held by other interests. If the entity is considered to be a VIE, the Company determines whether the Company is the primary beneficiary, and then consolidates those VIEs for which the Company has determined that the Company is the primary beneficiary. If the entity in which the Company holds an interest does not meet the definition of a VIE, the Company evaluates whether the Company has a controlling financial interest through the Company’s voting interest in the entity. The Company consolidates entities when the Company owns more than 50 percent of the voting shares of a company or otherwise has a controlling financial interest. References in these financial statements to the net (loss) income attributable to stockholders do not include non-controlling interests, which represent the outside ownership interests of the Company’s consolidated, non-wholly owned entities and are presented separately in the consolidated financial statements. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

Use of Estimates—The preparation of the Company’s consolidated financial statements and the accompanying notes in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of certain assets and liabilities and the amounts of contingent assets and liabilities at the balance sheet date and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition

Revenue Recognition—Revenues consist of amounts derived from hotel operations, including room sales and other hotel revenues, and are presented on a disaggregated basis in the Company’s consolidated statements of operations. These revenues are recorded net of any sales and occupancy taxes collected from the hotel guests. All revenues are recorded on

an accrual basis as they are earned. Any cash received prior to a guest’s arrival is recorded as an advance deposit from the guest and recognized as revenue at the time of the guest’s occupancy at the hotel property.

Investment in Hotel Properties

Investment in Hotel Properties—The Company evaluates whether each hotel property acquisition should be accounted for as an asset acquisition or a business combination. If substantially all of the fair value of the gross assets acquired is concentrated in a single asset or a group of similar identifiable assets, then the transaction is considered to be an asset acquisition. All of the Company’s acquisitions since inception have been determined to be asset acquisitions. Transaction costs associated with asset acquisitions are capitalized and transaction costs associated with business combinations would be expensed as incurred.

The Company’s acquisitions generally consist of land, land improvements, buildings, building improvements, and furniture, fixtures and equipment (“FF&E”). The Company may also acquire intangible assets or liabilities related to in-place leases, management agreements, debt, and advanced bookings. For transactions determined to be asset acquisitions, the Company allocates the purchase price among the assets acquired and the liabilities assumed on a relative fair value basis at the date of acquisition. The Company determines the fair value of assets acquired and liabilities assumed with the assistance of third-party valuation specialists, using cash flow analysis as well as available market and cost data. The determination of fair value includes making numerous estimates and assumptions.

The difference between the fair value and the face value of debt assumed in connection with an acquisition is recorded as a premium or discount and amortized to interest expense over the remaining term of the debt assumed. The valuation of assumed debt liabilities is based on our estimate of the current market rates for similar liabilities in effect at the acquisition date.

The Company’s investments in hotel properties are carried at cost and are depreciated using the straight-line method over the estimated useful lives of 15 years for land improvements, 40 years for buildings and building improvements and 3 to 7 years for FF&E. Maintenance and repair costs are expensed in the period incurred and major renewals or improvements to the hotel properties are capitalized.

The Company assesses the carrying value of its hotel properties whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. The recoverability is measured by comparing the carrying amount of the property to the estimated future undiscounted cash flows of the property, which take into account current market conditions, and the Company’s intent with respect to holding or disposing of the hotel properties. If the Company’s analysis indicates that the carrying value is not recoverable on an undiscounted cash flow basis, the Company will recognize an impairment loss for the amount by which the carrying value exceeds the fair value. The fair value is determined through various valuation techniques, including internally developed discounted cash flow models, comparable market transactions or third-party appraisals.

The use of projected future cash flows is based on assumptions that are consistent with a market participant’s future expectations for the industry and the economy in general and the Company’s expected use of the underlying hotel properties. The assumptions and estimates related to the future cash flows and the capitalization rates are complex and subjective in nature. Changes in economic and operating conditions that occur subsequent to a current impairment analysis and the Company’s ultimate use of the hotel property could impact the assumptions and result in future impairment losses to the hotel properties.

Advertising Costs

Advertising Costs—The Company expenses advertising costs as incurred. These costs represent the expense for franchise advertising and reservation systems under the terms of the hotel management and franchise agreements and expenses that are directly attributable to advertising and promotion. Advertising expense was $2.6 million and $1.5 million for the years ended December 31, 2023 and 2022, respectively, and is included in sales and marketing in the consolidated statements of operations.

Non-controlling Interest

Non-controlling Interest—Non-controlling interests represent the portion of equity in a subsidiary held by owners other than the Company. Non-controlling interests are reported in the consolidated balance sheets within equity, separate from stockholders’ equity. Revenue and expenses attributable to both the Company and the non-controlling interests are reported in the consolidated statements of operations, with net income or loss attributable to non-controlling interests reported separately from net income or loss attributable to the Company.

Cash and Cash Equivalents

Cash and Cash Equivalents—Cash and cash equivalents include cash in bank accounts as well as highly liquid investments with an original maturity of three months or less. The Company deposits cash with several high-quality financial institutions. These deposits are guaranteed by the Federal Deposit Insurance Corporation (“FDIC”) up to an insurance limit of $250,000. At times, the Company’s cash and cash equivalents may exceed federally insured levels.

Restricted Cash

Restricted Cash—Restricted cash primarily consists of earnest money deposits related to hotel property acquisitions, as well as certain funds maintained in escrow accounts to fund future payments for insurance, property tax obligations, and reserves for future capital expenditures, as required by our debt agreements.

Accounts Receivable

Accounts Receivable—Accounts receivable consist primarily of receivables due from hotel guests for room stays and meeting and banquet room rentals, which are uncollateralized customer obligations. Management determines the likelihood of collectability of receivables on an individual customer basis, based on the amount of time the balance has been outstanding, likelihood of collecting, and the customer’s current economic status. The carrying amount of the accounts receivables is reduced by an allowance for credit losses that reflects management’s best estimate of the amounts that will not be collected.

Deferred Financing Costs

Deferred Financing Costs—Deferred financing costs represent origination fees, legal fees, and other costs associated with obtaining financing. Deferred financing costs are presented on the consolidated balance sheets as a direct deduction from the carrying amount of the related debt liability. These costs are amortized to interest expense over the terms of the respective financing agreements using the straight-line method, which approximates the effective interest method. The Company expenses unamortized deferred financing costs when the associated financing agreement is refinanced or repaid before maturity unless certain criteria are met that would allow for the carryover of such costs to the refinanced agreement. Costs incurred in connection with potential financial transactions that are not completed are expensed in the period in which it is determined the financing will not be completed.

Offering Costs

Offering Costs—The Company has incurred certain costs related directly to the Company’s private offerings consisting of, among other costs, commissions, legal, due diligence costs, printing, marketing, filing fees, postage, data processing fees, and other offering related costs. These costs are capitalized and recorded as a reduction of equity proceeds on the accompanying consolidated balance sheets.

Property Operations Expenses

Property Operations Expenses—Property operations expenses consist of expenses related to room rental, food and beverage sales, telephone usage, and other miscellaneous service costs, as well as all costs of operating the Company’s hotel properties such as building repairs, maintenance, property taxes, utilities, and other related costs.

Property Management Fees

Property Management Fees—Property management fees include expenses incurred for management services provided for the day-to-day operations of our hotel properties, which are generally charged at a rate of 4% of gross revenues. Property management fees also include asset management fees, which may be charged at an annual rate of up to 0.75% of gross assets and are paid to the Advisor.

Franchise Fees

Franchise Fees—The Company pays initial fees related to hotel franchise rights prior to acquiring a hotel property. The fees are included in prepaid expenses and other assets until the time the related hotel property is acquired. Initial franchise fees related to hotel properties that are acquired are amortized on a straight-line basis over the life of the agreement. Initial franchise fees related to hotel properties that are not acquired are refunded to the Company, net of any associated fees, and any fees are expensed as incurred. Franchise fees on the accompanying consolidated statements of operations include the amortization of initial franchise fees, as well as monthly fees paid to franchisors for royalty, marketing, and reservation fees and other related costs.

Acquisition Costs

Acquisition Costs—The Company incurs costs during the review of potential hotel property acquisitions including legal fees, environmental reviews, market studies, financial advisory services, and other professional service fees. If the Company does complete a property acquisition, an acquisition fee of up to 1.4% is charged by the Advisor, based on the purchase price of the property plus any estimated PIP costs. For transactions determined to be asset acquisitions, these costs are capitalized as part of the overall cost of the project. For transactions determined to be business combinations, these costs would be expensed in the period incurred. Acquisition-related and acquisition due diligence costs that relate to a property that is not acquired, are expensed and included in acquisition costs on the accompanying consolidated statements of operations. Prior to the ultimate determination of whether a property will be acquired or not, acquisition-related and

acquisition due diligence costs are recorded as, and included in, prepaid expenses and other assets on the accompanying consolidated balance sheets.

Net Loss Per Share of Common Stock

Net Loss Per Share of Common Stock—Basic net loss per common share is computed based upon the weighted average number of shares outstanding during the period. Diluted net loss per common share is calculated after giving effect to all potential common shares that were dilutive and outstanding for the period. Basic and diluted net loss per common share were the same for the periods presented.

Stock-Based Compensation

Stock-Based Compensation—During 2022, the Company began compensating its independent directors with stock-based compensation as approved by and administered under the supervision of our Board of Directors. The awards are fully vested at issuance and the Company recognizes stock-based compensation expense based on the award’s fair value at the grant date. Compensation expense related to stock awards is determined on the grant date based on the offering price of our common stock and is charged to earnings when issued. Stock-based compensation expense was $42,280 and $60,000 for the years ended December 31, 2023 and 2022, respectively, and is included in general and administrative expense in the consolidated statements of operations.

Income Taxes

Income Taxes—The Company has elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended. To qualify as a REIT, the Company must meet a number of organizational and operational requirements, including a requirement that it distribute at least 90% of its REIT taxable income, subject to certain adjustments and excluding any net capital gain, to stockholders. The Company’s intention is to adhere to the REIT qualification requirements and to maintain its qualification for taxation as a REIT.

As a REIT, the Company is generally not subject to U.S. federal corporate income tax on the portion of taxable income that is distributed to stockholders. If the Company fails to qualify for taxation as a REIT in any taxable year, the Company will be subject to U.S. federal income taxes at regular corporate rates and it may not be able to qualify as a REIT for four subsequent taxable years. As a REIT, the Company may be subject to certain state and local taxes on its income and property, and to U.S. federal income and excise taxes on undistributed taxable income. Taxable income from non-REIT activities managed through the Company’s taxable REIT subsidiary (“TRS”) is subject to U.S. federal, state, and local income taxes at the applicable rates.

The TRS accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax basis, and for net operating loss, capital loss and tax credit carryforwards. The deferred tax assets and liabilities are measured using the enacted income tax rates in effect for the year in which those temporary differences are expected to be realized or settled. The effect on the deferred tax assets and liabilities from a change in tax rates is recognized in earnings in the period when the new rate is enacted. However, deferred tax assets are recognized only to the extent that it is more likely than not that they will be realized based on consideration of all available evidence, including the future reversals of existing taxable temporary differences, future projected taxable income and tax planning strategies. Valuation allowances are provided if, based upon the weight of the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The Company performs periodic reviews for any uncertain tax positions and, if necessary, will record the expected future tax consequences of uncertain tax positions in the consolidated financial statements.

Fair Value Measurement

Fair Value Measurement—The Company establishes fair value measures based on the fair value definition and hierarchy levels established by GAAP. These fair values are based on a three-tiered fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1—Observable inputs such as quoted prices in active markets.

Level 2—Directly or indirectly observable inputs, other than quoted prices in active markets.

Level 3—Unobservable inputs in which there is little or no market data, which require a reporting entity to develop its own assumptions.

The Company’s estimates of fair value were determined using available market information and appropriate valuation methods. Considerable judgment is necessary to develop estimated fair value. The use of different market assumptions or

estimation methods may have a material effect on the estimated fair value amounts. The Company classifies assets and liabilities in the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement.

Accounting Standards Update

Accounting Standards Update—The Company, as an emerging growth company, has elected to use the extended transition period which allows us to defer the adoption of new or revised accounting standards. This allows the Company to adopt new or revised accounting standards as of the effective date for non-public business entities.

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02, “Leases” (“ASU No. 2016-02”) (Topic 842), which replaces Leases (Topic 840), and sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). ASU No. 2016-02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance under Leases (Topic 840), for operating leases. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales type leases, direct financing leases and operating leases. The Company adopted this standard effective January 1, 2022, electing to recognize and measure its leases prospectively at the beginning of the period of adoption, without restating the presentation of periods prior to the effective date, which continue to be reported in accordance with the Company’s historical accounting policy.

At adoption of the new standard, the Company recorded a right-of-use asset and lease liability for its Sheraton Northbrook, Illinois hotel property (the "Northbrook Property") ground lease measured at the estimated present value of the remaining minimum lease payments under the lease. The Company’s ground lease is classified as a financing lease under Topic 842. For this finance lease, effective January 1, 2022, the Company began recognizing depreciation and amortization expense and interest expense in the Company’s consolidated statements of operations instead of ground lease rent expense. While the total expense recognized over the life of a lease is unchanged, the timing of expense recognition for finance leases results in higher expense recognition during the earlier years of the lease and lower expense during the later years of the lease. In addition to recording operating and financing right-of-use assets and lease liabilities, the Company also reclassified at adoption its intangible liability for its above market ground lease to the beginning right-of-use asset. See Note 3 for more information regarding the Company’s lease assets and liabilities.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU No. 2016-13”), which requires that entities use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowance for credit losses. The measurement of expected credit losses is based upon historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU No. 2016-13 will be effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted ASU No. 2016-13 using the modified retrospective approach and the adoption did not have a material impact on the Company’s consolidated financial statements.

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, to improve reportable segment disclosure requirements through enhanced disclosures about significant segment expenses. The ASU is effective for annual reporting periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the ASU to determine its impact on the Company’s segment disclosures.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The standard requires additional disclosures about income taxes, including specific categories in the rate reconciliation and disaggregated information on income taxes paid and income from continuing operations. The standard also eliminates the requirement to disclose an estimated range of the reasonably possible change in unrecognized tax benefits in the next 12 months. The Company is still evaluating the level of disclosure that will be required. This standard is to be applied on a prospective basis and is effective for annual periods beginning after December 15, 2024, with early adoption permitted.

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INVESTMENT IN HOTEL PROPERTIES (Tables)

12 Months Ended

Dec. 31, 2023

Investment in Hotel Properties

Schedule of investment in hotel properties

	December 31,		December 31,
	2023		2022
Land and land improvements	$	32,655,286	$	32,650,698
Building and building improvements		245,132,662		241,278,409
Furniture, fixtures, and equipment		23,850,758		21,884,508
Right-of-use asset - ground lease		7,081,156		7,286,984
Construction in progress		6,097,067		4,576,041
Investment in hotel properties, at cost		314,816,929		307,676,640
Less: accumulated depreciation		(27,469,450)		(17,458,998)
Investment in hotel properties, net	$	287,347,479	$	290,217,642

Schedule of Company's VIE condensed consolidated balance sheet

	December 31,		December 31,
	2023		2022
Assets
Investment in hotel properties, net of accumulated depreciation of $1,281,612 and $471,491	$	21,194,229	$	22,036,289
Cash and cash equivalents		163,501		493,056
Restricted cash		851,290		2,173,237
Accounts receivable, net		412,856		154,976
Prepaid expenses and other assets		27,622		67,068
Total Assets	$	22,649,498	$	24,924,626
Liabilities
Debt, net	$	12,086,033	$	12,244,068
Finance lease liability		4,750,889		4,862,172
Accounts payable		143,030		182,692
Accrued expenses		109,897		445,763
Other liabilities		302,228		655,372
Total liabilities	$	17,392,077	$	18,390,067

Schedule of acquisitions of hotel properties

2022 Acquisitions
				Number
			Date	of Guest	Purchase			Transaction				%
Hotel	Property Type	Location	Acquired	Rooms	Price			Costs		Total		Interest
Hampton Inn & Suites (the “Fargo Property”)	Limited-Service	Fargo, ND	January 18, 2022	90	$	11,440,000	(1)	$	302,222	$	11,742,222	100	%
Courtyard by Marriott (the "El Paso Airport Property")	Select-Service	El Paso, TX	February 8, 2022	90		15,120,000	(2)		333,234		15,453,234	100	%
Fairfield Inn & Suites (the "Lakewood Property")	Limited-Service	Lakewood, CO	March 29, 2022	142		18,800,000	(3)		862,117		19,662,117	100	%
Residence Inn (the "Fort Collins Property")	Extended-Stay	Fort Collins, CO	August 3, 2022	113		15,800,000	(4)		546,009		16,346,009	100	%
Hilton Garden Inn (the "Pineville HGI Property")	Select-Service	Pineville, NC	August 25, 2022	113		10,930,000	(5)		347,149		11,277,149	100	%
Hilton Garden Inn (the "Charlotte Property")	Select-Service	Charlotte, NC	August 25, 2022	112		15,440,000	(6)		416,387		15,856,387	100	%
Holiday Inn (the "Wichita Property")	Limited-Service	Wichita, KS	December 22, 2022	84		7,400,000	(7)		234,310		7,634,310	100	%
				744	$	94,930,000		$	3,041,428	$	97,971,428

(1) Includes the issuance of $4,091,291 in Series T LP Units of the Operating Partnership.

(2) Includes the issuance of $4,600,000 in Common Limited Partnership Units of the Operating Partnership.

(3) Includes the issuance of $5,638,000 in Series T LP Units of the Operating Partnership.

(4) Includes the issuance of $3,703,690 in Series T LP Units of the Operating Partnership.

(5) Includes the issuance of $2,729,211 in Series T LP Units of the Operating Partnership.

(6) Includes the issuance of $6,427,546 in Series T LP Units of the Operating Partnership.

(7) Includes the issuance of $1,217,625 in Series T LP Units of the Operating Partnership.

Schedule of aggregate purchase price for the hotel properties

	For the Years Ended December 31,
	2023		2022
Land and land improvements	$	—	$	12,538,514
Building and building improvements		—		79,702,403
Furniture, fixtures, and equipment		—		5,730,511
Total assets acquired		—		97,971,428
Assumed mortgage debt		—		7,198,709
Net purchase price	$	—	$	90,772,719

Schedule of reconciliation of undiscounted cash flows for each of the next five years and total of the remaining years to the finance lease liability

2024	$	610,237
2025		624,112
2026		645,791
2027		660,511
2028		675,672
Thereafter		43,341,125
Total finance lease payments		46,557,448
Interest		(33,451,338)
Present value of finance lease liabilities	$	13,106,110

HDGH

Investment in Hotel Properties

Schedule of assets acquired and liabilities assumed

	August 10,
	2022
Assets
Building	$	16,700,000
Furniture, fixtures & equipment		900,000
Right-of-use asset - ground lease		4,862,172
Cash and cash equivalents		36,790
Restricted cash		1,305,636
Accounts receivable, net		168,974
Prepaid expenses and other assets		107,291
Total Assets	$	24,080,863
Liabilities
Debt	$	12,781,084
Finance lease liability		4,862,172
Accounts payable		237,636
Accrued expenses		1,970,554
Other liabilities		419,336
Total liabilities	$	20,270,782
Assets in excess of liabilities (gain on acquisition of VIE)	$	3,810,081

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PREPAID EXPENSES AND OTHER ASSETS (Tables)

12 Months Ended

Dec. 31, 2023

PREPAID EXPENSES AND OTHER ASSETS

Schedule of prepaid expenses and other assets

	December 31,		December 31,
	2023		2022
Franchise fees(1)	$	—	$	150,000
Acquisition costs		—		485,304
Insurance		941,582		389,656
Other		884,007		385,033
	$	1,825,589	$	1,409,993

(1) Prepaid franchise fees paid in 2022 in relation to Sheraton Albuquerque Airport, terminated in 2023.

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ACCRUED EXPENSES (Tables)

12 Months Ended

Dec. 31, 2023

ACCRUED EXPENSES

Schedule of accrued expenses

	December 31,		December 31,
	2023		2022
Property taxes	$	3,040,984	$	3,215,458
Interest		3,504,989		1,585,813
Other		1,262,145		1,052,248
	$	7,808,118	$	5,853,519

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DEBT (Tables)

12 Months Ended

Dec. 31, 2023

DEBT

Schedule of hotel properties securing the Company's hotel mortgage debt and revolving lines of credit

	Interest		Outstanding		Outstanding
	Rate as of		Balance as of		Balance as of
	December 31,	Maturity	December 31,		December 31,
	2023	Date	2023		2022
Holiday Inn Express - Cedar Rapids(1)	5.33%	9/1/2024	$	5,698,543	$	5,799,804
Hampton Inn & Suites - Pineville(2)	5.13%	6/6/2024		8,368,135		8,580,586
Hampton Inn - Eagan	4.60%	1/1/2025		8,839,737		9,063,528
Home2 Suites - Prattville(3)	4.13%	8/1/2024		8,984,688		9,199,041
Home2 Suites - Lubbock	4.69%	10/6/2026		7,103,138		7,343,948
Fairfield Inn & Suites - Lubbock	4.93%	4/6/2029		8,809,051		8,971,430
Homewood Suites - Southaven(4)	3.70%	3/3/2025		12,658,773		13,007,706
Courtyard by Marriott - Aurora(5)(6)	11.46%	2/5/2024(7)		15,000,000		15,000,000
Holiday Inn - El Paso(6)(8)	5.00%	5/15/2024(8)		7,600,000		7,900,000
Hilton Garden Inn - Houston(9)	3.85%	9/2/2026		13,852,705		13,947,217
Sheraton - Northbrook(6)(10)	11.71%	12/5/2024		4,026,202		3,766,639
Hampton Inn - Fargo(11)	4.00%	3/1/2027		7,095,283		7,275,480
Courtyard by Marriott - El Paso(12)(13)	6.01%	5/13/2027		9,975,072		9,990,000
Fairfield Inn & Suites - Lakewood(6)(14)	7.00%	3/28/2024		13,845,000		13,845,000
Residence Inn - Fort Collins(15)	11.60%	5/4/2025		11,200,000		—
Residence Inn - Fort Collins - CapEx(15)	12.85%	5/4/2025		1,875,000		—
Residence Inn - Fort Collins - A-1(15)(16)	7.00%	8/3/2028		501,465		11,500,000
Hilton Garden Inn - El Paso	4.94%	8/6/2025		12,341,759		12,613,869
Hilton Garden Inn - Pineville(17)	6.20%	8/25/2027		7,020,000		7,020,000
Hilton Garden Inn - Charlotte(17)	6.20%	8/25/2027		9,805,000		9,805,000
Holiday Inn Express - Wichita(12)	6.41%	12/21/2027		5,642,000		5,642,000
Total Mortgage Debt				180,241,551		180,271,248
Premium on assumed debt, net				203,135		221,082
Deferred financing costs, net				(2,574,861)		(3,193,939)
Net Mortgage				177,869,825		177,298,391
$5.0 million revolving line of credit - Western(18)	9.50%	4/15/2024(20)		4,651,139		5,000,000
$13.3 million revolving line of credit - A-1 Bonds(19)	7.00%	12/31/2023(19)		13,176,807		7,380,156
$0.6 million loan - NHS	7.00%	1/31/2024(21)		600,000		—
Total Lines of Credit				18,427,946		12,380,156
Debt, net			$	196,297,771	$	189,678,547

(1) Loan is interest-only through April 30, 2022 and is at a fixed rate of interest. The parties are working to finalize the extension documents as of the date of this filing.

(2) On July 23, 2024, the Hampton Inn & Suites Pineville was sold and the loan was repaid on the closing date. See Note 13 “Subsequent Events.”

(3) On November 4, 2024, this loan was repaid in full and refinanced with a new loan secured by the Prattville Property. See Note 13 “Subsequent Events”.

(4) On December 6, 2024, this loan was repaid in full and refinanced with a new loan secured by the Southaven Property. See Note 13 “Subsequent Events”.

(5) Variable interest rate equal to 30-day LIBOR plus 6.00%, provided that LIBOR shall not be less than 1.00%.

(6) Loan is interest-only until maturity.

(7) The Company has notified the lender of its intention to exercise the option under the loan agreement to extend the maturity date to February 5, 2025.

(8) On May 15, 2024, the maturity date was extended to November 15, 2024 and the interest rate was increased to 9.0%. See Note 13 “Subsequent Events.”

(9) Loan is interest-only for the first 24 months after origination.

(10) Variable interest rate equal to 30-day LIBOR or equivalent rate plus 6.25%, provided that LIBOR or equivalent rate shall not be less than 0.75%.

(11) Proceeds of this loan were used to repay in full the original loan secured by the Fargo Property entered into on January 24, 2022 with A-1 Bonds.

(12) Loan is interest-only for the first 18 months after origination.

(13) Proceeds of this loan were used to repay in full the original loan secured by the El Paso Airport Property entered into on February 14, 2022 with A-1 Bonds.

(14) On March 27, 2024, this loan was repaid in full and refinanced with two new loans secured by the Lakewood Property and unissued common limited partnership units of the Operating Partnership. See Note 13 “Subsequent Events.”

(15) On April 18, 2023, Tranche 1 and Tranche 2 were repaid in full and refinanced with a new loan secured by the Fort Collins Property.

(16) Tranche 3’s maturity date is August 2, 2028.

(17) Loan is interest-only through February 25, 2024.

(18) Variable interest rate equal to U.S. Prime plus 0.50%

(19) On March 27, 2024, this line of credit was increased to $15.5 million and the maturity date was extended to December 31, 2024. See Note 13 “Subsequent Events.”

(20) On May 10, 2024, the maturity date was extended to June 5, 2024. The Company and Western State Bank are working to finalize an extension of this line of credit as of the date of this filing. See Note 13 “Subsequent Events.”

(21) On August 21, 2024, the maturity date was extended to September 30, 2025. See Note 13 “Subsequent Events.”

Schedule of future minimum principal payments on the Company's debt

2024	$	69,392,481
2025		62,574,437
2026		20,686,104
2027		37,441,359
2028		708,616
Thereafter		7,866,500
		198,669,497
Premium on assumed debt, net		203,135
Deferred financing costs, net		(2,574,861)
	$	196,297,771

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INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2023

INCOME TAXES

Schedule of the components of the company's income tax benefit

	For the Years Ended December 31,
	2023		2022
Federal:
Deferred	$	402,080	$	(5,047,228)
State:
Current		—		(89,346)
Deferred		(147,736)		(708,441)
Income tax (expense)/benefit	$	254,344	$	(5,845,015)

Schedule of reconciliation of income taxes at U.S statutory federal income tax rate

	For the Years Ended December 31,
	2023		%	2022		%
Expected income tax benefit at U.S. Federal statutory rate	$	1,247,366	-21.0%	$	2,743,594	-21.0%
Tax impact of REIT election		-	0.0%		(614,966)	4.7%
Expected tax benefit at TRS		1,247,366	-21.0%		2,128,628	-16.3%
Valuation Allowance		(1,009,839)			(7,314,530)
Gross tax (expense)/benefit		237,527			(5,185,902)
State income tax expense, net		42,874	-0.7%		(89,346)	0.7%
Temporary differences - deprecation		-	0.0%		(569,767)	4.4%
Permanent differences		(26,057)	0.4%		-	0.0%
Income tax (expense)/benefit	$	254,344	-4.3%	$	(5,845,015)	44.7%

Schedule of the company's deferred tax assets and liabilities

	December 31,
	2023		2022
Deferred Tax Assets:
Net operating loss carryforwards - Federal	$	7,089,135	$	6,265,111
Net operating loss carryforwards - State		1,598,579		1,049,419
Valuation Allowance		(8,687,714)		(7,314,530)
		-		-
Deferred Tax Liabilities:
Tax FF&E basis less than book basis - Federal		(2,462,213)		(2,864,293)
Tax FF&E basis less than book basis - State		(555,222)		(426,608)
		(3,017,435)		(3,290,901)
Deferred tax (liabilities)/assets, net	$	(3,017,435)	$	(3,290,901)

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RELATED PARTY TRANSACTIONS (Tables)

12 Months Ended

Dec. 31, 2023

Advisor And Affiliates

Related Party Transactions

Schedule of fees and reimbursements incurred and payable

	Incurred
	For the Years Ended December 31,
	2023		2022
Fees:
Acquisition fees	$	—	$	1,626,599
Financing fees		84,000		1,861,628
Asset management fees		2,488,100		1,918,321
Performance fees		195,874		181,541
	$	2,767,974	$	5,588,089
Reimbursements:
Offering costs	$	1,935,023	$	2,256,081
General and administrative		3,258,648		3,640,108
Sales and marketing		144,421		321,821
Acquisition costs		185,115		67,051
	$	5,523,207	$	6,285,061

NHS

Related Party Transactions

Schedule of fees and reimbursements incurred and payable

	Incurred				Payable as of
	For the Years Ended December 31,				December 31,		December 31,
	2023		2022		2023		2022
Fees:
Management fees	$	1,073,723	$	1,071,385	$	186,298	$	145,733
Administrative fees		119,613		184,101		20,962		22,791
Accounting fees		159,896		195,096		32,220		31,164
	$	1,353,232	$	1,450,582	$	239,480	$	199,688
Reimbursements	$	810,723	$	1,273,180	$	216,595	$	143,009

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STOCKHOLDERS' EQUITY (Tables)

12 Months Ended

Dec. 31, 2023

STOCKHOLDERS' EQUITY

Schedule of distributions

			Distribution								Net Cash
	Distributions		Declared Per		Distributions Paid (3)						Flows Provided By
Period	Declared (1)		Share (1) (2)		Cash		Reinvested		Total		(Used In) Operations
First Quarter 2023	$	1,779,846	$	0.175	$	1,424,802	$	395,820	$	1,820,622	$	264,655
Second Quarter 2023		1,794,077		0.175		1,317,166		384,772		1,701,938		3,484,371
Third Quarter 2023		1,816,105		0.175		1,344,743		381,033		1,725,776		2,285,665
Fourth Quarter 2023		1,826,402		0.175		1,433,319		335,912		1,769,231		(2,980,745)
	$	7,216,430	$	0.700	$	5,520,030	$	1,497,537	$	7,017,567	$	3,053,946
			Distribution								Net Cash
	Distributions		Declared Per		Distributions Paid (3)						Flows Provided By
Period	Declared (1)		Share (1) (2)		Cash		Reinvested		Total		(Used In) Operations
First Quarter 2022	$	1,556,308	$	0.175	$	933,464	$	567,240	$	1,500,704	$	(3,293,181)
Second Quarter 2022		1,540,200		0.175		1,203,791		526,159		1,729,950		20,841
Third Quarter 2022		1,821,829		0.175		1,094,353		452,923		1,547,276		2,268,982
Fourth Quarter 2022		1,762,398		0.175		1,234,969		433,293		1,668,262		(326,742)
	$	6,680,735	$	0.700	$	4,466,577	$	1,979,615	$	6,446,192	$	(1,330,100)

(1) Distributions for the period from January 1, 2022 through December 31, 2023 were payable to each stockholder as 100% in cash on a monthly basis.

(2) Assumes each share was issued and outstanding each day that was a record date for distributions during the period presented.

(3) Distributions for the period from January 1, 2022 through December 31, 2023 were paid on a monthly basis. Distributions for all record dates of a given month during such period were paid during the following month, except for the distributions declared for December 2023 which were paid in March 2024.

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ORGANIZATION (Details)		12 Months Ended
	Apr. 07, 2023 USD ($) item	Dec. 31, 2023 USD ($) class segment $ / shares shares	Jan. 06, 2023 $ / shares	Dec. 31, 2022 USD ($) $ / shares	Dec. 31, 2021 USD ($)	Jun. 15, 2020 USD ($)	Apr. 29, 2020 USD ($) $ / shares shares	Jun. 01, 2018 USD ($) $ / shares
Organization
Number of reportable segments | segment		1
Number of operating segments | segment		1
Number of voting classes of partnership units | class		3
Number of non voting classes of partnership units | class		4
Common stock, par value (in dollars per share) | $ / shares		$ 0.01	$ 0.01	$ 0.01
Common LP Units
Organization
Units issued price (In dollars per share) | $ / shares			10.57
Value of outstanding units		$ 3,720,284		$ 4,751,639
Series T LP Units
Organization
Units issued price (In dollars per share) | $ / shares			$ 10.57
Aggregate value of units issued in connection with property contributions		45,700,000
Distributions declared		200,000
Value of outstanding units		$ 45,524,201		45,739,120
Series T LP Units | Minimum
Organization
Time period after issuance, for the conversion of Series T LP Units in to Common LP Units		24 months
Series T LP Units | Maximum
Organization
Time period after issuance, for the conversion of Series T LP Units in to Common LP Units		36 months
Series GO LP Units
Organization
Value of outstanding units		$ 10,933,302		$ 14,688,392
Series GO II LP Units
Organization
Value of outstanding units		$ 765,162
Operating Partnership | Common LP Units
Organization
Number of outstanding partnership units | shares		612,100
Operating Partnership | Series B Limited Partnership Units
Organization
Number of outstanding partnership units | shares		1,000
Operating Partnership | Series T LP Units
Organization
Number of outstanding partnership units | shares		5,073,506
Operating Partnership | Series GO LP Units
Organization
Number of outstanding partnership units | shares		3,124,503
Cumulative proceeds from issuance of stock		$ 1,000,000.0
Operating Partnership | Interval Units
Organization
Number of outstanding partnership units | shares		0
Operating Partnership | Series GO II LP Units
Organization
Number of outstanding partnership units | shares		129,787
Maximum offering	$ 30,000,000
Maximum offering per the sole discretion of the General Partner	$ 60,000,000
Number of extension period | item	2
Units offering extension period (Year)	1 year
Percentage of purchase price equal to NAV	75.00%
Cumulative number of shares issued (in shares) | shares		129,787
Private Offering | Series GO LP Units
Organization
Maximum offering						$ 20,000,000
Maximum offering per the sole discretion of the General Partner						$ 30,000,000
Cumulative number of units issued since inception of the Offering (in shares) | shares		3,124,503
Cumulative gross proceeds from issuance of units since inception of the Offering		$ 21,500,000
Private Offering | Operating Partnership | Common LP Units
Organization
Cumulative number of units issued since inception of the Offering (in shares) | shares		612,100
Units issued price (In dollars per share) | $ / shares		$ 10.00
Private Offering | Interval Common Stock
Organization
Common stock, par value (in dollars per share) | $ / shares							$ 0.01
Number of shares of common stock designated as non-voting shares of Interval Common Stock (in shares) | shares							7,000,000
Maximum offering							$ 30,000,000
Maximum offering per the sole discretion of the Company's board of directors							$ 60,000,000
Private Offering | Common Stock
Organization
Common stock, par value (in dollars per share) | $ / shares								$ 0.01
Maximum offering					$ 150,000,000			$ 100,000,000
Cumulative number of shares issued (in shares) | shares		10,243,193
Cumulative number of shares issued pursuant to the DRIP (in shares) | shares		1,167,594
Cumulative proceeds from issuance of stock		$ 100,200,000
Cumulative number of shares repurchased (in shares) | shares		287,525
Cumulative stock repurchased, original investment		$ 2,858,355
Cumulative stock repurchased under DRIP, original investment		$ 2,794,469

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Cash and Cash Equivalents
FDIC Insurance limit	$ 250,000	$ 250,000
Advertising Costs
Advertising Expense	$ 2,600,000	1,500,000
Property Management Fees
Management fees (as a percent)	4.00%
Asset management fees (as a percent)	0.75%
Acquisition Costs
Acquisition fee (as a percent)	1.40%
Stock-Based Compensation
Stock-based compensation expense	$ 42,280	$ 60,000
Income Taxes
Non eligibility term for REIT non compliance	4 years
Land improvements
Investment in Hotel Properties
Estimated useful lives (in years)	15 years
Building improvements
Investment in Hotel Properties
Estimated useful lives (in years)	40 years
Furniture, fixtures, and equipment | Minimum
Investment in Hotel Properties
Estimated useful lives (in years)	3 years
Furniture, fixtures, and equipment | Maximum
Investment in Hotel Properties
Estimated useful lives (in years)	7 years

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INVESTMENT IN HOTEL PROPERTIES - Summary (Details)	Dec. 31, 2023 USD ($) property state room	Dec. 31, 2022 USD ($)
Investment in hotel properties consisted of the following:
Land and land improvements	$ 32,655,286	$ 32,650,698
Building and building improvements	245,132,662	241,278,409
Furniture, fixtures, and equipment	23,850,758	21,884,508
Finance ground lease assets	7,081,156	7,286,984
Construction in progress	6,097,067	4,576,041
Investment in hotel properties, at cost	314,816,929	307,676,640
Less: accumulated depreciation	(27,469,450)	(17,458,998)
Investment in hotel properties, net	$ 287,347,479	$ 290,217,642
Other disclosures
Number of hotel properties consolidated | property	19
Number of hotel properties owned | property	18
Number of hotel properties not owned by the Company | property	1
Aggregate number of rooms in hotel properties | room	2,261
Number of states where hotel properties are owned | state	11

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INVESTMENT IN HOTEL PROPERTIES - VIE (Details)	Dec. 31, 2023 USD ($) property	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)
Assets
Investment in hotel properties, net of accumulated depreciation of $1,281,612 and $471,491	$ 287,347,479	$ 290,217,642
Accumulated depreciation	27,469,450	17,458,998
Cash and cash equivalents	3,052,937	6,193,449	$ 7,866,401
Restricted Cash	9,891,392	10,732,832
Accounts receivable, net	1,466,879	1,468,732
Prepaid expenses and other assets	1,825,589	1,409,993
Total Assets (variable interest entities - $22,649,498 and $24,924,626)	305,774,334	312,385,762
Liabilities
Debt, net	196,297,771	189,678,547
Finance lease liabilities	13,106,110	13,026,849
Accounts payable	3,877,980	3,034,148
Accrued expenses	7,808,118	5,853,519
Total liabilities (variable interest entities - $17,392,077 and $18,390,067)	237,470,284	223,393,216
Variable Interest Entity, Primary Beneficiary
Assets
Investment in hotel properties, net of accumulated depreciation of $1,281,612 and $471,491	21,194,229	22,036,289
Accumulated depreciation	1,281,612	471,491
Cash and cash equivalents	163,501	493,056
Restricted Cash	851,290	2,173,237
Accounts receivable, net	412,856	154,976
Prepaid expenses and other assets	27,622	67,068
Total Assets (variable interest entities - $22,649,498 and $24,924,626)	22,649,498	24,924,626
Liabilities
Debt, net	12,086,033	12,244,068
Finance lease liabilities	4,750,889	4,862,172
Accounts payable	143,030	182,692
Accrued expenses	109,897	445,763
Other liabilities	302,228	655,372
Total liabilities (variable interest entities - $17,392,077 and $18,390,067)	$ 17,392,077	$ 18,390,067
Variable Interest Entity, Primary Beneficiary | Holiday Inn (the "EI Paso Property")
Liabilities
Number of hotel properties owned by VIE | property	1

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INVESTMENT IN HOTEL PROPERTIES - Acquisitions (Details)								12 Months Ended
	Dec. 22, 2022 USD ($) room shares	Aug. 25, 2022 USD ($) room shares	Aug. 10, 2022 USD ($) room	Aug. 03, 2022 USD ($) room shares	Mar. 29, 2022 USD ($) room	Feb. 08, 2022 USD ($) room	Jan. 18, 2022 USD ($) room	Dec. 31, 2023 item property	Dec. 31, 2022 USD ($) room
Acquisitions
Number of hotel properties acquired | property								7
Number of hotel properties not owned by the Company | property								1
Number of guest rooms | room									744
Purchase Price									$ 94,930,000
Transaction Costs									3,041,428
Total									$ 97,971,428
Vista Management Agreement
Acquisitions
Management agreement, number of renewal periods | item								2
Successive renewal term								5 years
HP Management Agreement
Acquisitions
Initial term of management agreement								3 years
Successive renewal term								3 years
KAJ Management Agreement
Acquisitions
Initial term of management agreement								5 years
NHS Management Agreement
Acquisitions
Number of Properties Subject to Management Agreement | item								11
Management agreement, automatic renewal term								5 years
Aimbridge Management Agreement
Acquisitions
Management agreement, automatic renewal term								1 year
Initial term of management agreement								5 years
Successive renewal term								1 year
Series T LP Units. | Minimum
Acquisitions
Time period for the conversion of Series T LP Units in to Common LP Units								24 months
Series T LP Units. | Maximum
Acquisitions
Time period for the conversion of Series T LP Units in to Common LP Units								36 months
Hampton Inn and Suites, Fargo Medical Center (the "Fargo Property")
Acquisitions
Number of guest rooms | room							90
Purchase Price							$ 11,440,000
Transaction Costs							302,222
Total							$ 11,742,222
Interest (as a percent)							100.00%
Time period for the conversion of Series T LP Units in to Common LP Units							36 months
Asset acquisition, new loan							$ 7,200,000
Cash consideration							150,000
Hampton Inn and Suites, Fargo Medical Center (the "Fargo Property") | Series T LP Units.
Acquisitions
Amount of units issued as consideration							$ 4,091,291
Courtyard El Paso Airport, (the "El Paso Airport Property")
Acquisitions
Number of guest rooms | room						90
Purchase Price						$ 15,120,000
Transaction Costs						333,234
Total						$ 15,453,234
Interest (as a percent)						100.00%
Asset acquisition, new loan						$ 10,000,000.0
Cash consideration						620,000
Courtyard El Paso Airport, (the "El Paso Airport Property") | Common LP Units
Acquisitions
Amount of units issued as consideration						$ 4,600,000
Fairfield Inn & Suites (the "Lakewood Property")
Acquisitions
Number of guest rooms | room					142
Purchase Price					$ 18,800,000
Transaction Costs					862,117
Total					$ 19,662,117
Interest (as a percent)					100.00%
Amount of units issued as consideration					$ 6,200,000
Asset acquisition, new loan					12,600,000
Cash consideration					$ 552,000
Fairfield Inn & Suites (the "Lakewood Property") | Minimum
Acquisitions
Time period for the conversion of Series T LP Units in to Common LP Units					36 months
Fairfield Inn & Suites (the "Lakewood Property") | Maximum
Acquisitions
Time period for the conversion of Series T LP Units in to Common LP Units					48 months
Fairfield Inn & Suites (the "Lakewood Property") | Series T LP Units.
Acquisitions
Amount of units issued as consideration					$ 5,638,000
Residence Inn by Marriott Fort Collins (the "RI Hotel Property")
Acquisitions
Number of guest rooms | room				113
Purchase Price				$ 15,800,000
Transaction Costs				546,009
Total				$ 16,346,009
Interest (as a percent)				100.00%
Asset acquisition, new loan				$ 11,500,000
Cash consideration				$ 600,000
Residence Inn by Marriott Fort Collins (the "RI Hotel Property") | Minimum
Acquisitions
Time period for the conversion of Series T LP Units in to Common LP Units				36 months
Residence Inn by Marriott Fort Collins (the "RI Hotel Property") | Maximum
Acquisitions
Time period for the conversion of Series T LP Units in to Common LP Units				48 months
Residence Inn by Marriott Fort Collins (the "RI Hotel Property") | Series T LP Units.
Acquisitions
Amount of units issued as consideration				$ 3,703,690
Units issued as consideration | shares				560,369
Hilton Garden Inn, (the "El Paso University Property")
Acquisitions
Acquisition expense			$ 571,198
Hilton Garden Inn, (the "El Paso University Property") | El Paso University Amended Agreements
Acquisitions
Percentage of value of ownership interest of the prior members			6.00%
Hilton Garden Inn, (the "El Paso University Property") | El Paso University Amended Agreements | HDGH [Member]
Acquisitions
Number of guest rooms | room			153
Member interest acquired in exchange for capital contributions (as a percent)			24.90%
Capital contributions received			$ 3,200,000
Percentage of distributions from operations to be received			100.00%
Interest rate of loan, option (as a percent)			12.00%
Loan principal amount, counterparty			$ 14,400,000
Loan interest rate, counterparty			4.939%
Hilton Garden Inn (the "Pineville HGI Property")
Acquisitions
Number of guest rooms | room		113
Purchase Price		$ 10,930,000
Transaction Costs		347,149
Total		$ 11,277,149
Interest (as a percent)		100.00%
Time period for the conversion of Series T LP Units in to Common LP Units		24 months
Hilton Garden Inn (the "Pineville HGI Property") | Western Alliance Bank
Acquisitions
Asset acquisition, new loan		$ 7,800,000
Asset acquisition, new loan by subsidiaries		7,000,000.0
Hilton Garden Inn (the "Pineville HGI Property") | Series T LP Units.
Acquisitions
Amount of units issued as consideration		$ 2,729,211
Units issued as consideration | shares		249,921
Cash consideration		$ 400,000
Hilton Garden Inn (the "Charlotte Property")
Acquisitions
Number of guest rooms | room		112
Purchase Price		$ 15,440,000
Transaction Costs		416,387
Total		$ 15,856,387
Interest (as a percent)		100.00%
Time period for the conversion of Series T LP Units in to Common LP Units		24 months
Loan amount		$ 9,800,000
Cash consideration		400,000
Hilton Garden Inn (the "Charlotte Property") | Western Alliance Bank
Acquisitions
Asset acquisition, new loan		8,700,000
Hilton Garden Inn (the "Charlotte Property") | Series T LP Units.
Acquisitions
Amount of units issued as consideration		$ 6,427,546
Units issued as consideration | shares		598,755
Holiday Inn (the "Wichita Property ")
Acquisitions
Number of guest rooms | room	84
Purchase Price	$ 7,400,000
Transaction Costs	234,310
Total	$ 7,634,310
Interest (as a percent)	100.00%
Time period for the conversion of Series T LP Units in to Common LP Units	36 months
Contractual consideration	$ 7,400,000
Asset acquisition, new loan	5,600,000
Holiday Inn (the "Wichita Property ") | Series T LP Units.
Acquisitions
Amount of units issued as consideration	$ 1,217,625
Units issued as consideration | shares	121,762
Cash consideration	$ 500,000

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INVESTMENT IN HOTEL PROPERTIES - Purchase Price Allocation (Details) - USD ($)	Dec. 31, 2023	Dec. 31, 2022
Acquisitions
Land and land improvements	$ 32,655,286	$ 32,650,698
Building and building improvements	245,132,662	241,278,409
Furniture, fixtures, and equipment	23,850,758	21,884,508
Total Assets (variable interest entities - $22,649,498 and $24,924,626)	$ 305,774,334	312,385,762
Asset Acquisitions 2022
Acquisitions
Land and land improvements		12,538,514
Building and building improvements		79,702,403
Furniture, fixtures, and equipment		5,730,511
Total Assets (variable interest entities - $22,649,498 and $24,924,626)		97,971,428
Assumed mortgage debt		7,198,709
Net purchase price		$ 90,772,719

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INVESTMENT IN HOTEL PROPERTIES - Estimated fair value of assets acquired and liabilities assumed (Details) - HDGH	Aug. 10, 2022 USD ($)
Assets
Building	$ 16,700,000
Furniture, fixtures & equipment	900,000
Right of use asset - ground lease	4,862,172
Cash and cash equivalents	36,790
Restricted cash	1,305,636
Accounts receivable, net	168,974
Prepaid expenses and other assets	107,291
Total Assets	24,080,863
Liabilities
Debt	12,781,084
Finance lease liabilities	4,862,172
Accounts payable	237,636
Accrued expenses	1,970,554
Other liabilities	419,336
Total liabilities	20,270,782
Assets in excess of liabilities (gain on acquisition of VIE)	$ 3,810,081

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INVESTMENT IN HOTEL PROPERTIES - Leases (Details) - USD ($)			12 Months Ended
	Aug. 10, 2022	Dec. 03, 2021	Dec. 31, 2023	Dec. 31, 2022	Jan. 01, 2022
Ground Lease
Lease liability			$ 13,106,110	$ 13,026,849
Right-of-use asset			$ 7,081,156	$ 7,286,984
Northbrook Property
Ground Lease
Above market ground lease liability at acquisition date		$ 5,497,061
Period of time that has expired on lease at time of acquisition (in years)		15 years
Lease term (in years)		61 years
Yearly percentage increase in base rent		3.00%
Discount rate percentage (in %)			7.75%
Finance lease, interest expense			$ 639,561
Right-of-use amortization expense			$ 53,885
El Paso University Property
Ground Lease
Lease term (in years)	32 years
Discount rate percentage (in %)			9.00%
Lease liability	$ 4,862,172
Right-of-use asset	$ 4,862,172
Adjustment term of annual base rent	5 years
ASU 2016-02 | Cumulative Effect, Period of Adoption, Adjusted Balance | Northbrook Property
Ground Lease
Lease liability					$ 7,975,757
Right-of-use asset					$ 2,478,696

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INVESTMENT IN HOTEL PROPERTIES - Lease Payments (Details) - USD ($)	Dec. 31, 2023	Dec. 31, 2022
Reconciliation of undiscounted cash flows to finance lease liability:
2024	$ 610,237
2025	624,112
2026	645,791
2027	660,511
2028	675,672
Thereafter	43,341,125
Total finance lease payments	46,557,448
Interest	(33,451,338)
Present value of finance lease liabilities	$ 13,106,110	$ 13,026,849

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PREPAID EXPENSES AND OTHER ASSETS (Details) - USD ($)	Dec. 31, 2023	Dec. 31, 2022
PREPAID EXPENSES AND OTHER ASSETS
Franchise fees		$ 150,000
Acquisition costs		485,304
Insurance	$ 941,582	389,656
Other	884,007	385,033
Total	$ 1,825,589	$ 1,409,993

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ACCRUED EXPENSES (Details) - USD ($)	Dec. 31, 2023	Dec. 31, 2022
ACCRUED EXPENSES
Property taxes	$ 3,040,984	$ 3,215,458
Interest	3,504,989	1,585,813
Other	1,262,145	1,052,248
Total	$ 7,808,118	$ 5,853,519

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DEBT - Lines of Credit (Details) - USD ($) $ in Thousands		12 Months Ended
	Oct. 09, 2023	Dec. 31, 2023	Jul. 31, 2023	Apr. 18, 2023	Jan. 12, 2023	Aug. 10, 2022	Feb. 10, 2020
Western Line of Credit
Debt
Loan Principal Curtailment	$ 300
Revolving line of credit | Western Line of Credit
Debt
Line of credit	$ 4,670	$ 5,000					$ 5,000
Partnership units pledged		300,000
Outstanding amount		$ 4,700
Interest rate (as a percent)		4.00%
Additional partnership units held as collateral			200,000
Interest rate (as a percent)		9.50%
Partnership units held as collateral			300,000
Revolving line of credit | Western Line of Credit | U.S. Prime Rate
Debt
Basis spread (as a percent)		0.50%
Revolving line of credit | A-1 Line of Credit
Debt
Line of credit		$ 13,300		$ 13,300	$ 10,000	$ 5,000
Outstanding amount		$ 13,200
Interest rate (as a percent)		7.00%			7.00%
Revolving line of credit | A-1 Line of Credit | Common LP Units
Debt
Partnership units held as collateral				1,330,000	1,000,000

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DEBT - Mortgage Debt (Details)	12 Months Ended
	Dec. 31, 2023 USD ($) loan property	Dec. 31, 2022 USD ($)
Debt
Outstanding balance	$ 198,669,497
Mortgage Debt
Debt
Outstanding balance	$ 180,241,551	$ 180,271,248
Number of properties as security for mortgage debt | property	19
Fixed Rate Mortgage Loans
Debt
Number of loans with fixed interest rates | loan	16
Fixed Rate Mortgage Loans | Minimum
Debt
Fixed interest rate (as a percent)	3.70%
Fixed Rate Mortgage Loans | Maximum
Debt
Fixed interest rate (as a percent)	7.00%
Variable Rate Mortgage Loan One | LIBOR
Debt
Number of variable interest rate loans | loan	1
Basis spread (as a percent)	6.00%
Reference rate threshold (as a percent)	1.00%
Effective interest rate (as a percent)	11.46%
Variable Rate Mortgage Loan Two
Debt
Weighted-average interest rate (as a percent)	6.24%
Variable Rate Mortgage Loan Two | LIBOR
Debt
Basis spread (as a percent)	6.25%
Reference rate threshold (as a percent)	0.75%
Effective interest rate (as a percent)	11.71%
Variable Rate Mortgage Loan Three Member | Secured Overnight Financing Rate 7.50
Debt
Basis spread (as a percent)	7.50%
Reference rate threshold (as a percent)	10.00%
Effective interest rate (as a percent)	12.85%
Variable Rate Mortgage Loan Three Member | Secured Overnight Financing Rate 6.25
Debt
Basis spread (as a percent)	6.25%
Reference rate threshold (as a percent)	10.00%
Effective interest rate (as a percent)	11.60%
High Desert Garden Holdings, LLC, El Paso University Property | Mortgage Debt
Debt
Principal amount	$ 14,400,000
Interest rate (as a percent)	4.94%

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DEBT - Fort Collins Loan Refinancing (Details)	May 02, 2023 USD ($)	Apr. 18, 2023 USD ($) item
New Fort Collins Loan Agreement
Debt
Loan amount		$ 11,200,000
Number of options to extend debt instrument term | item		3
Additional maturity term		1 year
Percentage of prepayment of outstanding principal amount		10.00%
Prepayment period		10 days
Prepayment period on initial term which includes prepayment fee		25 months
Number of months of interest payments considered for prepayment fee calculation		24 months
Debt instrument exit fee		$ 112,000
New Fort Collins Loan Agreement | SOFR
Debt
Basis spread (as a percent)		6.25%
Original Fort Collins Loan Agreement
Debt
Repayments of Debt		$ 11,500,000
Number of loans | item		3
Interest rate (as a percent)		7.00%
Exit fee (as a percent)		1.75%
Original Fort Collins Loan Agreement | Tranche 1
Debt
Loan amount		$ 10,298,535
Penalty incurred on repayment of debt		0
Original Fort Collins Loan Agreement | Tranche 2
Debt
Loan amount		700,000
Penalty incurred on repayment of debt		0
Original Fort Collins Loan Agreement | Tranche 3
Debt
Loan amount		$ 501,465
Fort Collins CAPEX Loan
Debt
Loan amount	$ 1,900,000
Basis spread (as a percent)	7.50%
Prepayment fee percentage	1.00%

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DEBT - EI Paso HI Loan Modification (Details) - USD ($)	May 15, 2023	May 12, 2021	Dec. 31, 2023
Debt
Outstanding balance			$ 198,669,497
Holiday Inn El Paso Loan
Debt
Loan amount		$ 7,900,000
Repayments of Debt	$ 300,000
Outstanding balance	7,600,000
Amount agreed to deposit by the borrower in FF&E reserve	$ 819,674
Time period for the conversion of Series T LP Units in to Common LP Units		48 months

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DEBT - Summary of Debt (Details)	12 Months Ended
	Dec. 31, 2023 USD ($)	May 15, 2024	Mar. 27, 2024 USD ($) loan	Oct. 09, 2023 USD ($)	Apr. 18, 2023 USD ($)	Jan. 12, 2023 USD ($)	Dec. 31, 2022 USD ($)	Aug. 10, 2022 USD ($)	Feb. 10, 2020 USD ($)
Outstanding Debt:
Outstanding balance	$ 198,669,497
Premium on assumed debt, net	203,135
Deferred financing costs, net	(2,574,861)
Debt, net	196,297,771						$ 189,678,547
Revolving line of credit
Outstanding Debt:
Total Other Debt	18,427,946						12,380,156
Mortgage Debt
Outstanding Debt:
Outstanding balance	180,241,551						180,271,248
Premium on assumed debt, net	203,135						221,082
Deferred financing costs, net	(2,574,861)						(3,193,939)
Net Mortgage	177,869,825						177,298,391
Western Line of Credit | Revolving line of credit
Outstanding Debt:
Line of credit	$ 5,000,000.0			$ 4,670,000					$ 5,000,000.0
Interest rate (as a percent)	9.50%
Total Other Debt	$ 4,651,139						5,000,000
Western Line of Credit | Revolving line of credit | U.S. Prime Rate
Outstanding Debt:
Basis spread (as a percent)	0.50%
A-1 Line of Credit | Revolving line of credit
Outstanding Debt:
Line of credit	$ 13,300,000				$ 13,300,000	$ 10,000,000.0		$ 5,000,000.0
Interest rate (as a percent)	7.00%					7.00%
Total Other Debt	$ 13,176,807						7,380,156
A-1 Line of Credit | Revolving line of credit | Subsequent Event
Outstanding Debt:
Line of credit			$ 15,500,000
NHS Loan
Outstanding Debt:
Line of credit	$ 600,000
Interest rate (as a percent)	7.00%
Total Other Debt	$ 600,000
Holiday Inn Express (the "Cedar Rapids Property") | Mortgage Debt
Outstanding Debt:
Interest rate (as a percent)	5.33%
Outstanding balance	$ 5,698,543						5,799,804
Hampton Inn & Suites (the "Pineville Property") | Mortgage Debt
Outstanding Debt:
Interest rate (as a percent)	5.13%
Outstanding balance	$ 8,368,135						8,580,586
Hampton Inn (the "Eagan Property") | Mortgage Debt
Outstanding Debt:
Interest rate (as a percent)	4.60%
Outstanding balance	$ 8,839,737						9,063,528
Home2 Suites (the "Prattville Property") | Mortgage Debt
Outstanding Debt:
Interest rate (as a percent)	4.13%
Outstanding balance	$ 8,984,688						9,199,041
Home2 Suites (the "Lubbock Home2 Property") | Mortgage Debt
Outstanding Debt:
Interest rate (as a percent)	4.69%
Outstanding balance	$ 7,103,138						7,343,948
Fairfield Inn & Suites (the "Lubbock Home2 Property") | Mortgage Debt
Outstanding Debt:
Interest rate (as a percent)	4.93%
Outstanding balance	$ 8,809,051						8,971,430
Homewood Suites (the "Southaven Property") | Mortgage Debt
Outstanding Debt:
Interest rate (as a percent)	3.70%
Outstanding balance	$ 12,658,773						13,007,706
Courtyard by Marriott (the "Aurora Property") | LIBOR
Outstanding Debt:
Basis spread (as a percent)	6.00%
Reference rate threshold (as a percent)	1.00%
Courtyard by Marriott (the "Aurora Property") | Mortgage Debt
Outstanding Debt:
Interest rate (as a percent)	11.46%
Outstanding balance	$ 15,000,000						15,000,000
Holiday Inn (the "EI Paso Property") | Mortgage Debt
Outstanding Debt:
Interest rate (as a percent)	5.00%
Outstanding balance	$ 7,600,000						7,900,000
Holiday Inn (the "EI Paso Property") | Mortgage Debt | Subsequent Event
Outstanding Debt:
Interest rate (as a percent)		9.00%
Hilton Garden Inn (the "Houston Property")
Outstanding Debt:
Interest-only period	24 months
Hilton Garden Inn (the "Houston Property") | Mortgage Debt
Outstanding Debt:
Interest rate (as a percent)	3.85%
Outstanding balance	$ 13,852,705						13,947,217
Sheraton Hotel (the "Northbrook Property") | LIBOR
Outstanding Debt:
Basis spread (as a percent)	6.25%
Reference rate threshold (as a percent)	0.75%
Sheraton Hotel (the "Northbrook Property") | Mortgage Debt
Outstanding Debt:
Interest rate (as a percent)	11.71%
Outstanding balance	$ 4,026,202						3,766,639
Hampton Inn - Fargo | Mortgage Debt
Outstanding Debt:
Interest rate (as a percent)	4.00%
Outstanding balance	$ 7,095,283						7,275,480
Courtyard by Marriott (the "El Paso Property")
Outstanding Debt:
Interest-only period	18 months
Courtyard by Marriott (the "El Paso Property") | Mortgage Debt
Outstanding Debt:
Interest rate (as a percent)	6.01%
Outstanding balance	$ 9,975,072						9,990,000
Fairfield Inn & Suites (the "Lakewood Property") | Subsequent Event
Outstanding Debt:
Number of loans | loan			2
Fairfield Inn & Suites (the "Lakewood Property") | Mortgage Debt
Outstanding Debt:
Interest rate (as a percent)	7.00%
Outstanding balance	$ 13,845,000						13,845,000
Residence Inn - Fort Collins | Mortgage Debt
Outstanding Debt:
Interest rate (as a percent)	11.60%
Outstanding balance	$ 11,200,000
Residence Inn - Fort Collins - CapEx | Mortgage Debt
Outstanding Debt:
Interest rate (as a percent)	12.85%
Outstanding balance	$ 1,875,000
Residence Inn - Fort Collins A-1 | Mortgage Debt
Outstanding Debt:
Interest rate (as a percent)	7.00%
Outstanding balance	$ 501,465						11,500,000
Hilton Garden Inn, (the "El Paso University Property") | Mortgage Debt
Outstanding Debt:
Interest rate (as a percent)	4.94%
Outstanding balance	$ 12,341,759						12,613,869
Hilton Garden Inn (the "Pineville HGI Property") | Mortgage Debt
Outstanding Debt:
Interest rate (as a percent)	6.20%
Outstanding balance	$ 7,020,000						7,020,000
Hilton Garden Inn (the "Charlotte Property") | Mortgage Debt
Outstanding Debt:
Interest rate (as a percent)	6.20%
Outstanding balance	$ 9,805,000						9,805,000
Holiday Inn Express - Wichita | Mortgage Debt
Outstanding Debt:
Interest rate (as a percent)	6.41%
Outstanding balance	$ 5,642,000						$ 5,642,000

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DEBT - Future Minimum Payments (Details) - USD ($)	Dec. 31, 2023	Dec. 31, 2022
Future minimum payments
2024	$ 69,392,481
2025	62,574,437
2026	20,686,104
2027	37,441,359
2028	708,616
Thereafter	7,866,500
Total	198,669,497
Premium on assumed debt, net	203,135
Deferred financing costs, net	(2,574,861)
Debt, net	$ 196,297,771	$ 189,678,547

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FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) - USD ($)	Dec. 31, 2023	Dec. 31, 2022
Fair value of financial instruments
Gross carrying value	$ 198,669,497
Mortgage Debt
Fair value of financial instruments
Fair value of mortgage debt	178,500,000	$ 175,800,000
Gross carrying value	$ 180,241,551	$ 180,271,248

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INCOME TAXES - Other (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Income Taxes
Income taxes paid	$ 0	$ 0
Uncertain tax positions	0	0
Valuation allowance	8,687,714	7,314,530
Valuation allowance recorded in current year	$ 1,400,000	$ 7,300,000
Percentage of distributions paid that were determined to be returns of capital distributions	100.00%	100.00%
Net deferred tax liability	$ 3,017,435	$ 3,290,901
Federal
Income Taxes
NOL carryforwards	7,100,000	6,300,000
State
Income Taxes
NOL carryforwards	$ 1,600,000	$ 1,000,000.0

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INCOME TAXES - Components of Income Tax Benefit (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Federal:
Deferred	$ 402,080	$ (5,047,228)
State:
Current		(89,346)
Deferred	(147,736)	(708,441)
Income tax (expense)/benefit	$ 254,344	$ (5,845,015)

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INCOME TAXES - Reconciliation (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Effective income tax reconciliation, amount
Expected income tax benefit at U.S. Federal statutory rate	$ 1,247,366	$ 2,743,594
Tax impact of REIT election		(614,966)
Expected tax benefit at TRS	1,247,366	2,128,628
Valuation Allowance	(1,009,839)	(7,314,530)
Gross tax (expense)/benefit	237,527	(5,185,902)
State income tax (expense) benefit, net	42,874	(89,346)
Temporary differences - deprecation		(569,767)
Permanent differences	(26,057)
Income tax (expense)/benefit	$ 254,344	$ (5,845,015)
Effective income tax reconciliation, percent
Expected income tax benefit at U.S. Federal statutory rate (as a percent)	(21.00%)	(21.00%)
Tax impact of REIT election (as a percent)	(0.00%)	(4.70%)
Expected tax benefit at TRS (as a percent)	(21.00%)	(16.30%)
State income tax (expense) benefit, net (as a percent)	(0.70%)	0.70%
Temporary differences - depreciation (as a percent)	(0.00%)	4.40%
Permanent differences (as a percent)	0.40%	(0.00%)
Income tax (expense)/benefit (as a percent)	(4.30%)	44.70%

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INCOME TAXES - Deferred Taxes (Details) - USD ($)	Dec. 31, 2023	Dec. 31, 2022
Deferred Tax Assets:
Net operating loss carryforwards - Federal	$ 7,089,135	$ 6,265,111
Net operating loss carryforwards - State	1,598,579	1,049,419
Valuation Allowance	(8,687,714)	(7,314,530)
Deferred Tax Liabilities:
Tax FF&E basis less than book basis - Federal	(2,462,213)	(2,864,293)
Tax FF&E basis less than book basis - State	(555,222)	(426,608)
Total, deferred tax liabilities	(3,017,435)	(3,290,901)
Deferred tax (liabilities)/assets, net	$ (3,017,435)	$ (3,290,901)

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RELATED PARTY TRANSACTIONS - Other (Details)		12 Months Ended
	Mar. 06, 2023 USD ($) shares	Dec. 31, 2023 USD ($) $ / room $ / property shares	Dec. 31, 2022 USD ($) shares	Dec. 31, 2021 shares
Related Party Transactions
Distributions paid		$ 7,363,159	$ 5,258,437
Accrued guarantee fees		1,200,000
Corey Maple
Related Party Transactions
Accrued guarantee fees		151,765	155,676
Corey Maple | Western Line of Credit
Related Party Transactions
Line of credit amount guaranteed by related party		$ 5,000,000.0
Partnership units held as collateral | shares		300,000
Norman Leslie
Related Party Transactions
Accrued guarantee fees		$ 151,765	155,676
Advisor And Affiliates
Related Party Transactions
Guarantee fees (as a percent)		1.00%
Reimbursements payable		$ 10,600,000	5,600,000
NHS
Related Party Transactions
Renewal term of advisory agreement		5 years
Monthly base management fee (as a percent)		4.00%
Accounting fee per room | $ / room		14.00
Administrative fee (as a percent)		0.60%
Flat fee per property | $ / property		5,000
Loan amount	$ 600,000	$ 600,000
Interest rate (as a percent)	7.00%
Operating partnership | shares	60,000
Home2 Suites (the "Prattville Property") | Corey Maple
Related Party Transactions
Loan amount		9,600,000
Homewood Suites, Southhaven, Mississippi | Corey Maple
Related Party Transactions
Loan amount		13,500,000
Home wood Suites Fargo North Dakota | Corey Maple
Related Party Transactions
Loan amount		$ 7,400,000
Hilton Garden Inn (the "Houston Property") | Corey Maple
Related Party Transactions
Related party loan guarantee percentage		50
Loan amount		$ 13,900,000
Hilton Garden Inn, (the "El Paso University Property") | Corey Maple
Related Party Transactions
Related party loan guarantee percentage		50
Loan amount		$ 14,400,000
Holiday Inn Express (the "Wichita Hotel Property") | Corey Maple
Related Party Transactions
Loan amount		5,600,000
Hampton Inn & Suites (the "Pineville Property") | Norman Leslie
Related Party Transactions
Loan amount		9,300,000
Advisory Agreement | Legendary Capital REIT III, LLC
Related Party Transactions
Distributions payable		$ 360,821	334,417
Legendary Capital REIT III, LLC | Advisory Agreement
Related Party Transactions
Term of advisory agreement		10 years
Acquisition fee (as a percent)		1.40%
Financing fee (as a percent)		1.40%
Asset management fee (as a percent)		0.75%
Refinancing fee (as a percent)		0.75%
Real estate commissions, maximum (as a percent)		5.00%
Annual guarantee fee (as a percent)		1.00%
Annual subordinated performance fee (as a percent)		20.00%
Cumulative return (as a percent)		6.00%
Distributions (as a percent)		5.00%
Distributions as a percent of the limited partners' capital contributions in event of liquidation, termination, merger or other cessation (as a percent)		5.00%
Distributions as a percent of net proceeds from sale of properties in event of liquidation, termination, merger or other cessation (as a percent)		20.00%
Reimbursement after termination of the Offering (as a percent)		15.00%
Legendary Capital REIT III, LLC | Advisory Agreement | Minimum
Related Party Transactions
Disposal fee on hotel sales price (as a percent)		0.00%
Disposal fee on gross consideration received (as a percent)		0.00%
Legendary Capital REIT III, LLC | Advisory Agreement | Maximum
Related Party Transactions
Disposal fee on hotel sales price (as a percent)		4.00%
Disposal fee on gross consideration received (as a percent)		4.00%
Real estate commissions (as a percent)		3.00%
Legendary Capital REIT III, LLC | Advisory Agreement | Corey Maple
Related Party Transactions
Distributions paid		$ 40,123	$ 40,123
Number of shares held by shareholders | shares			57,319	57,319
Legendary Capital REIT III, LLC | Advisory Agreement | Corey Maple | Series GO LP Units
Related Party Transactions
Distributions paid		$ 4,352	$ 1,994
Number of shares held by shareholders | shares		15,361	15,361
Legendary Capital REIT III, LLC | Advisory Agreement | Norman Leslie
Related Party Transactions
Distributions paid		$ 40,123	$ 40,123
Number of shares held by shareholders | shares			57,319	57,319

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RELATED PARTY TRANSACTIONS - Legendary Capital (Details) - Advisor And Affiliates - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Related Party Transactions
Fees incurred	$ 2,767,974	$ 5,588,089
Reimbursements incurred	5,523,207	6,285,061
Acquisition Fees
Related Party Transactions
Fees incurred		1,626,599
Financing Fees
Related Party Transactions
Fees incurred	84,000	1,861,628
Asset Management Fees
Related Party Transactions
Fees incurred	2,488,100	1,918,321
Performance Fees
Related Party Transactions
Fees incurred	195,874	181,541
Offering Costs
Related Party Transactions
Reimbursements incurred	1,935,023	2,256,081
General and Administrative
Related Party Transactions
Reimbursements incurred	3,258,648	3,640,108
Sales and Marketing
Related Party Transactions
Reimbursements incurred	144,421	321,821
Acquisition Costs
Related Party Transactions
Reimbursements incurred	$ 185,115	$ 67,051

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RELATED PARTY TRANSACTIONS - NHS (Details) - NHS - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Related Party Transactions
Fees incurred	$ 1,353,232	$ 1,450,582
Fees payable	239,480	199,688
Reimbursements incurred	810,723	1,273,180
Reimbursements payable	216,595	143,009
Management Fees.
Related Party Transactions
Fees incurred	1,073,723	1,071,385
Fees payable	186,298	145,733
Administrative Fees
Related Party Transactions
Fees incurred	119,613	184,101
Fees payable	20,962	22,791
Accounting Fees
Related Party Transactions
Fees incurred	159,896	195,096
Fees payable	$ 32,220	$ 31,164

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RELATED PARTY TRANSACTIONS - One Rep Construction, LLC (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
One Rep Construction, LLC
Related Party Transactions
Fees payable	$ 34,856
One Rep Construction, LLC | Minimum
Related Party Transactions
Construction management fee (as a percent)	6.00%
One Rep Construction, LLC | Maximum
Related Party Transactions
Construction management fee (as a percent)	7.00%
One Rep Construction, LLC | Construction management fees
Related Party Transactions
Fees incurred	$ 191,803
One Rep Construction, LLC
Related Party Transactions
Fees payable		$ 33,947
One Rep Construction, LLC | Construction management fees
Related Party Transactions
Fees incurred		$ 258,037
One Rep Construction, LLC | Corey Maple
Related Party Transactions
Ownership interest by related party (as a percent)	33.33%
One Rep Construction, LLC | Norman Leslie
Related Party Transactions
Ownership interest by related party (as a percent)	33.33%
One Rep Construction, LLC | David Ekman
Related Party Transactions
Ownership interest by related party (as a percent)	33.33%

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RELATED PARTY TRANSACTIONS - A-1 Bonds (Details) - Legendary A-1 Bonds, LLC	12 Months Ended
	Dec. 31, 2022 USD ($) property	Dec. 31, 2023 USD ($)	Apr. 18, 2023 USD ($) shares	Jan. 12, 2023 USD ($) shares	Aug. 09, 2022 USD ($)
Related Party Transactions
Loan amount	$ 42,500,000	$ 0
Number of hotel properties under which the loans are secured | property	4
Repayments of debt	$ 28,200,000
A-1 Line of Credit
Related Party Transactions
Revolving line of credit			$ 13,300,000	$ 10,000,000.0	$ 5,000,000.0
Partnership units held as collateral | shares			1,330,000	1,000,000
Interest rate (as a percent)			7.00%
Outstanding balance, Line of credit		$ 13,200,000

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FRANCHISE AGREEMENTS (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Maximum
Franchise Agreements
Initial term of franchise agreement	18 years	18 years
Royalty fee (as a percent)	6.00%	6.00%
Program fee (as a percent)	4.00%	4.00%
Initial franchise fee	$ 175,000	$ 175,000
Minimum
Franchise Agreements
Initial term of franchise agreement	10 years	10 years
Royalty fee (as a percent)	5.00%	5.00%
Program fee (as a percent)	3.00%	3.00%
Initial franchise fee	$ 50,000	$ 50,000

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STOCKHOLDERS' EQUITY - Common Stock (Details)	12 Months Ended
	Dec. 31, 2023 Vote $ / shares shares	Jan. 06, 2023 $ / shares	Dec. 31, 2022 $ / shares shares	Dec. 31, 2021 USD ($)	Jun. 01, 2018 USD ($) $ / shares
Stockholders' Equity
Common stock, shares authorized | shares	900,000,000		900,000,000
Preferred stock, shares authorized | shares	100,000,000		100,000,000
Common stock voting rights | Vote	1
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01	$ 0.01
Percentage of current share net asset value	95.00%
Private offering | Common Stock
Stockholders' Equity
Common stock, par value (in dollars per share)					$ 0.01
Common stock, offering price					$ 10.00
Maximum offering | $				$ 150,000,000	$ 100,000,000

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STOCKHOLDERS' EQUITY - Distributions (Details) - USD ($)	3 Months Ended								12 Months Ended		24 Months Ended
	Dec. 31, 2023	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Dec. 31, 2022	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2023	Dec. 31, 2022	Dec. 31, 2023
STOCKHOLDERS' EQUITY
Distributions Declared	$ 1,826,402	$ 1,816,105	$ 1,794,077	$ 1,779,846	$ 1,762,398	$ 1,821,829	$ 1,540,200	$ 1,556,308	$ 7,216,430	$ 6,680,735
Distribution Declared Per Share	$ 0.175	$ 0.175	$ 0.175	$ 0.175	$ 0.175	$ 0.175	$ 0.175	$ 0.175	$ 0.700	$ 0.700
Distributions Paid in Cash	$ 1,433,319	$ 1,344,743	$ 1,317,166	$ 1,424,802	$ 1,234,969	$ 1,094,353	$ 1,203,791	$ 933,464	$ 5,520,030	$ 4,466,577
Distributions Reinvested	335,912	381,033	384,772	395,820	433,293	452,923	526,159	567,240	1,497,537	1,979,615
Total distributions	1,769,231	1,725,776	1,701,938	1,820,622	1,668,262	1,547,276	1,729,950	1,500,704	7,017,567	6,446,192
Net Cash Flows Provided By (Used In) Operations	$ (2,980,745)	$ 2,285,665	$ 3,484,371	$ 264,655	$ (326,742)	$ 2,268,982	$ 20,841	$ (3,293,181)	$ 3,053,946	$ (1,330,100)
Percentage of distribution in cash											100.00%

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STOCKHOLDERS' EQUITY - Share Repurchase Program (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Stockholders' Equity
Number of shares repurchased	0	135,248
Stock repurchased, original investment		$ 1,352,472
Value of stock repurchased		$ 1,347,319
Share repurchase plan, amount available for eligible repurchases	$ 1,931,014
Repurchase Plan
Stockholders' Equity
Notice period	10 days

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STOCKHOLDERS' EQUITY - Offering Price and Share NAV (Details) - $ / shares	Dec. 31, 2023	Jan. 06, 2023	Jan. 05, 2023	Dec. 31, 2022
Stockholders' Equity
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01		$ 0.01
Net asset value per share (In dollars per share)		10.57	$ 10.00
Common LP Units
Stockholders' Equity
Units issued price (In dollars per share)		10.57
Series T LP Units.
Stockholders' Equity
Units issued price (In dollars per share)		$ 10.57

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STOCKHOLDERS' EQUITY - Interval Common Stock (Details)	12 Months Ended
	Dec. 31, 2023 $ / shares shares
Repurchase Plan
Stockholders' Equity
Minimum period of time holders of Interval Common Stock shares must be required to have held the Interval Common Stock shares to participate in the Repurchase Plan	1 year
Limit of repurchases of Interval Common Shares after Repurchase Reserve has been exhausted, percentage per calendar quarter	1.25%
Limit of repurchases of Interval Common Shares after Repurchase Reserve has been exhausted, percentage per calendar year of the Interval Shares Value	5.00%
Repurchase Reserve expressed as a percentage of the aggregate gross proceeds from the Company's private offering of Interval Shares	20.00%
Notice period	10 days
Repurchase Plan | Last day of same calendar quarter preceding year
Stockholders' Equity
Percentage of Aggregate Value of Interval Shares to be repurchased, threshold	5.00%
Repurchase Plan | Last day of preceding calendar quarter
Stockholders' Equity
Percentage of Aggregate Value of Interval Shares to be repurchased, threshold	5.00%
Interval Common Stock
Stockholders' Equity
Dividend rate (as a percent)	86.00%
Share price, dividend reinvestment plan (in dollars per share) | $ / shares	9.50
Private offering | Interval Common Stock
Stockholders' Equity
Maximum number of shares authorized per the offering | shares	3,000,000
Maximum number of shares authorized per the offering at the sole direction of the Board of Directors | shares	6,000,000
Common stock, offering price | $ / shares	$ 10.00

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STOCKHOLDERS' EQUITY - Noncontrolling Interests (Details)		12 Months Ended
	Apr. 07, 2023 USD ($) item $ / shares	Dec. 31, 2023 USD ($) class $ / shares shares	Jan. 06, 2023 $ / shares	Dec. 31, 2022 USD ($)	Jun. 15, 2020 USD ($)
Stockholders' Equity
Number of classes of limited partner units | class		5
Series GO LP Units
Stockholders' Equity
Non-voting partnership units, holding period required before distributions will be paid		18 months
Specified percentage of original GP unit capital contributions		70.00%
Participating amount, any period after December 31, 2020 | $ / shares		$ 1.00
Participating amount, any period after December 31, 2021 | $ / shares		2.00
Participating amount, any period after December 31, 2022 | $ / shares		$ 3.00
Value of outstanding units		$ 10,933,302		$ 14,688,392
Series GO II LP Units
Stockholders' Equity
Non-voting partnership units, holding period required before distributions will be paid		18 months
Specified percentage of original GP unit capital contributions		70.00%
Participating amount, any period after December 31, 2020 | $ / shares		$ 1.00
Participating amount, any period after December 31, 2021 | $ / shares		2.00
Participating amount, any period after December 31, 2022 | $ / shares		$ 3.00
Series B LP Units
Stockholders' Equity
Value of outstanding units		$ (3,869,459)		(2,841,056)
Distributions (as a percent)		5.00%
Cumulative return (as a percent)		6.00%
Percentage of original contributions (as percent)		5.00%
Series T LP Units.
Stockholders' Equity
Aggregate value of units issued in connection with property contributions		$ 45,700,000
Distributions declared		200,000
Value of outstanding units		$ 45,524,201		45,739,120
Units issued price (In dollars per share) | $ / shares			$ 10.57
Series T LP Units. | Minimum
Stockholders' Equity
Time period after issuance, for the conversion of Series T LP Units in to Common LP Units		24 months
Series T LP Units. | Maximum
Stockholders' Equity
Time period after issuance, for the conversion of Series T LP Units in to Common LP Units		36 months
Common LP Units
Stockholders' Equity
Value of outstanding units		$ 3,720,284		$ 4,751,639
Units issued price (In dollars per share) | $ / shares			$ 10.57
Operating Partnership | Series B LP Units
Stockholders' Equity
Number of issued partnership units | shares		1,000
Private offering | Series GO LP Units
Stockholders' Equity
Maximum offering					$ 20,000,000
Maximum offering per the sole discretion of the General Partner					$ 30,000,000
Cumulative number of units issued since inception of the Offering (in shares) | shares		3,124,503
Cumulative gross proceeds from issuance of units since inception of the Offering		$ 21,500,000
Private offering | Series GO II LP Units
Stockholders' Equity
Maximum offering	$ 30,000,000
Maximum offering per the sole discretion of the General Partner	$ 60,000,000
Percentage of purchase price equal to NAV	75.00%
Cumulative number of units issued since inception of the Offering (in shares) | shares		129,787
Cumulative gross proceeds from issuance of units since inception of the Offering		$ 1,000,000.0
Units offering extension period (Year)	1 year
Number of extension period | item	2
Units issued price (In dollars per share) | $ / shares	$ 7.93
Percentage of income sharing proportion	25.00%
Private offering | Operating Partnership | Common LP Units
Stockholders' Equity
Cumulative number of units issued since inception of the Offering (in shares) | shares		612,100
Units issued price (In dollars per share) | $ / shares		$ 10.00

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COMMITMENTS AND CONTINGENCIES (Details)				1 Months Ended	12 Months Ended
	Aug. 28, 2023 USD ($)	Apr. 23, 2023 USD ($) room	Jan. 31, 2023 USD ($) room	Nov. 30, 2019 USD ($) room	Dec. 31, 2023 USD ($)	Dec. 31, 2022 room	Nov. 20, 2023 USD ($)
COMMITMENTS AND CONTINGENCIES
Number of guest rooms | room						744
Real estate acquisition, additional consideration					$ 0
Legendary Capital REIT III, LLC
COMMITMENTS AND CONTINGENCIES
SEC settlement, disgorgement	$ 463,900
Pennsylvania Purchase Agreement
COMMITMENTS AND CONTINGENCIES
Number of real estate properties to be acquired | room				3
Contractual consideration				$ 46,900,000
Earnest money deposit required per the terms of the Purchase Agreement				$ 1,500,000
Sheraton Albuquerque Airport Contribution Agreement | Sheraton Albuquerque Airport Property
COMMITMENTS AND CONTINGENCIES
Number of guest rooms | room		276
Earnest money deposit returned as a result of termination of contribution agreement		$ 300,000
College Station Voco Contribution Agreement | Aggieland Boutique Hotel
COMMITMENTS AND CONTINGENCIES
Number of guest rooms | room			166
Escrow deposit			$ 50,000
Property under contract, aggregate consideration to be transferred			$ 18,500,000
Settlement Agreement, November 2023 | Central PA Equities 17, LLC, Central PA Equities 19, LLC, and Springwood - FHP LP
COMMITMENTS AND CONTINGENCIES
Earnest money deposit returned per terms of Settlement Agreement							$ 700,000
Accrued interest on earnest money deposit, percentage allocated to each of the parties							0.4667%
Settlement Agreement, November 2023 | Operating Partnership
COMMITMENTS AND CONTINGENCIES
Earnest money deposit returned per terms of Settlement Agreement							$ 800,000
Accrued interest on earnest money deposit, percentage allocated to each of the parties							0.5333%

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SUBSEQUENT EVENTS - A-1 Line of Credit Amendments (Details) - A-1 Line of Credit - Revolving line of credit - USD ($)	Mar. 27, 2024	Dec. 17, 2024	Dec. 31, 2023	Apr. 18, 2023	Jan. 12, 2023	Aug. 10, 2022
Subsequent Events
Line of credit			$ 13,300,000	$ 13,300,000	$ 10,000,000.0	$ 5,000,000.0
Outstanding amount			$ 13,200,000
Subsequent Event
Subsequent Events
Line of credit	$ 15,500,000
Extension fee	$ 133,000
Interest rate (as a percent)	14.50%
Exit fee (as a percent)	1.50%
Outstanding amount		$ 15,500,000
Common LP Units
Subsequent Events
Partnership units held as collateral				1,330,000	1,000,000
Common LP Units | Subsequent Event
Subsequent Events
Partnership units held as collateral	1,550,000

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SUBSEQUENT EVENTS - Western Line of Credit Amendments and NHS Loan (Details) - USD ($)	May 10, 2024	Dec. 17, 2024	Dec. 31, 2023
Subsequent Events
Outstanding balance			$ 198,669,497
Western Line of Credit | Revolving line of credit
Subsequent Events
Outstanding amount			$ 4,700,000
Western Line of Credit | Subsequent Event | Revolving line of credit
Subsequent Events
Repayments of line of credit	$ 250,000
Outstanding amount		$ 4,100,000
NHS Loan | Subsequent Event | Revolving line of credit
Subsequent Events
Outstanding balance		$ 600,000

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SUBSEQUENT EVENTS - Lakewood Loan Extension, Termination and New Loans (Details) - Subsequent Event	Mar. 27, 2024 USD ($) shares
Original Lakewood Loan
Subsequent Events
Loan amount	$ 12,600,000
New Lakewood Loan
Subsequent Events
Loan amount	$ 12,000,000.0
Basis spread (as a percent)	7.00%
Basis spread on variable rate, extension period	7.50%
Initial interest rate	12.327%
Additional maturity term	6 months
Extension fee	$ 60,000
Prepayment period	30 days
Debt instrument exit fee	$ 120,000
New Lakewood Loan | Minimum
Subsequent Events
Initial interest rate	11.00%
New A-1 Lakewood Loan
Subsequent Events
Payment of extension fee	$ 138,450
Exit fee (as a percent)	1.50%
Debt instrument, maximum borrowing capacity	$ 4,896,801
Interest rate (as a percent)	14.50%
Debt origination fee	$ 73,452
New A-1 Lakewood Loan | Common LP Units
Subsequent Events
Partnership units held as collateral | shares	489,680

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SUBSEQUENT EVENTS - El Paso HI Second Loan Modification (Details) - Holiday Inn El Paso Loan - Subsequent Event	May 15, 2024 USD ($)
Subsequent Events
Extension fee	$ 76,000
Interest rate (as a percent)	9.00%

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SUBSEQUENT EVENTS - Prattville Refinance (Details) - New Prattville Loan - Subsequent Event	Nov. 04, 2024 USD ($)
Subsequent Events
Loan amount	$ 11,000,000.0
Effective interest rate (as a percent)	7.84%
Interest-only period	24 months
Principal payment	$ 15,200
Prepayment penalties	$ 0
Prepayment Due to Refinancing, Paid in Year One
Subsequent Events
Prepayment fee percentage	3.00%
Prepayment Due to Refinancing, Paid in Year Two
Subsequent Events
Prepayment fee percentage	2.00%
Prepayment Due to Refinancing, Paid in Year Three to Five
Subsequent Events
Prepayment fee percentage	1.00%
SOFR
Subsequent Events
Variable interest rate	3.00%
Minimum
Subsequent Events
Interest rate (as a percent)	4.85%

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SUBSEQUENT EVENTS - Distributions Paid (Details) - Subsequent Event - USD ($)	Sep. 26, 2024	Aug. 20, 2024	Jul. 19, 2024	Jun. 18, 2024	May 20, 2024	Apr. 22, 2024	Jan. 16, 2024
Subsequent Events
Cash distributions declared	$ 353,107	$ 356,690	$ 345,775	$ 311,181	$ 271,667	$ 237,857	$ 471,271
DRIP distributions declared	$ 63,549	$ 59,688	$ 70,312	$ 62,992	$ 60,693	$ 52,904	$ 108,117
Common stock dividends per share declared on daily rate basis	$ 0.001366120	$ 0.001366120	$ 0.001366120	$ 0.001232877	$ 0.001095890	$ 0.000958905	$ 0.00191781
Annual dividend rate (as a percent)	5.00%	5.00%	5.00%	4.50%	4.00%	3.50%	7.00%
Share price (in dollars per share)	$ 10.00	$ 10.00	$ 10.00	$ 10.00	$ 10.00	$ 10.00	$ 10.00
Common LP Units
Subsequent Events
Cash distributions declared for Operating Partnership units	$ 25,504	$ 25,504	$ 25,504	$ 22,954	$ 20,403	$ 17,853	$ 35,706
Series GO LP Units
Subsequent Events
Cash distributions declared for Operating Partnership units	$ 130,186	$ 130,186	$ 130,186	$ 117,169	$ 104,150	$ 91,131	$ 182,262

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SUBSEQUENT EVENTS - Properties Under Contract, Pineville Property Sold (Details)			12 Months Ended
	Jul. 23, 2024 USD ($)	Apr. 15, 2024 USD ($) room	Dec. 31, 2022 room
Subsequent Events
Number Of Guest Rooms | room			744
Subsequent Event | Hampton Stow Contribution Agreement
Subsequent Events
Number Of Guest Rooms | room		84
Escrow Deposit		$ 50,000
Property under contract, aggregate consideration to be transferred		$ 10,200,000
Subsequent Event | Staybridge Stow Contribution Agreement
Subsequent Events
Number Of Guest Rooms | room		92
Earnest money deposit returned per terms of Settlement Agreement		$ 10,900,000
Escrow Deposit		$ 50,000
Subsequent Event | Hampton Inn & Suites (the "Pineville Property")
Subsequent Events
Sale of property	$ 8,850,000

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SUBSEQUENT EVENTS - Southaven Refinance (Details) - Subsequent Event - New Southaven Loan $ in Millions	Dec. 06, 2024 USD ($)
Subsequent Events
Loan amount	$ 18.0
Effective interest rate (as a percent)	7.77%
United States Treasury rate
Subsequent Events
Variable interest rate	3.58%

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SUBSEQUENT EVENTS - Offerings (Details) - Private offering - USD ($) $ in Millions	Dec. 17, 2024	Dec. 31, 2023
Series GO II LP Units
Subsequent Events
Cumulative number of units issued since inception of the Offering (in shares)		129,787
Cumulative gross proceeds from issuance of units since inception of the Offering		$ 1.0
Common Stock
Subsequent Events
Cumulative number of shares issued since inception of the Offering (in shares)		10,243,193
Cumulative number of shares issued pursuant to the DRIP (in shares)		1,167,594
Cumulative gross proceeds from issuance of stock since inception of the Offering		$ 100.2
Subsequent Event | Series GO II LP Units
Subsequent Events
Cumulative number of units issued since inception of the Offering (in shares)	475,324
Cumulative gross proceeds from issuance of units since inception of the Offering	$ 3.6
Subsequent Event | Common Stock
Subsequent Events
Cumulative number of shares issued since inception of the Offering (in shares)	10,297,188
Cumulative number of shares issued pursuant to the DRIP (in shares)	1,215,332
Cumulative gross proceeds from issuance of stock since inception of the Offering	$ 100.7

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SCHEDULE III - Real Estate and Accumulated Depreciation - Changes in Real Estate and Accumulated Depreciation (Details)	12 Months Ended
	Dec. 31, 2023 USD ($) room	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)
Real Estate and Accumulated Depreciation.
Number of Rooms | room	2,261
Encumbrances	$ 180,241,551
Initial Cost
Land and Land Improvements	39,888,121
Building, Building Improvements and FF&E	259,252,614
Costs Capitalized Subsequent to Acquisition
Building, Building Improvements and FF&E	15,666,081
Gross Amount at End of Year
Land and Land Improvements	39,898,232
Building, Building Improvements and FF&E	274,918,695
Total	314,816,929	$ 307,676,640	$ 178,912,503
Accumulated Depreciation	(27,469,450)	$ (17,458,998)	$ (9,487,728)
Aggregate cost for federal income tax purposes	$ 314,200,000
Holiday Inn Express (the "Cedar Rapids Property")
Real Estate and Accumulated Depreciation.
Number of Rooms | room	83
Encumbrances	$ 5,698,543
Initial Cost
Land and Land Improvements	1,536,966
Building, Building Improvements and FF&E	6,321,367
Costs Capitalized Subsequent to Acquisition
Building, Building Improvements and FF&E	915,799
Gross Amount at End of Year
Land and Land Improvements	1,547,077
Building, Building Improvements and FF&E	7,237,166
Total	8,784,243
Accumulated Depreciation	$ (1,553,790)
Hampton Inn & Suites (the "Pineville Property")
Real Estate and Accumulated Depreciation.
Number of Rooms | room	111
Encumbrances	$ 8,368,135
Initial Cost
Land and Land Improvements	2,014,533
Building, Building Improvements and FF&E	12,327,740
Costs Capitalized Subsequent to Acquisition
Building, Building Improvements and FF&E	1,477,299
Gross Amount at End of Year
Land and Land Improvements	2,014,533
Building, Building Improvements and FF&E	13,805,039
Total	15,819,572
Accumulated Depreciation	$ (2,296,516)
Hampton Inn (the "Eagan Property")
Real Estate and Accumulated Depreciation.
Number of Rooms | room	122
Encumbrances	$ 8,839,737
Initial Cost
Land and Land Improvements	1,691,813
Building, Building Improvements and FF&E	12,536,520
Costs Capitalized Subsequent to Acquisition
Building, Building Improvements and FF&E	324,808
Gross Amount at End of Year
Land and Land Improvements	1,691,813
Building, Building Improvements and FF&E	12,861,328
Total	14,553,141
Accumulated Depreciation	$ (2,314,893)
Home2 Suites (the "Prattville Property")
Real Estate and Accumulated Depreciation.
Number of Rooms | room	90
Encumbrances	$ 8,984,688
Initial Cost
Land and Land Improvements	1,691,954
Building, Building Improvements and FF&E	13,414,060
Costs Capitalized Subsequent to Acquisition
Building, Building Improvements and FF&E	222,875
Gross Amount at End of Year
Land and Land Improvements	1,691,954
Building, Building Improvements and FF&E	13,636,935
Total	15,328,889
Accumulated Depreciation	$ (2,117,682)
Home2 Suites (the "Lubbock Home2 Property")
Real Estate and Accumulated Depreciation.
Number of Rooms | room	100
Encumbrances	$ 7,103,138
Initial Cost
Land and Land Improvements	803,229
Building, Building Improvements and FF&E	13,906,502
Costs Capitalized Subsequent to Acquisition
Building, Building Improvements and FF&E	1,597,023
Gross Amount at End of Year
Land and Land Improvements	803,229
Building, Building Improvements and FF&E	15,503,525
Total	16,306,754
Accumulated Depreciation	$ (2,152,794)
Fairfield Inn & Suites (the "Lubbock Home2 Property")
Real Estate and Accumulated Depreciation.
Number of Rooms | room	101
Encumbrances	$ 8,809,051
Initial Cost
Land and Land Improvements	982,934
Building, Building Improvements and FF&E	15,261,162
Costs Capitalized Subsequent to Acquisition
Building, Building Improvements and FF&E	86,269
Gross Amount at End of Year
Land and Land Improvements	982,934
Building, Building Improvements and FF&E	15,347,431
Total	16,330,365
Accumulated Depreciation	$ (2,499,482)
Homewood Suites (the "Southaven Property")
Real Estate and Accumulated Depreciation.
Number of Rooms | room	99
Encumbrances	$ 12,658,773
Initial Cost
Land and Land Improvements	1,593,232
Building, Building Improvements and FF&E	19,351,858
Costs Capitalized Subsequent to Acquisition
Building, Building Improvements and FF&E	194,792
Gross Amount at End of Year
Land and Land Improvements	1,593,232
Building, Building Improvements and FF&E	19,546,650
Total	21,139,882
Accumulated Depreciation	$ (2,575,350)
Courtyard by Marriott (the "Aurora Property")
Real Estate and Accumulated Depreciation.
Number of Rooms | room	141
Encumbrances	$ 15,000,000
Initial Cost
Land and Land Improvements	4,400,098
Building, Building Improvements and FF&E	19,668,031
Costs Capitalized Subsequent to Acquisition
Building, Building Improvements and FF&E	293,531
Gross Amount at End of Year
Land and Land Improvements	4,400,098
Building, Building Improvements and FF&E	19,961,562
Total	24,361,660
Accumulated Depreciation	$ (2,125,843)
Holiday Inn (the "EI Paso Property")
Real Estate and Accumulated Depreciation.
Number of Rooms | room	175
Encumbrances	$ 7,600,000
Initial Cost
Land and Land Improvements	1,747,553
Building, Building Improvements and FF&E	8,913,467
Costs Capitalized Subsequent to Acquisition
Building, Building Improvements and FF&E	3,046,445
Gross Amount at End of Year
Land and Land Improvements	1,747,553
Building, Building Improvements and FF&E	11,959,912
Total	13,707,465
Accumulated Depreciation	$ (1,282,211)
Hilton Garden Inn (the "Houston Property")
Real Estate and Accumulated Depreciation.
Number of Rooms | room	182
Encumbrances	$ 13,852,705
Initial Cost
Land and Land Improvements	3,168,376
Building, Building Improvements and FF&E	17,659,977
Costs Capitalized Subsequent to Acquisition
Building, Building Improvements and FF&E	4,942,105
Gross Amount at End of Year
Land and Land Improvements	3,168,376
Building, Building Improvements and FF&E	22,602,082
Total	25,770,460
Accumulated Depreciation	$ (1,533,401)
Sheraton Hotel (the "Northbrook Property")
Real Estate and Accumulated Depreciation.
Number of Rooms | room	160
Encumbrances	$ 4,026,202
Initial Cost
Land and Land Improvements	2,856,747
Building, Building Improvements and FF&E	16,859,016
Costs Capitalized Subsequent to Acquisition
Building, Building Improvements and FF&E	186,966
Gross Amount at End of Year
Land and Land Improvements	2,856,747
Building, Building Improvements and FF&E	17,045,982
Total	19,902,729
Accumulated Depreciation	$ (1,068,615)
Hampton Inn & Suites (The "Fargo Property")
Real Estate and Accumulated Depreciation.
Number of Rooms | room	90
Encumbrances	$ 7,095,283
Initial Cost
Land and Land Improvements	2,041,684
Building, Building Improvements and FF&E	9,700,538
Costs Capitalized Subsequent to Acquisition
Building, Building Improvements and FF&E	449,057
Gross Amount at End of Year
Land and Land Improvements	2,041,684
Building, Building Improvements and FF&E	10,149,595
Total	12,191,279
Accumulated Depreciation	$ (582,671)
Courtyard by Marriott (the "El Paso Property")
Real Estate and Accumulated Depreciation.
Number of Rooms | room	90
Encumbrances	$ 9,975,072
Initial Cost
Land and Land Improvements	1,856,428
Building, Building Improvements and FF&E	13,596,806
Costs Capitalized Subsequent to Acquisition
Building, Building Improvements and FF&E	138,644
Gross Amount at End of Year
Land and Land Improvements	1,856,428
Building, Building Improvements and FF&E	13,735,450
Total	15,591,878
Accumulated Depreciation	$ (968,812)
Fairfield Inn & Suites (the "Lakewood Property")
Real Estate and Accumulated Depreciation.
Number of Rooms | room	142
Encumbrances	$ 13,845,000
Initial Cost
Land and Land Improvements	2,091,051
Building, Building Improvements and FF&E	17,571,066
Costs Capitalized Subsequent to Acquisition
Building, Building Improvements and FF&E	414,511
Gross Amount at End of Year
Land and Land Improvements	2,091,051
Building, Building Improvements and FF&E	17,985,577
Total	20,076,628
Accumulated Depreciation	$ (1,066,158)
Residence Inn (The "For Collins Property")
Real Estate and Accumulated Depreciation.
Number of Rooms | room	113
Encumbrances	$ 13,576,465
Initial Cost
Land and Land Improvements	2,402,288
Building, Building Improvements and FF&E	13,943,721
Costs Capitalized Subsequent to Acquisition
Building, Building Improvements and FF&E	1,167,021
Gross Amount at End of Year
Land and Land Improvements	2,402,288
Building, Building Improvements and FF&E	15,110,742
Total	17,513,030
Accumulated Depreciation	$ (594,116)
Hilton Garden Inn, (the "El Paso Property")
Real Estate and Accumulated Depreciation.
Number of Rooms | room	153
Encumbrances	$ 12,341,759
Initial Cost
Land and Land Improvements	4,862,172
Building, Building Improvements and FF&E	17,600,000
Costs Capitalized Subsequent to Acquisition
Building, Building Improvements and FF&E	13,669
Gross Amount at End of Year
Land and Land Improvements	4,862,172
Building, Building Improvements and FF&E	17,613,669
Total	22,475,841
Accumulated Depreciation	$ (1,281,612)
Hilton Garden Inn (The "Pineville Property")
Real Estate and Accumulated Depreciation.
Number of Rooms | room	113
Encumbrances	$ 7,020,000
Initial Cost
Land and Land Improvements	1,891,718
Building, Building Improvements and FF&E	9,385,430
Costs Capitalized Subsequent to Acquisition
Building, Building Improvements and FF&E	64,681
Gross Amount at End of Year
Land and Land Improvements	1,891,718
Building, Building Improvements and FF&E	9,450,112
Total	11,341,830
Accumulated Depreciation	$ (514,862)
Hilton Garden Inn (the "Charlotte Property")
Real Estate and Accumulated Depreciation.
Number of Rooms | room	112
Encumbrances	$ 9,805,000
Initial Cost
Land and Land Improvements	1,622,610
Building, Building Improvements and FF&E	14,233,777
Costs Capitalized Subsequent to Acquisition
Building, Building Improvements and FF&E	52,041
Gross Amount at End of Year
Land and Land Improvements	1,622,610
Building, Building Improvements and FF&E	14,285,818
Total	15,908,428
Accumulated Depreciation	$ (685,096)
Holiday Inn Express (the "Wichita Hotel Property")
Real Estate and Accumulated Depreciation.
Number of Rooms | room	84
Encumbrances	$ 5,642,000
Initial Cost
Land and Land Improvements	632,735
Building, Building Improvements and FF&E	7,001,575
Costs Capitalized Subsequent to Acquisition
Building, Building Improvements and FF&E	78,545
Gross Amount at End of Year
Land and Land Improvements	632,735
Building, Building Improvements and FF&E	7,080,120
Total	7,712,855
Accumulated Depreciation	$ (255,546)
Minimum | Holiday Inn Express (the "Cedar Rapids Property")
Gross Amount at End of Year
Depreciable Lives	3 years
Minimum | Hampton Inn & Suites (the "Pineville Property")
Gross Amount at End of Year
Depreciable Lives	3 years
Minimum | Hampton Inn (the "Eagan Property")
Gross Amount at End of Year
Depreciable Lives	3 years
Minimum | Home2 Suites (the "Prattville Property")
Gross Amount at End of Year
Depreciable Lives	3 years
Minimum | Home2 Suites (the "Lubbock Home2 Property")
Gross Amount at End of Year
Depreciable Lives	3 years
Minimum | Fairfield Inn & Suites (the "Lubbock Home2 Property")
Gross Amount at End of Year
Depreciable Lives	3 years
Minimum | Homewood Suites (the "Southaven Property")
Gross Amount at End of Year
Depreciable Lives	3 years
Minimum | Courtyard by Marriott (the "Aurora Property")
Gross Amount at End of Year
Depreciable Lives	3 years
Minimum | Holiday Inn (the "EI Paso Property")
Gross Amount at End of Year
Depreciable Lives	3 years
Minimum | Hilton Garden Inn (the "Houston Property")
Gross Amount at End of Year
Depreciable Lives	3 years
Minimum | Sheraton Hotel (the "Northbrook Property")
Gross Amount at End of Year
Depreciable Lives	3 years
Minimum | Hampton Inn & Suites (The "Fargo Property")
Gross Amount at End of Year
Depreciable Lives	3 years
Minimum | Courtyard by Marriott (the "El Paso Property")
Gross Amount at End of Year
Depreciable Lives	3 years
Minimum | Fairfield Inn & Suites (the "Lakewood Property")
Gross Amount at End of Year
Depreciable Lives	3 years
Minimum | Residence Inn (The "For Collins Property")
Gross Amount at End of Year
Depreciable Lives	3 years
Minimum | Hilton Garden Inn, (the "El Paso Property")
Gross Amount at End of Year
Depreciable Lives	3 years
Minimum | Hilton Garden Inn (The "Pineville Property")
Gross Amount at End of Year
Depreciable Lives	3 years
Minimum | Hilton Garden Inn (the "Charlotte Property")
Gross Amount at End of Year
Depreciable Lives	3 years
Minimum | Holiday Inn Express (the "Wichita Hotel Property")
Gross Amount at End of Year
Depreciable Lives	3 years
Maximum | Holiday Inn Express (the "Cedar Rapids Property")
Gross Amount at End of Year
Depreciable Lives	40 years
Maximum | Hampton Inn & Suites (the "Pineville Property")
Gross Amount at End of Year
Depreciable Lives	40 years
Maximum | Hampton Inn (the "Eagan Property")
Gross Amount at End of Year
Depreciable Lives	40 years
Maximum | Home2 Suites (the "Prattville Property")
Gross Amount at End of Year
Depreciable Lives	40 years
Maximum | Home2 Suites (the "Lubbock Home2 Property")
Gross Amount at End of Year
Depreciable Lives	40 years
Maximum | Fairfield Inn & Suites (the "Lubbock Home2 Property")
Gross Amount at End of Year
Depreciable Lives	40 years
Maximum | Homewood Suites (the "Southaven Property")
Gross Amount at End of Year
Depreciable Lives	40 years
Maximum | Courtyard by Marriott (the "Aurora Property")
Gross Amount at End of Year
Depreciable Lives	40 years
Maximum | Holiday Inn (the "EI Paso Property")
Gross Amount at End of Year
Depreciable Lives	40 years
Maximum | Hilton Garden Inn (the "Houston Property")
Gross Amount at End of Year
Depreciable Lives	40 years
Maximum | Sheraton Hotel (the "Northbrook Property")
Gross Amount at End of Year
Depreciable Lives	40 years
Maximum | Hampton Inn & Suites (The "Fargo Property")
Gross Amount at End of Year
Depreciable Lives	40 years
Maximum | Courtyard by Marriott (the "El Paso Property")
Gross Amount at End of Year
Depreciable Lives	40 years
Maximum | Fairfield Inn & Suites (the "Lakewood Property")
Gross Amount at End of Year
Depreciable Lives	40 years
Maximum | Residence Inn (The "For Collins Property")
Gross Amount at End of Year
Depreciable Lives	40 years
Maximum | Hilton Garden Inn, (the "El Paso Property")
Gross Amount at End of Year
Depreciable Lives	40 years
Maximum | Hilton Garden Inn (The "Pineville Property")
Gross Amount at End of Year
Depreciable Lives	40 years
Maximum | Hilton Garden Inn (the "Charlotte Property")
Gross Amount at End of Year
Depreciable Lives	40 years
Maximum | Holiday Inn Express (the "Wichita Hotel Property")
Gross Amount at End of Year
Depreciable Lives	40 years

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SCHEDULE III - Real Estate and Accumulated Depreciation - Investment in Real Estate and Accumulated Depreciation (Details) - USD ($)	12 Months Ended
	Dec. 31, 2023	Dec. 31, 2022
Investment in Real Estate:
Balance at beginning of period	$ 307,676,640	$ 178,912,503
Acquisitions		120,433,600
Improvements	7,140,289	8,330,537
Balance at end of period	314,816,929	307,676,640
Accumulated Depreciation:
Balance at beginning of period	(17,458,998)	(9,487,728)
Depreciation expense	(10,054,083)	(7,995,492)
Asset write-offs	43,631	24,222
Balance at end of period	$ (27,469,450)	$ (17,458,998)