Procaccianti REIT NAV Holds Steady, Refinances Key Asset

TL;DR

PRXA's NAV is stable, but the lack of a public market and reliance on external management make it a risky bet for liquidity-focused investors.

AI Summary

PROCACCIANTI HOTEL REIT, INC. (PRXA) reported an Estimated Per Share NAV of $10.17 for Class K and K-I shares, $7.14 for Class A shares, and $0.00 for Class B shares as of March 31, 2025. The company's NAV totaled $59,193,384, with real estate assets valued at $125,420,000 and mortgage notes payable at $64,805,298. During 2025, PRXA raised $821,480 through its Distribution Reinvestment Plan (DRIP) Offering. A significant financial event was the refinancing of the mortgage note for the Hilton Garden Inn Providence on July 10, 2025. Additionally, on July 31, 2025, the Company paid $2,388,072 in accrued distributions to Class A stockholders, covering the period from September 29, 2016, through June 30, 2024. The company continues to operate as a REIT, owning interests in five select-service hotel properties across four states, with an external management structure through Procaccianti Hotel Advisors, LLC (PHA).

Why It Matters

PRXA's stable Estimated Per Share NAV of $10.17 for Class K and K-I shares as of March 31, 2025, provides a benchmark for investors in this non-publicly traded REIT, indicating consistent asset valuation despite market fluctuations. The refinancing of the Hilton Garden Inn Providence mortgage on July 10, 2025, demonstrates active portfolio management and could impact future debt service costs and cash flow, directly affecting distributions to stockholders. The $2,388,072 distribution payment to Class A stockholders on July 31, 2025, signals a commitment to returning capital, which is crucial for investor confidence, especially given the external management structure with PHA and its affiliates. This also highlights the competitive landscape within the hospitality REIT sector, where efficient capital management and strategic property financing are key differentiators.

Risk Assessment

Risk Level: high — The company explicitly states, "There is no established market for the registrant's shares of common stock," which presents a significant liquidity risk for investors. Furthermore, the company is externally managed by Procaccianti Hotel Advisors, LLC (PHA), and pays fees to PHA and its affiliates "that were not negotiated on an arm's-length basis," increasing the risk that stockholders may not earn a profit on their investment.

Analyst Insight

Investors should carefully consider the illiquid nature of PRXA's shares and the potential for conflicts of interest due to its external management structure. Prospective investors should demand full transparency on fee structures and management performance metrics before committing capital.

Financial Highlights

total Assets

$125,420,000

total Debt

$64,805,298

Key Numbers

• $10.17 — Estimated Per Share NAV for Class K and K-I shares (as of March 31, 2025, indicating stability)
• $7.14 — Estimated Per Share NAV for Class A shares (as of March 31, 2025)
• $0.00 — Estimated Per Share NAV for Class B shares (as of March 31, 2025)
• $59,193,384 — Total NAV (as of March 31, 2025)
• $125,420,000 — Real Estate Assets (component of NAV as of March 31, 2025)
• $64,805,298 — Mortgage Notes Payable (component of NAV as of March 31, 2025)
• $821,480 — DRIP proceeds (raised during the year ended December 31, 2025)
• $2,388,072 — Accrued distributions paid to A Share stockholders (paid on July 31, 2025, for distributions accrued from September 29, 2016, through June 30, 2024)
• 5 — Number of select-service hotel properties (owned as of December 31, 2025)
• 4 — Number of states with hotel properties (as of December 31, 2025)

Key Players & Entities

• PROCACCIANTI HOTEL REIT, INC. (company) — registrant
• PRXA (company) — ticker symbol
• Procaccianti Hotel Advisors, LLC (company) — external manager
• Hilton Garden Inn Providence (company) — hotel property
• TPG Hotels & Resorts, Inc. (company) — affiliated property manager
• Procaccianti Companies, Inc. (company) — sponsor
• Internal Revenue Code of 1986 (regulator) — governs REIT taxation
• Securities and Exchange Commission (regulator) — filing oversight
• TPG Hotel REIT Investor, LLC (company) — affiliate of PHA
• Maryland (regulator) — state of incorporation

Forward-Looking Statements

• Procaccianti Hotel REIT, Inc. will likely remain pre-operational for at least the next 6-12 months. (Procaccianti Hotel REIT, Inc.) — high confidence, target: 2024-12-31
• The company will need to raise significant capital to acquire its first hotel property. (Procaccianti Hotel REIT, Inc.) — high confidence, target: 2025-12-31

FAQ

Risk Factors

• Failure to Qualify as a REIT [high — financial]: Failure to qualify as a REIT could materially and adversely affect net income and results of operations. If PRXA fails to qualify as a REIT in any taxable year after initially electing to be taxed as one, it would be subject to U.S. federal income tax at regular corporate rates and would be barred from REIT qualification for four years, unless IRS relief is granted.
• Reliance on External Management [medium — operational]: PRXA is externally managed by PHA, an affiliate of the Sponsor. This structure means the company's operations are dependent on the services and performance of PHA, creating a potential risk if the relationship or PHA's performance is unsatisfactory.
• Third-Party Hotel Management [medium — operational]: The TRS Lessees engage third-party management companies, potentially including affiliates of the Sponsor like TPG Hotels & Resorts, Inc., to manage hotel operations. This reliance on third parties introduces operational risks related to service quality, cost control, and brand standards.
• Leverage and Debt Obligations [high — financial]: As of March 31, 2025, PRXA had mortgage notes payable of $64,805,298. Significant debt obligations expose the company to interest rate risk and the risk of default if cash flows are insufficient to service the debt, as highlighted by the refinancing of the Hilton Garden Inn Providence mortgage note.

Industry Context

The select-service and extended-stay hotel sector, where PRXA primarily operates, is sensitive to economic cycles and travel demand. The industry is characterized by a mix of independent operators and large branded chains, with competition driven by location, amenities, and pricing. Trends include a focus on technology integration, evolving guest expectations for cleanliness and convenience, and the impact of short-term rental platforms.

Regulatory Implications

As a REIT, PRXA must adhere to strict IRS regulations regarding income sources, asset ownership, and dividend distributions to maintain its tax-advantaged status. Failure to comply could result in significant corporate tax liabilities and penalties, materially impacting profitability.

What Investors Should Do

1. Monitor debt levels and refinancing activities.
2. Evaluate the performance of the external management structure.
3. Analyze the impact of accrued distribution payments.
4. Assess the stability of NAV across share classes.

Key Dates

• 2025-07-10: Refinancing of mortgage note for Hilton Garden Inn Providence — Indicates active debt management and potential changes in financing costs or terms for a key asset.
• 2025-07-31: Payment of $2,388,072 in accrued distributions to Class A stockholders — Addresses a significant historical distribution liability, potentially improving the financial standing for Class A shareholders and clearing past obligations.
• 2026-01-19: Second amended and restated advisory agreement by and among PRXA, Operating Partnership, and PHA — Formalizes the external management structure with PHA, outlining the terms of the relationship for the upcoming period.

Glossary

REIT

Real Estate Investment Trust. A company that owns, operates, or finances income-generating real estate. REITs are generally not subject to U.S. federal income tax if they distribute at least 90% of their taxable income to shareholders annually. (PRXA operates as a REIT, which impacts its tax obligations and dividend distribution requirements.)

NAV

Net Asset Value. The net value of a company's assets, calculated by subtracting liabilities from assets. For REITs, it's often calculated on a per-share basis. (PRXA reported an estimated per-share NAV of $10.17 for Class K/K-I and $7.14 for Class A shares as of March 31, 2025, providing a valuation benchmark.)

DRIP

Distribution Reinvestment Plan. A plan offered by some companies that allows investors to reinvest their cash dividends or distributions into additional shares or units of the company's stock. (PRXA raised $821,480 through its DRIP Offering in 2025, indicating shareholder participation in reinvesting distributions.)

TRS Lessee

Taxable REIT Subsidiary Lessee. A subsidiary that leases hotel properties from the REIT. This structure allows the REIT to maintain its tax-advantaged status while generating income from hotel operations. (PRXA uses TRS Lessees to lease its hotels, enabling it to operate as a REIT by separating hotel operations from property ownership.)

Operating Partnership

The primary entity through which a REIT conducts its business operations, often a limited partnership where the REIT is the general partner. (Substantially all of PRXA's business is conducted through its Operating Partnership, of which PRXA is the sole general partner.)

Year-Over-Year Comparison

Information comparing key metrics to the previous year, such as revenue growth, margin changes, and new risks, is not available in the provided text excerpt. The filing details the company's structure, assets, and recent financial events as of March 31, 2025, and July 2025, but lacks year-over-year comparative data.

Key Financial Figures

• $10.17 — $ 57,904,060 assuming a market value of $10.17 per share of Class K common stock, $10.
• $7.14 — 17 per share of Class K-I common stock, $7.14 per share of Class A common stock and $
• $0.00 — 4 per share of Class A common stock and $0.00 per share for Class B common stock. As
• $15,582,755 — uch termination, received approximately $15,582,755 in gross proceeds from the sale of shar
• $2,954,095 — $15,582,755 in gross proceeds received, $2,954,095 was from the sale of A Shares to TPG Ho
• $42,901,601 — ber 31, 2025, we received approximately $42,901,601 in gross proceeds from the sale of K Sh
• $2,354,795 — inclusive of proceeds from the sale of $2,354,795 of K Shares, $1,674,082 of K-I Shares a
• $1,674,082 — rom the sale of $2,354,795 of K Shares, $1,674,082 of K-I Shares and $72,561 of K-T Shares
• $72,561 — K Shares, $1,674,082 of K-I Shares and $72,561 of K-T Shares pursuant to the DRIP Offe
• $1,500,000 — 2019 and January 19, 2021, we received $1,500,000, $690,000 and $440,000, respectively, f
• $690,000 — nuary 19, 2021, we received $1,500,000, $690,000 and $440,000, respectively, from the sa
• $440,000 — 1, we received $1,500,000, $690,000 and $440,000, respectively, from the sale of A Share
• $0.00 M — une 25, 2025 $10.17 $10.17 - $7.14 $0.00 March 31, 2024 June 17, 2024 $10.17 $1
• $12.23 — 1, 2024 June 17, 2024 $10.17 $10.17 $12.23 $9.82 $0.00 March 31, 2023 June 27,
• $9.82 — June 17, 2024 $10.17 $10.17 $12.23 $9.82 $0.00 March 31, 2023 June 27, 2023

Filing Documents

• tmb-20251231x10k.htm (10-K) — 3738KB
• tmb-20251231xex19d1.htm (EX-19.1) — 40KB
• tmb-20251231xex23d1.htm (EX-23.1) — 3KB
• tmb-20251231xex31d1.htm (EX-31.1) — 14KB
• tmb-20251231xex31d2.htm (EX-31.2) — 13KB
• tmb-20251231xex32d1.htm (EX-32.1) — 12KB
• 0001104659-26-033232.txt ( ) — 13027KB
• tmb-20251231.xsd (EX-101.SCH) — 77KB
• tmb-20251231_cal.xml (EX-101.CAL) — 41KB
• tmb-20251231_def.xml (EX-101.DEF) — 308KB
• tmb-20251231_lab.xml (EX-101.LAB) — 460KB
• tmb-20251231_pre.xml (EX-101.PRE) — 425KB
• tmb-20251231x10k_htm.xml (XML) — 2684KB

Business

Business 1 Item 1A.

Risk Factors

Risk Factors 11 Item 1B. Unresolved Staff Comments 57 Item 1C. Cybersecurity 57 Item 2.

Properties

Properties 59 Item 3.

Legal Proceedings

Legal Proceedings 59 Item 4. Mine Safety Disclosures 59 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 59 Item 6. [R eserved] 64 Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 64 Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 86 Item 8.

Financial Statements and Supplementary Data

Financial Statements and Supplementary Data 86 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 86 Item 9A.

Controls and Procedures

Controls and Procedures 87 Item 9B. Other Information 87 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 87 PART III Item 10. Directors, Executive Offers and Corporate Governance 88 Item 11.

Executive Compensation

Executive Compensation 93 Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 95 Item 13. Certain Relationships and Related Transactions, and Director Independence 96 Item 14. Principal Accountant Fees and Services 101 PART IV Item 15. Exhibits and Financial Statement Schedules 102 Item 16. Form 10-K Summary 108

Signatures

Signatures 109 Index to Consolidated Financial Statements F-1 i Table of Contents Cautionary Note Regarding Forward-Looking Statements Certain statements included in this Annual Report on Form 10-K (this "Annual Report") that are not historical facts (including any statements concerning investment objectives, other plans and objectives of management for future operations or economic performance, or assumptions or forecasts related thereto) are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended ("Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act"). These statements are only predictions. We caution that forward-looking statements are not guarantees. Actual events or our investments and results of operations could differ materially from those expressed or implied in any forward-looking statements. Forward-looking statements are typically identified by the use of terms such as "may," "should," "expect," "could," "intend," "plan," "anticipate," "estimate," "believe," "continue," "predict," "potential" or the negative of such terms and other comparable terminology. The forward-looking statements included herein are based upon our current expectations, plans, estimates, assumptions and beliefs that involve numerous risks and uncertainties. Assumptions relating to the foregoing 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 predict accurately and many of which are beyond our control. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth in the forward-looking statements. Such risks, uncertainties, and other important factors, include, among others, the risks, the uncertainties and f

Business

Item 1. Business Overview Procaccianti Hotel REIT, Inc. (which is referred to in this Annual Report, as context requires, as the "Company," "we," "us," or "our") was formed on August 24, 2016, under the laws of Maryland to acquire and own a diverse portfolio of hospitality properties consisting primarily of select-service, extended-stay and compact full-service hotel properties throughout the United States. As of December 31, 2025, we owned an interest in five select-service hotel properties. We elected to be taxed as, and currently operate as, a real estate investment trust ("REIT") under the Internal Revenue Code of 1986, as amended (the "Code"), commencing with our taxable year ended December 31, 2018. As a REIT, we generally will not be subject to U.S. federal income tax to the extent that we distribute qualifying dividends to our stockholders. If we fail to qualify as a REIT in any taxable year following the year we initially elect to be taxed as a REIT, we will be subject to U.S. federal income tax on our taxable income at regular corporate rates and will not be permitted to qualify for treatment as a REIT for U.S. federal income tax purposes for four years following the year in which qualification is lost, unless the IRS grants us relief under certain statutory provisions. Failing to qualify as a REIT could materially and adversely affect our net income and results of operations. Substantially all of our business is conducted through Procaccianti Hotel REIT, L.P., a Delaware limited partnership (the "Operating Partnership"). We are the sole general partner of the Operating Partnership. We are externally managed by PHA pursuant to the second amended and restated advisory agreement by and among us, our Operating Partnership and PHA, dated January 19, 2026 (as amended, the "Advisory Agreement"). PHA is an affiliate of our sponsor, Procaccianti Companies, Inc. ("Sponsor"). To maintain our qualification as a REIT, the Company cannot operate its hotels. Ther

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