Two Moody National REITs Become One

Moody National REIT I and Moody National REIT II have signed a definitive merger agreement.
Moody National REIT I’s Homewood Suites Austin-South

Moody National REIT I’s Homewood Suites Austin-South

Houston—Less than two months after announcing plans to become a single entity, two investment trusts affiliated with Moody National Cos. signed a definitive merger agreement.

According to the terms of the merger agreement, Moody National REIT II has agreed to acquire Moody National REIT I and is set to pay gross consideration of $11.00 per share of REIT I common stock before the payment of various fees and costs—but at a net per share price no less than $10.25, in which case the exchange ratio will be 0.41 shares of REIT II common stock for each share of REIT I common stock.

Two separate Special Committees negotiated the merger agreement on behalf of the two REITs’ boards of directors, and the REIT merger is subject to the review and approval of REIT I’s stockholders.

“The special committees of both boards have put forth a tremendous effort on behalf of their respective shareholders and have structured a deal that truly results in a ‘win-win’ for all the shareholders involved,” said Brett Moody, CEO & president of REIT I and REIT II, in a prepared statement.

REIT I will be provided a go-shop period ending on Dec. 31, 2016, during which financial adviser FBR Capital Markets & Co. will actively seek alternative proposals from third parties. Additionally, REIT II is set to receive a termination fee of maximum $1.5 million, including expenses, if REIT I terminates the merger agreement with a superior proposal that occurs during the go-shop period. REIT I is also set to pay a termination fee of maximum $2.5 million, including expenses, if it terminates the merger with a superior proposal received after the go-shop period.

Both based in Maryland and sponsored by Moody National Cos. affiliate Moody National REIT Sponsor, the REITs focus on select-service hotels located in major U.S. markets. Moody National REIT I holds a portfolio of 14 assets comprising 12 hotels—including Marriott, Hilton and Hyatt select-service hotels—and two notes receivable secured by real property. The portfolio of Moody National REIT II includes the Residence Inn Austin University in Austin, Texas, acquired in October 2015, and the Marriott SpringHill Suites Seattle Downtown, acquired in May 2016.