Moody National REIT II Launches Liquidation

The real estate investment trust shifts to liquidation accounting as it grapples with impairments, debt maturities, and pandemic aftershocks.

November 18, 2025

Liquidation Plan Kicks Off After Shareholder Approval

Moody National REIT II is officially winding down. After shareholder approval on September 30, 2025, the company began executing a Plan of Liquidation that includes selling its remaining hotel properties, settling debt, and distributing proceeds to investors. The move comes after years of pressure on the portfolio—driven by persistent operating losses, maturing loans, and the long tail of the COVID-19 downturn.

The company has now adopted liquidation accounting, which means assets are measured based on expected sale value, and liabilities reflect the full cost of wrapping up operations. As of quarter-end, Moody National REIT II reported $145.4 million in hotel investments and $176.6 million in liabilities, resulting in net liabilities of $14.1 million. The gap includes over $7.7 million in projected liquidation costs beyond what’s expected to be recovered from remaining operations.

The company currently owns nine hotel properties across five states, with heavy concentration in Texas. These holdings are now being actively marketed or under contract. Four properties were already sold in early 2025, raising $121.8 million in gross proceeds. Another, Hilton Garden Inn Austin, was foreclosed on in May. Several more properties are under agreement to sell in Q4 2025 or early 2026.

Revenue Drops, Losses Mount

On the financial side, revenue for the quarter landed at $11 million —down from $20.7 million year-over-year—driven by a sharp decline in room bookings and overall hotel activity. The company booked a $17.9 million net loss for the three months ending September 30, driven largely by a $14.7 million impairment on hotel assets and $2.9 million in interest expense.

Short-Term Debt Pressures Remain

Debt remains a central concern. Four of the remaining mortgage loans, totaling about $51 million, are due before year-end. An additional $28 million in related-party notes also mature within a year. These obligations, combined with a shrinking asset base and limited income, raise doubt about the company’s ability to meet upcoming payments without continued asset sales or loan extensions.

Since early 2020, Moody National REIT II has suspended both its capital-raising efforts and shareholder distributions. The company doesn’t plan to resume either—outside of potential liquidation payouts from net proceeds. To preserve REIT status, those distributions need to be completed within 24 months of shareholder approval of the liquidation plan.

Winding Down Operations

Now operating under a defined exit strategy, Moody National REIT II is focused entirely on executing property sales, meeting financial obligations, and managing final disbursements. The exact timing and amount of future distributions remain uncertain, and the company has acknowledged that proceeds could fluctuate as valuations shift or additional costs arise. For now, management is steering through the final stage—working to bring the process to a close and return what value it can to shareholders.