Procaccianti Hotel REIT Reports NAV Drop

Despite falling share valuations and a highly concentrated portfolio, the REIT maintained cash distributions and refinanced key debt.

March 25, 2025

2024 Performance Overview

Procaccianti Hotel REIT wrapped up 2024 with a lean, focused portfolio and a notable drop in its estimated net asset value. Despite this, the company continued to generate operating cash flow strong enough to cover quarterly distributions—and refinanced a significant portion of its debt along the way.

As of year-end, the REIT owned interests in five select-service hotels across four states, totaling 559 rooms. These properties include:

• Springhill Suites – Wilmington, NC


• Staybridge Suites – St. Petersburg, FL


• Hotel Indigo – Traverse City, MI


• Hilton Garden Inn – Providence, RI


• Cherry Tree Inn & Suites – Traverse City, MI

The company’s NAV saw a reset across most share classes. Class K and K-I shares were marked at $10.17, down from $11.53 the year prior. Class A shares dropped from $22.76 to $9.82, while Class B shares remained at $0.00. These updated valuations reflect the current operating environment—including inflation, higher financing costs, and broader market volatility.

Distributions and Cash Flow

Even with that backdrop, Procaccianti held steady on distributions. For the full year, it paid $3.8 million in total distributions—all funded directly from property-level operating income. The company noted that 99% of all distributions since inception have come from operations, not financing or fundraising. The distribution reinvestment plan (DRIP) raised $805,366 following the close of its public offering.

On the financing side, mortgage notes for three of the five properties were refinanced in 2024. Total outstanding debt stood at $64.9 million, staying within the company’s leverage guidelines. Borrowing remains well below the 300% net asset cap established in the charter.

Structure and Governance

The REIT is externally managed by Procaccianti Hotel Advisors (PHA), and day-to-day operations are handled by affiliates of the advisor. This includes property management and certain fee-based services that apply throughout the investment lifecycle. The REIT continues to rely on these arrangements, which were not negotiated at arm’s length.

Procaccianti’s structure also shapes how investors interact with the company. Its shares are not listed, and liquidity is limited to the share repurchase program, which comes with restrictions. Repurchase pricing is based on the holding period and the most recent NAV—and repurchases are subject to volume limits and board approval.

Capital Strategy and Portfolio Focus

While the REIT doesn't plan to acquire new properties in the near term, it’s keeping the door open for opportunistic transactions. The current portfolio is fully deployed, and capital investments in existing assets were funded through refinancing proceeds and furniture, fixtures, and equipment reserves.

From a strategic standpoint, the company continues to focus on income-producing hotel properties that align with its value-add approach. That includes targeting select-service and upscale assets where management sees potential to improve operations or drive modest gains through renovations and brand repositioning.

What to Watch in 2025

Looking ahead, the board will continue to evaluate NAV annually, and a shareholder liquidity event remains on the horizon. If a liquidity strategy isn’t in motion by the seventh anniversary of the public offering’s close (August 2028), the board will be required to present a plan of liquidation unless they vote to defer that step.

In the meantime, management is focused on cash flow, debt management, and maintaining consistent distributions—while staying responsive to the broader hotel and capital markets.