Troutman Pepper Hamilton Sanders LLP 600 Peachtree Street NE, Suite 3000 Atlanta, GA 30308-2216 |
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Mary Katherine Rawls
marykatherine.rawls@troutman.com
March 7, 2023
William Demarest
Isaac Esquivel
Division of Corporation Finance
Office of Real Estate & Construction
United States Securities and Exchange Commission
Washington, D.C. 20549
| Re: | Procaccianti Hotel REIT, Inc. |
| Form 10-K for fiscal year ended December 31, 2021 | |
| Filed March 25, 2022 | |
| Form 8-K filed June 27, 2022 | |
| File Nos. 000-56272 |
Dear Messrs. Demarest and Esquivel:
Procaccianti Hotel REIT, Inc., a Maryland corporation (the “Company”), wishes to respond to the letter of the Division of Corporation Finance (the “Staff”) of the United States Securities and Exchange Commission (the “Commission”) dated February 9, 2023. The headings and numbered paragraphs below correspond to the headings and numbered paragraphs in the Staff’s comment letter. The Company hereby responds to the specific comment as follows:
Form 8-K filed June 27, 2022
Item 8.01 Other Events
Determination of Estimated Per Share NAVs, page 1
1. We note your response to prior comment 1. In addition to describing the impact of the liquidation preferences on K Shares, K-I Shares and K-T Shares and subordination of fees payable to the Company’s advisor on your Estimated Per Share NAV calculation, please further enhance your disclosure by providing quantitative information necessary to clearly understand your Estimated Per Share NAV calculation. Please provide us with your Estimated Per Share NAV calculation for each class as of March 31, 2022 in your response.
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March 7, 2023 Page 2 |
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In addition to the Company’s undertaking in its January 25, 2023 response letter to the Commission’s December 20, 2022 comment letter (“Response No. 1”), the Company undertakes to expand its disclosure in subsequent filings to provide the quantitative breakdown of the Estimated Per Share NAV calculation for each of its share classes in the format below. The following charts show the components of the Estimated Per Share NAV as of March 31, 2022, in the aggregate and by share class:
| Components of NAV | 3/31/2022 | |||
| Real Estate | $ | 130,270,000 | ||
| Mortgage Notes Payable | (63,343,282 | ) | ||
| Other Assets | 10,455,970 | |||
| Other Liabilities | (4,181,996 | ) | ||
| Noncontrolling Interest | (9,052,965 | ) | ||
| Net Asset Value | $ | 64,147,727 | ||
| Components of NAV by Share Class | K-I | K | K-T | Class A | Class B | Total | ||||||||||||||||||
| Accrued Unpaid Distributions | $ | 230,087 | $ | 708,266 | $ | 11,017 | $ | 1,473,071 | $ | 0 | $ | 2,422,441 | ||||||||||||
| Liquidation Preference | 13,219,139 | 40,811,110 | 631,997 | 5,814,095 | 0 | 60,476,341 | ||||||||||||||||||
| Remaining Distribution Allocation | 151,018 | 466,234 | 7,220 | 468,354 | 156,118 | 1,248,944 | ||||||||||||||||||
| Net Asset Value | 13,600,244 | 41,985,611 | 650,234 | 7,755,521 | 156,118 | $ | 64,147,727 | |||||||||||||||||
| Shares Outstanding | 1,321,914 | 4,081,111 | 63,200 | 581,410 | 125,000 | |||||||||||||||||||
| NAV Per Share | $ | 10.29 | $ | 10.29 | $ | 10.29 | $ | 13.34 | $ | 1.25 | ||||||||||||||
The Estimated Per Share NAV was calculated in accordance with our Charter, as amended, taking into account (i) first, the liquidation preference on the K-I Shares, K Shares and K-T Shares equal to $10.00, plus all accumulated, accrued, and unpaid distributions on our K-I Shares, K Shares and K-T Shares, respectively; (ii) second, the payment of any deferred and unpaid asset management fees, acquisition fees and disposition fees (including interest accrued on all such fees at a non-compounded rate of 6.0% per annum) to our advisor; (iii) third, the liquidation preference on the A Shares equal to $10.00, plus all accumulated, accrued and unpaid distributions on our A Shares; and (iv) finally, following the distribution and payment in full of all of the preceding obligations, (a) 50.0% of all remaining NAV allocated to the holders of the K-I Shares, K Shares, K-T Shares (pro rata based on the number of K-I Shares, K Shares, and K-T Shares); (b) 12.5% of remaining NAV to the B Shares; and (c) 37.5% of remaining NAV to the A Shares.
The Company believes that the information below, together with the information provided in Response No. 1 and the Company’s current disclosures, clearly describe the calculation of the Company’s Estimated Per Share NAV.
If you have any questions or comments please contact me at (678) 592 -7738.
Best regards,
Mary Katherine Rawls
Cc: Heath D. Linsky
Gregory Vickowski
Ron Hadar