Does anyone have feedback on Phoenix American Hospitality and their fourth fund?

Question

Hi,I came across a high cash flow fund recently - Phoenix American Hospitality's REIT https://fourthoffering.phoenixamericanhospitality.com/. They claim to distribute 12% cash return in addition to any capital appreciation after the exit (3-4 years from now). I was curious if anyone has experience of having invested in this fund or their previous fund offerings?Thanks,- Piyush

Ronnie Black · Answer

I would be very careful at this point. See the email below investors like myself received 2 days ago. Thaye have suspended interest payments.

Notice to American Hospitality Properties REIT, Inc. Investors:

We are suspending our June distribution, which was scheduled to be distributed around July 15th.

Please note that this is a suspension not a permanent cancellation.

What happened?

We have been served with a subpoena by the Securities and Exchange Commission. We are in the process of evaluating the impact of the subpoena on the company, and during such time we have been advised by counsel that the company should suspend the monthly payment of distributions.

What does this mean for investors?

Once we have resolved issues, we anticipate restarting our distributions – including a “catch-up” distribution for any suspended distributions.

We will update investors once we have a timeline for getting you back to receiving our monthly distributions.

We do not anticipate that investors will receive fewer distributions, as we expect to recommence the payment of distributions once this matter has been resolved.

W.L. “Perch” Nelson

President & CEO

Phoenix American Hospitality LLC, Fund Manager

American Hospitality Properties Funds (AHP REIT I & II)

14643 Dallas Parkway, Suite 970

Dallas, Texas 75254

Office: 214.750.2967

Fax: 214.238.5265

Bruce Lynn · Answer

Hospitality is tough right now in many spots and for many operators. Something like 72% average occupancy nationwide in May, which traditionally is one of the strongest months. Loans maturing and in some locations lots of inventory coming online. I've heard for example something like 20,000 rooms coming in 2024 in DFW area. That's too many. Airlines showing signs of weakness which translates into weakness for hotels as well.

Refinancing will likely be an issue as loans come due.

So just like multifamily and office there will be fallout. Probably not the best time to invest in hotel assets until economy recovers and there is some relief in rates.

Refinancing will likely be an issue as loans come due.

So just like multifamily and office there will be fallout. Probably not the best time to invest in hotel assets until economy recovers and there is some relief in rates.

Corbin Thomas · Answer

I have not reviewed any of this company's PPMs, and everything might be as good as the Google reviewers claim. However, with 25 years of experience in RE Syndications, there are several major red flags I look out for:

• High Cash Flow.
• Aggressive Marketing.
• Lack of 100% Transparency in PPM and Marketing Material.

Whenever cash flows exceed market expectations, I question the sustainability of such returns. If these claims are valid, why is there a need for aggressive marketing? The best sponsors build their reputations and investor base on long-term performance and trust.

Chris Seveney · Answer

@Sachin Relia

I know they just launched a new reit 2, in their last reit they have yet to submit their audited financials from 2022 (due by April 30th) or their semi annual report for 2023 (due by September 30th)

They also have switched auditing firms in this new venture….

I would ask them the status of the above.

Chris Seveney · Answer

@Piyush Josh

Send me a PM and I can share with you how to do due diligence on a reg a offering

Does anyone have feedback on Phoenix American Hospitality and their fourth fund?

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