Fifth Amendment to Contribution Agreement by and between the Operating Partnership and RLC-IV CYFC, LLC for the Courtyard by Marriott Fort Collins, dated as of August 3, 2022

EX-10.217 3 tmb-20220630xex10d217.htm EX-10.217

Ex 10.217

FIFTH AMENDMENT TO CONTRIBUTION AGREEMENT

This FIFTH AMENDMENT TO CONTRIBUTION AGREEMENT (this “Amendment”) is

effective as of the 3^th day of August 2022 (the “Amendment Date”) by and among Lodging Fund REIT III OP, LP, a Delaware limited partnership (the “Operating Partnership”), and RLC V RIFC, LLC, a Colorado limited liability company (the “Contributor”).

WHEREAS, Contributor and Operating Partnership entered into that certain Contribution Agreement dated February 1, 2022 (the “Agreement”) as amended by the First Amendment on March 24, 2022, as amended by the Second Amendment on April 29, 2022, as amended by the Third Amendment May 10^th, 2022 as amended by the Fourth Amendment executed on June 9, 2022 for the contribution of a 113-room hotel business known as the Residence by Marriott Fort Collins located at 1127 Oakridge Drive, Fort Collins, Colorado 80525 (the “Property”);

NOW THEREFORE, for valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows:

1.Capitalization. All capitalized terms used herein will have the meanings ascribed to those terms in the Agreement, unless otherwise specified herein.

2.Time and Place. The Operating Partnership and Contributor shall perform each obligation required to convey and close this transaction by August 3, 2022, notwithstanding the Operating Partnership’s right to extend the Closing Date in 30-day increments which may be done by written notice (email acceptable).

3.Exhibit D. Exhibit D is replaced with the attached Exhibit D, which is integrated into this Amendment by reference.

4.Conflict; Counterparts. In the event of any conflict between the terms of this Amendment and the Agreement, this Amendment shall control. This Amendment may be executed in multiple counterparts via facsimile or email in .PDF format, each of which shall be deemed to be an original, but such counterparts when taken together shall constitute but one Amendment.

5.Successors and Assigns. This Amendment shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors, administrators, and assigns.

6.Ratification. Except as set forth above, the terms of the Agreement are hereby ratified and confirmed in their entirety.

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[signature pages to follow]

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Section 8.1 IN WITNESS WHEREOF, tl1is Amendment has been duly executed by the parties hereto as of the day and year first above written.

SELLER:

Article 9 RLC V RIFC, LLC

Section 9.1 a Colorado limited liability company

By: /s/ Stephen Mills

Stephen Mills, Manager

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Article 10 [OPERATING PARTNERSHIP'S SIGNATURE PAGE TO FOLLOW]

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OPERATING PARTNERSHIP:

LODGING FUND REIT III OP, LP

A Delaware limited partnership

By: Lodging Fund REIT III, Inc. Its: General Partner

By: /s/ David R. Durell

Name: David R. Durell

Title: Chief Investment Officer

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EXHIBIT D TO

CONTRIBUTION AGREEMENT

TOTAL CONSIDERATION

Total Consideration pursuant to Section 2.8 of the Agreement shall be $17,700,000 consisting of:

$11,500,000 via assumption of Contributor’s current financing as of the Effective Date

$5,603,689.91 in Series T Limited Units, equivalent to 560,369 Series T Limited Units

$596,310.09. cash paid at Closing for delinquent taxes, which this amount is subject to a 1.5 multiplier at the time of conversion.

Distributions pursuant to Section 2.11 of the Agreement shall be: Base Year NOI is equal $1,500,768

Years 1-3 Distribution Schedule

Payable as cash distributions 14, 26, and 38 months post-closing

Distribution Amount	Condition
0.70%	If NOI is equal to or greater than 70% but less than 80% of Base Year NOI
1.4%	If NOI is equal to or greater than 80% but less than 90% of Base Year NOI
2.10%	If NOI is equal to or greater than 90% but less than 100% of Base Year NOI
2.80%	If NOI is equal to or greater than 100% but less than 110% of Base Year NOI
3.50%	If NOI is equal to or greater than 110% but less than 120% of Base Year NOI
4.20%	If NOI is equal to or greater than 120% of Base Year NOI

The number of Common Limited Units in the Operating Partnership shall be determined based on the formula below, which shall constitute the Series T Value. The Series T Value shall be determined upon (i) the Contributor’s election of either 36 of 48 months after the Closing Date or (ii) the sale of (a) the Property or (b) substantially all of the Operating Partnership’s assets.

Conversion Valuation Formula means the Applicable Cap Rate (8.65%) when applied to the then current trailing 12 month net operating income of the Contributed Asset, less amounts incurred or accrued by the Partnership for (i) any funds advanced as cash at closing (ii) the Original Loan Balance, (iii) loan assumption or origination fees and related expenses, (iv) if applicable, costs of prepayment or defeasance and related expenses, (v) PIP and capital expenditures, (vi) operating cash infused by the General Partner and/or Partnership, (vii) any shortfall of the 10% minimum cumulative yield on General Partner’s invested capital, and (viii) any other unrealized or unreimbursed costs of operating the Contributed Asset, (ix) 2% of value at conversion to offset transaction costs.

Applicable Cap Rate shall mean: 8.65%

“12 month net operating income of the Contributed Asset” shall mean: (a) the Gross Revenue of the Property, minus (b) Operating Expenses for the Property, for the current trailing twelve (12)-month period.

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“Gross Revenue” shall include the following amounts recorded in accordance with generally accepted accounting principles consistently applied:

(a)The entire amount of the price charged, whether wholly or partly for cash or on credit, or otherwise, for the rental of all rooms, suites, conference rooms, restaurants, banquet facilities, and any other facilities and for all goods, wares, and merchandise sold, leased, licensed, or delivered, and all charges for services sold or performed in, at, upon, or from any part of, the Property;

(b)All gross income from parking fees and valet service fees billed to guests of or visitors to the Property or any transient use of parking facilities by anyone;

(c)Without duplication, all deposits received and not refunded to the person or entity making the deposit in connection with any transactions at such time as the Operating Partnership becomes entitled to such deposit or the expiration of one (1) year from the date of such deposit, whichever first occurs;

(d)In-room entertainment services, communication services, Internet services, in-room masseur/masseuse services, and the like, if charged to a guest of the Property.

“Operating Expenses” shall mean: all of the ordinary and normal expenses of operation of the Property, determined on an annualized accrual basis, including annualized property taxes and property assessed clean energy (“PACE”) loan payments, insurance premiums (or taxes and/or insurance impounds, if taxes and/or insurance are impounded by Lender), reserve account equal to four percent (4%) of Gross Revenue for furniture, fixtures and equipment reserves, franchise fees and royalties, telephone and internet expenses, administrative and general expenses, management fees, utilities, repair and maintenance, salaries and wages, and advertising and marketing expenses; provided, however, that Operating Expenses will not include:

depreciation and amortization;

non-cash items;

all capital items or expenditures, including construction costs and professional fees and other expenses relating thereto and any amortization thereof;

costs of repair or restoration after a casualty or condemnation;

debt service payments made to lenders;

income or franchise taxes; and

extraordinary one-time expenses that are not reasonably expected to be incurred in future periods.

“Net Cash Flow” means the Property Net Operating Income (including any FF&E Reserves) less Principal and Interest, less any distributions provided on T-Unit Equity, less Borrower’s Fund Level Expenses attributable to Property.

“Combined Yield” defined as the sum of Borrower’s 10% annual returns plus Borrower’s share of Distributable Cash, divided by all of Borrower’s invested capital, annualized.