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 UNITED
STATES
 SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549

 FORM 10-K

 ANNUAL
 REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the fiscal year ended December
 31, 2024

 or

 TRANSITION
 REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the Transition Period from
 to.

 Commission
file number 000-55778

 MOODY
 (Exact name of registrant as specified in its charter)

 Maryland

 47-1436295

 (State
 or other jurisdiction of

 (I.R.S.
 Employer

 incorporation
 or organization)

 Identification
 No.)

 9655
 Katy Freeway, Suite 600

 Houston, Texas

 77024

 (Address
 of principal executive offices)

 (Zip
 Code)

 ( 713) 977-7500
(Registrant's telephone number, including area code)

 Securities
registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

 Title
 of Each Class

 Trading
 Symbols(s)

 Name
 of each exchange
 on which registered

 None

 N/A

 N/A

 Securities
registered pursuant to Section 12(g) of the Securities Exchange Act of 1934:

 Common
Stock, $0.01 par value per share

by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No

by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes No

by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit
such files). Yes No

by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer,"
"smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 Large
 accelerated filer

 Accelerated
 filer

 Non-accelerated
 filer

 Smaller
 reporting company

 Emerging
 growth company

 If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.

 If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the
registrant included in the filing reflect the correction of an error to previously issued financial statements.

by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).

by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

 The
aggregate market value of the common stock held by non-affiliates of the registrant: There is currently no established
market for the registrant's shares of common stock. There were 13,640,429 shares of the registrant's common stock
held by non-affiliates as of June 30, 2024, the last business day of the registrant's most recently completed second fiscal
quarter.

 As
of March 26, 2025, there were 13,640,429 shares of the registrant's common stock issued and outstanding, consisting
of 13,000,645 shares of Class A common stock, 159,092 shares of Class I common stock, and 480,692 shares of Class T common stock.

 MOODY

 Cautionary Note Regarding Forward-Looking Statements; Risk Factor Summary

 Item 1.

 Business

 Item 1A.

 Risk Factors

 Item 1B.

 Unresolved Staff Comments

 Item 1C.

 Cybersecurity

 Item 2.

 Properties

 Item 3.

 Legal Proceedings

 Item 4.

 Mine Safety Disclosures

 Item 5.

 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 Item 6.

 [Reserved]

 Item 7.

 Management's Discussion and Analysis of Financial Condition and Results of Operations

 Item 7A.

 Quantitative and Qualitative Disclosures About Market Risk

 Item 8.

 Financial Statements and Supplementary Data

 Item 9.

 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 Item 9A.

 Controls and Procedures

 Item 9B.

 Other Information

 Item 9C.

 Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

 Item 10.

 Directors, Executive Officers and Corporate Governance

 Item 11.

 Executive Compensation

 Item 12.

 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 Item 13.

 Certain Relationships and Related Transactions, and Director Independence

 Item 14.

 Principal Accountant Fees and Services

 Item 15.

 Exhibits and Financial Statement Schedules

 Item 16.

 Form 10-K Summary

 CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS

 Certain
statements included in this Annual report on Form 10-K, or this Annual Report, that are not historical facts (including any statements
concerning investment objectives, other plans and objectives of management for future operations or economic performance, or assumptions
or forecasts related thereto) are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933,
as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These
statements are only predictions. We caution that forward-looking statements are not guarantees. Actual events or our investments
and results of operations could differ materially from those expressed or implied in any forward-looking statements. Forward-looking
statements are typically identified by the use of terms such as "may," "should," "expect,"
"could," "intend," "plan," "anticipate," "estimate," "believe,"
"continue," "predict," "potential" or the negative of such terms and other comparable terms.

 The
forward-looking statements included herein are based upon our current expectations, plans, estimates, assumptions and beliefs,
which involve numerous risks and uncertainties. Assumptions relating to the foregoing involve judgments with respect to, among
other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or
impossible to predict accurately and many of which are beyond our control. Although we believe that the expectations reflected
in such forward-looking statements are based on reasonable assumptions, our actual results and performance could differ materially
from those set forth in the forward-looking statements.

 Any
of the assumptions underlying the forward-looking statements included herein could be inaccurate, and undue reliance should not
be placed upon any forward-looking statements included herein. All forward-looking statements are made as of the date of this
Annual Report and the risk that actual results will differ materially from the expectations expressed herein will increase with
the passage of time. Except as otherwise required by the federal securities laws, we undertake no obligation to publicly update
or revise any forward-looking statements made after the date of this Annual Report, whether as a result of new information, future
events, changed circumstances or any other reason. In light of the significant uncertainties inherent in the forward-looking statements
included in this Annual Report, including, without limitation, the risks described under "Item 1A. Risk Factors" of
this Annual Report, the inclusion of such forward-looking statements should not be regarded as a representation by us or any other
person that the objectives and plans set forth in this Annual Report will be achieved.

 RISK
FACTOR SUMMARY

 You
should carefully review Item 1A—"Risk Factors" section of this Annual Report for a discussion of the risks and
uncertainties that we believe are material to our business, operating results, prospects and financial condition. These risks
and uncertainties include, but are not limited to, risks related to the following:

 There
 is no public trading market for shares of our common stock and we are not required to
 effectuate a liquidity event by a certain date. Since
 there is no public trading market for shares of our common stock, repurchase of shares
 by us will likely be the only way to dispose of your shares. Our share repurchase program
 is indefinitely suspended, and even if we resume the repurchase of shares, our share
 repurchase program will be subject to significant limitations.

 Our
 ability to obtain financing or refinancing on acceptable terms, satisfy our existing
 debt service obligations and negotiate extensions or other modifications to the terms
 of our existing financing arrangements to the extent necessary.

 Foreclosure
 or other actions initiated by lenders in response to our default on loans secured by
 our properties.

 There
 is no assurance that we will be able to successfully achieve our investment objectives.

 We
 pay substantial fees and expenses to our advisor and its affiliates, which were not negotiated
 at arm's-length, and may be higher than fees payable to unaffiliated third parties.

 Our
 success depends on the performance of our sponsor and affiliates of our sponsor.

 We
 suspended the payment of distributions in March 2020 and have not resumed distribution
 payments. We cannot guarantee when, if at all, we will resume making distributions. We
 may fund any such distributions from sources other than cash flow from operations, including,
 without limitation, the sale of assets, borrowings or return of capital, and we have
 no limits on the amounts we may pay from such sources.

 We
 have incurred net losses in the past and may incur net losses in the future, and we have
 an accumulated deficit and may continue to have an accumulated deficit in the future.

 Stockholders
 should not rely on any estimates of our net asset value ("NAV") per share
 as being an accurate measure of the current value of shares of our common stock.

 NAV
 per share calculations are not governed by governmental or independent securities, financial
 or accounting rules or standards.

 The
 return on an investment in our common stock may be reduced if we are required to register
 as an investment company under the Investment Company Act of 1940, as amended.

 in national, regional or local economic, demographic or real estate market conditions,
 including actual or perceived instability in the U.S. banking system, may adversely affect
 our results of operations and returns to our stockholders.

 Our
 concentration of investments in the hospitality sector leaves our profitability vulnerable
 to a downturn or slowdown in the sector.

 If
 our investments are concentrated in a geographic area that experiences adverse economic
 conditions, our investments may lose value and we may experience losses.

 If
 we do not successfully attract and retain franchise flagships for premier-brand, select-service
 hotel properties, our business will suffer.

 We
 may have difficulty selling our properties, which may limit our ability to pay distributions,
 and we may be forced to dispose of properties at a time or upon terms that we would not
 otherwise choose in order to repay the financing secured by such properties.

 Joint
 venture investments could be adversely affected by our lack of sole decision-making authority,
 our reliance on the financial condition of co-venturers and disputes between us and our
 co-venturers.

 The
 inability of hotel managers to effectively operate our properties may hurt our financial
 performance.

 Our
 properties face significant competition.

 We
 may change our investment and operational policies without stockholder consent.

 We
 have, and may continue to, invest in the equity securities of other REITs, including
 publicly-traded REITs. REITs that invest primarily in real estate are subject to the
 risks of the real estate market and securities market.

 We
 have, and may continue to, invest in securities that are publicly traded and are, therefore,
 subject to the risks inherent in investing in public securities, including price volatility.

 We
 have incurred mortgage indebtedness and other borrowings, which may increase our business
 risks, could hinder our ability to make distributions and could decrease the value of
 our shares.

 Volatility
 in the financial markets and challenging economic conditions could adversely affect our
 ability to secure debt financing on attractive terms and our ability to service any future
 indebtedness that we may incur.

 Increases
 in interest rates could increase the amount of our debt payments and negatively impact
 our operating results.

 Lenders
 may require us to enter into restrictive covenants relating to our operations.

 We
 may compete with affiliates of our sponsor for opportunities to acquire or sell investments,
 which may have an adverse impact on our operations.

 The
 time and resources that affiliates of our sponsor devote to us may be diverted, and we
 may face additional competition due to the fact that affiliates of our sponsor are not
 prohibited from raising money for, or managing, other business entities.

 The
 fees we pay to our advisor in connection with the acquisition and management of our investments
 were not determined on an arm's-length basis and therefore may not be on the same
 terms we could achieve from a third party.

 We
 may purchase real estate assets from third parties who have existing or previous business
 relationships with affiliates of our advisor, and, as a result, in any such transaction,
 we may not have the benefit of arm's-length negotiations of the type normally conducted
 between unrelated parties.

 We
 depend on our advisor to select our investments and otherwise conduct our business, and
 any material adverse change in its financial condition or our relationship with our advisor
 could have a material adverse effect on our business and ability to achieve our investment
 objectives.

 If
 we fail to qualify as a real estate investment trust ("REIT"), and no relief
 provisions apply, we will face serious tax consequences that will substantially reduce
 the funds available to satisfy our obligations and to implement our business strategy.

 Compliance
 with REIT requirements may cause us to forego otherwise attractive opportunities or liquidate
 otherwise attractive investments.

 PART
I

 ITEM
1. Business

 References
herein to "Moody National REIT II" the "Company," "we," "us," or "our,"
refer to Moody National REIT II, Inc., a Maryland corporation, and its subsidiaries unless the context specifically requires otherwise.

 General
Description of Business and Operations

 We
are a Maryland corporation formed on July 25, 2014, to invest in a portfolio of select-service hospitality properties with premier
brands including, but not limited to, Marriott, Hilton and Hyatt. We have elected to be taxed as a real estate investment trust,
or REIT, under the Internal Revenue Code of 1986, as amended, or the Internal Revenue Code, beginning with our taxable year ended
December 31, 2016. We own substantially all of our assets and conduct our operations through Moody National Operating Partnership
II, LP, or our operating partnership. We are the sole general partner of our operating partnership, and the initial limited partners
of our operating partnership were our subsidiary, Moody OP Holdings II, LLC, or Moody Holdings II, and Moody National LPOP II,
LLC, or Moody LPOP II, an affiliate of our advisor (as defined below). Moody Holdings II invested $1,000 in our operating partnership
in exchange for limited partnership interests in our operating partnership, and Moody LPOP II invested $1,000 in our operating
partnership in exchange for special limited partnership interests in our operating partnership.

 We
are externally managed by Moody National Advisor II, LLC, a related party, which we refer to as our advisor, pursuant to an advisory
agreement among us, our operating partnership and our advisor, or the advisory agreement. Our advisor was formed in July 2014.
Moody National REIT Sponsor, LLC, which we refer to as our sponsor, is owned and managed by Brett C. Moody, who also serves as
our Chief Executive Officer and President and the Chief Executive Officer and President of our advisor.

 On
January 20, 2015, we commenced our initial public offering of up to $1.1 billion in shares of common stock, consisting of up to
$1.0 billion in shares of our common stock offered to the public and up to $100 million in shares offered to our stockholders
pursuant to our distribution reinvestment plan, or the DRP. On June 26, 2017, we reallocated the shares of our common stock being
sold in our initial public offering as Class A common stock, $0.01 par value per share, or the Class A Shares, Class I common
stock, $0.01 par value per share, or the Class I Shares, and Class T common stock, $0.01 par value per share, or the Class T Shares.
We collectively refer to the Class A Shares, Class I Shares, and Class T Shares as our "shares." On July 19, 2018,
we commenced our follow-on public offering of up to $990 million in any combination of the three classes of our shares, consisting
of up to $895 million in shares of our common stock offered to the public and up to $95 million in shares of our common stock
offered to our stockholders pursuant to the DRP.

 Our
follow-on public offering was terminated (including pursuant to the DRP) effective as of March 25, 2020. We accepted investors'
subscriptions for and issued an aggregate of 10.2 million shares in our initial public offering and follow-on offering, excluding
shares issued in connection with the Mergers (as defined below) and including 567,000 shares pursuant to the DRP, resulting in
aggregate gross offering proceeds of $234.6 million. We accepted investors' subscriptions for and issued 4.1 million shares
in the follow-on offering, including 352,000 shares pursuant to the DRP, resulting in gross offering proceeds of $87.2 million
for the follow-on offering.

 Effective
January 16, 2018, our advisor assumed responsibility for the payment of all selling commissions, dealer manager fees and stockholder
servicing fees paid in connection with our public offering; provided, however, that our advisor intends to recoup
the selling commissions, dealer manager fees and stockholder servicing fees that it funded through receipt of an increased acquisition
fee (as discussed in Note 6, "Related Party Arrangements-Acquisition Fees," in the accompanying consolidated financial
statements).

 Moody
Securities, LLC, an affiliate of our advisor, which we refer to as the "dealer manager" or "Moody Securities,"
is our dealer manager and was responsible for the distribution of our common stock in our public offerings.

 As
of December 31, 2024, our portfolio consisted of ownership interests in fourteen hotel properties located in six states, comprising
a total of 2,028 rooms.

 Our
principal executive offices are located at 9655 Katy Freeway, Suite 600, Houston, Texas 77024, and our main telephone number is
(713) 977-7500.

 COVID-19
Pandemic

 The
global COVID-19 pandemic had a significant adverse effect on our financial condition and operating results.

 The
COVID-19 pandemic dramatically reduced travel, which had an unprecedented adverse impact on the hotel industry. As a result, the
COVID-19 pandemic had a significant adverse effect on the operating results of our hotel properties, which depend primarily upon
revenues driven by business and leisure travel, and on our business, financial performance and operating results. Since March
2020, we experienced a significant decline in bookings, occupancy and revenues across our hotel properties. Our hotel properties
operated at a property net operating loss since the outbreak of COVID-19, which had an adverse impact on our results of operations
and cash flow from operations. In addition, we reduced certain services and amenities at our hotel properties.

 Each
of our hotel properties is subject to a mortgage loan secured by our ownership interest in the property. If we are unable to service
the mortgage loan secured by a hotel property due to decreased revenues generated by such property, the lender with respect to
such mortgage loan may initiate foreclosure procedures with respect to the property or initiate other available remedies. As of
the date of this Annual Report, we are current with respect to the payments due under the mortgage loans secured by our hotel
properties or are in compliance with the modified terms of certain mortgage loans and other accommodations as agreed to with the
lenders, such as extending the maturity date or paying default interest. As discussed in Note 4, "Debt," to the consolidated
financial statements included in this Annual Report, during 2021 certain lenders agreed to limited loan modifications, including
temporary deferrals of interest and principal payments and agreements to forebear the enforcement of default remedies available
under the terms of the loan documents. As of the date of this Annual Report, no lenders accelerated the maturity of any of the
loans secured by our properties or initiated foreclosure procedures with respect to any of our properties. However, there can
be no guarantee that the lenders will continue to agree to further loan modifications or accommodations and will not elect to
exercise the remedies available to them under the loan documents, including acceleration or foreclosure actions. The exercise
of any such remedies by a lender will have an adverse effect on our financial condition and results of operations and will impair
our ability to resume the payment of distributions to our stockholders.

 In
response to the COVID-19 pandemic, we terminated our public offering of common stock (including pursuant to the DRP), effective
as of March 2020. We are not currently raising capital through the sale of our securities and we do not intend to begin to do
so in the near term. We also indefinitely suspended the payment of distributions to our stockholders effective as of March 2020
and the operation of our share repurchase program effective as of April 2020. Our board of directors and our management continue
to evaluate our financial condition and the overall economic environment to determine if and when we will seek to resume raising
capital, resume the payment of distributions and reinstate our share repurchase program. Specifically, our board of directors,
in consultation with management, will continue to monitor our operations and intends to resume distributions at a time and level
determined to be prudent in relation to our other cash requirements or in order to maintain our REIT status for federal income
tax purposes. However, it is impossible to predict if or when we will be able to take any such actions.

 Merger
with Moody National REIT I, Inc.

 On
September 27, 2017, the merger of Moody National REIT I, Inc., or Moody I, with and into our company, and the merger of Moody
National Operating Partnership I, L.P., the operating partnership of Moody I, or Moody I OP, with and into our operating partnership,
which we collectively refer to herein as the Mergers, were completed. For additional discussion of the Mergers, see Part I., Item
1. "Business—Merger with Moody National REIT I, Inc." of our Annual Report on Form 10-K, as filed with the SEC
on March 31, 2020, and the notes to the consolidated financial statements included in this Annual Report.

Objectives

 Our
primary investment objectives are to:

 preserve,
 protect and return stockholders' capital contributions;

 pay
 regular cash distributions to stockholders; and

 realize
 capital appreciation upon the ultimate sale of the real estate assets we acquire.

 There
can be no guarantee that we will achieve the foregoing objectives. We suspended the payment of distributions in March 2020 and
there is no guarantee when we will resume the payment of distributions. We have not acquired any new properties since 2019 and
as discussed herein we have recently disposed of several properties. See Item 1A. — "Risk Factors" section of
this Annual Report on Form 10-K.

Strategy

 The
following discussion reflects our historical investment strategy. The significant adverse impact of the COVID-19 pandemic on our
financial condition and results of operations, and the hotel sector as a whole, has limited, and may continue to limit, our ability
to effectively implement our investment strategy and acquire additional properties. At this time, we cannot predict when, if at
all, that we will be able to resume pre-COVID-19
levels of operations.

 Our
portfolio consists primarily of select-service
hotel properties with premier brands, including, but not limited to, Marriott, Hilton and Hyatt, that are located in major metropolitan
markets in the East Coast, West Coast and the Sunbelt regions of the United States. Select-service hotel properties target business-oriented
travelers by providing clean rooms with basic amenities. In contrast to lower-cost budget motels, select-service hotels provide
amenities such as an exercise room, business facilities and breakfast buffets. In contrast to full-service hotels, select-service
hotels typically do not have a full-service restaurant, which is relatively costly to operate. To a lesser extent, we may also
invest in other hospitality properties located within other markets and regions as well as real estate securities and debt-related
investments related to the hospitality sector. Our board of directors, or our board, may adjust our investment focus from time
to time based upon market conditions and other factors our board deems relevant.

 In
identifying any future investments, we rely upon a market optimization investment strategy
and acquisition model that analyzes economic fundamentals and demographic trends in major metropolitan markets. By
utilizing a targeted, disciplined approach, we believe that we will be able to capitalize on market inefficiencies and identify
undervalued investment opportunities with underlying intrinsic value that have the potential to create greater value at disposition. Our
investment strategy seeks to identify technical pressures created by demographic, business and industry changes, which we believe
lead to supply and demand imbalances within certain sectors of commercial real estate.

 We
believe that premier-brand, select-service hotel properties in major metropolitan markets have the potential to generate attractive
returns relative to other types of hotel properties due to their ability to achieve revenue per available room, or RevPAR, levels
at or close to those achieved by traditional, full-service hotels while achieving higher profit margins due to their more efficient
operating model and more predicable net operating income. In addition, our market optimization investment strategy, accounting
for growth potential and risks related to asset devaluation, takes into account supply-demand imbalances and targets markets that
offer stable population growth, high barriers to entry and multiple demand generators.

Portfolio

 As
of December 31, 2024, our portfolio included interests in fourteen hotel properties located in six states comprising a total of
2,028 rooms. On December 10, 2024, we sold the Townplace Suites Fort Worth property to an unaffiliated purchaser for $9.1 million.
During 2025, we have sold three of the properties that we held as of December 31, 2024, as discussed herein.

 Hotel
Properties

 The
following table sets forth summary information regarding our investment in hotel properties as of December 31, 2024 (all $ amounts
in thousands):

 Name

 Date
 Acquired

 Location

 Ownership

 Original

 Purchase
 Price (1)

 Rooms

 Mortgage
 Debt
 Outstanding (2)

 Inn Austin (5)(7)

 October
 15, 2015

 Texas

 100%

 $

 27,500

 $

 14,842

 Springhill
 Suites Seattle

 May
 24, 2016

 Seattle,
 Washington

 100%

 74,100

 Suites Woodlands

 The
 Woodlands, Texas

 100%

 17,356

 8,049

 Hyatt
 Place Germantown

 Germantown,

 100%

 16,074

 5,696

 Hyatt
 Place North Charleston

 North
 Charleston, South Carolina

 100%

 13,806

 5,354

 Texas

 100%

 19,328

 9,461

 Inn Grapevine (6)7)

 Grapevine,
 Texas

 100%

 25,245

 10,836

 Marriott
 Courtyard Lyndhurst (7)(8)

 Lyndhurst,
 New Jersey

 (3)

 39,547

 17,058

 Hilton
 Garden Inn Austin

 Texas

 100%

 29,288

 Inn Great Valley

 Frazer,
 Pennsylvania

 100%

 15,285

 7,102

 Embassy
 Suites Nashville (7)

 Nashville,

 100%

 82,207

 37,003

 Suites Austin

 Texas

 100%

 18,835

 9,587

 Inn Houston

 Texas

 100%

 9,958

 3,762

 Inn Houston Medical Center

 April
 29, 2019

 Texas

 100%

 52,000

 Totals

 $

 440,529

 2,028

 $

 211,972

 (1)
 Excludes
 closing costs and includes gain on acquisition.

 (2)
 As
 of December 31, 2024.

 (3)
 The
 Marriott Courtyard Lyndhurst is owned by MN Lyndhurst Venture, LLC, of which the OP is a
 member and holds 100% of the Class B membership interests therein. See Note 4, "Debt."

 (4)
 acquired on September 27, 2017 as a result of the merger of Moody National REIT I, Inc. ("Moody
 I") with and into the Company (the "Merger") and the merger of Moody National
 Operating Partnership I, L.P., the operating partnership of Moody I ("Moody I OP"),
 with and into the OP (the "Partnership Merger," and together with the Merger,
 the "Mergers").

 (5)
 sold on February 6, 2025, to an unaffiliated third party purchaser for an aggregate sale
 price of $20,500,000.

 (6)
 sold on February 6, 2025, to an unaffiliated third party purchaser for an aggregate sale
 price of $22,500,000.

 (7)
 Classified
 as real estate assets held for sale as of December 31, 2024.

 (8)
 sold on March 21, 2025, to an unaffiliated third party purchaser for an aggregate sale price
 of $21,250,000.

 Borrowing
Policies

 We
have used, and may in the future use, secured and unsecured debt as a means of providing additional funds for the acquisition
of real property, securities and debt-related investments. By operating on a leveraged basis, we would have more funds available
for investments, however we do not currently anticipate acquiring additional properties in the near term. Our use of leverage
increases the risk of default on loan payments and the resulting foreclosure on a particular asset. In addition, lenders may have
recourse to assets other than those specifically securing the repayment of the indebtedness.

 Consistent
with the leverage policy adopted by our board, our debt financing will be approximately 55% to 60% of the aggregate costs of our
investments before non-cash reserves and depreciation, although our debt financing could be as high as 75% of the aggregate cost
of our investments before non-cash reserves and depreciation. Our board may from time to time modify our leverage policy in light
of then-current economic conditions, relative costs of debt and equity capital, fair values of our properties, general conditions
in the market for debt and equity securities, growth and acquisition opportunities or other factors. Our actual leverage may be
higher or lower than our target leverage depending on a number of factors, including the availability of attractive investment
and disposition opportunities, inflows and outflows of capital and increases and decreases in the value of our portfolio.

 There
is no limitation on the amount we may invest in any single improved real property. However, under our Articles of Amendment and
Restatement, which we refer to as our "charter," we are prohibited from borrowing in excess of 300% of the value of
our net assets. "Net assets" for purposes of this calculation is defined to be our total assets (other than intangibles),
valued at cost prior to deducting depreciation, reserves for bad debts and other non-cash reserves, less total liabilities. The
preceding calculation is generally expected to approximate 75% of the aggregate cost of our assets before non-cash reserves and
depreciation. However, we may temporarily borrow in excess of these amounts if such excess is approved by a majority of our independent
directors and disclosed to our stockholders in our next quarterly report, along with justification for such excess. In such event,
we will review our debt levels at that time and take action to reduce any such excess as soon as practicable. We do not intend
to exceed our charter's leverage limit except in the early stages of building our portfolio when the costs of our investments
are most likely to exceed our net offering proceeds.

 Our
advisor will use its best efforts to obtain financing on the most favorable terms available to us and will seek to refinance assets
during the term of a loan only in limited circumstances, such as when a decline in interest rates makes it beneficial to prepay
an existing loan, when an existing loan is approaching maturity or if an attractive investment becomes available and the proceeds
from the refinancing can be used to purchase such investment. The benefits of any such refinancing may include increased cash
flow resulting from reduced debt service requirements, an increase in distributions from proceeds of the refinancing and an increase
in diversification and assets owned if all or a portion of the refinancing proceeds are reinvested.

 Our
charter restricts us from obtaining loans from any of our directors, our advisor and any of our affiliates unless such loan is
approved by a majority of the directors (including a majority of the independent directors) not otherwise interested in the transaction
as fair, competitive and commercially reasonable and no less favorable to us than comparable loans between unaffiliated parties.
Our aggregate borrowings, secured and unsecured, are reviewed by our board at least quarterly. As of December 31, 2024, our total
outstanding indebtedness was $269.4 million. This amount did not exceed 300% of the value of our net assets.

 Each
of our hotel properties is subject to a mortgage loan secured by our ownership interest in the property. The COVID-19 pandemic
resulted in a significant decline in the revenues generated by our hotel properties. If we are unable to service the mortgage
loan secured by a hotel property, the lender may initiate foreclosure procedures with respect to the property or initiate other
available remedies. As of the date of this Annual Report, we are current with respect to the payments due under the mortgage loans
secured by our hotel properties or are in compliance with the modified terms of certain mortgage loans as agreed to with the lenders
and other accommodations. As of the date of this Annual Report, no lenders have accelerated the maturity of any of the loans secured
by our properties or initiated foreclosure procedures with respect to any of our properties. See Note 4, "Debt," to
the consolidated financial statements included in this Annual Report for additional information.

 Economic
Dependency

 We
depend on our advisor for certain services that are essential to us, including the identification, evaluation, negotiation, purchase
and disposition of properties and other investments, management of the daily operations of our real estate portfolio, and other
general and administrative responsibilities. In the event that our advisor is unable to provide these services to us, we will
be required to obtain such services from other sources, and our failure to identify such other sources could have an adverse impact
on our financial condition and results of operations. We also depend upon the dealer manager for the sale of our shares of common
stock in our public offerings.

 Competitive
Market Factors

 The
hotel industry is highly competitive. We face competition from various entities for investment opportunities in our targeted assets,
including other REITs, pension funds, insurance companies, investment funds, real estate companies and developers. Many of these
entities have substantially greater financial resources than we do and may be able to accept more risk than we can prudently manage,
including risks with respect to the geographic location of investments or the creditworthiness of tenants. Competition from these
entities may reduce the number of suitable investment opportunities offered to us or increase the bargaining power of property
owners seeking to sell real estate assets. We have purchased, and intend to purchase, hotels in developed areas that include other
hotels and compete for guests primarily with other hotels in the immediate vicinity and secondarily with other hotels in the geographic
market. An increase in the number of competitive hotels in a particular area could have a material adverse effect on the occupancy,
average daily rate and revenue per available room (RevPAR) of our hotels in that area. We believe that brand recognition, location,
price and quality (of both the hotel and the services provided) are the principal competitive factors affecting our hotel properties.
Additionally, general economic conditions in a particular market and nationally impact the performance of the hotel industry.

 Disruptions
in the credit markets may materially impact the cost and availability of debt to finance real estate acquisitions, which is a
key component of our acquisition strategy. A limited availability of financing in the future could reduce suitable investment
opportunities and create a competitive advantage for other entities that have greater financial resources than we do. Further,
as a result of their greater financial resources, our competitors may have more flexibility than we do in their ability to offer
reduced room rates at properties. This could put pressure on our ability to maintain or raise rates and could adversely affect
our ability to attract or retain customers. As a result, our financial condition, results of operations, cash flow, ability to
satisfy our debt service obligations and ability to resume the payment of distributions to our stockholders may be adversely affected.

 Tax
Status

 We
elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code commencing with the taxable year ended
December 31, 2016. We believe we are organized and operate in such a manner as to qualify
for taxation as a REIT under the Internal Revenue Code, and we intend to operate in such a manner, but no assurance can be given
that we will operate in a manner so as to remain qualified as a REIT. We did not meet all of the qualifications to be a REIT under
the Internal Revenue Code for the year ended December 31, 2015 and for the period from July 25, 2014 (our inception) to December
31, 2014, including not having the requisite number of shareholders for a sufficient number of days in those periods. To qualify
as a REIT, we must meet a number of organizational and operational requirements, including a requirement that we distribute at
least 90% of our REIT taxable income (determined for this purpose without regard to the dividends-paid deduction and excluding
net capital gain) to our stockholders. As a REIT, we generally will not be subject to federal income tax at the corporate level.
Prior to qualifying to be taxed as a REIT, we were subject to normal federal and state corporation income taxes.

 Regulations

 As
an owner of real estate, our operations are subject, in certain instances, to supervision and regulation by U.S. and other governmental
authorities, and may be subject to various laws and judicial and administrative decisions imposing various requirements and restrictions,
which include, among other things: (i) federal and state securities laws and regulations; (ii) federal, state and local tax laws
and regulations, (ii) state and local laws relating to real property; (iv) federal, state and local environmental and human health
and safety laws, ordinances, and regulations, and (v) various laws relating to housing, including the Americans with Disabilities
Act of 1990. Some of these laws and regulations may impose joint and several liability on customers, owners or operators for the
costs to investigate or remediate contaminated properties, regardless of fault or whether the acts causing the contamination were
legal.

 Under
various federal, state and local environmental laws, a current or previous owner or operator of real property may be liable for
the cost of removing or remediating hazardous or toxic substances on a real property. Such laws often impose liability whether
or not the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. In addition,
the presence of hazardous substances, or the failure to properly remediate these substances, may adversely affect our ability
to sell, rent or pledge such real property as collateral for future borrowings. Environmental laws also may impose restrictions
on the manner in which real property may be used or businesses may be operated. Some of these laws and regulations have been amended
so as to require compliance with new or more stringent standards as of future dates. Compliance with new or more stringent laws
or regulations or stricter interpretation of existing laws may require us to incur material expenditures or may impose material
environmental liability. Additionally, tenants' or guests' operations, the existing condition of land when we buy
it, operations in the vicinity of our real properties, such as the presence of underground storage tanks, or activities of unrelated
third parties may affect our real properties. There are also various local, state and federal fire, health, life-safety and similar
regulations with which we may be required to comply and which may subject us to liability in the form of fines or damages for
noncompliance. In connection with the acquisition and ownership of real properties, we may be exposed to such costs in connection
with such regulations. The cost of defending against environmental claims, of any damages or fines we must pay, of compliance
with environmental regulatory requirements or of remediating any contaminated real property could materially and adversely affect
our business and results of operations or lower the value of our assets and, consequently, lower the amounts available for distribution

 We
do not believe that compliance with the laws and regulations described above will have a material adverse effect on our financial
condition or results of operations. However, we cannot predict the impact of unforeseen contingencies or new or changed laws or
regulations on our company or properties in which we hold an interest, or on properties that may be acquired directly or indirectly
in the future.

 Seasonality

 The
hotel industry historically has been seasonal in nature. Seasonal variations in occupancy at our hotel properties and other hotel
properties we may acquire may cause quarterly fluctuations in our revenues. Specifically, business class hotels tend to draw lower
occupancy rates during holidays as there is less business travel on such dates. To the extent that cash flow from operations is
insufficient during any quarter, due to temporary or seasonal fluctuations in revenue, we expect to utilize cash on hand or, if
necessary, any available financing sources to pay our expense.

 Human
Capital

 We
have no employees. We are externally managed by our advisor. Our executive officers serve as officers of our advisor and are employed
by affiliates of our advisor. See "Item 13. Certain Relationships and Related Transactions, and Director Independence—Certain
Relationship and Related Transactions—The Advisor."

 Conflicts
of Interest

 We
are subject to conflicts of interest arising out of our relationship with our advisor and its affiliates. See Item 1A, "Risk
Factors—Risks Related to Conflicts of Interest."

 Insurance

 We
maintain insurance coverage for general liability, property, business interruption and other risks with respect to our hotel properties.
These policies offer coverage features and insured limits that we believe are customary for similar types of properties in similar
locations. However, various types of catastrophic losses, like earthquakes, hurricanes, or certain types of terrorism, may not
be insurable or may not be economically insurable.

 Available

 We
are subject to the reporting and information requirements of the Exchange Act and, as a result, we file periodic reports and other
information with the SEC. Access to copies of the filings that we make with the SEC may be obtained free of charge from our website,
We are providing the address to our website solely for the information of investors. We are not incorporating our website or any
information from the website into this Annual Report. The SEC also maintains a website,  where
our filings are available free of charge. We will provide without charge a copy of this Annual Report, including financial statements
and schedules, upon written request delivered to our principal executive office at the address listed on the cover page of this
Annual Report.

 ITEM
1A. Risk Factors

 The
following are some of the risks and uncertainties that could cause our actual results to differ materially from those presented
in our forward-looking statements. The risks and uncertainties described below are not the only ones we face but do represent
those risks and uncertainties that we believe are most significant to our business, operating results, financial condition, prospects
and forward-looking statements. Our current stockholders may be referred to as "you" or "your" in this
Item 1A. References to "shares" and "our common stock" refer to the shares of our common stock.

 RISKS
RELATED TO OUR ORGANIZATIONAL STRUCTURE

 There
is no public trading market for shares of our common stock and we are not required to effectuate a liquidity event by a certain
date. As a result, it will be difficult for our stockholders to sell their shares of our common stock and, if stockholders are
able to sell their shares, they are likely to sell them at a substantial discount.

 There
is no current public market for the shares of our common stock and we have no obligation to list our shares on any public securities
market or provide any other type of liquidity to our stockholders. It will therefore be difficult for you to sell your shares
of common stock promptly or at all. Even if you are able to sell your shares of common stock, the absence of a public market may
cause the price received for any shares of our common stock sold to be less than what you paid or less than your proportionate
value of the assets we own. We have adopted a share repurchase program but it is limited in terms of the amount of shares that
a stockholder may sell back to us each quarter. Our board of directors may amend, suspend or terminate our share repurchase program
upon 10 days' prior notice to our stockholders. On March 24, 2020, in response to the COVID-19 pandemic, our board of directors
approved the indefinite suspension of our share repurchase program, effective as of April 6, 2020. There is no way to predict
when, if at all, our board of directors will determine to resume the repurchase of shares of our common stock pursuant to our
share repurchase program. Additionally, our charter does not require that we consummate a transaction to provide liquidity to
stockholders on any date certain or at all. As a result, you should purchase shares of our common stock only as a long-term investment,
and you must be prepared to hold your shares for an indefinite length of time.

 You
will not have the opportunity to evaluate our future investments before we make them, which makes your investment more speculative.

 As
of December 31, 2024, we held interests in 14 hotel properties located in six states, comprising a total of 2,028 rooms. We sold
three of such properties during 2025, as discussed elsewhere herein. Other than those assets, stockholders will not be able to
evaluate the economic merits, transaction terms or other financial or operational data concerning our investments. Stockholders
must rely on our advisor and our board of directors to implement our investment policies, to evaluate our investment opportunities
and to structure the terms of our investments. This additional risk may hinder the ability to achieve a stockholder's personal
investment objectives related to portfolio diversification, risk-adjusted investment returns and other objectives.

 There
is no assurance that we will be able to successfully achieve our investment objectives.

 We
may not be able to successfully operate our business or achieve our investment objectives. As a result, an investment in our shares
of common stock may entail more risk than the shares of common stock of another real estate investment trust. In
addition, stockholders should not rely on the past performance of real property, real estate securities or debt-related investments
owned by other Moody companies to predict our future results. Nor should stockholders assume that the prior performance of other
investment programs sponsored by our sponsor or its affiliates (whether private or publicly offered, including, without limitation,
Moody I) will be indicative of our future results.

 Because
our charter does not require our listing or liquidation by a specified date, stockholders should only view our shares as a long-term
investment and should be prepared to hold them for an indefinite period of time.

 In
the future, our board of directors will consider alternatives for providing liquidity to our stockholders, which we refer to as
a liquidity event. A liquidity event may include the sale of our assets, a sale or merger of our company or a listing of our shares
on a national securities exchange. It is anticipated that our board of directors will consider a liquidity event within three
to six years after the completion of our primary offering; however, the timing of any such event will significantly depend upon
economic and market conditions after completion of our offering stage. Because our charter does not require us to pursue a liquidity
event by a specified date and our share repurchase program is indefinitely suspended, stockholders should only view our shares
as a long-term investment and should be prepared to hold them for an indefinite period of time.

 We
pay certain fees and expenses to our advisor and its affiliates. These fees were not negotiated at arm's-length, may be
higher than fees payable to unaffiliated third parties and reduce cash available for investment.

 We
have, and in the future expect to continue to, pay fees and expenses to our advisor and its affiliates. These fees were not negotiated
at arm's-length and may be higher than fees payable to unaffiliated third parties. In addition, stockholders will only receive
a full return of their invested capital if we either (1) sell our assets or our company for a sufficient amount in excess of the
original purchase price of our assets or (2) the market value of our company after we list our shares of common stock on a national
securities exchange is substantially in excess of the original purchase price of our assets.

 Our
share repurchase program has been indefinitely suspended. If we resume the repurchase of shares of our common stock pursuant to
our share repurchase program, stockholders will be limited in their ability to sell their shares of common stock pursuant to our
share repurchase program.

 On
March 24, 2020, in response to the COVID-19 pandemic, our board of directors approved the indefinite suspension of our share repurchase
program, effective as of April 6, 2020. There is no way to predict when, if at all, our board of directors will determine to resume
the repurchase of shares of our common stock pursuant to our share repurchase program.

 If
our board of directors elects to resume the repurchase of shares of our common stock pursuant to our share repurchase program,
it may provide you with a limited opportunity to have your shares repurchased by us, subject
to certain restrictions and limitations. If reinstated, our
share repurchase program will contain certain restrictions and limitations, including those relating to the number of shares of
our common stock that we can repurchase at any given time and limiting the repurchase price. In addition, our board
of directors will reserve the right to amend, suspend or terminate our share repurchase program at any time upon 10 days'
prior written notice to our stockholders, which notice may be provided by including such information (i) in a current report on
Form 8-K or in our annual or quarterly reports, as publicly filed or furnished with the SEC, or (ii) in a separate mailing to
our stockholders. Therefore, even if our share repurchase program is reinstated, you may not have the opportunity to make a repurchase
request prior to an amendment, termination or suspension of our share repurchase program and you may not be able to sell any of
your shares of common stock back to us pursuant to our share repurchase program. Moreover, if you do sell your shares of common
stock back to us pursuant to our share repurchase program you may not receive the same price you paid for any shares of our common
stock being repurchased.

 Stockholders
should not rely on the estimated NAV per share as being an accurate measure of the current value of our shares of common stock.

 Our
board of directors has historically determined an estimated NAV per share of each class of our common stock as of December 31st
of each year. The objective of our board of directors in determining the estimated NAV per share was to arrive at a value, based
on the most recent data available, that it believed was reasonable based on methodologies that it deemed appropriate after consultation
with our advisor. However, the market for commercial real estate can fluctuate quickly and substantially and the value of our
assets is expected to change in the future and may decrease. Also, our board of directors does not consider certain other factors,
such as a liquidity discount to reflect the fact that our shares are not currently traded on a national securities exchange.

 As
with any valuation method, the methods used to determine the estimated NAV per share were based upon a number of assumptions,
estimates and judgments that may not be accurate or complete. Our assets have been valued based upon appraisal standards and the
values of our assets using these methods are not required to be a reflection of market value under those standards and will not
necessarily result in a reflection of fair value under generally accepted accounting principles, or GAAP. Further, different parties
using different property-specific and general real estate and capital market assumptions, estimates, judgments and standards could
derive a different estimated NAV per share, which could be significantly different from the estimated NAV per share determined
by our board of directors. The estimated NAV per share is not a representation or indication that, among other things: a stockholder
would be able to realize the estimated NAV per share if he or she attempts to sell shares; a stockholder would ultimately realize
distributions per share equal to the estimated NAV per share upon liquidation of assets and settlement of our liabilities or upon
a sale of our company; shares of our common stock would trade at the estimated NAV per share on a national securities exchange;
a third party would offer the estimated NAV per share in an arms-length transaction to purchase all or substantially all of our
shares of common stock; or the methodologies used to determine the estimated NAV per share would be acceptable to FINRA, the Employee
Retirement Income Security Act of 1974, as amended, or ERISA, or other regulatory authorities (including state regulators), with
respect to their respective requirements. Further, the estimated NAV per share was calculated as of a specific time and the value
of our shares will fluctuate over time as a result of, among other things, future acquisitions or dispositions of assets, developments
related to individual assets and changes in the real estate and capital markets. In particular, the ongoing global pandemic of
COVID-19, together with the restrictions on travel and other measures enacted in response to the pandemic, has had and will continue
to have a significant adverse impact on the operations and value of our hotel properties for an indefinite period of time.

 On
March 26, 2024, our board of directors, including all of our independent directors, determined an estimated NAV per share of our
Class A Shares, Class I Shares and Class T Shares as of December 31, 2023 of $17.25. Our board of directors expected to determine
a new NAV per share for each class of our common stock as of December 31, 2024 in accordance with our historical practice. However,
our board of directors has determined that it is not in our best interests to incur the significant expense of determining as
estimated NAV per share of our common stock as of December 31, 2024. In making such determination, our board of directors considered,
among other factors, our reduced cash flows and the demands of our debt service obligations and other critical operating expenses
and the volatility and lack of liquidity in the commercial real estate market which makes accurate property values difficult to
discern. As of the date of this Annual Report our board of directors remains unable to determine an updated estimated NAV per
share. We cannot provide any assurance as to when we will resume determining an estimated NAV per share, however our board intends
to do so when our financial condition and other relevant circumstances permit. For information regarding our estimated NAV per
share of our Class A Shares, Class I Shares and Class T Shares as of December 31, 2024, see Part II, Item 5, "Market for
Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities" in our Annual Report
on Form 10-K for the year ended December 31, 2023, as filed with the SEC on April 11, 2024.

 NAV
per share calculations are not governed by governmental or independent securities, financial or accounting rules or standards.

 The
method for calculating our estimated NAV per share, including the components used in calculating our NAV per share, is not prescribed
by rules of the SEC or any other regulatory agency. Further, there are no accounting rules or standards that prescribe which components
should be used in calculating NAV, and our NAV is not audited by our independent registered public accounting firm. Stockholders
should not view our NAV per share as a measure of our historical or future financial condition or performance. The components
and methodology we may use in calculating our NAV per share may differ from those used by other companies now or in the future.

 We
infrequently calculate our estimated NAV per share and therefore stockholders may not be able to determine the net asset value
of their shares on an ongoing basis. Further, we have not determined an estimated NAV per share as of December 31, 2024.

 Historically,
we have determined an updated estimated NAV per share every year as of or about a date as of the last day of our fiscal year and
disclosed that updated estimated NAV per share in our annual report on Form 10-K or a current report on Form 8-K that we file
with the SEC. However, our board of directors has determined that it is not in our best interests to incur the significant
expense of determining as estimated NAV per share of our common stock as of December 31, 2024. In making such determination, our
board of directors considered, among other factors, our reduced cash flows and the demands of our debt service obligations and
other critical operating expenses and the volatility and lack of liquidity in the commercial real estate market which makes accurate
property values difficult to discern. We cannot provide any assurance as to when we will resume determining an estimated NAV per
share, however our board intends to do so when our financial condition and other circumstances permit. We do not intend to calculate
an estimated NAV per share for our shares more frequently than annually. Therefore, a stockholder may not be able to determine
the estimated NAV of their shares on an ongoing basis. In addition, the recovery by our advisor of selling commissions, dealer
manager fees and stockholder servicing fees through the receipt of the "Contingent Advisor Payment," as described
in Note 6, "Related Party Arrangements," would negatively impact our estimated NAV per share. Furthermore, because
we will include leverage in the calculation of the Contingent Advisor Payment, the use of more leverage could allow our advisor
to recoup the payment of such fees more quickly than if we use less leverage. However, such an impact will not be reflected in
our estimated NAV per share until we determine a new estimated NAV per share which, as noted above, may only be annually.

 If
we internalize our management functions, a stockholder's interest in us could be diluted and we could incur other significant
costs associated with being self-managed.

 Our
board of directors may decide in the future to internalize our management functions. If we do so, we may elect to negotiate to
acquire our advisor's assets and personnel. At this time, we cannot anticipate the form or amount of consideration or other
terms relating to any such acquisition. Such consideration could take many forms, including cash payments, promissory notes and
shares of our common stock. The payment of such consideration could result in dilution of our stockholder's interests and
could reduce the earnings per share and funds from operations per share attributable to their investment.

 Additionally,
while we would no longer bear the costs of the various fees and expenses we pay to our advisor under the advisory agreement, our
direct expenses would include general and administrative costs, including legal, accounting and other expenses related to corporate
governance, SEC reporting and compliance. We would also be required to employ personnel and would be subject to potential liabilities
commonly faced by employers, such as workers disability and compensation claims, potential labor disputes and other employee-related
liabilities and grievances as well as incur the compensation and benefits costs of our officers and other employees and consultants
that we now expect will be paid by our advisor or its affiliates. We may issue equity awards to officers, employees and consultants,
which awards would decrease net income and funds from operations and may further dilute your investment. We cannot reasonably
estimate the amount of fees to our advisor we would save or the costs we would incur if we became self-managed. If the expenses
we assume as a result of an internalization are higher than the expenses we avoid paying to our advisor, our earnings per share
and funds from operations per share would be lower as a result of the internalization than it otherwise would have been, potentially
decreasing the amount of funds available to distribute to our stockholders and the value of our shares.

 If
we internalize our management functions, we could have difficulty integrating these functions as a stand-alone entity. Currently,
our advisor and its affiliates perform asset management and general and administrative functions, including accounting and financial
reporting, for multiple entities. These personnel have a great deal of know-how and experience which provides us with economies
of scale. We may fail to properly identify the appropriate mix of personnel and capital needs to operate as a stand-alone entity.
An inability to manage an internalization transaction effectively could thus result in our incurring excess costs and suffering
deficiencies in our disclosure controls and procedures or our internal control over financial reporting. Such deficiencies could
cause us to incur additional costs, and our management's attention could be diverted from most effectively managing our
real estate assets.

 If
we were to internalize our management or if another investment program, whether sponsored by our sponsor or otherwise, hires the
employees of our advisor in connection with its own internalization transaction or otherwise, our ability to conduct our business
may be adversely affected.

 We
rely on persons employed by our advisor and its affiliates to manage our day-to-day operations. If we were to effectuate an internalization
of our advisor, we may not be able to retain all of the employees of our advisor and its affiliates or to maintain a relationship
with our sponsor. In addition, some of the employees of our advisor and its affiliates provide services to one or more other investment
programs. These programs or third parties may decide to retain some or all of our advisor's key employees in the future.
If this occurs, these programs could hire certain of the persons currently employed by our advisor and its affiliates who are
most familiar with our business and operations, thereby potentially adversely impacting our business.

 Our
cash distributions have been indefinitely suspended. To the extent paid in the future, our distributions will not be guaranteed,
may fluctuate and may constitute a return of capital or taxable gain from the sale or exchange of property.

 On
March 24, 2020, our board of directors approved the suspension of the payment of distributions to our stockholders, effective
immediately, due to the impact that the COVID-19 pandemic. There can be no assurance when the payment of distributions will resume,
if at all. To the extent the payment of distributions is resumed, the amount and timing of distributions will be determined by
our board of directors and will typically depend upon the amount of funds available for distribution, which will depend on items
such as current and projected cash requirements and tax considerations. As a result, our distribution rate and payment frequency
may vary from time to time. Our long-term strategy is to fund the payment of monthly distributions to our stockholders entirely
from our funds from operations. However, we may need to borrow funds, request that our advisor in its discretion, defer its receipt
of fees and reimbursements of expenses or, to the extent necessary, utilize offering proceeds in order to make cash distributions.
Accordingly, the amount of distributions paid at any given time may not reflect current cash flow from operations. Distributions
payable to stockholders may also include a return of capital, rather than a return on capital.

 We
have paid distributions from the proceeds of our offerings. To the extent that we pay distributions from sources other than our
cash flow from operations, we will have reduced funds available for investment and the overall return to our stockholders may
be reduced.

 Our
organizational documents permit us to pay distributions from any source, including net proceeds from our public offerings, borrowings,
advances from our sponsor or advisor and the deferral of fees and expense reimbursements by our advisor, in its sole discretion.
Since our inception, our cash flow from operations has not been sufficient to fund all of our distributions. Of the $54.5 million
in total distributions we paid during the period from our inception through December 31, 2024, including shares issued pursuant
to our DRP, $0, or 0%, were paid from cash provided by operating activities and $54.5 million, or 100%, were paid from offering
proceeds. If and to the extent that we resume the payment of distributions, we may continue to fund distributions from the net
proceeds from our securities offerings or sources other than cash flow from operations. We have not established a limit on the
amount of offering proceeds, or sources other than cash flow from operations which we may use to fund distributions.

 If
we are unable to consistently fund distributions to our stockholders entirely from our cash flow from operations, the value of
the shares of our common stock may be reduced, including upon a listing of our common stock, the sale of our assets or any other
liquidity event should such event occur. To the extent that we fund distributions from sources other than our cash flow from operations,
our funds available for investment will be reduced relative to the funds available for investment if our distributions were funded
solely from cash flow from operations, our ability to achieve our investment objectives will be negatively impacted and the overall
return to our stockholders may be reduced. In addition, if we make a distribution in excess of our current and accumulated earnings
and profits, the distribution will be treated first as a tax-free return of capital, which will reduce the stockholder's
tax basis in its shares of common stock. The amount, if any, of each distribution in excess of a stockholder's tax basis
in its shares of common stock will be taxable as gain realized from the sale or exchange of property.

 On
March 24, 2020, our board of director unanimously approved the suspension of the payment of distributions to our stockholders,
effective immediately, due to the impact that the COVID-19 pandemic. There can be no assurance when the payment of distributions
will resume, it at all.

 We
have incurred net losses in the past and may incur net losses in the future, and we have an accumulated deficit and may continue
to have an accumulated deficit in the future.

 For
the years ended December 31, 2024 and 2023, we had net losses of $99.9 million and $20.4 million, respectively. We incurred a
net loss attributable to common stockholders of $97.6 million and $20.0 million for the years ended December 31, 2024 and 2023,
respectively. Our accumulated deficits were $290.9 million and $193.2 million as of December 31, 2024 and 2023, respectively.
We may incur net losses in the future and may continue to have an accumulated deficit.

 Our
failure to operate successfully or profitably could have a material adverse effect on our ability to generate cash flow.

 To
be successful, we must, among other things:

 identify
 and acquire investments that align with our investment strategies;

 establish
 and maintain contacts with licensed securities brokers and other agents to successfully
 complete our public offering;

 attract,
 integrate, motivate and retain qualified personnel to manage our day-to-day operations;

 respond
 to competition for our targeted real estate properties, real estate securities and debt-related
 investments as well as for potential investors in our shares; and

 continue
 to build and expand our operations structure to support our business.

 Our
failure, or our advisor's or sponsor's failure, to operate successfully or profitably could have a material adverse
effect on our ability to generate cash flow to resume distributions to our stockholders and could cause a stockholder to lose
all or a portion of his or her investment in our shares.

 Our
success depends on the performance of our sponsor and affiliates of our sponsor.

 Our
ability to achieve our investment objectives and to pay distributions depends upon the performance of our advisor, our sponsor
and other affiliates of our sponsor, and any adverse change in their financial health could cause our operations to suffer. Our
sponsor and its other affiliates are sensitive to trends in the general economy, as well as the real estate and credit markets.

 To
the extent that any decline in revenues and operating results impacts our sponsor's ability to provide our advisor with
sufficient resources to perform its obligations to us pursuant to the advisory agreement, our results of operations, financial
condition and ability to pay distributions to our stockholders could also suffer. Additionally, such adverse conditions could
require a substantial amount of time on the part of the management of our advisor and its affiliates, particularly with regard
to other real estate programs, thereby decreasing the amount of time they spend actively managing our investments.

 We
are uncertain of our sources for funding our future capital needs. If we do not have sufficient funds from operations to cover
our expenses or to fund improvements to any hospitality properties we may acquire and cannot obtain debt or equity financing on
acceptable terms, our ability to cover our expenses or to fund improvements to our hospitality properties will be adversely affected.

 We
have historically used the proceeds from our public offering for investments in hospitality assets and for payment of operating
expenses, various fees and other expenses. Our public offering has been terminated and we do not expect to commence raising additional
capital from the sale of our securities in the near term. As a result, we may not have sufficient funds from operations to cover
our expenses or to fund improvements to our properties. Accordingly, in the event that we develop a need for additional capital
in the future for the improvement of our properties or for any other reason, that capital may not be available to us. If we do
not have sufficient funds from cash flow generated by our investments or cannot obtain debt or equity financing on acceptable
terms, our financial condition and ability to resume making distributions may be adversely affected.

 Our
stockholders and Moody I stockholders were diluted by the Mergers.

 The
Mergers diluted the ownership position of our current stockholders and resulted in Moody I stockholders having an ownership stake
in us that is smaller than their prior stake in Moody I. In connection with the Mergers, we issued approximately 3.63 million
shares of our Class A common stock to the former holders of Moody I common stock, based on the elections of Moody I's stockholders.
Accordingly, our current stockholders and former Moody I stockholders held approximately 57% and 43% of our common stock, respectively,
following the Mergers. In addition, approximately 298,037 units of limited partnership interest in our operating partnership were
issued in connection with the Mergers. Consequently, our stockholders and Moody I stockholders, as a general matter, have less
influence over the management and policies of us after the Mergers than each exercised over the management and policies of us
and Moody I, as applicable, immediately prior to the Mergers.

 We
incurred debt in connection with the Mergers, which may limit our financial and operating flexibility, and we may incur additional
borrowings, which could increase the risks associated with our borrowings.

 In
connection with the Mergers, we incurred additional debt. Our new borrowings could have material adverse consequences for our
business and may:

 require
 us to dedicate a large portion of our cash flow to pay principal and interest on our
 borrowings, which will reduce the availability of cash flow to fund working capital,
 capital expenditures, and other business activities;

 increase
 our vulnerability to general adverse economic and industry conditions;

 subject
 us to maintaining various debt, operating income, net worth, cash flow, and other financial
 covenants;

 limit
 our flexibility in planning for, or reacting to, changes in our business and industry;

 restrict
 our operating policies and ability to make strategic acquisitions, dispositions, or exploiting
 business opportunities;

 place
 us at a disadvantage compared to our competitors that have less borrowings;

 limit
 our ability to borrow more funds (even when necessary to maintain adequate liquidity),
 dispose of assets, or make distributions to stockholders; or

 increase
 our costs of capital.

 If
new borrowings are added to our existing borrowing levels, the related risks that we now face would increase. In addition, at
the time that any of our outstanding borrowings or new borrowings mature, we may not be able to refinance such borrowings or have
the funds to pay them off.

 In
connection with the Mergers, we assumed the liabilities of Moody I.

 We
assumed the liabilities of Moody I in connection with the Mergers. These liabilities could have a material adverse effect on our
business to the extent we have not identified such liabilities or have underestimated the amount of such liabilities.

 Maryland
law and our organizational documents limit your right to bring claims against our officers and directors.

 Maryland
law provides that a director will not have any liability as a director so long as he or she performs his or her duties in accordance
with the applicable standard of conduct. In addition, our charter provides that, subject to the applicable limitations set forth
therein or under Maryland law, no director or officer will be liable to us or our stockholders for monetary damages. Our charter
also provides that we will generally indemnify and advance expenses to our directors, our officers, our advisor and its affiliates
for losses they may incur by reason of their service in those capacities subject to any limitations under Maryland law or in our
charter. Moreover, we have entered into separate indemnification agreements with each of our directors and executive officers.
As a result, we and our stockholders may have more limited rights against these persons than might otherwise exist under common
law. We may be obligated to fund the defense costs incurred by these persons in some cases. However, our charter provides that
we may not indemnify our directors, our advisor and its affiliates for loss or liability suffered by them or hold our directors
or our advisor and its affiliates harmless for loss or liability suffered by us unless they have determined that the course of
conduct that caused the loss or liability was in our best interests, they were acting on our behalf or performing services for
us, the liability was not the result of negligence or misconduct by our non-independent directors, our advisor and its affiliates
or gross negligence or willful misconduct by our independent directors, and the indemnification or obligation to hold harmless
is recoverable only out of our net assets, including the proceeds of insurance, and not from the stockholders.

 The
limit on the percentage of shares of our common stock that any person may own may discourage a takeover or business combination
that may benefit our stockholders.

 Our
charter restricts the direct or indirect ownership by one person or entity to no more than 9.8% of the value of the aggregate
of our then outstanding shares of capital stock (which includes common stock and any preferred stock or convertible stock we may
issue) and no more than 9.8% of the value or number of shares, whichever is more restrictive, of the aggregate of our then outstanding
shares of common stock unless exempted (prospectively or retroactively) by our board of directors. These restrictions may discourage
a change of control of us and may deter individuals or entities from making tender offers for shares of our common stock on terms
that might be financially attractive to stockholders or which may cause a change in our management. In addition to deterring potential
transactions that may be favorable to our stockholders, these provisions may also decrease a stockholder's ability to sell
his or her shares of our common stock.

 We
may issue preferred stock, convertible stock or other classes of common stock, which issuance could adversely affect the holders
of our common stock issued pursuant to our public offering.

 Our
stockholders do not have preemptive rights to any shares issued by us in the future. We may issue, without stockholder approval,
preferred stock, convertible stock or other classes of common stock with rights that could dilute the value of your shares of
common stock. However, the issuance of preferred stock or convertible stock must be approved by a majority of our independent
directors not otherwise interested in the transaction, who will have access, at our expense, to our legal counsel or to independent
legal counsel. The issuance of preferred stock or other classes of common stock could increase the number of stockholders entitled
to distributions without simultaneously increasing the size of our asset base.

 Our
charter authorizes us to issue 1,100,000,000 shares of capital stock, par value $0.01 per share, of which 1,000,000,000 shares
are classified as common stock of which 250,000,000 shares are classified as Class
A shares, 250,000,000 shares are classified as Class D shares, 250,000,000 shares are classified as Class I shares, 250,000,000
shares are classified as Class T shares, par value $0.01 per share and 100,000,000 shares are classified as preferred stock.
Our board of directors, with the approval of a majority of the entire board of directors and without any action by our stockholders,
may amend our charter from time to time to increase or decrease the aggregate number of authorized shares of capital stock or
the number of authorized shares of capital stock of any class or series. If we ever created and issued preferred stock or convertible
stock with a distribution preference over common stock, payment of any distribution preferences of outstanding preferred stock
or convertible stock would reduce the amount of funds available for the payment of distributions on our common stock. Further,
holders of preferred stock are normally entitled to receive a preference payment in the event we liquidate, dissolve or wind up
before any payment is made to our common stockholders, likely reducing the amount common stockholders would otherwise receive
upon such an occurrence. In addition, under certain circumstances, the issuance of preferred stock or a separate class or series
of common stock may render more difficult or tend to discourage:

 a
 merger, tender offer or proxy contest;

 the
 assumption of control by a holder of a large block of our securities; and

 the
 removal of incumbent management.

 Our
UPREIT structure may result in potential conflicts of interest with limited partners in our operating partnership whose interests
may not be aligned with those of our stockholders.

 We
are structured as an "UPREIT," which stands for "umbrella partnership real estate investment trust." We
use the UPREIT structure because a contribution of property directly to us is generally a taxable transaction to the contributing
property owner. In the UPREIT structure, a contributor of a property who desires to defer taxable gain on the transfer of a property
may transfer the property to our operating partnership in exchange for limited partnership interests and defer taxation of gain
until the contributor later exchanges his or her limited partnership interests for shares of our common stock. We believe that
using an UPREIT structure gives us an advantage in acquiring desired properties from persons who may not otherwise sell their
properties because of unfavorable tax results.

 Our
operating partnership may issue limited partner interests in connection with certain transactions. Limited partners in our operating
partnership have the right to vote on certain amendments to the operating partnership agreement, as well as on certain other matters.
Persons holding such voting rights may exercise them in a manner that conflicts with the interests of our stockholders. As general
partner of our operating partnership, we are obligated to act in a manner that is in the best interest of all partners of our
operating partnership. Circumstances may arise in the future when the interests of limited partners in our operating partnership
may conflict with the interests of our stockholders. These conflicts may be resolved in a manner stockholders do not believe are
in their best interest.

 In
addition, Moody LPOP II, as the holder of the special limited partnership interests in our operating partnership, will be entitled
to receive distributions from our operating partnership equal to 15.0% of our net cash flows, whether from continuing operations,
the repayment of loans, the disposition of assets or otherwise, but only after our stockholders have received, in the aggregate,
cumulative distributions equal to their total invested capital plus a 6.0% (or 8.0% in the case of former limited partners of
Moody I OP) cumulative, non-compounded annual pre-tax return on such aggregated invested capital. In addition, the special limited
partnership interests will be redeemed by our operating partnership upon (1) the listing of our common stock on a national securities
exchange or (2) the occurrence of certain events that result in the termination or non-renewal of our advisory agreement (other
than for cause), in each case for an amount that the holder of the special limited partnership interests would have been entitled
to receive, as described above, if our operating partnership had disposed of all of its assets at the enterprise valuation as
of the date of the event triggering the redemption. The payment of any of the foregoing amounts would reduce the overall return

 We
may grant stock-based awards to our directors, employees and consultants pursuant to our long-term incentive plan, which will
have a dilutive effect on your investment in us.

 We
have adopted a long-term incentive plan which we use to attract and retain qualified directors, officers, employees, and consultants.
The long-term incentive plan authorizes the granting of restricted stock, stock options, stock appreciation rights, restricted
or deferred stock units, dividend equivalents, other stock-based awards and cash-based awards to directors, employees and consultants
of ours selected by the board of directors for participation in our long-term incentive plan. We currently intend only to issue
awards of restricted stock to our independent directors under our long-term incentive plan. Accordingly, we have adopted an independent
directors compensation plan as a sub-part of our long-term incentive plan, pursuant to which each of our independent directors
is entitled to receive restricted stock in connection with their service on the board of directors and with other events. As of
December 31, 2024, we had issued 65,000 shares of restricted stock to our independent directors pursuant to that plan.

 If
we issue additional stock-based awards to eligible participants under our long-term incentive plan, the issuance of these stock-based
awards may dilute an investment in our shares of common stock. In particular, certain features of our long-term incentive plan
could have a dilutive effect on an investment in us, including (1) a lack of annual award limits, individually or in the aggregate
(subject to the limit on the maximum number of shares which may be issued pursuant to awards granted under the plan), (2) the
fact that the limit on the maximum number of shares which may be issued pursuant to awards granted under the plan is not tied
to the amount of proceeds raised in our initial public offering and (3) share counting procedures which provide that shares subject
to certain awards, including, without limitation, substitute awards granted by us to employees of another company in connection
with our merger or consolidation with such company, or shares subject to outstanding awards of another company assumed by us in
connection with our merger or consolidation with such company, are not subject to the limit on the maximum number of shares which
may be issued pursuant to awards granted under the plan.

 We
are not required to comply with certain reporting requirements, including those relating to auditor's attestation reports
on the effectiveness of our system of internal control over financial reporting and disclosure about our executive compensation,
that apply to other public companies.

 So
long as our shares of common stock are not traded on a securities exchange, we will be deemed to be a "non-accelerated filer"
under the Exchange Act, and as a non-accelerated filer, we will be exempt from compliance with the auditor attestation requirements
of Section 404 of the Sarbanes-Oxley Act. In addition, so long as we are externally managed by our advisor and we do not directly
compensate our executive officers, or reimburse our advisor or its affiliates for salaries, bonuses, benefits and severance payments
for persons who also serve as one of our executive officers or as an executive officer of our advisor, we do not have any executive
compensation.

 Your
investment return may be reduced if we are required to register as an investment company under the Investment Company Act.

 We
intend to continue to conduct our operations so that neither we, nor our operating partnership nor the subsidiaries of our operating
partnership are investment companies under the Investment Company Act of 1940, as amended, or the "Investment Company Act."
However, there can be no assurance that we and our subsidiaries will be able to successfully avoid operating as an investment
company.

 A
change in the value of any of our assets could negatively affect our ability to maintain our exemption from regulation under the
Investment Company Act. To maintain compliance with the applicable exemption under the Investment Company Act, we may be unable
to sell assets we would otherwise want to sell and may need to sell assets we would otherwise wish to retain. In addition, we
may have to acquire additional assets that we might not otherwise have acquired or may have to forego opportunities to acquire
assets that we would otherwise want to acquire and would be important to our investment strategy.

 If
we were required to register as an investment company but failed to do so, we would become subject to substantial regulation with
respect to our capital structure (including our ability to use borrowings), management, operations, transactions with affiliated
persons (as defined in the Investment Company Act), and portfolio composition, including disclosure requirements and restrictions
with respect to diversification and industry concentration, and other matters. Compliance with the Investment Company Act would,
accordingly, limit our ability to make certain investments and require us to significantly restructure our business plan, which
could materially adversely affect our NAV and our ability to resume paying distributions to our stockholders.

 Operational
risks, including the risk of cyberattacks, may disrupt our businesses, result in losses or limit our growth.

 We
rely heavily on our and our sponsor's financial, accounting, treasury, communications and other data processing systems.
Such systems may fail to operate properly or become disabled as a result of tampering or a breach of the network security systems
or otherwise. In addition, such systems are from time to time subject to cyberattacks which may continue to increase in sophistication
and frequency in the future. Attacks on our sponsor and its affiliates and their portfolio companies' and service providers'
systems could involve attempts that are intended to obtain unauthorized access to our proprietary information or personal identifying
information of our stockholders, destroy data or disable, degrade or sabotage our systems, including through the introduction
of computer viruses and other malicious code.

 Cyberattacks
and other cyber security threats could originate from a wide variety of sources, including cyber criminals, nation state hackers,
hacktivists and other outside parties. There has been an increase in the frequency and sophistication of the cyber and security
threats that we and our sponsor face, with attacks ranging from those common to businesses generally to those that are more advanced
and persistent. As a result, we and our sponsor may face a heightened risk of a security breach or disruption with respect to
this information. If successful, these types of attacks on our or sponsor's network or other systems could have a material
adverse effect on our business and results of operations, due to, among other things, the loss of investor or proprietary data,
interruptions or delays in our business and damage to our reputation. There can be no assurance that the measures taken to ensure
the integrity of such systems will provide protection, especially because cyberattack techniques used change frequently or are
not recognized until successful.

 If
unauthorized parties gain access to such information and technology systems, they may be able to steal, publish, delete or modify
private and sensitive information including non-public personal information related to our stockholders (and their beneficial
owners) and material non-public information. Although our sponsor and its service providers may implement various measures to
manage risks relating to these types of events, such systems could prove to be inadequate and, if compromised, could become inoperable
for extended periods of time, cease to function properly or fail to adequately secure private information. Our sponsor does not
control cyber security plans and systems put in place by third party service providers, and such third party service providers
may have limited indemnification obligations to our sponsor and us, each of which could be negatively impacted as a result. Breaches
such as those involving covertly introduced malware, impersonation of authorized users and industrial or other espionage may not
be identified even with sophisticated prevention and detection systems, potentially resulting in further harm and preventing them
from being addressed appropriately. The failure of these systems or of disaster recovery plans for any reason could cause significant
interruptions in our sponsor's or our operations and result in a failure to maintain the security, confidentiality or privacy
of sensitive data, including personal information relating to stockholders, material non-public information and the intellectual
property and trade secrets and other sensitive information. Our sponsor or our company could be required to make a significant
investment to remedy the effects of any such failures, harm to their reputations, legal claims that they and their respective
affiliates may be subjected to, regulatory action or enforcement arising out of applicable privacy and other laws, adverse publicity
and other events that may affect their business and financial performance.

 We
and our sponsor are highly dependent on information systems and technology. The costs related to cyber or other security threats
or disruptions may not be fully insured or indemnified by other means. In addition, cybersecurity has become a top priority for
regulators around the world. Many jurisdictions in which our sponsor operates have laws and regulations relating to data privacy,
cybersecurity and protection of personal information. Some jurisdictions have also enacted laws requiring companies to notify
individuals of data security breaches involving certain types of personal data. Breaches in security could potentially jeopardize
confidential and other information of our sponsor, our company, our sponsor's employees, our investors or counterparties,
processed and stored in, and transmitted through, our or our sponsor's computer systems and networks, or otherwise cause
interruptions or malfunctions in the operations of our sponsor, our company, our sponsor's employees, our investors or counterparties,
which could result in significant losses, increased costs, disruption of our business, regulatory intervention or reputational
damage. If our sponsor fails to comply with the relevant laws and regulations, it could result in regulatory investigations and
penalties, which could lead to negative publicity and may cause our investors or investors in and clients of our sponsor to lose
confidence in the effectiveness of our or our sponsor's security measures.

 We
depend on our sponsor's headquarters in Houston, Texas, where most of our sponsor's personnel are located, for the
continued operation of our business. A disaster or a disruption in the infrastructure that supports our business, including a
disruption involving electronic communications or other services used by us or third parties with whom we conduct business, or
directly affecting our headquarters, could have a material adverse impact on our ability to continue to operate our business without
interruption. Our sponsor's disaster recovery programs may not be sufficient to mitigate the harm that may result from such
a disaster or disruption. In addition, insurance and other safeguards might only partially reimburse us for our losses, if at
all.

 Our
information systems and technology may not continue to be able to accommodate our growth, and the cost of maintaining such systems
may increase from its current level. Such a failure to accommodate growth, or an increase in costs related to such information
systems, could have a material adverse effect on us. In addition, we rely on third-party service providers for certain aspects
of our business, including for certain information systems, technology and administration. Any interruption or deterioration in
the performance of these third parties or failures of their information systems and technology could impair the quality of our
operations and could affect our reputation and hence adversely affect our business.

 We
may experience risk related to the use of artificial intelligence.

 Technological
developments in artificial intelligence, including machine learning technology and generative artificial intelligence (collectively,
"AI Technologies") and their current and potential future applications, as well as the legal and regulatory frameworks
within which they operate, are rapidly evolving. The full extent of current or future risks related thereto is not possible to
predict and we may not be able to anticipate, prevent, mitigate or remediate all of the potential risks, challenges or impacts
of such changes. Any of these technological innovations could result in harm to us, our sponsor or our advisor, significantly
disrupt the market in which they operate and subject them to increased competition, which could materially and adversely affect
their business, financial condition and results of operations, and have an adverse impact on us. Advancements in computing and
AI Technologies, including efficiency improvements, without related increases in the adoption and development of such technologies,
could also negatively impact demand for, and the valuation of, digital infrastructure assets.

 We,
our sponsor and our advisor may avail ourselves/themselves of the benefits, insights and efficiencies that are available through
the use of AI Technologies. However, the use of AI Technologies presents a number of risks that cannot be fully mitigated. For
example, AI Technologies are highly reliant on the collection and analysis of large amounts of data and complex algorithms, but
it is not possible or practicable to incorporate all relevant data into models that AI Technologies utilize to operate. Moreover,
with the use of AI Technologies, there often exists a lack of transparency of how inputs are converted to outputs, and neither
we, our sponsor, or our advisor can fully validate this process and its accuracy. The accuracy of such inputs and the resulting
impact on the results of AI Technologies cannot be verified and could result in a diminished quality of work product that includes
or is derived from inaccurate or erroneous information. Further, inherent bias in the construction of AI Technologies can lead
to a wide array of risks including but not limited to accuracy, efficacy and reputational harm. Therefore, it is expected that
data in such models will contain a degree of inaccuracy and error, and potentially materially so, and that such data as well as
algorithms in use could otherwise be inadequate or flawed, which would be likely to degrade the effectiveness of AI Technologies
and could adversely impact us, our sponsor, or our advisor to the extent we/they rely on the work product of such AI Technologies.
The volume and reliance on data and algorithms also make AI Technologies, and in turn us and our sponsor more susceptible to cybersecurity
threats, including the compromise of underlying models, training data, or other intellectual property. We or our sponsor could
be exposed to risks to the extent third-party service providers, or any counterparties use AI Technologies in their business activities.
At the same time, to the extent utilized by us or our advisor, any interruption of access to or use of AI Technologies could impede
the ability of us or our sponsor to generate information and analysis that could be beneficial to us/them and our/their business,
financial condition and results of operations. AI Technologies will likely also be competitive with certain business activities
or increase the obsolescence of certain organizations' products or services, particularly as AI Technologies improve. This
could also have an adverse impact on us.

 Regulations
related to AI Technologies could also impose certain obligations and costs related to monitoring and compliance. For example,
in April 2023, the Federal Trade Commission, U.S. Department of Justice, Consumer Financial Protection Bureau, and U.S. Equal
Employment Opportunity Commission released a joint statement on artificial intelligence demonstrating interest in monitoring the
development and use of automated systems and enforcement of their respective laws and regulations. In October 2023, an executive
order established new standards for AI safety and security. In addition to the U.S. regulatory framework, in 2024, the EU adopted
the Artificial Intelligence Act in 2024, which applies to certain AI Technologies and the data used to train, test and deploy
them, which may create additional compliance burdens, higher administrative costs and significant penalties should we, our sponsor
or our advisor fail to comply.

 AI
Technologies and their current and potential future applications including in the private investment and financial sectors, as
well as the legal and regulatory frameworks within which they operate, continue to rapidly evolve, and it is not possible to predict
the full extent of current or future risks related thereto.

 Our
bylaws contain provisions that may make it more difficult for a stockholder to bring a claim in a judicial forum that the stockholder
believes is favorable for disputes with us or our directors, officers, agents or employees, if any, and may discourage lawsuits
against us and our directors, officers, agents or employees, if any.

 Our
bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Circuit Court for Baltimore City,
Maryland, or, if that Court does not have jurisdiction, the United States District Court for the District of Maryland, Baltimore
Division, will be the sole and exclusive forum for: (i) any derivative action or proceeding brought on behalf of our company,
(ii) any action asserting a claim of breach of any duty owed by any of our directors or officers or employees to us or to our
stockholders, (iii) any action asserting a claim against us or any of our directors or officers or employees arising pursuant
to any provision of the Maryland General Corporation Law, or the MGCL, or our charter or bylaws or (iv) any action asserting a
claim against us or any of our directors or officers or employees that is governed by the internal affairs doctrine. Any person
or entity purchasing or otherwise acquiring or holding any interest in our shares shall be deemed to have notice of and to have
consented to these provisions of our bylaws, as they may be amended from time to time.

 Our
board of directors, without stockholder approval, adopted this provision of the bylaws so that we can respond to such litigation
more efficiently, reduce the costs associated with our responses to such litigation, particularly litigation that might otherwise
be brought in multiple forums, and make it less likely that plaintiffs' attorneys will be able to employ such litigation
to coerce us into otherwise unjustified settlements. This exclusive forum provision may limit a stockholder's ability to
bring a claim in a judicial forum that the stockholder believes is favorable for disputes with us or our directors, officers,
agents or employees, if any, and may discourage lawsuits against us and our directors, officers, agents or employees, if any.
We believe the risk of a court declining to enforce this provision is remote, as the General Assembly of Maryland has specifically
amended the MGCL to authorize the adoption of such provisions. However, if a court were to find this provision of our bylaws inapplicable
to, or unenforceable in respect of, one or more of the specified types of actions or proceedings notwithstanding that the MGCL
expressly provides that the charter or bylaws of a Maryland corporation may require that any internal corporate claim be brought
only in courts sitting in one or more specified jurisdictions, we may incur additional costs that we do not currently anticipate
associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition
and results of operations.

 Maryland
law and our organizational documents limit our stockholders' ability to amend our charter or dissolve us without the approval
of our board of directors.

 Although
the Statement of Policy Regarding Real Estate Investment Trusts published by the North American Securities Administrators Association
("NASAA") indicates that stockholders are permitted to amend our charter or terminate us without the necessity for
concurrence by our board of directors, we are required to comply with the MGCL, which provides that any amendment to our charter
or any dissolution of our company must first be declared advisable by our board of directors. Therefore, our stockholders may
vote to authorize the amendment of our charter or the dissolution of our company, but only after such action has been declared
advisable by our board of directors. Accordingly, the only proposals to amend our charter or to dissolve our company that will
be presented to our stockholders will be those that have been declared advisable by our board of directors and also require approval
by our stockholders.

 RISKS
RELATED TO CONFLICTS OF INTEREST

 We
depend on our advisor and its key personnel and our business could suffer if any of such key personnel were to cease to be affiliated
with our advisor.

 We
depend upon the performance of our advisor in the acquisition, disposition and management of real estate assets and the determination
of any financing arrangements. In addition, our success depends to a significant degree upon the continued contributions of certain
of the key personnel of our sponsor, including Brett C. Moody and Robert W. Engel, each of whom would be difficult to replace.
We currently do not have key man life insurance on any of these key personnel. If our advisor were to lose the benefit of the
experience, efforts and abilities of one or more of these individuals, our operating results could suffer.

 We
may compete with affiliates of our sponsor for opportunities to acquire or sell investments, which may have an adverse impact
on our operations.

 We
may compete with affiliates of our sponsor for opportunities to acquire or sell hospitality properties. We may also buy or sell
hospitality properties at the same time as affiliates of our sponsor. In this regard, there is a risk that our sponsor will select
for us investments that provide lower returns to us than investments purchased by its affiliates. Certain of our affiliates own
or manage hospitality properties in geographical areas in which we expect to own hospitality properties. As a result of our potential
competition with affiliates of our sponsor, certain investment opportunities that would otherwise be available to us may not in
fact be available. This competition may also result in conflicts of interest that are not resolved in our favor.

 The
time and resources that affiliates of our sponsor devote to us may be diverted, and we may face additional competition due to
the fact that affiliates of our sponsor are not prohibited from raising money for, or managing, another entity that makes the
same types of investments that we target.

 Affiliates
of our sponsor are not prohibited from raising money for, or managing, another investment entity that makes the same types of
investments as those we target. For example, our advisor's management team has successfully completed over 40 fully subscribed
private placements in real estate programs of multiple property types with over 1000 investors across the United States and one
public, non-listed REIT, Moody I, which terminated its primary offering on October 12, 2015 and which raised approximately $132
million. As a result, the time and resources they could devote to us may be diverted to other investment activities. Additionally,
some of our officers serve as officers of investment entities sponsored by our sponsor and its affiliates. Since these professionals
engage in and will continue to engage in other business activities on behalf of themselves and others, these professionals will
face conflicts of interest in allocating their time among us, our advisor, and its affiliates and other business activities in
which they are involved. This could result in actions that are more favorable to other affiliates of our advisor than us.

 In
addition, as noted above, we may compete with affiliates of our advisor for the same investors and investment opportunities. We
may also co-invest with any such affiliate. Even though all such co-investments will be subject to approval by our independent
directors, they could be on terms not as favorable to us as those we could achieve co-investing with a third-party.

 Our
advisor and its affiliates, including our officers and some of our directors, face conflicts of interest caused by compensation
arrangements with us and other affiliates of our sponsor, which could result in actions that are not in the best interests of
our stockholders.

 Our
advisor and its affiliates receive substantial fees from us in return for their services and these fees could influence the advice
provided to us. Among other matters, the compensation arrangements could affect their judgment with respect to:

 public
 offerings of equity by us, which allow our dealer manager to earn additional dealer manager
 fees;

 real
 estate acquisitions, which allow our advisor to earn acquisition fees upon purchases
 of assets and to increase asset management fees;

 real
 estate asset sales, since the asset management fees payable to our advisor will decrease
 and since our advisor will be entitled to disposition fees upon sales;

 the
 purchase of real estate assets from our sponsor and its affiliates, which may allow our
 advisor or its affiliates to earn additional asset management fees, hotel management
 fees and disposition fees; and

 and when we seek to list our common stock on a national securities exchange, which listing
 could entitle Moody LPOP II, as the holder of special limited partnership interests,
 to have its interests in our operating partnership redeemed.

 Further,
our advisor may recommend that we invest in a particular asset, pay a higher purchase price for the asset or use higher leverage
to acquire an asset than it would otherwise recommend if it did not receive an acquisition fee. Certain potential acquisition
fees and asset management fees payable to our advisor and hotel management and leasing fees payable to the property manager would
be paid irrespective of the quality of the underlying real estate or hotel management services during the term of the related
agreement. These fees may incentivize our advisor to recommend transactions with respect to the sale of a property or properties
that may not be in our best interest at the time. Investments with higher net operating income growth potential are generally
riskier or more speculative. In addition, the premature sale of an asset may add concentration risk to the portfolio or may be
at a price lower than if we held on to the asset. Our advisor will have considerable discretion with respect to the terms and
timing of acquisition, disposition and leasing transactions. In evaluating investments and other management strategies, the opportunity
to earn these fees may lead our advisor to place undue emphasis on criteria relating to its compensation at the expense of other
criteria, such as the preservation of capital, to achieve higher short-term compensation. Considerations relating to our affiliates'
compensation from us and other affiliates of our sponsor could result in decisions that are not in the best interests of our stockholders.

 Our
advisor may have conflicting fiduciary obligations if we acquire assets from affiliates of our sponsor or enter into joint ventures
with affiliates of our sponsor. As a result, in any such transaction we may not have the benefit of arm's-length negotiations
of the type normally conducted between unrelated parties.

 Our
advisor may cause us to invest in a property owned by, or make an investment in equity securities in or real estate-related loans
to, our sponsor or its affiliates or through a joint venture with affiliates of our sponsor. In these circumstances, our advisor
will have a conflict of interest when fulfilling its fiduciary obligation to us. In any such transaction, we would not have the
benefit of arm's-length negotiations of the type normally conducted between unrelated parties.

 The
fees we pay to affiliates in connection with our public offering and in connection with the acquisition and management of our
investments were not determined on an arm's-length basis; therefore, we do not have the benefit of arm's-length negotiations
of the type normally conducted between unrelated parties.

 The
fees to be paid to our advisor, our property manager, our sub-property managers (if any) and other affiliates for services they
provide for us were not determined on an arm's-length basis. As a result, the fees have been determined without the benefit
of arm's-length negotiations of the type normally conducted between unrelated parties and could be in excess of amounts
that we would otherwise pay to third parties for such services.

 We
may purchase real estate assets from third parties who have existing or previous business relationships with affiliates of our
advisor, and, as a result, in any such transaction, we may not have the benefit of arm's-length negotiations of the type
normally conducted between unrelated parties.

 We
may purchase assets from third parties that have existing or previous business relationships with affiliates of our advisor. The
officers, directors or employees of our advisor and its affiliates and the principals of our advisor who also perform services
for other affiliates of our sponsor may have a conflict in representing our interests in these transactions on the one hand and
the interests of such affiliates in preserving or furthering their respective relationships on the other hand. In any such transaction,
we will not have the benefit of arm's-length negotiations of the type normally conducted between unrelated parties, and
the purchase price or fees paid by us may be in excess of amounts that we would otherwise pay to third parties.

 RISKS
RELATED TO INVESTMENTS IN REAL ESTATE

 The
hospitality industry is subject to unique risks that may negatively impact our business.

 Our
hotel properties are subject to the risks inherent to the hotel industry. These risks, which may adversely affect the occupancy
of our hotels properties, the rates that can be charged for rooms at our hotel properties, the operating expenses of our hotel
properties and the revenues generated by our hotel properties, include:

 changes
 in global, national, regional or local economic, demographic or capital market conditions,
 including low consumer confidence, increases in unemployment levels and depressed real
 estate prices resulting from the severity and duration of any downturn in the United
 States or global economy, including any recession which results in significant employment
 losses across many sectors of the economy and reduced levels of consumer spending and
 travel, and actual or perceived instability in the U.S. banking system;

 decreased
 corporate or government travel-related budgets and spending, as well as cancellations,
 deferrals or renegotiations of group business such as industry conventions;

 statements,
 actions or interventions by governmental officials related to travel and corporate travel-related
 activities and the resulting negative public perception of such travel and activities;

 the
 financial and general business condition of the airline, automotive and other transportation-related
 industries and its effect on travel, including decreased airline capacity and routes
 and increased travel costs;

 events
 or conditions beyond our control that negatively shape public perception of business
 and leisure travel, make travel more difficult or prevent travel altogether or result
 in temporary closures or other disruption at hotel properties, including natural disasters,
 extreme weather conditions, acts of terrorism, war and outbreaks of contagious disease
 such as the global COVID-19 pandemic;

 cyberattacks;

 climate
 change or availability of natural resources;

 organized
 labor activities, which could cause a diversion of business from hotels involved in labor
 negotiations and loss of business for hotels generally as a result of certain labor tactics;
 and

 other
 changes in the overall demand for hotel rooms, including increases in supply of hotel
 rooms that exceed increases in demand, changes in the desirability of particular locations
 or changes to the travel patterns of customers.

 The
COVID-19 pandemic had an adverse effect on our financial condition and operating results.

 The
global COVID-19 pandemic had a significant adverse effect on our financial condition and operating results.

 COVID-19
dramatically reduced travel, which had an unprecedented adverse impact on the hotel industry. As a result, the COVID-19 pandemic
had a significant adverse effect on the operating results of our hotel properties, which depend primarily upon revenues driven
by business and leisure travel, and on our business, financial performance and operating results. Since March 2020, we experienced
a significant decline in bookings, occupancy and revenues across our hotel properties. Our hotel properties operated at a property
net operating loss since the outbreak of COVID-19, which had an adverse impact on our results of operations and cash flow from
operations. In addition, we reduced certain services and amenities at our hotel properties. Although all of our hotel properties
are currently open and operational, we may be required, or elect, to temporarily suspend operations at one or more of our hotel
properties in the future depending on the continued or renewed impact of COVID-19 and its related effects. If operations at any
of our hotel properties are suspended, we cannot give any assurance as to when operations at such hotel properties will resume
at a full or reduced level.

 Each
of our hotel properties is subject to a mortgage loan secured by our ownership interest in the property. If we are unable to service
the mortgage loan secured by a hotel property due to decreased revenues generated by such property, the lender with respect to
such mortgage loan may initiate foreclosure procedures with respect to the property or initiate other available remedies. As of
the date of this Annual Report, we are current with respect to the payments due under the mortgage loans secured by our hotel
properties or are in compliance with the modified terms of certain mortgage loans as agreed to with the lenders and other accommodations.
During 2021 certain lenders agreed to limited loan modifications, including temporary deferrals of interest and principal payments
and agreements to forebear the enforcement of default remedies available under the terms of the loan documents. As of the date
of this Annual Report, no lenders accelerated the maturity of any of the loans secured by our properties or initiated foreclosure
procedures with respect to any of our properties. However, there can be no guarantee that the lenders will continue to agree to
further loan modifications or accommodations and will not elect to exercise the remedies available to them under the loan documents,
including acceleration or foreclosure actions. The exercise of any such remedies by a lender will have an adverse effect on our
financial condition and results of operations and will impair our ability to resume the payment of distributions to our stockholders.

 In
response to the COVID-19 pandemic, we terminated our public offering of common stock (including pursuant to the DRP), effective
as of March 2020. We are not currently raising capital through the sale of our securities and we do not intend to begin to do
so in the near term. We also indefinitely suspended the payment of distributions to our stockholders effective as of March 2020
and the operation of our share repurchase program effective as of April 2020. Our board of directors and our management continue
to evaluate our financial condition and the overall economic environment to determine if and when we will seek to resume raising
capital, resume the payment of distributions and reinstate our share repurchase program. Specifically, our board of directors,
in consultation with management, will continue to monitor our operations and intends to resume distributions at a time and level
determined to be prudent in relation to our other cash requirements or in order to maintain our REIT status for federal income
tax purposes. However, it is impossible to predict if or when we will be able to resume the payment of distributions or return
to normal operations.

 Ongoing
military conflicts and political instability has caused disruptions in the U.S. and global economy and may have an adverse impact
on our financial performance.

 There
are currently ongoing military conflicts between Russia and Ukraine (the "Russia-Ukraine Conflict") and between Israel
and Hamas (collectively, "Current Military Conflicts"). The Current Military Conflicts have caused, and are currently
expected to continue to cause, disruptions to global financial systems, international trade, and the transportation and energy
sectors, among other disruptions. In addition, the Current Military Conflicts have displaced millions of people, causing an acute
global refugee crisis, and have increased the threat of nuclear accidents or attacks, cyberattacks and further regional or global
conflicts (including a potential expansion of the Current Military Conflicts to other countries as well as other potential conflicts,
including, but not limited to, conflicts in other geographic locations and between other state and non-state actors), among other
potentially serious consequences.

 In
response to Russia's actions during the Russia-Ukraine Conflict, multiple countries and governing bodies, including the
United States and the European Union, have put in place global sanctions and other severe restrictions or prohibitions on the
activities of certain individuals and businesses connected to Russia or Belarus. Private companies have also implemented restrictions
that severely limit, and in some cases, reverse or cancel, business transactions in or involving certain individuals or businesses
connected to or associated with Russia or Belarus. Further, some private companies have moved to divest of Russia-based subsidiaries
and assets.

 The
ultimate impact of the Current Military Conflicts on global economic and commercial activity and conditions, and on our operations,
financial condition and performance, is impossible to predict. The Current Military Conflicts may have a significant adverse impact
on us and our investments. This impact may include reductions in revenue and growth, unexpected operational losses and liabilities
and reductions in the availability of capital. The Current Military Conflicts may also limit our ability to source, diligence
and execute new investments and to manage, finance and exit investments in the future. Developing and further governmental actions
(military or otherwise) may cause additional disruption and constrain or alter existing financial, legal and regulatory frameworks
and systems in ways that are adverse to our investment strategy, all of which could adversely affect our ability to fulfill our
investment objectives.

in national, regional or local economic, demographic or real estate market conditions may adversely affect our results of operations
and returns to our stockholders.

 We
are subject to risks generally attributable to the ownership of real estate assets, including but not limited to: changes in national,
regional or local economic, demographic or real estate market conditions; adverse domestic or global economic conditions, particularly
in the event of a recession which results in significant employment losses across many sectors of the economy and reduced levels
of consumer spending and travel; changes in supply of or demand for similar properties in an area; increased competition for real
estate assets targeted by our investment strategy; actual or perceived instability in the U.S. banking system; changes in interest
rates and availability of financing; and changes in government rules, regulations and fiscal policies, including changes in tax,
real estate, environmental and zoning laws. These conditions, or others we cannot predict, may adversely affect our results of
operations and returns to our stockholders.

 Trade
negotiations and related government actions may create regulatory uncertainty for us and our tenants and adversely affect the
profitability of investments.

 In
recent years, the U.S. government has indicated its intent to alter its approach to international trade policy and in some cases
to renegotiate, or potentially terminate, certain existing bilateral or multi-lateral trade agreements and treaties with foreign
countries, and has made proposals and taken actions related thereto. For example, the U.S. government has imposed, and may in
the future further increase, tariffs on certain foreign goods, including from China, such as steel and aluminum. Some foreign
governments, including China, have instituted retaliatory tariffs on certain U.S. goods. Most recently, the current U.S. presidential
administration has imposed or sought to impose significant increases to tariffs on goods imported into the U.S., including from
China, Canada and Mexico.

 There
is uncertainty as to further actions that may be taken under the current U.S. presidential administration with respect to U.S.
trade policy. Further governmental actions related to the imposition of tariffs or other trade barriers or changes to international
trade agreements or policies, could further increase costs, decrease margins, reduce the competitiveness of products and services
and adversely affect the revenues and profitability of companies whose businesses rely on goods imported from outside of the United
States.

 We
have established investment criteria based on certain target markets and geographic areas. If our investments are concentrated
in an area that experiences adverse economic conditions, our investments may lose value and we may experience losses.

 Our
hospitality properties are concentrated in the state of Texas and in the future may become concentrated in one or more other geographic
locations or regions. These investments carry the risks associated with significant geographical concentration. We have not established
and do not plan to establish any investment criteria to limit our exposure to these risks for future investments, and we may experience
losses as a result. A worsening of economic conditions in a geographic area in which our investments may be concentrated could
have an adverse effect on our business.

in supply of, or demand for, similar real properties in a particular area may increase the price of real properties we seek to
purchase and decrease the price of real properties when we seek to sell them.

 The
real estate industry is subject to market forces. We are unable to predict certain market changes including changes in supply
of, or demand for, similar real properties in a particular area. Any potential purchase of an overpriced asset could decrease
our rate of return on these investments and result in lower operating results and overall returns to our stockholders.

 Competition
with third parties in acquiring properties and other investments may reduce our profitability and the return on a stockholder's
investment.

 We
compete with many other entities engaged in real estate investment activities, including individuals, corporations, bank and insurance
company investment accounts, other REITs and real estate limited partnerships, many of which have greater resources than we do.
Larger REITs may enjoy significant competitive advantages that result from, among other things, a lower cost of capital and enhanced
operating efficiencies. In addition, the number of entities and the amount of funds competing for suitable investments may increase.
Any such increase would result in increased demand for these assets and therefore increased prices paid for them. If we pay higher
prices for properties and other investments, our profitability will be reduced and a stockholder may experience a lower return
on his or her investment.

 Uninsured
losses or premiums for insurance coverage relating to real property may adversely affect a stockholder's returns.

 There
are types of losses, generally catastrophic in nature, such as losses due to wars, acts of terrorism, earthquakes, floods, hurricanes,
pollution or environmental matters that are uninsurable or not economically insurable, or may be insured subject to limitations,
such as large deductibles or co-payments. Risks associated with potential acts of terrorism could sharply increase the premiums
we pay for coverage against property and casualty claims. Additionally, mortgage lenders sometimes require commercial property
owners to purchase specific coverage against terrorism as a condition for providing mortgage loans. These policies may not be
available at a reasonable cost, if at all, which could inhibit our ability to finance or refinance our properties. In such instances,
we may be required to provide other financial support, either through financial assurances or self-insurance, to cover potential
losses. Changes in the cost or availability of insurance could expose us to uninsured casualty losses. In the event that any of
our properties incurs a casualty loss which is not fully covered by insurance, the value of our assets will be reduced by any
such uninsured loss. In addition, we cannot assure stockholders that funding will be available to us for repair or reconstruction
of damaged hospitality property in the future.

 Our
hotel properties will be subject to property taxes that may increase in the future, which could adversely affect our cash flow.

 Our
hotel properties are subject to property taxes that may increase as tax rates change and as our hotel properties are assessed
or reassessed by taxing authorities. As the owner of the hotel properties, we are responsible for payment of the taxes to the
applicable government authorities. If we fail to pay any such taxes, the applicable taxing authority may place a lien on the property
and the property may be subject to a tax sale.

 Our
property manager's or sub-property manager's failure to integrate their subcontractors into their operations in an
efficient manner could reduce the return on a stockholder's investment.

 Our
property manager or sub-property manager may rely on multiple subcontractors for on-site hotel management of our properties. If
our property manager and sub-property manager are unable to integrate these subcontractors into their operations in an efficient
manner, our property manager or sub-property manager may have to expend substantial time and money coordinating with these subcontractors,
which could have a negative impact on the revenues generated from such properties.

 Actions
of joint venture partners could negatively impact our performance.

 We
may enter into joint ventures with third parties, including with entities that are affiliated with our advisor. We may also purchase
and develop properties in joint ventures or in partnerships, co-tenancies or other co-ownership arrangements with the sellers
of the properties, affiliates of the sellers, developers or other persons. Such investments may involve risks not otherwise present
with a direct investment in real estate, including, for example:

 the
 possibility that our venture partner in an investment might become bankrupt;

 that
 the venture partner may at any time have economic or business interests or goals which
 are, or which become, inconsistent with our business interests or goals;

 that
 such venture partner may be in a position to take action contrary to our instructions
 or requests or contrary to our policies or objectives;

 the
 possibility that we may incur liabilities as a result of an action taken by such venture
 partner;

 that
 disputes between us and a venture partner may result in litigation or arbitration that
 would increase our expenses and prevent our officers and directors from focusing their
 time and effort on our business;

 the
 possibility that if we have a right of first refusal or buy/sell right to buy out a venture
 partner, we may be unable to finance such a buy-out if it becomes exercisable or we may
 be required to purchase such interest at a time when it would not otherwise be in our
 best interest to do so; or

 the
 possibility that we may not be able to sell our interest in the joint venture if we desire
 to exit the joint venture.

 Under
certain joint venture arrangements, neither venture partner may have the power to control the venture and an impasse could be
reached, which might have a negative influence on the joint venture and decrease potential returns to our stockholders. In addition,
to the extent that our venture partner is an affiliate of our advisor, certain conflicts of interest will exist.

 Costs
of complying with governmental laws and regulations related to environmental protection and human health and safety may be high.

 All
real property investments and the operations conducted in connection with such investments are subject to federal, state and local
laws and regulations relating to environmental protection and human health and safety. Some of these laws and regulations may
impose joint and several liability on customers, owners or operators for the costs to investigate or remediate contaminated properties,
regardless of fault or whether the acts causing the contamination were legal.

 Under
various federal, state and local environmental laws, a current or previous owner or operator of real property may be liable for
the cost of removing or remediating hazardous or toxic substances on such real property. Such laws often impose liability whether
or not the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. In addition,
the presence of hazardous substances, or the failure to properly remediate these substances, may adversely affect our ability
to sell, rent or pledge such real property as collateral for future borrowings. Environmental laws also may impose restrictions
on the manner in which real property may be used or businesses may be operated. Some of these laws and regulations have been amended
so as to require compliance with new or more stringent standards as of future dates. Compliance with new or more stringent laws
or regulations or stricter interpretation of existing laws may require us to incur material expenditures. Future laws, ordinances
or regulations may impose material environmental liability. Additionally, our tenants' operations, the existing condition
of land when we buy it, operations in the vicinity of our real properties, such as the presence of underground storage tanks,
or activities of unrelated third parties may affect our real properties. There are also various local, state and federal fire,
health, life-safety and similar regulations with which we may be required to comply and which may subject us to liability in the
form of fines or damages for noncompliance. In connection with the acquisition and ownership of our real properties, we may be
exposed to such costs in connection with such regulations. The cost of defending against environmental claims, of any damages
or fines we must pay, of compliance with environmental regulatory requirements or of remediating any contaminated real property
could materially and adversely affect our business, lower the value of our assets or results of operations and, consequently,
lower the amounts available for distribution to our stockholders.

 The
costs associated with complying with the Americans with Disabilities Act may reduce the amount of cash available for distribution

 The
real properties in which we may invest may also be subject to the Americans with Disabilities Act of 1990, as amended, or the
ADA. Under the ADA, places of public accommodation are required to comply with federal requirements related to access and use
by disabled persons. The ADA has separate compliance requirements for "public accommodations" and "commercial
facilities" that generally require that buildings and services be made accessible and available to people with disabilities.
With respect to the properties we acquire, the ADA's requirements could require us to remove access barriers and could result
in the imposition of injunctive relief, monetary penalties or, in some cases, an award of damages. We cannot assure you that we
will be able to acquire properties that comply with the ADA or allocate the responsibility for compliance with the ADA to another
third party, such as the seller or the tenant of the property. Any monies we use to comply with the ADA will reduce the amount
of cash available for distribution to our stockholders.

 A
concentration of our investments in the hospitality industry may leave our profitability vulnerable to a downturn or slowdown
in the sector.

 Our
investments consist entirely of hospitality properties. As a result, we are subject to risks inherent in investments in a single
type of property. Because our investments are concentrated in the hospitality sector, the potential effects on our revenues, and
as a result, on cash available for distribution to our stockholders, resulting from a downturn or slowdown in the hospitality
sector will be more pronounced than if we had diversified our investments across multiple sectors. Widespread outbreaks of contagious
disease, such as the global pandemic of COVID-19, have had and in the future may continue to have a significant adverse effect
the hospitality industry, which increases the potential negative impact such outbreaks may have on our overall financial condition.

 A
possible lack of diversification within the hospitality sector increases the risk of investment.

 There
is no limit on the number of hotels of a particular hotel brand which we may acquire, or on the number of hotels we may acquire
in a specific geographic region. We have invested and plan to continue to invest primarily in the select-service hotel properties
with premier brands including, but not limited to, Marriott, Hilton, and Hyatt that are located in major metropolitan markets
in the East Coast, West Coast and Sunbelt regions of the United States. If our hotel properties become geographically concentrated,
or if we acquire a substantial number of hotel properties of a particular brand, an economic downturn in one or more of the markets
in which we have invested or a negative event relating to a brand in which we have a concentration of hotels could have an adverse
effect on our financial condition and our ability to make distributions to our stockholders.

 If
we do not successfully attract and retain franchise flagships for premier-brand, select-service hotel properties, our business
will suffer, and this result will reduce the value of your investment.

 Generally,
we must attract and retain premier-brand hospitality franchises, including, Marriott, Hilton, and Hyatt franchises, for any hotel
properties we may choose to acquire. Hospitality franchises generally require that design and quality standards be met for guest
room and common areas before a hospitality franchisor will agree to provide the franchise agreement to operate a property. Compliance
with these brand standards may impose significant costs upon us. Failure to maintain our hospitality properties in accordance
with these standards or comply with other terms and conditions of the applicable franchise agreement could result in a franchise
license being canceled. If a franchise license terminates due to our failure to make required improvements or to otherwise comply
with its terms, we may also be liable to the franchisor for a termination fee. The loss of a franchise license could materially
and adversely affect the operations or the underlying value of the hotel property because of the loss associated with the brand
recognition and the marketing support and centralized reservation systems provided by the franchisor. A loss of a franchise license
for one or more hotel properties could materially and adversely affect our results of operations, financial condition and our
cash flows, including our ability to service debt and make distributions to our stockholders.

 There
are risks associated with employing hotel employees.

 While
we do not and will not directly employ or manage the labor force at our hospitality properties, we are subject to many of the
costs and risks generally associated with the hotel labor force. Our property manager or sub-property manager (if any) is responsible
for hiring and maintaining the labor force at each of our hotel properties and for establishing and maintaining the appropriate
processes and controls over such activities. From time to time, the operations of our hotel properties may be disrupted through
strikes, public demonstrations or other labor actions and related publicity. We may also incur increased legal costs and indirect
labor costs as a result of the aforementioned disruptions, or contract disputes or other events. Significant adverse disruptions
caused by union activities or increased costs affiliated with such activities could materially and adversely affect our results
of operations, financial condition and our cash flows, including our ability to service debt and make distributions to our stockholders.

 Hospitality
properties are illiquid investments, and we may be unable to adjust our portfolio in response to changes in economic or other
conditions or sell a property if or when we decide to do so.

 Hospitality
properties are illiquid investments. We may be unable to adjust our portfolio in response to changes in economic or other conditions.
In addition, the hospitality property market is affected by many factors beyond our control, such as general economic conditions,
availability of financing, interest rates, and supply and demand. We cannot predict whether we will be able to sell any real property
for the price or on the terms set by us, or whether any price or other terms offered by a prospective purchaser would be acceptable
to us. We cannot predict the length of time needed to find a willing purchaser and to close the sale of a real property. Additionally,
we may be required to expend funds to correct defects or to make improvements before a property can be sold. We cannot assure
you that we will have funds available to correct such defects or to make such improvements.

 In
acquiring a hospitality property, we may agree to restrictions that prohibit the sale of that property for a period of time or
impose other restrictions, such as a limitation on the amount of debt that can be placed or repaid on that real property. All
these provisions would restrict our ability to sell a property, which could reduce the amount of cash available for distribution

 Our
ability to make distributions to our stockholders will depend upon the ability of hotel managers to operate our hotels effectively.

 We
expect to invest the proceeds from our public offerings primarily in additional hotel properties. To qualify as a REIT, we cannot
operate any hotel or directly participate in the decisions affecting the daily operations of any hotel. Our property manager or
a third-party property manager or sub-property manager will have direct control of the daily operations of our hotels. We will
not have the authority to directly control any particular aspect of the daily operations of any hotel ( e.g., setting room
rates). Thus, even if we believed the hotels were being operated in an inefficient or sub-optimal manner, we would not be able
to require a change to the method of operation. Our only alternative for changing the operation of the hotels would be to replace
the manager of one or more hotels in situations where the applicable management agreement permits us to terminate the existing
manager.

 Our
ability to make distributions to stockholders will be impacted by the performance of the hotel managers in generating sufficient
revenues from the hotels in excess of operating expenses. The hotel managers will be affected by factors beyond their control,
such as changes in the level of demand for rooms and related services of the hotels, their ability to maintain and increase gross
revenues and operating margins at the hotels and other factors. Therefore, any operating difficulties or other factors affecting
the hotel managers' ability to maintain and increase gross revenues and operating margins at the hotels could significantly
adversely affect our financial condition and results of operations.

 The
use of internet travel websites by customers can adversely affect our profitability.

 The
use of internet travel intermediaries by consumers may cause us to experience fluctuations in our operating performance and otherwise
adversely affect our profitability and cash flows. Our property managers will likely rely upon internet travel intermediaries
such as Travelocity.com, Expedia.com, Orbitz.com, Hotels.com and Priceline.com to generate demand for our hotel properties. As
internet bookings increase, these intermediaries may be able to obtain higher commissions, reduced room rates or other significant
contract concessions from our property managers. Moreover, some of these internet travel intermediaries are attempting to offer
hotel rooms as a commodity, by increasing the importance of price and general indicators of quality (such as "three-star
downtown hotel") at the expense of brand identification. Consumers may eventually develop brand loyalties to their reservations
system rather than the premier-brand, select-service hotel properties we intend to primarily invest in, which could have an adverse
effect on our business because we will rely heavily on brand identification. If the amount of sales made through internet intermediaries
increases significantly and our property managers fail to appropriately price room inventory in a manner that maximizes the opportunity
for enhanced profit margins, room revenues may flatten or decrease and our profitability may be adversely affected.

 Competition
in the hospitality industry and with third parties in acquiring properties may reduce our profitability and the return on a stockholder's
investment.

 The
hospitality industry is generally characterized as being intensely competitive. Any hotel in which we invest will compete with
existing and new hotels and other short-term rental competitors in their geographic markets, including with independent hotels,
hotels which are part of local or regional chains and hotels in other well-known national chains, including hotels and other short-term
rental competitors offering different types of accommodations and services. The principal competitive factors that will affect
the hotel properties in which we will seek to invest include, but are not limited to, brand recognition, location, range of services
and guest amenities and the quality and price of the rooms and services provided. Any one of the foregoing could impact our profitability
and ability to pay distributions.

 We
face significant competition for attractive hotel investment opportunities from other major real estate investors with significant
capital, including both publicly traded REITs and private institutional investment funds. Because of competition from other well-capitalized
real estate investors, we can provide no assurance that we will be able to acquire desired hotel properties. Where it is possible
to acquire desired hotel properties, we can provide no assurance that we will be able to do so on favorable terms or that such
properties will meet our return expectations or conform to our investment criteria. The competition to acquire attractive hotel
investment opportunities could have an adverse effect on our financial condition and ability to pay distributions.

 We
face possible risks associated with natural disasters and the physical effects of climate change.

 We
are subject to the risks associated with natural disasters and the physical effects of climate change, which can include more
frequent or severe storms, droughts, hurricanes and flooding, any of which could have a material adverse effect on our hotels,
operations and business. Over time, our coastal markets are expected to experience increases in storm intensity and rising sea
levels causing damage to our hotels. As a result, we could become subject to significant losses and/or repair costs that may or
may not be fully covered by insurance. Other markets may experience prolonged variations in temperature or precipitation that
may limit access to the water needed to operate our hotels or significantly increase energy costs, which may subject those hotels
to additional regulatory burdens, such as limitations on water usage or stricter energy efficiency standards. Climate change also
may affect our business by increasing the cost of (or making unavailable) property insurance on terms we find acceptable in areas
most vulnerable to such events, increasing operating costs at our hotels, such as the cost of water or energy, and requiring us
to expend funds as we seek to repair and protect our hotels against such risks. There can be no assurance that climate change
will not have a material adverse effect on our hotels, operations or business.

 RISKS
ASSOCIATED WITH REAL ESTATE SECURITIES AND DEBT-RELATED INVESTMENTS

 Disruptions
in the financial markets and deteriorating economic conditions could adversely impact the commercial mortgage market as well as
the market for debt-related investments generally, which could hinder our ability to implement our business strategy and generate
returns for our stockholders.

 As
part of our investment strategy, we may acquire real estate-related loans, real estate-related debt securities and other real
estate-related investments in the hospitality sector. The returns available to investors on these investments are determined by:
(1) the supply and demand for such investments and (2) the existence of a market for such investments, which includes the ability
to sell or finance such investments. During periods of volatility, the number of investors participating in the market may change
at an accelerated pace. As liquidity or "demand" increases, the returns available to investors will decrease. Conversely,
a lack of liquidity will cause the returns available to investors to increase. Continued or future instability may interfere with
the successful implementation of our business strategy.

 If
we make or invest in mortgage loans, our mortgage loans may be affected by unfavorable real estate market conditions, which could
decrease the value of those loans and the return on a stockholder's investment.

 If
we make or invest in mortgage loans, we will be at risk of defaults by the borrowers on those mortgage loans. These defaults may
be caused by many conditions beyond our control, including interest rate levels and local and other economic conditions affecting
real estate values. We will not know whether the values of the properties securing our mortgage loans will remain at the levels
existing on the dates of origination of those mortgage loans. If the values of the underlying properties drop, our risk will increase
because of the lower value of the security associated with such loans.

 To
the extent we make or invest in mortgage loans, our mortgage loans will be subject to interest rate fluctuations that could reduce
our returns as compared to market interest rates and reduce the value of the mortgage loans in the event we sell them; accordingly,
the value of a stockholder's investment would be subject to fluctuations in interest rates.

 To
the extent we invest in fixed-rate, long-term mortgage loans and market interest rates rise, the mortgage loans could yield a
return that is lower than then-current market rates, which would lower the proceeds we would receive in the event we sell such
assets. If market interest rates decrease, we will be adversely affected to the extent that mortgage loans are prepaid because
we may have to originate new loans at the new, lower prevailing interest rate. To the extent we invest in variable-rate loans
and interest rates decrease, our revenues will also decrease. Finally, to the extent we invest in variable-rate loans and interest
rates increase, the value of the loans we own at such time would decrease, which would lower the proceeds we would receive in
the event we sell such assets. For these reasons, if we invest in mortgage loans, our returns on those loans and the value of
a stockholder's investment will be subject to fluctuations in market interest rates.

 The
CMBS and CDOs in which we may invest are subject to several types of risks.

 Commercial
mortgage-backed securities, or CMBS, are bonds which evidence interests in, or are secured by, a single commercial mortgage loan
or a pool of commercial mortgage loans. Collateralized debt obligations, or CDOs, are a type of debt obligation that are backed
by commercial real estate assets, such as CMBS, commercial mortgage loans, B-notes, or mezzanine paper. Accordingly, the mortgage-backed
securities we may invest in are subject to all the risks of the underlying mortgage loans.

 In
a rising interest rate environment, the value of CMBS and CDOs may be adversely affected when payments on underlying mortgages
do not occur as anticipated, resulting in the extension of the security's effective maturity and the related increase in
interest rate sensitivity of a longer-term instrument. The value of CMBS and CDOs may also change due to shifts in the market's
perception of issuers and regulatory or tax changes adversely affecting the mortgage securities markets as a whole. In addition,
CMBS and CDOs are subject to the credit risk associated with the performance of the underlying mortgage properties. In certain
instances, third-party guarantees or other forms of credit support can reduce the credit risk.

 CMBS
and CDOs are also subject to several risks created through the securitization process. Subordinate CMBS and CDOs are paid interest
only to the extent that there are funds available to make payments. To the extent the collateral pool includes a large percentage
of delinquent loans, there is a risk that interest payment on subordinate CMBS and CDOs will not be fully paid. Subordinate securities
of CMBS and CDOs are also subject to greater credit risk than those CMBS and CDOs that are more highly rated.

 The
mezzanine loans in which we may invest would involve greater risks of loss than senior loans secured by income-producing real
properties.

 We
may invest in mezzanine loans that take the form of subordinated loans secured by second mortgages on the underlying real property
or loans secured by a pledge of the ownership interests of the entity owning the real property, the entity that owns the interest
in the entity owning the real property or other assets. These types of investments involve a higher degree of risk than long-term
senior mortgage lending secured by income-producing real property because the investment may become unsecured as a result of foreclosure
by the senior lender. In the event of a bankruptcy of the entity providing the pledge of its ownership interests as security,
we may not have full recourse to the assets of such entity, or the assets of the entity may not be sufficient to satisfy our mezzanine
loan. If a borrower defaults on our mezzanine loan or debt senior to our loan, or in the event of a borrower bankruptcy, our mezzanine
loan will be satisfied only after the senior debt. As a result, we may not recover some or all of our investment. In addition,
mezzanine loans may have higher loan-to-value ratios than conventional mortgage loans, resulting in less equity in the real property
and increasing the risk of loss of principal.

 We
may invest in equity of other REITs that invest in real estate as one of their core businesses and other real estate-related companies,
which subjects us to certain risks including those risks associated with an investment in our own common stock.

 We
have, and may continue to, invest in the equity securities of other REITs, including publicly-traded REITs. REITs that invest
primarily in real estate are subject to the risks of the real estate market and securities market. REITs are dependent upon specialized
management skills, have limited diversification and are, therefore, subject to risks inherent in financing a limited number of
projects. REITs may be subject to management fees and other expenses, and as a result to the extent that we invest in REITs we
will bear our proportionate share of the costs of the REITs' operations. Investing in REITs and real estate-related companies
involves certain unique risks in addition to those risks associated with investing in the real estate industry in general. The
market value of REIT shares and the ability of the REIT to distribute income may be adversely affected by several factors, including
the risks described herein that relate to an investment in our common stock. REITs depend generally on their ability to generate
cash flow to make distributions to shareholders. In addition, distributions received by us from REITs may consist of dividends,
capital gains or return of capital. Generally, dividends received by us from REIT shares and distributed to our stockholders will
not constitute "qualified dividend income" eligible for the reduced tax rate applicable to qualified dividend income.
In addition, the performance of a REIT may be affected by changes in the tax laws or by its failure to qualify for tax-free pass-through
of income.

 REITs
(especially mortgage REITs) are also subject to interest rate risk. Rising interest rates may cause REIT investors to demand a
higher annual yield, which may, in turn, cause a decline in the market price of the equity securities issued by a REIT.

 Investing
in certain REITs and real estate-related companies, which often have small market capitalizations, may also involve the same risks
as investing in other small capitalization companies. REITs and real estate-related companies may have limited financial resources
and their securities may trade less frequently and in limited volume and may be subject to more abrupt or erratic price movements
than larger company securities.

 We
will face "spread widening" risk related to our investment in securities.

 For
reasons not necessarily attributable to any of the risks set forth herein (for example, supply/demand imbalances or other market
forces), the market spreads of the securities in which we invest may increase substantially causing the securities prices to fall.
It may not be possible to predict, or to hedge against, such "spread widening" risk. In addition, mark-to-market accounting
of our investments will have an interim effect on the reported value prior to realization of an investment.

 We
may make open market purchases or invest in publicly traded securities.

 We
have, and may continue to, invest in securities that are publicly traded and are, therefore, subject to the risks inherent in
investing in public securities, including price volatility. When investing in public securities, we may be unable to obtain financial
covenants or other contractual rights, including management rights that we might otherwise be able to obtain in making privately
negotiated investments. Moreover, we may not have the same access to information in connection with investments in public securities,
either when investigating a potential investment or after making an investment, as compared to privately negotiated investments.
In addition, an investment may be sold by us to a public company where the consideration received is a combination of cash and
stock of the public company, which may, depending on the securities laws of the relevant jurisdiction, be subject to lock-up periods.

 RISKS
ASSOCIATED WITH DEBT FINANCING

 The
COVID-19 pandemic had a significant adverse effect on the hospitality industry and increased the risk that we will be unable to
satisfy our debt service obligations and become subject to foreclosure actions initiated by lenders and other adverse consequences.

 We
generally finance a portion of the purchase price of our investments by borrowing funds. Our failure to comply with the covenants
in our existing loan agreements, or inability to make required principal and interest payments, could cause a default under the
applicable loan agreement, which could result in fees, penalties and the acceleration of the outstanding debt. If a lender accelerates
the repayment of a loan due to our default, we may be required to repay such loan with capital obtained from other sources, which
may not be available to us or may only be available on unfavorable terms. If we default under a loan, we may become involved in
litigation related to matters concerning the loan and the remedies available to the lender, which could result in significant
legal costs. Additionally, defaulting under a loan may damage our reputation as a borrower and limit our ability to secure financing
on attractive terms in the future.

 Incurring
mortgage debt increases our risk of loss since our default on indebtedness secured by one of our properties may result in the
lender initiating foreclosure actions on the property. For tax purposes, a foreclosure on any of our properties will be treated
as a sale of the property for a purchase price equal to the outstanding balance of the debt secured by the mortgage. If the outstanding
balance of the debt secured by the mortgage exceeds our tax basis in the property, we will recognize taxable income on foreclosure,
but we would not receive any cash proceeds. We generally seek to obtain mortgages securing indebtedness which encumber only the
particular property to which the indebtedness relates, However, if any mortgage contains cross collateralization or cross default
provisions, a default on a single property could affect multiple properties.

 The
COVID-19 pandemic had a significant adverse effect on the hospitality industry and increased the risk that we will be unable to
satisfy our debt service obligations and become subject to foreclosure actions initiated by lenders. As of the date of this Annual
Report, we are current with respect to the payments due under the mortgage loans secured by our hotel properties or are in compliance
with the modified terms of certain mortgage loans as agreed to with the lenders and other accommodations. Certain lenders have
agreed to limited loan modifications, including temporary deferrals of interest and principal payments, and agreements to forbear
the enforcement of default remedies available under the terms of the loan documents. As of the date of this Annual Report, no
lenders have accelerated the maturity of any of the loans secured by our properties or initiated foreclosure procedures with respect
to any of our properties. However, there can be no guarantee that the lenders will continue to agree to further loan modifications
or accommodations and will not elect to exercise the remedies available to them under the loan documents, including acceleration
or foreclosure actions. The exercise of any such remedies by a lender will have an adverse effect on our financial condition and
results of operations and will impair our ability to resume the payment of distributions to our stockholders.

 Our
inability to find financing on attractive terms may make it more difficult for us to finance or refinance properties. We may be
forced to sell properties in the event that we cannot refinance the loans secured by the properties or do not otherwise have funds
available to pay off the loans upon maturity.

 If
mortgage debt is unavailable on reasonable terms as a result of increased interest rates, underwriting standards, capital market
instability or other factors, we may not be able to finance the initial purchase of properties. In addition, if we place mortgage
debt on properties, we run the risk of being unable to refinance such debt on favorable terms when the loans come due. If interest
rates are higher when we refinance debt, our income could be reduced. We may be unable to refinance debt at appropriate times,
which may require us to sell properties on terms that are not advantageous to us, or could result in the foreclosure of such properties.
If any of these events occur, our cash flow would be reduced.

 We
have placed certain of our properties on the market for sale due to uncertainty regarding our ability to refinance the mortgage
loans secured by such properties. Such properties may be sold individually or as one or more multi-property portfolios. There
can be no guarantee that we will dispose of any of such properties or when any such dispositions will occur. Four properties were
under contract for sale and classified as held for sale as of December 31, 2024, and the sale of two of those four properties
closed subsequent to December 31, 2024. Due to the maturity of the loans secured by such properties, we may be forced to dispose
of such properties on terms that are less advantageous to us than we would otherwise prefer, including for sales prices lower
than the purchase price we paid for such properties. If we are unable to dispose of such properties prior to the maturity date
of the loans secured by such properties, successfully refinance such loans or negotiate maturity date extensions or other accommodations
for such loans, the lenders may initiate foreclosure proceedings or exercise other remedies available to them under the loan documents. The
exercise of any such remedies by a lender will have an adverse effect on our financial condition and results of operations and
will adversely impact the value of an investment in our shares.

 We
are subject to risks related to bank failures.

 The
current economic and regulatory environment has raised the risk of instability in the banking sector and bank failures. We may
be affected by bank failures to the extent that our depositary accounts with a distressed bank exceed Federal Deposit Insurance
Corporation ("FDIC") limits and cannot be recovered or we have obtained a line of credit or other financing from a
distressed bank that can no longer be drawn upon. These risks can apply at the company or investment level. Our advisor intends
to mitigate these risks by limiting depositary account amounts to the FDIC ensured levels where practical and carefully monitoring
our banking relationships. Our advisor reviews all direct banking relationships as part of its ongoing diligence of our key service
providers.

 We
may not have sufficient funds to pay interest payments if interest rates increase significantly.

 Mortgage
loans we have or may in the future obtain may have variable interest rates. In response to the last global economic recession,
extraordinary monetary policy actions of the U.S. Federal Reserve and other central banking institutions, including the utilization
of quantitative easing, were taken to create and maintain a low interest rate environment. However, the U.S. Federal Reserve raised
its benchmark interest rate nine times between December 2015 and the end of 2020, including four times in 2018, each time by a
quarter of a percentage point, before reducing interest rates three times in 2019 and twice in 2020. The U.S. Federal Reserve
reduced its benchmark interest rate to 0% in March 2020 before voting in November 2020 to keep short-term interest rates anchored
in a range between 0% and 0.25%. Further, the U.S. Federal Reserve has raised interest rates repeatedly in 2022 and 2023, including
the following increases, before lowering interest rates in 2024:

 Month

 Percentage
 Increase (Decrease)

 March
 2022

 0.25%

 May
 2022

 0.50%

 June
 2022

 0.75%

 July
 2022

 0.75%

 2022

 0.75%

 November
 2022

 0.75%

 December
 2022

 0.50%

 February
 2023

 0.25%

 March
 2023

 0.25%

 May
 2023

 0.25%

 July
 2023

 0.25%

 2024

 (0.50)%

 November
 2024

 (0.25)%

 December
 2024

 (0.25)%

 Any
change in the fiscal policies or stated target interest rates of the U.S. Federal Reserve or other central banking institutions,
or market expectations of such change, are difficult to predict and may result in significantly higher long-term interest rates.
Such a transition may be abrupt and may, among other things, reduce the availability and/or increase the costs of obtaining new
debt and refinancing existing indebtedness.

 In
the event that the interest rate on any of our outstanding mortgage loans or other indebtedness increases significantly, we may
not have sufficient funds to pay the required interest payments. In such event, our continued ownership of the applicable property
that secures such loan may be threatened. Further, an increase in interest rates and adverse changes in fiscal policy or credit
market conditions could have an adverse effect on consumer spending, which could impact our revenues.

 Lenders
may require us to enter into restrictive covenants relating to our operations, which could limit our ability to make distributions

 When
providing financing, a lender may impose restrictions on us that affect our distribution and operating policies and our ability
to incur additional debt. Loan documents we enter into may contain covenants that limit our ability to further mortgage a property,
discontinue insurance coverage, or replace Moody National Advisor II, LLC as our advisor. In addition, loan documents may limit
our ability to replace a property's property manager or terminate certain operating or lease agreements related to a property.
These or other limitations may adversely affect our flexibility and our ability to achieve our investment objectives.

 Our
derivative financial instruments that we may use to hedge against interest rate fluctuations may not be successful in mitigating
our risks associated with interest rates and could reduce the overall returns on your investment.

 We
may use derivative financial instruments to hedge exposures to changes in interest rates on loans secured by our real estate assets,
but no hedging strategy can protect us completely. We cannot assure you that our hedging strategy and the derivatives that we
use will adequately offset the risk of interest rate volatility or that our hedging transactions will not result in losses. In
addition, the use of such instruments may reduce the overall return on our investments. These instruments may also generate income
that may not be treated as qualifying REIT income for purposes of the 75% or 95% REIT gross income test.

 FEDERAL
INCOME TAX RISKS

 Failure
to qualify as a REIT could adversely affect our operations and our ability to make distributions.

 We
have elected to be taxed as a REIT for our taxable year ended December 31, 2016 and will operate in a manner designed to permit
us to continue to qualify as a REIT for federal income tax purposes.

 Our
qualification as a REIT will depend on our ongoing satisfaction of numerous requirements established under highly technical and
complex provisions of the Internal Revenue Code for which there are only limited judicial or administrative interpretations and
involve the determination of various factual matters and circumstances not entirely within our control. The complexity of these
provisions and of the applicable income tax regulations that have been promulgated under the Internal Revenue Code is greater
in the case of a REIT that holds its assets through a partnership, as we do. Moreover, no assurance can be given that new legislation,
regulations, administrative interpretations or court decisions will not change the tax laws with respect to qualification as a
REIT or the federal income tax consequences of that qualification.

 If
we fail to qualify as a REIT in any taxable year for which we have elected to be taxed as a REIT and do not qualify for certain
statutory relief provisions, we would be required to pay U.S. federal income tax (and applicable state and local taxes) on our
taxable income, and distributions to our stockholders would not be deductible by us in determining our taxable income. In such
a case, we might need to borrow money or sell assets in order to pay our taxes. Our payment of income tax would decrease the amount
of our cash available for distribution to our stockholders. Furthermore, we would not be required to distribute substantially
all of our net taxable income to our stockholders. In addition, if we fail to qualify as a REIT in any taxable year for which
we have elected to be taxed as a REIT, unless we are eligible for certain statutory relief provisions, we could not re-elect to
be taxed as a REIT until the fifth calendar year following the year in which we failed to qualify. In addition, although we intend
to operate in a manner intended to qualify as a REIT, it is possible that future economic, market, legal, tax or other considerations
may cause our board of directors to recommend that we revoke our REIT election.

 We
believe that our operating partnership will be treated for federal income tax purposes as a partnership and not as an association
or as a publicly traded partnership taxable as a corporation. If the Internal Revenue Service were successfully to determine that
our operating partnership should properly be treated as a corporation, our operating partnership would be required to pay federal
income tax at corporate rates on its net income. In addition, we would fail to qualify as a REIT, with the resulting consequences
described above.

 We
may be subject to adverse legislative or regulatory tax changes that could increase our tax liability and reduce our operating
flexibility.

 In
recent years, numerous legislative, judicial and administrative changes have been made in the provisions of U.S. federal income
tax laws applicable to investments similar to an investment in shares of our common stock. The Tax Cuts and Jobs Act has resulted
in fundamental changes to the Code, with many of the changes applicable to individuals applying only through December 31, 2025.
Further changes to the tax laws, unrelated to the Tax Cuts and Jobs Act, are possible.

 Although
REITs generally receive certain tax advantages compared to entities taxed as regular corporations, it is possible that future
legislation would result in a REIT having fewer tax advantages, and it could become more advantageous for a company that invests
in real estate to elect to be treated for U.S. federal income tax purposes as a corporation. As a result, our charter authorizes
our board of directors to revoke or otherwise terminate our REIT election, without the approval of our stockholders, if it determines
that changes to U.S. federal income tax laws and regulations or other considerations mean it is no longer in our best interests
to qualify as a REIT. According to publicly released statements, a top legislative priority of President Biden's administration
and of Democrats in the Senate and the House of Representatives is significant tax increases and various other changes to U.S.
tax rules. It is unclear whether any legislation will be enacted into law or, if enacted, what form it would take, and it is also
unclear whether there could be regulatory or administrative action that could affect U.S. tax rules.

 We
cannot assure that any future changes will not adversely affect the taxation of our stockholders. Any such changes could have
an adverse effect on an investment in our shares or on the market value or the resale potential of our assets. Our stockholders
are urged to consult with their tax advisors with respect to the impact of these legislative changes on an investment in our shares
and the status of legislative, regulatory or administrative developments and proposals and their potential effect on an investment
in our shares.

 To
qualify as a REIT, we must meet annual distribution requirements, which may result in us distributing amounts that may otherwise
be used for our operations or b orrowing funds on a short-term basis during unfavorable market
conditions.

 To
qualify as a REIT, we will be required each year to distribute to our stockholders dividends equal to at least 90% of our real
estate investment trust taxable income, determined without regard to the dividends-paid deduction and excluding net capital gains.
We will be subject to federal income tax on any undistributed taxable income, including net capital gains, and to a 4% non-deductible
excise tax on any amount by which dividends we pay with respect to any calendar year are less than the sum of (1) 85% of our ordinary
income, (2) 95% of our capital gain net income and (3) 100% of our undistributed income from prior years. These requirements could
cause us to distribute amounts that otherwise would be spent on investments in real estate assets, and it is possible that we
might be required to borrow funds or sell assets to fund these distributions. If we fund distributions through borrowings, then
we will have to repay debt using money we could have otherwise used to acquire properties. If we sell assets to pay distributions,
we also will have fewer investments. Fewer investments may impact our ability to generate future cash flows from operations and,
therefore, reduce your overall return. Although we intend to make distributions sufficient to meet the annual distribution requirements
and to avoid corporate income and excise taxes, it is possible that we might not always be able to do so.

 We
may choose to pay dividends in a combination of cash and our own common stock, in which case stockholders may be required to pay
income taxes in excess of the cash dividends they receive.

 We
may choose to pay dividends in a combination of cash and our own common stock. Under IRS Revenue Procedure 2017-45, as a publicly
offered REIT, we may give stockholders a choice, subject to various limits and requirements, of receiving a dividend in cash or
in our common stock. As long as at least 20% of the total dividend is available in cash and certain other requirements are satisfied,
the IRS will treat the stock distribution as a dividend (to the extent applicable rules treat such distribution as being made
out of our earnings and profits). As a result, U.S. stockholders may be required to pay income taxes with respect to such dividends
in excess of the cash dividends they receive. In the case of non-U.S. stockholders, we generally will be required to withhold
tax with respect to the entire dividend, which withholding tax may exceed the amount of cash such non-U.S. stockholder would otherwise
receive.

 If
the leases of our hotels to the taxable REIT subsidiary ("TRS") lessee are not respected as true leases for U.S. federal
income tax purposes, we will fail to qualify as a REIT.

 To
qualify as a REIT, we must annually satisfy two gross income tests, under which specified percentages of our gross income must
be derived from certain sources, such as "rents from real property." Rents paid to our operating partnership by the
TRS lessee pursuant to the leases of our hotels will constitute substantially all of our gross income. In order for such rent
to qualify as "rents from real property" for purposes of the gross income tests, the leases must be respected as true
leases for U.S. federal income tax purposes and not be treated as service contracts, financing arrangements, joint ventures or
some other type of arrangement. If our leases are not respected as true leases for U.S. federal income tax purposes, we will fail
to qualify as a REIT.

 If
any hotel managers that we may engage do not qualify as "eligible independent contractors," or if our hotels are not
"qualified lodging facilities," we will fail to qualify as a REIT.

 Rent
paid by a lessee that is a "related party tenant" of ours generally will not be qualifying income for purposes of
the two gross income tests applicable to REITs, but an exception is provided for leases of "qualified lodging facilities"
to a TRS so long as the hotels are managed by an "eligible independent contractor" and certain other requirements
are satisfied. We expect to lease all or substantially all of our hotels to the TRS lessee, which is a disregarded subsidiary
that is intended to qualify as a TRS. We expect that the TRS lessee will engage hotel managers, including our affiliated property
manager and third-party property managers that are intended to qualify as "eligible independent contractors." Among
other requirements, in order to qualify as an eligible independent contractor, the hotel manager must not own, directly or through
its equity owners, more than 35% of our outstanding stock, and no person or group of persons can own more than 35% of our outstanding
stock and the equity interests of the hotel manager, taking into account certain ownership attribution rules. The ownership attribution
rules that apply for purposes of these 35% thresholds are complex and monitoring actual and constructive ownership of our stock
by our hotel managers and their owners may not be practical. Accordingly, there can be no assurance that these ownership levels
will not be exceeded.

 In
addition, for a hotel management company to qualify as an eligible independent contractor, such company or a related person must
be actively engaged in the trade or business of operating "qualified lodging facilities" (as defined below) for one
or more persons not related to the REIT or its TRS at each time that such company enters into a hotel management contract with
a TRS or its TRS lessee. No assurances can be provided that any hotel managers that we may engage will in fact comply with this
requirement in the future. Failure to comply with this requirement would require us to find other managers for future contracts,
and if we hired a management company without knowledge of the failure, it could jeopardize our status as a REIT.

 Finally,
each property that we lease to our TRS lessee must be a "qualified lodging facility." A "qualified lodging facility"
is a hotel, motel, or other establishment more than one-half of the dwelling units in which are used on a transient basis, including
customary amenities and facilities, provided that no wagering activities are conducted at or in connection with such facility
by any person who is engaged in the business of accepting wagers and who is legally authorized to engage in such business at or
in connection with such facility. The REIT provisions of the Internal Revenue Code provide only limited guidance for making determinations
under the requirements for qualified lodging facilities, and there can be no assurance that these requirements will be satisfied.

 Ordinary
dividends payable by REITs generally do not qualify for reduced U.S. federal income tax rates.

 The
maximum tax rate applicable to qualified dividend income payable to certain non-corporate U.S. stockholders, including individuals,
is currently 20%. Dividends paid by REITs, however, are not eligible for the reduced rates except to the extent designated as
capital gain dividends or qualified dividend income. Although this does not adversely affect the taxation of REITs or dividends
payable by REITs, the more favorable rates applicable to regular corporate qualified dividends could cause certain non-corporate
investors to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations
that pay dividends, which could adversely affect the value of the shares of REITs, including our common stock. However, for taxable
years through the taxable year ending December 31, 2025, non-corporate U.S. taxpayers may be entitled to claim a deduction in
determining their taxable income of up to 20% of "qualified REIT dividends" (dividends not designated as capital gain
dividends or qualified dividend income), subject to certain limitations.

 Recharacterization
of sale-leaseback transactions may cause us to lose our REIT status.

 We
may purchase real properties and lease them back to the sellers of such properties. We cannot guarantee that the Internal Revenue
Service will not challenge our characterization of any sale-leaseback transactions. In the event that any such sale-leaseback
transaction is challenged and recharacterized as a financing transaction or loan for federal income tax purposes, deductions for
depreciation and cost recovery relating to such property would be disallowed. If a sale-leaseback transaction were so recharacterized,
we might fail to satisfy the REIT qualification "asset tests" or the "gross income tests" and, consequently,
lose our REIT status. Alternatively, the amount of our REIT taxable income could be recalculated which might also cause us to
fail to meet the distribution requirement for a taxable year.

 You
may have current tax liability on distributions if you elect to reinvest in shares of our common stock.

 If
you participate in our distribution reinvestment plan, you will be deemed to have received a cash distribution equal to the fair
market value of the stock received pursuant to our distribution reinvestment plan, which will be taxed as a dividend to the extent
of our current or accumulated earnings and profits. As a result, unless you are a tax-exempt entity, you may have to use funds
from other sources to pay your tax liability on the value of the common stock received. Our distribution reinvestment plan is
currently suspended.

 Restrictions
on deduction of all of our interest expense could prevent us from satisfying the REIT distribution requirements and avoiding incurring
income or excise taxes.

 Rules
enacted as part of the Tax Cuts and Jobs Act may limit our ability (and the ability of entities that are not treated as disregarded
entities for U.S. federal income tax purposes and in which we hold an interest) to deduct interest expense. Under amended Section
163(j) of the Internal Revenue Code, the deduction for business interest expense may be limited to the amount of the taxpayer's
business interest income plus 30% of the taxpayer's "adjusted taxable income" unless the taxpayer's gross
receipts do not exceed $25 million per year during the applicable testing period or the taxpayer qualifies to elect and elects
to be treated as an "electing real property trade or business." A taxpayer's adjusted taxable income will start
with its taxable income and add back items of non-business income and expense, business interest income and business interest
expense, net operating losses, any deductions for "qualified business income," and, in taxable years beginning before
January 1, 2022, any deductions for depreciation, amortization or depletion. A taxpayer that is exempt from the interest expense
limitations as an electing real property trade or business is ineligible for certain expensing benefits and is subject to less
favorable depreciation rules for real property. The new rules for business interest expense will apply to us and at the level
of each entity in which or through which we invest that is not a disregarded entity for U.S. federal income tax purposes. To the
extent that our interest expense is not deductible, our taxable income will be increased, as will our REIT distribution requirements
and the amounts we need to distribute to avoid incurring income and excise taxes.

 Sales
of our properties at gains are potentially subject to the prohibited transaction tax, which could reduce the return on your investment.

 Our
ability to dispose of property is restricted as a result of our REIT status. Under applicable provisions of the Internal Revenue
Code regarding prohibited transactions by REITs, we will be subject to a 100% tax on any gain realized on the sale or other disposition
of any property (other than foreclosure property) we own, directly or through a subsidiary entity, including our operating partnership,
but excluding our TRS's, that is deemed to be inventory or property held primarily for sale to customers in the ordinary
course of trade or business unless a safe harbor applies under the Internal Revenue Code. Whether property is inventory or otherwise
held primarily for sale to customers in the ordinary course of a trade or business depends on the particular facts and circumstances
surrounding each property.

 In
certain circumstances, we may be subject to federal and state taxes as a REIT, which would reduce our cash available for distribution
to you.

 Even
if we maintain our status as a REIT, we may be subject to federal and state taxes. For example, net income from a "prohibited
transaction" will be subject to a 100% tax. We may not be able to make sufficient distributions to avoid income and/or excise
taxes applicable to REITs. If we were to fail either gross income test (and did not lose our REIT status because such failure
was due to reasonable cause and not willful neglect), we would be subject to tax on the income that does not meet the gross income
test requirements. We may also decide to retain capital gains we earn from the sale or other disposition of our real estate assets
and pay income tax directly on such income. We may also be subject to state and local taxes on our income or property, either
directly or at the level of the companies through which we indirectly own our assets. In addition, our TRS will be subject to
federal income tax and applicable state and local taxes on its net income. Any federal or state taxes we pay will reduce our cash
available for distribution to you.

 Distributions
to tax-exempt investors may be classified as unrelated business taxable income.

 Neither
ordinary nor capital gain distributions with respect to our common stock nor gain from the sale of common stock should generally
constitute unrelated business taxable income to a tax-exempt investor. However, there are certain exceptions to this rule. In
particular:

 part
 of the income and gain recognized by certain qualified pension trusts with respect to
 our common stock may be treated as unrelated business taxable income if we are a "pension-held
 REIT," which should not be the case;

 part
 of the income and gain recognized by a tax-exempt investor with respect to our common
 stock would constitute unrelated business taxable income if the investor incurs debt
 to acquire the common stock; and

 part
 or all of the income or gain recognized with respect to our common stock by social clubs,
 voluntary employee benefit associations, supplemental unemployment benefit trusts and
 qualified group legal services plans which are exempt from federal income taxation under
 Sections 501(c)(7), (9), (17), or (20) of the Internal Revenue Code may be treated as
 unrelated business taxable income.

 Complying
with the REIT requirements may cause us to forego otherwise attractive opportunities.

 To
qualify as a REIT for federal income tax purposes, we must continually satisfy tests concerning, among other things, the sources
of our income, the nature and diversification of our assets, the amounts we distribute to our stockholders and the ownership of
shares of our common stock. We may be required to make distributions to stockholders at disadvantageous times or when we do not
have funds readily available for distribution. Thus, compliance with the REIT requirements may hinder our ability to operate solely
on the basis of maximizing profits.

 Complying
with the REIT requirements may force us to liquidate otherwise attractive investments.

 To
qualify as a REIT, we must ensure that at the end of each calendar quarter, at least 75% of the value of our assets consists of
cash, cash items, government securities and qualified real estate assets, including shares of stock in other REITs and certain
mortgage loans and mortgage-backed securities. The remainder of our investment in securities (other than government securities,
qualified real estate assets and securities of our TRSs) generally cannot include more than 10% of the outstanding voting securities
of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer. In addition, in general,
no more than 5% of the value of our assets (other than government securities, qualified real estate assets and securities of our
TRSs) can consist of the securities of any one issuer. No more than 20% of the value of our total securities can be represented
by securities of one or more TRSs. Finally, no more than 25% of our assets may consist of "nonqualified publicly offered
REIT debt instruments." If we fail to comply with these requirements at the end of any calendar quarter, we must correct
such failure within 30 days after the end of the calendar quarter to avoid losing our REIT status and suffering adverse tax consequences.
As a result, we may be required to liquidate otherwise attractive investments.

 Liquidation
of assets may jeopardize our REIT status.

 To
qualify as a REIT, we must comply with requirements regarding our assets and our sources of income. If we are compelled to liquidate
any investments we make to satisfy our obligations to our lenders, we may be unable to comply with these requirements, ultimately
jeopardizing our status as a REIT, or we may be subject to a 100% tax on any resultant gain if we sell assets that are treated
as dealer property or inventory.

 The
failure of a mezzanine loan to qualify as a real estate asset could adversely affect our ability to qualify as a REIT.

 We
may acquire mezzanine loans. If a mezzanine loan satisfies an Internal Revenue Service safe harbor, the mezzanine loan will be
treated as a real estate asset for purposes of the REIT asset tests and interest derived from the mezzanine loan will be treated
as qualifying mortgage interest for purposes of the REIT 75% gross income test. Although the Revenue Procedure provides a safe
harbor on which taxpayers may rely, it does not prescribe rules of substantive tax law. We intend to make investments that comply
with the various requirements applicable to our qualification as a REIT. We may, however, acquire mezzanine loans that do not
meet all of the requirements of this safe harbor. In the event we own a mezzanine loan that does not meet the safe harbor, the
Internal Revenue Service could challenge such loan's treatment as a real estate asset for purposes of the REIT asset tests
and could challenge treatment of interest on such loan as qualifying income for purposes of the 75% gross income test, and, if
such a challenge were sustained, we could fail to qualify as a REIT.

 The
use of a TRS will increase our overall tax liability.

 Our
domestic TRS will be subject to federal and state corporate income tax on its taxable income. Accordingly, although our ownership
of a TRS lessee allows us to participate in the operating income from any hotel properties that may be acquired in addition to
receiving rent, that operating income is fully subject to corporate income tax. Such taxes could be substantial. In addition,
special taxes apply to non-arm's length transactions with our TRSs. We will be required to pay a 100% tax on any redetermined
rents, redetermined deductions, excess interest and redetermined TRS service income. In general, redetermined rents are rents
from real property that are overstated as a result of services furnished by our TRS. Redetermined deductions and excess interest
generally represent amounts that are deducted by a TRS for amounts paid to us that are in excess of the amounts that would have
been deducted based on arm's-length negotiations. Redetermined TRS service income generally means the additional gross income
a TRS would recognize if it were paid an arm's length fee for services provided to, or on behalf of, us.

 Non-U.S.
investors may be subject to U.S. federal income tax on the sale of shares of our common stock if we are unable to qualify as a
domestically controlled REIT and generally will be subject to U.S. federal income tax on capital gain dividends.

 A
non-U.S. person disposing of a U.S. real property interest, including shares of a U.S. corporation whose assets consist principally
of U.S. real property interests, is generally subject to U.S. federal income tax on the gain recognized on such disposition. A
non-U.S. stockholder generally would not be subject to U.S. federal income tax, however, on gain from the disposition of stock
in a REIT if the REIT is a domestically controlled REIT. A domestically controlled REIT is a REIT in which, at all times during
a specified testing period, less than 50% in value of its shares is held directly or indirectly by non-U.S. stockholders. We cannot
assure you that we will qualify as a domestically controlled REIT. If we were to fail to so qualify, gain realized by a non-U.S.
investor on a sale of our common stock would be subject to U.S. federal income tax unless our common stock was traded on an established
securities market, which is not currently the case, and the non-U.S. investor did not at any time during a specified testing period
directly or indirectly own more than 10% of the value of our outstanding common stock. In addition, if a non-U.S. person receives
a dividend that is attributable to gains from our sale of a U.S. real property interest, such non-U.S. person generally will be
required to report such dividend on a U.S. federal income tax return and pay U.S. federal income tax at regular U.S. federal income
tax rates and a 30% branch profits tax in the case of a non-U.S. corporation unless an applicable tax treaty provides an exemption
from, or lower rate of, branch profits tax.

 If
our operating partnership failed to qualify as a partnership or is not otherwise disregarded for U.S. federal income tax purposes,
we would cease to qualify as a REIT.

 If
the IRS were to successfully challenge the status of our operating partnership as a partnership or disregarded entity for U.S.
federal income tax purposes, it would be taxable as a corporation. In the event that this occurs, it would reduce the amount of
distributions that the operating partnership could make to us. This would also result in our failing to qualify as a REIT and
becoming subject to a corporate-level tax on our income, which would substantially reduce our cash available to pay distributions
and the yield on an investment in our stock.

 There
may be tax consequences to any modifications to our borrowings, our hedging transactions and other contracts to replace references
to LIBOR.

 We
may be party to loan agreements with LIBOR-based interest rates and derivatives with LIBOR-based terms used for hedging and may
hold or acquire assets with LIBOR-based terms. We may have to renegotiate such LIBOR-based instruments to replace references to
LIBOR. Under current law, certain modifications of terms of LIBOR-based instruments may have tax consequences, including deemed
taxable exchanges of the pre-modification instrument for the modified instrument. Proposed Treasury Regulations have been issued
that would treat certain modifications that would be taxable events under current law as non-taxable events. The proposed Treasury
Regulations also would permit real estate mortgage investment conduits ("REMICs") to make certain modifications without
losing REMIC qualification. The proposed Treasury Regulations do not discuss REIT-specific issues of modifications to LIBOR-based
instruments. It is not clear when the proposed Treasury Regulations will be finalized or what, if any, changes will be made to
the proposed Treasury Regulations in final Treasury Regulations. We will attempt to migrate to a post-LIBOR environment without
jeopardizing our REIT qualification or suffering other adverse tax consequences but can give no assurances that we will succeed.

 Our
board of directors is authorized to revoke our REIT election without stockholder approval, which may cause adverse consequences

 Our
charter authorizes our board of directors to revoke or otherwise terminate our REIT election, without the approval of our stockholders,
if it determines that changes to U.S. federal income tax laws and regulations or other considerations mean it is no longer in
our best interests to qualify as a REIT. Our board of directors has fiduciary duties to us and our stockholders and could only
cause such changes in our tax treatment if it determines in good faith that such changes are in our best interests and in the
best interests of our stockholders. In this event, we would become subject to U.S. federal income tax on our taxable income, and
we would no longer be required to distribute most of our net income to our stockholders, which may cause a reduction in the total
return to our stockholders.

 RETIREMENT
PLAN RISKS

 There
are special considerations for pension or profit-sharing or 401(k) plans, health or welfare plans or individual retirement accounts
whose assets are being invested in our common stock due to requirements under ERISA and the Internal Revenue Code. Furthermore,
a person acting on behalf of a plan not subject to ERISA may be subject to similar penalties under applicable federal, state,
local, or non-U.S. law by reason of purchasing our stock.

 A
stockholder that is investing the assets of a pension, profit sharing or 401(k) plan, health or welfare plan, or an IRA, or other
plan or arrangement subject to ERISA or Section 4975 of the Internal Revenue Code in us, should consider:

 the investment is consistent with the applicable provisions of ERISA and the Internal
 Revenue Code;

 the investment is made in accordance with the documents and instruments governing the
 applicable plan, IRA, or other arrangement, including the investment policy;

 the investment satisfies the prudence, diversification, and other applicable fiduciary
 requirements in Section 404(a) of ERISA;

 the investment will impair the liquidity of the plan, IRA, or other arrangement;

 the investment will produce unrelated business taxable income, referred to as UBTI and
 as defined in Sections 511 through 514 of the Internal Revenue Code, to the plan;

 the
 need to value the assets of the plan annually; and

 the investment will constitute a prohibited transaction under Section 406 of ERISA or
 Section 4975 of the Internal Revenue Code.

 Such
a stockholder should consider whether an investment in us will cause some or all of our assets to be considered assets of an employee
benefit plan, IRA, or other arrangement. We do not believe that under ERISA and U.S. Department of Labor regulations currently
in effect that our assets would be treated as "plan assets" for purposes of ERISA, although there can be no assurances.
However, if our assets were considered to be plan assets, transactions involving our assets would be subject to ERISA and Section
4975 of the Internal Revenue Code and some of the transactions we have entered into with our advisor and its affiliates could
be considered "prohibited transactions," under ERISA or the Internal Revenue Code. If such transactions were considered
"prohibited transactions," our advisor and its affiliates could be subject to liabilities and excise taxes or penalties.
In addition, our officers and directors, our advisor and its affiliates could be deemed to be fiduciaries under ERISA, subject
to other conditions, restrictions and prohibitions under Part 4 of Title I of ERISA and those serving as fiduciaries of plans
investing in us may be considered to have improperly delegated fiduciary duties to us. Additionally, other transactions with "parties-in-interest"
or "disqualified persons" with respect to an investing plan might be prohibited under ERISA, the Internal Revenue
Code or other governing authority in the case of a government plan. Therefore, we would be operating under a burdensome regulatory
regime that could limit or restrict investments we can make or our management of our real estate assets. Even if our assets are
not considered to be plan assets, a prohibited transaction could occur if we or any of our affiliates is a fiduciary (within the
meaning of ERISA) with respect to an employee benefit plan purchasing shares and, therefore, in the event any such persons are
fiduciaries (within the meaning of ERISA) of your plan or IRA, such stockholder should not hold our shares unless an administrative
or statutory exemption applies to your purchase.

 Failure
to satisfy the fiduciary standards of conduct and other requirements of ERISA, the Internal Revenue Code, or other applicable
statutory or common law may result in the imposition of civil (and criminal, if the violation was willful) penalties, and can
subject the fiduciary to equitable remedies and/or damages. In addition, if an investment in our common stock constitutes a prohibited
transaction under ERISA or the Internal Revenue Code, the fiduciary that authorized or directed the investment may be subject
to the imposition of excise taxes with respect to the amount invested. Furthermore, to the extent that the assets of a plan or
arrangement not subject to the fiduciary provisions of ERISA (for example, governmental plans, non-electing church plans, and
foreign plans) will be used to purchase our stock, such plans should consider the impact of applicable federal, state, local,
or non-U.S. law on the decision to make such purchase.

 If
we were at any time deemed to hold "plan assets" under ERISA or the Internal Revenue Code, stockholders subject to
ERISA and the related excise tax provisions of the Internal Revenue Code may be subject to adverse financial and legal consequences.

 Stockholders
subject to ERISA or the Internal Revenue Code should consult their own advisors as to the effect of an investment in the shares.
As discussed under "Certain ERISA Considerations," our assets may be deemed to constitute "plan assets"
of stockholders that are subject to the fiduciary provisions of ERISA or the prohibited transaction rules of Section 4975 of the
Internal Revenue Code ("Plans"). If we were deemed to hold "plan assets" of Plans, (i) ERISA's fiduciary
standards would apply to, and might materially affect, our operations if any such Plans are subject to ERISA and (ii) any transaction
we enter into could be deemed a transaction with each Plan and transactions we might enter into in the ordinary course of business
could constitute prohibited transactions under ERISA and/or Section 4975 of the Internal Revenue Code. Holding plan assets may
negatively impact our results.

 ITEM
 1B.
 Unresolved
 Staff Comments

 None.

 ITEM
 1C.
 Cybersecurity

 Cybersecurity Risk Management Processes for Assessing, Identifying, and Managing Threats [Text Block]

 With
oversight from our board of directors, our advisor and our senior management have implemented an enterprise-wide information security
program designed to identify, protect against, detect, assess, respond to, and manage reasonably foreseeable cybersecurity risks
and threats. Our cybersecurity processes have been integrated into our overall risk management system. To protect our information
systems from cybersecurity threats, our advisor uses various security tools that help prevent, identify, escalate, investigate,
resolve and recover from identified vulnerabilities and security incidents in a timely manner. These include, but are not limited
to, internal reporting and monitoring and detection tools. Our advisor also employs third parties to identify, prioritize, assess,
mitigate and remediate information system risks; however, our advisor relies on such third parties to implement security programs
commensurate with their risk, and our advisor cannot ensure in all circumstances that their efforts will be successful.

 Our
advisor regularly assesses risks from cybersecurity and technology threats and monitors our information systems for potential
vulnerabilities. Our advisor uses a risk quantification model to identify, measure and prioritize cybersecurity and technology
risks and develop related security controls and safeguards. Our advisor conducts regular reviews and tests of our information
security program to evaluate the effectiveness of our information security program and improve our security measures and planning.
The results of these assessments are reported to our senior management.

 Our
and our advisor's systems could potentially experience directed attacks intended to lead to interruptions and delays in
our operations as well as loss, misuse or theft of personal information (of third parties, employees, and our members) and other
data, confidential information or intellectual property. Any significant disruption to our or our advisor's operations or
access to our or our advisor's systems could adversely affect our business and results of operation. Further, a penetration
of our or our advisor's systems or a third-party's systems or other misappropriation or misuse of personal information
could subject our advisor or us to business, regulatory, litigation and reputation risk, which could have a negative effect on
our business, financial condition and results of operations. See " Risk Factors - Operational risks,
including the risk of cyberattacks, may disrupt our businesses, result in losses or limit our growth. "

 Cybersecurity Risk Board of Directors Oversight [Text Block]

 Our
advisor's Vice President - Communications leads our advisor's information security group responsible for overseeing
our information security program. Our advisor's Vice President - Communications has over 18 years of industry experience.
Team members who support our advisor's information security program have relevant educational and industry experience. The
teams, led by our advisor's Vice President – Communications, provide regular reports to our senior management and
other relevant teams on various cybersecurity threats, assessments and findings. Our board of directors receives updates regarding
cybersecurity issues as and when deemed necessary by our senior management.

 Senior
management oversees our annual enterprise risk assessment, where we assess key risks within our company, including security and
technology risks and cybersecurity threats, oversees our cybersecurity risk, and receives regular reports from our Vice President
- Communications on various cybersecurity matters, including risk assessments, mitigation strategies, areas of emerging risks,
incidents and industry trends, and other areas of importance.

 ITEM
 2.
 Properties

 As
of December 31, 2024, we owned interests in fourteen hotel properties located in six states with a total of 2,028 rooms. During
2025, we have sold three of the properties that we held as of December 31, 2024, as discussed herein. For more information on
our hotel properties see Part I, Item 1, "Business—Investment Portfolio."

 Our
principal executive offices are located at 9655 Katy Freeway, Suite 600, Houston, Texas 77024. We consider these facilities to
be suitable and adequate for the management and operations of our business.

 ITEM
 3.
 Legal
 Proceedings

 From
time to time, we are party to legal proceedings that arise in the ordinary course of our business. Management is not aware of
any pending or contemplated legal proceedings the outcome of which is or would be reasonably likely to have a material adverse
effect on our results of operations or financial condition.

 ITEM
 4.
 Mine
 Safety Disclosures

 Not
applicable.

 PART
II

 ITEM
 5.
 for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases
 of Equity Securities

 Stockholder

 As
of March 26, 2025, there were 13,640,429 shares of our common stock issued and outstanding, consisting of 13,000,645 shares of
Class A common stock, 159,092 shares of Class I common stock, and 480,692 shares of Class T common stock, held by a total of approximately
7,200 stockholders. The number of stockholders is based on the records of DST Systems, Inc., which serves as our transfer agent.

 Our
shares of common stock are not currently listed on a national securities exchange or any over-the-counter market and there is
no established public trading market for our common stock. We do not expect our shares to become listed in the near future, and
they may not become listed at all. Consequently, there is the risk that our stockholders may not be able to sell their shares
at a time or price acceptable to them. Our charter does not require our board to pursue a liquidity event at any particular time,
or at all. However, we expect that our board will determine to pursue a liquidity event when it believes that the then-current
market conditions are favorable for a liquidity event and that such a transaction is in the best interests of our stockholders.
A liquidity event could include (1) the sale of all or substantially all of our assets either on a portfolio basis or individually
followed by a liquidation, (2) a merger or another transaction approved by our board in which our stockholders will receive cash
or shares of a publicly traded company, or (3) a listing of our shares on a national securities exchange. There can be no assurance
as to when a suitable transaction will be available.

 Estimated
Net Asset Value per Share

 Our
board of directors has historically determined an estimated NAV per share of each class of our common stock as of December 31st
of each year. On March 26, 2024, our board of directors, including all of our independent directors, determined an estimated NAV
per share of our Class A Shares, Class I Shares and Class T Shares as of December 31, 2023 of $17.25. Our board of directors expected
to determine a new NAV per share for each class of our common stock as of December 31, 2024 in accordance with our historical
practice. However, our board of directors has determined that it is not in our best interests to incur the significant expense
of determining as estimated NAV per share of our common stock as of December 31, 2024. In making such determination, our board
of directors considered, among other factors, our reduced cash flows and the demands of our debt service obligations and other
critical operating expenses and the volatility and lack of liquidity in the commercial real estate market which makes accurate
property values difficult to discern. As of the date of this Annual Report our board of directors remains unable to determine
an updated estimated NAV per share. We cannot provide any assurance as to when we will resume determining an estimated NAV per
share, however our board intends to do so when our financial condition and other relevant circumstances permit.

 For
information regarding our estimated NAV per share of our Class A Shares, Class I Shares and Class T Shares as of December 31,
2024, see Part II, Item 5, "Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases
of Equity Securities" in our Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on April
11, 2024.

 Sales
of Unregistered Securities

 We
did not issue any shares of our common stock or other securities that were not registered under the Securities Act during the
year ended December 31, 2024.

 Share
Repurchase Program

 In
response to the COVID-19 pandemic, our board of directors indefinitely suspended our share repurchase program effective as of
April 6, 2020. There is no way to predict when, if at all, our board of directors will determine to resume the repurchase of shares
of our common stock pursuant to our share repurchase program.

 If
our board of directors elects to resume the repurchase of shares of our common stock pursuant to our share repurchase program,
it may provide our stockholders with a limited opportunity to have their shares of our common stock repurchased by us. If reinstated,
our share repurchase program will contain certain restrictions and limitations, including those relating to the number of shares
of our common stock that we can repurchase at any given time. In addition, our board of directors will reserve the right to amend,
suspend or terminate our share repurchase program at any time upon 10 days' prior written notice to our stockholders.

 Due
to its indefinite suspension, during the year ended December 31, 2024, we did not repurchase any shares of our common stock pursuant
to our share repurchase program.

 Distribution

 We
first paid distributions on September 15, 2015. On March 24, 2020, our board unanimously approved the indefinite suspension of
the payment of distributions to our stockholders, effective immediately, and the operation of the DRP, effective as of April 6,
2020. Our board of directors, in consultation with management, will continue to monitor our operations and intends to resume distributions
at a time and level determined to be prudent in relation to our other cash requirements or in order to maintain our REIT status
for federal income tax purposes. However, it is impossible to predict if or when we will be able to resume the payment of distributions.

 For
the year ended December 31, 2024, we had cash used in operating activities of $2.5 million, and $(11.0) million in funds from
operations. For the year ended December 31, 2023, we had cash provided by operating activities of $3.3 million, and $(4.5) million
in funds from operations. For the years ended December 31, 2024 and 2023, we did not pay any distributions.

 ITEM 6.
 [Reserved]

 ITEM
 7.
 Management's
 Discussion and Analysis of Financial Condition and Results of Operations

 The
following discussion and analysis should be read in conjunction with our accompanying consolidated financial statements and the
notes thereto included elsewhere in this Annual Report. Also see "Forward Looking Statements" preceding Part I. As
used herein, the terms "we," "our," "us" and "our company" refer to Moody National
REIT II, Inc. and, as required by context, Moody National Operating Partnership II, LP, a Delaware limited partnership, our operating
partnership, and to their respective subsidiaries. References to "Shares" and "our common stock" refer
to shares of any class of our common stock.

 Overview

 We
are a Maryland corporation formed on July 25, 2014 to invest in a portfolio of select-service hospitality properties with premier
brands including, but not limited to, Marriott, Hilton and Hyatt. We have elected to be taxed as a REIT under the Internal Revenue
Code beginning with our taxable year ended December 31, 2016. We own, and in the future intend to own, substantially all of our
assets and conduct our operations through our operating partnership. We are the sole general partner of our operating partnership,
and the initial limited partners of our operating partnership were our subsidiary, Moody Holdings II, and Moody LPOP II, an affiliate
of our advisor (as defined below). Moody Holdings II invested $1,000 in our operating partnership in exchange for limited partnership
interests in our operating partnership, and Moody LPOP II invested $1,000 in our operating partnership in exchange for special
limited partnership interests in our operating partnership.

 We
are externally managed by our advisor pursuant to an advisory agreement among us, our operating partnership and our advisor. Our
sponsor is owned and managed by Brett C. Moody, who also serves as our Chief Executive Officer and President and the Chief Executive
Officer and President of our advisor.

 On
January 20, 2015, we commenced our initial public offering of up to $1.1 billion in shares of common stock, consisting of up to
$1.0 billion in shares of our common stock offered to the public and up to $100 million in shares offered to our stockholders
pursuant to the DRP. On June 26, 2017, we reallocated the shares of our common stock being sold in our initial public offering
as Class A common stock, $0.01 par value per share, or the Class A Shares, Class I common stock, $0.01 par value per share, or
the Class I Shares, and Class T common stock, $0.01 par value per share, or the Class T Shares. On July 19, 2018, we commenced
our follow-on public offering of up to $990 million in any combination of the three classes of our shares, consisting of up to
$895 million in shares of our common stock offered to the public and up to $95 million in shares of our common stock offered to
our stockholders pursuant to the DRP.

 Our
follow-on public offering was terminated (including pursuant to the DRP) effective as of March 25, 2020. We accepted investors'
subscriptions for and issued an aggregate of 10.2 million shares in our initial public offering and our follow-on public offering,
excluding shares issued in connection with the Mergers and including 567,000 shares pursuant to the DRP, resulting in aggregate
gross offering proceeds of $234.6 million. We accepted investors' subscriptions for and issued 4.1 million shares in the
follow-on public offering, including 352,000 shares pursuant to the DRP, resulting in gross offering proceeds of $87.2 million
for the follow-on offering.

 Effective
January 16, 2018, our advisor assumed responsibility for the payment of all selling commissions, dealer manager fees and stockholder
servicing fees paid in connection with our public offering; provided, however, that our advisor intends to recoup the selling
commissions, dealer manager fees and stockholder servicing fees that it funded through receipt of an increased acquisition fee
(as discussed in Note 6, "Related Party Arrangements-Acquisition Fees," in the accompanying consolidated financial
statements).

 Moody
Securities, LLC, an affiliate of our advisor, which we refer to as the "dealer manager" or "Moody Securities,"
is our dealer manager and was responsible for the distribution of our common stock in our public offerings.

 As
of December 31, 2024, our portfolio consisted of ownership interests in fourteen hotel properties located in six states, comprising
a total of 2,028 rooms. Our principle executive offices are located at 9655 Katy Freeway, Suite 600, Houston, Texas 77024, and
our main telephone number is (713) 977-7500.

 COVID-19
Pandemic

 The
global COVID-19 pandemic had a significant adverse effect on our financial condition and operating results. COVID-19 dramatically
reduced travel, which had an unprecedented adverse impact on the hotel industry. As a result, the COVID-19 pandemic had a significant
adverse effect on the operating results of our hotel properties, which depend primarily upon revenues driven by business and leisure
travel, and on our business, financial performance and operating results. Since March 2020, we experienced a significant decline
in bookings, occupancy and revenues across our hotel properties. Our hotel properties have operated at a property net operating
loss since the outbreak of COVID-19, which had an adverse impact on our results of operations and cash flow from operations. In
addition, we reduced certain services and amenities at our hotel properties.

 Each
of our hotel properties is subject to a mortgage loan secured by our ownership interest in the property. If we are unable to service
the mortgage loan secured by a hotel property due to decreased revenues generated by such property, the lender with respect to
such mortgage loan may initiate foreclosure procedures with respect to the property or initiate other available remedies. As of
the date of this Annual Report, we are current with respect to the payments due under the mortgage loans secured by our hotel
properties or are in compliance with the modified terms of certain mortgage loans as agreed to with lenders and accommodations.
As discussed in Note 4, "Debt," to the consolidated financial statements included in this Annual Report, during 2021
certain lenders agreed to limited loan modifications, including temporary deferrals of interest and principal payments and agreements
to forbear the enforcement of default remedies available under the terms of the loan documents. As of the date of the Annual Report,
no lenders have accelerated the maturity of any of the loans secured by our properties or initiated foreclosure procedures with
respect to any of our properties. However, there can be no guarantee that the lenders will continue to agree to further loan modifications
or accommodations and will not elect to exercise the remedies available to them under the loan documents, including acceleration
or foreclosure actions. The exercise of any such remedies by a lender will have an adverse effect on our financial condition and
results of operations and will impair our ability to resume the payment of distributions to our stockholders.

 In
response to the COVID-19 pandemic, we terminated our public offering of common stock (including pursuant to the DRP) effective
as of March 2020. We are not currently raising capital through the sale of our securities and we do not intend to begin to do
so in the near term. We have also indefinitely suspended the payment of distributions to our stockholders effective as of March
2020 and the operation of our share repurchase program effective as of April 2020. Our board of directors and our management continue
to evaluate our financial condition and the overall economic environment to determine if and when we will seek to resume raising
capital, resume the payment of distributions and reinstate our share repurchase program. Specifically, our board of directors,
in consultation with management, will continue to monitor our operations and intends to resume distributions at a time and level
determined to be prudent in relation to our other cash requirements or in order to maintain our REIT status for federal income
tax purposes. However, it is impossible to predict if or when we will be able to take any or all of such actions.

 Merger
with Moody National REIT I, Inc.

 On
September 27, 2017, the merger of Moody I with and into our company and the merger of Moody I OP with and into our operating partnership,
were completed. For additional discussion of the Mergers, see Part I., Item 1. "Business—Merger with Moody National
REIT I, Inc."

 Review
of Investment Policies

 Our
board, including our independent directors, has reviewed our investment policies as described in this Annual Report and determined
that such policies are in the best interests of our stockholders based on the following factors: (1) such policies increase the
likelihood that we will be able to acquire a diversified portfolio of income producing properties, thereby reducing risk in our
portfolio; (2) our executive officers and directors and the affiliates of our advisor have expertise with the type of real estate
investments we seek; (3) there are sufficient property acquisition opportunities with the attributes that we seek; and (4) borrowings
should enable us to purchase assets and earn income more quickly, thereby increasing the likelihood of generating income for our
stockholders and preserving stockholder capital.

 Results
of Operations

 We
were formed on July 25, 2014. As of December 31, 2024, we legally owned interests in fourteen hotel properties located in six
states, comprising a total of 2,028 rooms. As of December 31, 2023, we legally owned interests in fifteen hotel properties located
in six states, comprising a total of 2,123 rooms. On December 10, 2024, we sold the Townplace Suites Fort Worth property to an
unaffiliated purchaser for $9.1 million.

 Beginning
in March 2020, COVID-19 caused widespread cancellations of both business and leisure travel throughout the United States, resulting
in significant decreases in bookings, occupancy and revenues throughout our hotel portfolio and the hospitality industry as a
whole. Due to the COVID-19 pandemic in the United States, the revenue and operating results declined below 2019 levels for the
years after 2020.

 Revenue

 Hotel
revenue decreased to $80.6 million for the year ended December 31, 2024, from $82.4 million for the year ended December 31, 2023,
due to decreases in occupancy at certain hotels which were partially offset by increases in occupancies at certain other hotels
primarily resulting from an increase in travel.

 The
table below sets forth a comparison of hotel revenues for the hotels we owned continuously for the years ended December 31, 2024
and 2023 (all amounts in thousands).

 Years ended

 2024

 2023

 Increase

 Residence Inn Austin (1)

 $
 4,634

 $
 5,079

 $
 (445
)

 Springhill Suites Seattle

 11,936

 10,394

 1,542

 Homewood Suites Woodlands

 3,112

 2,900

 Hyatt Place Germantown

 4,305

 4,198

 Hyatt Place North Charleston

 3,145

 2,741

 Hampton Inn Austin

 3,607

 4,091

 (484
)

 Residence Inn Grapevine (2)

 6,821

 6,522

 Marriott Courtyard Lyndhurst (3)

 4,448

 7,417

 (2,969
)

 Hilton Garden Inn Austin

 3,858

 4,646

 (788
)

 Hampton Inn Great Valley

 3,488

 3,542

 (54
)

 Embassy Suites Nashville

 13,095

 13,770

 (675
)

 Homewood Suites Austin

 4,208

 4,568

 (360
)

 Townplace Suites Fort Worth (4)

 2,562

 2,750

 (188
)

 Hampton Inn Houston

 2,889

 2,161

 Residence Inn Houston Medical Center

 8,485

 7,589

 $
 80,593

 $
 82,368

 $
 (1,775
)

 (1)
 sold on February 6, 2025 to an unaffiliated purchaser.

 (2)
 sold on February 6, 2025 to an unaffiliated purchaser.

 (3)
 sold on March 21, 2025 to an unaffiliated purchaser.

 (4)
 sold on December 10, 2024 to an unaffiliated purchaser.

 Revenues
decreased for eight hotel properties primarily due to decreases in occupancy and increased for seven hotel properties primarily
due to increased hotel occupancies primarily resulting from an increase in travel for the year ended December 31, 2024.

 Hotel
Operating Expenses

 Hotel
operating expenses decreased to $55.8 million for the year ended December 31, 2024 from $56.4 million for the year ended December
31, 2023. Such decrease was due to the sale of Townplace Suites Fort Worth in December 2024, offset by increases in prices for
goods and services used in the operation of the hotels for the year ended December 31, 2024 compared to the year ended December
31, 2023.

Taxes, Insurance and Other Expenses

taxes, insurance and other expenses increased to $7.2 million for the year ended December 31, 2024 from $6.5 million for the year
ended December 31, 2023. The increase in property taxes, insurance and other expenses was primarily due to increases in certain
state and local property taxes.

 Depreciation
and Amortization

 Depreciation
and amortization decreased to $14.9 million for the year ended December 31, 2024 from $15.9 million for the year ended December
31, 2023 due to the ceasing of recording depreciation on hotel properties held for sale.

 Corporate
General and Administrative Expenses

 Corporate
general and administrative expenses were $7.1 million and $6.9 million for each of the years ended December 31, 2024 and 2023,
respectively. These general and administrative expenses consisted primarily of asset management fees, professional fees, and directors'
fees.

 Loss
on Impairment of Hotel Properties

 Loss
on impairment of hotel properties was $73.9 million and $0 for the years ended December 31, 2024 and 2023, respectively. We
recognized loss on impairment of hotel properties for the year ended December 31, 2024 to adjust the carrying amount of the
Residence Inn Austin, Embassy Suites Nashville, Marriott Courtyard Lyndhurst, Townplace Suites Forth Worth, Residence Inn Houston
Medical Center, Hilton Garden Inn Austin, Springhill Suites Seattle and Homewood Suites Woodlands to estimated fair
value.

Expense and Amortization of Debt Issuance Costs

expense and amortization of debt issuance costs increased to $19.1 million for the year ended December 31, 2024 from $16.9 million
for the year ended December 31, 2023. The increase in interest expense and amortization of debt issuance costs was primarily due
to higher interest rates for new and floating rate loans and interest on notes payable to related party. In future periods our
interest expense will vary based on the amount of our borrowings, which will depend on the availability and cost of borrowings
and our ability to identify and acquire assets that meet our investment objectives.

 Loss
on Sale of Hotel Property

 Loss
on sale of hotel property was $70,000 and $0 for the years ended December 31, 2024 and 2023. Townplace Suites Fort Worth was sold
on December 10, 2024 for $9.1 million.

Tax Expense

 Our
income tax expense was $2.4 million for the year ended December 31, 2024 compared to an income tax expense of $161,000 for the
year ended December 31, 2023. The increase was primarily due to expensing of deferred income tax assets resulting from net operating
loss carryforwards unlikely to be utilized in the future for the year ended December 31, 2024 compared to the year ended December
31, 2023.

 Liquidity
and Capital Resources

 Our
principal demand for funds is for the payment of operating expenses, principal and interest payments on our outstanding indebtedness,
and, to the extent we elect to resume the payment of distributions, the payment of distributions to our stockholders.

 Our
principal short-term source of liquidity is the operating cash flows generated from our hotel properties. Historically, proceeds
from our public offering supplied a significant portion of our available cash. However, our public offering has been terminated
and we cannot predict if or when we will be able to resume raising capital pursuant to the sale of our securities. If we are able
to resume raising capital pursuant to an offering of our securities, there may be a delay between the sale of our securities and
our purchase of assets, which could result in a delay in the benefits to our stockholders, if any, of returns generated from our
investment operations. Since 2020, we have taken measures to preserve capital and increase liquidity, including suspending our
monthly distribution and postponing non-essential capital improvements. We anticipate funding our near-term cash needs with improving
operating cash flows generated from our properties.

 We
may, but are not required to, establish working capital reserves out of cash flow generated by our real estate assets or out of
proceeds from the sale of our real estate assets. We do not anticipate establishing a general working capital reserve; however,
we may establish working capital reserves with respect to particular investments. We also may, but are not required to, establish
reserves out of cash flow generated by our real estate assets or out of net sale proceeds in non-liquidating sale transactions.
Working capital reserves are typically used to fund tenant improvements, leasing commissions and major capital expenditures. We
also escrow funds for property improvements. Our lenders also may require working capital reserves. Financing agreements that
we enter into may also contain various customary covenants, including but not limited to financial covenants, covenants requiring
monthly deposits in respect of certain property costs, covenants imposing restrictions on indebtedness and liens, and restrictions
on investments and participation in other asset disposition, merger or business combination or dissolution transactions.

 Although
there can be no assurances, we anticipate that available cash will be adequate to meet our near-term potential operating cash
flow deficits, debt service and capital expenditures. If we are unable to satisfy our near-term anticipated cash requirements
as currently planned, we may raise capital through the disposition of assets, the sale of our equity or debt securities or short-term
borrowing, all of which may be more costly to us in the current economic environment. During 2024, we placed six of our fifteen
hotel properties on the market for sale: (1) the Residence Inn Austin, (2) the Residence Inn Grapevine, (3) the Marriott Courtyard
Lyndhurst, (4) the Embassy Suites Nashville, (5) the Townplace Suites Fort Worth, and (6) the Residence Inn Houston Medical Center.

 On
November 7, 2024, we entered into a purchase and sale agreement to sell the Marriott Courtyard Lyndhurst to an unaffiliated purchaser
for an aggregate purchase price of $21.3 million. On November 27, 2024, we entered into a purchase and sale agreement to sell
the Embassy Suites Nashville to an unaffiliated purchaser for an aggregate purchase price of $57.5 million. On December 13, 2024,
we entered into a purchase and sale agreement to sell the Residence Inn Grapevine to an unaffiliated purchaser for an aggregate
purchase price of $22.5 million. On December 13, 2024, we entered into a purchase and sale agreement to sell the Residence Inn
Austin to an unaffiliated purchaser for an aggregate purchase price of $20.5 million. On December 10, 2024, we sold the Townplace
Suites Fort Worth property to an unaffiliated purchaser for $9.1 million. During 2025, we sold the Residence Inn Grapevine, Residence
Inn Austin, and Marriott Courtyard Lyndhurst, as discussed elsewhere herein.

 There
can be no guarantee that we will dispose of any other properties or when any such sales will occur. Such properties may be sold
individually or as one or more multi-property portfolios. A number of our properties are subject to mortgage loans which matured
and became due and payable in full during 2024 or which will mature and become due and payable in full during 2025. We may be
forced to dispose of such properties on terms that are less advantageous to us than we would otherwise prefer, including for sales
prices lower than the purchase price we paid for such properties. If we are unable to dispose of a property prior to the maturity
date of the loan secured by such property, successfully refinance such loan or negotiate a maturity date extension or other accommodations
for such loan, the lender may initiate foreclosure proceedings or exercise other remedies available to them under the loan documents.
The exercise of any such remedies by a lender will have an adverse effect on our financial condition and results of operations
and will adversely impact the value of an investment in our shares.

 Net
Cash (Used in) Provided by Operating Activities

 As
of December 31, 2024 and 2023, we owned interests in fourteen and fifteen hotel properties, respectively. Net cash used in operating
activities was $2.5 million for the year ended December 31, 2024 compared to cash provided by operating activities of $3.3 million
for the year ended December 31, 2023. The increase in cash used in operating activities for the year ended December 31, 2024 was
due to the fact that due to related parties increased by $4.9 million for the year ended December 31, 2024 compared to an increase
in due to related parties of $6.6 million for the year ended December 31, 2023. Also, such increase in cash used operating activities
was due to an increase in net loss to $99.9 million for the year ended December 31, 2024 compared to $20.4 million for the year
ended December 31, 2023.

 Net
Cash Provided by (Used in) Investing Activities

 For
the year December 31, 2024, net cash provided by investing activities was $7.5 million compared to net cash used in investing
activities of $(2.7) million for the year December 31, 2023. The increase in cash provided by investing activities for the year
ended December 31, 2024 was primarily due to an increase in proceeds from sale of hotel property to $9.1 million for the year
ended December 31, 2024 compared to $0 for the year ended December 31, 2023.

 Net
Cash (Used in) Provided by Financing Activities

 For
the year ended December 31, 2024, our cash flows from financing activities consisted primarily of proceeds of notes payable to
related parties and repayment of notes payable. Net cash (used in) provided by financing activities for the year ended December
31, 2024 and 2023 was $(812,000) and $3.2 million, respectively. The decrease in cash provided by financing activities for the
year ended December 31, 2024 was primarily due to the fact that we had repayments of notes payable, net of proceeds, of $10.4
million for the year ended December 31, 2024 compared to repayments of notes payable, net of proceeds, of $6.1 million for the
year ended December 31, 2023.

 Cash
and Cash Equivalents and Restricted Cash

 As
of December 31, 2024, we had cash, cash equivalents and restricted cash of $29.2 million.

 Debt

 We
use, and intend to use in the future, secured and unsecured debt as a means of providing additional funds for the acquisition
of real property, and potentially for the acquisition of real estate-related securities. By operating on a leveraged basis, we
expect that we will have more funds available for investments and will be able to make more investments than would otherwise be
possible, which will potentially result in enhanced investment returns and a more diversified portfolio. However, our use of leverage
increases the risk of default on loan payments and the resulting foreclosure on a particular asset. In addition, lenders may have
recourse to assets other than those specifically securing the repayment of the indebtedness. When debt financing is unattractive
due to high interest rates or other reasons, or when financing is otherwise unavailable on a timely basis, we may purchase certain
assets for cash with the intention of obtaining debt financing at a later time.

 Each
of our hotel properties is subject to a mortgage secured by our ownership interest in the property. The COVID-19 pandemic resulted
in a significant decline in the revenues generated by our hotel properties and increased the risk that we will be unable to satisfy
our debt service obligations. If we are unable to service the mortgage loan secured by a hotel property, the lender may initiate
foreclosure procedures with respect to the property or initiate other available remedies. As of December 31, 2024, we were current
with respect to the payments due under the mortgage loans secured by our hotel properties or are in compliance with the modified
terms of certain mortgage loans as agreed to with the lenders and other accommodations. As discussed in Note 4, "Debt,"
to the consolidated financial statements included in this Annual Report, certain lenders have agreed to limited loan modifications,
including temporary deferrals of interest and principal payments. As of the date of this Annual Report, no lenders have accelerated
the maturity of any of the loans secured by our properties or initiated foreclosure procedures with respect to any of our properties.
However, there can be no guarantee that the lenders will continue to agree to further loan modifications or accommodations and
will not elect to exercise the remedies available to them under the loan documents, including acceleration or foreclosure actions.
The exercise of any such remedies by a lender will have an adverse effect on our financial condition and results of operations
and will impair our ability to resume the payment of distributions to our stockholders. Several of the mortgage loans secured
by our hotel properties matured during 2024 or will mature in 2025.

 The
U.S. Federal Reserve raised interest rates repeatedly during 2023 while reducing rates in 2024 and may further increase interest
rates in 2025. Any change in the fiscal policies or stated target interest rates of the U.S. Federal Reserve or other central
banking institutions, or market expectations of such change, are difficult to predict and may result in significantly higher long-term
interest rates. Such a transition may be abrupt and may, among other things, reduce the availability or increase the costs of
obtaining new debt and refinancing existing indebtedness. In the event that the interest rate on any of our outstanding mortgage
loans or other indebtedness increases significantly, we may not have sufficient funds to pay the required interest payments.

 Notes
Payable to Related Party

 On
March 30, 2021, Moody National Capital, LLC ("Moody Capital"), an affiliate of our sponsor, loaned us $8 million pursuant
to a promissory note (the "Related Party Note"). The Related Party Note provides that we may borrow up to an additional
$2.0 million from Moody Capital, for a maximum aggregate loan amount of $10 million. All amounts borrowed under the Related Party
Note plus all accrued interest thereon were due and payable in full on March 29, 2024, provided that we had the right to extend
such maturity date for up to two years at our discretion. We elected to extend such maturity date for one year to March 30, 2025.
Interest on the Related Party Note began to accrue effective March 30, 2021. The principal amount of the loan under the Related
Party Note bears interest at a rate per annum equal to the Secured Overnight Financing Rate ("SOFR") plus 4.75%; provided,
however, that such interest rate will be increased to a rate per annum equal to SOFR plus 6.75% if the Related Party Note
is subordinated to another lender. The effective interest rate for the Related Party Note was 9.27% as of December 31, 2024. The
balance of the Related Party Note was $10.0 million as of each of December 31, 2024 and 2023.

 From
April 2021 to August 16, 2021, Moody Capital made a series of advances to us to meet our specific cash flow needs. Effective June
30, 2021, these advances were memorialized in a promissory note (the "Second Related Party Note") with a total maximum
aggregate loan amount of $10 million. All amounts borrowed under the Second Related Party Note plus all accrued interest thereon
were due and payable in full on June 30, 2024, provided that we had the right to extend such maturity date for up to two years
at our discretion. We elected to extend such maturity date for one year to June 30, 2025. Interest on the Second Related
Party Note began to accrue effective June 30, 2021. The principal amount of the loan under the Second Related Party Note bears
interest at a rate per annum equal to SOFR plus 6.75%; provided, however, that such interest rate will be increased to
a rate per annum equal to SOFR plus 8.75% if the Second Related Party Note is subordinated to another lender. The effective interest
rate for the Second Related Party Note was 11.27% as of December 31, 2024. The balance of the Second Related Party Note was $10.0
million as of each of December 31, 2024 and 2023.

 From
August 20, 2021, to December 31, 2021, Moody Capital made a series of advances to us to meet our specific cash flow needs. These
advances were memorialized in a promissory note (the "Third Related Party Note") with a total maximum aggregate loan
amount of $10 million. All amounts borrowed under the Third Related Party Note plus all accrued interest thereon will be due and
payable in full on August 20, 2024, provided that we had the right to extend such maturity date for up to two years at our discretion.
We elected to extend such maturity date for one year to August 20, 2025. Interest on the Third Related Party Note began to accrue
effective August 20, 2021. The principal amount of the loan under the Third Related Party Note bears interest at a rate per annum
equal to SOFR plus 7.75%; provided, however, that such interest rate will be increased to a rate per annum equal to SOFR
plus 9.75% if the Third Related Party Note is subordinated to another lender. The effective interest rate for the Third Related
Party Note was 12.27% as of December 31, 2024. The balance of the Third Related Party Note was $10.0 million as of as of each
of December 31, 2024 and 2023.

 From
April 13, 2022, to September 30, 2023, Moody Capital made a series of advances to us to meet our specific cash flow needs. These
advances were memorialized in a promissory note (the "Fourth Related Party Note") with a total maximum aggregate loan
amount of $10.0 million. All amounts borrowed under the Fourth Related Party Note plus all accrued interest thereon will be due
and payable in full on April 13, 2025, provided that we have the right to extend such maturity date for up to two years at our
discretion. Interest on the Fourth Related Party Note began to accrue effective April 13, 2022. The principal amount of the loan
under the Fourth Related Party Note bears interest at a rate per annum equal to one-year SOFR plus 8.75%; provided, however,
that such interest rate will be increased to a rate per annum equal to one-year SOFR plus 9.75% if the Fourth Related Party Note
is subordinated to another lender. The effective interest rate for the Fourth Related Party Note was 13.27% as of December 31,
2024. The balance of the Fourth Related Party Note was $10.0 million as of each of December 31, 2024 and 2023.

 From
January 1, 2024, to June 30, 2024 Moody Capital made a series of advances to us to meet our specific cash flow needs. These advances
were memorialized in a promissory note (the "Fifth Related Party Note") with a total maximum aggregate loan amount
of $10.0 million. All amounts borrowed under the Fifth Related Party Note plus all accrued interest thereon will be due and payable
in full on January 1, 2026, provided that we have the right to extend such maturity date for up to two years at our discretion.
Interest on the Fifth Related Party Note began to accrue effective January 1, 2024. The principal amount of the loan under the
Fifth Related Party Note bears interest at a rate per annum equal to one-year SOFR plus 8.75%; provided, however, that
such interest rate will be increased to a rate per annum equal to one-year SOFR plus 9.75% if the Fifth Related Party Note is
subordinated to another lender. The effective interest rate for the Fifth Related Party Note was 13.27% as of December 31, 2024.
The balance of the Fifth Related Party Note was $10.0 million as of December 31, 2024.

will be paid for the Related Party Note, the Second Related Party Note, the Third Related Party Note, the Fourth Related Note,
and the Fifth Related Party Note as permitted by our available cash flow, or from the excess proceeds following a sale of a property
after the payment of expenses and amounts due to any senior lender, if applicable, and will be compounded semi-annually. We expect
to enter into a mutually agreeable subordination agreement with any such senior lender. We may prepay the amounts due under the
Related Party Note, the Second Related Party Note, the Third Related Party Note, the Fourth Related Note, and the Fifth Related
Party Note without any prepayment penalty. Accrued interest on notes payable to related party was $14.5 million and $8.2 million
as of December 31, 2024 and 2023, respectively.

 Economic
Injury Disaster Loans

 We
have obtained fifteen loans of $500,000 each (an aggregate of $7.5 million) from the U.S. Small Business Administration. The U.S.
Small Business Administration loans will be due in monthly installments of principal and interest beginning two years from the
dates of the loans with balances due 30 years from the dates of the loans. The monthly installments are applied to accrued interest
first, then to principal. The U.S. Small Business Administration loans bear interest at the rate of 3.75% per annum and are secured
by our tangible and intangible personal property. The aggregate balance of the U.S. Small Business Administration loans was $7.5
million as of December 31, 2024 and 2023.

 Aggregate
Indebtedness

 As
of December 31, 2024, our outstanding indebtedness totaled $269 million, which amount includes (i) the mortgage loans secured
by each of our hotel properties (including debt associated with properties acquired in the Mergers) and loans from the U.S. Small
Business Administration in the aggregate principal amount of $219 million, and (ii) the Related Party Note, the Second Related
Party Note, the Third Related Party Note, the Fourth Related Party Note, and the Fifth Related Party Note in the aggregate principal
amount of $50.0 million. Our aggregate borrowings are reviewed by our board of directors at least quarterly. Under our charter,
we are prohibited from borrowing in excess of 300% of the value of our net assets. "Net assets" for purposes
of this calculation is defined to be our total assets (other than intangibles), valued at cost prior to deducting depreciation,
reserves for bad debts and other non-cash reserves, less total liabilities. The preceding calculation is generally expected to
approximate 75% of the aggregate cost of our assets before non-cash reserves and depreciation. However, we may temporarily borrow
in excess of 300% of the value of our assets if such excess is approved by a majority of our independent directors and disclosed
to our stockholders in our next quarterly report, along with an explanation for such excess. As of December 31, 2024 and 2023,
our debt levels did not exceed 300% of the value of our net assets.

 For
more information on our outstanding indebtedness, see Note 4, "Debt" to the consolidated financial statements included
in this Annual Report.

 Contractual
Commitments and Contingencies

 The
following is a summary of our contractual obligations as of December 31, 2024 (in thousands):

 Payments Due By Period

 Contractual Obligations

 Total

 2025

 2026-2027

 2028-2029

 Thereafter

 Long-term debt obligations (1)

 $
 219,466

 $
 149,311

 $
 40,936

 $
 22,245

 $
 6,974

 Interest payments on outstanding debt obligations (2)

 20,310

 7,908

 6,169

 2,714

 3,519

 Total

 $
 239,776

 $
 157,219

 $
 47,105

 $
 24,959

 $
 10,493

 (1)
 Amounts
include principal payments only.

 (2)
 Projected
interest payments are based on the outstanding principal amounts and weighted-average interest rates at December 31, 2024.

and Offering Costs

 Our
organization and offering expenses may be incurred directly by us or may be incurred by our advisor on our behalf. Pursuant to
the advisory agreement, we will reimburse our advisor for organizational and offering expenses associated with our public offerings
incurred by our advisor on our behalf, provided that within 60 days of the last day of the month in which any public offering
ends, our advisor is obligated to reimburse us to the extent that organization and offering costs we have incurred in connection
with such public offering exceed 15% of the gross offering proceeds from the sale of shares of our common stock in such offering.
As of January 16, 2018, our advisor assumed responsibility for the payment of all selling commissions, dealer manager fees and
stockholder servicing fees paid in connection with our public offering. We will not reimburse our advisor for the selling commissions
and fees it paid on our behalf, however our advisor intends to recoup all or a portion of such amounts over time through receipt
of the contingent advisor payment, as discussed in Note 6, "Related Party Arrangements" to the consolidated financial
statements included elsewhere in this Annual Report.

 As
of December 31, 2024, total organization and offering expenses for our initial public offering and follow-on offering were $21.1
million, comprised of $12.3 million of expenses incurred directly by us and $8.8 million in expenses incurred by and reimbursable
to our advisor (excluding the selling commissions, dealer manager fees and stockholder servicing fees paid on our behalf by our
advisor effective as of January 16, 2018). Total organization and offering expenses for the initial public offering were $18.4
million, comprised of $12.3 million of expenses incurred directly by us and $6.1 million in expenses incurred by and reimbursable
to our advisor (excluding the selling commissions, dealer manager fees and stockholder servicing fees paid on our behalf by our
advisor). As of December 31, 2024, total organization and offering expenses for the follow-on offering were $2.7 million, comprised
of $0 of expenses incurred directly by us and $2.7 million in expenses incurred by and reimbursable to our advisor (excluding
the selling commissions, dealer manager fees and stockholder servicing fees paid on our behalf by our advisor). As of December
31, 2024, we had $0 due to our advisor for reimbursable offering costs.

 All
offering costs, including selling commissions and dealer manager fees, are recorded as an offset to additional paid-in-capital,
and all organization costs are recorded as an expense when we have an obligation to reimburse our advisor.

 Operating
Expenses

 We
will reimburse our advisor for all expenses paid or incurred by our advisor in connection with the services it provides to us,
subject to the limitation that we will not reimburse our advisor for any amount by which our operating expenses (including the
asset management fee we pay to our advisor) at the end of the four preceding fiscal quarters exceeds the greater of: (1) 2% of
our average invested assets, or (2) 25% of our net income determined without reduction for any additions to reserves for depreciation,
bad debts or other similar non-cash reserves and excluding any gain from the sale of our assets for that period, which we refer
to as the "2%/25% Limitation." Notwithstanding the above, we may reimburse our advisor for expenses in excess of the
2%/25% Limitation if a majority of our independent directors determine that such excess expenses are justified based on unusual
and non-recurring factors. For the four fiscal quarters ended December 31, 2024, our total operating expenses were $7.1 million,
which included $5.1 million in operating expenses incurred directly by us and $2.0 million in operating expenses incurred by our
advisor on our behalf. Of the $7.1 million in total operating expenses incurred during the four fiscal quarters ended December
31, 2024, $0 exceeded the 2%/25% Limitation. We reimbursed our advisor $2.0 million in operating expenses during the four fiscal
quarters ended December 31, 2024. As of December 31, 2024, we had $267,000 due to our advisor for operating expense reimbursement.

 Critical
Accounting Policies

 General

 We
consider the accounting policies described below to be critical because they involve significant judgments and assumptions, require
estimates about matters that are inherently uncertain and because they are important for understanding and evaluating our reported
financial results. These judgments affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods.
If management's judgment or interpretation of the facts and circumstances relating to various transactions is different,
it is possible that different accounting policies will be applied or different amounts of assets, liabilities, revenues and expenses
will be recorded, resulting in a different presentation of the consolidated financial statements or different amounts reported
in the consolidated financial statements. Additionally, other companies may utilize different estimates that may impact the comparability
of our results of operations to those of companies in similar businesses.

Taxes

 We
elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code commencing with the taxable year ended
December 31, 2016. We did not meet all of the qualifications to be a REIT under the Internal Revenue Code for the year ended December
31, 2015 and for the period from July 25, 2014 (inception) to December 31, 2014, including not having the requisite number of
shareholders for a sufficient number of days in those periods. Prior to qualifying to be taxed as a REIT we were subject to normal
federal and state corporation income taxes.

 Provided
that we continue to qualify as a REIT, we generally will not be subject to federal corporate income tax to the extent we distribute
our REIT taxable income to our stockholders, so long as we distribute at least 90% of our REIT taxable income (which is computed
without regard to the dividends-paid deduction or net capital gain and which does not necessarily equal net income as calculated
in accordance with GAAP) and satisfy the other organizational and operational requirements for REIT qualification. Even if we
qualify for taxation as a REIT, we may be subject to certain state and local taxes on our income and property, and federal income
and excise taxes on our undistributed income.

 We
lease the hotels that we acquire to a wholly owned TRS that is subject to federal, state and local income taxes.

 We
account for income taxes of our TRS using the asset and liability method under which deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax bases. We record a valuation allowance for net deferred tax assets that are not expected
to be realized.

 We
have reviewed tax positions under GAAP guidance that clarify the relevant criteria and approach for the recognition and measurement
of uncertain tax positions. The guidance prescribes a recognition threshold and measurement attribute for the financial statement
recognition of a tax position taken, or expected to be taken, in a tax return. A tax position may only be recognized in the consolidated
financial statements if it is more likely than not that the tax position will be sustained upon examination. We had no material
uncertain tax positions as of December 31, 2024.

 The
preparation of our various tax returns requires the use of estimates for federal and state income tax purposes. These estimates
may be subjected to review by the respective taxing authorities. A revision to an estimate may result in an assessment of additional
taxes, penalties and interest. At this time, a range in which our estimates may change is not expected to be material. We will
account for interest and penalties relating to uncertain tax provisions in the current period's results of operations, if
necessary. We have tax years 2020 through 2024 remaining subject to examination by various federal and state tax jurisdictions.

 Valuation
and Allocation of Hotel Properties — Acquisitions

 Upon
acquisition, the purchase price of hotel properties are allocated to the tangible assets acquired, consisting of land, buildings
and furniture, fixtures and equipment, any assumed debt, identified intangible assets and asset retirement obligations, if any,
based on their fair values. Acquisition costs are charged to expense as incurred. Initial valuations are subject to change during
the measurement period, but the measurement period ends as soon as the information is available. The measurement period shall
not exceed one year from the acquisition date.

 Land
fair values are derived from appraisals, and building fair values are calculated as replacement cost less depreciation or our
estimates of the relative fair value of these assets using discounted cash flow analyses or similar methods. The fair value of
furniture, fixtures and equipment is based on their fair value using replacement costs less depreciation.

 We
determine the fair value of any assumed debt by calculating the net present value of the scheduled mortgage payments using interest
rates for debt with similar terms and remaining maturities that we believe we could obtain at the date of acquisition. Any difference
between the fair value and stated value of the assumed debt is recorded as a discount or premium and amortized over the remaining
life of the loan as interest expense.

 In
allocating the purchase price of each of our properties, we make assumptions and use various estimates, including, but not limited
to, the estimated useful lives of the assets, the cost of replacing certain assets and discount rates used to determine present
values. Many of these estimates are obtained from independent third party appraisals. However, we are responsible for the source
and use of these estimates. These estimates are based on judgment and subject to being imprecise; accordingly, if different estimates
and assumptions were derived, the valuation of the various categories of our hotel properties or related intangibles could, in
turn, result in a difference in the depreciation or amortization expense recorded in our consolidated financial statements. These
variances could be material to our results of operations and financial condition.

 Impairment
of Hotel Properties

 We
monitor events and changes in circumstances indicating that the carrying amounts of a hotel property may not be recoverable. When
such events or changes in circumstances are present, we assess potential impairment by comparing estimated future undiscounted
cash flows expected to be generated over the life of the asset from operating activities and from its eventual disposition, to
the carrying amount of the asset. In the event that the carrying amount exceeds the estimated future undiscounted cash flows,
we recognize an impairment loss to adjust the carrying amount of the asset to estimated fair value for assets held for use and
fair value less costs to sell for assets held for sale. Losses on impairment of hotel properties were $73.9 million and $0 for
the years ended December 31, 2024 and 2023, respectively.

 In
evaluating a hotel property for impairment, we make several estimates and assumptions, including, but not limited to, the projected
date of disposition of the property, the estimated future cash flows of the property during our ownership and the projected sales
price of the property. A change in these estimates and assumptions could result in a change in the estimated undiscounted cash
flows or fair value of our hotel properties which could then result in different conclusions regarding impairment and material
changes to our consolidated financial statements. For further discussion of loss on impairment of our hotel properties, see Note
3, "Investment in Hotel Properties, Real Estate Assets Held for Sale, and Dispositions."

 Recently
Issued Accounting Standards

 In
December 2023, the FASB issued ASU 2023-09 "Income Taxes (Topics 740): Improvements to Income Tax Disclosures" which
requires entities to expand disclosures regarding the reconciliation of income tax rate and the amount of income taxes paid, net
of refunds received, disaggregated by federal, state and foreign jurisdiction.

 In
December 2023, the FASB issued ASU 2023-07 "Segment Reporting" which requires entities to disclose additional and
more detailed information about a reportable segment's expenses.

 Other
recently issued accounting standards or pronouncements not disclosed in the foregoing paragraphs have been excluded because they
are either not relevant to us, or are not expected to have, or did not have, a material effect on our consolidated financial statements.

 Inflation

 As
of December 31, 2024, our investments consisted of ownership interests in fourteen hotel properties. Operators of hotels, in general,
possess the ability to adjust room rates daily to reflect the effects of inflation. Competitive pressures may, however, limit
the operators' ability to raise room rates. As of December 31, 2024, we were not experiencing any material impact from inflation.

 REIT
Compliance

 We
elected to be taxed as a REIT commencing with the taxable year ended December 31, 2016. To qualify as a REIT for tax purposes,
we are required to distribute at least 90% of our REIT taxable income (determined for this purpose without regard to the dividends-paid
deduction and excluding net capital gain) to our stockholders. We must also meet certain asset and income tests, as well as other
requirements. We will monitor the business and transactions that may potentially impact our REIT status. If we fail to qualify
as a REIT in any taxable year following the taxable year in which we initially elect to be taxed as a REIT, we will be subject
to federal income tax (including any applicable alternative minimum tax) on our taxable income at regular corporate rates and
generally will not be permitted to qualify for treatment as a REIT for federal income tax purposes for the four taxable years
following the year during which our REIT qualification is lost unless the Internal Revenue Service grants us relief under certain
statutory provisions. Such an event could materially adversely affect our net income and net cash available for distribution to
our stockholders. We did not meet all of the qualifications to be a REIT under the Internal Revenue Code for the year ended December
31, 2015 and the period from July 25, 2014 (inception) to December 31, 2014.

 Distributions

 On
March 24, 2020, our board unanimously approved the indefinite suspension of the payment of distributions to our stockholders,
effective immediately, and the operation of the DRP, effective as of April 6, 2020. Our board of directors, in consultation with
management, will continue to monitor our operations and intends to resume distributions at a time and level determined to be prudent
in relation to our other cash requirements or in order to maintain our REIT status for federal income tax purposes. However, it
is impossible to predict if or when we will be able to resume the payment of distributions.

 We
did not make any distributions for the years ended December 31, 2024 and 2023. For the year ended December 31, 2024, we had cash
used in operating activities of $2.5 million, and $(11.0) million in funds from operations. For the year ended December 31, 2023,
we had cash provided by operating activities of $3.3 million, and $(4.5) million in funds from operations. Of the $54.5 million
in total distributions we have paid during the period from our inception through December 31, 2024, including shares issued pursuant
to the DRP, 0% was funded from cash flow from operations and 100% was funded from offering proceeds.

 Funds
from Operations and Modified Funds from Operations

 One
of our objectives is to provide cash distributions to our stockholders from cash generated by our operations. Cash generated from
operations is not equivalent to net income as determined under GAAP. Due to certain unique operating characteristics of real estate
companies, the National Association of Real Estate Investment Trusts, or NAREIT, an industry trade group, has promulgated a standard
known as Funds from Operations, or FFO, which it believes more accurately reflects the operating performance of a REIT. As defined
by NAREIT, FFO means net income computed in accordance with GAAP, excluding gains (or losses) from sales of property, plus depreciation
and amortization, and after adjustments for unconsolidated partnerships and joint ventures in which the REIT holds an interest.
We have adopted the NAREIT definition for computing FFO because, in our view, FFO is a meaningful supplemental performance measure
in conjunction with net income.

in the accounting and reporting rules under GAAP that have been put into effect since the establishment of NAREIT's definition
of FFO have prompted a significant increase in the magnitude of non-cash and non-operating items included in FFO, as defined.
As a result, in addition to FFO, we also calculate modified funds from operations, or MFFO, a non-GAAP supplemental financial
performance measure that our management uses in evaluating our operating performance. Similar to FFO, MFFO excludes items such
as depreciation and amortization. However, MFFO excludes non-cash and non-operating items included in FFO, such as amortization
of certain in-place lease intangible assets and liabilities and the amortization of certain tenant incentives. Our calculation
of MFFO will exclude these items, as well as the effects of straight-line rent revenue recognition, fair value adjustments to
derivative instruments that do not qualify for hedge accounting treatment, non-cash impairment charges and certain other items,
when applicable. Our calculation of MFFO will also include, when applicable, items such as master lease rental receipts, which
are excluded from net income (loss) and FFO, but which we consider in the evaluation of the operating performance of our real
estate investments.

 We
believe that MFFO reflects the overall impact on the performance of our real estate investments of occupancy rates, rental rates,
property operating costs and development activities, as well as general and administrative expenses and interest costs, which
is not immediately apparent from net income (loss). As such, we believe MFFO, in addition to net income (loss) as defined by GAAP,
is a meaningful supplemental performance measure which is used by our management to evaluate our operating performance and determine
our operating, financing and dividend policies.

 Please
see the limitations listed below associated with the use of MFFO as compared to net income (loss):

 Our
 calculation of MFFO will exclude any gains (losses) related to changes in estimated values
 of derivative instruments related to any interest rate swaps which we hold. Although
 we expect to hold these instruments to maturity, if we were to settle these instruments
 prior to maturity, it would have an impact on our operations. We do not currently hold
 any such derivate instruments and thus our calculation of MFFO set forth in the table
 below does not reflect any such exclusion.

 Our
 calculation of MFFO will exclude any impairment charges related to long-lived assets
 that have been written down to current market valuations. Although these losses will
 be included in the calculation of net income (loss), we will exclude them from MFFO because
 we believe doing so will more appropriately present the operating performance of our
 real estate investments on a comparative basis. We have not recognized any such impairment
 charges and thus our calculation of MFFO set forth in the table below does not reflect
 any such exclusion.

 Our
 calculation of MFFO will exclude organizational and offering expenses and acquisition
 expenses. Although organizational and acquisition expenses reduce net income, we fund
 such costs with proceeds from our offering and acquisition-related indebtedness, and
 do not consider these expenses in the evaluation of our operating performance and determining
 MFFO. Offering expenses do not affect net income. Our calculation of MFFO set forth in
 the table below reflects the exclusion of acquisition expenses.

 We
believe MFFO is useful to investors in evaluating how our portfolio might perform after our offering and acquisition stage has
been completed and, as a result, may provide an indication of the sustainability of our distributions in the future. However,
as described in greater detail below, MFFO should not be considered as an alternative to net income (loss) or as an indication
of our liquidity. Many of the adjustments to MFFO are similar to adjustments required by SEC rules for the presentation of pro
forma business combination disclosures, particularly acquisition expenses, gains or losses recognized in business combinations
and other activity not representative of future activities. MFFO is also more comparable in evaluating our performance over time
and as compared to other real estate companies, which may not be as involved in acquisition activities or as affected by impairments
and other non-operating charges.

 MFFO
is useful in assisting management and investors in assessing the sustainability of operating performance in future operating periods,
and in particular, after the offering and acquisition stages are complete and net asset value is disclosed. However, MFFO is not
a useful measure in evaluating net asset value because impairments are taken into account in determining net asset value but not
in determining MFFO. Investors are cautioned that, due to the fact that impairments are based on estimated future undiscounted
cash flows and, given the relatively limited term of our operations, it could be difficult to recover any impairment charges.

 The
calculation of FFO and MFFO may vary from entity to entity because capitalization and expense policies tend to vary from entity
to entity. Consequently, our presentation of FFO and MFFO may not be comparable to other similarly titled measures presented by
other REITs. In addition, FFO and MFFO should not be considered as an alternative to net income (loss) or to cash flows from operating
activities and are not intended to be used as a liquidity measure indicative of cash flow available to fund our cash needs. In
particular, as we are currently in the acquisition phase of our life cycle, acquisition costs and other adjustments which are
increases to MFFO are, and may continue to be, a significant use of cash. MFFO also excludes impairment charges, rental revenue
adjustments and unrealized gains and losses related to certain other fair value adjustments. Accordingly, both FFO and MFFO should
be reviewed in connection with other GAAP measurements.

 The
table below summarizes our calculation of FFO and MFFO for the years ended December 31, 2024 and 2023 and a reconciliation of
such non-GAAP financial performance measures to our net loss (in thousands).

 Year ended December 31,

 2024

 2023

 Net Loss

 $
 (99,905
)

 $
 (20,437
)

 Adjustments:

 Depreciation and amortization of real estate

 14,935

 15,938

 Loss on sale of hotel property

 —

 73,863

 —

 Funds from Operations

 (11,037
)

 (4,499
)

 Adjustments:

 Amortization of debt issuance costs

 Allowance for income taxes

 2,303

 —

 Modified Funds from Operations

 $
 (8,164
)

 $
 (3,854
)

 Off-Balance
Sheet Arrangements

 As
of December 31, 2024 and 2023, we had no off-balance sheet arrangements that have or are reasonably likely to have a current or
future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources.

 Related-Party
Transactions and Agreements

 We
have entered into agreements with our advisor and its affiliates whereby we have paid, and may continue to pay, certain fees to,
or reimburse certain expenses of, our advisor or its affiliates in connection with services our advisor and its affiliates provide
us. See Note 6, "Related Party Arrangements," to the consolidated financial statements included in this Annual Report
and Part III, Item 13, "Certain Relationships and Related Transactions and Director Independence," for a discussion
of our related-party transactions, agreements and fees.

 Subsequent
Events

 In preparing the consolidated
financial statements, we evaluated all subsequent events and transactions for potential recognition or disclosure through March 31, 2024,
the date the audited consolidated financial statements were available for issuance.

Inn Grapevine

 On
February 6, 2025, we sold the Residence Inn Grapevine property to an unaffiliated purchaser for $22,500,000.

 On
February 6, 2025, we sold the Residence Inn Austin property to an unaffiliated purchaser for $20,500,000.

 Marriott
Courtyard Lyndhurst

 On
March 21, 2025, we sold the Marriott Courtyard Lyndhurst property to an unaffiliated purchaser for $21,250,000.

 Notes Payable to Related Party

 On February 7, 2025, Moody Capital repaid the Fifth
Related Party Note in the amount of $10.0 million.

 On March 30, 2025, we elected to extend such maturity
date of the Related Party Note for one year to March 30, 2026.

 ITEM
 7A.
 Quantitative
 and Qualitative Disclosures About Market Risk

Risk

risk is the adverse effect on the value of a financial instrument that results from a change in interest rates. We may be exposed
to interest rate changes primarily as a result of long-term debt used to maintain liquidity, fund capital expenditures and expand
our real estate investment portfolio and operations. Market fluctuations in real estate financing may affect the availability
and cost of funds needed to expand our investment portfolio. In addition, restrictions upon the availability of real estate financing
or high interest rates for real estate loans could adversely affect our ability to dispose of real estate in the future. We will
seek to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs. We may
use derivative financial instruments to hedge exposures to changes in interest rates on loans secured by our assets. The market
risk associated with interest-rate contracts is managed by establishing and monitoring parameters that limit the types and degree
of market risk that may be undertaken.

 With
regard to variable rate financing, our advisor will assess our interest rate cash flow risk by continually identifying and monitoring
changes in interest rate exposures that may adversely impact expected future cash flows and by evaluating hedging opportunities.
Our advisor maintains risk management control systems to monitor interest rate cash flow risk attributable to both our outstanding
and forecasted debt obligations as well as our potential offsetting hedge positions. While this hedging strategy will be designed
to minimize the impact on our net income and funds from operations from changes in interest rates, the overall returns on an investment
in our company may be reduced.

 As
of December 31, 2024, our indebtedness, as described below, was comprised of notes secured by our hotel properties. All such notes
accrue interest at a fixed rate, except for the Hampton Inn Houston note and the Hyatt Place North Charleston note, which accrue
interest at a floating rate, and, therefore, an increase or decrease in interest rates would not have a material effect on our
interest expense with respect to such notes. Interest rate changes will affect the fair value of any fixed rate instruments that
we hold. As we expect to hold our fixed rate instruments to maturity and the amounts due under such instruments would be limited
to the outstanding principal balance and any accrued and unpaid interest, we do not expect that fluctuations in interest rates,
and the resulting change in fair value of our fixed rate instruments, would have a significant impact on our operations.

 As
of December 31, 2024 and 2023, our mortgage notes payable secured by the respective assets, consisted of the following ($ amounts
in thousands):

 Loan

 as of
 2024

 as of
 2023

 Rate at
 2024

 Maturity Date

 Residence Inn Austin (1)

 $
 14,842

 $
 15,160

 4.580
 %

 November 1, 2025

 Springhill Suites Seattle

 40,954

 4.380
 %

 October 1, 2026

 Homewood Suites Woodlands

 8,049

 8,239

 4.690
 %

 April 11, 2025

 Hyatt Place Germantown

 5,696

 5,834

 7.250
 %

 June 29, 2028

 Hyatt Place North Charleston

 5,354

 5,456

 9.000
 %

 November 29, 2028

 Hampton Inn Austin

 9,461

 9,602

 9.000
 %

 November 6, 2029

 Residence Inn Grapevine (2)

 10,836

 11,080

 10.250
 %

 April 6, 2024

 Marriott Courtyard Lyndhurst (3)(4)

 17,058

 17,531

 4.700
 %

 September 27, 2024

 Hilton Garden Inn Austin (3)

 16,641

 4.530
 %

 December 11, 2024

 Hampton Inn Great Valley

 7,102

 7,269

 4.700
 %

 April 11, 2025

 Embassy Suites Nashville

 37,003

 37,924

 4.2123
 %

 July 11, 2025

 Homewood Suites Austin

 9,587

 9,809

 4.650
 %

 August 11, 2025

 Hampton Inn Houston

 3,762

 3,915

 9.500
 %

 April 28, 2028

 Residence Inn Houston Medical Center

 27,431

 10.000
 %

 April 1, 2025

 U.S. Small Business Administration Economic Injury Disaster Loans

 7,494

 7,500

 3.750
 %

 November 2051

 Total notes payable

 219,466

 229,844

 Less unamortized debt issuance costs

 (702
)

 (839
)

 Total notes payable, net of unamortized debt issuance costs

 $
 218,764

 $
 229,005

 (1)
 sold on February 6, 2025 to an unaffiliated purchaser for $20,500,000. The proceeds of
 such sale were used to repay the mortgage loan secured by this property.

 (2)
 sold on February 6, 2025 to an unaffiliated purchaser for $22,500,000. The proceeds of
 such sale were used to repay the mortgage loan secured by this property.

 (3)
 The
 current lenders for the mortgage loans on the Marriott Courtyard Lyndhurst property,
 which matured September 27, 2024, and the Hilton Garden Inn Austin, which matured on
 December 11, 2024, have agreed to temporarily forbear on any of their remedies while
 we finalize the terms of new replacement loans with new lenders.

 (4)
 sold on March 21, 2025 to an unaffiliated purchaser for $21,250,000. The proceeds of
 such sale were used to repay the mortgage loan secured by the property.

 Monthly
payments of principal and interest are due and payable until the maturity date.

 Each
of our hotel properties are subject to a mortgage loan bearing interest at a fixed rate secured by our ownership interest in the
property, except for Hyatt Place North Charleston, the Hampton Inn Austin and the Hampton Inn Houston mortgage loans which
bear interest at floating rates.

 Credit
Risk

 We
are also exposed to credit risk. Credit risk in our investments in debt and securities relates to each individual borrower's
ability to make required interest and principal payments on scheduled due dates. We seek to manage credit risk through our advisor's
comprehensive credit analysis prior to making an investment, actively monitoring our asset portfolio and the underlying credit
quality of our holdings and subordination and diversification of our portfolio. Our analysis is based on a broad range of real
estate, financial, economic and borrower-related factors which we believe are critical to the evaluation of credit risk inherent
in a transaction.

 ITEM
 8.
 Financial
 Statements and Supplementary Data

 Our
Consolidated Financial Statements and supplementary data can be found beginning on Page F-1 of this Annual Report.

 ITEM
 9.
 in and Disagreements with Accountants on Accounting and Financial Disclosure

 None.

 ITEM
 9A.
 Controls
 and Procedures

 Disclosure
Controls and Procedures

 As of the end of the period
covered by this Annual Report, management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness
of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934, as amended, or the Exchange Act). Based upon, and as of the date of, the evaluation, our Chief Executive Officer
and Chief Financial Officer concluded that the disclosure controls and procedures were not effective due to material weakness in internal
control over financial reporting further described below.

 Despite the identified
material weakness, including our Chief Executive Officer and Chief Financial Officer concluded that the consolidated financial statements
included in this Annual Report on Form 10-K present fairly, in all material respects, the financial position, results of operations and
cash flows for the periods disclosed in conformity with GAAP.

 Internal Control over Financial Reporting

 Our management is responsible
for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) or 15d-15(f)
promulgated under the Exchange Act. Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may
become inadequate because of change in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 Our management does not
expect that our disclosure controls and procedures or the Company's internal control over financial reporting will prevent or detect
all errors and all fraud. A control system, regardless of how well conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control systems will be met. These inherent limitations include the following: judgements in decision-making
can be faulty, and control and process breakdowns can occur because of simple errors or mistakes, controls can be circumvented by individuals,
acting alone or in collusion with each other, or by management override. The design of any system of controls is based in part on certain
assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its state goals
under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in
the degree of compliance with policies or procedures. Because of the inherent limitation in all control systems, no evaluation of controls
can provide absolute assurance that all control issues and instance of fraud, if any, have been detected.

 In connection with the
preparation of this Annual Report, our management assessed the effectiveness of our internal control over financial reporting as of December
31, 2024. In making that assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) in Internal Control-Integrated Framework. Based on its assessment, our management believes that, as of December
31, 2024, our internal control over financial reporting was ineffective based on those criteria.

 Management noted the following
deficiency that management believes to be a material weakness:

 -
 Lack of sufficient controls around inputs and assumptions used in management's impairment analysis.

 Changes in Internal Control over Financial
Reporting

 In response to the above
identified weakness in our internal control over financial reporting, we plan to improve the control policies and procedures over financial
reporting processes. We expect to conclude these remediation initiatives during the year ending December 31, 2025. We continue to evaluate
testing of our internal control policies and procedures, including assessing internal and external resources that may be available to
complete these tasks, but do not know when these tasks will be completed.

 A material weakness (within
the meaning of PCAOB Auditing Standard No. 5) is a deficiency, or a combination of deficiencies, in internal control over financial reporting
such that there is reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented
or detected on a timely basis. A significant deficiency is a deficiency, or combination of deficiencies, in internal control over financial
reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of
our financial reporting.

 This annual report does
not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management's
report was not subject to attestation by our registered public accounting firm.

 ITEM
 9B.
 Other

 None
of our directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement
(as defined in Item 408(c) of Regulation S-K) during the quarter ended December 31, 2024.

 ITEM
 9C.
 Disclosure
 Regarding Foreign Jurisdictions that Prevent Inspections.

 Not
Applicable.

 PART
III

 ITEM
 10.
 Directors,
Executive Officers and Corporate Governance

 Our
directors and executive officers and their positions and offices are as follows:

 Name

 Position

 Brett
 C. Moody

 Chairman
 of the Board, Chief Executive Officer and President

 Robert
 W. Engel

 Chief
 Financial Officer and Treasurer

 William
 H. Armstrong III

 Charles
 L. Horn

 Clifford
 P. McDaniel

 John
 P. Thompson

 Brett
C. Moody, age 61, has served as our Chairman of our board of directors, Chief Executive Officer and President since our organization.
Mr. Moody also serves as Chief Executive Officer and President of our advisor. Mr. Moody also served as Chairman of the board
of directors, Chief Executive Officer and President of Moody I and Chief Executive Officer and President of its advisor from January
2008 to September 2017. Mr. Moody founded Moody Mortgage Corporation in 1996 and has served as its Chairman and Chief Executive
Officer since its formation. Mr. Moody, who has over 30 years of commercial real estate experience, has since guided the growth
of his company from a mortgage company to a full service real estate firm, which includes affiliates Moody National Mortgage Corporation,
Moody National Realty Company, Moody National Management, Moody National Hospitality Management, LLC, Moody National Development
Company and their respective subsidiaries, collectively referred to as the Moody National Companies. His primary responsibilities
include overseeing real estate acquisitions and management as well as building, coaching and leading the Moody National Companies
team of professionals. As Chairman of the Board and Chief Executive Officer of Moody National Mortgage Corporation, Mr. Moody
has closed over 200 transactions totaling over $2 billion. Prior to founding Moody National Mortgage Corporation, Mr. Moody was
a financial analyst for the Dunkum Mortgage Group, now Live Oak Capital. Mr. Moody also serves on the Board of Directors of Foundation
for the Future, the Yellowstone Academy for At Risk Children, and the Palmer Drug Abuse Program. Mr. Moody attended the University
of Texas at Austin, but did not receive any degrees.

 Our
board of directors, excluding Mr. Moody, has determined that the leadership positions previously and currently held by Mr. Moody,
and the extensive experience he has accumulated from acquiring and managing investments in commercial real estate and debt, have
provided Mr. Moody with the experiences, attributes and skills necessary to effectively carry out the duties and responsibilities
of a director.

 Robert
W. Engel, age 70, has served as our Chief Financial Officer and Treasurer since our organization. Mr. Engel also served as
Chief Financial Officer and Treasurer of Moody I from January 2008 to September 2017, and as Secretary of Moody I from May 2010
to September 2017. In addition, Mr. Engel also serves as the Chief Financial Officer—Real Estate Development and Management
of the Moody National Companies Organization, a position he has held since September 2006. Prior to working at the Moody National
Companies Organization, Mr. Engel served as the Divisional Controller, Real Estate Development and Management, of BMS Management,
Inc., an owner and manager of commercial and multifamily properties primarily in Houston, Texas from May 2005 to September 2006.
From November 1999 to May 2005, Mr. Engel served as Controller and Chief Financial Officer, Real Estate Development and Management
for Hartman Management, Inc., advisor to Hartman Commercial Properties REIT, which provides commercial real estate services. Mr.
Engel is a CPA and holds memberships in the American Institute of Certified Public Accountants, and the Texas Society of Certified
Public Accountants. Mr. Engel is also a CPM, with membership in the Institute of Real Estate Management, and a CCIM as a member
of the CCIM Institute. He is a licensed real estate broker in the State of Texas. Mr. Engel holds Series 7, 22, 24, 27, 62 and
63 licenses with FINRA. Mr. Engel received a B.B.A. with highest honors from the University of Texas in Austin, Texas.

 William
H. Armstrong III, age 60, has served as one of our independent directors since September 2017. Mr. Armstrong also served as
one of Moody I's independent directors from September 2008 until September 2017. Mr. Armstrong serves as Chairman of the
Board, Chief Executive Officer and President of Stratus Properties Inc. (NASDAQ: STRS), a company engaged in the acquisition,
development, management, operation and sale of commercial, hotel, entertainment, multifamily and single-family residential real
estate properties located primarily in the Austin, Texas area. Mr. Armstrong has been employed by Stratus Properties since its
inception in 1992, served as Chief Financial Officer and Chief Operating Officer of Stratus Properties from 1996 to 1998, and
has served as Chairman of the Board, Chief Executive Officer and President of Stratus Properties since 1998. Prior to joining
Stratus Properties, Mr. Armstrong was Vice President of Sonnenblick Goldman, a national real estate investment banking and advisory
firm. Mr. Armstrong serves on the Finance Committee of the U.S. Green Building Council, a Washington, D.C.-based non-profit organization,
and he has been active in the National Association of Real Estate Investment Trusts, or NAREIT, the Urban Land Institute and the
Real Estate Council of Austin. Mr. Armstrong received a B.A. in Economics from the University of Colorado Denver.

 Our
board of directors, excluding Mr. Armstrong, has determined that Mr. Armstrong's previous leadership positions, including
directorships, with other organizations primarily engaged in investing in commercial real estate have provided Mr. Armstrong with
the experience, attributes and skills necessary to effectively carry out the duties and responsibilities of a director.

 Charles
L. Horn, age 64, has served as one of our independent directors, and as Chairman of our Audit Committee, since August 2014.
Mr. Horn also served as an independent director and as Chairman of the Audit Committee of Moody I from May 2012 to September 2017.
From November 2021 to June 2023, Mr. Horn has served as President and Chief Executive Officer of Loyalty Ventures, Inc. (NASDAQ:LYLT),
a leading provider of customer loyalty and marketing solutions. From July 2019 to October 2021, Mr. Horn has served as Executive
Vice President and Senior Advisor of Alliance Data Systems, Inc. (NYSE: ADS), a leading provider of customer loyalty and marketing
solutions, and from December 2009 to June 2019, Mr. Horn served as Executive Vice President and Chief Financial Officer of Alliance
Data Systems, Inc. From 1999 to November 2009, Mr. Horn served as Senior Vice President and Chief Financial Officer for Builders
Firstsource, Inc. (NASDAQ: BLDR), a leading supplier of structural building materials to homebuilders. From 1994 to 1999, Mr.
Horn served as Vice President of Finance and Treasury for the retail operations of Pier 1 Imports, Inc., and, from 1992 to 1994,
Mr. Horn served as Executive Vice President and Chief Financial Officer of Conquest Industries. Mr. Horn is a Certified Public
Accountant in the State of Texas. Mr. Horn received a B.A. in business administration from Abilene Christian University and an
M.B.A. from the University of Texas in Austin, Texas.

 Our
board of directors, excluding Mr. Horn, has determined that Mr. Horn's experience as the chief financial officer of public,
listed companies and as a certified public accountant has provided Mr. Horn with the experiences, attributes and skills necessary
to effectively carry out his duties and responsibilities as a director.

 Clifford
P. McDaniel, age 63, has served as one of our independent directors since February 2016. Since February 2015, Mr. McDaniel
has served as an Executive Managing Director of the Affordable Housing Group in the Houston office of ARA, a Newmark Company,
a real estate investment brokerage firm. From January 1996 to June 2021, Mr. McDaniel served as a Principal with ARA. In his roles
at ARA, Mr. McDaniel has developed expertise in the financial and procedural aspects of real estate transactions for multiple
institutional clients. From June of 2021 to present, Mr. McDaniel has been a Managing director of Lument. Mr. McDaniel also serves
at the Executive Director of On Track Ministries, Vice President of Club Outreach Ministries and Secretary of West Houston 15
MUD. Mr. McDaniel received a B.S. in Communications from the University of Texas in Austin, Texas.

 Our
board, excluding Mr. McDaniel, has determined that Mr. McDaniel's current and previous experience in strategic real estate
acquisitions and dispositions has provided Mr. McDaniel with the experiences, attributes and skills necessary to effectively carry
out the duties and responsibilities of a director.

 John
P. Thompson, age 61, has served as one of our independent directors since September 2017. Mr. Thompson also served as one
of Moody I's independent directors from September 2008 until September 2017. Mr. Thompson is the founder of PinPoint Commercial,
L.P., which provides real estate services focusing on industrial, senior housing and medical related projects primarily in Texas.
As CEO of Pinpoint Commercial, Mr. Thompson leads all investment and development activities for the firm and oversees the company's
financial and management operations. Prior to founding PinPoint Commercial in 1998, Mr. Thompson served as an industrial real
estate broker with CB Richard Ellis, Inc. Mr. Thompson received a B.B.A. in Finance from the University of Texas in Austin, Texas.

 Our
board of directors, excluding Mr. Thompson, has determined that Mr. Thompson's experience managing investments in industrial
and retail properties and brokering industrial properties has provided Mr. Thompson with the experiences, attributes and skills
necessary to effectively carry out the duties and responsibilities of a director.

 Audit
Committee

 Our
board has a separately designated standing audit committee. The audit committee meets on a regular basis, at least quarterly and
more frequently as necessary. The audit committee's primary functions are to evaluate and approve the services and fees
of our independent registered public accounting firm, to periodically review the auditors' independence and to assist the
board in fulfilling its oversight responsibilities by reviewing the financial information to be provided to the stockholders and
others, the system of internal controls which management has established and the audit and financial reporting process. Our audit
committee charter requires that all members of our audit committee be independent. The current members of the audit committee
are Charles L. Horn and Clifford P. McDaniel, both of whom are independent directors. Mr. Horn currently serves as the chairman
of the audit committee. Our board of directors has determined that Mr. Horn satisfies the SEC's requirements for and serves
as our "audit committee financial expert."

 Code
of Ethics

 We
have adopted a Code of Ethics which contains general guidelines for conducting our business and is designed to help directors,
employees and independent consultants resolve ethical issues in an increasingly complex business environment. The Code of Ethics
applies to all of our officers, including our principal executive officer, principal financial officer and principal accounting
officer and persons performing similar functions and all members of our board. The Code of Ethics covers topics including, but
not limited to, conflicts of interest, record keeping and reporting, payments to foreign and United States government personnel
and compliance with laws, rules and regulations. We will provide to any person without charge a copy of our Code of Ethics, including
any amendments or waivers thereto, upon written request delivered to our principal executive office at the address listed on the
cover page of this Annual Report. Within the time required by the rules of the SEC, we will file on Form 8-K any amendment to
or waiver of our Code of Ethics.

 Insider
Trading Arrangements and Policies

 We
have adopted insider trading policies and procedures governing the purchase, sale, or other dispositions of our securities by
our directors, officers and employees that are reasonably designed to promote compliance with insider trading laws, rules and
regulations.

 ITEM
 11.
 Executive

of our Executive Officers

 We
are externally managed and have no employees. Each of our executive officers are employees of our advisor or one or more of its
affiliates and receive compensation for his or her services, including services performed on our behalf, from such entities. Our
executive officers do not receive compensation directly from us for services rendered to us and we do not intend to pay any compensation
to our executive officers. We do not reimburse our advisor directly or indirectly for the salary or other compensation paid to
any of our executive officers. As a result, we do not have nor has our board considered a compensation policy for our executive
officers and we have not included a Compensation and Discussion Analysis in this Annual Report.

 See
Item 13, "Certain Relationships and Related Transactions and Director Independence" below for a discussion of fees
paid to our advisor and its affiliates.

of our Directors

 If
a director is also one of our executive officers or an affiliate of our advisor, we do not pay any compensation to that person
for services rendered as a director. The amount and form of compensation payable to our independent directors for their service
to us is determined by our board of directors, based upon recommendations from our advisor. The following table sets forth certain
information regarding compensation earned by or paid to our directors during the year ended December 31, 2024.

 Name

 Fees Earned or Paid in Cash (1)

 Restricted
 Stock
 Grants

 All Other Compensation

 Total

 Brett C. Moody

 $
 —

 $
 —

 $
 —

 $
 —

 Charles L. Horn (2)

 84,000

 —

 —

 84,000

 Clifford P. McDaniel (2)

 —

 —

 John P. Thompson (2)

 —

 —

 William H. Armstrong III (2)

 —

 —

 Total

 $
 246,000

 $
 —

 $
 —

 $
 246,000

 (1)

 The
 amounts shown in this column include fees earned for attendance at board of director
 and committee meetings and annual retainers, as described below under "—Cash
 Compensation."

 (2)
 director.

 Cash

 We
pay each of our independent directors an annual retainer of $50,000, plus $2,000 per in-person board meeting attended, $1,500
per in-person committee meeting attended and $1,000 for each telephonic meeting attended; provided, however, we do
not pay an additional fee to our directors for attending a committee meeting when the committee meeting is held on the same day
as a board meeting. We also pay the audit committee chairperson an additional annual retainer of $30,000, which annual retainer
amount was increased from $10,000 effective as of January 1, 2024, and reimburse all directors for reasonable out-of-pocket expenses
incurred in connection with attending board meetings.

Directors Compensation Plan

 We
have adopted an independent directors compensation plan, which operates as a sub-plan of our long-term incentive plan (described
below) pursuant to which each of our independent directors was entitled, subject to the plan's conditions and restrictions,
to receive an initial grant of 5,000 shares of restricted stock when we raised $2,000,000 in gross offering proceeds. Each subsequent
independent director that joins our board of directors will receive an initial grant of 5,000 shares of restricted stock upon
his or her election to our board of directors. In addition, each independent director will receive an additional grant of 2,500
shares of restricted stock upon each of the first four annual meetings of stockholders when he or she is re-elected to our board
of directors. The restricted stock will generally vest and become non-forfeitable in equal quarterly instalments beginning on
the first day of the first quarter following the date of grant; provided, however, that the restricted stock will
become fully vested on the earlier of (1) the termination of the independent director's service as a director due to death
or disability, or (2) we experience a change in control. As of December 31, 2024, all of our current independent directors have
received all of the grants of restricted stock to which they are entitled pursuant to the terms of the independent directors compensation
plan.

 All
directors receive reimbursement of reasonable out-of-pocket expenses incurred in connection with attending meetings of the board
of directors. If a director is also one of our executive officers, we will not pay any compensation to such person for services
rendered as a director.

 Long-Term
Incentive Plan

 We
have adopted a long-term incentive plan which we use to attract and retain qualified directors, officers, employees, and consultants.
Our long-term incentive plan offers these individuals an opportunity to participate in our growth through awards in the form of,
or based on, our common stock. We currently anticipate that we will issue awards only to our independent directors under our long-term
incentive plan.

 The
long-term incentive plan authorizes the granting of restricted stock, stock options, stock appreciation rights, restricted or
deferred stock units, dividend equivalents, other stock-based awards and cash-based awards to directors, employees and consultants
of ours selected by the board of directors for participation in our long-term incentive plan. Stock options granted under the
long-term incentive plan will not exceed an amount equal to 10.0% of the outstanding shares of our common stock on the date of
grant of any such stock options. Stock options may not have an exercise price that is less than the fair market value of a share
of our common stock on the date of grant.

 Our
board of directors or a committee appointed by our board of directors administers the long-term incentive plan, with sole authority
to determine all of the terms and conditions of the awards, including whether the grant, vesting or settlement of awards may be
subject to the attainment of one or more performance goals. As described above, our independent directors receive shares of restricted
stock under a sub-plan to our long-term incentive plan, thereby aligning their interests more closely with the interests of our
stockholders. No awards will be granted under the long-term incentive plan if the grant or vesting of the awards would jeopardize
our status as a REIT under the Internal Revenue Code or otherwise violate the ownership and transfer restrictions imposed under
our charter. Unless otherwise determined by our board of directors, no award granted under the long-term incentive plan will be
transferable except through the laws of descent and distribution.

 We
have authorized and reserved an aggregate maximum number of 2,000,000 shares for issuance under the long-term incentive plan,
of which 1,935,000 shares remained as of December 31, 2024. In the event of a transaction between our company and our stockholders
that causes the per-share value of our common stock to change (including, without limitation, any stock dividend, stock split,
spin-off, rights offering or large nonrecurring cash dividend), the share authorization limits under the long-term incentive plan
will be adjusted proportionately and the board of directors will make such adjustments to the long-term incentive plan and awards
as it deems necessary, in its sole discretion, to prevent dilution or enlargement of rights immediately resulting from such transaction.
In the event of a stock split, a stock dividend or a combination or consolidation of the outstanding shares of common stock into
a lesser number of shares, the authorization limits under the long-term incentive plan will automatically be adjusted proportionately
and the shares then subject to each award will automatically be adjusted proportionately without any change in the aggregate purchase
price.

 Our
board of directors may in its sole discretion at any time determine that all or a portion of a participant's awards will
become fully vested. The board may discriminate among participants or among awards in exercising such discretion. The long-term
incentive plan will automatically expire on the tenth anniversary of the date on which it is approved by our board of directors
and stockholders, unless extended or earlier terminated by our board of directors. Our board of directors may terminate the long-term
incentive plan at any time. The expiration or other termination of the long-term incentive plan will not, without the participant's
consent, have an adverse impact on any award that is outstanding at the time the long-term incentive plan expires or is terminated.
Our board of directors may amend the long-term incentive plan at any time, but no amendment will adversely affect any award without
the participant's consent and no amendment to the long-term incentive plan will be effective without the approval of our
stockholders if such approval is required by any law, regulation or rule applicable to the long-term incentive plan.

Committee Interlocks and Insider Participation

 We
currently do not have a compensation committee of our board (or other committee of our board serving an equivalent function),
and none of our officers or other persons participate in deliberations of our board regarding the compensation of our executive
officers, because we do not pay, or plan to pay, any compensation to our officers. There are no interlocks or insider participation
as to compensation decisions required to be disclosed pursuant to SEC regulations. We have not included a Compensation and Discussion
Analysis in this Annual Report, as discussed above.

 ITEM 12.
 Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 Equity
Compensation Plan Information

 The
following table provides information about our common stock that may be issued upon the exercise of options, warrants and rights
under our long-term incentive plan, as of December 31, 2024.

 Plan Category

 Number of
 Securities to be
 Issued Upon
 Exercise of
 Outstanding
 Options,
 Warrants and
 Rights

 Weighted-
 average
 Exercise Price
 of Outstanding
 Options,
 Warrants and
 Rights

 Number of
 Securities
 Remaining
 Available for
 Future Issuance Under Equity Compensation
 Plans

 Equity compensation plans approved by security holders:

 —

 $
 —

 1,935,000

 Equity compensation plans not approved by security holders:

 N/A

 N/A

 N/A

 Total

 —

 $
 —

 1,935,000

 Security
Ownership of Certain Beneficial Owners and Management

 The
following table sets forth the beneficial ownership of our common stock as of March 26, 2025, for each person or group that is
known by us to be the beneficial owner of more than 5.0% of our outstanding shares of common stock, for each of our directors
and executive officers and for our directors and executive officers as a group. To our knowledge, each person who beneficially
owns our shares of our common stock has sole voting and disposition power with regard to such shares.

 Name of Beneficial Owner (1)

 Number of Shares Beneficially Owned (2)

 Percent of All
 Shares

 Officers and Directors

 Brett C. Moody (3)

 11,121

 *

 William H. Armstrong

 26,959

 *

 Robert W. Engel

 —

 —

 Charles L. Horn

 18,075

 *

 Clifford P. McDaniel

 18,158

 *

 John P. Thompson

 16,292

 *

 All Directors and Executive Officers as a group (6 persons) (3)

 90,605

 *

 *
 Represents
 less than 1.0%.

 (1)
 The
 address of each of Messrs. Moody, Armstrong, Engel, Horn, McDaniel and Thompson is c/o
 Moody National REIT II, Inc., 9655 Katy Freeway, Suite 600, Houston, Texas 77024.

 (2)
 Under
 SEC rules, a person is deemed to be a "beneficial owner" of a security if
 that person has or shares "voting power," which includes the power to dispose
 of or to direct the disposition of such security. A person also is deemed to be a beneficial
 owner of any securities which that person has a right to acquire within 60 days. Under
 these rules, more than one person may be deemed to be a beneficial owner of the same
 securities and a person may be deemed to be a beneficial owner of securities as to which
 he or she has no economic or pecuniary interest. Except as otherwise noted, all shares
 shown in the table are Class A shares.

 (3)
 Includes
 11,121 Class A shares owned by our sponsor, which is indirectly owned and controlled
 by Mr. Moody.

 ITEM 13.
 Certain
Relationships and Related Transactions and Director Independence

 The
following describes all transactions during the period from January 1, 2023 to December 31, 2024 involving us, our directors,
our advisor, our sponsor and any affiliate thereof and all such proposed transactions. See Note 6 (Related Party Arrangements)
to the consolidated financial statements included in this Annual Report. Our independent directors are specifically charged with
and have examined the fairness of such transactions to our stockholders and have determined that all such transactions are fair
and reasonable to us.

 Ownership
Interests

 Our
sponsor owns 8,000 shares of our common stock that it purchased for an aggregate of $200,000 on August 14, 2014. Moody LPOP II
contributed $1,000 to our operating partnership in exchange for special limited partnership interests and our affiliate, Moody
Holdings II, contributed $1,000 to our operating partnership in exchange for limited partnership interests.

 As
of December 31, 2024, Moody Holdings II owned less than 1% of the outstanding limited partnership interests in our operating partnership
and Moody LPOP II owned 100% of the special limited partnership interests issued by our operating partnership. We are the sole
general partner of our operating partnership and own approximately 97.7% of the limited partnership units of our operating partnership.
As we accepted subscriptions for shares of our common stock, we transferred substantially all of the net offering proceeds from
our public offering to our operating partnership as a contribution in exchange for partnership interests and our percentage ownership
in our operating partnership increased proportionately. Moody LPOP II's ownership interest of the special limited partnership
interests entitles it to receive distributions equal to 15% of our net cash flows, whether from continuing operations, the repayment
of loans, the disposition of assets or otherwise, but only after our stockholders have received, in the aggregate, cumulative
distributions equal to their total invested capital plus a 6% cumulative, non-compounded annual pre-tax return on such aggregated
invested capital. In addition, the special limited partnership interest holder will be entitled to a separate payment if it redeems
its special limited partnership interests. The special limited partnership interests may be redeemed upon (1) the listing of our
common stock on a national securities exchange or (2) the occurrence of certain events that result in the termination or non-renewal
of our advisory agreement, in each case for an amount that Moody LPOP II would have been entitled to receive as if our operating
partnership had disposed of all of its assets at the enterprise valuation as of the date of the event triggering the redemption.

 Our
Relationships with our Advisor and our Sponsor

 Our
advisor, Moody National Advisor II, LLC, supervises and manages our day-to-day operations and selects our real property investments
and real estate-related investments, subject to the oversight of our board of directors. Our advisor also provides marketing,
sales and client services on our behalf. Our advisor was formed in July 2014 and is indirectly owned by our sponsor. Brett C.
Moody, the Chairman of our board of directors and our Chief Executive Officer and President, also serves as the Chief Executive
Officer of our sponsor and our advisor. All of our officers and directors, other than our independent directors, are officers
of our advisor and serve, and may serve in the future, other affiliates of our advisor.

 We
and our operating partnership have entered into the advisory agreement with our advisor, the current one-year term of which expires
on January 20, 2026, subject to an unlimited number of successive one-year renewals upon mutual consent of the parties. A majority
of the independent directors may terminate the advisory agreement without cause or penalty on 60 days' written notice and
we may terminate the advisory agreement immediately for fraud, criminal conduct, misconduct or negligent breach of fiduciary duty
by our advisor, a material breach of the advisory agreement by our advisor or upon the bankruptcy of our advisor. Services provided
by our advisor under the terms of the advisory agreement include the following:

 participate
 in formulating an investment strategy and asset allocation framework consistent with
 achieving our investment objectives;

 research,
 identify, review and recommend to our board of directors for approval investments in
 real estate assets and dispositions consistent with our investment policies and objectives;

 structure
 the terms and conditions of transactions pursuant to which acquisitions and dispositions
 of real estate assets will be made;

 actively
 oversee and manage our portfolio of real estate assets for purposes of meeting our investment
 objectives;

 manage
 our day-to-day affairs, including financial accounting and reporting, investor relations,
 marketing, informational systems and other administrative services on our behalf;

 select
 joint venture partners, structure corresponding agreements and oversee and monitor these
 relationships;

 arrange
 for financing and refinancing of our real estate assets; and

 recommend
 various liquidity events to our board of directors when appropriate.

 The
above summary is provided to illustrate the material functions that our advisor performs for us pursuant to the advisory agreement
and is not intended to include all of the services that may be provided to us by the advisor, its affiliates or third parties.

 Fees
and Expense Reimbursements Paid to our Advisor

to the advisory agreement, we pay our advisor or its affiliates the fees described below.

 As
 of January 16, 2018, our advisor assumed responsibility for the payment of all selling
 commissions, dealer manager fees and stockholder servicing fees paid in connection with
 our public offering. In connection therewith, we increased the acquisition fee we pay
 our advisor from 1.5% to up to 3.85% of (1) the cost of all investments that we acquire
 (including our pro rata share of any indebtedness assumed or incurred in respect of the
 investment and exclusive of acquisition and financing coordination fees), (2) our allocable
 cost of investments acquired in a joint venture (including our pro rata share of the
 purchase price and our pro rata share of any indebtedness assumed or incurred in respect
 of that investment and exclusive of acquisition fees and financing coordination fees)
 or (3) the amount funded by us to acquire or originate a loan or other investment, including
 mortgage, mezzanine or bridge loans (including any third-party expenses related to such
 investment and exclusive of acquisition fees and financing coordination fees). The 3.85%
 acquisition fee is comprised of (i) a 1.5% base acquisition fee and (ii) up to an additional
 2.35% contingent acquisition fee amount that we refer to as the "contingent advisor
 payment." The 1.5% base acquisition fee will always be payable upon our acquisition
 of an investment, unless the receipt thereof is waived by our advisor. Our advisor intends
 to recoup the selling commissions, dealer manager fees and stockholder servicing fees
 it funds on our behalf through receipt of the contingent advisor payment. The amount
 of the contingent advisor payment to be paid in connection with the closing of an acquisition
 will be reviewed on an acquisition-by-acquisition basis and such payment will not exceed
 the then-outstanding amounts paid by our advisor for selling commissions, dealer manager
 fees and stockholder servicing fees at the time of such closing. For purposes of determining
 the amount of contingent advisor payment payable, the amounts paid by our advisor for
 dealer manager fees, selling commissions or stockholder servicing fees and considered
 "outstanding" will be reduced by the amount of the contingent advisor payment
 previously paid. Our advisor may waive or defer all or a portion of the acquisition
 fee at any time and from time to time, in our advisor's sole discretion. We
 did not incur any acquisition fees payable to our advisor for the years ended December
 31, 2024 and 2023.

 We
 pay our advisor a financing coordination fee of 1% of the amount available under any
 loan or line of credit made available to us and 0.75% of the amount available or outstanding
 under any refinanced loan or line of credit. Our advisor will pay some or all of these
 fees to third parties with whom it subcontracts to coordinate financing for us. We incurred
 financing coordination fees payable to our advisor of $191,000 and $0 during the years
 ended December 31, 2024 and 2023, respectively.

 We
 pay our advisor a monthly asset management fee of one-twelfth of 1.0% of the cost of
 investment of all real estate investments we acquire. We incurred asset management fees
 of $4.8 million payable to our advisor for each of the years ended December 31, 2024
 and 2023.

 We
 pay Moody National Hospitality Management, LLC, or the property manager, an affiliate
 of our advisor, a monthly hotel management fee equal to 4% of the monthly gross receipts
 from the properties managed by the property manager for services it provides in connection
 with operating and managing such properties. The property manager may pay some or all
 of the compensation it receives from us to a third-party property manager for management
 or leasing services. In the event that we contract directly with a non-affiliated third-party
 property manager, we will pay the property manager a market-based oversight fee. We will
 reimburse the costs and expenses incurred by the property manager on our behalf, including
 legal, travel and other out-of-pocket expenses that are directly related to the management
 of specific properties, but we will not reimburse the property manager for general overhead
 costs or personnel costs other than employees or subcontractors who are engaged in the
 on-site operation, management, maintenance or access control of the properties. We paid
 the property manager property management fees of $3.2 million and $3.4 million and accounting
 fees of $450,000 for each of the years ended December 31, 2024 and 2023, respectively.

 We
 pay an annual incentive fee to the property manager. Such annual incentive fee is equal
 to 15% of the amount by which the operating profit from the properties managed by the
 property manager for such fiscal year (or partial fiscal year) exceeds 8.5% of the total
 investment in such properties. The property manager may pay some or all of this annual
 fee to third-party sub-property managers for management services. For purposes of this
 fee, "total investment" means the sum of (i) the price paid to acquire a
 property, including closing costs, conversion costs, and transaction costs; (ii) additional
 invested capital; and (iii) any other costs paid in connection with the acquisition of
 the property, whether incurred pre-acquisition or post-acquisition. As of December 31,
 2024, we had not paid the property manager any annual incentive fees.

 If
 our advisor provides a substantial amount of services in connection with the sale of
 a property or other investment, as determined by our independent directors, we may also
 pay our advisor a disposition fee in an amount of up to one-half of the brokerage commission
 paid but in no event greater than 3% of the contract sales price of each property or
 other investment sold; provided, however, in no event may the aggregate disposition
 fees paid to our advisor and any real estate commissions paid to unaffiliated third parties
 exceed 6% of the contract sales price. As of December 31, 2024, we had not paid any disposition
 fees to our advisor.

 In
addition to the fees we pay to our advisor pursuant to the advisory agreement, we also reimburse our advisor for the following
costs and expenses:

 Our
 organization and offering expenses may be incurred directly by us or may be incurred
 by our advisor on our behalf. Pursuant to the advisory agreement, we will reimburse our
 advisor for organizational and offering expenses associated with our public offerings
 incurred by our advisor on our behalf, provided that within 60 days of the last day of
 the month in which any public offering ends, our advisor is obligated to reimburse us
 to the extent that organization and offering costs we have incurred in connection with
 such public offering exceed 15% of the gross offering proceeds from the sale of shares
 of our common stock in such offering. As of January 16, 2018, our advisor assumed responsibility
 for the payment of all selling commissions, dealer manager fees and stockholder servicing
 fees paid in connection with our public offering. We will not reimburse our advisor for
 the selling commissions and fees it pays on our behalf, however our advisor intends to
 recoup all or a portion of such amounts over time through receipt of the contingent advisor
 payment, as discussed above.

 As
of December 31, 2024 and 2023, total organization and offering expenses for the initial public offering and the follow-on offering
were $21.1 million, comprised of $12.3 million of expenses incurred directly by us and $8.8 million in expenses incurred by and
reimbursable to our advisor (excluding the selling commissions, dealer manager fees and stockholder servicing fees paid on our
behalf by our advisor effective as of January 16, 2018). As of December 31, 2024, total organization and offering expenses for
the follow-on offering were $2.7 million, comprised of $0 of expenses incurred directly by us and $2.7 million in expenses incurred
by and reimbursable to our advisor. As of December 31, 2024, we had $0 due to our advisor for reimbursable offering costs.

 We
 will reimburse our advisor for all expenses paid or incurred by our advisor in connection
 with the services provided to us, subject to the limitation that we will not reimburse
 our advisor for any amount by which our operating expenses (including the asset management
 fee) at the end of the four preceding fiscal quarters exceeds the 2%/25% Limitation (as
 defined in Part II, Item 7 of this Annual Report). Notwithstanding the above, we may
 reimburse our advisor for expenses in excess of this limitation if a majority of our
 independent directors determines that such excess expenses are justified based on unusual
 and non-recurring factors. For the four fiscal quarters ended December 31, 2024, our
 total operating expenses were $7.1 million, which included $5.1 million in operating
 expenses incurred directly by us and $2.0 million incurred by our advisor on our behalf.
 Of the $7.1 million in total operating expenses incurred during the four fiscal quarters
 ended December 31, 2024, $0 exceeded the 2%/25% Limitation. We reimbursed our advisor
 $2.0 million during the four fiscal quarters ended December 31, 2024. As of December
 31, 2024, we had $267,000 due to our advisor for operating expense reimbursement.

 We
 reimburse our advisor for acquisition expenses incurred related to the selection and
 acquisition of real property investments and real estate-related investments; provided,
 however, that in no event will the total of all acquisition fees (including financing
 coordination fees) and acquisition expenses payable exceed 6% of the contract purchase
 price of all real estate investments acquired. We did not reimburse our advisor for any
 acquisition expenses for the years ended December 31, 2024 and 2023.

 Selling
Commissions and Fees Paid to our Dealer Manager

 From
January 1, 2017 through June 12, 2017, we paid Moody Securities an up-front selling commission of up to 7.0% of the gross proceeds
of what are now the Class A Shares sold in the primary offering and a dealer manager fee of up to 3.0% of the gross proceeds of
what are now the Class A Shares sold in the primary offering. Beginning on June 12, 2017, we reallocated our common shares into
four separate share classes, Class A Shares, Class T Shares, Class I Shares, and Class D Shares. We offered our Class A Shares,
Class T Shares, and Class I Shares in our public offering, with differing commissions and fees applicable to each such class of
shares.

 Beginning
January 16, 2018, our advisor assumed responsibility for the payment of all selling commissions, dealer manager fees and stockholder
servicing fees paid in connection with our public offering; provided, however, that our advisor intends to recoup
all or a portion of such amounts over time through receipt of the contingent advisor payment (as discussed above). As of December
31, 2024, we had paid Moody Securities $9.7 million in selling commissions, trailing stockholder servicing fees, and dealer manager
fees related to our public offerings, of which $8.5 million could potentially be recouped by our advisor at a later date through
receipt of the contingent advisor payment.

 Notes
Payable to Related Party

 See
Note 4, "Debt" to the consolidated financial statements included in this Annual Report for a description of notes
payable to related party. The balance of such notes was $50.0 million as of December 31, 2024.

 Approval
of Related Party Transactions

 Our
board, including our independent directors, has examined the material terms, factors and circumstances surrounding the transactions
and arrangements described above. On the basis of such examination, our board, including our independent directors, has determined
that such transactions are fair and reasonable to us and on terms and conditions not less favorable to us than those available
from unaffiliated third parties.

 Conflict
Resolution Procedures

 As
discussed above, we are subject to potential conflicts of interest arising out of our relationship with our advisor and its affiliates.
These conflicts may relate to compensation arrangements, the allocation of investment opportunities, the terms and conditions
on which various transactions might be entered into by us and our advisor or its affiliates and other situations in which our
interests may differ from those of our advisor or its affiliates. We have adopted the procedures set forth below to address these
potential conflicts of interest.

 Allocation
of Investment Opportunities

 Many
investment opportunities that are suitable for us may also be suitable for our sponsor or its affiliates. We, our sponsor, our
advisor and other affiliates share certain of the same executive officers and key employees. In the event that we, or any other
investment vehicle formed or managed by these real estate professionals, or any other investment vehicle sponsored by our sponsor
and its affiliates, are in the market and seeking investments similar to those we intend to make, these real estate professionals
will review the investment objectives, portfolio and investment criteria of each such investment vehicle to determine the suitability
of the investment opportunity.

 In
connection with determining whether an investment opportunity is suitable for one or more investment vehicles sponsored by our
sponsor and its affiliates, these real estate professionals may take into account such factors as they, in their discretion, deem
relevant, including, among others, the following:

 the
 investment objectives and criteria of our sponsor and other affiliates;

 the
 cash requirements of our sponsor and its affiliates;

 the
 portfolio of our sponsor and its affiliates by type of investment and risk of investment;

 the
 policies of our sponsor and its affiliates relating to leverage;

 the
 anticipated cash flow of the asset to be acquired;

 the
 income tax effects of the purchase;

 the
 size of the investment; and

 the
 amount of funds available to our sponsor and its affiliates and the length of time such
 funds have been available for investment.

 Following
the completion of suitability determinations, these real estate professionals shall have the authority, in their sole discretion,
to direct the investment opportunity to the entity for which such investment opportunity would be the most suitable. The advisory
agreement requires that this determination be made in a manner that is fair without favoring our sponsor or any other affiliate.
Notwithstanding the foregoing, in the event that an investment opportunity becomes
available that is equally suitable, under all of the factors considered by these real estate professionals, for both us and one
or more other public or private entities sponsored by our sponsor and its affiliates, or managed by these real estate
professionals, then the entity that has had the longest period of time elapse since it was offered an investment opportunity will
first be offered such investment opportunity.

 If
a subsequent event or development causes any investment, in the opinion of these real estate professionals, to be more appropriate
for another affiliated entity, they may offer the investment to such entity. In making an allocation determination, these real
estate professionals have no obligation to make any investment opportunity available to us.

Directors

 Our
independent directors, acting as a group, will resolve potential conflicts of interest whenever they determine that the exercise
of independent judgment by the board of directors or our advisor or its affiliates could reasonably be compromised. However, the
independent directors may not take any action which, under Maryland law, must be taken by the entire board of directors or which
is otherwise not within their authority. The independent directors, as a group, are authorized to retain their own legal and financial
advisors. Among the matters the independent directors review and act upon are:

 the
 continuation, renewal or enforcement of our agreements with our advisor and its affiliates,
 including the advisory agreement with our advisor and the dealer manager agreement with
 our dealer manager;

 transactions
 with affiliates, including our directors and officers;

 awards
 under our long-term incentive plan; and

 pursuit
 of a potential liquidity event.

Involving Our Advisor and its Affiliates

 The
independent directors will evaluate at least annually whether the compensation that we contract to pay to our advisor and its
affiliates is reasonable in relation to the nature and quality of services performed and whether such compensation is within the
limits prescribed by our charter. The independent directors will supervise the performance of our advisor and its affiliates and
the compensation we pay to them to determine whether the provisions of our advisory agreement are being carried out. The independent
directors record their findings on the factors they deem relevant in the minutes of the meetings of our board of directors.

 Acquisition,
Leases and Sales Involving Affiliates

 We
will not purchase assets in which our sponsor, our advisor, any of our directors or any of their affiliates has an interest without
a determination by a majority of our board of directors, including a majority of the independent directors, not otherwise interested
in the transaction that such transaction is fair and reasonable to us and at a price to us no greater than the cost of the asset
to the affiliated party from which we are purchasing the asset, or, if the price to us is in excess of such cost, that substantial
justification for such excess exists and such excess is reasonable. In no event may we acquire or lease any such asset at an amount
in excess of its current appraised value.

 We
will not sell or lease assets to our advisor, our sponsor, any of our directors or any of their respective affiliates without
a determination by a majority of our board of directors, including a majority of the independent directors, not otherwise interested
in the transaction that such transaction is fair and reasonable to us.

 Our
charter provides that the consideration we pay for real property will ordinarily be based on the fair market value of the property
as determined by a majority of our board of directors or the members of a duly authorized committee of the board. In cases in
which a majority of our independent directors so determine, and in all cases in which real property is acquired from our sponsor,
our advisor, any of our directors or any of their affiliates, the fair market value shall be determined by an independent expert
selected by our independent directors not otherwise interested in the transaction.

 Mortgage
Loans Involving Affiliates

 We
are prohibited from investing in or making mortgage loans unless an appraisal of the underlying property is obtained. In all cases
in which the transaction is with our advisor, our sponsor, our directors or any of their respective affiliates, the appraisal
must be obtained by an independent expert, and we must keep the appraisal for at least five years and make it available for inspection
and duplication by any of our common stockholders. In addition, we must obtain a mortgagee's or owner's title insurance
policy or commitment as to the priority of the mortgage or the condition of the title. In addition, our charter prohibits us from
investing in indebtedness secured by a mortgage that is subordinate to any lien or other indebtedness of our sponsor, our advisor,
any of our directors or any of our affiliates.

 Loans
Involving Affiliates

 We
will not make any loans to our advisor, our sponsor, any of our directors or any of their respective affiliates except mortgage
loans for which an appraisal of the underlying property is obtained from an independent appraiser or loans to wholly owned subsidiaries.
In addition, we will not borrow from our advisor, our sponsor, any of our directors or any of their respective affiliates unless
a majority of our board of directors, including a majority of the independent directors, not otherwise interested in the transaction
approve the transaction as being fair, competitive and commercially reasonable and no less favorable to us than comparable loans
between unaffiliated parties. These restrictions on loans will only apply to advances of cash that are commonly viewed as loans,
as determined by our board of directors. By way of example only, the prohibition on loans would not restrict advances of cash
for legal expenses or other costs incurred as a result of any legal action for which indemnification is being sought, nor would
the prohibition limit our ability to advance reimbursable expenses incurred by our directors or officers, our sponsor, our advisor
or any of their respective affiliates.

 Other
Transactions Involving Affiliates

 We
will not engage in any other transaction with our sponsor, our advisor, any of our directors or any of their respective affiliates
unless a majority of our board of directors, including a majority of the independent directors, not otherwise interested in such
transaction approve such transaction as fair and reasonable to us and on terms and conditions no less favorable to us than those
available from unaffiliated third parties.

Independence

 We
have a five-member board. One of our directors, Brett C. Moody, is affiliated with our sponsor and its affiliates, and we do not
consider Mr. Moody to be an independent director. The four remaining directors qualify as "independent directors"
as defined in our charter in compliance with the requirements of the North American Securities Administrators Association's
Statement of Policy Regarding Real Estate Investment Trusts. Although our shares are not listed on any national securities exchange,
our independent directors are "independent" as defined by the standards of the New York Stock Exchange, or the NYSE.
The NYSE standards provide that to qualify as an independent director, in addition to satisfying certain bright-line criteria,
the board must affirmatively determine that a director has no material relationship with us (either directly or as a partner,
stockholder or officer of an organization that has a relationship with us). Our board of directors has affirmatively determined
that each of Messrs. Horn, McDaniel, Thompson and Armstrong are "independent" members of our board of directors under
all applicable standards for independence, including with respect to committee service on our audit committee.

 Our
charter provides that a majority of the directors must be "independent directors," except for a period of up to 60
days after the death, removal or resignation of an independent director pending the election of a successor independent director.
As defined in our charter, an "independent director" is a person who is not, on the date of determination, and within
the last two years from the date of determination has not been, directly or indirectly, associated with our sponsor or our advisor
by virtue of (1) ownership of an interest in our sponsor, our advisor, or any of their affiliates, other than us; (2) employment
by our sponsor, our advisor, or any of their affiliates; (3) service as an officer or director of our sponsor, our advisor, or
any of their affiliates, other than as one of our directors; (4) performance of services, other than as a director, for us; (5)
service as a director or trustee of more than three real estate investment trusts organized by our sponsor or advised by our advisor;
or (6) maintenance of a material business or professional relationship with our sponsor, our advisor, or any of their affiliates.
A business or professional relationship is considered "material" if the aggregate gross revenue derived by the director
from the sponsor, the advisor, and their affiliates (excluding fees for serving as one of our directors or other REIT or real
estate program organized or advised or managed by our advisor or its affiliates) exceeds 5% of either the director's annual
gross revenue during either of the last two years or the director's net worth on a fair market value basis. An indirect
association with the sponsor or our advisor shall include circumstances in which a director's spouse, parent, child, sibling,
mother- or father-in-law, son- or daughter-in-law, or brother- or sister-in-law is or has been associated with the sponsor, the
advisor, any of their affiliates, or with us. None of our independent directors face conflicts of interest because of affiliations
with other programs sponsored by our sponsor and its affiliates.

 Currently
Proposed Transactions

 There
are no currently proposed material transactions with related persons other than those transactions described above and Moody Capital's
election to extend the maturity of the Related Party Note for a period of one year to March 30, 2025, as provided for in the Related
Party Note.

 ITEM 14.
Accountant Fees and Services

Registered Public Accounting Firm

 Frazier
& Deeter, LLC, or Frazier & Deeter, has served as our independent registered public accounting firm since 2014.

 Pre-Approval
Policies

 The
audit committee charter imposes a duty on the audit committee to pre-approve all auditing services performed for us by our independent
auditors as well as all permitted non-audit services in order to ensure that the provision of such services does not impair the
auditors' independence. In determining whether to pre-approve services, the audit committee will consider whether the service
is a permissible service under the rules and regulations promulgated by the SEC. The audit committee may, in its discretion, delegate
to one or more of its members the authority to pre-approve any audit or non-audit services to be performed by the independent
auditors, provided any such approval is presented to and approved by the full audit committee at its next scheduled meeting.

 All
services rendered by Frazier & Deeter for the years ended December 31, 2024 and 2023 were pre-approved in accordance with
the policies and procedures described above.

Registered Public Accounting Firm Fees

 The
audit committee reviewed the audit services performed by Frazier & Deeter, as well as the fees charged by Frazier & Deeter
for such services. Frazier & Deeter did not provide any non-audit services. The aggregate fees billed to us by Frazier &
Deeter for professional accounting services for the years ended December 31, 2024 and 2023 are set forth in the table below.

 Year ended
 2024

 Year ended
 2023

 Audit fees

 $
 409,000

 $
 325,000

 Audit related fees

 —

 —

 Tax fees

 —

 —

 All other fees

 —

 —

 Total

 $
 409,000

 $
 325,000

 For
purposes of the preceding tables, Frazier & Deeter's professional fees are classified as follows:

 Audit
 fees —These are fees for professional services performed for the audit of our
 annual consolidated financial statements, the required review of quarterly financial
 statements, registration statements and other procedures performed by independent auditors
 in order for them to be able to form an opinion on our consolidated financial statements.

 Audit-related
 fees —These are fees for assurance and related services that traditionally are
 performed by independent auditors that are reasonably related to the performance of the
 audit or review of the financial statements, such as due diligence related to acquisitions
 and dispositions, attestation services that are not required by statute or regulation,
 internal control reviews, and consultation concerning financial accounting and reporting
 standards.

 Tax
 fees —These are fees for all professional services performed by professional
 staff in our independent auditor's tax division, except those services related
 to the audit of our financial statements. These include fees for tax compliance, tax
 planning, and tax advice, including federal, state, and local issues. Services may also
 include assistance with tax audits and appeals before the IRS and similar state and local
 agencies, as well as federal, state, and local tax issues related to due diligence.

 All
 other fees— These are fees for any services not included in the above-described
 categories, including assistance with internal audit plans and risk assessments.

 PART
IV

 ITEM
15.

 Exhibits
and Financial Statement Schedules

 The
following documents are filed as part of this Annual Report:

 (a)
 List
 of Documents Filed

 (1)
 The
 financial statements contained herein begin on page F-1 hereof

 (2)
 Financial
 Statement Schedules

 Schedule
III – Real Estate Assets and Accumulated Depreciation is set forth on page F-24 hereof.

 All
other schedules for which provision is made in the applicable accounting regulations of the SEC are not required under the related
instructions or are not applicable and therefore have been omitted.

 (3)
 Exhibits

 EXHIBIT

 Exhibit

 Description

 3.1

 Articles
 of Amendment and Restatement of Moody National REIT II, Inc. (incorporated by reference to Exhibit 3.1 to Pre-Effective Amendment
 No. 3 to the Registration Statement on Form S-11 (File No. 333-198305) filed on January 12, 2015)

 3.2

 Articles
 of Amendment to the Articles of Amendment and Restatement of Moody National REIT II, Inc. (incorporated by reference to Exhibit
 3.1 to the Current Report on Form 8-K filed on June 13, 2017)

 3.3

 Articles
 Supplementary to the Articles of Amendment and Restatement of Moody National REIT II, Inc. (incorporated by reference to Exhibit
 3.2 to the Current Report on Form 8-K filed on June 13, 2017)

 3.4

 Bylaws
 of Moody National REIT II, Inc. (incorporated by reference to Exhibit 3.3 to the Registration Statement on Form S-11 (File
 No. 333-198305) filed on August 22, 2014)

 4.1

 Description
 of Securities Registered under Section 12 of the Exchange Act (incorporated by reference to Exhibit 4.1 to the Annual Report
 on Form 10-K filed on March 29, 2023)

 4.2

 Second
 Amended and Restated Distribution Reinvestment Plan of Moody National REIT II, Inc. (incorporated by reference to Exhibit
 4.1 to the Current Report on Form 8-K filed on June 13, 2017)

 10.1

 Moody
 National REIT II, Inc. Independent Directors Compensation Plan (incorporated by reference to Exhibit 10.5 to Pre-Effective
 Amendment No. 3 to the Registration Statement on Form S-11 (File No. 333-198305) filed on January 12, 2015)

 10.2

 Moody
 National REIT II, Inc. Amended and Restated Long-Term Incentive Plan (incorporated by reference to Exhibit 10.3 to the Current
 Report on Form 8-K filed on June 13, 2017)

 10.3

 Third
 Amended and Restated Limited Partnership Agreement of Moody National Operating Partnership II, LP dated as of September 27,
 2017 (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K filed on September 28, 2017)

 10.4

 Second
 Amended and Restated Advisory Agreement, dated as of June 12, 2017, by and among Moody National REIT II, Inc., Moody National
 Operating Partnership II, LP and Moody National Advisor II, LLC (incorporated by reference to Exhibit 10.1 to the Current
 Report on Form 8-K filed on June 13, 2017)

 10.5

 Amendment
 No. 1 to the Second Amended and Restated Advisory Agreement, dated as of January 16, 2018, by and among Moody National REIT
 II, Inc., Moody National Operating Partnership II, LP and Moody National Advisor II, LLC (incorporated by reference to Exhibit
 10.1 to the Current Report on Form 8-K filed on January 16, 2018)

 10.6

 Dealer
 Manager Agreement, dated July 16, 2018, by and among Moody National REIT II, Inc., Moody National Operating Partnership II,
 LP and Moody Securities, LLC (incorporated by reference to Exhibit 1.1 to Pre-Effective Amendment No. 2 to the Registration
 Statement on Form S-11 (Registration No. 333-222610), filed on July 16, 2018)

 10.7

 Form
 of Participating Broker-Dealer Agreement (included as Exhibit A to the Dealer Manager Agreement filed as Exhibit 10.6 hereof)

 19*

 Insider Trading Policy Statement

 21.1*

 Subsidiaries of the Company

 31.1*

 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 31.2*

 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 32.1*

 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 32.2*

 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 101.INS

 Instance Document

 101.SCH

 Taxonomy Extension Schema Document

 101.CAL

 Taxonomy Extension Calculation Linkbase Document

 101.DEF

 Taxonomy Extension Definition Linkbase Document

 101.LAB

 Taxonomy Extension Label Linkbase Document

 101.PRE

 Taxonomy Extension Presentation Linkbase Document

 *
Filed herewith.

 ITEM
16. Form 10-K Summary

 We
have elected not to provide summary information.

 SIGNATURES

to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.

 MOODY

 Date:
 March 28, 2025

 By:

 /s/
 Brett C. Moody

 Brett
 C. Moody

 Chief
 Executive Officer and President

to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.

 Signature

 Title(s)

 Date

 /s/
 Brett C. Moody

 Chairman
 of the Board, Chief Executive Officer and President

 March

 Brett
 C. Moody

 (Principal
 Executive Officer)

 /s/
 Robert W. Engel

 Chief
 Financial Officer and Treasurer

 March

 Robert
 W. Engel

 (Principal
 Financial and Accounting Officer)

 /s/
 Charles L. Horn

 March

 Charles
 L. Horn

 /s/
 Clifford P. McDaniel

 March

 Clifford
 P. McDaniel

 /s/
 John P. Thompson

 March

 John
 P. Thompson

 /s/
 William H. Armstrong III

 March

 William
 H. Armstrong III

 Moody
National REIT II, Inc.
 Index to Consolidated Financial Statements and Schedule

 Page

 Report
 of Independent Registered Public Accounting Firm (Frazier & Deeter, LLC, PCAOB ID: 215)

 F- 2

 Consolidated Balance Sheets as of December 31, 2024 and 2023

 Consolidated Statements of Operations for the years ended December 31, 2024 and 2023

 Consolidated Statements of Changes in Equity for the years ended December 31, 2024 and 2023

 Consolidated Statements of Cash Flows for the years ended December 31, 2024 and 2023

 Notes to Consolidated Financial Statements

 Schedule III - Real Estate Assets and Accumulated Depreciation

 F- 1

 Report
of Independent Registered Public Accounting Firm

 To the Stockholders and Board of Directors of

Moody National REIT II, Inc.

 Opinion on the Consolidated Financial Statements

 We have audited the accompanying consolidated balance sheets of Moody National
REIT II, Inc. and subsidiaries (the "Company") as of December 31, 2024 and 2023, and the related consolidated statements
of operations, changes in equity, and cash flows for the years then ended, and the related notes and financial statement schedule III
(collectively, the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly,
in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations
and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

 Basis for Opinion

 These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public
accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to
be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.

 We conducted our audits in accordance with the standards of the PCAOB.
Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements
are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform,
an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal
control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal
control over financial reporting. Accordingly, we express no such opinion.

 Our audits included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those
risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for
our opinion.

 Critical Audit Matter

 The critical audit matter communicated below is a matter arising from the
current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee
and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially
challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on
the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a
separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

 Evaluation of investments in hotel properties for impairment

 Description of the Matter

 As of December 31, 2024, the Company had investments in hotel properties,
net of accumulated depreciation, of $174,712,000. As further disclosed in Note 2 to the consolidated financial statements, throughout
the year the Company performs an analysis of each property to determine whether an indicator of impairment exists. Many indicators of
impairment, such as unfavorable changes in economic conditions or changes in the intended holding periods of the properties, are subjective.
If indicators of impairment are present, the Company determines whether the sum of the undiscounted cash flows estimated to be generated
by the respective properties over the expected holding period of the asset based on historical property data and industry data, is less
than the properties' carrying amounts. The Company prepares an annual recoverability analysis assuming estimated cash flows for
each of its properties to assist with its evaluation of impairment indicators.

 F- 2

 Management's analysis is complex due to the highly judgmental nature
of assumptions used in the impairment analysis including any change in the property's intended hold period and projected undiscounted
future cash flows. The inputs used to analyze properties for impairment, such as a change in the intended holding period of the property,
projected undiscounted future cash flows, and determination of the capitalization rate used, are subjective. Because of the subjective
nature of the impairment analysis and the inputs used in the estimate and the extent of audit effort required in auditing management's
analysis, we identified the evaluation of investments in hotel properties for impairment as a critical audit matter.

 How We Addressed the Matter in Our Audit

 We obtained an understanding and evaluated the design over the Company's
impairment analysis, including changes in the intended hold period.

 Our testing of the Company's impairment analysis included, among
others, evaluating management's assumptions, including testing the completeness and accuracy of the underlying data, testing internal
operating projections and performing a sensitivity analysis over terminal capitalization rates through third-party industry guides and
our industry expert. For example, we tested estimated cash flows by comparing them to historical operating results by property and current
industry, market, and economic trends through third-party industry guides. In addition, we considered the hold period necessary for the
property's carrying value to be recovered via undiscounted cash flows. We assessed the Company's intent and ability to hold
each hotel property by examining documents to assess the Company's plans, if any, to dispose of individual hotel properties. We
held discussions with management about the status of any potential transactions and management's judgments to understand the probability
of future events that could affect the holding period and other cash flow assumptions for the properties.

 We have served as the Company's auditor since 2014.

 /s/ Frazier & Deeter, LLC

 Atlanta, Georgia
March 31, 2025

 F- 3

 MOODY
 CONSOLIDATED BALANCE SHEETS
 (in thousands, except per share amounts)

 2024

 2023

 ASSETS

 Investments in hotel properties, net

 $
 174,712

 $
 386,297

 Real estate assets held for sale

 115,346

 —

 Cash and cash equivalents

 9,305

 7,286

 Restricted cash

 19,886

 17,778

 Accounts receivable, net of allowance for doubtful accounts of $ 34 and $ 35 at December 31, 2024 and 2023, respectively

 Prepaid expenses and other assets

 2,991

 Deferred franchise costs, net of accumulated amortization of $ 567 and $ 520 at December 31, 2024 and 2023, respectively

 Total Assets

 $
 321,404

 $
 415,858

 LIABILITIES AND EQUITY

 Liabilities:

 Notes payable, net of unamortized debt issuance costs of $ 702 and $ 839 as of December 31, 2024 and 2023, respectively

 $
 218,764

 $
 229,005

 Notes payable to related party

 50,000

 40,000

 Accounts payable and accrued expenses

 14,855

 14,076

 Due to related parties, net

 23,213

 18,300

 Dividends payable

 Total Liabilities

 306,902

 301,451

 Special Limited Partnership Interests

 Commitments and Contingencies

 —

 Equity:

 Stockholders' equity:

 Preferred stock, $ 0.01 par value per share; 100,000 shares authorized; no shares issued and outstanding

 —

 —

 Common stock, $ 0.01 par value per share; 1,000,000 shares authorized, 13,640 shares issued and outstanding at December 31, 2024 and 2023

 Additional paid-in capital

 Accumulated deficit

 ( 290,890
)

 ( 193,247
)

 Total stockholders' equity

 14,887

 112,530

 Noncontrolling (deficit) interests in Operating Partnership

 ( 386
)

 1,876

 Total Equity

 14,501

 114,406

 Total Liabilities and Equity

 $
 321,404

 $
 415,858

 See
accompanying notes to consolidated financial statements.

 F- 4

 MOODY
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (in thousands, except per share amounts)

 Years ended December 31,

 2024

 2023

 Revenues

 Room revenues

 $
 75,343

 $
 77,094

 Other hotel revenues

 5,250

 5,274

 Total hotel revenues

 80,593

 82,368

 Expenses

 Hotel operating expenses

 55,846

 56,431

 Property taxes, insurance and other

 7,203

 6,460

 Depreciation and amortization

 14,935

 15,938

 Corporate general and administrative

 7,057

 6,913

 73,863

 —

 Total expenses

 158,904

 85,742

 Operating loss

 ( 78,311
)

 ( 3,374
)

 Other expenses

 Interest expense and amortization of debt issuance costs

 19,084

 16,902

 Loss on sale of hotel property

 —

 Total other expenses

 19,154

 16,902

 Loss before income tax expense

 ( 97,465
)

 ( 20,276
)

 Income tax expense

 2,440

 ( 99,905
)

 ( 20,437
)

 Loss attributable to noncontrolling interests in Operating Partnership

 2,262

 Net loss attributable to common stockholders

 $
 ( 97,643
)

 $
 ( 19,975
)

 Per-share information – basic and diluted:

 Net loss attributable to common stockholders

 $
 ( 7.16
)

 $
 ( 1.46
)

 Weighted average common shares outstanding

 See
accompanying notes to consolidated financial statements.

 F- 5

 MOODY
 CONSOLIDATED STATEMENTS
OF CHANGES IN EQUITY
 Years ended December 31, 2024 and 2023
 (in thousands)

 Preferred Stock

 Common Stock

 Noncontrolling
 Interests in
 Operating
 Partnership

 of
 Shares

 Par
 Value

 of
 Shares

 Par
 Value

 Additional
 Paid-In
 Capital

 Accumulated
 Deficit

 of
 Units

 Value

 Total
 Equity

 Beginning Balance at December 31, 2022

 —

 $
 —

 $

 $

 $
 ( 173,272
)

 $
 2,338

 $
 134,843

 —

 —

 —

 —

 —

 ( 19,975
)

 —

 ( 462
)

 ( 20,437
)

 Balance at December 31, 2023

 —

 —

 ( 193,247
)

 1,876

 114,406

 —

 —

 —

 —

 —

 ( 97,643
)

 —

 ( 2,262
)

 ( 99,905
)

 Balance at December 31, 2024

 —

 $
 —

 $

 $

 $
 ( 290,890
)

 $
 ( 386
)

 $
 14,501

 See
accompanying notes to consolidated financial statements.

 F- 6

 MOODY
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (in thousands)

 Year ended December 31,

 2024

 2023

 Cash flows from operating activities

 $
 ( 99,905
)

 $
 ( 20,437
)

 Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

 Depreciation and amortization

 14,935

 15,938

 Amortization of debt issuance costs

 Deferred income taxes

 2,303

 —

 Loss on sale of hotel property

 —

 73,863

 —

 Changes in operating assets and liabilities:

 Accounts receivable

 ( 113
)

 Prepaid expenses and other assets

 ( 244
)

 ( 64
)

 Accounts payable and accrued expenses

 Due to related parties

 4,913

 6,599

 Net cash (used in) provided by operating activities

 ( 2,545
)

 3,345

 Cash flows from investing activities

 Proceeds from sale of hotel property

 9,100

 —

 Improvements and additions to hotel properties

 ( 1,431
)

 ( 2,674
)

 Payment of hotel property selling costs

 ( 185
)

 —

 Net cash provided by (used in) investing activities

 7,484

 ( 2,674
)

 Cash flows from financing activities

 Proceeds of notes payable

 9,477

 11,365

 Repayment of notes payable

 ( 19,856
)

 ( 17,841
)

 Proceeds of notes payable to related party

 10,000

 9,890

 Payment of debt issuance costs

 ( 433
)

 ( 224
)

 Net cash (used in) provided by financing activities

 ( 812
)

 3,190

 Net change in cash and cash equivalents and restricted cash

 4,127

 3,861

 Cash and cash equivalents and restricted cash at beginning of year

 25,064

 21,203

 Cash and cash equivalents and restricted cash at end of year

 $
 29,191

 $
 25,064

 Supplemental Disclosure of Cash Flow Activity

 Cash paid for interest

 $
 11,769

 $
 11,556

 Cash paid for income taxes

 $

 $

 See
accompanying notes to consolidated financial statements.

 F- 7

 MOODY
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 December 31, 2024 and 2023

 1.

 As
discussed in Note 5, "Equity," Moody National REIT II, Inc. (the "Company") was initially capitalized
by Moody National REIT Sponsor, LLC (the "Sponsor"). The Company's fiscal year end is December 31.

 As
of December 31, 2024, the Company owned interests in fourteen hotel properties located in six states comprising a total of 2,028 rooms.
For more information on the Company's real estate investments, see Note 3, "Investment in Hotel Properties, Real Estate Assets Held for Sale, and Dispositions."

 On
January 20, 2015, the Securities and Exchange Commission (the "SEC") declared the Company's registration statement
on Form S-11 effective, and the Company commenced its initial public offering of up to $ 1.1 billion in shares of common stock
consisting of up to $ 1.0 billion in shares of the Company's common stock offered to the public, and up to $ 100.0 million
in shares offered to the Company's stockholders pursuant to its distribution reinvestment plan (the "DRP").

 On
June 26, 2017, the Company reallocated the Company's shares of common stock as Class A common stock, $ 0.01 par value
per share ("Class A Shares"), Class D common stock, $ 0.01 par value per share ("Class D Shares"),
Class I common stock, $ 0.01 par value per share ("Class I Shares"), and Class T common stock, $ 0.01 par
value per share ("Class T Shares" and, together with the Class A Shares, the Class D Shares and the Class I Shares,
the "Shares"). On January 16, 2018, the Advisor (as defined below) assumed responsibility for the payment of all selling
commissions, dealer manager fees and stockholder servicing fees paid in connection with the Company's public offering; provided,
however, that the Advisor intends to recoup the selling commissions, dealer manager fees and stockholder servicing fees that
it funds through an increased acquisition fee, or "Contingent Advisor Payment," as described in Note 6 "Related
Party Arrangements."

 On
January 18, 2018, the Company filed a registration statement on Form S-11 (Registration No. 333-222610) registering $ 990.0 million
in any combination of the Shares to be sold on a "best efforts" basis in the Company's follow-on public offering.
The SEC declared the registration statement effective on July 19, 2018.

 The
Company's follow-on public offering was terminated (including pursuant to the DRP) effective as of March 25, 2020 due to
the impact that the spread of COVID-19, a disease caused by a novel strain of coronavirus, had and may have in the future, on
the Company's hotel properties. The Company accepted investors' subscriptions for and issued an aggregate of 10.2 million shares
in the Company's initial public offering and follow-on offering, excluding shares issued in connection with the Company's
merger with Moody National REIT I, Inc. and including 567,000 shares pursuant to the DRP, resulting in gross offering
proceeds of $ 234.6 million. The Company accepted investors' subscriptions for and issued 4.1 million shares
in the follow-on offering, including 352,000 shares pursuant to the DRP, resulting in gross offering proceeds of $ 87.2 million for
the follow-on offering.

 The
Company's advisor is Moody National Advisor II, LLC (the "Advisor"), a Delaware limited liability company and
an affiliate of the Sponsor. Pursuant to an advisory agreement among the Company, the OP (defined below) and the Advisor (the
"Advisory Agreement"), and subject to certain restrictions and limitations therein, the Advisor is responsible for
managing the Company's affairs on a day-to-day basis and for identifying and making acquisitions and investments on behalf
of the Company.

 Substantially
all of the Company's business is conducted through Moody National Operating Partnership II, LP, a Delaware limited partnership
(the "OP"). The Company is the sole general partner of the OP. The initial limited partners of the OP were Moody OP
Holdings II, LLC, a Delaware limited liability company and a wholly owned subsidiary of the Company ("Moody Holdings II"),
and Moody National LPOP II, LLC ("Moody LPOP II"), an affiliate of the Advisor. Moody Holdings II initially invested $ 1,000 in
the OP in exchange for limited partnership interests, and Moody LPOP II invested $ 1,000 in the OP in exchange for a
separate class of limited partnership interests (the "Special Limited Partnership Interests"). As the Company accepted
subscriptions for shares of common stock, it transferred substantially all of the net proceeds from such sales to the OP as a
capital contribution. The limited partnership agreement of the OP provides that the OP will be operated in a manner that will
enable the Company to (1) satisfy the requirements for being classified as a REIT for tax purposes, (2) avoid any federal income
or excise tax liability and (3) ensure that the OP will not be classified as a "publicly traded partnership" for purposes
of Section 7704 of the Internal Revenue Code of 1986, as amended (the "Internal Revenue Code"), which classification
could result in the OP being taxed as a corporation, rather than as a partnership. In addition to the administrative and operating
costs and expenses incurred by the OP in acquiring and operating real properties, the OP pays all of the Company's administrative
costs and expenses, and such expenses are treated as expenses of the OP.

 F- 8

 COVID-19
Pandemic

 The
global COVID-19 pandemic had a significant adverse effect on the Company's financial condition and operating results.

 The
COVID-19 pandemic dramatically reduced travel, which had an unprecedented adverse impact on the hotel industry. As a result, the
COVID-19 pandemic had a significant adverse effect on the operating results of the Company's hotel properties, which depend
primarily upon revenues driven by business and leisure travel, and on the Company's business, financial performance and
operating results. Since March 2020, the Company experienced a significant decline in bookings, occupancy and revenues across
the Company's hotel properties. The Company's hotel properties operated at a property net operating loss since the
outbreak of COVID-19, which had an adverse impact on the Company's results of operations and cash flow from operations.
In addition, the Company reduced certain services and amenities at the Company's hotel properties.

 Each
of the Company's hotel properties is subject to a mortgage loan secured by the Company's ownership interest in the
property. If the Company is unable to service the mortgage loan secured by a hotel property due to decreased revenues generated
by such property, the lender with respect to such mortgage loan may initiate foreclosure procedures with respect to the property
or initiate other available remedies. As of the date of this Annual Report, the Company is current with respect to the payments
due under the mortgage loans secured by the Company's hotel properties or is compliance with the modified terms of certain
mortgage loans as agreed to with the lenders and other accommodations. During 2021, certain lenders agreed to limited loan modifications,
including temporary deferrals of interest and principal payments and agreements to forebear the enforcement of default remedies
available under the terms of the loan documents. As of the date of this Annual Report, no lenders have accelerated the maturity
of any of the loans secured by the Company's properties or initiated foreclosure procedures with respect to any of the Company's
properties.

 In
response to the COVID-19 pandemic, the Company terminated its public offering of common stock (including pursuant to the DRP),
effective as of March 2020. The Company is not currently raising capital through the sale of its securities and the Company does
not intend to begin to do so in the near term. The Company has also indefinitely suspended the payment of distributions to stockholders
effective as of March 2020 and the operation of the Company's share repurchase program effective as of April 2020. The Company's
board of directors ("Board") and the Company's management continue to evaluate the Company's financial
condition and the overall economic environment to determine if and when the Company will seek to resume raising capital, resume
the payment of distributions and reinstate the Company's share repurchase program. Specifically, the Board, in consultation
with management, will continue to monitor the Company's operations and intends to resume distributions at a time and level
determined to be prudent in relation to the Company's other cash requirements or in order to maintain the Company's
REIT status for federal income tax purposes. However, it is impossible to predict if or when the Company will be able to resume
the payment of distributions or return to normal operations.

 2.
 Summary
of Significant Accounting Policies

 Basis
of Presentation and Principles of Consolidation

 The
Company's consolidated financial statements include its accounts and the accounts of its subsidiaries over which it has
control. All intercompany balances and transactions are eliminated in consolidation.

 Use
of Estimates

 The
preparation of consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles ("GAAP")
requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of
the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates and those differences could be material.

 Segment

 Management
evaluates the Company's hotels as a single reportable segment as a result of aggregating multiple operating segments, because
all of the Company's hotels have similar economic characteristics and provide similar services to similar types of customers.
Our single reportable segment comprises the structure used by our Chief Executive Officer, Chief Operating Officer, and Chief
Financial Officer, who collectively have been determined to be our Chief Operations Decision Maker ("CODM"), to make
key operating decisions and assess performance. Our CODM evaluates our single reportable segment's operating performance
based on individual hotel property net income (loss) before interest expense, income tax expense, depreciation and amortization,
corporate general and administrative expense, loss on impairment of hotel properties, loss on early extinguishment of debt, other
charges, interest and other income, and gains or losses on sales of hotel properties ("Adjusted Hotel EBITDA"). One
single reportable segment's assets are consistent with total assets included in the Company's consolidated balance
sheets.

 F- 9

 The
following table includes revenues, significant hotel operating expenses, and Adjusted Hotel EBITDA for the Company's hotels,
reconciled to the consolidated amounts included the Company's consolidated statements of operations (in thousands):

 Years ended December 31,

 2024

 2023

 Revenues

 Room revenues

 $
 75,343

 $
 77,094

 Other hotel revenues

 5,250

 5,274

 Total hotel revenues

 80,593

 82,368

 Expenses

 Room

 25,821

 26,253

 Administrative

 8,029

 8,101

 Franchise fee

 7,060

 7,241

 Marketing

 3,469

 3,604

 Repairs and maintenance

 5,073

 4,591

 Utilities

 3,169

 3,192

 Management fees

 3,224

 3,449

 Insurance

 2,413

 2,056

 Property taxes

 4,791

 4,404

 Total hotel expenses

 63,049

 62,891

 Adjusted Hotel EBITDA

 17,544

 19,477

 Reconciliation of Adjusted Hotel EBITDA to net loss:

 Other expenses

 Interest expense and amortization of debt issuance costs

 19,084

 16,902

 Depreciation and amortization

 14,935

 15,938

 Corporate general and administrative

 7,057

 6,913

 73,863

 —

 Loss on sale of hotel property

 —

 Income tax expense

 2,440

 Total other expenses

 117,449

 39,914

 $
 ( 99,905
)

 $
 ( 20,437
)

and Offering Costs

and offering costs of the Company are paid directly by the Company or incurred by the Advisor on behalf of the Company. Pursuant
to the Advisory Agreement between the Company and the Advisor, the Company is obligated to reimburse the Advisor or its affiliates,
as applicable, for organization and offering costs incurred by the Advisor associated with each of the Company's public
offerings, provided that within 60 days of the last day of the month in which a public offering ends, the Advisor is obligated
to reimburse the Company to the extent aggregate organization and offering costs incurred by the Company in connection with the
completed public offering exceed 15.0% of the gross offering proceeds from the sale of the Company's shares of common
stock in the completed public offering. Such organization and offering costs include selling commissions and dealer manager fees
paid to a dealer manager, legal, accounting, printing and other offering expenses, including marketing, salaries and direct expenses
of the Advisor's employees and employees of the Advisor's affiliates and others. Any reimbursement of the Advisor
or its affiliates for organization and offering costs will not exceed actual expenses incurred by the Advisor. The Company's
organization and offering costs incurred in connection with the Company's initial public offering did not exceed 15 %
of the gross offering proceeds from the sale of shares of common stock in such offering.

 F- 10

 All
offering costs, including selling commissions and dealer manager fees, are recorded as an offset to additional paid-in-capital,
and all organization costs are recorded as an expense when the Company has an obligation to reimburse the Advisor.

 As
of December 31, 2024, total offering costs for the initial public offering and the follow-on offering were $ 21.1 million,
comprised of $ 12.3 million of offering costs incurred directly by the Company and $ 8.8 million in offering costs incurred
by and reimbursable to the Advisor. Total offering costs for the initial public offering were $ 18.4 million, comprised of
$ 12.3 million of offering costs incurred directly by the Company and $ 6.1 million in offering costs incurred by and
reimbursable to the Advisor. As of December 31, 2024, total offering costs for the follow-on offering were $ 2.7 million,
comprised of $ 0 of offering costs incurred directly by the Company and $ 2.7 million in offering costs incurred by and
reimbursable to the Advisor. As of December 31, 2024, the Company had $ 0 due to the Advisor for reimbursable offering costs.

Taxes

 The
Company elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code commencing with the taxable
year ended December 31, 2016. The Company did not meet all of the qualifications to be a REIT under the Internal Revenue Code
for the years ended December 31, 2015 and 2014, including not having 100 shareholders for a sufficient number of days
in 2015. Prior to qualifying to be taxed as a REIT, the Company was subject to normal federal and state corporation income taxes.

 Provided
that the Company continues to qualify as a REIT, it generally will not be subject to federal corporate income tax to the extent
it distributes its REIT taxable income to its stockholders, so long as it distributes at least 90 % of its REIT taxable income
(which is computed without regard to the dividends paid deduction or net capital gain and which does not necessarily equal net
income as calculated in accordance with GAAP) and satisfies the other organizational and operational requirements for qualification
as a REIT. Even if the Company qualifies for taxation as a REIT, it may be subject to certain state and local taxes on its income
and property, and federal income and excise taxes on its undistributed income. The Company leases the hotels it acquires to a
wholly-owned taxable REIT subsidiary ("TRS") that is subject to federal, state and local income taxes.

 The
Company accounts for income taxes of its TRS using the asset and liability method under which deferred tax assets and liabilities
are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted
tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred
tax assets and liabilities from a change in tax rates is recognized in earnings in the period prior to when the new rates become
effective. The Company records a valuation allowance for net deferred tax assets that are not expected to be realized.

 The
Company has reviewed tax positions under GAAP guidance that clarify the relevant criteria and approach for the recognition and
measurement of uncertain tax positions. The guidance prescribes a recognition threshold and measurement attribute for the financial
statement recognition of a tax position taken, or expected to be taken, in a tax return. A tax position may only be recognized
in the consolidated financial statements if it is more likely than not that the tax position will be sustained upon examination.
The Company had no material uncertain tax positions as of December 31, 2024.

 The
preparation of the Company's various tax returns requires the use of estimates for federal and state income tax purposes.
These estimates may be subjected to review by the respective taxing authorities. A revision to an estimate may result in an assessment
of additional taxes, penalties and interest. At this time, a range in which the Company's estimates may change is not expected
to be material. The Company will account for interest and penalties relating to uncertain tax positions in the current period
results of operations, if necessary. The Company has tax years 2020 through 2024 remaining subject to examination by various federal
and state tax jurisdictions. For more information, see Note 10, "Income Taxes."

 Fair
Value Measurement

 Fair
value measures are classified into a three-tiered fair value hierarchy, which prioritizes the inputs used in measuring fair value
as follows:

 Level
 1:

 Observable
 inputs such as quoted prices in active markets.

 Level
 2:

 Directly or indirectly
 observable inputs, other than quoted prices in active markets.

 Level
 3:

 Unobservable inputs
 in which there is little or no market data, which require a reporting entity to develop its own assumptions.

 F- 11

 Assets
and liabilities measured at fair value are based on one or more of the following valuation techniques:

 approach:

 Prices
 and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

 Cost
 approach:

 Amount required
 to replace the service capacity of an asset (replacement cost).

 approach:

 Techniques used
 to convert future income amounts to a single amount based on market expectations (including present-value, option-pricing,
 and excess-earnings models).

 The
Company's estimates of fair value were determined using available market information and appropriate valuation methods.
Considerable judgment is necessary to interpret market data and develop estimated fair value. The use of different market assumptions
or estimation methods may have a material effect on the estimated fair value amounts. The Company classifies assets and liabilities
in the fair value hierarchy based on the lowest level of input that is significant to the fair value measurement.

 With
the exception of the Company's fixed-rate notes payable, the carrying amounts of other financial instruments, which include
cash and cash equivalents, restricted cash, accounts receivable, notes payable, and accounts payable and accrued expenses, approximate
their fair values due to their short-term nature. For the fair value of the Company's notes payable, see Note 4, "Debt."

 Concentration
of Risk

 As
of December 31, 2024, the Company had cash and cash equivalents and restricted cash deposited in certain financial institutions
in excess of federally insured levels. The Company diversifies its cash and cash equivalents with several banking institutions
in an attempt to minimize exposure to any one of these institutions. The Company regularly monitors the financial stability of
these financial institutions along with the balances on deposit at such institutions to minimize the Company's potential
risk and believes that it is not exposed to any significant credit risk in cash and cash equivalents or restricted cash.

 The
Company holds cash accounts at several institutions in excess of the Federal Deposit Insurance Corporation (the "FDIC")
protection limits of $ 250,000. The Company's exposure to credit loss in the event of the failure of these institutions is
represented by the difference between the FDIC protection limit and the total amounts on deposit. At December 31, 2024, the Company's
cash accounts exceeded federally insured limits by approximately $ 5.8 million and the Company's restricted cash accounts
exceeded federally insured limits by approximately $ 16.7 million.

 The
Company is exposed to geographic risk in that eight of its fourteen hotel properties are located in one state, Texas.

 Valuation
and Allocation of Hotel Properties — Acquisition

 Upon
acquisition, the purchase price of hotel properties is allocated to the tangible assets acquired, consisting of land, buildings
and furniture, fixtures and equipment, any assumed debt, identified intangible assets and asset retirement obligations, if any,
based on their fair values. Acquisition costs are charged to expense as incurred. Initial valuations are subject to change during
the measurement period, but the measurement period ends as soon as the information is available. The measurement period shall
not exceed one year from the acquisition date.

 Land
values are derived from appraisals and building values are calculated as replacement cost less depreciation or estimates of the
relative fair value of these assets using discounted cash flow analyses or similar methods. The value of furniture, fixtures and
equipment is based on their fair value using replacement costs less depreciation. Any difference between the fair value of the
hotel property acquired and the purchase price of the hotel property is recorded as goodwill or gain on acquisition of hotel property.

 The
Company determines the fair value of any assumed debt by calculating the net present value of the scheduled mortgage payments
using interest rates for debt with similar terms and remaining maturities that the Company believes it could obtain at the date
of acquisition. Any difference between the fair value and stated value of the assumed debt is recorded as a discount or premium
and amortized over the remaining life of the loan of interest expense.

 In
allocating the purchase price of each of the Company's properties, the Company makes assumptions and uses various estimates,
including, but not limited to, the estimated useful lives of the assets, the cost of replacing certain assets and discount rates
used to determine present values. The Company uses Level 3 inputs to value acquired properties. Many of these estimates are obtained
from independent third-party appraisals. However, the Company is responsible for the source and use of these estimates. These
estimates require judgment and are subject to being imprecise; accordingly, if different estimates and assumptions were derived,
the valuation of the various categories of the Company's hotel properties or related intangibles could in turn result in
a difference in the depreciation or amortization expense recorded in the Company's consolidated financial statements. These
variances could be material to the Company's results of operations and financial condition.

 F- 12

 Valuation
and Allocation of Hotel Properties — Ownership

in hotel properties is recorded at cost less accumulated depreciation. Major improvements that extend the life of an asset are
capitalized and depreciated over a period equal to the shorter of the life of the improvement or the remaining useful life of
the asset. The costs of ordinary repairs and maintenance are charged to expense when incurred.

 Depreciation
expense is computed using the straight-line method based upon the following estimated useful lives:

 Estimated
 Useful Lives
 (years)

 Buildings and improvements

 39 - 40

 Exterior improvements

 10 - 20

 Furniture, fixtures and equipment

 5 - 10

 Real
Estate Assets Held for Sale

 A
long-lived asset (or disposal group) to be disposed of by sale (including an asset group considered a component of an entity)
is considered held for sale when all of the following criteria for a qualifying plan of sale are met: 1) management, having the
authority to approve the action, commits to a plan to sell the asset or disposal group; 2) the asset or disposal group is available
for immediate sale (i.e., a seller currently has the intent and ability to transfer the asset (group) to a buyer) in its present
condition, subject only to conditions that are usual and customary for sales of such assets or disposal groups; 3) an active program
to locate a buyer and other actions required to complete the plan to sell have been initiated; 4) the sale of the asset or disposal
group is probable (i.e., likely to occur) and the transfer is expected to qualify for recognition as a completed sale within one
year; 5) the long-lived asset or disposal group is being actively marketed for sale at a price that is reasonable in relation
to its current fair value; and 6) actions necessary to complete the plan indicate that it is unlikely significant changes to the
plan will be made or that the plan will be withdrawn. An exception to the one-year requirement (in point 4) above) is permitted
if events or circumstances beyond an entity's control extend the period of time required to sell the assets beyond one year.
No depreciation is recorded for real estate assets held for sale.

 Impairments
of Hotel Properties

 The
Company monitors events and changes in circumstances indicating that the carrying amount of a hotel property may not be recoverable.
When such events or changes in circumstances are present, the Company assesses potential impairment by comparing estimated future
undiscounted cash flows expected to be generated over the life of the asset from operating activities and from its eventual
disposition, to the carrying amount of the asset. In the event that the carrying amount exceeds the estimated future undiscounted
cash flows, the Company recognizes an impairment loss to adjust the carrying amount of the asset to estimated fair value for assets
held for use and fair value less costs to sell for assets held for sale. Losses on impairment of hotel properties were $ 73.9
million and $ 0
for the years ended December 31, 2024 and 2023, respectively.

 In
evaluating a hotel property for impairment, the Company makes several estimates and assumptions, including, but not limited to,
the projected date of disposition of the property, the estimated future cash flows of the property during the Company's
ownership and the projected sales price of the property. A change in these estimates and assumptions could result in a change
in the estimated undiscounted cash flows or fair value of the Company's hotel property which could then result in different
conclusions regarding impairment and material changes to the Company's consolidated financial statements. The Company has
recorded an impairment based on management's best estimate of fair value at December 31, 2024. This is a significant
estimate that could materially change within one year. For further discussion of loss on impairment of the Company's hotel
properties, see Note 3, "Investment in Hotel Properties, Real Estate Assets Held for Sale, and Dispositions."

 Revenue
Recognition

 Hotel
revenues, including room, food, beverage and other ancillary revenues, are recognized as the related services are delivered. Revenue
is recorded net of any sales and other taxes collected from customers. Amounts received prior to guest arrival are recorded as
advances from the customer and are recognized at the time of occupancy.

 F- 13

 Cash
and Cash Equivalents

 Cash
and cash equivalents represent cash on hand or held in banks and short-term investments with an initial maturity of years or less
at the date of purchase.

 Restricted
Cash

 Restricted
cash includes reserves for property taxes, as well as reserves for property improvements, replacement of furniture, fixtures,
and equipment and debt service, as required by certain management or mortgage and term debt agreements restrictions and provisions.

 The
following is a reconciliation of the Company's cash and cash equivalents and restricted cash to the total presented in the
unaudited consolidated statement of cash flows as of December 31, 2024 and 2023 (in thousands):

 2024

 2023

 Cash and cash equivalents

 $
 9,305

 $
 7,286

 Restricted cash

 19,886

 17,778

 Total cash and cash equivalents and restricted cash

 $
 29,191

 $
 25,064

 Accounts
Receivable

 The
Company takes into consideration certain factors that require judgments to be made as to the collectability of receivables. Collectability
factors taken into consideration are the amounts outstanding, payment history and financial strength of the customer, which, taken
as a whole, determines the valuation. Ongoing credit evaluations are performed and an allowance for potential credit losses is
provided against the portion of accounts receivable that is estimated to be uncollectible.

 Deferred
Franchise Costs

 Deferred
franchise costs are recorded at cost and amortized over the term of the respective franchise contract on a straight-line basis.
Accumulated amortization of deferred franchise costs was $ 567,000 and $ 520,000 as of December 31, 2024 and
2023, respectively.

 Expected
future amortization of deferred franchise costs as of December 31, 2024 is as follows (in thousands):

 Years Ending December 31,

 2025

 $

 2026

 2027

 2028

 2029

 Thereafter

 Total

 $

 Debt
Issuance Costs

 Debt
issuance costs are presented as a direct deduction from the carrying value of the notes payable on the consolidated balance sheets.
Debt issuance costs are amortized as a component of interest expense over the term of the related debt using the straight-line
method, which approximates the interest method. Expected future amortization of debt issuance costs as of December 31, 2024 is
as follows (in thousands):

 Expected future amortization of debt issuance costs as of December 31, 2023 is as follows (in thousands):

 Years Ending December 31,

 2025

 $

 2026

 2027

 2028

 2029

 Total

 $

 Earnings
(Loss) per Share

 Earnings
(loss) per share ("EPS") is calculated based on the weighted average number of shares outstanding during each period.
Basic and diluted EPS are the same for all periods presented. There were no non-vested shares of restricted common stock
as of December 31, 2024 and 2023, respectively, held by the Company's independent directors.

 F- 14

 Recently
Issued Accounting Standards

 In
December 2023, the FASB issued ASU 2023-09 "Income Taxes (Topics 740): Improvements to Income Tax Disclosures" which
requires entities to expand disclosures regarding the reconciliation of income tax rate and the amount of income taxes paid, net
of refunds received, disaggregated by federal, state and foreign jurisdiction.

 In
December 2023, the FASB issued ASU 2023-07 "Segment Reporting" which requires entities to disclose additional and
more detailed information about a reportable segment's expenses.

 Other
recently issued accounting standards or pronouncements not disclosed in the foregoing paragraphs have been excluded because they
are either not relevant to, or are not expected to have, or did not have, a material effect on the Company's consolidated
financial statements.

 3.
in Hotel Properties, Real Estate Assets Held for Sale, and Dispositions

 The
following table sets forth summary information regarding the Company's investment in hotel properties and real estate assets
held for sale as of December 31, 2024 (all $ amounts in thousands):

 Property Name

 Date Acquired

 Location

 Ownership

 Original
 Purchase Price (1)

 Rooms

 Mortgage
 Debt Outstanding (2)

 Inn Austin (5)(7)

 October
 15, 2015

 Texas

 %

 $
 27,500

 $
 14,842

 Springhill
 Suites Seattle

 May
 24, 2016

 Seattle,
 Washington

 %

 74,100

 Suites Woodlands

 The
 Woodlands, Texas

 %

 17,356

 8,049

 Hyatt
 Place Germantown

 Germantown,

 %

 16,074

 5,696

 Hyatt
 Place North Charleston

 North
 Charleston, South Carolina

 %

 13,806

 5,354

 Texas

 %

 19,328

 9,461

 Inn Grapevine (6)(7)

 Grapevine,
 Texas

 %

 25,245

 10,836

 Marriott
 Courtyard Lyndhurst (7)(8)

 Lyndhurst,
 New Jersey

 - (3)

 39,547

 17,058

 Hilton
 Garden Inn Austin

 Texas

 %

 29,288

 Inn Great Valley

 Frazer,
 Pennsylvania

 %

 15,285

 7,102

 Embassy
 Suites Nashville (7)

 Nashville,

 %

 82,207

 37,003

 Suites Austin

 Texas

 %

 18,835

 9,587

 Inn Houston

 Texas

 %

 9,958

 3,762

 Inn Houston Medical Center

 April
 29, 2019

 Texas

 %

 52,000

 Totals

 $
 440,529

 2,028

 $
 211,972

 (1)
 Excludes
 closing costs and includes gain on acquisition.

 (2)
 As
 of December 31, 2024.

 (3)
 The
 Marriott Courtyard Lyndhurst is owned by MN Lyndhurst Venture, LLC, of which the OP is a
 member and holds 100 %
 of the Class B membership interests therein. See Note 4, "Debt."

 (4)
 acquired on September 27, 2017 as a result of the merger of Moody National REIT I, Inc. ("Moody
 I") with and into the Company (the "Merger") and the merger of Moody National
 Operating Partnership I, L.P., the operating partnership of Moody I ("Moody I OP"),
 with and into the OP (the "Partnership Merger," and together with the Merger,
 the "Mergers").

 (5)
 sold on February 6, 2025 to an unaffiliated third party purchaser for an aggregate sale price
 of $ 20,500,000.

 (6)
 sold on February 6, 2025 to an unaffiliated third party purchaser for an aggregate sale price
 of $ 22,500,000.

 (7)
 Classified
 as real estate assets held for sale as of December 31, 2024.

 (8)
 sold on March 21, 2025 to an unaffiliated third party purchaser for an aggregate sales price
 of $ 21,250,000.

 F- 15

in hotel properties consisted of the following at December 31, 2024 and 2023 (all amounts in thousands):

 2024

 2023

 Land

 $
 40,084

 $
 76,936

 Buildings and improvements

 164,139

 338,982

 Furniture, fixtures and equipment

 36,408

 65,197

 Total cost

 240,631

 481,115

 Accumulated depreciation

 ( 65,919
)

 ( 94,818
)

 Investment in hotel properties, net

 $
 174,712

 $
 386,297

 Based
on unobservable inputs in which there is little or no market data, the Company developed its own assumptions in determining the
fair value of and an aggregate loss on impairment of $ 73.9 million for the Residence Inn Austin, Embassy Suites Nashville, Marriott
Courtyard Lyndhurst, Townplace Suites Forth Worth, Residence Inn Houston Medical Center, Hilton Garden Inn Austin, Springhill
Suites Seattle and Homewood Suites Woodlands. Such loss on impairment was allocated pro-rata among land, buildings and improvements
and furniture, fixtures and equipment.

 Townplace
Suites Fort Worth

 On
December 10, 2024, the Company sold the Townplace Suites Fort Worth property to an unaffiliated purchaser for $ 9.1
million and incurred selling costs of approximately $ 185,000.

 Real
Estate Assets Held for Sale

 On
November 7, 2024, we entered into a purchase and sale agreement to sell the Marriott Courtyard Lyndhurst to an unaffiliated purchaser
for an aggregate purchase price of $ 21.3 million. On November 27, 2024, we entered into a purchase and sale agreement to sell
the Embassy Suites Nashville to an unaffiliated purchaser for an aggregate purchase price of $ 57.5 million. On December 13, 2024,
we entered into a purchase and sale agreement to sell the Residence Inn Grapevine to an unaffiliated purchaser for an aggregate
purchase price of $ 22.5 million. On December 13, 2024, we entered into a purchase and sale agreement to sell the Residence Inn
Austin to an unaffiliated purchaser for an aggregate purchase price of $ 20.5 million. During 2025, we completed the sale of the
Residence Inn Grapevine, Residence Inn Austin, and Marriott Courtyard Lyndhurst as discussed elsewhere herein.

 The
carrying value of real estate assets held for sale as of December 31, 2024 is as follows (all $ amounts in thousands):

 Residence Inn Austin

 $
 19,645

 Residence Inn Grapevine

 20,019

 Marriott Courtyard Lyndhurst

 19,523

 Embassy Suites Nashville

 56,159

 TOTAL

 $
 115,346

 4.
 Debt

 The
Company's aggregate borrowings are reviewed by the Board at least quarterly. Under the Company's Articles of Amendment
and Restatement (as amended, the "Charter"), the Company is prohibited from borrowing in excess of 300 % of the
value of the Company's net assets. "Net assets" for purposes of this calculation is defined to be the Company's
total assets (other than intangibles), valued at cost prior to deducting depreciation, reserves for bad debts and other non-cash
reserves, less total liabilities. However, the Company may temporarily borrow in excess of 300 % of the value of the Company's
net assets if such excess is approved by a majority of the Company's independent directors and disclosed to stockholders
in the Company's next quarterly report, along with an explanation for such excess. As of December 31, 2024, the Company's
debt levels did not exceed 300 % of the value of the Company's net assets, as defined above.

 F- 16

 As
of December 31, 2024 and 2023, the Company's mortgage notes payable secured by the respective assets, consisted of the following
($ amounts in thousands):

 Loan

 as of
 2024

 as of
 2023

 Rate at
 2024

 Maturity Date

 Residence Inn Austin (1)

 $
 14,842

 $
 15,160

 4.580
 %

 November 1, 2025

 Springhill Suites Seattle

 40,954

 4.380
 %

 October 1, 2026

 Homewood Suites Woodlands

 8,049

 8,239

 4.690
 %

 April 11, 2025

 Hyatt Place Germantown

 5,696

 5,834

 7.250
 %

 June 29, 2028

 Hyatt Place North Charleston

 5,354

 5,456

 9.000
 %

 November 29, 2028

 Hampton Inn Austin

 9,461

 9,602

 9.000
 %

 November 6, 2029

 Residence Inn Grapevine (2)

 10,836

 11,080

 10.250
 %

 April 6, 2024

 Marriott Courtyard Lyndhurst (3)(4)

 17,058

 17,531

 4.700
 %

 September 27, 2024

 Hilton Garden Inn Austin (3)

 16,641

 4.530
 %

 December 11, 2024

 Hampton Inn Great Valley

 7,102

 7,269

 4.700
 %

 April 11, 2025

 Embassy Suites Nashville

 37,003

 37,924

 4.2123
 %

 July 11, 2025

 Homewood Suites Austin

 9,587

 9,809

 4.650
 %

 August 11, 2025

 Hampton Inn Houston

 3,762

 3,915

 9.500
 %

 April 28, 2028

 Residence Inn Houston Medical Center

 27,431

 10.000
 %

 April 1, 2025

 U.S. Small Business Administration Economic Injury Disaster Loans

 7,494

 7,500

 3.750
 %

 November 2051

 Total notes payable

 219,466

 229,844

 Less unamortized debt issuance costs

 ( 702
)

 ( 839
)

 Total notes payable, net of unamortized debt issuance costs

 $
 218,764

 $
 229,005

 (1)
 sold on February 6, 2025 to an unaffiliated purchaser for $ 20,500,000. The proceeds of
 such sale were used to repay the mortgage loan secured by this property.

 (2)
 sold on February 6, 2025 to an unaffiliated purchaser for $ 22,500,000. The proceeds of
 such sale were used to repay the mortgage loan secured by this property.

 (3)
 The
 current lenders for the mortgage loans on the Marriott Courtyard Lyndhurst property,
 which matured September 27, 2024, and the Hilton Garden Inn Austin, which matured on
 December 11, 2024, have agreed to temporarily forbear on any of their remedies while
 we finalize the terms of new replacement loans with new lenders.

 (4)
 sold on March 21, 2025 to an unaffiliated purchaser for $ 21,250,000. The proceeds of
 such sale were used to repay the mortgage loan secured by this property

 Monthly
payments of principal and interest are due and payable until the maturity date.

 Each
of the Company's hotel properties are subject to a mortgage loan bearing interest at a fixed rate secured by the Company's
ownership interest in the property, except for Hyatt Place North Charleston, the Hampton Inn Austin and the Hampton Inn Houston
mortgage loans which bear interest at floating rates.

 Scheduled
maturities of the Company's notes payable as of December 31, 2024 are as follows (in thousands):

 Years ending December 31,

 2025

 $
 149,311

 2026

 39,935

 2027

 1,001

 2028

 13,593

 2029

 8,652

 Thereafter

 6,974

 Total

 $
 219,466

 F- 17

 Economic
Injury Disaster Loans

 The
Company obtained fifteen Loans ("Loans") of $ 500,000 each from the U.S. Small Business Administration. The
Loans will be due in monthly installments of principal and interest beginning two years from the dates of the Loans with balances
due 30 years from the dates of the Loans. The monthly installments are applied to accrued interest first, then to principal.
The Loans bear interest at the rate of 3.75 % per annum and are secured by the Company's tangible and intangible personal
property. The aggregate balance of the Loans was $ 7.5 million as of December 31, 2024 and 2023.

 Notes
Payable to Related Party

 On
March 30, 2021, Moody National Capital, LLC ("Moody Capital"), an affiliate of the Company, loaned the Company $ 8.0
million pursuant to a promissory note (the "Related Party Note"). The Related Party Note provides that the Company
may borrow up to an additional $ 2.0 million from Moody Capital, for a maximum aggregate loan amount of $ 10.0 million. All amounts
borrowed under the Related Party Note plus all accrued interest thereon, were due and payable in full on March 29, 2024,
provided that the Company had the right to extend such maturity date for up to two years at the Company's discretion.
The Company elected to extend such maturity date for one year to March 30, 2025. Interest on the Related Party Note began
to accrue effective March 30, 2021. The principal amount of the loan under the Related Party Note bears interest at a rate per
annum equal SOFR plus 4.75 %; provided, however, that such interest rate will be increased to a rate per annum equal to SOFR
plus 6.75 % if the Related Party Note is subordinated to another lender. The effective interest rate for the Related Party
Note was 9.27 % as of December 31, 2024. The balance of the Related Party Note was $ 10.0 million as of each of December 31,
2024 and 2023.

 From
April 2021 to August 16, 2021, Moody Capital made a series of advances to the Company to meet specific cash flow needs of the
Company. Effective June 30, 2021, these advances were memorialized in a promissory note ("Second Related Party Note")
with a total maximum aggregate loan amount of $ 10.0 million. All amounts borrowed under the Second Related Party Note plus all
accrued interest thereon, will be due and payable in full on June 30, 2024, provided that the Company had the right to extend
such maturity date for up to two years at the Company's discretion. The Company elected to extend such maturity
date for one year to June 30, 2025. Interest on the Second Related Party Note began to accrue effective June 30, 2021. The principal
amount of the loan under the Second Related Party Note bears interest at a rate per annum equal SOFR plus 6.75 %; provided,
however, that such interest rate will be increased to a rate per annum equal to SOFR plus 8.75 % if the Second Related Party
Note is subordinated to another lender. The effective interest rate for the Second Related Party Note was 11.27 % as of December
31, 2024. The balance of the Second Related Party Note was $ 10.0 million as of each of December 31, 2024 and 2023.

 From
August 20, 2021 to September 30, 2021, Moody Capital made a series of advances to the Company to meet specific cash flow needs.
These advances were memorialized in a promissory note ("Third Related Party Note") with a total maximum aggregate
loan amount of $ 10.0 million. All amounts borrowed under the Third Related Party Note plus all accrued interest thereon, will
be due and payable in full on August 20, 2024, provided that the Company had the right to extend such maturity date for up
to two years at the Company's discretion. The Company elected to extend such maturity date for one year to August
20, 2025. Interest on the Third Related Party Note began to accrue effective August 20, 2021. The principal amount of the loan
under the Third Related Party Note bears interest at a rate per annum equal SOFR plus 7.75 %; provided, however, that such
interest rate will be increased to a rate per annum equal to SOFR plus 9.75 % if the Third Related Party Nate is subordinated
to another lender. The effective interest rate for the Third Related Party Note was 12.27 % as of December 31, 2024. The balance
of the Third Related Party Note was $ 10.0 million as of each of December 31, 2024 and 2023.

 From
April 13, 2022 to September 30, 2023, Moody Capital made a series of advances to the Company to meet specific cash flow needs.
These advances were memorialized in a promissory note ("Fourth Related Party Note") with a total maximum aggregate
loan amount of $ 10.0 million. All amounts borrowed under the Fourth Related Party Note plus all accrued interest thereon, will
be due and payable in full on April 13, 2025, provided that the Company had the right to extend such maturity date for up to two
years at the Company's discretion. Interest on the Fourth Related Party Note began to accrue effective April 13, 2022. The
principal amount of the loan under the Fourth Related Party Note bears interest at a rate per annum equal to one-year SOFR plus
 8.75 %; provided, however, that such interest rate will be increased to a rate per annum equal to one-year SOFR plus 9.75 % if the
Fourth Related Party Note is subordinated to another lender. The effective interest rate for the Fourth Related Party Note was
 13.27 % as of December 31, 2024. The balance of the Fourth Related Party Note was $ 10.0 million as of each of December 31, 2024
and 2023.

 F- 18

 From
January 1, 2024 to June 30, 2024, Moody Capital made a series of advances to the Company to meet specific cash flow needs. These
advances were memorialized in a promissory note ("Fifth Related Party Note") with a total maximum aggregate loan amount
of $ 10.0 million. All amounts borrowed under the Fifth Related Party Note plus all accrued interest thereon, will be due and payable
in full on January 1, 2026, provided that the Company had the right to extend such maturity date for up to two years at the Company's
discretion. Interest on the Fifth Related Party Note began to accrue effective January 1, 2024. The principal amount of the loan
under the Fifth Related Party Note bears interest at a rate per annum equal to one-year SOFR plus 8.75 %; provided, however, that
such interest rate will be increased to a rate per annum equal to one-year SOFR plus 9.75 % if the Fifth Related Party Note is
subordinated to another lender. The effective interest rate for the Fifth Related Party Note was 13.27 % as of December 31, 2024.
The balance of the Fifth Related Party Note was $ 10.0 million as of December 31, 2024.

will be paid for the Related Party Note, the Second Related Party Note, the Third Related Party Note, and the Fourth Related Party
Note and the Fifth Related Party Note as permitted by available cash flow of the Company, or from the excess proceeds following
a sale of a property after the payment of expenses and amounts due to any senior lender, if applicable, and will be compounded
semi-annually. The Company expects to enter into a mutually agreeable subordination agreement with any such senior lender. The
Company may prepay the amounts due under the Related Party Note, the Second Related Party Note, the Third Related Party Note,
the Fourth Related Party Note and the Fifth Related Party Note without any prepayment penalty. Accrued interest on notes payable
to related party was $ 14.5 million and $ 8.2 million as of December 31, 2024 and 2023, respectively.

 The
estimated fair value of the Company's notes payable as of December 31, 2024 and 2023 was $ 219 million and $ 230 million,
respectively. The fair value of the notes payable was estimated based on discounted cash flow analyses using the current incremental
borrowing rates for similar types of borrowing arrangements as of the respective reporting dates. The discounted cash flow method
of assessing fair value results in a general approximation of value, and such value may never actually be realized.

 5.
 Equity

 Capitalization

 Under
its Charter, the Company has the authority to issue 1.0 billion shares of common stock and 100.0 million shares
of preferred stock. All shares of such stock have a par value of $ 0.01 per share. On August 15, 2014, the Company sold 8,000 shares
of common stock to the Sponsor at a purchase price of $ 25.00 per share for an aggregate purchase price of $ 200,000, which
was paid in cash. As of December 31, 2024, there were a total of 13.6 million shares of the Company's common stock
issued and outstanding, including 10.2 million shares, net of redemptions, issued in the Company's public offerings, 3.3 million
shares, net of redemptions, issued in connection with the Mergers, the 8,000 shares sold to Sponsor and 65,000 shares
of restricted stock issued to the Company's directors (as discussed in Note 7, "Incentive Award Plan") as follows
(in thousands):

 Schedule of shares outstanding

 Class

 Shares
 Outstanding
 as of
 December 31, 2024

 Class A Shares

 13,000

 Class T Shares

 Class I Shares

 Total

 The
Board is authorized to amend the Charter without the approval of the stockholders to increase the aggregate number of authorized
shares of capital stock or the number of shares of any class or series that the Company has authority to issue.

 Distributions

 The
Company first paid distributions on September 15, 2015. On March 24, 2020, the Board unanimously approved the suspension
of (i) the payment of distributions to the Company's stockholders, effective immediately, and (ii) the operation of the
DRP, effective as of April 6, 2020, due to the impact that the COVID-19 pandemic had on the Company's hotel properties.
The payment of distributions and the operation of the DRP will remain suspended until such time as the Board approves their resumption.

 F- 19

 Noncontrolling
(Deficit) Interest in Operating Partnership

 Noncontrolling
(deficit) interest in the OP at December 31, 2024 and 2023 was $ ( 386,000) and $ 1.9 million, respectively, which represented 316,037 common
units in the OP issued in connection with the acquisition of the Springhill Suites Seattle and the Partnership Merger, and is
reported in equity in the consolidated balance sheets. Loss from the OP attributable to these noncontrolling interests was $ 2.3
million and $ 462,000 for the years ended December 31, 2024 and 2023, respectively.

 6.
 Related
Party Arrangements

to the Advisory Agreement, the Advisor and certain affiliates of Advisor receive fees and compensation in connection with the
Company's public offering and the acquisition, management and sale of the Company's real estate investments. In addition,
in exchange for $ 1,000 and in consideration of services to be provided by the Advisor, the OP has issued an affiliate of
the Advisor, Moody LPOP II, a separate, special limited partnership interest, in the form of Special Limited Partnership Interests.
For further detail, please see Note 8, "Subordinated Participation Interest."

 Sales
Commissions and Dealer Manager Fees

 From
January 1, 2017, through June 12, 2017, the Company paid Moody Securities an up-front selling commission of up to 7.0 % of
the gross proceeds of what are now the Class A Shares sold in the primary offering and a dealer manager fee of up to 3.0 %
of the gross proceeds of what are now the Class A Shares sold in the primary offering. Beginning on June 12, 2017, the Company
reallocated its common shares into four separate share classes, Class A Shares, Class T Shares, Class I Shares and Class D Shares,
with the differing fees for each class of shares.

 Beginning
January 16, 2018, the Advisor assumed responsibility for the payment of all selling commissions, dealer manager fees and stockholder
servicing fees paid in connection with the Company's public offering; provided, however, that the Advisor intends
to recoup the funding of such amounts through the Contingent Advisor Payment (described below). In connection with the implementation
of the Contingent Advisor Payment, the Company reduced the up-front selling commission paid with respect to the Class A Shares
from up to 7.0 % to up to 6.0 % of the gross proceeds of the Class A Shares sold in the primary offering and reduced the
dealer manager fee paid with respect to the Class A Shares from up to 3.0 % to up to 2.5 % of the gross proceeds of the
Class A Shares sold in the primary offering. As of December 31, 2024, the Company had paid Moody Securities $ 9.7 million
in selling commissions and trailing stockholder servicing fees, and dealer manager fees related to the Company's public
offering, of which $ 8.5 million could potentially be recouped by the Advisor at a later date through the Contingent Advisor
Payment

and Offering Expenses

 The
Advisor will receive reimbursement for organizational and offering expenses incurred on the Company's behalf, but only to
the extent that such reimbursements do not exceed actual expenses incurred by Advisor and do not cause the cumulative selling
commissions, dealer manager fees, stockholder servicing fees and other organization and offering expenses borne by the Company
to exceed 15.0 % of gross offering proceeds from the sale of shares in the Company's follow-on offering as of the date
of reimbursement.

 As
of December 31, 2024, total offering costs for the initial public offering and the follow-on offering were $ 21.1 million,
comprised of $ 12.3 million of offering costs incurred directly by the Company and $ 8.8 million in offering
costs incurred by and reimbursable to the Advisor. As of December 31, 2024, total offering costs for the initial public offering
were $18.4 million, comprised of $ 12.3 million of offering costs incurred directly by the Company and $ 6.1 million in
offering costs incurred by and reimbursable to the Advisor. As of December 31, 2024, total offering costs for the follow-on offering
were $ 2.7 million, comprised of $ 0 of offering costs incurred directly by the Company and $ 2.7 million in
offering costs incurred by and reimbursable to the Advisor. As of December 31, 2024, the Company had $ 0 due to the Advisor
for reimbursable offering costs.

 Acquisition
Fees

 As
of January 16, 2018, the Advisor assumed responsibility for the payment of all selling commissions, dealer manager fees and stockholder
servicing fees in connection with the Company's public offering. In connection therewith, as of January 16, 2018, the acquisition
fee payable to the Advisor was increased from 1.5 % to up to a maximum of 3.85 % of (1) the cost of all investments the
Company acquires (including the Company's pro rata share of any indebtedness assumed or incurred in respect of the investment
and exclusive of acquisition and financing coordination fees), (2) the Company's allocable
cost of investments acquired in a joint venture (including the Company's pro rata share of the purchase price
and the Company's pro rata share of any indebtedness assumed or incurred in respect of that investment and exclusive of
acquisition fees and financing coordination fees) or (3) the amount funded by the Company to acquire or originate a loan or other
investment, including mortgage, mezzanine or bridge loans (including any third-party expenses related to such investment and exclusive
of acquisition fees and financing coordination fees). The up to 3.85 % acquisition fee consists of (i) a 1.5 % base acquisition
fee and (ii) up to an additional 2.35 % contingent acquisition fee (the "Contingent Advisor Payment"). The 1.5 %
base acquisition fee will always be payable upon the acquisition of an investment by the Company, unless the receipt thereof is
waived by the Advisor. The amount of the Contingent Advisor Payment to be paid in connection with the closing of an acquisition
will be reviewed on an acquisition-by-acquisition basis and such payment shall not exceed the then-outstanding amounts paid by
the Advisor for dealer manager fees, selling commissions or stockholder servicing fees at the time of such closing. For purposes
of determining the amount of Contingent Advisor Payment payable, the amounts paid by the Advisor for dealer manager fees, selling
commissions or stockholder servicing fees and considered "outstanding" will be reduced by the amount of the Contingent
Advisor Payment previously paid and taking into account the amount of the Contingent Advisor Holdback. The Advisor may waive or
defer all or a portion of the acquisition fee at any time and from time to time, in the Advisor's sole discretion. The Company
did not incur any acquisition fees payable to the Advisor for the years ended December 31, 2024 and 2023.

 F- 20

 Reimbursement
of Acquisition Expenses

 The
Advisor may also be reimbursed by the Company for actual expenses related to the evaluation, selection and acquisition of real
estate investments, regardless of whether the Company actually acquires the related assets. The Company did not reimburse the
Advisor for any acquisition expenses during the years ended December 31, 2024 and 2023.

 Financing
Coordination Fee

 The
Advisor also receives financing coordination fees of 1 % of the amount available under any loan or line of credit made available
to the Company and 0.75 % of the amount available or outstanding under any refinanced loan or line of credit. The Advisor
will pay some or all of these fees to third parties with whom it subcontracts to coordinate financing for the Company. The Company
incurred financing coordination fees payable to the Advisor of $191,000 and $0 during the years ended December 31, 2024 and 2023,
respectively.

Management Fee

 The
Company pays Moody National Hospitality Management, LLC ("Property Manager") a monthly hotel management fee equal
to 4.0 % of the monthly gross operating revenues from the properties managed by Property Manager for services it provides
in connection with operating and managing properties. The hotel management agreements between the Company and the Property Manager
generally have initial terms of ten years. Property Manager may pay some or all of the compensation it receives from the
Company to a third-party property manager for management or leasing services. In the event that the Company contracts directly
with a non-affiliated third-party property manager, the Company will pay Property Manager a market-based oversight fee. The Company
will reimburse the costs and expenses incurred by Property Manager on the Company's behalf, including legal, travel and
other out-of-pocket expenses that are directly related to the management of specific properties, but the Company will not reimburse
Property Manager for general overhead costs or personnel costs other than employees or subcontractors who are engaged in the on-site
operation, management, maintenance or access control of the properties. For the years ended December 31, 2024 and 2023, the Company
incurred property management fees of $ 3.2 million and $ 3.4 million and accounting fees each year of $ 450,000 which are
included in hotel operating expenses in the accompanying consolidated statements of operations.

 The
Company pays an annual incentive fee to Property Manager. Such annual incentive fee is equal to 15 % of the amount by which
the operating profit from the properties managed by Property Manager for such fiscal year (or partial fiscal year) exceeds 8.5 %
of the total investment of such properties. Property Manager may pay some or all of this annual incentive fee to third-party sub-property
managers for management services. For purposes of this annual incentive fee, "total investment" means the sum of (i)
the price paid to acquire a property, including closing costs, conversion costs, and transaction costs; (ii) additional invested
capital and (iii) any other costs paid in connection with the acquisition of the property, whether incurred pre- or post-acquisition.
As of December 31, 2024, the Company had not paid any annual incentive fees to Property Manager.

 Asset
Management Fee

 The
Company pays the Advisor a monthly asset management fee of one-twelfth of 1.0 % of the cost of investment of all real estate
investments the Company acquires. For the years ended December 31, 2024 and 2023, the Company incurred asset management fees of
$ 4.8 million for each year payable to Advisor, which are recorded in corporate general and administrative expenses in the
accompanying consolidated statements of operations

 Disposition
Fee

 The
Company also pays the Advisor or its affiliates a disposition fee in an amount of up to one-half of the brokerage commission paid
on the sale of an asset, but in no event greater than 3 % of the contract sales price of each property or other investment
sold; provided, however, in no event may the aggregate disposition fees paid to the Advisor and any real estate commissions paid
to unaffiliated third parties exceed 6 % of the contract sales price. As of December 31, 2024, the Company had not incurred
any disposition fees payable to the Advisor.

 F- 21

 Operating
Expense Reimbursement

 The
Company will reimburse the Advisor for all expenses paid or incurred by the Advisor in connection with the services provided to
the Company, subject to the limitation that the Company will not reimburse the Advisor for any amount by which the Company's
aggregate operating expenses (including the asset management fee payable to the Advisor) at the end of the four preceding fiscal
quarters exceeds the greater of: (1) 2 % of the Company's average invested assets, or (2) 25 % of the Company's
net income determined without reduction for any additions to reserves for depreciation, bad debts or other similar non-cash reserves
and excluding any gain from the sale of the Company's assets for that period (the " 2 %/ 25 % Limitation"). Notwithstanding
the above, the Company may reimburse the Advisor for expenses in excess of the 2 %/ 25 % Limitation if a majority of the Company's
independent directors determines that such excess expenses are justified based on unusual and non-recurring factors. For the four
fiscal quarters ended December 31, 2024, total operating expenses of the Company were $ 7.1 million, which included $ 5.1 million
in operating expenses incurred directly by the Company and $ 2.0 million incurred by the Advisor on behalf of the Company.
Of the $ 7.1 million in total operating expenses incurred during the four fiscal quarters ended December 31, 2024, $ 0 exceeded
the 2 %/ 25 % Limitation. The Company reimbursed the Advisor $ 2.0 million during the four fiscal quarters ended December
31, 2024. As of December 31, 2024, the Company had $ 267,000 due to the Advisor for operating expense reimbursement.

 Notes
Payable to Related Party

 See
Note 4, "Debt" to the consolidated financial statements for a description of notes payable to related party. The balance
of notes payable to related party was $ 50.0 million and $ 40.0 million as of December 31, 2024 and 2023, respectively.

 Due
to Related Parties, Net

 The
composition of the amounts due to related parties, net as of December 31, 2024 and 2023 is as follows (in thousands):

 2024

 2023

 Operating expense reimbursement

 $

 $

 Asset management fee

 4,819

 4,797

 Accounts payable to Property Manager

 3,127

 4,986

 Accounts payable to Moody Capital

 —

 Accrued interest on related party notes

 14,475

 8,208

 Total due to related parties, net

 $
 23,213

 $
 18,300

 7.
 Incentive
Award Plan

 The
Company has adopted an incentive plan (the "Incentive Award Plan") that provides for the grant of equity awards to
its employees, directors and consultants and those of the Company's affiliates. The Incentive Award Plan authorizes the
grant of non-qualified and incentive stock options, restricted stock awards, restricted stock units, stock appreciation rights,
dividend equivalents and other stock-based awards or cash-based awards. Shares of common stock will be authorized and reserved
for issuance under the Incentive Award Plan. The Company has also adopted an independent directors compensation plan (the "Independent
Directors Compensation Plan") pursuant to which each of the Company's independent directors was entitled, subject
to the Independent Directors Compensation Plan's conditions and restrictions, to receive an initial grant of 5,000 shares
of restricted stock when the Company raised the minimum offering amount of $ 2,000,000 in the Company's initial public
offering. Each new independent director who subsequently joins the Board will receive a grant of 5,000 shares of restricted
stock upon his or her election to the Board. In addition, on the date of each of the first four annual meetings of the Company's
stockholders at which an independent director is re-elected to the Board, he or she will receive an additional grant of 2,500 shares
of restricted stock. Subject to certain conditions, the non-vested shares of restricted stock granted pursuant to the Independent
Directors Compensation Plan will vest and become non-forfeitable in four equal quarterly installments beginning on the first day
of the first quarter following the date of grant; provided, however, that the restricted stock will become fully vested on the
earlier to occur of (1) the termination of the independent director's service as a director due to his or her death or disability
or (2) a change in control of the Company. As of December 31, 2024, there were 1,935,000 common shares remaining available
for future issuance under the Incentive Award Plan and the Independent Directors Compensation Plan.

 F- 22

 For
the years ended December 31, 2024 and 2023, no compensation expense was recorded by the Company related to such shares of restricted
stock. As of December 31, 2024, there were no non-vested shares of restricted common stock granted pursuant to the Independent
Directors Compensation Plan.

 8.
 Subordinated
Participation Interest

to the limited partnership agreement for the OP, Moody LPOP II, the holder of the Special Limited Partnership Interests, is entitled
to receive distributions equal to 15.0 % of the OP's net cash flows, whether from continuing operations, the repayment
of loans, the disposition of assets or otherwise, but only after the Company's stockholders (and current and future limited
partnership interest holders of the OP other than the former limited partners of Moody I OP) have received, in the aggregate,
cumulative distributions equal to their total invested capital plus a 6.0 % cumulative, non-compounded annual pre-tax return
on such aggregated invested capital. Former limited partners of Moody I OP must have received a cumulative annual return of 8.0 %,
which is equal to the same return to which such holders were entitled before distributions to the special limited partner of Moody
I OP could have been paid under the limited partnership agreement of Moody I OP. In addition, Moody LPOP II is entitled to a separate
payment if it redeems its Special Limited Partnership Interests. The Special Limited Partnership Interests may be redeemed upon:
(1) the listing of the Company's common stock on a national securities exchange or (2) the occurrence of certain events
that result in the termination or non-renewal of the Advisory Agreement, in each case for an amount that Moody LPOP II would have
been entitled to receive had the OP disposed of all of its assets at the enterprise valuation as of the date of the event triggering
the redemption.

 9.
 Commitments
and Contingencies

 Restricted
Cash

 Under
certain management and debt agreements existing at September 30, 2024, the Company escrows payments required for real estate taxes,
insurance, replacement of hotel furniture and fixtures, debt service and property improvement plans. The composition of the Company's
restricted cash as of December 31, 2024 and 2023 are as follows (all amounts in thousands):

 2024

 2023

 Real estate taxes

 $
 4,927

 $
 4,893

 Insurance

 Hotel furniture and fixtures

 7,649

 8,248

 Debt service

 5,645

 4,344

 Property improvement plan

 1,658

 Total restricted cash

 $
 19,886

 $
 17,778

 Franchise
Agreements

 As
of December 31, 2024, all of the Company's hotel properties, including those acquired as part of the Moody I Portfolio,
are operated under franchise agreements with initial terms ranging from 10 to 20 years. The franchise agreements
allow the properties to operate under the franchisor's brand. Pursuant to the franchise agreements, the Company pays a royalty
fee generally between 3.0 % and 6.0 % of room revenue, plus additional fees for marketing, central reservation systems
and other franchisor costs that amount to between 1.5 % and 4.3 % of room revenue. The Company incurred franchise fee
expense of approximately $ 7.1 million and $ 7.2 million for the years ended December 31, 2024 and 2023, respectively,
which amounts are included in hotel operating expenses in the accompanying consolidated statements of operations.

 10.
Taxes

 The
Company has formed a TRS that is treated as a C-corporation for federal income tax purposes and uses the asset and liability method
of accounting for income taxes. Tax return positions are recognized in the consolidated financial statements when they are "more-likely-than-not"
to be sustained upon examination by the taxing authority. Deferred income tax assets and liabilities result from temporary differences.
Temporary differences are differences between the tax bases of assets and liabilities and their reported amounts in the consolidated
financial statements that will result in taxable or deductible amounts in future periods. A valuation allowance may be placed
on deferred income tax assets, if it is determined that it is more likely than not that a deferred tax asset may not be realized.

 As
of December 31, 2024, the Company had operating loss and capital loss carry-forwards of $ 20.4 million and $ 900,000, respectively.

 The
Company had deferred tax assets of $ 0 and $ 2.3 million as of December 31, 2024 and 2023, net of a valuation allowance of
$ 25.5 million and $ 20.3 million as of December 31, 2024 and 2023, respectively, related to net operating loss
carry forwards of the TRS which are included in prepaid expenses and other assets on the consolidated balance sheets. As of December
31, 2024, the TRS had a net operating loss carry-forward of $ 121.4 million, of which $ 8.3 million was transferred
from Moody I's taxable REIT subsidiaries when they were merged into the Company's TRS on the date of the closing of
the Mergers.

 F- 23

 Below
is a reconciliation between the provision for income taxes and the amounts computed by applying the federal income tax rate to
the loss before taxes (in thousands):

 Years ended December 31,

 2024

 2023

 Statutory federal tax benefit

 $
 ( 20,980
)

 $
 ( 4,292
)

 Federal tax impact of REIT election

 18,087

 1,320

 Statutory federal tax benefit at TRS

 ( 2,893
)

 ( 2,972
)

 State income tax expense, net of federal benefit

 Change in valuation allowance

 5,196

 2,972

 Income tax expense

 $
 2,440

 $

 The
difference between income tax expense and the amount computed by applying the statutory federal income tax rate to the combined
income of the Company's TRS before taxes were as follows:

 Years ended December 31,

 2024

 2023

 Book loss before income taxes of the TRS

 $
 ( 13,777
)

 $
 ( 14,151
)

 Statutory rate at 21 %

 $
 ( 2,893
)

 $
 ( 2,972
)

 Effect of state and local income taxes, net of federal tax benefit

 Change in valuation allowance

 5,196

 2,972

 Income tax expense

 $
 2,440

 $

 On
December 31, 2024, the Company had net deferred tax assets of $ 0. The Company has past years' federal and state tax operating loss
carryforwards of the TRS that will generally expire in 2034 through 2039 if not utilized by then. The Company analyzes state loss
carryforwards on a state-by-state basis and records a valuation allowance when management deems it more likely than not that future results
will not generate sufficient taxable income in the respective state to realize the deferred tax asset prior to the expiration of the
loss carryforwards. Management believes that it is more likely than not that the results of future operations of the TRS will not generate
sufficient taxable income to realize the deferred tax assets, in excess of the valuation allowance, related to federal and state loss
carryforwards prior to the expiration of the loss carryforwards and has determined previously recognized deferred income tax benefits
would not be recognized and recorded an additional $ 2.3 million of valuation allowance. From time to time, the Company may be subjected
to federal, state or local tax audits in the normal course of business.

 11.
 Liquidity

 The Company's liquidity position raises substantial
doubt about the Company's ability to continue as a going concern and its capability to repay its matured loans of $ 33.2 million
as of December 31, 2024 and loans of $ 103.5 million maturing during the year ending December 31, 2025.

 Management's plan to meliorate doubt concerning
the Company's liquidity and the Company's capacity to pay its loans as they mature include:

 1)
 Sales of properties,

 2)
 Forfeit properties with non-recourse mortgage loans to the lenders, and

 3)
 Extend notes payable to related parties which can be extended at the election of the Company.

 12.
 Subsequent Events

 In
preparing the consolidated financial statements, the Company has evaluated all subsequent events and transactions for potential
recognition or disclosure through March 28, 2024, the date the audited consolidated financial statements were available for issuance.

Inn Grapevine

 On
February 6, 2025, the Company sold the Residence Inn Grapevine property to an unaffiliated purchaser for $ 22,500,000.

 On
February 6, 2025, the Company sold the Residence Inn Austin property to an unaffiliated purchaser for $ 20,500,000.

 Marriott
Courtyard Lyndhurst

 On
March 21, 2025, the Company sold the Marriott Courtyard Lyndhurst property to an unaffiliated purchaser for $ 21,250,000.

 Notes Payable to Related Party

 On February 7, 2025, Moody Capital repaid the Fifth
Related Party Note in the amount of $ 10.0 million.

 On March 30, 2025, the Company elected to extend such
maturity date of the Related Party Note for one year to March 30, 2026.

 F- 24

 REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION

 MOODY
 SCHEDULE III
 REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION
 DECEMBER 31, 2024
(in thousands)

 SCHEDULE III REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION

 Initial
 Cost to Company

 Total
 Cost

 Description

 Location

 Ownership
 Percent

 Encumbrances

 Land

 Building,
 Improvements, and FF&E

 Total

 Cost
 Capitalized Subsequent to Acquisition (2)

 Land

 Building,
 Improvements and FF&E

 Total (1)

 Accumulated+
 Depreciation and Amortization

 Original

 Date of Construction

 Date

 Acquired

 Springhill
 Suites Seattle

 Seattle,
 Washington

 100.0

 %

 $

 $

 14,040

 $

 60,060

 $

 74,100

 $

 ( 8,409

)

 $

 14,040

 $

 54,651

 $

 65,691

 $

 19,530

 2001

 May
 24, 2016

 Suites Woodlands

 The
 Woodlands, Texas

 100.0

 %

 8,049

 2,828

 14,528

 17,356

 ( 3,155

)

 2,228

 11,973

 14,201

 4,099

 2001

 Hyatt
 Place Germantown

 Germantown,

 100.0

 %

 5,696

 1,874

 14,200

 16,074

 1,874

 15,122

 16,996

 4,174

 2009

 Hyatt
 Place North Charleston

 North
 Charleston, South Carolina

 100.0

 %

 5,354

 13,023

 13,806

 13,888

 14,671

 3,767

 2009

 Texas

 100.0

 %

 9,461

 4,329

 14,999

 19,328

 4,329

 15,983

 20,312

 4,788

 1997

 Hilton
 Garden Inn Austin

 Texas

 100.0

 %

 9,058

 20,230

 29,288

 ( 10,490

)

 5,499

 13,299

 18,798

 6,743

 2002

 Inn Great Valley

 Frazer,
 Pennsylvania

 100.0

 %

 7,102

 1,730

 13,555

 15,285

 2,098

 1,730

 15,653

 17,383

 5,222

 1998

 Suites Austin

 Texas

 100.0

 %

 9,587

 4,218

 14,617

 18,835

 1,219

 4,218

 15,836

 20,054

 4,858

 1998

 Inn Houston

 Texas

 100.0

 %

 3,762

 3,550

 6,408

 9,958

 3,498

 3,550

 9,906

 13,456

 4,338

 1995

 Inn Houston Medical Center

 Texas

 100.0

 %

 6,480

 45,520

 52,000

 ( 12,931

)

 4,833

 34,236

 39,069

 8,400

 2019

 April
 29, 2019

 Total

 $

 132,233

 $

 48,890

 $

 217,140

 $

 266,030

 $

 ( 25,399

)

 $

 43,084

 $

 200,547

 $

 240,631

 $

 65,919

 (1)
 The
 aggregate cost of real estate for federal income tax purposes was $ 425 million as of
 December 31, 2024.

 (2)
 Costs
 capitalized subsequent to acquisition are net of impairments.

 F- 25

 MOODY
 SCHEDULE III
 REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION (CONTINUED)
 DECEMBER 31, 2024 and 2023

 2024

 2023

 Real estate:

 Balance at the beginning of the year

 $
 481,115

 $
 478,441

 Improvements and additions

 1,431

 2,674

 Retirements

 ( 11,256
)

 —

 Reclassification to real estate assets held for sale (1)

 ( 156,796
)

 —

 ( 73,863
)

 —

 Balance at the end of the year

 $
 240,631

 $
 481,115

 Accumulated depreciation:

 Balance at the beginning of the year

 $
 94,818

 $
 78,964

 Depreciation

 14,823

 15,854

 Retirements

 ( 2,272
)

 —

 Reclassification to real estate assets held for sale (1)

 ( 41,450
)

 —

 Balance at the end of the year

 $
 65,919

 $
 94,818

 (1)
 See Note 3, Investment
in Hotel Properties, Real Estate Assets Held for Sale, and Dispositions.

 F- 26