Moody Med Center 2 DST

Offering Overview

An all-cash, debt-free hospitality DST owning the 182-room Residence Inn by Marriott Houston Medical Center, a 16-story interior-corridor select-service / extended-stay hotel at 7807 Kirby Drive, Houston, Texas, in the Medical Center / NRG Stadium submarket anchored by the Texas Medical Center, the world's largest medical complex. The Trust acquired the Project on February 27, 2026 from an affiliated seller (Moody National Kirby-Houston Holding) for $33,000,000, approximately 6.3% below the $35,200,000 as-is appraised value (and below the $39,400,000 prospective value upon completion of a brand-mandated Property Improvement Plan). The Trust raised $41,905,000 of equity with no financing; proceeds funded the acquisition, $3,620,782 of operating and capital reserves (including roughly $3.2 million reserved for the Marriott PIP), and offering costs. The hotel is operated under a master lease with an affiliated Master Tenant (Moody Med Center 2 MT, LLC), which contracted Moody National Management, L.P. as Property Manager; rent comprises Base Rent plus Percentage Rent equal to 70% of gross revenue above a baseline of $6,200,000 growing 3% annually. Distributions to Holders are projected to begin at 6.0% of invested equity and increase to 6.8% over the approximately 10-year hold. The Med Center submarket posted strong post-pandemic RevPAR growth (21.8% in 2022, 13.6% in 2023, 10.2% in 2024) with only 71 rooms added in 2025 and none currently under construction. Sponsored by Moody National, a Houston-based real estate firm; the Managing Broker-Dealer is a Moody affiliate. Beginning two years after the offering closes, Holders may elect to contribute their interests to an affiliate Exchange Entity for units in an optional Section 721 transaction (receiving cash unless they elect units); the Project is expected to be sold in approximately 10 years.

Investment Highlights

• The hotel's demand anchor is the Texas Medical Center, the world's largest medical complex (with the TMC3 research-campus expansion underway), supplemented by NRG Stadium events, producing deep, needs-based, relatively recession-resilient lodging demand from patients, families, medical staff, and researchers. New supply is constrained: the submarket added only 71 rooms in 2025 and has none currently under construction, supporting occupancy and pricing power.
• The DST is all-cash and debt-free, eliminating refinancing, balloon-maturity, and interest-rate risk and removing the debt-service drag, so the entire 6.0%-to-6.8% distribution is unlevered. The structure also avoids the lender cash-management sweeps and restrictive covenants that burden the leveraged hotel and multifamily DSTs, giving the Trust Manager greater operational flexibility through hospitality cycles.
• The asset was acquired at $33,000,000, roughly 6.3% below its $35,200,000 as-is appraised value and well below the $39,400,000 prospective value upon completion of the Property Improvement Plan, providing a discounted basis. It operates under the Residence Inn by Marriott extended-stay flag, which draws longer-tenured, higher-margin medical-related stays, and a roughly $3.2 million capital reserve is set aside to fund the brand-mandated PIP.
• The submarket's operating trajectory is strong: RevPAR grew 21.8% in 2022, 13.6% in 2023, and 10.2% in 2024 on a combination of occupancy and average-daily-rate gains, with continued growth projected through 2029. Extended-stay product such as the Residence Inn typically delivers steadier occupancy and higher operating margins than transient full-service hotels, reinforcing income durability within the volatile lodging sector.
• The offering includes an optional Section 721 / UPREIT exit: beginning two years after the offering closes, Holders may elect to contribute their interests to an affiliate Exchange Entity in exchange for units (or receive cash), providing a potential tax-deferred continuation path that is uncommon among single-asset hotel DSTs and offers an alternative to a fully taxable disposition.

Forecasted Cash Flow

Projected annual cash-on-cash distributions with the corresponding tax-equivalent yield over the hold, based on the sponsor’s underwriting assumptions.

Illustrative projections only — targeted distributions are not guaranteed and actual results will vary. Tax-equivalent yield assumes depreciation shelter of distributed income.

Analyst Notes

Moody Med Center 2 is an all-cash, core-plus hospitality DST whose return is an unlevered, operations-driven distribution (6.0% rising to 6.8% of equity) plus terminal value, on a single 182-room Residence Inn by Marriott in the Texas Medical Center submarket, operated through an affiliated master lease and hotel-management agreement. It is the ledger's first hotel and, like the all-cash net-lease holdings, carries no financing risk, but unlike those its cash flow is an operating hotel business with daily-repricing, economically sensitive revenue rather than contractual rent. The investment case rests on deep needs-based medical-center lodging demand, constrained new supply, strong post-pandemic RevPAR growth, a discounted basis to appraised value, and a durable extended-stay brand. On a risk-adjusted basis the absence of leverage materially de-risks the balance sheet and supports a higher unlevered yield, but is offset by hospitality's inherent volatility, single-asset, single-market, and single-flag concentration, dense Moody-affiliate conflicts across the seller, master tenant, manager, and broker-dealer, property-improvement-plan execution risk, and distribution dependence on reserves. Macro fit is favorable in that medical-anchored extended-stay lodging is among the more defensive hospitality niches and a debt-free structure suits a higher-rate environment, but RevPAR is cyclical and the exit in roughly 10 years depends on hotel pricing and Texas Medical Center demand. The optional Section 721 / UPREIT exit adds a tax-deferred continuation option. Underwriting feasibility hinges on sustaining occupancy and ADR through the hold and executing the PIP on budget; the disclosed distribution ramp is the offering's stated guidance, and the realization is a sale or 721 contribution in approximately 10 years.

Financing

This offering is unleveraged — the DST holds its assets debt-free (0% loan-to-value), so no mortgage financing applies.

Benchmark Comparison

Benchmark reflects the average of comparable Hospitality offerings. Differences are relative to the benchmark.

Offering Documents

Offering Documents Available By Request

About the Sponsor

Moody National

Moody National is a Houston vertically integrated firm, founded in 1996, specializing in hospitality and multifamily DSTs through a full-service platform—roughly 500 professionals spanning acquisition, development, construction and management, with in-house title and insurance. With $3 billion in total capitalization as of early 2025 and more than 3,000 investors served, its hospitality specialization is comparatively rare among DST sponsors and is backed by genuine operating control. The hotel concentration adds cyclicality, balanced by the multifamily book and integrated execution.