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Section 1: 1-A/A

1-A/A LIVE 0001694997 XXXXXXXX 024-10762 true Aspen REIT, Inc. MD 2016 0001694997 6798 81-4842839 0 0 96 Spring St. 6th Floor New York NY 10012 646-780-5451 Stephane De Baets Other 5356885.00 0.00 687077.00 96699926.00 106481347.00 4403672.00 119374832.00 126366415.00 -19885068.00 106481347.00 34933207.00 16822604.00 3786012.00 162963.00 0.00 0.00 Grant Thornton LLP Common Stock 100 000000000 NA Preferred Stock 0 000000000 NA 0 true true false Tier2 Audited Equity (common or preferred stock) N N N Y Y N 1675000 100 20.0000 33500000.00 0.00 0.00 0.00 33500000.00 Maxim Group LLC 0.00 Grant Thornton LLP 0.00 Clifford Chance US LLP; Ellenoff Grossman & Schole LLP 0.00 ICR Services Inc. 0.00 33500000.00 false true AL AK AZ AR CA CO CT DE DC FL GA HI ID IL IN IA KS KY LA ME MD MA MI MN MS MO MT NE NV NH NJ NM NY NC ND OH OK OR PA RI SC SD TN TX UT VT VA WA WV WI WY AL AK AZ AR CA CO CT DE DC FL GA HI ID IL IN IA KS KY LA ME MD MA MI MN MS MO MT NE NV NH NJ NM NY NC ND OH OK OR PA RI SC SD TN TX UT VT VA WA WV WI WY false Aspen REIT, Inc. Common Stock 100 0 $1,000 for 100 shares of common stock, par value $0.01 per share Section 4(a)(2) of the Securities Act as a transaction by an issuer not involving a public offering (Back To Top)

Section 2: PART II AND III (PART II AND III)


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INDEX TO FINANCIAL STATEMENTS

Table of Contents

PART II—INFORMATION REQUIRED IN OFFERING CIRCULAR

An offering statement pursuant to Regulation A relating to these securities has been filed with the United States Securities and Exchange Commission, which we refer to as the Commission. Information contained in this Preliminary Offering Circular is subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted before the offering statement filed with the Commission is qualified. This Preliminary Offering Circular shall not constitute an offer to sell or the solicitation of an offer to buy nor may there be any sales of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful before registration or qualification under the laws of any such jurisdiction. We may elect to satisfy our obligation to deliver a Final Offering Circular by sending investors a notice within two business days after the completion of our sale to you that contains the URL where the Final Offering Circular or the offering statement in which such Final Offering Circular was filed may be obtained.

Subject to Completion, dated January 10, 2018

PRELIMINARY OFFERING CIRCULAR

LOGO

ASPEN REIT, INC.

1,675,000 Shares

Common Stock

           This preliminary offering circular, which we refer to as the Offering Circular, relates to an initial public offering of 1,675,000 shares of common stock, $0.01 par value per share at an initial public offering price of $20.00 per share of Aspen REIT, Inc. Prior to this offering, there has been no public market for our common stock. We intend to apply to list our common stock on the NYSE American exchange, or NYSE American, under the symbol "AJAX" and we expect our common stock to commence trading upon the closing of this offering. We cannot assure you that the NYSE American will accept our application. See "Risk Factors—Risks Related to Our Common Stock and This Offering—There is no public market for our common stock and a market may never develop, which could cause our common stock to trade at a discount and make it difficult for holders of our common stock to sell their shares" and "Description of Capital Stock—Listing" for conditions to the commencement of trading of our common stock.

           We are an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012. This Offering Circular follows the disclosure format of Part I of Form S-11 pursuant to the general instructions of Part II(a)(1)(ii) of Form 1-A.

           We intend to elect and qualify to be taxed as a real estate investment trust, or a REIT, for U.S. federal income tax purposes, commencing with our taxable year ending December 31, 2018. To assist us in qualifying as a REIT, among other purposes, stockholders are generally restricted from owning more than 9.8% by value or number of shares, whichever is more restrictive, of our aggregate outstanding shares of all classes and series, the outstanding shares of any class or series of our preferred stock or our outstanding common stock. Our charter contains various other restrictions on the ownership and transfer of our shares, see "Description of Capital Stock—Restrictions on Ownership and Transfer."

           Investing in our common stock involves significant risks that are described in the "Risk Factors" section beginning on page 20 of this Offering Circular. You should carefully consider these risk factors prior to investing in our common stock.

           Maxim Group LLC, which we refer to as the Lead Agent, is acting as lead managing selling agent to offer the shares to prospective investors on a "best efforts" basis. In addition, the Lead Agent may engage one or more sub-selling agents or selected dealers, which we collectively with the Lead Agent refer to herein as the Selling Agents. The Selling Agents are not purchasing the shares offered by us, and they are not required to sell any specific number or dollar amount of the shares in this offering.

           
 
 
  Price to Public
  Selling Agent
Commissions(1)

  Proceeds,
before expenses,
to Issuer(2)

 

Per Share

  $20.00   $1.40   $18.60
 

Total Offering Amount

  $33,500,000   $2,345,000   $31,155,000

 

(1)
We have agreed to pay the Selling Agents a commission of 7.0% of the gross proceeds received by us from this offering.

(2)
315 East Dean Associates, Inc., our predecessor and the party from whom we are acquiring our sole asset, has agreed to pay 100% of (i) the Selling Agent commissions payable to the Selling Agents in connection with this offering and (ii) our other offering and contribution transaction expenses, including the acquisition fee payable to ER-REITS, LLC, our manager. See "Plan of Distribution" for a detailed description of compensation payable to the Selling Agents.

           The shares are being offered on a "best efforts/all or none" basis. The offering will commence on the date of the offering is qualified by the Commission. Except for funds from investors participating directly through Selling Agents, all investor funds received from the date of this Offering Circular to the closing date of this offering, which is expected to take place on                         , 2017, will be deposited into an escrow account maintained by Prime Trust, LLC, which we refer to as Prime Trust, as escrow agent until closing. The closing date is also the termination date of this offering. If, on the closing date, investor funds are not received for the full amount of shares to be sold in this offering, the offering will terminate and any funds received will be returned promptly, without interest or deduction.

           IN GENERAL, IF YOU ARE NOT AN "ACCREDITED INVESTOR" UNDER APPLICABLE SECURITIES LAWS, NO SALE MAY BE MADE TO YOU IN THIS OFFERING IF THE AGGREGATE PURCHASE PRICE YOU PAY IS MORE THAN 10% OF THE GREATER OF YOUR (I) ANNUAL INCOME OR (II) NET WORTH. DIFFERENT RULES APPLY TO ACCREDITED INVESTORS AND NON-NATURAL PERSONS. BEFORE MAKING ANY REPRESENTATION THAT YOUR INVESTMENT DOES NOT EXCEED APPLICABLE THRESHOLDS, WE ENCOURAGE YOU TO REVIEW RULE 251(d)(2)(i)(C) OF REGULATION A. FOR GENERAL INFORMATION ON INVESTING, WE ENCOURAGE YOU TO REFER TO www.investor.gov. For more information concerning the procedures of this offering, please see "Plan of Distribution" beginning on page 171, including the sections "—Investment Limitations" and "—Procedures for Subscribing" therein.

           The Commission does not pass upon the merits of or give its approval to any securities offered or the terms of the offering, nor does it pass upon the accuracy or completeness of any offering circular or other solicitation materials. These securities are offered pursuant to an exemption from registration with the Commission; however, the Commission has not made an independent determination that the securities offered are exempt from registration.

Maxim Group LLC

   

The date of this Offering Circular is                                    , 2017


Table of Contents

GRAPHIC


Table of Contents

TABLE OF CONTENTS

 
  Page  

Market and Industry Data and Forecasts

    i  

Notice Regarding the Hotel Manager

    i  

Cautionary Note Regarding Forward-Looking Statements

    ii  

Offering Circular Summary

    1  

Summary Historical and Pro Forma Financial Operating Data

    18  

Risk Factors

    20  

Use of Proceeds

    46  

Distribution Policy

    47  

Capitalization

    50  

Selected Historical and Pro Forma Financial Operating Data

    51  

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

    53  

Business

    83  

Our Principal Agreements

    97  

Our Mortgage Financing

    109  

Management

    112  

The Structure and Formation of Our Company

    118  

Principal Stockholders

    119  

Certain Relationships and Related Transactions

    120  

Description of Capital Stock

    123  

Certain Provisions of The Maryland General Corporation Law and Our Charter and Bylaws

    129  

Limited Partnership Agreement of Our Operating Partnership

    136  

Shares Eligible for Future Sale

    139  

U.S. Federal Income Tax Considerations

    141  

ERISA Considerations

    169  

Plan of Distribution

    171  

Legal Matters

    182  

Experts

    182  

Where You Can Find More Information

    182  

Index to Financial Statements

    F-1  

        You should rely only on the information contained in this Offering Circular. We have not, and the Selling Agents have not, authorized anyone to provide you with additional information or information different from that contained in this Offering Circular. We are offering to sell, and seeking offers to buy, our shares of common stock only in jurisdictions where offers and sales are permitted. The information contained in this Offering Circular is accurate only as of the date of this Offering Circular, regardless of the time of delivery of this Offering Circular or of any sale of shares of common stock. Neither the delivery of this Offering Circular nor any sale or delivery of our securities shall, under any circumstances, imply that there has been no change in our affairs since the date of this Offering Circular. This Offering Circular will be updated and made available for delivery to the extent required by the federal securities laws.


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MARKET AND INDUSTRY DATA AND FORECASTS

        Certain market and industry data included in this Offering Circular have been obtained from third-party sources that we believe to be reliable. Market estimates are calculated by using independent industry publications, government publications and third-party forecasts in conjunction with our assumptions about our markets. We have not independently verified such third-party information. We use market data, including certain forecasts, in the "Industry and Market Information" sections under the captions "Offering Circular Summary" and "Business." We have obtained this information from an appraisal of the St. Regis Aspen Resort prepared for us by Jones Lang LaSalle, or JLL, a nationally recognized appraiser, in connection with our loan agreement entered into in April 2017. Furthermore, the data from STR, Inc., or STR, regarding results of hotel operations is not, and should not be construed as, legal or investment advice, or as an endorsement of any property, a recommendation regarding any particular security or course of action, or a guarantee of future performance. We pay STR a fee for its industry reports, which we receive in the regular course of our business in connection with our operations.

        While we are not aware of any misstatements regarding any market, industry or similar data presented herein, such data involves risks and uncertainties and is subject to change based on various factors, including those discussed under the headings "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors" in this Offering Circular.


NOTICE REGARDING THE HOTEL MANAGER

        Neither Marriott International Inc. nor Starwood Hotels & Resorts Worldwide, Inc. and its subsidiaries, which we collectively refer to as our Hotel Manager, nor any of their affiliates (i) hold an ownership interest in the St. Regis Aspen Resort Hotel, (ii) are a party to, or participant in, this offering, or (iii) are responsible for any disclosures or other information set forth herein.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

        Certain statements included in this Offering Circular and the documents incorporated into this Offering Circular by reference 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 forward-looking statements include information about possible or assumed future results of our business, financial condition, liquidity, results of operations, plans and objectives. When we use the words "believe," "expect," "anticipate," "estimate," "plan," "continue," "intend," "should," "may" or similar expressions, we intend to identify forward-looking statements.

        The forward-looking statements contained in this Offering Circular reflect our current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances that may cause our actual results to differ significantly from those expressed in any forward-looking statement.

        Statements regarding the following subjects, among others, may be forward-looking:

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        The forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. Forward-looking statements are not predictions of future events. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us. Some of these factors are described in this Offering Circular under the headings "Offering Circular Summary," "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business." If a change occurs, our business, financial condition, liquidity and results of operations may vary materially from those expressed in our forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made. New risks and uncertainties arise over time, and it is not possible for us to predict those events or how they may affect us. Except as required by law, we are not obligated to, and do not intend to, update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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OFFERING CIRCULAR SUMMARY

        This summary highlights some of the information in this Offering Circular. It does not contain all of the information that you should consider before investing in our common stock. You should carefully read the more detailed information set forth under "Risk Factors" and the other information included in this Offering Circular.

        Except where the context suggests otherwise, references in this Offering Circular to (1) "our company," "we," "us" and "our" refer to Aspen REIT, Inc., a Maryland corporation, together with its subsidiaries, (2) "our operating partnership" refers to Aspen OP, LP, a Delaware limited partnership, together with its subsidiaries, including Aspen Owner, LLC, which will own the St. Regis Aspen Resort upon completion of the contribution transactions described herein, (3) our "TRS" refers to Aspen TRS, Inc., a Delaware corporation and our taxable REIT subsidiary, or TRS, together with its wholly owned subsidiary which will lease the St. Regis Aspen Resort, and (4) the "St. Regis Aspen Resort" refers to our sole real estate asset, the St. Regis Aspen Resort, located in Aspen, Colorado. "Occupancy" is defined as the number of rooms rented at a hotel divided by the number of rooms available; "ADR" refers to average daily rate which is defined as the average room price per day attained by a hotel; and "RevPAR" refers to revenue per available room which is defined as ADR multiplied by occupancy.

        We are structured as an umbrella partnership REIT, or UPREIT, for the purposes of owning a hotel asset. After giving effect to the contribution transactions described herein, which are expected to occur prior to or concurrently with the closing of this offering, we will own the St. Regis Aspen Resort through our operating partnership, of which we serve as the sole general partner. We expect that Aspen TRS, Inc., a wholly owned subsidiary of our operating partnership, will qualify as our TRS under the U.S. Internal Revenue Code of 1986, as amended, or the Code, and will lease the St. Regis Aspen Resort from our operating partnership. For a discussion of aspects of our REIT structure that could affect our operating results, see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Certain Consequences of the Contribution Transactions and Our REIT Election" and "Risk Factors—Risks Related to Our Qualification as a REIT."

        Unless otherwise indicated, the information contained in this Offering Circular assumes that the contribution transactions described under "The Structure and Formation of Our Company" have been completed.

Overview

        Aspen REIT, Inc. is a Maryland corporation that has been formed to own the St. Regis Aspen Resort in Aspen, Colorado. We are a single-asset REIT and currently intend to own only the St. Regis Aspen Resort. Therefore, an investment in our common stock is an investment in the St. Regis Aspen Resort.

        Upon the completion of this offering, we will be externally managed by ER-REITS, LLC, which we refer to as our Manager, which is a newly-formed, majority-owned subsidiary of Elevated Returns, LLC, or Elevated Returns, which in turn is wholly owned by Stephane De Baets, our chairman, chief executive officer and president. Elevated Returns is a New York based real estate asset management and advisory firm and, as of September 30, 2017, had approximately $250 million in assets under management, including the St. Regis Aspen Resort. We believe our relationship with Elevated Returns will provide us with significant advantages, as Elevated Returns executives are actively involved in the day-to-day management of its invested companies and focused on the ownership, operation and acquisition of hospitality assets located within the top markets throughout the United States.

        The St. Regis Aspen Resort is a full-service luxury hotel located in Aspen, Colorado with an upscale restaurant, a private spa and heated outdoor pool with panoramic views of the Aspen mountainside. The resort is centrally located within walking distance of many of Aspen's high-end retail shops, restaurants and entertainment and two blocks from the base of Aspen Mountain. The St. Regis

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Aspen Resort features on-site ski and snowboard rentals, as well as a ski valet service that removes the hassle from transporting equipment to and from the four nearby ski mountains each day. The St. Regis Aspen Resort recently completed $1.6 million of renovations.

        The St. Regis Aspen Resort has 179 guest rooms, consisting of 154 standard rooms and 25 suites. Guests staying in suites enjoy the St. Regis Butler Service, which has been a hallmark of the St. Regis experience for over 100 years and provides packing and unpacking services, garment pressings and assistance with obtaining dinner reservations and theater tickets. In addition, the hotel offers approximately 29,000 square feet of indoor and outdoor conference and banquet venues with views of the Rocky Mountains, including 14 fully equipped meeting spaces that can accommodate special events and celebrations for up to 1,200 guests, and corporate meeting planners can enjoy the services of a St. Regis Meeting Butler, a highly trained individual who acts as a liaison between the meeting planners and other departments of the hotel. The indoor meeting space includes the 9,146-square-foot Grand Ballroom, which we believe is the largest ballroom in Aspen. The St. Regis Aspen Resort also features luxury recreational facilities, including the 15,000-square-foot Remède Spa, a fitness center, a heated outdoor swimming pool and three outdoor whirlpools with views of the mountainside. Additionally, various high-end retailers lease retail space from the hotel.

        The St. Regis Aspen Resort operates three food and beverage outlets: Velvet Buck is the property's casual restaurant and also services the hotel's catering and in-room dining operations; Mountain Social, serving cocktails and light meals, is located off the lobby and offers both couch and table seating, a large fireplace, and views of Aspen Mountain; and Splash is open during the summer season and is located adjacent to the outdoor swimming pool. Light meals and cocktails from this outlet are served at dedicated outdoor tables and lounge chairs around the swimming pool. The hotel also leases space to the Chefs Club Aspen restaurant and bar, which is managed and owned in part by Mr. De Baets.

        In addition to drawing couples and families for vacations throughout the year, the St. Regis Aspen Resort attracts celebrities, high net worth individuals and top executives and has a history of being selected for exclusive private events, both leisure- and business-related. The St. Regis Aspen Resort offers an array of activities year-round, including world-class skiing, snowmobiling and dog sledding during the winter and whitewater rafting, horseback riding, hiking, golf, hot air ballooning and paragliding during the summer. While famous for its skiing, Aspen and the surrounding area offer festivals year-round, including World Cup ski races, ESPN Winter X Games, Food & Wine Classic, Jazz Aspen Snowmass Labor Day Festival, and Aspen Music Festival. The St. Regis Aspen Resort is regularly the venue for well-known annual events in the entertainment, fashion and press industries, such as the Aspen Valley Polo Club, Après Ski Cocktail Classic and Wintersköl Awards Dinner.

        The St. Regis Aspen Resort opened in 1992 as a Ritz-Carlton Hotel. In 1998, the property was converted to the St. Regis brand when it was purchased by Starwood Hotels & Resorts Worldwide, Inc. and its subsidiaries, which we collectively refer to as Starwood, or our Hotel Manager. In 2005, the property was divided into two separate units, a residential condominium complex, which is not and will not be owned by us, and the hotel unit, which represents the St. Regis Aspen Resort, which will be our sole asset. On October 30, 2010, our Predecessor purchased the St. Regis Aspen Resort from Starwood for approximately $70.0 million ($390,000 per room). We refer to this acquisition as the 2010 Acquisition. Starwood has managed the St. Regis Aspen Resort since 1998 and, in connection with the 2010 Acquisition, our Predecessor entered into a hotel management agreement with Sheraton Operating Corporation, a wholly owned subsidiary of Starwood, to continue its management of the hotel. The St. Regis brand provides a luxury experience at over 30 hotels around the world, including the St. Regis Aspen Resort. On September 23, 2016, Marriott International Inc., or Marriott, completed the acquisition of Starwood, after which Starwood became an indirect wholly owned subsidiary of Marriott, a worldwide operator, franchisor, and licensor of hotels and timeshare properties under numerous brand names. At year-end 2016, Marriott operated 1,821 properties (521,552 rooms)

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under long-term management agreements with property owners, 48 properties (10,933 rooms) under long-term lease agreements with property owners, and 22 properties (9,906 rooms) that it owns.

        Mr. De Baets, our chairman, chief executive officer and president, and the indirect majority owner of our Manager, has over 20 years of experience in asset management, financial structuring and mergers and acquisitions, and has been involved with the St. Regis Aspen Resort since our Predecessor acquired an interest in the hotel in 2010. Mr. De Baets has advised companies in both Asia and the United States and has significant experience and professional networks in both the real estate and hospitality industries.

Our Competitive Strengths

Our occupancy, ADR, and RevPAR are generally strong relative to our competitive set and the Colorado Ski Area.

        As measured by STR, Inc., or STR, which is an independent research firm that compiles data on the lodging industry, and as demonstrated in the charts below, our monthly occupancy, ADR and RevPAR are generally strong relative to our competitive set and also outperform the hotels in the Colorado Ski Area. We define our competitive set as comparable internationally branded luxury resorts in renowned ski resorts in the Rocky Mountain region, including Aspen-Snowmass, Colorado, Deer Valley-Park City, Utah, Vail-Avon, Colorado, and Jackson Hole, Wyoming. The Colorado Ski Area is a market industry segment defined by STR and is made up of all hotels across all chain scales that are located within the geographic area. The ski resort areas included in this geographic market are Vail-Avon, Aspen-Snowmass, Telluride, Breckenridge, Crested Butte, Fraser, and Granby.

        Our primary strategy to maintain and grow RevPAR is based on preserving our ADR while increasing occupancy by driving group business during our off-peak seasons in spring and autumn. Unlike many other properties, the St. Regis Aspen Resort limits the sale of vacant rooms at discounted rates through programs that fill rooms at the last minute. We believe that this policy helps preserve the St. Regis Aspen Resort's brand and maintain and grow a loyal clientele who are willing to pay higher prices for the St. Regis Aspen Resort experience.

        The charts below show our monthly occupancy, ADR and RevPAR rates from January 2015 through September 30, 2017, as compared to our competitive set and the Colorado Ski Area.

      


Source: STR data.

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Source: STR data.



Source: STR data.

        We believe that our strong performance is primarily due to the high-quality service that the St. Regis Aspen Resort provides to our customers and the amenities of the resort.

The St. Regis Aspen Resort is a luxury hotel and a high-end asset.

        We believe that high-end assets have characteristics that represent a well-defined segment within the property market which, over the long term, is more insulated from cyclical fluctuations of the real estate market. The St. Regis Aspen Resort is a luxury hotel that appeals to celebrities, high net worth individuals, tourists and corporate executives, among others. Aspen and the surrounding area, famous for its skiing, also offer festivals year-round, some of which include Wintersköl, Food & Wine Classic, Jazz Aspen Snowmass, and Aspen Music Festival. With views of the Rockies, it has access to winter skiing, summer sports and is within walking distance of all of Aspen's shops, restaurants and entertainment. We believe that our history and size give us a competitive advantage over new entrants to the market that are less connected to the community. The St. Regis Aspen Resort is regularly the

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venue for well-known annual events in the entertainment, fashion and press industries, such as the Aspen Valley Polo Club, Après Ski Cocktail Classic, and Wintersköl Awards Dinner.

The St. Regis Aspen Resort is selected as a venue for high-profile events, which we believe results in higher ADR for the resort.

        The St. Regis Aspen Resort has a history as a venue for high-profile exclusive events and attractions. Typically, the winter and summer seasons in Aspen are our most popular seasons for high-profile events, and we believe this drives, in part, higher occupancy during these seasons than in the spring and fall. Due to this popularity, we can also typically increase our room rates, contributing to what is typically a higher ADR for December through March and, to a lesser degree, June through August. Set forth below is a chart showing our monthly ADR from January 2015 to September 30, 2017, with event seasons highlighted.


St. Regis Aspen Resort Monthly ADR

GRAPHIC


Source: STR data.

        Furthermore, we believe that hosting high-profile events attracts customers to the hotel beyond the days immediately surrounding the event. These events are often showcased in the press and reinforce our brand, contributing to our financial results.

Elevated Returns and Hotel Manager have extensive experience in managing luxury hotels and restaurants.

        Mr. De Baets, our chairman, chief executive officer and president, and the sole owner of Elevated Returns, the majority owner of our Manager, has over 20 years of experience in asset management, financial structuring and mergers and acquisitions, and has been involved with the St. Regis Aspen Resort since the 2010 Acquisition. Mr. De Baets has advised companies in both Asia and the United States and has significant experience and professional networks in both the real estate and hospitality industries. Other notable properties of which Mr. De Baets has managed or currently manages and in which he has had or has an ownership interest include the Sunset Tower Hotel in West Hollywood, California, the Chefs Club restaurants in Aspen, Colorado and New York City, and Chefs Club Counter, Lupulo and Aldea Restaurants in New York City. While in Asia, Mr. De Baets specialized in the hospitality industry and has been involved in the acquisition, disposition and restructuring of numerous hotels.

        Our chief financial officer, secretary and treasurer, Michael Wirth, joined Elevated Returns in 2016 and has over 30 years of experience in the real estate and financial services sectors and over 12 years of experience in the REIT industry. Mr. Wirth has also been a top executive at private and public real estate and financial services companies (taking five such companies through the initial public offering ("IPO") process) for over 16 years and holds independent board positions with private companies. In addition, Alex Ho, Elevated Returns' comptroller, has worked with Mr. De Baets for over 20 years, and

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Jason Kirschenbaum, our Manager's managing director, joined Elevated Returns in 2016 and has over 10 years of experience in the real estate business, including real estate investment, financing and development.

        Starwood has managed the St. Regis Aspen Resort since 1998, and in connection with the 2010 Acquisition, our Predecessor entered into a hotel management agreement with Sheraton Operating Corporation, a wholly owned subsidiary of Starwood, to continue Starwood's management of the hotel. The St. Regis brand provides a luxury experience at over 30 hotels around the world, including the St. Regis Aspen Resort. On September 23, 2016, Marriott completed the acquisition of Starwood, after which Starwood became an indirect wholly owned subsidiary of Marriott, a worldwide operator, franchisor, and licensor of hotels and timeshare properties under numerous brand names. At year-end 2016, Marriott operated 1,821 properties (521,552 rooms) under long-term management agreements with property owners, 48 properties (10,933 rooms) under long-term lease agreements with property owners, and 22 properties (9,906 rooms) that it owns.

        We believe our management team, together with Elevated Returns and our Hotel Manager, has the skills and experience necessary to effectively manage and operate a first-class resort destination, enabling us to provide attractive risk-adjusted returns to our stockholders. Upon the completion of this offering and the contribution transactions, our Predecessor, an entity in which Mr. De Baets is an indirect investor and serves as the president, is expected to own 51.0% of the equity interests in our operating partnership.

Aspen is a popular destination for leisure travel in multiple seasons, and we have an established presence in the Aspen area.

        Aspen's desirability as a popular vacation destination and location for resort homes has made it one of the nation's most expensive areas to develop, and, as the city of Aspen is surrounded on three sides by National Forest Land, giving the area limited developable land, it is considered to be an extremely exclusive real estate market with the high barriers to entry. While Aspen began as a silver mining town, Aspen has become known as a luxury resort town for the wealthy and famous, and has become a second or third home to corporate executives and celebrities. As a result of this influx of wealth, Aspen boasts some of the most expensive real estate prices in the United States, and the downtown has been largely transformed into an upscale shopping district known for high-end restaurants, salons and boutiques, while also showcasing the rustic charm of the Mountain West, including landmarks like the Wheeler Opera House, which was built in 1889 during the area's silver mining boom. We believe the high real estate prices and barriers to entry for new development benefit us, as we have an established presence in Aspen as a provider of luxury lodging.

        Moreover, with its luxury positioning and wide appeal to international travelers, Aspen has developed a strong economy of its own. Located high in the Rocky Mountains, Aspen is internationally renowned as a winter and summer resort. The Rocky Mountains generally have reliable snow, a long ski season and reliable vehicular and air access. Aspen, in particular, with access to four ski mountains (Aspen Mountain, Aspen Highlands, Buttermilk, and Snowmass Mountain), trail systems for snowshoeing and cross-country skiing and a vibrant après ski scene, offers an array of winter entertainment. In addition to being a leading world-class skiing destination, the area offers year-round recreational activities and cultural events that draw visitors during all seasons and make Aspen, and our hotel, less dependent on snowfall compared to other major U.S. ski resort destinations.

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Our Business and Growth Strategies

        By capitalizing on our competitive strengths, we seek to increase long-term stockholder value by achieving sustainable long-term growth. Our business and growth strategies to achieve these objectives include the following:

Increasing revenue with a sophisticated growth strategy to increase occupancy through the St. Regis Aspen Resort experience.

        The St. Regis Aspen Resort's revenue is primarily driven by room rentals and food and beverage sales, as well as events and catering. We intend to continue implementing a strategy to maximize both room rental and food and beverage revenue. For the nine months ended September 30, 2017 and the year ended December 31, 2016, the St. Regis Aspen Resort's room rental revenues were $22.9 million and $28.7 million, respectively. In addition, we believe we have an opportunity to improve the St. Regis Aspen Resort's occupancy, which will further increase RevPAR. See "—Our occupancy, ADR, and RevPAR are generally strong relative to our competitive set and the Colorado Ski Area."

        In order to further capitalize on the value of the St. Regis Aspen Resort brand, we believe that we can grow the St. Regis Aspen Resort's revenue by continuing to implement a sophisticated strategy with goals such as the following:

Our Manager is incentivized to succeed.

        Our business is customer focused, so our Manager is consistently making adjustments to fulfill our growth strategy and to adapt to changes in the market, so that we continue to meet and exceed our customers' expectations.

        We have structured our relationship with our Manager and Hotel Manager so that our interests and the interests of our stockholders are closely aligned with those of our Manager and Hotel Manager over the long term. Upon the completion of this offering, our Predecessor, an entity in which Mr. De Baets is an indirect investor and serves as the president, is expected to own 51.0% of the equity interests in our operating partnership. In addition, we have structured our management arrangements with our Manager and Hotel Manager to provide for incentive fees based on our performance. We believe that Mr. De Baets' ownership of equity interests in our operating partnership, as well as the incentive fees that may be earned by our Manager and Hotel Manager, will create an incentive to maximize returns for our stockholders by aligning our interests with those of Mr. De Baets and our Manager and Hotel Manager. See also, "Our Principal Agreements."

Industry and Market Information

        Tourism and real estate fuel the local Aspen economy. Although direct ski-generated revenues have been outpaced by real estate income, skiing remains the foundation of the Aspen tourism industry and economy. In connection to its tourism appeal and high revenue residents, the retail industry in Aspen has developed in the past years, with many high-end brands establishing their presence. The high-end retail environment is crucial in maintaining and growing the distinctive luxury appeal and positioning of Aspen.

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        Aspen draws people from all over the world. In winter, travelers from across the United States and abroad enjoy world-class skiing. The main tourist attractions in the Aspen area are the four ski resorts: Aspen Mountain, Aspen Highlands, Buttermilk, and Snowmass Mountain, which are all operated by the Aspen Skiing Company and together represent approximately 5,500 acres of skiable terrain. The St. Regis Aspen Resort is located close to the base of Aspen Mountain, which features 673 skiable acres, 3,267 feet of vertical drop, 76 trails, and eight lifts. Snowmass Mountain is the largest of the four mountains and features 3,132 skiable acres, 4,406 feet of vertical drop, and 21 lifts.

        Aspen is situated in a relatively remote area of the Rocky Mountains, close to the Continental Divide. As a result, air travel tends to be a dominant mode of transportation for Aspen visitors, especially for those travelling a long distance, and airport passenger counts are important indicators of lodging demand. The nearest airport, Aspen—Pitkin County Airport, is located approximately three miles from the central business district of Aspen, although the airports in Colorado, such as Denver, Grand Junction and Eagle, also serve the Aspen community and are located within an approximately three-hour drive of Aspen.

        Aspen has primarily been a winter destination; however, in the past several years, new summer events and festivals have made the area more popular in warm weather. Year-round, outdoor enthusiasts experience the many recreational activities that the region has to offer, such as hiking, biking, golf, white-water rafting and fishing. Aspen is also rich in history and culture, including art galleries and music venues, and hosts internationally famous events. Below is a brief description of some major events and attractions in the area.

Overview of U.S. and Aspen Ski Markets

        Downhill skiing is the primary demand generator for the Aspen market area, and the health and trends of the ski industry have a direct impact on the performance of the lodging market at ski resorts generally and in Aspen in particular. Aspen is located in the Rocky Mountain Region, which is one of the five major ski regions in the United States, as defined by the National Ski Areas Association, and includes the following states: Colorado, Idaho, Montana, New Mexico, Utah and Wyoming. Of the five major ski regions in the United States, the Rocky Mountain region accommodates the most skiers by a significant margin. While skier visitation can vary dramatically from year to year, depending on snowfall, the national economy, and international economic and political dynamics, the Rocky Mountain region is known to have the most reliable snow, the longest ski season, the most resorts, and some of the best vehicular and air access of the five major ski regions in the United States.

        Aspen competes primarily with major ski facilities in North America and secondarily with upscale large ski resorts around the world and particularly in Continental Europe. The primary competitive

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properties are full-service resorts that boast a large number of ski slopes and ski lifts, winters characterized typically by good snow conditions, well-developed entertainment, retail and restaurant amenities and high-end residential real estate. In particular, Aspen competes in North America with ski resorts such as Vail-Avon, Colorado, Jackson Hole, Wyoming, Deer Valley-Park City, Utah and Whistler, British Columbia, Canada. Due to its international reputation, Aspen also competes secondarily with resorts in Continental Europe such as Verbier, St. Moritz and Davos in Switzerland and Courcheval and Tignes/Val D'Isère in France.

Hotel Market

        The hotel industry is highly competitive. We compete with other Aspen hotels for guests, as well as with comparable internationally branded luxury resorts in renowned ski resorts in the Rocky Mountain region, including Aspen-Snowmass, Colorado, Deer Valley-Park City, Utah, Vail-Avon, Colorado, and Jackson Hole, Wyoming. Competitive advantage within Aspen is based on a number of factors, including location, convenience, brand affiliation, room rates, range of services and guest amenities or accommodations offered and quality of customer service. Competitive advantage with other comparable ski resorts depends largely on snow conditions at the various resorts, as well as with the convenience of Aspen and brand affiliation with the St. Regis brand.

        We also compete with existing and new hotels operated under various brand names. Three new hotels are scheduled to open in Aspen in the next five years, including another hotel affiliated with Starwood, which would compete directly with the St. Regis Aspen Resort for loyalty rewards program business. For further information, see "Risk Factors—Risks Related to our Business—Competition from other luxury hotels in Aspen, Colorado and alternative lodging companies could have a material adverse effect on our results of operations."

Summary Risk Factors

        An investment in our common stock involves various risks. You should carefully consider the risks discussed below and under "Risk Factors" before purchasing our common stock. If any of the following risks or risks discussed under "Risk Factors" occurs, our business, financial condition or results of operations could be materially and adversely affected. In that case, the trading price of our common stock could decline, and you may lose some or all of your investment.

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Contribution Transactions and Our Structure

        We were formed as a Maryland corporation on December 22, 2016. We will conduct our business through an UPREIT structure, in which the St. Regis Aspen Resort is wholly owned indirectly by our operating partnership, Aspen OP, LP. Aspen REIT is the sole general partner of our operating partnership and has the exclusive power to manage and conduct our operating partnership's business, subject to the limitations described in the limited partnership agreement. We will contribute the net proceeds of this offering to our operating partnership in exchange for OP units.

        Through a series of transactions that we expect will occur prior to or concurrently with the completion of this offering, or the contribution transactions, we will acquire the St. Regis Aspen Resort. Our acquisition of these assets will be completed pursuant to a contribution and sale agreement, pursuant to which our Predecessor, an entity owned in part by Mr. De Baets, will contribute the asset to our operating partnership in exchange for an aggregate of 1,743,368 OP units and $32.5 million in cash. Upon the completion of this offering and the contribution transactions, our

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Predecessor, an entity in which Mr. De Baets is an indirect investor and serves as president, is expected to own 51.0% of the equity interests in our operating partnership.

        The following chart shows the anticipated structure of our company after giving effect to the contribution transactions and this offering.

GRAPHIC


(1)
Mr. De Baets and unaffiliated third-party investors indirectly own 315 East Dean Associates, Inc. In addition, Mr. De Baets serves as the president of 315 East Dean Associates, Inc.

(2)
OP units in our operating partnership are redeemable for cash or, at our option, exchangeable for shares of common stock on a one-for-one basis, beginning one year after the completion of this offering.

(3)
As described below, our Manager is controlled by Mr. De Baets.

The Management Agreement and the Manager

Manager

        Effective upon the completion of this offering and the contribution transactions, we will be managed by ER-REITS, LLC, which is a newly-formed, majority-owned subsidiary of Elevated Returns, which in turn is wholly owned by Mr. De Baets and is a New York-based real estate asset management and advisory firm. As of September 30, 2017, Elevated Returns had approximately $250 million in assets under management, including the St. Regis Aspen Resort, in industries such as real estate and consumer brands. Elevated Returns executives are actively involved in the day-to-day management of its invested companies and focused on the ownership, operation, and acquisition of hospitality assets located within the top markets throughout the United States.

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        Our Manager's chief executive officer and president, Mr. De Baets, has over 20 years of experience in asset management, financial structuring, and mergers and acquisitions. He has advised companies in both Asia and the United States and has significant experience and professional networks in both real estate and hospitality. In 2015, Mr. De Baets formed Elevated Returns to focus on the acquisition and/or management of top lodging, restaurant and leisure assets, including the St. Regis Aspen Resort, Sunset Tower Hotel in West Hollywood, CA, Chefs Club Group (Chefs Club Aspen and Chefs Club NY), Chefs Club Counter and Noosa Hospitality which owns Aldea Restaurant and Lupulo Restaurant in New York, NY.

        Elevated Returns' strategy focuses on:

        While Elevated Returns has in the past acquired and managed, and both our Manager and Elevated Returns may in the future manage, other luxury hotels, neither our Manager nor Elevated Returns currently has any intent to acquire or manage any properties in the Aspen area that compete directly with the St. Regis Aspen Resort.

        Our Manager's plans to further implement its overall strategy with respect to the St. Regis Aspen Resort by:

Management Agreement

        We and our operating partnership will enter into a management agreement with our Manager that will be effective upon the completion of this offering and the contribution transactions. Pursuant to the terms of the management agreement, our Manager will perform certain services for us, subject to oversight by our board of directors. For more information about the terms of our management agreement, see "Our Principal Agreements—Management Agreement."

Management Fees

        We will pay our Manager a base management fee, in cash, payable quarterly in arrears, in an amount equal to the greater of: (i) $1,000,000 per year ($250,000 per quarter), which is subject to an annual increase equal to the greater of (a) a consumer price index, or CPI, adjustment and (b) 3.0%, and (ii) 1.5% of our stockholders' equity. The base management fee will be reduced by any of our expenses paid by us directly or reimbursed to our Manager that quarter; provided, however, that the

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base management fee payable with respect to any calendar quarter shall never be less than $0. The base management fee is payable independent of our performance.

        Our Manager will also be eligible to receive an incentive fee in an amount equal to the excess of (i) the product of (a) 25.0% and (b) the excess of (1) our Core Earnings for the previous 12-month period, over (2) the product of (A) our stockholders' equity in the previous 12-month period and (B) 7.0% per annum, over (ii) the sum of any incentive fees paid to our Manager with respect to the first three calendar quarters of such previous 12-month period. For a description of our "stockholders' equity" and "core earnings," see "Our Principal Agreements—Management Agreement—Management Fees—Management Fees."

        Upon the completion of this offering, without taking into account the payment of any potential incentive fee, we expect our management fees and expense reimbursements, as described in further detail below, will slightly decrease compared to the fees and expense reimbursements paid by our Predecessor; however, no assurances can be given that our expected fees and expense reimbursements will not increase.

Disposition Fee

        Following a disposition of the St. Regis Aspen Resort or all or substantially all of our interest in the St. Regis Aspen Resort, we will pay our Manager a management sale fee, in cash, in an amount equal to 2.0% of the total consideration paid by the purchaser in connection with the disposition of the St. Regis Aspen Resort. No disposition fee shall be payable to our Manager in respect of any disposition that occurs during the 12 months following the completion of this offering if the total consideration paid by the purchaser (including any indebtedness assumed by the purchaser) in connection with the disposition of the St. Regis Aspen Resort is less than the value of the aggregate consideration paid by us and our operating partnership in the contribution transactions. For a description of "aggregate consideration" and "total consideration," see "Our Principal Agreements—Management Agreement—Management Fees—Disposition Fee."

Termination Fee

        In conjunction with a termination of the management agreement by us, unless the termination is for cause, we will pay our Manager a termination fee equal to three times the sum of (i) the average annual base management fee and (ii) the average annual incentive fee earned by our Manager, in each case during the 24-month period immediately preceding such termination, calculated as of the end of the most recently completed fiscal quarter before the date of termination.

Expense Reimbursement

        We will reimburse our Manager or its affiliates for certain costs and expenses relating to third-party services that are typically borne by an externally-managed company.

Hotel Management Agreement

        In order to qualify as a REIT, we cannot directly or indirectly operate the St. Regis Aspen Resort. We will lease the St. Regis Aspen Resort to our TRS, which in turn engages the Hotel Manager to manage the St. Regis Aspen Resort. The St. Regis Aspen Resort is operated pursuant to a hotel management agreement with a wholly-owned subsidiary of our Hotel Manager, Starwood. For additional details regarding the principal terms of the hotel management agreement, see "Our Principal Agreements—Hotel Management Agreement."

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Financing Strategy

        Upon the completion of this offering and the contribution transactions, our only long-term debt is expected to be a $120.0 million mortgage on the St. Regis Aspen Resort. As of the date of this Offering Circular, the principal amount outstanding under the mortgage was $120.0 million and the interest rate was 4.55% (subject to adjustment if the lender exercises its rights to bifurcate the promissory note) plus one-month LIBOR. The borrower has hedged against the potential rise in LIBOR above 3.0% pursuant to a rate cap agreement. The initial maturity date on the loan is April 1, 2019, which may be extended by us three times for a period of one year each, provided that certain conditions, including but not limited to satisfying a debt yield test, are met and an extension fee is paid in the amount of 0.25% of the amount of the outstanding principal amount of the loan. Our loan agreement contains restrictive covenants that may impact our ability to pay dividends and therefore our ability to qualify as a REIT. For a summary of the principal terms of this mortgage, see "Financing—Loan Agreement and Related Documents."

Restrictions on Ownership and Transfer

        To assist us in complying with the limitations on the concentration of ownership of a REIT imposed by the Code, among other purposes, our charter prohibits, with certain exceptions, any stockholder from beneficially or constructively owning, applying certain attribution rules under the Code, more than 9.8% by value or number of shares, whichever is more restrictive, of any of the outstanding shares of our common stock, the outstanding shares of any class or series of our preferred stock, or the outstanding shares of our capital stock. For a further discussion of ownership and transfer restrictions, see "Description of Capital Stock—Restrictions on Ownership and Transfer."

Tax Status

        In connection with this offering, we intend to elect to qualify to be taxed as a REIT under the Code, commencing with our taxable year ending on December 31, 2018. We believe that we have been organized in conformity with the requirements for qualification and taxation as a REIT under the Code, and that our proposed method of operation will enable us to meet the requirements for qualification and taxation as a REIT under the Code. To qualify, and maintain our qualification, as a REIT, we must meet on a continuing basis, through our organization and actual investment and operating results, various requirements under the Code relating to, among other things, the sources of our gross income, the composition and values of our assets, our distribution levels and the diversity of ownership of our common stock. If we fail to qualify as a REIT in any taxable year and do not qualify for certain statutory relief provisions, we will be subject to U.S. federal income tax at regular corporate rates and may be precluded from qualifying as a REIT for the subsequent four taxable years following the year during which we failed to qualify as a REIT. Even if we qualify for taxation as a REIT, we may still be subject to certain U.S. federal, state and local taxes on our income or property. Dividends paid by us generally will not be eligible for taxation at the preferential U.S. federal income tax rates that currently apply to certain distributions received by non-corporate individuals from taxable corporations.

        In order for the income from our hotel operations to constitute "rents from real property" for purposes of the gross income tests required for REIT qualification, we cannot directly or indirectly operate the St. Regis Aspen Resort. Accordingly, we will lease the St. Regis Aspen Resort, which will be wholly owned by our operating partnership, to our TRS. Our TRS will pay rent to our operating partnership that can qualify as "rents from real property," provided that our Hotel Manager is an "eligible independent contractor," which we believe to be the case. Our TRS will be subject to U.S. federal income tax at regular corporate rates on its taxable income.

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Implications of Being an Emerging Growth Company

        We are an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and we are eligible to take advantage of certain specified reduced disclosure and other requirements that are otherwise generally applicable to public companies that are not "emerging growth companies" including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

        Although we have not made a determination whether to take advantage of any or all of these exemptions, we expect to remain an "emerging growth company" for up to five years, or until the earliest of (1) the last day of the first fiscal year in which our annual gross revenues exceed $1.07 billion, (2) December 31 of the fiscal year that we become a "large accelerated filer" as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur if the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of the last business day of our most recently completed second fiscal quarter and we have been publicly reporting for at least 12 months or (3) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the preceding three-year period.

        In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards, meaning that the company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have chosen to take advantage of this extended transition period and, as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for private companies for as long as we maintain our emerging company status and do not revoke this election. Accordingly, the accounting standards that we apply while we remain an emerging growth company may differ materially from the accounting standards applied by other similar public companies, including emerging growth companies that have elected to opt out of this extended transition period. This election could have a material impact on our financial statements and the comparability of our financial statements to the financial statements of similar public companies. This potential lack of comparability could make it more difficult for investors to value our securities, which could have a material impact on the price of our common stock.

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THE OFFERING

Common stock offered by us

  1,675,000 shares on a "best efforts/all or none" basis.

Common stock and OP units to be outstanding upon the completion of this offering and the contribution transactions

 

3,418,368 shares and OP units(1).

Use of proceeds

 

We estimate that we will receive net proceeds from this offering in the amount of approximately $33.5 million. Our Predecessor has agreed to pay 100% of (i) the Selling Agent commissions payable to the Selling Agents in connection with this offering and (ii) our other offering and contribution transaction expenses, including the acquisition fee payable to our Manager and legal, accounting, consulting, and regulatory filing expenses. We intend to contribute the net proceeds of this offering to our operating partnership, which we expect will subsequently use the net proceeds as follows:

 

approximately $32.5 million will be paid to 315 East Dean Associates, Inc., our Predecessor, in connection with the contribution transactions; and

 

approximately $1.0 million will be reserved for working capital purposes, including capital expenditures.

 

Prior to the use of the net proceeds for working capital purposes, we intend to invest such net proceeds in interest-bearing accounts and short-term, interest-bearing securities which are consistent with our intention to qualify for taxation as a REIT. See "Use of Proceeds."

Distribution policy

 

We intend to make regular quarterly distributions to holders of our common stock. U.S. federal income tax law generally requires that a REIT distribute annually at least 90% of its REIT taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and that it pay tax at regular corporate rates to the extent that it annually distributes less than 100% of its taxable income. We intend to pay quarterly distributions, which on an annual basis will equal all or substantially all of our taxable income.

 

Any distributions we make will be at the discretion of our board of directors and will depend upon, among other things, our actual results of operations. These results and our ability to pay distributions will be affected by various factors, including our revenues, operating expenses, the rental rate and occupancy rate of our hotel and unanticipated expenditures. For more information, see "Distribution Policy."

   



(1)
Includes (a) 1,675,000 shares of common stock to be issued in this offering and (b) 1,743,368 OP units to be issued in connection with the contribution transactions.

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We cannot assure you that we will make any distributions to our stockholders.

NYSE American symbol

 

"AJAX"

Risk factors

 

An investment in our common stock involves various risks. You should consider carefully the risks discussed below and under "Risk Factors" before purchasing shares of our common stock.

Our Corporate Information

        Our principal executive offices are located at 96 Spring Street, 6th Floor, New York, New York, 10012. Our telephone number is (646) 780-5451. Our website is www.aspenreit.com. The information on our website is not intended to form a part of or be incorporated by reference into this Offering Circular.

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SUMMARY HISTORICAL AND PRO FORMA FINANCIAL OPERATING DATA

        The following table sets forth summary financial and other data on (i) a historical basis for our Predecessor and (ii) a pro forma basis for our company giving effect to (a) the contribution transactions and related fair value adjustments, (b) this offering and the use of net proceeds therefrom as described under "Use of Proceeds," (c) entry into our management agreement with our Manager and (d) the refinancing of existing mortgage indebtedness of approximately $100.0 million and the April 2017 refinancing thereof for approximately $120.0 million.

        The summary historical balance sheet information as of December 31, 2016 and 2015 of our Predecessor and summary historical statements of operations for the years ended December 31, 2016 and 2015 of our Predecessor have been derived from the audited historical financial statements of our Predecessor included elsewhere in this Offering Circular. The summary historical balance sheet information as of September 30, 2017 of our Predecessor and the summary statements of operations for the nine months ended September 30, 2017 and 2016 of our Predecessor have been derived from the unaudited historical financial statements of our Predecessor included elsewhere in this Offering Circular. The summary historical balance sheet information as of September 30, 2016 of our Predecessor have been derived from our Predecessor's unaudited historical financial statements not included in this Offering Circular. Our Predecessor's results of operations for the nine months ended September 30, 2017 are not necessarily indicative of our results of operations for the year ending December 31, 2017.

        The summary pro forma balance sheet information as of September 30, 2017 and the summary pro forma statements of operations for the nine months ended September 30, 2017 and for the year ended December 31, 2016 have been derived from the unaudited pro forma financial statements included elsewhere in this Offering Circular. The summary pro forma balance sheet information as of December 31, 2016 have been derived from unaudited pro forma financial statements not included in this Offering Circular. The unaudited pro forma financial statements are not necessarily indicative of the actual financial position of our company or our Predecessor as of September 30, 2017 or December 31, 2016, nor are they indicative of the results of operations of future periods.

        The summary performance data for Hotel Net Operating Income (Hotel NOI), funds from operations (FFO) and Adjusted FFO, are non-GAAP financial measures and are provided as additional information to complement GAAP measures by providing a further understanding of operating results from management's perspective. The reconciliation of these benchmarks to GAAP for the nine months ended September 30, 2017 and the year ended December 31, 2016 are detailed in "Management's Discussion and Analysis—Results of Operations—Non-GAAP Financial Measures."

        The unaudited summary pro forma financial data as of and for the nine months ended September 30, 2017 and for the year ended December 31, 2016 is presented as if (i) the contribution transactions and related fair value adjustments, (ii) this offering and the use of proceeds therefrom as described under "Use of Proceeds," (iii) entry into our management agreement with our Manager and (iv) the refinancing of existing mortgage indebtedness of approximately $100.0 million and the April 2017 refinancing thereof for approximately $120.0 million, each as more fully described in this Offering Circular, took place concurrently on September 30, 2017 for the balance sheet data and on January 1, 2016 for the operating data. The unaudited pro forma financial data are not necessarily indicative of what our actual financial position and results of operations would have been as of the date and for the periods indicated, nor do they purport to represent our future financial position or results of operations.

        You should read the summary historical consolidated financial and operating data set forth below in conjunction with the sections titled "Management's Discussion and Analysis of Financial Condition and Results of Operations" as well as our financial statements and the related notes included elsewhere in this Offering Circular. The following table summarizes certain selected consolidated financial data for the periods presented. Our historical results may not be indicative of our future performance. The summary historical consolidated financial and operating information presented below contains financial measures that are not presented in accordance with accounting principles generally accepted in the United States ("GAAP"). See "Non-GAAP Financial Measures."

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  (unaudited)
As of and for
the nine months
ended
September 30,
   
   
   
   
 
 
   
   
  Pro forma as
of and for the
nine months
ended
September 30,
2017
  Pro forma as
of and for
the year
ended
December 31,
2016
 
 
  As of and for the year
ended December 31,
 
(in thousands, except percentages and per share amounts)
  2017   2016   2016   2015  

Income Statement Data

                                     

Revenues, net

                                     

Rooms

  $ 22,872   $ 20,659   $ 28,671   $ 24,350   $ 22,872   $ 28,671  

Food and beverage

    6,962     7,085     8,148     8,022     6,962     8,148  

Other operating departments, rental and other

    5,099     4,650     5,745     5,028     5,099     5,745  

Total revenue

    34,933     32,394     42,564     37,400     34,933     42,564  

Departmental costs and expenses

                                     

Rooms

    5,077     4,920     6,350     5,416     5,077     6,350  

Food and beverage

    5,247     5,734     7,137     6,785     5,247     7,137  

Other operating departments, rental and other

    2,394     2,606     3,279     2,834     2,394     3,279  

Total departmental costs and expenses

    12,718     13,260     16,766     15,035     12,718     16,766  

Departmental income

    22,215     19,134     25,798     22,365     22,215     25,798  

Total operating expenses

    16,822     15,146     20,165     18,457     19,585     24,508  

Operating income, net

    5,393     3,988     5,633     3,908     2,630     1,290  

Interest expense

    5,230     4,318     5,792     7,273     5,366     6,334  

Other income

            (250 )   (213 )       (250 )

Net income (loss)

    163     (330 )   91     (3,152 )   (2,736 )   (4,794 )

Net (income) loss attributable to non-controlling interest in operating partnership

                    1,395     2,445  

Net income (loss) attributable to the Company

    163     (330 )   91     (3,152 )   (1,341 )   (2,349 )

Basic and diluted per common share data:

                                     

Basic and diluted net income (loss) available to common shareholders(1)

  $ 0.00   $ (0.01 ) $ 0.00   $ (0.06 ) $ (0.80 ) $ (1.40 )

Basic weighted average common shares outstanding

    50,000,000     50,000,000     50,000,000     50,000,000     1,675,000     1,675,000  

Balance Sheet Data

                                     

Cash and cash equivalents

  $ 5,357   $ 4,138   $ 6,030   $ 4,339   $ 6,357   $ 8,143  

Other current assets

    4,080     3,601     7,993     7,230     4,081     7,993  

Property and equipment, net

    96,700     98,827     98,250     100,902     183,952     184,005  

Total assets

    106,481     106,762     112,471     112,699     194,490     200,338  

Total current liabilities

    6,991     6,889     12,073     10,505     6,748     12,073  

Notes payable

    119,375     99,794     99,897     99,484     119,375     119,897  

Stockholder's equity

    (19,885 )   78     500     2,709     33,500     33,500  

Non-controlling interest in operating partnership

                    34,867     34,867  

Total stockholder's equity, and non-controlling interest in operatng partnership

    (19,885 )   78     500     2,709     68,367     68,367  

Performance Data

   
 
   
 
   
 
   
 
   
 
   
 
 

Hotel NOI

  $ 12,492   $ 9,885   $ 13,942   $ 11,236   $ 12,313   $ 13,372  

FFO

  $ 4,250   $ 3,830   $ 5,631   $ 2,078   $ 4,884   $ 5,380  

Adjusted FFO

  $ 4,550   $ 3,847   $ 5,648   $ 3,520   $ 5,184   $ 5,640  

Rooms department net profit

    77.8 %   76.2 %   77.9 %   77.8 %   77.8 %   77.9 %

Occupancy

    66.0 %   67.0 %   60.0 %   56.1 %   66.0 %   60.0 %

ADR

  $ 709   $ 628   $ 733   $ 664   $ 709   $ 733  

RevPAR

  $ 468   $ 421   $ 440   $ 373   $ 468   $ 440  

Food & beverage department net profit

    24.6 %   19.1 %   12.4 %   15.4 %   24.6 %   12.4 %

Other operating department, rental and other net profit

    53.0 %   44.0 %   42.9 %   43.6 %   53.0 %   42.9 %

(1)
Basic and diluted earnings per share does not include 1,743,368 shares of our common stock issuable upon the redemption of an equal number of OP units. OP units in our operating partnership are redeemable by the holder for cash or, at our option, exchangeable for shares of common stock on a one-for-one basis, beginning one year after the completion of this offering. There would be no change to basic and diluted earnings per share if the OP units were redeemed.

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RISK FACTORS

        An investment in our common stock involves a high degree of risk. Before making an investment decision, you should carefully consider the following risk factors, together with the other information contained in this Offering Circular. If any of the risks discussed in this Offering Circular occurs, our business, financial condition, liquidity and results of operations could be materially and adversely affected. If this were to happen, the price of our common stock could decline significantly and you could lose a part or all of your investment.


Risks Related to Our Business

The St. Regis Aspen Resort is our only real estate asset so our business is greatly exposed to the risks associated with that asset.

        Although nothing in our charter or bylaws prevents us from acquiring other assets, including other hotels, in the future, upon completion of this offering and our contribution transactions, our investment will be, and is expected to continue to be, concentrated in a single asset—the St. Regis Aspen Resort. Our business would be materially adversely affected by harm or damage to the St. Regis Aspen Resort or its reputation in a way that cannot be quickly resolved and remedied. This concentration of risk in a single asset exposes us to greater risks associated with that asset than if our investments were more numerous and diversified.

We are dependent on our Manager, which is a newly-formed, majority owned subsidiary of Elevated Returns, which in turn is wholly owned by Mr. De Baets, our chairman, chief executive officer and president, for our success. We may not be able to find a suitable replacement for our Manager if our management agreement is terminated or if Mr. De Baets is unable for any reason to perform his duties.

        We do not expect to have any employees and we rely completely on our Manager to perform certain services for us. We have no separate facilities and are completely reliant on our Manager, which has significant discretion as to the implementation of our operating policies and strategies. We depend on the diligence, skill and network of business contacts of our Manager. In addition, we offer no assurance that our Manager will remain our manager. The initial term of our management agreement with our Manager only extends until the third anniversary of the closing of this offering, with automatic one-year renewals thereafter. If the management agreement is terminated, and no suitable replacement is found to manage us, we may not be able to execute our business plan.

        In addition, our success depends, to a significant extent, on the continued services of Stephane De Baets, Michael Wirth and the rest of our senior management team. As an externally managed company, our key personnel, including Messrs. De Baets and Wirth, will not be exclusively dedicated to our operations and may devote a substantial portion of their working time to matters unrelated to our business. We have not dedicated any particular number of employees to our business and do not require any employee-hour commitment to our business.

        Mr. De Baets has established an extensive network of lodging industry contacts and relationships, including relationships with global and national hotel brands, hotel owners, financiers, operators, commercial real estate brokers, developers and management companies. Additionally, if Mr. De Baets no longer either (i) controls our Manager or (ii) is our chief executive officer or chairman of our board of directors, we could be in violation of the covenants in our loan agreement. See "—Restrictive covenants in our loan agreement contain provisions limiting our ability to issue shares and OP units, and limiting non-publicly traded interests in the St. Regis Aspen Resort, which could have a material adverse effect on us." Although we have secured a $5.0 million "key person" life insurance policy, we do not otherwise maintain "key person" life insurance on any of our employees, and there can be no assurance that the amount of such coverage will be sufficient to offset any adverse economic effects on

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our operations. Therefore, the loss of services of Mr. De Baets or other members of our senior management team would likely harm our business and our prospects.

Our management has very limited experience operating a REIT and operating a public company and therefore may have difficulty in successfully and profitably operating our business, or complying with regulatory requirements.

        Prior to the completion of this offering, our management has had very limited experience operating a REIT and operating a public company. As a result, we cannot assure you that we will be able to successfully operate as a REIT, execute our business strategies as a public company, or comply with regulatory requirements applicable to public companies and REITs.

We are dependent on the performance of our Hotel Manager and could be materially and adversely affected if our Hotel Manager does not manage the St. Regis Aspen Resort in our best interests.

        Since U.S. federal income tax laws restrict REITs and their subsidiaries from operating or managing hotels, we will not operate or manage the St. Regis Aspen Resort. Instead, we will lease the St. Regis Aspen Resort to our TRS, which will retain the Hotel Manager to operate the St. Regis Aspen Resort pursuant to a hotel management agreement. We could be materially and adversely affected if our Hotel Manager fails to provide quality services and amenities, fails to maintain a quality brand name or otherwise fails to manage the St. Regis Aspen Resort in our best interest. We will not have the authority to require the St. Regis Aspen Resort to be operated in a particular manner or to govern any particular aspect of the daily operations of the St. Regis Aspen Resort. Thus, even if we believe that the St. Regis Aspen Resort is being managed inefficiently or in a manner that does not result in satisfactory occupancy, ADR and RevPAR, we may not be able to make our Hotel Manager change its method of operating the St. Regis Aspen Resort. Our results of operations, financial position, cash flows and our ability to service debt and to make distributions to stockholders are, therefore, dependent on the ability of our Hotel Manager to operate the St. Regis Aspen Resort successfully.

        In addition, from time to time, disputes may arise between us and our Hotel Manager regarding its performance or compliance with the terms of the hotel management agreement, which in turn could adversely affect our results of operations. We generally will attempt to resolve any such disputes through discussions and negotiations; however, if we are unable to reach satisfactory results through discussions and negotiations, we may choose to terminate our hotel management agreement, litigate the dispute or submit the matter to third-party dispute resolution, the outcome of which may be unfavorable to us.

        In the event that our hotel management agreement is terminated, we can provide no assurances that we could find a replacement hotel manager in a timely manner, or at all, or that any replacement manager will be successful in operating the St. Regis Aspen Resort. Furthermore, if our Hotel Manager is financially unable or unwilling to perform its obligations pursuant to our hotel management agreement, our ability to find a replacement manager for the St. Regis Aspen Resort could be challenging and time consuming and could cause us to incur significant costs to obtain a new hotel management agreement for the hotel. Accordingly, if we lose our hotel management agreement, the operations at the St. Regis Aspen Resort could be materially and adversely affected, which could have a material adverse effect on us.

Adverse economic or other conditions in the specific market in which we do business, and the market more broadly, could negatively affect our occupancy levels and rates and therefore our operating results.

        The St. Regis Aspen Resort is located in Aspen, Colorado. Aspen is a mountain resort community, which is currently one of the most expensive residential and lodging real estate markets in the United

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States. Aspen's local economy depends heavily on the vacation, travel, tourism and recreation industries. As a result, we may be adversely affected by such factors as:

The "St. Regis" brand is not under our control, and negative publicity related to the St. Regis brand name, or our inability to continue to use the St. Regis brand name, could materially adversely affect our business.

        We believe the "St. Regis" brand, which is integral to our corporate identity, represents high-end, luxury lodging. For so long as our hotel management agreement is in effect, our hotel will be operated under the St. Regis brand. However, there can be no guarantee that our Hotel Manager will elect to extend the term of the agreement at the expiration of the initial term or that we will be able to enter into a new hotel management with our Hotel Manager at the end of the term. In addition, our hotel management agreement provides that in the event our Hotel Manager decides that it cannot operate the hotel in accordance with the operating standards set forth in the hotel management agreement, it may elect to disassociate the hotel from the St. Regis brand. In the event that we are no longer able to use the St. Regis brand name, our business could be materially and adversely affected.

        In addition, the St. Regis brand is licensed to and used by a number of other hotels operated by Starwood. We rely on the general goodwill of consumers towards the St. Regis brand as part of our external marketing strategy. Consequently, any adverse publicity towards the St. Regis brand name, or more generally, Starwood or Marriott, which own the St. Regis brand, or in relation to another St. Regis hotel over which we have no control or influence, could have a material adverse effect on our business.

Changes to the Starwood Preferred Guests, or SPG, guest loyalty program could adversely impact our revenues and ability to pay dividends.

        We have been advised by Marriott that they intend to revise the SPG guest loyalty program for us beginning March 1, 2018. During 2016 and the first nine months of 2017, our revenues under this program were $3.3 million and $5.1 million, respectively. Although we continue to discuss with Marriott the details regarding such changes, there is a risk that any changes could result in a decrease in revenues to us which could reduce our profitability and could materially and adversely affect our results of operations and ability to pay dividends.

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Our ability to make distributions to our stockholders may be adversely affected by various operating risks common to the lodging industry, including competition, over-building in the Aspen, Colorado market and dependence on business travel and tourism in Aspen, Colorado.

        Hotels have different economic characteristics than many other real estate assets. A typical office property, for example, has long-term leases with third-party tenants, which provides a relatively stable long-term stream of revenue. Hotels, on the other hand, generate revenue from guests that typically stay at the hotel for only a few nights, which causes the room rate and occupancy levels at the St. Regis Aspen Resort to change every day, and results in earnings that can be highly volatile.

        In addition, the St. Regis Aspen Resort is subject to various operating risks common to the lodging industry, many of which are beyond our control, including, among others, the following:

        The occurrence of any of the foregoing could materially and adversely affect us.

Competition from other luxury hotels in Aspen, Colorado and alternative lodging companies could have a material adverse effect on our results of operations.

        The lodging industry is highly competitive. The St. Regis Aspen Resort competes with other hotels for guests in Aspen, Colorado based on a number of factors, including location, convenience, brand affiliation, room rates, range of services and guest amenities or accommodations offered and quality of customer service. Competition is specific to the individual market in which the St. Regis Aspen Resort is located and includes competition from existing and new hotels, as well as alternative lodging companies such as Airbnb®, HomeAway® and VRBO®. Our competitors may have an operating model

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that enables them to offer rooms at lower rates than we can, which could result in our competitors increasing their occupancy at our expense. In addition, our hotel management agreement does not contain any prohibition on Starwood opening hotels that would compete with the St. Regis Aspen Resort, and three new hotels are scheduled to open in Aspen in the next five years, including another hotel affiliated with Starwood, which would compete directly with the St. Regis Aspen Resort for loyalty rewards program business. Competition could adversely affect our occupancy, ADR and RevPAR, and may require us to provide additional amenities or make capital improvements that we otherwise would not have to make, which could reduce our profitability and could materially and adversely affect our results of operations.

If there are deficiencies in our disclosure controls and procedures or internal control over financial reporting, we may be unable to accurately present our financial statements or prevent fraud, which could materially and adversely affect us.

        As a publicly traded company, we will be required to report our financial statements on a consolidated basis. Effective internal controls are necessary for us to accurately report our financial results. Section 404 of the Sarbanes-Oxley Act will require us to evaluate and report on our internal control over financial reporting. However, for as long as we are an "emerging growth company" under the JOBS Act, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act. We could be an "emerging growth company" for up to five years.

        An independent assessment of the effectiveness of our internal controls could detect problems that our management's assessment might not. There can be no guarantee that our internal control over financial reporting will be effective in accomplishing all control objectives all of the time. Furthermore, as we grow our business, our internal controls will become more complex, and we may require significantly more resources to ensure our internal controls remain effective. Deficiencies, including any material weakness, in our internal control over financial reporting which may occur in the future could result in misstatements of our results of operations that could require a restatement, failing to meet our public company reporting obligations and causing investors to lose confidence in our reported financial information, which could materially and adversely affect us.

The St. Regis Aspen Resort may not continue to be the venue chosen for high-profile events.

        Historically, the St. Regis Aspen Resort has been the venue for various high-profile events, such as the Aspen Valley Polo Club, Après Ski Cocktail Classic and Wintersköl Awards Dinner. These events increase the St. Regis Aspen Resort's visibility in the media and typically directly or indirectly increase occupancy and increase food and beverage revenues.

        However, whether the St. Regis Aspen Resort will be selected as a venue for a high-profile event is largely out of our control. The dates of an event and the requested venue size can be limiting factors for our potential clients. Additionally, our Manager and Hotel Manager attempt to maintain relationships with our event-related clients, but if key personnel at our Manager or Hotel Manager are no longer involved in our business, we may lose the business of certain event-related clients. If the number of high-profile events at the St. Regis Aspen Resort decreases, or the St. Regis Aspen Resort is no longer chosen for high-profile events at all, our operating results could be adversely affected.

There are risks associated with our indebtedness, which is secured by our only asset, the St. Regis Aspen Resort.

        Upon the completion of this offering and the contribution transactions, our only long-term debt is expected to be a $120.0 million mortgage on the St. Regis Aspen Resort, which was entered into on April 3, 2017 with Garfield SRA Mortgage Investment, LLC. As of the date of this Offering Circular,

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the principal amount outstanding under the mortgage was $120.0 million. Our level of debt and the limitations imposed on us by our mortgage could have significant adverse consequences, including the following:

Restrictive covenants in our loan agreement contain provisions limiting (1) our ability to issue shares of common stock in the future and (2) transfers of ownership interests by certain holders.

        Our loan agreement with our senior mortgage lender includes restrictive covenants that could limit (1) our ability to issue shares of common stock in the future and (2) the ability of certain of our holders of OP units to transfer their OP units. Our loan agreement provides that any issuance of common stock by us or a transfer of the ownership interests in us by Mr. De Baets and Ravipan Jaruthavee, the majority owner of the St. Regis Aspen Resort, prior to the completion of this offering and the contribution transactions, will be permitted only if following such issuance or transfer, as the case may be, (i)(a) Mr. De Baets continues to own, directly or indirectly, at least         % of our equity interests, including for this purpose his interests in our operating partnership and (b) Mr. De Baets has the right to receive at least        % of the distributions, including for this purpose, his right to receive distributions from our operating partnership and (ii) Mr. De Baets and Ms. Jaruthavee collectively (a) own, directly or indirectly, at least        % of the equity interests in us, including for this purpose their aggregate interests in our operating partnership and (b) have the right to at least        % of the distributions, including for this purpose, their collective rights to distributions from our operating partnership. See "Our Mortgage Financing" for more information on our loan agreement.

        Accordingly, we may not be able to issue additional shares of our common stock in the future unless we were able to obtain a waiver of these conditions. In addition, if Mr. De Baets or Ms. Jaruthavee were to transfer their ownership interests in us we may be in breach of the ownership requirements in our loan agreement, which could have a material adverse effect on our company. To mitigate this risk, our operating partnership has entered into a lock-up agreement with our Predecessor that provides that our Predecessor may not redeem or otherwise transfer any of its OP units during the term of our loan agreement without our prior written consent. In addition, the lock-up agreement provides that our Predecessor cannot make distributions of OP units to its stockholders unless Mr. De

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Baets and Ms. Jaruthavee agree to be subject to lock-up agreements with our operating partnership on the same terms as our lock-up agreement described above with our Predecessor.

We could be in default under our loan agreement if the guarantors of our mortgage fail to meet certain financial covenants.

        Mr. De Baets and ER Merry Way LP, or ER Merry Way, 315 East Dean Associates, Inc.'s indirect majority shareholder, have guaranteed our mortgage on the St. Regis Aspen Resort, but the guarantee is triggered only upon the occurrence of certain "bad acts" by us. See "Financing—Guaranty." Our loan agreement also provides that if Mr. De Baets and ER Merry Way, collectively, fail to maintain a net worth (as defined in the loan agreement) of at least $20.0 million and cash liquidity of at least $5.0 million, we would be in default under our loan agreement and our lender could exercise all remedies available to it, including accelerating our debt or foreclosing on the St. Regis Aspen Resort. Whether Mr. De Baets and ER Merry Way continue to meet these net worth and liquidity requirements is out of our control. As a result, we may unexpectedly be in default under our loan agreement because of their failure to meet these requirements, and this could have a material adverse effect on our business.

Our loan agreement may restrict our ability to make distributions to our stockholders.

        Our loan agreement with our senior mortgage lender provides that in the event of (i) a failure by us to meet certain minimum debt yield thresholds resulting in a cash sweep period, (ii) a continuing event of default, (iii) a material default (after the expiration of any applicable notice and cure periods) by our Hotel Manager under the hotel management agreement, (iv) our Hotel Manager filing or being the subject of a bankruptcy petition, (v) a trustee or receiver being appointed for the Hotel Manager's assets, or (vi) our Hotel Manager being adjudicated insolvent or making an assignment for the benefit of creditors, we are not permitted to make distributions to our stockholders, even if necessary to maintain our REIT qualification. While we consider any of the foregoing events to be unlikely, such an event is beyond our control. As a result, we may unexpectedly be unable to make distributions to stockholders and maintain our REIT qualification, which could have a material adverse effect on our business and the value of our common stock. See "Our Mortgage Financing" for more information on our loan agreement.

The cyclical nature of the lodging industry may cause fluctuations in our operating performance, which could have a material adverse effect on us.

        The lodging industry historically has been highly cyclical in nature. Fluctuations in lodging demand and, therefore, operating performance, are caused largely by general economic and local market conditions, which subsequently affect levels of business and leisure travel. In addition to general economic conditions, new hotel room supply is an important factor that can affect the lodging industry's performance, and overbuilding has the potential to further exacerbate the negative impact of an economic recession. Room rates and occupancy, and thus RevPAR, tend to increase when demand growth exceeds supply growth. We can provide no assurances regarding whether, or the extent to which, lodging demand will rebound or whether any such rebound will be sustained. An adverse change in lodging fundamentals could result in returns that are substantially below our expectations or result in losses, which could have a material adverse effect on us.

The seasonality of the lodging industry could have a material adverse effect on us.

        The lodging industry is seasonal in nature, which can be expected to cause quarterly fluctuations in our revenues. Our quarterly earnings may be adversely affected by factors outside our control, including weather conditions and poor economic factors in the specific market in which we operate. For example, the St. Regis Aspen Resort generally experiences higher revenues in the months of December through

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June. This seasonality can be expected to cause periodic fluctuations in the St. Regis Aspen Resort's room revenues, occupancy levels, room rates and operating expenses. We can provide no assurances that our cash flows will be sufficient to offset any shortfalls that occur as a result of these fluctuations. Consequently, volatility in our financial performance resulting from the seasonality of the lodging industry could have a material adverse effect on us.

Many of our real estate-related costs will not decrease even if revenues from the St. Regis Aspen Resort decrease.

        Many costs, such as real estate taxes, insurance premiums and maintenance costs, generally are not reduced even when a hotel is not fully occupied, room rates decrease or other circumstances cause a reduction in revenues. If we are unable to offset these fixed costs with sufficient revenues from the St. Regis Aspen Resort, our financial performance could be materially and adversely affected.

As a REIT, it may be more difficult for us to fund capital expenditures.

        The St. Regis Aspen Resort has an ongoing need for renovations and other capital improvements, including replacements, from time to time, of furniture, fixtures and equipment. We may not be able to fund capital improvements on the St. Regis Aspen Resort solely from cash provided from our operating activities because we must distribute at least 90% of our REIT taxable income, determined without regard to the deductions for dividends paid and excluding net capital gains, to maintain our qualification as a REIT, and we are subject to tax on any retained income and gains. As a result, our ability to fund capital expenditures through retained earnings is very limited. Consequently, we expect to rely upon the availability of debt or equity capital to fund capital improvements. In addition, our organizational documents do not limit the amount of debt we can incur. If we are unable to obtain the capital necessary to make required periodic capital expenditures and renovate the St. Regis Aspen Resort on attractive terms, or at all, our financial condition, liquidity and results of operations could be materially and adversely affected.

Increases in interest rates may increase the cost of hedging our interest expense and adversely affect our cash flow and our ability to service our indebtedness and make cash distributions to our stockholders.

        Upon the completion of this offering and the contribution transactions, our only long-term debt is expected to be a $120.0 million mortgage on the St. Regis Aspen Resort. As of the date of this Offering Circular, the principal amount outstanding under the mortgage was $120.0 million. The interest rate is 4.55% (subject to adjustment if the lender exercises its rights to bifurcate the promissory note), plus the applicable one month LIBOR rate, which was approximately 5.79% as of September 30, 2017. We are required under our loan agreement to enter into a rate cap agreement. In connection with the completion of this offering and the contribution transactions, we will have assumed the existing rate cap agreement and hedged against a potential rise in one-month LIBOR above 3.0%.

        Our hedging arrangements may not be effective in reducing our exposure to interest rate changes and they involve risks, such as the risk that the counterparty may fail to honor its obligations under an arrangement. There is no assurance that a potential counterparty will perform its obligations under a hedging arrangement or that we will be able to enforce such an arrangement. Additionally, the credit markets have recently experienced historic lows in interest rates. As the overall economy strengthens, it is possible that monetary policy will continue to tighten further, resulting in higher interest rates.

        Interest rates on variable-rate debt could increase in the near future, which could increase our financing costs and hedging costs, and decrease our cash flow and our ability to pay cash distributions to our stockholders. Additionally, the failure to hedge effectively against interest rate changes may adversely affect our financial condition, results of operations and ability to make cash distributions to our stockholders.

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We could become more highly leveraged in the future because our organizational documents contain no limitation on the amount of debt we may incur.

        Our organizational documents contain no limitations on the amount of indebtedness that we or our operating partnership may incur. We could increase our total outstanding indebtedness at any time. If we become more highly leveraged, the resulting increase in debt service could adversely affect our ability to make payments on our outstanding indebtedness and to pay our anticipated cash distributions and/or to continue to make cash distributions to maintain our REIT qualification, and could harm our financial condition.

Disruptions in the financial markets could affect our ability to refinance our existing debt on reasonable terms or at all and have other adverse effects on us.

        Uncertainty in the credit markets may negatively impact our ability to access additional debt financing or to refinance existing debt maturities on attractive terms (or at all), which may negatively affect our ability to make improvements to our property. In addition, we have approximately $120.0 million of debt outstanding which will mature on April 1, 2019. If interest rates are higher when we refinance this debt, our income could be reduced. We may be unable to refinance debt at appropriate times, which may require us to seek alternative sources of potentially less attractive financing, and may require us to adjust our business plans accordingly. In addition, these factors may make it more difficult for us to sell our property or may adversely affect the price we receive for our property, as prospective buyers may experience increased costs of debt financing or difficulties in obtaining debt financing.

Costs associated with complying with the Americans with Disabilities Act of 1990, or the ADA, may result in unanticipated expenses.

        Under the ADA, places of public accommodation are required to meet certain U.S. federal requirements related to access and use by disabled persons. These requirements became effective in 1992. A number of additional U.S. federal, state and local laws may also require modifications to the St. Regis Aspen Resort, or restrict certain further renovations, with respect to access thereto by disabled persons. Noncompliance with the ADA could result in the imposition of fines or an award of damages to private litigants and also could result in an order to correct any non-complying feature, which could result in substantial capital expenditures. Although we believe that our properties substantially comply with present requirements of the ADA, we have not conducted an audit or investigation of all of the St. Regis Aspen Resort to determine its compliance. If the St. Regis Aspen Resort is not in compliance with the ADA or other legislation, then we would be required to incur additional costs to bring the St. Regis Aspen Resort into compliance. If we incur substantial costs to comply with the ADA or other legislation, our financial condition, results of operations, cash flow, per share trading price of our common stock and our ability to satisfy our debt service obligations and to make cash distributions to our stockholders could be adversely affected.

Environmental compliance costs and liabilities associated with operating the St. Regis Aspen Resort may affect our results of operations.

        Under various U.S. federal, state and local laws, ordinances and regulations, owners and operators of real estate may be liable for the costs of investigating and remediating certain hazardous substances or other regulated materials on or in such property. Such laws often impose such liability without regard to whether the owner or operator knew of, or was responsible for, the presence of such substances or materials. The presence of such substances or materials, or the failure to properly remediate such substances, may adversely affect the owner's or operator's ability to lease, sell or rent such property or to borrow using such property as collateral. Persons who arrange for the disposal or treatment of hazardous substances or other regulated materials may be liable for the costs of removal

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or remediation of such substances at a disposal or treatment facility, whether or not such facility is owned or operated by such person. Certain environmental laws impose liability for release of asbestos-containing materials into the air and third-parties may seek recovery from owners or operators of real properties for personal injury associated with asbestos-containing materials.

        Certain environmental laws also impose liability, without regard to knowledge or fault, for removal or remediation of hazardous substances or other regulated materials upon owners and operators of contaminated property even after they no longer own or operate the property. Moreover, the past or present owner or operator from which a release emanates could be liable for any personal injuries or property damages that may result from such releases, as well as any damages to natural resources that may arise from such releases.

        Certain environmental laws impose compliance obligations on owners and operators of real property with respect to the management of hazardous materials and other regulated substances. For example, environmental laws govern the management of asbestos-containing materials and lead-based paint. Failure to comply with these laws can result in penalties or other sanctions.

        No assurances can be given that any prior owner or operator of the St. Regis Aspen Resort did not create any material environmental condition not known to us, or that a material environmental condition does not otherwise exist as to the St. Regis Aspen Resort. There also exists the risk that material environmental conditions, liabilities or compliance concerns may have arisen after the review was completed or may arise in the future. Finally, future laws, ordinances or regulations and future interpretations of existing laws, ordinances or regulations may impose additional material environmental liability.

We may become subject to litigation or threatened litigation that may divert management's time and attention, require us to pay damages and expenses or restrict the operation of our business.

        We may become subject to disputes with commercial parties with whom we maintain relationships or other parties with whom we do business. Any such dispute could result in litigation between us and the other parties. Whether or not any dispute actually proceeds to litigation, we may be required to devote significant management time and attention to its successful resolution (through litigation, settlement or otherwise), which would detract from our management's ability to focus on our business. Any such resolution could involve the payment of damages or expenses by us, which may be significant. In addition, any such resolution could involve our agreement with terms that restrict the operation of our business. We also could be sued for personal injuries and/or property damage occurring at the St. Regis Aspen Resort. The liability insurance we maintain may not cover all costs and expenses arising from such lawsuits.

Our business is subject to the risks of fires and other natural catastrophic events and to interruption by man-made problems such as computer viruses or terrorism.

        Our systems and operations are vulnerable to damage or interruption from fires, power losses, telecommunications failures, terrorist attacks, acts of war, human errors, break-ins and similar events. For example, a significant natural disaster, such as an earthquake, fire or flood, could have a material adverse impact on our business, operating results and financial condition. Our IT systems may also be vulnerable to computer viruses, break-ins and similar disruptions from unauthorized tampering with our computer systems, which could lead to interruptions, delays, loss of critical data or the unauthorized disclosure of confidential intellectual property or client data. We may not have sufficient protection or recovery plans in certain circumstances, such as natural disasters affecting the Aspen area, and our business interruption insurance may be insufficient to compensate us for losses that may occur. Such disruptions could negatively impact our ability to run our business, which could have an adverse effect on our operating results and financial condition.

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Future terrorist attacks or changes in terror alert levels could materially and adversely affect our business.

        Previous terrorist attacks and subsequent terrorist alerts have adversely affected the U.S. travel and hospitality industries since 2001, often disproportionately to the effect on the overall economy. The extent of impact that actual or threatened terrorist attacks in the U.S. or elsewhere could have on domestic and international travel and our business in particular cannot be determined, but any such attacks or the threat of such attacks could directly affect the value of the St. Regis Aspen Resort through damage, destruction or loss and could have a material adverse effect on travel and hotel demand, our ability to finance our business and our ability to insure the St. Regis Aspen Resort. Any of these events could materially and adversely affect our business, our operating results and our prospects.

Uninsured losses or losses in excess of our insurance coverage could adversely affect our financial condition, operating results and cash flow.

        We maintain comprehensive liability, fire, flood and earthquake insurance with respect to the St. Regis Aspen Resort. Certain types of losses, however, may be either uninsurable or not economically insurable, such as losses due to tornadoes, blizzards, riots, acts of war or terrorism. Should an uninsured loss occur, we could lose both our investment in and anticipated profits and cash flow from our property. In addition, if any such loss is insured, we may be required to pay significant amounts on any claim for recovery of such a loss prior to our insurer being obligated to reimburse us for the loss, or the amount of the loss may exceed our coverage for the loss. As a result, our operating results may be adversely affected.

Pursuant to the JOBS Act, we are eligible to take advantage of certain specified reduced disclosure and other requirements that are otherwise generally applicable to public companies for so long as we are an "emerging growth company."

        We are an "emerging growth company" as defined in the JOBS Act and we are eligible to take advantage of certain specified reduced disclosure and other requirements that are otherwise generally applicable to public companies that are not "emerging growth companies" including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We may take advantage of these exemptions for up to five years or such earlier time that we are no longer an "emerging growth company." We would cease to be an "emerging growth company" if we have more than $1.07 billion in annual gross revenues, we have more than $700.0 million in market value of our shares held by non-affiliates, or we issue more than $1.0 billion of non-convertible debt over a three-year period. If we take advantage of any or all of these exceptions, we cannot predict if some investors will find our common stock less attractive. As a result, there may be a less active trading market for our common stock and our share price may be more volatile.

        In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards, meaning that the company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have chosen to take advantage of this extended transition period and, as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for private companies for as long as we maintain our emerging company status and do not revoke this election. Accordingly, the accounting standards that we apply while we remain an emerging growth company may differ materially from the accounting standards applied by other similar public companies, including emerging growth companies that have elected to opt out of this extended

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transition period. This election could have a material impact on our financial statements and the comparability of our financial statements to the financial statements of similar public companies. This potential lack of comparability could make it more difficult for investors to value our securities, which could have a material impact on the price of our common stock.

We are a smaller reporting company and the reduced reporting requirements available to smaller reporting companies may make our common stock less attractive to investors.

        We are a "smaller reporting company," as defined in the Securities Act. For as long as we continue to be a smaller reporting company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not smaller reporting companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding historical financial statements, reduced executive compensation disclosure requirements in our periodic reports, registration statements, and proxy statements and exemptions from the requirements of holding non-binding advisory votes on executive compensation and stockholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. We will remain a smaller reporting company until the beginning of a year in which we would have a public float of $75.0 million held by non-affiliates as of the last business day of the second quarter of the prior year.


Risks Related to Our Structure and Our Relationship with Our Manager

If the ownership of our common stock on a fully diluted basis continues to be highly concentrated, it will prevent you and other minority stockholders from influencing corporate decisions.

        Upon the completion of this offering and the contribution transactions, we expect that our Predecessor will own approximately 51.0% of the equity interests in our operating partnership. All of our Predecessor's interests are expected to be held as OP units; however, OP units are redeemable for cash, or at our option, for shares of our common stock on a one-to-one basis beginning one year after the completion of this offering. Additionally, change of control transactions will require the approval of at least a majority of the holders of shares of our common stock and OP units voting as a single class. Furthermore, the terms of our loan agreement restrict certain transfers of shares of our common stock or OP units by Mr. De Baets or Ms. Jaruthavee, or issuances by us of such securities, unless certain conditions are met, including that (i)(a) Mr. De Baets continues to own, directly or indirectly, at least        % of our equity interests when taken together with his interests in our operating partnership and (b) Mr. De Baets has the right to at least        % of the distributions, when taken together with his right to distributions from our operating partnership and (ii) Mr. De Baets and Ms. Jaruthavee (a) own collectively, directly or indirectly, at least        % of the equity interests in us when taken together with their aggregate interests in our Operating Partnership and (b) collectively, have the right to at least        % of the distributions, when taken together with their collective rights to distributions from our Operating Partnership.

        This concentration of ownership may delay, deter or prevent acts that would be favored by other holders. Also, our larger stockholders (on a fully diluted basis) may seek to cause us to take courses of action that, in their judgment, could enhance their investment in us, but which might involve risks to our other stockholders or adversely affect us or our other stockholders, including investors in this offering. As a result, the market price of our common stock could decline or stockholders might not receive a premium over the then-current market price of our common stock upon a change of control or the sale of all or substantially all of our interest in the St. Regis Aspen Resort. In addition, this concentration of ownership may adversely affect the trading price of our common stock because investors may perceive disadvantages in owning shares in a company with a significant concentration of ownership.

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Compliance with the requirements of the Exchange Act and the Sarbanes-Oxley Act could result in higher operating costs and adversely affect our results of operations.

        Upon the completion of this offering and the contribution transactions, we will be subject to the periodic reporting, proxy solicitation, insider trading prohibitions and other obligations imposed under the Exchange Act. In addition, certain of the provisions of the Sarbanes-Oxley Act will immediately become applicable to us. Compliance with these requirements will increase our legal, accounting and other compliance costs and the cost of directors' and officers' liability insurance, and will require management to devote substantial time and effort to ensure initial and ongoing compliance with these obligations. A key component of compliance under the Exchange Act is to produce quarterly and annual financial reports within prescribed time periods after the close of our fiscal year and each fiscal quarter. Historically, we have not been required to prepare such financial reports within these time periods. Failure to satisfy these reporting requirements may result in delisting of our common stock by the NYSE American, and inquiries from or sanctions by the Commission. We expect these rules, regulations and requirements to significantly increase our accounting, legal, compliance and other costs and to make some activities more time-consuming and costly. We may also need to hire additional accounting, legal, compliance and administrative staff with experience working for public companies. However, we may be unable to hire such additional staff on terms that are favorable to us, or at all. In addition, such additional staff may not be able to provide such services at levels sufficient to comply with these requirements. Moreover, the rules that will be applicable to us as a public company after this offering could make it more difficult and expensive for us to attract and retain qualified members of our board of directors and qualified executive officers. If we fail to predict these costs accurately or to manage these costs effectively, our operating results could be adversely affected.

There are various conflicts of interest in our relationship with our Manager, which could result in decisions that are not in the best interests of our stockholders. The management agreement with our Manager was not negotiated on an arm's-length basis and may not be as favorable to us as if it had been negotiated with an unaffiliated third party.

        Our management agreement with our Manager, which is a newly-formed, majority owned subsidiary of Elevated Returns, which in turn is wholly owned by Mr. De Baets, was not negotiated on an arm's-length basis. Consequently, its terms, including fees payable to our Manager, may not be as favorable to us as if they had been negotiated with an unaffiliated third party. For example, termination of the management agreement without cause would be difficult and costly. Following the initial three-year term ending on November     , 2020, the management agreement may be terminated annually upon the affirmative vote of our board of directors, including a majority of our independent directors, based upon (1) unsatisfactory performance by our Manager that is materially detrimental to us or (2) our determination that the management fees payable to our Manager are not fair, subject to our Manager's right to prevent any termination due to unfair fees by accepting a reduction of management and/or incentive fees agreed to by at least two-thirds of our board of directors, including a majority of our independent directors. We must provide our Manager 180 days' written notice of any termination. Additionally, upon such a termination, or if we materially breach the management agreement and our Manager terminates the management agreement, the management agreement provides that we will pay our Manager a termination fee equal to three times the sum of (i) the average annual base management fee and (ii) the average annual incentive fee earned by our Manager, in each case during the 24-month period immediately preceding such termination. These provisions increase the cost to us of terminating the management agreement and adversely affect our ability to terminate the management agreement without cause. In addition, we may choose not to enforce, or to enforce less vigorously, our rights and remedies under the agreement because of our desire to maintain our ongoing relationship with our Manager.

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        Further, our Manager or its affiliates may engage in additional management or investment opportunities that have overlapping objectives with ours, and thus will face conflicts in the allocation of resources between us, any other properties they manage and for their own accounts. Additionally, the ability of our Manager, and the officers and employees providing services to us under the management agreement, to engage in other business activities may reduce the time our Manager spends managing us. Under our management agreement, our officers are required to devote such amount of their time to our management as necessary and appropriate, commensurate with our level of activity but are not required to devote a specific amount of time to our affairs.

Our Manager's liability will be limited under the management agreement, and we have agreed to indemnify our Manager against certain liabilities, which may lead our Manager to act in a riskier manner on our behalf than it would when acting for its own account.

        Under the management agreement, our Manager will not assume any responsibility to us other than to render the services called for under that agreement, and it will not be responsible for any action of our board of directors in following or declining to follow our Manager's advice or recommendations. Our Manager maintains a contractual, as opposed to a fiduciary, relationship with us. Under the terms of the management agreement, our Manager, its officers, stockholders, members, partners, managers and employees, and any person controlling or controlled by our Manager will not be liable to us, any subsidiary of ours, our directors, our stockholders or any subsidiary's stockholders, members or partners for acts or omissions performed in accordance with and pursuant to the management agreement, except those resulting from acts constituting negligence or misconduct. In addition, we have agreed to indemnify our Manager and each of its officers, directors, members, managers and employees from and against any claims or liabilities, including reasonable legal fees and other expenses reasonably incurred, arising out of or in connection with our business and operations or any action taken or omitted on our behalf pursuant to authority granted by the management agreement, except where attributable to negligence or misconduct. These protections may lead our Manager to act in a riskier manner when acting on our behalf than it would when acting for its own account.

Conflicts of interest could arise with respect to certain transactions between the holders of OP units, which include Mr. De Baets, on the one hand, and us and our stockholders, on the other.

        Upon the completion of this offering and the contribution transactions, conflicts of interest could arise with respect to the interests of holders of OP units, which include Mr. De Baets, on the one hand, and which include members of our senior management team and us and our stockholders, on the other. In particular, the consummation of certain business combinations, the sale, disposition or transfer of the St. Regis Aspen Resort or the repayment of certain indebtedness that may be desirable to us or our stockholders could have adverse tax consequences to such unit holders. In addition, our directors and officers have duties to our company under applicable Maryland law in connection with their management of our company. At the same time, we have fiduciary duties, as a general partner, to our operating partnership and to the limited partners under Delaware law in connection with the management of our operating partnership. Our duties as a general partner to our operating partnership and its partners may come into conflict with the duties of our directors and officers to our company and our stockholders. Furthermore, our partnership agreement does not require us to resolve such conflicts in favor of either our company or the limited partners in our operating partnership and there can be no assurance that any procedural protections we implement to address these or other conflicts of interest will result in optimal outcomes for us and our stockholders.

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The partnership agreement of our operating partnership contains provisions that may delay, defer or prevent a change in control or sale of the St. Regis Aspen Resort.

        The partnership agreement of our operating partnership provides that change of control transactions are required to be approved by at least a majority of the holders of shares of our common stock and OP units voting as a single class. Procedurally, we will hold a stockholder vote and then an OP unit vote. For the purposes of the OP unit vote, we will be deemed to have voted our OP units in proportion to the manner in which all of our outstanding shares of common stock were voted in our stockholder vote. These approval rights could delay, deter, or prevent a transaction or a change in control that might involve a premium price for our common stock or otherwise be in the best interests of our stockholders. For a further discussion, see "Limited Partnership Agreement of Our Operating Partnership."

Certain provisions of Maryland law could inhibit a change in our control.

        Certain "business combination" and "control share acquisition" provisions of the Maryland General Corporation Law, or the MGCL, may have the effect of inhibiting a third party from making a proposal to acquire us or of impeding a change in our control under circumstances that otherwise could provide the holders of our common stock with the opportunity to realize a premium over the then-prevailing market price of our common stock.

        The "business combination" provisions of the MGCL, subject to certain limitations, generally prohibit certain business combinations between a Maryland corporation and an "interested stockholder" (defined generally as any person who beneficially owns, directly or indirectly, 10% or more of the voting power of our then-outstanding voting shares or an affiliate or associate of ours who, at any time within the two-year period prior to the date in question, was the beneficial owner, directly or indirectly, of 10% or more of the voting power of our then-outstanding shares) or an affiliate thereof for five years after the most recent date on which the interested stockholder becomes an interested stockholder and, thereafter, imposes special appraisal rights or special stockholder voting requirements on these business combinations. In general, after the five-year prohibition, any business combination between us and an interested stockholder must be recommended by our board of directors and approved by the affirmative vote of at least (1) 80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation and (2) two-thirds of the votes entitled to be cast by holders of our voting stock other than shares held by the interested stockholder with whom or with whose affiliate the business combination is to be effected or held by an affiliate or associate of the interested stockholder. In general, these super-majority vote requirements do not apply if, among other conditions, our common stockholders receive a minimum price (as provided under the MGCL) for their shares and the consideration is received in cash or in the same form as previously paid by the interested stockholder for its shares.

        These provisions of the MGCL do not apply, however, to business combinations that are approved or exempted by our board of directors prior to the time that the interested stockholder becomes an interested stockholder. Our board of directors has by resolution exempted us from these provisions of the MGCL with respect to business combinations between us and (1) any other person, provided that such business combination is first approved by our board of directors (including a majority of our directors who are not affiliates or associates of such person), (2) Mr. De Baets and his affiliates and (3) persons acting in concert with any of the foregoing. As a result, such persons may be able to enter into business combinations with us without compliance by us with the supermajority vote requirements and other provisions of the statute. This resolution, however, may be altered or repealed by our board of directors in whole or in part at any time. If this resolution is repealed, or our board of directors does not otherwise approve a business combination, this statute may discourage others from trying to acquire control of us and increase the difficulty of consummating any offer. See "Certain Provisions of The Maryland General Corporation Law and Our Charter and Bylaws—Business Combinations."

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        The "control share" provisions of the MGCL provide that, subject to certain exceptions, holders of "control shares" of a Maryland corporation (generally defined as shares which, when aggregated with all other shares controlled by the stockholder (except solely by virtue of a revocable proxy), entitle the stockholder to exercise one of three increasing ranges of voting power in the election of directors) acquired in a "control share acquisition" (generally defined as the direct or indirect acquisition of ownership or control of issued and outstanding "control shares") have no voting rights with respect to such shares except to the extent approved by our stockholders by the affirmative vote of at least two-thirds of the votes entitled to be cast on the matter, excluding votes entitled to be cast by the acquirer of control shares, our officers and our personnel who are also our directors. Our bylaws contain a provision exempting from the control share acquisition statute any and all acquisitions by any person of shares of our stock. There can be no assurance that this provision will not be amended or eliminated at any time in the future. See "Certain Provisions of the Maryland General Corporation Law and Our Charter and Bylaws."

Our authorized but unissued shares of common and preferred stock may prevent a change in our control.

        Our charter permits our board of directors to authorize us to issue additional shares of our authorized but unissued common or preferred stock. In addition, a majority of our entire board of directors may, without stockholder approval, amend our charter to increase the aggregate number of our shares of stock or the number of shares of stock of any class or series that we have the authority to issue. Also our board of directors may classify or reclassify any unissued shares of common or preferred stock and set the terms of the classified or reclassified shares. As a result, our board of directors may establish a series of shares of common or preferred stock that could delay or prevent a transaction or a change in control that might involve a premium price for shares of our common stock or otherwise be in the best interest of our stockholders.

Stockholders will have limited control over changes in our policies and operations, which increases the uncertainty and risks you face as a stockholder.

        Our board of directors determines our major policies, including our policies regarding financing, growth, debt capitalization, REIT qualification and distributions. Our board of directors may amend or revise these and other policies without your vote. Our board of directors' broad discretion in setting policies and your inability to exert control over those policies increases the uncertainty and risks you face as a stockholder.

We may change our business and financing strategies without stockholder consent, which may subject us to different risks.

        We may change our business and financing strategies at any time without the consent of our stockholders, which could result in our making investments and engaging in business activities that are different from, and possibly riskier than, the investments and businesses described in this document. For example, although we are currently a single-asset REIT, nothing in our charter or bylaws prevents us from acquiring other assets, including other hotels, in the future. A change in our strategy may increase our exposure to other risks or real estate market fluctuations.

Our rights and the rights of our stockholders to take action against our directors and officers are limited, which could limit your recourse in the event of actions not in your best interest.

        Our charter limits the liability of our present and former directors and officers to us and our stockholders for money damages to the maximum extent permitted under Maryland law. Under current

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Maryland law, our present and former directors and officers will not have any liability to us or our stockholders for money damages other than liability resulting from:

        Our charter and our bylaws require us to indemnify each present and former director or officer, to the maximum extent permitted by Maryland law, in connection with any proceeding to which he or she is made, or threatened to be made, a party to or witness in by reason of his or her service to us as a director or officer or in certain other capacities. In addition, we may be obligated to pay or reimburse the expenses incurred by our present and former directors and officers without requiring a preliminary determination of their ultimate entitlement to indemnification. As a result, we and our stockholders may have more limited rights against our present and former directors and officers than might otherwise exist absent the current provisions in our charter and bylaws or that might exist with other companies, which could limit your recourse in the event of actions not in your best interest.

Our charter contains provisions that make removal of our directors difficult, which could make it difficult for our stockholders to effect changes to our management.

        Our charter provides that, subject to the rights of holders of one or more classes or series of preferred stock, a director may be removed with or without cause, by the affirmative vote of at least two-thirds of the votes entitled to be cast generally in the election of directors. Vacancies on our board of directors generally may be filled only by a majority of the remaining directors in office, even if less than a quorum. These requirements make it more difficult to change our management by removing and replacing directors and may prevent a change in our control that is in the best interests of our stockholders.

Restrictions on ownership and transfer of our shares may restrict change of control or business combination opportunities in which our stockholders might receive a premium for their shares.

        In order for us to qualify to be taxed as a REIT for each taxable year after our taxable year ending December 31, 2018, no more than 50% in value of our outstanding shares may be owned, directly or constructively, by five or fewer individuals during the last half of any calendar year, and at least 100 persons must beneficially own our shares during at least 335 days of a taxable year of 12 months, or during a proportionate portion of a shorter taxable year. "Individuals" for this purpose include natural persons, private foundations, some employee benefit plans and trusts, and some charitable trusts. To assist us in preserving our REIT qualification, among other purposes, our charter generally prohibits, among other limitations, any person from beneficially or constructively owning more than 9.8% in value or in number of shares, whichever is more restrictive, of the aggregate outstanding shares of all classes and series of our stock, the outstanding shares of any class or series of our preferred stock or the outstanding shares of our common stock. These ownership limits and the other restrictions on ownership and transfer of our shares contained in our charter could have the effect of discouraging a takeover or other transaction in which holders of our common stock might receive a premium for their shares over the then-prevailing market price or which holders might believe to be otherwise in their best interests.

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Risks Related to Our Qualification as a REIT

Our failure to qualify or remain qualified as a REIT would subject us to U.S. federal income tax and applicable state and local taxes, which would reduce the amount of available cash to be distributed to our stockholders.

        We believe that we have been organized and intend to operate in a manner that will enable us to qualify to be taxed as a REIT for U.S. federal income tax purposes commencing with our taxable year ending December 31, 2018. We have not requested, and do not intend to request a ruling from the Internal Revenue Service, or IRS, that we qualify to be taxed as a REIT. Qualification as a REIT involves the application of highly technical and complex Code provisions and the regulations promulgated by the U.S. Treasury Department, or Treasury Regulations, for which there are limited judicial and administrative interpretations. The complexity of these provisions and of applicable Treasury Regulations is greater in the case of a REIT that, like us, holds its assets through a partnership, and judicial and administrative interpretations of the U.S. federal income tax laws governing REIT qualification are limited. To qualify to be taxed as a REIT, we must meet, on an ongoing basis, various tests regarding the nature and diversification of our assets and our income, the ownership of our outstanding shares and the amount of our distributions. Our compliance with the REIT income and quarterly asset requirements also depends upon our ability to manage successfully the composition of our income and assets on an ongoing basis. Our ability to satisfy these asset tests depends upon our analysis of the characterization and fair market values of our assets, some of which are not susceptible to a precise determination, and for which we will not obtain independent appraisals. Moreover, new legislation, court decisions or administrative guidance may, in each case possibly with retroactive effect, make it more difficult or impossible for us to qualify to be taxed as a REIT. Thus, while we believe that we have been organized and intend to operate so that we will qualify to be taxed as a REIT, given the highly complex nature of the rules governing REITs, the ongoing importance of factual determinations and the possibility of future changes in our circumstances, no assurance can be given that we will so qualify for any particular year. These considerations also might restrict the types of assets that we can acquire or services that we can provide in the future.

        If we fail to qualify to be taxed as a REIT in any taxable year, and we do not qualify for certain statutory relief provisions, we would be required to pay U.S. federal income tax on our taxable income at regular corporate rates, 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, sell assets, or reduce or even cease making distributions in order to pay our taxes. Our payment of income tax would reduce significantly the amount of available cash to be distributed to our stockholders. Furthermore, if we fail to maintain our qualification as a REIT, we no longer would be required to make distributions to our stockholders. In addition, unless we were 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.

Even if we qualify to be taxed as a REIT, we may face other tax liabilities that reduce our cash flow.

        Even if we qualify for taxation as a REIT, we may be subject to certain U.S. federal, state and local taxes on our income and assets, including taxes on any undistributed income, state or local income, property and transfer taxes, including real property transfer taxes. In addition, we could, in certain circumstances, be required to pay an excise or penalty tax (which could be significant in amount) in order to utilize one or more relief provisions under the Code to maintain our qualification as a REIT. See "U.S. Federal Income Tax Considerations—Taxation of REITs in General." Any of these taxes would decrease our operating cash flow otherwise available to be distributed to our stockholders. In addition, our TRS will be subject to U.S. federal, state and local corporate taxes, and its after-tax net income will be available for distribution to us but is not required to be distributed to us.

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If our lease with our TRS is not respected as a true lease for U.S. federal income tax purposes, we would fail to qualify to be taxed as a REIT.

        To qualify to be taxed as a REIT, we will be required to satisfy two gross income tests, pursuant to which specified percentages of our gross income must be passive income, such as rent from real property. For rent paid pursuant to the lease between our operating partnership and our TRS, which constitutes substantially all of our gross income, to qualify for purposes of the REIT gross income tests, the lease must be respected as a true lease for U.S. federal income tax purposes and must not be treated as a service contract, joint venture or some other type of arrangement. We believe our lease will be respected as a true lease for U.S. federal income tax purposes. There can be no assurances, however, that the IRS will agree with this characterization. If the lease were not respected as a true lease for U.S. federal income tax purposes, we would not be able to satisfy either of the two gross income tests applicable to REITs, and we would likely cease to qualify as a REIT.

If our Hotel Manager does not qualify as an "eligible independent contractor" or if the St. Regis Aspen Resort is not a "qualified lodging facility," we will fail to qualify to be taxed as a REIT.

        Rent paid by a lessee that is a "related party tenant" of ours will not be qualifying income for purposes of the two gross income tests applicable to REITs. An exception is provided, however, 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. Our operating partnership will lease the St. Regis Aspen Resort to our TRS, and our TRS will engage our Hotel Manager. We believe our Hotel Manager qualifies as an "eligible independent contractor." Among other requirements, to qualify as an eligible independent contractor, (i) the Hotel Manager and/or one or more actual or constructive owners of 10% or more of the Hotel Manager cannot own, actually or constructively, more than 35% of our outstanding shares, and (ii) one or more actual or constructive owners of more than 35% of our Hotel Manager cannot own 35% or more of our outstanding shares (determined by taking into account only the shares held by persons owning, actually or constructively, more than 5% of our outstanding shares because our shares will be regularly traded on an established securities market). The ownership attribution rules that apply for purposes of these 35% thresholds are complex, and monitoring actual and constructive ownership of our shares by Marriott's shareholders and of Marriott's shares by our owners may not be practical. Accordingly, there can be no assurance that these ownership levels will not be exceeded.

        In addition, for our Hotel Manager 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 us or our TRS at each time that such company enters into a hotel management contract with our TRS. As of the date hereof, we believe that our Hotel Manager operates qualified lodging facilities for certain persons who are not related to us or our TRS. However, no assurances can be provided that any future hotel manager will in fact comply with this requirement.

        Finally, the St. Regis Aspen Resort 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. As of the date hereof, we believe that the amenities provided at the St. Regis Aspen Resort are customary in that such amenities are customary for other properties of a comparable size and class owned by unrelated parties and therefore the St. Regis Aspen Resort is a qualified lodging facility. The REIT provisions of the Code provide no or 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.

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Failure to make required distributions would subject us to tax, which would reduce the operating cash flow to our stockholders.

        In order to qualify to be taxed as a REIT, we must distribute to our stockholders each calendar year at least 90% of our net taxable income (excluding net capital gain). To the extent that we satisfy the 90% distribution requirement, but distribute less than 100% of our net taxable income (including net capital gain), we would be subject to U.S. federal corporate income tax on our undistributed net taxable income. In addition, we will incur a 4% non-deductible excise tax on the amount, if any, by which our distributions in any calendar year are less than a minimum amount specified under U.S. federal income tax laws. Although we intend to distribute our net taxable income to our stockholders in a manner intended to satisfy the REIT 90% distribution requirement and to avoid the 4% non-deductible excise tax, it is possible that we, from time to time, may not have sufficient cash to distribute 100% of our net taxable income. There may be timing differences between our actual receipt of cash and the inclusion of items in our income for U.S. federal income tax purposes. In addition, certain assets can generate mismatches between net taxable income and available cash such as rental real estate financed through debt which require some or all of available cash flow to service borrowings. Accordingly, there can be no assurance that we will be able to distribute net taxable income to stockholders in a manner that satisfies the REIT distribution requirements and avoids the 4% non-deductible excise tax.

To maintain our REIT qualification, we may be forced to borrow funds during unfavorable market conditions.

        In order to maintain our REIT qualification and avoid the payment of income and excise taxes, we may need to borrow funds to meet the REIT distribution requirements even if the then-prevailing market conditions are not favorable for these borrowings. These borrowing needs could result from, among other things, timing differences between our actual receipt of cash and inclusion of income for U.S. federal income tax purposes, or the effect of non-deductible capital expenditures, the creation of reserves or required debt or amortization payments. These sources, however, may not be available on attractive terms or at all. Our access to third-party sources of capital depends on a number of factors, including the market's perception of our growth potential, our current debt levels, the per share trading price of our common stock, and our current and potential future earnings. We cannot assure you that we will have access to such capital on attractive terms at the desired times, or at all, which could adversely affect our financial condition, results of operations, cash flows and our ability to pay distributions on, and the per share trading price of, our common stock.

Our TRS will be subject to U.S. federal income tax, our ownership of our TRS will be limited, and we will be required to pay a 100% penalty tax on certain income or deductions if our transactions with our TRS are not conducted on arm's-length terms.

        We will operate the St. Regis Aspen Resort through our TRS. A TRS is a corporation other than a REIT in which a REIT directly or indirectly holds stock and that has made a joint election with such REIT to be treated as a TRS. If a TRS owns more than 35% of the total voting power or value of the outstanding securities of another corporation, such other corporation will also be treated as a TRS. Other than some activities relating to lodging and health care properties, a TRS may generally engage in any business, including the provision of customary or non-customary services to tenants of its parent REIT. A TRS is subject to U.S. federal income tax at regular corporate rates. Neither we, nor our TRS, can directly manage or operate hotels, making us entirely dependent on our Hotel Manager.

        No more than 20% of the value of a REIT's total assets may consist of stock or securities of one or more TRS. This requirement limits the extent of the activities which we can conduct through our TRS. The values of some of our assets, including the equity value of our TRS, may not be subject to precise determination, and such value is subject to change in the future. Furthermore, if we lend money to our TRS, our TRS may be unable to deduct all or a portion of the interest paid to us, which could

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increase the tax liability of our TRS. In addition, the Code imposes a 100% tax on certain transactions between a TRS and its parent REIT that are not conducted on an arm's length basis. We intend to structure transactions with our TRS, including the lease agreement with our TRS, on terms that we believe are arm's length to avoid incurring the 100% excise tax described above. There can be no assurances, however, that we will be able to avoid application of the 100% tax.

If our operating partnership is treated as a corporation for U.S. federal income tax purposes, we will cease to qualify to be taxed as a REIT.

        We believe our operating partnership qualifies as a partnership for U.S. federal income tax purposes. As a partnership for U.S. federal income tax purposes, our operating partnership will not be subject to U.S. federal income tax on its income. Instead, each of its partners, including us, will be required to pay tax on its allocable share of our operating partnership's income. No assurance can be provided, however, that the IRS will not challenge our operating partnership's status as a partnership for U.S. federal income tax purposes, or that a court would not sustain such a challenge. If the IRS were successful in treating our operating partnership as a corporation for U.S. federal income tax purposes, we would fail to meet the gross income tests and certain of the asset tests applicable to REITs. As a result, we would cease to qualify to be taxed as a REIT and both we and our operating partnership would become subject to U.S. federal, state and local income tax. The payment by our operating partnership of income tax would reduce significantly the amount of cash available to our operating partnership to satisfy obligations to make principal and interest payments on its debt and to make distributions to its partners, including us.

Dividends payable by REITs do not qualify for the reduced tax rates on dividend income from regular corporations, which could adversely affect the value of our common stock.

        The maximum U.S. federal income tax rate for certain qualified dividends payable to U.S. stockholders that are individuals, trusts and estates is 20%. Dividends payable by REITs, however, are generally not eligible for these reduced qualified dividend rates. However, for taxable years beginning after December 31, 2017 and before January 1, 2026, under the recently enacted Tax Cuts and Jobs Act, noncorporate taxpayers may deduct up to 20% of certain qualified business income, including "qualified REIT dividends" (generally, dividends received by a REIT shareholder that are not designated as capital gain dividends or qualified dividend income), subject to certain limitations, resulting in an effective maximum U.S. federal income tax rate of 29.6% on such income. Although the reduced U.S. federal income tax rate applicable to qualified dividends from C corporations does not adversely affect the taxation of REITs or dividends paid by REITs, the more favorable rates applicable to regular corporate dividends, together with the recently reduced corporate tax rate (currently, 21%), could cause investors who are individuals, trusts and estates 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.

Complying with REIT requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities.

        The REIT provisions of the Code may limit our ability to hedge our assets and operations. Under these provisions, any income that we generate from transactions intended to hedge our interest rate and currency risks will generally be excluded from gross income for purposes of the 75% and 95% gross income tests if (i) the instrument (a) hedges interest rate risk or foreign currency exposure on liabilities used to carry or acquire real estate assets, (b) hedges risk of currency fluctuations with respect to any item of income or gain that would be qualifying income under the 75% or 95% gross income tests or (c) hedges an instrument described in clause (a) or (b) for a period following the extinguishment of the liability or the disposition of the asset that was previously hedged by the hedged

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instrument, and (ii) such instrument is properly identified under the applicable Treasury Regulations. Income from hedging transactions that does not meet these requirements will generally constitute non-qualifying income for purposes of both the REIT 75% and 95% gross income tests. See "U.S. Federal Income Tax Considerations—Requirements for Qualification—General—Gross Income Tests." As a result of these rules, we may have to limit our use of hedging techniques that might otherwise be advantageous or implement those hedges through a TRS. This could increase the cost of our hedging activities because our TRS would be subject to tax on gains or expose us to greater risks associated with changes in interest rates than we would otherwise want to bear. In addition, losses in our TRS will generally not provide any tax benefit, except for being carried back or forward against past or future taxable income in the TRS.

The ability of our board of directors to revoke our REIT election without stockholder approval may cause adverse consequences to our stockholders.

        Our charter provides that the board of directors may revoke or otherwise terminate our REIT election, without the approval of our stockholders, if the board determines that it is no longer in our best interest to attempt to, or continue to, qualify to be taxed as a REIT. If we cease to qualify to be taxed as a REIT, we would become subject to U.S. federal income tax on our net taxable income and we generally would no longer be required to distribute any of our net taxable income to our stockholders, which may have adverse consequences on our total return to our stockholders.

Legislative or regulatory tax changes related to REITs could materially and adversely affect our business.

        The U.S. federal income tax laws and regulations governing REITs and their stockholders, as well as the administrative interpretations of those laws and regulations, are constantly under review and may be changed at any time, possibly with retroactive effect. No assurance can be given as to whether, when, or in what form, the U.S. federal income tax laws applicable to us and our stockholders may be enacted. Changes to the U.S. federal income tax laws and interpretations of U.S. federal tax laws could adversely affect an investment in our common stock.

        Prospective investors are urged to consult with their tax advisors regarding the potential effects of other legislative, regulatory or administrative developments on an investment in our common stock.

Your investment has various tax risks.

        Although provisions of the Code generally relevant to an investment in our common stock are described in "U.S. Federal Income Tax Considerations," you should consult your tax advisor concerning the effects of U.S. federal, state, local and non-U.S. tax laws to you with regard to an investment in our common stock.


Risks Related to Our Common Stock and This Offering

There is no public market for our common stock and a market may never develop, which could cause our common stock to trade at a discount and make it difficult for holders of our common stock to sell their shares.

        We intend to apply to list our common stock on the NYSE American. Our common stock will not commence trading on the NYSE American until all of the following conditions are met: (i) this offering is completed; and (ii) we have filed a registration statement on Form 8-A under the Exchange Act and the Form 8-A has become effective. Pursuant to applicable rules under Regulation A, the Form 8-A will not become effective until the Commission qualifies the offering statement of which this Offering Circular is a part, including any post-qualification amendments to the offering statement that may be necessary. For further information, see "Description of Capital Stock—Listing."

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        Assuming our common stock is approved for listing, shares of our common stock will be newly issued securities for which there is no established trading market and there can be no assurance that an active trading market for our common stock will develop, or if one develops, be maintained. Accordingly, no assurance can be given as to the ability of our stockholders to sell their common stock or the price that our stockholders may obtain for their common stock.

        Some of the factors that could negatively affect the market price of our common stock include:

        Market factors unrelated to our performance could also negatively impact the market price of our common stock. One of the factors that investors may consider in deciding whether to buy or sell our common stock is our distribution rate as a percentage of our share price relative to market interest rates. If market interest rates increase, prospective investors may demand a higher distribution rate or seek alternative investments paying higher dividends or interest. As a result, interest rate fluctuations and conditions in capital markets can affect the market value of our common stock.

We cannot assure our ability to pay dividends in the future.

        We intend to pay quarterly dividends and to make distributions to our stockholders in amounts such that all or substantially all of our net taxable income in each year is distributed. This, along with other factors, should enable us to continue to qualify for the tax benefits accorded to a REIT under the Code. We have not established a minimum dividends payment level, and all future distributions will

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be made at the discretion of our board of directors. Our ability to pay dividends will depend upon, among other factors:

        Certain of these matters are beyond our control and any significant difference between our expectations and actual results could have a material adverse effect on our cash flow and our ability to make distributions to stockholders.

        In addition, in the event of an event of default or certain other events, our loan agreement restricts our ability to make distributions to our stockholders, even if necessary to maintain our status as a REIT for U.S. federal income tax purposes. See "—Risks Related to Our Business—Our loan agreement may restrict our ability to make distributions to our stockholders."

An increase in market interest rates may have an adverse effect on the market price of our common stock and our ability to make or sustain distributions to our stockholders.

        One of the factors that investors may consider in deciding whether to buy or sell shares of our common stock is our ability to make or sustain distributions and the rate of our distributions, if any, as a percentage of our share price, relative to market interest rates. If market interest rates increase, prospective investors may demand a higher distribution rate on shares of our common stock or seek alternative investments paying higher distributions or interest. As a result, interest rate fluctuations and capital market conditions can affect the market price of shares of our common stock. For instance, if interest rates rise without an increase in our distribution rate, the market price of shares of our common stock could decrease because potential investors may require a higher distribution yield on shares of our common stock as market rates on our interest-bearing instruments such as bonds rise. In addition, to the extent we have variable rate debt, rising interest rates would result in increased interest expense on our variable rate debt, thereby adversely affecting our cash flow and our ability to service our indebtedness and make distributions to our stockholders.

Common stock and preferred stock eligible for future sale may have adverse effects on our stock price.

        Subject to applicable law and the rules of any stock exchange on which our shares may be listed or traded, our board of directors, without common stockholder approval, may authorize us to issue additional authorized and unissued common stock and preferred stock on the terms and for the consideration it deems appropriate and may amend our charter to increase the total number of shares, or the number of shares of any class or series, that we are authorized to issue. In addition, in connection with the contribution transactions, our operating partnership issued 1,743,368 OP units, which, subject to the lock-up agreement entered into between our operating partnership and our Predecessor, are redeemable for cash or, at our option, exchangeable on a one-for-one basis into shares of common stock after an agreed period of time and certain other conditions. We have granted registration rights to those persons who will be eligible to receive common stock issuable upon exchange of OP units issued in our contribution transactions.

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        The registration rights agreement requires that as soon as practicable after the date that is one year after the closing of this offering, but in no event later than 60 calendar days thereafter, we file a shelf registration statement registering the offer and resale of the common stock issuable upon exchange of OP units (or securities convertible into or exchangeable for OP units) issued in our contribution transactions on a delayed or continuous basis until such securities are Registrable Shares (as defined therein). We have the right to include common stock to be sold for our own account or other holders in the shelf registration statement. We are required to use all commercially reasonable efforts to cause the shelf registration statement to be declared effective by the Commission as promptly as reasonably practicable after the filing thereof, and to keep such shelf registration statement continuously effective for a period ending when all shares of common stock covered by the shelf registration statement are no longer Registrable Shares, as defined in the shelf registration statement.

        We intend to bear the expenses incident to these registration requirements, except that we will not bear the costs of (i) any underwriting fees, discounts or commissions, (ii) out-of-pocket expenses of the persons exercising the registration rights or (iii) transfer taxes.

        We cannot predict the effect, if any, of future sales of our common stock or the availability of shares for future sales, on the market price of our common stock. The market price of our common stock may decline significantly when the restrictions on resale by certain of our stockholders lapse. Sales of substantial amounts of common stock or the perception that such sales could occur may adversely affect the prevailing market price for our common stock.

Future offerings of debt or equity securities, which may rank senior to our common stock, may adversely affect the market price of our common stock.

        If we decide to issue debt securities in the future, which would rank senior to our common stock, it is likely that they will be governed by an indenture or other instrument containing covenants restricting our operating flexibility. Additionally, any equity securities or convertible or exchangeable securities that we issue in the future may have rights, preferences and privileges more favorable than those of our common stock and may result in dilution to owners of our common stock. We and, indirectly, our stockholders will bear the cost of issuing and servicing such securities. Because our decision to issue debt or equity securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. Thus, holders of our common stock will bear the risk of our future offerings reducing the market price of our common stock and diluting the value of their share holdings in us.

The determination of the offering price of our shares and the size of this offering is more arbitrary than the pricing of securities and size of an offering of a company with substantial historical operations.

        Prior to this offering there has been no public market for any of our securities. The public offering price of the shares was negotiated between us and the Lead Agent. In determining the size of this offering, management held customary organizational meetings with representatives of the Lead Agent with respect to the state of capital markets, generally, and the amount the Lead Agent believed they reasonably could raise on our behalf. Factors considered in determining the size of this offering and the public offering price for the shares, include:

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        Although these factors were considered, the determination of our offering price is more arbitrary than the pricing of securities of a company that has substantial historical operations.

        We have not obtained any third-party appraisals of the St. Regis Aspen Resort in connection with this offering or the contribution transactions. We have, however, taken into consideration the value contained in an appraisal by JLL that was obtained by our Predecessor in April 2017 in the ordinary course of our Predecessor's business. As a result, the consideration to be given by us for the St. Regis Aspen Resort in the contribution transactions may be less than or exceed its fair market value. For a further discussion of the consideration to be paid in connection with the contribution transactions, and the calculation of the initial management fee, see "The Structure and Formation of our Company—Contribution Transactions" and "Our Principal Agreements—Management Agreement."

We will allocate the vast majority of the net proceeds from this offering to purchase the St. Regis Aspen Resort, and we may allocate any remaining offering proceeds in ways with which you may not agree.

        We intend to contribute the net proceeds of this offering to our operating partnership, which we expect will subsequently use the net proceeds as follows: (i) approximately $32.5 million will be paid to our Predecessor in connection with the contribution transactions; and (ii) approximately $1.0 million will be reserved for working capital purposes, including capital expenditures. Mr. De Baets, who is an indirect owner and serves as the president of our Predecessor, will therefore receive or be a beneficiary of a significant portion of the net proceeds of this offering.

        With respect to any remaining net proceeds of this offering, our management will have discretion in using such proceeds and may use the proceeds in ways with which you may not agree. We are not required to allocate such remaining net proceeds to any specific use and, therefore, you cannot determine at this time the value or propriety of our application of such proceeds. Moreover, you will not have an opportunity to evaluate the economic, financial or other information on which we base our decisions on how to use such proceeds. We may use such proceeds for corporate purposes that do not immediately enhance our prospects for the future or increase the value of your investment. As a result, you and other stockholders may not agree with our decisions. See "Use of Proceeds" for additional information.

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USE OF PROCEEDS

        Our Predecessor has agreed to pay 100% of (i) the Selling Agent commissions payable to the Selling Agents in connection with this offering and (ii) our other offering and contribution transaction expenses, including the acquisition fee payable to our Manager and legal, accounting, consulting, and regulatory filing expenses. After deducting the estimated Selling Agent commissions and expenses of this offering not paid by our Predecessor, we estimate that we will receive net proceeds from this offering in the amount of approximately $33.5 million. We intend to contribute the net proceeds of this offering to our operating partnership, which we expect will subsequently use the net proceeds as follows:

        The initial public offering price of our common stock does not necessarily bear any relationship to the book value or the fair market value of the St. Regis Aspen Resort, but instead has been determined in consultation with the Lead Agent. Among the factors considered in determining that initial public offering price were the history and prospects for the industry in which we compete, the luxury hotel market, with a focus on the Aspen area, our financial information, the ability of our Manager and Hotel Manager and our business potential and earning prospects, the prevailing securities markets at the time of this offering, and the recent market prices of, and the demand for, publicly traded shares of generally comparable companies. We have not obtained any third-party appraisals of the St. Regis Aspen Resort in connection with this offering or the contribution transactions. We have, however, taken into consideration the value contained in an appraisal by JLL that was obtained by our Predecessor in April 2017 in the ordinary course of our Predecessor's business. As a result, the consideration to be given by us for the St. Regis Aspen Resort in the contribution transactions may be less than or exceed its fair market value. For a further discussion of the consideration to be paid in connection with the contribution transactions, see "The Structure and Formation of our Company—Contribution Transactions."

        Prior to the use of the net proceeds for working capital purposes, we intend to invest such remaining net proceeds in interest-bearing accounts and short-term, interest-bearing securities which are consistent with our intention to qualify for taxation as a REIT.

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DISTRIBUTION POLICY

        We intend to make regular quarterly distributions to holders of shares of our common stock. We intend to pay a pro rata initial distribution with respect to the period commencing on the completion of this offering and ending on December 31, 2017, based on a distribution of $0.29 per share for a full quarter. On an annualized basis, this would be $1.16 per share, or an annual distribution rate of approximately 5.8%, based on the initial public offering price per share set forth on the cover page of this offering circular.

        Readers are cautioned that our estimated distribution rate may differ from our expectations in the event that anticipated changes to the Starwood Preferred Guest, or SPG, guest loyalty program adversely affects our cash available for distribution or if other factors relating to our business adversely affect our cash available for distribution. For further information regarding the potential impact of anticipated changes to the SPG guest loyalty program to our results of operations and cash available for distribution, see footnote 3 to the table below.

        We estimate that this initial annualized distribution will represent approximately 90% of our estimated cash available for distribution to our common stockholders for the 12 months ending September 30, 2018. Our estimated cash available for distribution reflects certain assumptions regarding our future cash flows during this period as presented in the table and footnotes below.

        Although we believe we have included in this discussion of our distribution policy all material investing and financing activities (other than with respect to indebtedness that will be outstanding upon completion of this offering and the contribution transactions), any future investing and/or financing activities may have a material effect on our estimate of cash available for distribution. Because we have made the assumptions herein in estimating cash available for distribution, readers are cautioned that we do not intend this estimate to be a projection, forecast or promise of our actual results of operations or our liquidity, and we have estimated cash available for distribution for the sole purpose of estimating our initial annual distribution rate. Moreover, our estimate of cash available for distribution should not be considered as an alternative to cash flow from operating activities (computed in accordance with GAAP) or as an indicator of our liquidity or our ability to pay dividends or make other distributions to our stockholders. In addition, the methodology upon which we made the adjustments described below is not necessarily intended to be a basis for determining future distributions.

        It is possible that our distributions may exceed our current and accumulated earnings and profits as determined for U.S. federal income tax purposes. Therefore, a portion of our distributions may represent a return of capital for U.S. federal income tax purposes. Return of capital distributions will not be taxable income to a U.S. stockholder, as defined in "U.S. Federal Income Tax Considerations", to the extent those distributions do not exceed the stockholder's adjusted tax basis in his or her common stock, but rather will reduce such adjusted basis in our common stock. Therefore, the gain (or loss) recognized on the sale of that common stock or upon our liquidation will be increased (or decreased) accordingly. To the extent those distributions exceed a taxable U.S. stockholder's adjusted tax basis in his or her common stock, they generally will be treated as a capital gain realized from the taxable disposition of those shares. The percentage of our stockholder distributions that exceeds our current and accumulated earnings and profits may vary substantially from year to year. For a more complete discussion of the tax treatment of distributions to holders of our common stock, see "U.S. Federal Income Tax Considerations."

        Although we intend to maintain our initial distribution rate for the 12-month period following completion of this offering unless our actual or anticipated results of operations, cash flows or financial position, economic or market conditions or other factors differ materially from the assumptions used in our estimate, we offer no assurance or promises that such a level will be achieved or thereafter maintained. Any distributions we make in the future will be determined by our board of directors in its sole discretion out of funds legally available therefor and will depend upon a number of factors,

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including our actual and anticipated results of operations, cash flows and financial position, economic or market conditions, prohibitions or other restrictions under financing agreements, our qualification as a REIT, applicable law, changes to the SPG loyalty program and other factors described herein. Our results of operations, cash flows and financial position will be affected by a number of factors, including the revenue we receive from the St. Regis Aspen Resort, interest expense and any unanticipated expenditures. For more information regarding factors that could materially and adversely affect our results of operations, cash flows and financial position, and our ability to pay dividends and make other distributions to our stockholders, see "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors."

        We believe our estimate of cash available for distribution constitutes a reasonable basis for estimating the initial distribution amount; however, we offer no assurance that the estimate will prove accurate, and therefore actual distributions, if any, may therefore be significantly different from the estimated distributions. If our operating cash flow decreases, we may be required to fund distributions from working capital or borrow funds or issue equity or we may choose to make a portion of the required distributions in the form of a taxable stock dividend to preserve our cash balance or eliminate or otherwise reduce our distributions. We currently expect that our operating cash flow will cover our initial distribution for the 12 months following completion of this offering. We currently have no intention to make distributions using shares of our common stock.

        In order to qualify as a REIT, we must distribute to our stockholders each calendar year at least 90% of our net taxable income (excluding net capital gain). To the extent that we satisfy the 90% distribution requirement, but distribute less than 100% of our net taxable income (including net capital gain), we would be subject to U.S. federal corporate income tax on our undistributed net taxable income. In addition, we will incur a 4% non-deductible excise tax on the amount, if any, by which our distributions in any calendar year are less than a minimum amount specified under U.S. federal income tax laws. We intend to make distributions to our stockholders in a manner intended to satisfy the REIT 90% distribution requirement and to eliminate U.S. federal income tax liability on our income and the 4% nondeductible excise tax. We anticipate that our estimated cash available for distribution will exceed the annual distribution requirements applicable to REITs. However, under some circumstances, we may be required to use cash reserves, incur debt, or issue equity on terms or at times that we regard as unfavorable or make a taxable distribution of our shares of common stock in order to satisfy the REIT 90% distribution requirement and to eliminate U.S. federal income tax and the 4% nondeductible excise tax in that year. For more information, see "Certain U.S. Federal Income Tax Considerations."

        The following table describes our pro forma net income from continuing operations for the 12 months ended September 30, 2017, and the adjustments we have made thereto in order to estimate our initial cash available for distribution for the 12 months ending September 30, 2018 (amounts shown are presented in thousands, except share data, per share data and percentages). These calculations do not assume any changes to our operations or any unforeseen capital expenditures or other developments or occurrences which could affect substantially our results of operations and cash flows, or changes in our outstanding shares of common stock other than as set forth in the table below. Readers are cautioned that there is a risk that our actual results will not be the same as or comparable to the calculations below.

        The estimated and prospective financial information shown below and elsewhere in this offering circular was not prepared with a view toward compliance with published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. The estimated and prospective financial information shown below and elsewhere in this offering circular has been prepared by and is the responsibility of, our management.

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        For purpose of the table below, we have assumed each OP unit has been redeemed for one share of our common stock. Under our operating partnership agreement, subject to certain restrictions, each OP unit may be exchanged for cash, or, at our option, one share of common stock.

Pro forma net loss for the 12 months ended December 31, 2016

  $ (4,795 )

Add: Pro forma net loss for the 9 months ended September 30, 2016

    3,550  

Add: Pro forma net loss for the 9 months ended September 30, 2017

    (2,736 )

Pro forma net loss for the 12 months ended September 30, 2017

  $ (3,981 )

Add: Depreciation

    9,561  

Add: Amortization of lending cost(1)

    642  

Less: Improvement reserves(2)

    (1,804 )

Estimated cash available for distribution to our stockholders and holders of OP units for the 12 months ending September 30, 2018(3)

  $ 4,418  

Total estimated initial annualized distribution to our stockholders

  $ 3,976  

Estimated initial annualized distribution per share of our common stock and OP unit(4)

  $ 1.16  

Estimated payout ratio(5)

    90.0 %

(1)
Represents the impact of incremental interest and related amortization of lending costs associated with our Predecessor's April 2017 refinancing.

(2)
Represents required amounts to be reserved (i) under the terms of the senior secured loan agreement we will assume as part of the contribution transactions and (ii) for hotel improvements as required under our hotel management agreement.

(3)
We have been advised by Marriott that they intend to revise the SPG guest loyalty program for us beginning March 1, 2018. Although we continue to discuss with Marriott the details regarding such changes, there is a risk that any changes could result in a decrease in revenues to us, which could materially and adversely affect our cash available for distribution. For example, if our cash available for distribution were to be reduced by $500,000 as a result of changes to the SPG guest loyalty program, then our new estimated cash available for distribution to our stockholders and holders of OP units for the 12 months ending September 30, 2018 would be $3,918. We intend to continue to use a payout ratio of 90% of cash available for distribution, which means our estimated initial annualized distribution per share of our common stock would be $1.03. To the extent that the impact of any changes to SPG on cash available for distribution is more or less than $500,000, our dividend will be adjusted such that we will maintain a 90% payout ratio of cash available for distribution.

(4)
Based on a total of 1,675,000 shares of our common stock and 1,743,368 OP units (other than OP units held by us) to be outstanding upon completion of this offering and the contribution transactions.

(5)
Calculated as estimated initial annualized distribution per share of our common stock divided by the estimated cash available for distribution to our stockholders for the 12 months ending September 30, 2018.

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CAPITALIZATION

        The following table presents our Predecessor's cash and cash equivalents and capitalization as of September 30, 2017 on a (1) historical basis for our Predecessor, and (2) pro forma basis for our company taking into account the historical capitalization of Aspen REIT, Inc. and both the contribution transactions and this offering. The pro forma adjustments give effect to this offering and the contribution transactions as if each had occurred on September 30, 2017 and the application of the net proceeds as described in "Use of Proceeds." You should read this table in conjunction with "Use of Proceeds," "Summary Historical and Pro Forma Financial and Operating Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations," and the more detailed information contained in the financial statements and notes thereto included elsewhere in this Offering Circular.

 
  As of September 30, 2017  
(Dollars in thousands, except per share data)
  Historical(1)   Pro forma for the
contribution
transactions and
this offering(2)
 

Cash and cash equivalents

  $ 5,357   $ 6,357  

Restricted cash and cash equivalents(3)

    1,128     1,128  

Debt financing

             

Total debt financing

  $ 119,375   $ 119,375  

Stockholders' equity

             

Preferred stock, no shares authorized, no shares issued and outstanding on a historical basis; 50,000 shares authorized, no shares issued and outstanding on a pro forma basis

         

Common stock, 50,000,000 ($1.00 par value) shares authorized and outstanding at September 30, 2017 (historical); 1,675,000 ($0.01 par value) shares authorized and outstanding at September 30, 2017 (pro forma)(4)

    50,000     17  

Additional paid in capital

    3,391     33,483  

Accumulated deficit

    (73,276 )    

Non-controlling interests in operating partnership

        34,867  

Total stockholders' equity and non-controlling interests in operating partnership

    (19,885 )   68,367  

Total Capitalization

  $ 99,490   $ 187,742  

(1)
Historical amounts are derived from our unaudited financial statements and related footnotes appearing elsewhere in this Offering Circular.

(2)
Reflects:

a)
The offering of 1,675,000 shares of common stock ($0.01 par value per share) at a public offering price of $20.00 per share for gross proceeds of $33.5 million;

b)
Our acquisition of the St. Regis Aspen Resort in the contribution transactions for the payment of $32.5 million in cash and the issuance of 1,743,368 OP units (equal to approximately $34,9 million in OP units, assuming $20.00 per OP unit, the initial public offering price per share of common stock in this offering).

(3)
Restricted cash reserved under the terms of our note payable agreement for improvements and real estate taxes under the management agreement.

(4)
Our outstanding common stock excludes 1,743,368 shares of common stock issuable upon exchange of 1,743,368 OP units.

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SELECTED HISTORICAL AND PRO FORMA FINANCIAL OPERATING DATA

        The following table sets forth selected financial and other data on (i) a historical basis for our Predecessor and (ii) a pro forma basis for our company giving effect to (a) the contribution transactions and related fair value adjustments, (b) this offering and the use of net proceeds therefrom as described under "Use of Proceeds," (c) entry into our management agreement with our Manager and (d) the refinancing of existing mortgage indebtedness of approximately $100.0 million and the April 2017 refinancing thereof for approximately $120.0 million.

        The selected historical balance sheet information as of December 31, 2016 and 2015 of our Predecessor and selected historical statements of operations for the years ended December 31, 2016 and 2015 of our Predecessor have been derived from the audited historical financial statements of our Predecessor included elsewhere in this Offering Circular. The selected historical balance sheet information as of September 30, 2017 of our Predecessor and the selected statements of operations for the nine months ended September 30, 2017 and 2016 of our Predecessor have been derived from the unaudited historical financial statements of our Predecessor included elsewhere in this Offering Circular. The summary historical balance sheet information as of September 30, 2016 of our Predecessor have been derived from our Predecessor's unaudited historical financial statements not included in this Offering Circular. Our Predecessor's results of operations for the nine months ended September 30, 2017 are not necessarily indicative of our results of operations for the year ending December 31, 2017.

        The summary pro forma balance sheet information as of September 30, 2017 and the summary pro forma statements of operations for the nine months ended September 30, 2017 and for the year ended December 31, 2016 have been derived from the unaudited pro forma financial statements included elsewhere in this Offering Circular. The summary pro forma balance sheet information as of December 31, 2016 have been derived from unaudited pro forma financial statements not included in this Offering Circular. The unaudited pro forma financial statements are not necessarily indicative of the actual financial position of our company or our Predecessor as of September 30, 2017 or December 31, 2016, nor are they indicative of the results of operations of future periods.

        The summary performance data for Hotel NOI, FFO and Adjusted FFO, are non-GAAP financial measures and are provided as additional information to complement GAAP measures by providing a further understanding of operating results from management's perspective. The reconciliation of these benchmarks to GAAP for the nine months ended September 30, 2017 and the year ended December 31, 2016 are detailed in "Management's Discussion and Analysis—Results of Operations—Non-GAAP Financial Measures."

        The unaudited selected pro forma financial data as of and for the nine months ended September 30, 2017 and for the year ended December 31, 2016 is presented as if (i) the contribution transactions and related fair value adjustments, (ii) this offering and the use of proceeds therefrom as described under "Use of Proceeds," (iii) entry into our management agreement with our Manager and (iv) the refinancing of existing mortgage indebtedness of approximately $100.0 million and the April 2017 refinancing thereof for approximately $120.0 million, each as more fully described in this Offering Circular, took place concurrently on September 30, 2017 for the balance sheet data and on January 1, 2016 for the operating data. The unaudited pro forma financial data are not necessarily indicative of what our actual financial position and results of operations would have been as of the date and for the periods indicated, nor do they purport to represent our future financial position or results of operations.

        You should read the summary historical consolidated financial and operating data set forth below in conjunction with the sections titled "Management's Discussion and Analysis of Financial Condition and Results of Operations" as well as our financial statements and the related notes included elsewhere in this Offering Circular. The following table summarizes certain selected consolidated financial data for the periods presented. Our historical results may not be indicative of our future performance. The summary historical consolidated financial and operating information presented below contains financial measures that are not presented in accordance with GAAP. See "Non-GAAP Financial Measures."

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  (unaudited)
As of and for the nine
months ended
September 30,
   
   
  Pro forma as
of and for the
nine months
ended
September 30,
2017
   
 
 
  As of and for the year
ended December 31,
   
 
 
  Pro forma as
of and for the
year ended
December 31, 2016
 
(in thousands, except percentages and per share amounts)
  2017   2016   2016   2015  

Income Statement Data

                                     

Revenues, net

                                     

Rooms

  $ 22,872   $ 20,659   $ 28,671   $ 24,350   $ 22,872   $ 28,671  

Food and beverage

    6,962     7,085     8,148     8,022     6,962     8,148  

Other operating departments, rental and other

    5,099     4,650     5,745     5,028     5,099     5,745  

Total revenue

    34,933     32,394     42,564     37,400     34,933     42,564  

Departmental costs and expenses

                                     

Rooms

    5,077     4,920     6,350     5,416     5,077     6,350  

Food and beverage

    5,247     5,734     7,137     6,785     5,247     7,137  

Other operating departments, rental and other

    2,394     2,606     3,279     2,834     2,394     3,279  

Total departmental costs and expenses

    12,718     13,260     16,766     15,035     12,718     16,766  

Departmental income

    22,215     19,134     25,798     22,365     22,215     25,798  

Total operating expenses

    16,822     15,146     20,165     18,457     19,585     24,508  

Operating income, net

    5,393     3,988     5,633     3,908     2,630     1,290  

Interest expense

    5,230     4,318     5,792     7,273     5,366     6,334  

Other income

            (250 )   (213 )       (250 )

Net income (loss)

    163     (330 )   91     (3,152 )   (2,736 )   (4,794 )

Net (income) loss attributable to non-controlling interest in operating partnership

                    1,395     2,445  

Net Income (loss) attributable to the Company

    163     (330 )   91     (3,152 )   (1,341 )   (2,349 )

Basic and diluted per common share data:

                                     

Basic and diluted net income (loss) available to common shareholders(1)

  $ 0.00   $ (0.01 ) $ 0.00   $ (0.06 ) $ (0.80 ) $ (1.40 )

Basic weighted average common shares outstanding

    50,000,000     50,000,000     50,000,000     50,000,000     1,675,000     1,675,000  

Balance Sheet Data

                                     

Cash and cash equivalents

  $ 5,357   $ 4,138   $ 6,030   $ 4,339   $ 6,357   $ 8,143  

Other current assets

    4,080     3,601     7,993     7,230     4,081     7,993  

Property and equipment, net

    96,700     98,827     98,250     100,902     183,952     184,005  

Total assets

    106,481     106,762     112,471     112,699     194,490     200,338  

Total current liabilities

    6,991     6,889     12,073     10,505     6,748     12,073  

Notes payable

    119,375     99,794     99,897     99,484     119,375     119,897  

Stockholder's equity

    (19,885 )   78     500     2,709     33,500     33,500  

Non-controlling interest in operating partnership

                    34,867     34,867  

Total stockholder's equity, and non-controlling interest in operating partnership

    (19,885 )   78     500     2,709     68,367     68,367  

Performance Data

                                     

Hotel NOI

  $ 12,492   $ 9,885   $ 13,942   $ 11,236   $ 12,313   $ 13,372  

FFO

  $ 4,250   $ 3,830   $ 5,631   $ 2,078   $ 4,884   $ 5,380  

Adjusted FFO

  $ 4,550   $ 3,847   $ 5,648   $ 3,520   $ 5,184   $ 5,640  

Rooms department net profit

    77.8 %   76.2 %   77.9 %   77.8 %   77.8 %   77.9 %

Occupancy

    66.0 %   67.0 %   60.0 %   56.1 %   66.0 %   60.0 %

ADR

  $ 709   $ 628   $ 733   $ 664   $ 709   $ 733  

RevPAR

  $ 468   $ 421   $ 440   $ 373   $ 468   $ 440  

Food & beverage department net profit

    24.6 %   19.1 %   12.4 %   15.4 %   24.6 %   12.4 %

Other operating department, rental and other net profit                   

    53.0 %   44.0 %   42.9 %   43.6 %   53.0 %   42.9 %

(1)
Basic and diluted earnings per share does not include 1,743,368 shares of our common stock issuable upon the redemption of an equal number of OP units. OP units in our operating partnership are redeemable by the holder for cash or, at our option, exchangeable for shares of common stock on a one-for-one basis, beginning one year after the completion of this offering. There would be no change to basic and diluted earnings per share if the OP units were redeemed.

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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        This Offering Circular contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in our forward-looking statements for many reasons, including the risks described in "Risk Factors" and elsewhere in this Offering Circular. The historical financial position, results of operations and cash flows, as reflected in the accompanying historical financial statements of our Predecessor and related notes, are subject to management's evaluation and interpretation of business conditions, changing capital market conditions and other factors that could affect the ongoing viability of the St. Regis Aspen Resort. You should read the following discussion together with "Cautionary Note Regarding Forward-Looking Statements" and the historical financial statements and unaudited pro forma financial statements and, in each case, the related notes included elsewhere in this Offering Circular.

        Upon the completion of this offering and the contribution transactions, the historical operations of our Predecessor will be combined with our company. The following discussion and analysis should be read in conjunction with "Business," "Summary Historical and Pro Forma Financial and Operating Data" and the historical and pro forma financial statements and related notes included elsewhere in this Offering Circular. Since our formation, we have not had any corporate activity. Accordingly, we believe a discussion of our results of operations would not be meaningful, and, in lieu thereof, this Management's Discussion and Analysis of Financial Condition and Results of Operations therefore discusses the historical operations of our Predecessor.

        Unless the context otherwise requires or indicates, references in this section to "we," "our" and "us" refer to our company and its subsidiaries (including our operating partnership) after giving effect to the contribution transactions and our Predecessor before giving effect to the contribution transactions.

Overview

        Our Company.    Aspen REIT, Inc. is a Maryland corporation that has been formed to own the St. Regis Aspen Resort in Aspen, Colorado. We are a single-asset REIT and currently intend to own only the St. Regis Aspen Resort. Therefore, an investment in our common stock is an investment in the St. Regis Aspen Resort.

        Our Manager.    Effective upon the completion of this offering and the contribution transactions, we will be managed by ER-REITS, LLC, which is a newly-formed, majority-owned subsidiary of Elevated Returns, which in turn is wholly owned by Stephane De Baets, our chairman, chief executive officer and president and is a New York based real estate asset management and advisory firm. As of September 30, 2017, Elevated Returns had approximately $250 million in assets under management, including the St. Regis Aspen Resort, in industries such as real estate and consumer brands. Elevated Returns executives are actively involved in the day-to-day management of its invested companies and focused on the ownership, operation, and acquisition of hospitality assets located within the top markets throughout the United States.

        Our Property.    The St. Regis Aspen Resort is a full-service luxury hotel located in Aspen, Colorado with an upscale restaurant, a private spa and heated outdoor pool with panoramic views of the Aspen mountainside. The resort is centrally located within walking distance of many of Aspen's high-end retail shops, restaurants and entertainment and two blocks from the base of Aspen Mountain. The St. Regis Aspen Resort features on-site ski and snowboard rentals, as well as a ski valet service that removes the hassle from transporting equipment to and from the four nearby ski mountains each day. The St. Regis Aspen Resort recently completed $1.6 million of renovations.

        The St. Regis Aspen Resort has 179 guest rooms, consisting of 154 standard rooms and 25 suites. Guests staying in suites enjoy the St. Regis Butler Service, which has been a hallmark of the St. Regis

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experience for over 100 years and provides packing and unpacking services, garment pressings and assistance with obtaining dinner reservations and theater tickets. In addition, the hotel offers approximately 29,000 square feet of indoor and outdoor conference and banquet venues with views of the Rocky Mountains, including 14 fully equipped meeting spaces that can accommodate special events and celebrations for up to 1,200 guests, and corporate meeting planners can enjoy the services of a St. Regis Meeting Butler, a highly trained individual who acts as a liaison between the meeting planners and other departments of the hotel. The indoor meeting space includes the 9,146-square-foot Grand Ballroom, which we believe is the largest ballroom in Aspen. The St. Regis Aspen Resort also features luxury recreational facilities, including the 15,000-square-foot Remède Spa, a fitness center, a heated outdoor swimming pool and three outdoor whirlpools with views of the mountainside. Additionally, various high-end retailers lease retail space from the hotel.

        The St. Regis Aspen Resort operates three food and beverage outlets: Velvet Buck is the property's casual restaurant and also services the hotel's catering and in-room dining operations; Mountain Social, serving cocktails and light meals, is located off the lobby and offers both couch and table seating, a large fireplace, and views of Aspen Mountain; and Splash, is open during the summer season and is located adjacent to the outdoor swimming pool. Light meals and cocktails from this outlet are served at dedicated outdoor tables and lounge chairs around the swimming pool. The hotel also leases space to the Chefs Club Aspen restaurant and bar, which is managed and owned in part by Mr. De Baets.

        In addition to drawing couples and families for vacations throughout the year, the St. Regis Aspen Resort attracts celebrities, high net worth individuals and top executives and has a history of being selected for exclusive private events, both leisure- and business-related. The St. Regis Aspen Resort offers an array of activities year-round, including world-class skiing, snowmobiling and dog sledding during the winter and whitewater rafting, horseback riding, hiking, golf, hot air ballooning and paragliding during the summer. While famous for its skiing, Aspen and the surrounding area offer festivals year-round, including World Cup ski races, ESPN Winter X Games, Food & Wine Classic, Jazz Aspen Snowmass Labor Day Festival, and Aspen Music Festival. The St. Regis Aspen Resort is regularly the venue for well-known annual events in the entertainment, fashion and press industries, such as the Aspen Valley Polo Club, Après Ski Cocktail Classic and Wintersköl Awards Dinner.

        Our Hotel Manager.    Starwood, or our Hotel Manager, has managed the St. Regis Aspen Resort since our Predecessor acquired the St. Regis Aspen Resort in 2010. The St. Regis brand provides a luxury experience at over 30 hotels around the world, including the St. Regis Aspen Resort. On September 23, 2016, Marriott International Inc., or Marriott, completed the acquisition of Starwood, after which Starwood became an indirect wholly owned subsidiary of Marriott, a worldwide operator, franchisor, and licensor of hotels and timeshare properties under numerous brand names. At year-end 2016, Marriott operated 1,821 properties (521,552 rooms) under long-term management agreements with property owners, 48 properties (10,933 rooms) under long-term lease agreements with property owners, and 22 properties (9,906 rooms) that it owns.

Factors that May Influence Our Operating Results

        Our overall approach to the management and operations of the St. Regis Aspen Resort is to make selective improvements and increase our ADR, over time, as the market allows. We are also optimistic about the trend of increasing demand in the lodging industry in Aspen. Specifically, the following factors may influence our operating results.

        Growth Strategy.    Our internal growth strategy is to enhance the operating performance of the St. Regis Aspen Resort by: (i) selectively renovating the hotel; (ii) improving the marketing and management of the hotel; (iii) increasing the brand recognition of the St. Regis Aspen Resort to

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differentiate itself from competitors; (iv) increasing our margins on food and beverage sales; and (v) increasing the St. Regis Aspen Resort's ADR appropriately over time.

        Property Strategy.    With our Manager, we actively monitor the St. Regis Aspen Resort's operations, including property positioning, physical design, capital planning and investment, guest experience and overall strategic direction. In addition, we regularly review opportunities and efforts to enhance the quality and attractiveness of the St. Regis Aspen Resort, increase its long-term value and generate attractive returns on investment. We believe the brand recognition of "St. Regis" has the potential to generate attractive returns relative to other competing hotels in its market.

        Local and Regional Economy.    The demand for lodging, especially business travel, tends to fluctuate with the overall economy. Likewise, our results of operations are sensitive to changes in overall economic conditions that impact consumer spending, including discretionary spending. Furthermore, because we operate only in Aspen, positive or negative changes in economic or other conditions in the Aspen area, including the state budgetary shortfall, employment levels, natural hazards and other factors, may impact our overall performance. However, since the economic recession in the United States beginning around 2008, the lodging industry has experienced improving fundamentals, including demand, which we believe is still continuing industry-wide and at the St. Regis Aspen Resort. Furthermore, we believe that the St. Regis Aspen Resort is an iconic, high-end asset that has and will continue to be resistant to downturns in the market because of its unique history and location, and as a result of its pristine preservation.

        Tourism.    Our revenue is partly dependent on visitors to the St. Regis Aspen Resort and the surrounding area for leisure purposes. We believe that tourism has been rising in Aspen in recent years and will continue to do so in the future. However, tourism from non-U.S. visitors is typically sensitive to changes in currency exchange rates, which can be volatile. Recently the U.S. dollar has been strong relative to other currencies. If this continues to be the case, or the U.S. dollar becomes even stronger, this could make visiting the United States relatively more expensive for non-U.S. travelers. If tourism rates fall, we may not receive as many hotel and restaurant visitors.

        Interest Rates.    The United States has recently experienced low interest rates, but we expect that these interest rates could increase in the foreseeable future. We use debt to finance certain of our capital expenditures, so a change in interest rates could affect our results of operations. Currently, our only long-term debt is the $120.0 million mortgage on the St. Regis Aspen Resort that we will assume concurrently with the completion of this offering. The initial maturity date on the loan is April 1, 2019, which may be extended by us three times for a period of one year each, provided that certain conditions, including but not limited to satisfying a debt yield test, are met and an extension fee is paid in the amount of 0.25% of the amount of the outstanding principal amount of the loan. In connection with assuming this mortgage, we will also assume a rate cap agreement on this mortgage that would limit our interest rate exposure to a potential increase in LIBOR above 3.0%. If interest rates increase, our debt and/or hedging arrangements could become more expensive.

        Competition.    We operate in a competitive market and industry where potential guests have multiple hotel properties from which to choose locally, regionally, nationally and internationally. We compete with other Aspen hotels for guests, as well as with comparable internationally branded luxury resorts in renowned ski resorts in the Rocky Mountain region, including Aspen-Snowmass, Colorado, Deer Valley-Park City, Utah, Vail-Avon, Colorado, and Jackson Hole, Wyoming. The St. Regis Aspen Resort competes with other hotels for guests in Aspen, Colorado based on a number of factors, including location, convenience, brand affiliation, room rates, range of services and guest amenities or accommodations offered and quality of customer service. In addition, three new hotels are scheduled to open in Aspen in the next five years, including another hotel affiliated with Starwood, which would compete directly with the St. Regis Aspen Resort for loyalty rewards program business. Actions by our

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competitors, such as increased development, may adversely affect our occupancy, ADR and RevPAR, while increasing the operating expenses of our property.

Key Indicators of Operating Performance

        Revenue.    Our revenue is derived from hotel operations, comprised by the following departmental revenues:

        Departmental Expenses.    Similar to our revenue, our departmental operating expenses consist of the following primary components:

        Undistributed Operating Expenses.    Generally, property operating expenses are unallocated, and include non-departmental expenses, such as sales and marketing, general and administrative, utilities, property taxes, repairs and maintenance and other property specific costs.

        Fixed Charges.    Generally, these expenses include insurance, property taxes and other fixed charges including management fees.

        Management Fees.    Upon the completion of this offering and the contribution transactions, our operating partnership will enter into a management agreement with our Manager that will be effective

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upon the completion of this offering and the contribution transactions. Pursuant to the terms of the management agreement, our Manager will perform certain services for us, subject to oversight by our board of directors. For more information about the terms of our management agreement, see "Our Principal Agreements—Management Agreement."

        Management Fees.    We will pay our Manager a base management fee, in cash, payable quarterly in arrears, in an amount equal to the greater of: (i) $1,000,000 per year ($250,000 per quarter), which is subject to an annual increase equal to the greater of (a) a consumer price index, or CPI, adjustment and (b) 3.0%, and (ii) 1.5% of our stockholders' equity. The base management fee will be reduced by any of our expenses paid by us directly or reimbursed to our Manager that quarter; provided, however, that the base management fee payable with respect to any calendar quarter shall never be less than $0. The base management fee is payable independent of our performance. Our Manager will also be eligible to receive an incentive fee in an amount equal to the excess of (i) the product of (a) 25.0% and (b) the excess of (1) our Core Earnings for the previous 12-month period, over (2) the product of (A) our stockholders' equity in the previous 12-month period and (B) 7.0% per annum, over (ii) the sum of any incentive fees paid to our Manager with respect to the first three calendar quarters of such previous 12-month period. Upon the completion of this offering, without taking into account the payment of any potential incentive fee, we expect our management fees and expense reimbursements, as described in further detail below, will slightly decrease compared to the fees and expense reimbursements paid by our Predecessor; however, no assurances can be given that our expected fees and expense reimbursements will not increase. For a description of our "stockholders' equity" and "core earnings," see "Our Principal Agreements—Management Agreement—Management Fees—Management Fees."

        Disposition Fee.    Following a disposition of the St. Regis Aspen Resort or all or substantially all of our interest in the St. Regis Aspen Resort, we will pay our Manager a management sale fee, in cash, in an amount equal to 2.0% of the total consideration paid by the purchaser in connection with the disposition of the St. Regis Aspen Resort. No disposition fee shall be payable to our Manager in respect of any disposition that occurs during the 12 months following the completion of this offering if the total consideration paid by the purchaser (including any indebtedness assumed by the purchaser) in connection with the disposition of the St. Regis Aspen Resort is less than the value of the aggregate consideration paid by us and our operating partnership in the contribution transactions. For a description of "aggregate consideration" and "total consideration," see "Our Principal Agreements—Management Agreement—Management Fees—Disposition Fee."

        Termination Fee.    In conjunction with a termination of the management agreement by us, unless the termination is for cause, we will pay our Manager a termination fee equal to three times the sum of (i) the average annual base management fee and (ii) the average annual incentive fee earned by our Manager, in each case during the 24-month period immediately preceding such termination, calculated as of the end of the most recently completed fiscal quarter before the date of termination.

        Expense Reimbursement.    We will reimburse our Manager or its affiliates for certain costs and expenses relating to third-party services that are typically borne by an externally-managed company. Pursuant to our management agreement, our Manager may elect to reduce its base management fee with respect to some or all of these reimbursable expenses.

        Hotel Management Fees.    Our Hotel Manager receives a base hotel management fee and is also eligible to receive an incentive hotel management fee. The base hotel management fee is calculated as a percentage of the St. Regis Aspen Resort's operating revenues, but in no event is the base hotel management fee less than $500,000 per year, and the incentive hotel management fee is calculated as a percentage of the St. Regis Aspen Resort's operating profits. For additional details regarding the principal terms of the hotel management agreement, see "Our Principal Agreements—Hotel Management Agreement."

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        Organizational and Offering Costs.    Certain costs incurred by us related to equity offerings are charged as expenses in the period incurred. With regard to organizational and offering costs related to this offering, our Predecessor has agreed to pay all such costs and therefore we do not expect our results of operations to be affected.

        Occupancy, ADR and RevPAR.    We use a variety of operating and other information to evaluate the operating performance of our business. Certain key indicators include financial information that is prepared in accordance with GAAP, as well as other financial measures that are non-GAAP measures but are considered useful in both the lodging and REIT industries. See "—Non-GAAP Financial Measures." In addition, we use other information that may not be financial in nature, including statistical information and comparative data. We use this information to measure hotel performance and/or business as a whole. These metrics are useful in evaluating the financial and operating performance of the St. Regis Aspen Resort, its contribution to cash flow and its potential to provide attractive long-term total returns. Key indicators related to hotel performance include:

        We evaluate occupancy, ADR and RevPAR performance on an absolute basis with comparisons to budget and prior periods, as well as on a market basis. The table below includes the St. Regis Aspen Resort's occupancy, ADR and RevPAR for the periods indicated. For more information about occupancy, ADR and RevPAR for the periods indiciated, see "—Results of Operations—Comparison of the nine months ended September 30, 2017 to the nine months ended September 30, 2016—Rooms Department" and "—Comparison of the year ended December 31, 2016 to the year ended December 31, 2015—Rooms Department."

 
  Nine Months
Ended
September 30,
  Years Ended
December 31,
 
 
  2017   2016   2016   2015  

Number of rooms

    179     179     179     179  

Occupancy

    66.0 %   67.0 %   60.0 %   56.1 %

ADR

  $ 709   $ 628   $ 733   $ 664  

RevPAR

  $ 468   $ 421   $ 440   $ 373  

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        We expect that our occupancy, ADR and RevPAR performance will be impacted by macroeconomic factors such as regional and local employment growth, personal and discretionary income, consumer confidence, corporate earnings, office vacancy rates and business relocation decisions, airport and other business and leisure travel, new hotel construction and the pricing strategies of competitors. In addition, our occupancy, ADR and RevPAR performance are dependent on the continued success of the St. Regis Aspen Resort and the attractiveness of the St. Regis brand.

Critical Accounting Policies and Use of Significant Estimates

        Our financial statements have been prepared on the accrual basis of accounting in accordance with GAAP. The preparation of these financial statements requires us to make estimates and assumptions that 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 revenues and expenses during the reporting period. On an ongoing basis, we evaluate our estimates and assumptions, including those that impact our most critical accounting policies. We base our estimates and assumptions on historical experience and on various other factors that we believe are reasonable under the circumstances. Actual results may differ from these estimates. We believe the following are our most critical accounting policies. For a further discussion of our critical accounting policies, see the notes to our financial statements included elsewhere in this Offering Circular.

        The JOBS Act permits us an extended transition period for complying with new or revised accounting standards affecting public companies. We have elected to take advantage of this extended transition period, which means that the financial statements included in this Offering Circular, as well as any financial statements that we file in the future, will not be subject to all new or revised accounting standards generally applicable to public companies for the transition period for so long as we remain an emerging growth company or until we affirmatively and irrevocably opt out of the extended transition period under the JOBS Act.

        Basis of Presentation.    The financial statements have been prepared from the historical balance sheets, statements of operations and cash flows attributed to 315 East Dean Associates, Inc. (the "Predecessor"). The financial statements are stated in U.S. dollars and have been prepared in accordance with the accounting principles generally accepted in the United States ("GAAP").

        Use of Estimates.    The preparation of our financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes. Actual results, as determined at a later date, could differ from our estimates.

        Cash and Equivalents.    We consider all highly liquid investments that are purchased with an initial maturity of three months or less to be cash equivalents. A significant portion of our cash and cash equivalents is maintained at various financial institutions in amounts that may exceed federally insured limits of $250,000 per account; however, we limit our cash investments to high-quality financial institutions in order to minimize its credit risk. We have not experienced any losses and do not believe it is exposed to any significant risk on cash and cash equivalent balances.

        We currently maintain cash in bank accounts that may, at times, exceed federally insured limits. We have not experienced any losses in such accounts.

        Accounts Receivable.    Accounts receivable is comprised of amounts due from hotel guests and amounts due from individuals or companies for banquets and other events provided by the St. Regis Aspen Resort. We provide an allowance for doubtful accounts, as necessary, for accounts deemed potentially uncollectible in the judgment of management. Generally, receivables are deemed uncollectible when we have determined that all legal remedies have been exhausted at which time the receivable is written off. As of September 30, 2017 and 2016, the allowance for doubtful accounts was

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$0 and $12,000, respectively. As of December 31, 2016 and 2015, we have estimated an allowance for doubtful accounts of $6,000 and $1,000, respectively.

        Residence Club Receivable.    Located on the same lot but separate from the St. Regis Aspen Resort are certain condominium units owned and operated by parties separate from our company, which we refer to as the Residence Club. Historically, the Residence Club was owned and operated by our Hotel Manager. In May 2016 our Hotel Manager sold the Residence Club to a third party. Our relationship with our Hotel Manager (and, by extension the Residence Club during the time our Hotel Manager owned the Residence Club) is contractual, and while certain rights of authority have been conveyed through the hotel management agreement, our Hotel Manager does not significantly influence the management or operating policies of us or our Manager.

        Under the terms of the hotel management agreement, we incur cash expenditures at the direction of our Hotel Manager related to the operations of the Residence Club. The cash expenditures incurred by us on behalf of the Residence Club include allocated shared payroll costs, food and beverage and other departmental staff, utilities and shared services costs (including laundry, fitness center and transportation) and any direct costs for repairs and maintenance, as applicable, based on the terms outlined within the hotel management agreement. It is the responsibility of our Hotel Manager to provide these services to Residence Club, and the cash expenditures incurred by us are subject to reimbursement. Under ASC Topic 605, "Revenue Recognition—" such transactions are accounted for on a net basis in our capacity as an agent whereby we do not receive any benefit or obligation from the Residence Club, other than receiving a refund for the allocated cash expenditures.

        For the nine months ended September 30, 2017 and the year ended December 31, 2016, total amounts refunded were $2,971,000 and $3,662,000, respectively. As of September 30, 2017 and December 31, 2016 the amounts due from the Residence Club were $1,308,000 and $519,000, respectively, and are included in "Other receivables" on the balance sheet.

        Inventories.    Inventories consist primarily of food, beverages and spa gift shop items and are stated in the balance sheet, at the lower of cost or net realizable value using the first-in, first-out (FIFO) method of costing inventories. Operating stock, which represents items such as china, glassware, silver, and linen are expensed when placed in service.

        Property, Building and Equipment.    Property, building and equipment are carried at cost and depreciation is recorded using the straight-line method over the assets' estimated useful lives, which are generally as follows; six years for furniture, fixtures and equipment, 15 years for improvements and 39 years for building.

        The related cost and accumulated depreciation of assets retired or otherwise disposed of are removed from the accounts and the resultant gain or loss is reflected in earnings in the period incurred. Maintenance and repairs are expensed as incurred while additions and improvements are capitalized.

        We review our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of the hotel property may not be recoverable. Events or circumstances that may cause a review include, but are not limited to, adverse permanent changes in the demand for lodging at the properties due to declining economic conditions and/or new hotel construction where the hotel is located. When such conditions exist, management performs an analysis to determine if the estimated undiscounted future cash flows from operations and the proceeds from an ultimate disposition of the hotel property exceeds its carrying value. If the estimated undiscounted future cash flows are found to be less than the carrying amount of the asset, an adjustment to reduce the carrying amount to the hotel property's estimated fair market value would be recorded and an impairment loss recognized.

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        We also reevaluate the periods of depreciation to determine whether subsequent events and circumstances warrant revised estimates of useful lives. As of September 30, 2017 and 2016 and December 31, 2016 and 2015, we expect our property, building and equipment to be fully recoverable.

        Income Taxes.    315 East Dean Associates, Inc., our Predecessor, is a corporation for U.S. federal and state income tax purposes and therefore has paid federal, state and local taxes historically.

        Upon the completion of this offering and the contribution transactions, the St. Regis Aspen Resort will be owned by us, and our tax structure will be significantly different than our tax structure was in prior periods. For a discussion of certain tax consequences upon completion of this offering and the contribution transactions, see "U.S. Federal Income Tax Considerations."

        Financial Instruments.    We are required to disclose the fair value of financial instruments pursuant to ASC Topic 820, "Fair Value Measurements and Disclosures." We adopted ASC Topic 820, which defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosures requirements for fair value measurements. Our financial instruments are cash and cash equivalents, accounts receivable, accrued expenses, other current liabilities and long-term debt. We believe the carrying amounts for cash and equivalents, receivables, accrued expenses and other current liabilities are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization. The carrying amount for long-term debt is a reasonable estimate of fair value because the stated interest rate is fixed and equivalent to rates currently available.

        The three levels of the valuation hierarchy are defined as follows:

        Derivative Instruments.    Concurrently with an April 2017 refinancing of our note payable, we purchased an interest rate cap agreement with a notional amount of $120.0 million to manage the exposure to interest rate movements on the restructured variable rate debt when one month LIBOR exceeds 3.0%. As of September 30, 2017 and December 31, 2016, one month LIBOR was 1.235% and 0.546%, respectively. The effective date of the interest rate cap agreement is March 31, 2017, and the agreement matures on April 7, 2019.

        In April 2015, our Predecessor terminated an interest rate cap agreement associated with a refinanced note payable. The determination of the fair value of the interest rate cap includes estimates regarding future interest rate movements and their impact on future cash flows.

        Our Predecessor received proceeds from this sale of the interest rate cap agreement of $700,000, which approximated the then-fair value of the instrument. The change in fair value from January 1, 2015 through April 6, 2015, the date of termination, was recognized as interest expense. Concurrently, with the termination of the interest rate cap associated with the refinanced note payable, our Predecessor purchased an interest rate cap agreement with a notional amount of $100.0 million to manage the exposure to interest rate movements on the restricted variable rate debt when one-month LIBOR exceeds 2.0%. As of December 31, 2016 and 2015, one-month LIBOR was 0.546% and 0.539%

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respectively. The effective date of the interest rate cap agreement was April 6, 2015, and the agreement matured on April 15, 2017.

        Our interest rate cap derivatives are not designated as a hedge and do not qualify for hedge accounting. Accordingly, changes in the fair value of the interest rate cap are recognized as interest expense. Our investment in the interest rate cap is included in "Deposits and other assets" on the balance sheets.

        Revenue Recognition.    We recognize revenue daily when earned, which is at the time rooms, food and beverage, or spa or other services are provided. Amounts received in advance of guest-stays are reflected as "Advanced deposits" in the accompanying balance sheets. Revenues are presented net of applicable sales tax. We lease restaurant and retail space to unafilliated tenants and a related party. The leases are cancellable by us with three to six months' notice, and provide minimum rental increases. For these leases, the aggregate rental income over the lease term is recognized on a straight-line basis over the lease term. The difference between the income receivable in any year and the amount received under the lease during that year is recorded as deferred rent on our balance sheet and has been included in "Deposits and other assets" on balance sheets, which will reverse over the lease term. Deferred rent as of September 30, 2017 and 2016 was $54,000 and $94,000, respectively, and as of December 31, 2016 and 2015 was $95,000 and $94,000, respectively. The leases expire at varying dates ranging from May 2018 to March 2023.

Recently Issued Accounting Pronouncements.

        Leases.    In February 2016, the Financial Accounting Standards Board ("FASB") issued amended guidance on the accounting for leasing transactions. The primary objective of this update is to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Public entities must adopt the new guidance for reporting periods beginning after December 15, 2018, with early adoption permitted. Companies are required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. We are currently evaluating the impact that the standard will have on our financial statements, and we have made no conclusions as of the date of this Offering Circular. We anticipate that we will adopt the standard beginning on January 1, 2019.

        Revenue from Contracts with Customers.    In May 2014, the FASB issued amended guidance on the recognition of revenue from contracts with customers. The objective of the new standard is to establish a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and will supersede most of the existing revenue recognition guidance, including industry-specific guidance. The new standard requires an entity to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB approved a one-year deferral of the effective date of this standard. Public entities are required to adopt the new standard for fiscal years, and interim periods within those years, beginning after December 15, 2017, with the option of applying the standard early as of the original effective date for public entities. The new standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. We are currently evaluating the impact of the new guidance and the method of adoption, and we have made some preliminary conclusions as of the date of this Offering Circular. We believe we will adopt this standard using the full retrospective method to restate each prior reporting period presented. We do not expect any significant impact upon adoption of this standard as our contracts with customers are (i) generally short-term (itinerant room stays at the Hotel with revenues booked after services are provided), (ii) services and not goods related, and (iii) not based on percentage of completion or other multi-period or interim benchmarks for performance. Revenue for other contracts, such as those for events, are similarly recognized upon

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completion of services. We will continue to monitor and assess the possible impacts of this standard with possible early adoption prior to its mandated effectiveness.

REIT Qualification and Distribution Requirements

        We will elect to be taxed as a REIT and to comply with the related provisions of the Code. Accordingly, we generally will not be subject to U.S. federal income tax on income and gains distributed to our stockholders as long as certain asset, income and share ownership tests are met. To maintain our qualification as a REIT, we must annually distribute at least 90% of our net taxable income to our stockholders and meet certain other requirements. If we are subject to audit and if the Internal Revenue Service determines that we failed to meet one or more of these requirements, we could lose our REIT qualification. If we did not qualify to be taxed as a REIT, our net income would become subject to U.S. federal, state and local income taxes, which would be substantial, and the resulting adverse effects on our results of operations, liquidity and amounts distributable to our stockholders would be material.

        Although we currently intend to operate in a manner designed to qualify to be taxed as a REIT, it is possible that future economic, market, legal, tax or other considerations may cause our board of directors to authorize us to revoke our REIT election.

Certain Consequences of the Contribution Transactions and our REIT Election

        As a result of the completion of this offering and the contribution transactions, and our election to qualify to be taxed as a REIT for U.S. federal income tax purposes, our operating results may vary from our historical property-level results. In the future, we will be subject to the following fees and expenses that we were not subject to previously:

Results of Operations

        Below is a discussion of our recent results of operations. See the introduction to this "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "—Certain Consequences of the Contribution Transactions and our REIT Election" above for additional information regarding the periods presented and how our historical results could differ from our future results.

        Certain figures, such as interest rates and other percentages, included in this section have been rounded for ease of presentation. Percentage figures included in this section have not in all cases been calculated on the basis of such rounded figures but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this section may vary slightly from those obtained by performing the same calculations using the figures in our financial statements or in the associated text. Certain other amounts that appear in this section may similarly not sum due to rounding.

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Comparison of the nine months ended September 30, 2017 to the nine months ended September 30, 2016

        Presented below is the St. Regis Aspen Resort's statement of operations for the nine months ended September 30, 2017 and the nine months ended September 30, 2016:

 
  Nine Months Ended
September 30,
 
 
  2017   2016  
 
  (in thousands)
 

Revenue:

             

Rooms

  $ 22,872   $ 20,659  

Food and Beverage

    6,962     7,085  

Other operating departments, rental, and other

    5,099     4,650  

Total revenue

    34,933     32,394  

Departmental Costs and Expenses:

             

Rooms

    5,077     4,920  

Food and Beverage

    5,247     5,734  

Other operating departments, rental, and other

    2,394     2,606  

Total departmental costs and expenses, exclusive of depreciation shown below

    12,718     13,260  

Departmental income

   
22,215
   
19,134
 

Operating Expenses:

   
 
   
 
 

General and administrative

    3,395     3,381  

Marketing and promotion

    2,771     2,562  

Repairs and maintenance

    1,361     1,230  

Corporate expenses

    1,005     910  

Utilities

    492     484  

Management fees—related party

    1,076     576  

Hotel management fees

    2,237     1,470  

Property taxes

    699     682  

Depreciation

    3,786     3,851  

Total Operating Expenses

    16,822     15,146  

Operating Income

    5,393     3,988  

Other (income) and Expenses:

             

Interest Expense

    5,230     4,318  

Net Income (Loss)

  $ 163   $ (330 )

Overview

        Our net income was $163,000 for the nine months ended September 30, 2017, as compared to net loss of $330,000 for the nine months ended September 30, 2016. An increase in total hotel revenues and lower departmental costs resulted in higher departmental net income offset, in part, by higher operating expenses related to the generation of such revenues. For the nine months ended September 30, 2017, we incurred an additional $912,000 of third party financing fees and higher interest expense as a result of a refinancing in April 2017. In addition, during the nine months ended September 30, 2017, we paid $786,000 and $500,000 for incentive fees to our Hotel Manager and Elevated Returns, respectively. The discussion below first summarizes our main drivers, which are our revenue and expenses from our rooms department, food and beverage department and other departments, and then summarizes our other expenses and corporate expenses for the period.

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Rooms Department

        Overall, our room net profit for the nine months ended September 30, 2017 was $17.8 million, an increase of 13.4% as compared to $15.7 million for the nine months ended September 30, 2016. An analysis of room performance is presented below:

 
  Nine Months Ended
September 30,
 
 
  2017   2016  
 
  (in thousands, except
percentages, ADR
and RevPAR)

 

Rooms Department

             

Revenue

  $ 22,872   $ 20,659  

Expense

    5,077     4,920  

Rooms department net profit

  $ 17,795   $ 15,739  

Rooms department net profit %

    77.8 %   76.2 %

Other rooms department metrics

             

Occupancy

    66.0 %   67.0 %

ADR

  $ 709   $ 628  

RevPAR

  $ 468   $ 421  

        Our room revenue for the nine months ended September 30, 2017 was $22.9 million, an increase of 10.6% as compared to $20.7 million for the nine months ended September 30, 2016. This increase was primarily due to an average daily rate increase of approximately $81.00. Year over year, transient ADR increased by approximately $110.00, mainly in the Starwood Group Points award redemption category; transient room nights, which are guest stays not related to an associated group event at the Hotel, generally offer a higher ADR. Group ADR increased by approximately $80.00 as compared to 2016 with less buyout group contracts; group nights are guest stays related to an associated group event at the Hotel.

        Occupancy for the nine months ended September 30, 2017 decreased to 66.0% from 67.0% for the nine months ended September 30, 2016. The net effect of the slight decrease in occupancy and increased ADR for the period resulted in a RevPAR increase of 11.2% to $468 from $421 for the prior nine months ended September 30, 2016.

        Our room expense for the nine months ended September 30, 2017 and 2016 was $5.1 million and $4.9 million, respectively. Room expenses includes payroll, operating, reservations and guest supply expenses. Overall, rooms expenses increased at a lower percentage than rooms revenue, which, along with an increase in RevPAR contributed to an increase in rooms profit margin to 77.8% from 76.2% during the nine months ended September 30, 2017 and 2016, respectively.

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Food & Beverage Department

        Overall, our food and beverage net profit for the nine months ended September 30, 2017 was $1.7 million, an increase of 21.4% as compared to $1.4 million for the nine months ended September 30, 2016. An analysis of food and beverage performance is presented below:

 
  Nine months
Ended September 30,
 
 
  2017   2016  
 
  (in thousands, except percentages)
 

Food & Beverage Department

             

Revenue:

             

Food and Beverage

  $ 6,962   $ 7,085  

Expenses:

             

Food and Beverage

    5,247     5,734  

Food & beverage department net profit

  $ 1,715   $ 1,351  

Food & beverage department net profit %

    24.6 %   19.1 %

        Our food and beverage revenue for the nine months ended September 30, 2017 was $7.0 million, a decrease of 1.4% as compared to $7.1 million for the nine months ended September 30, 2016. This decrease was primarily due to a cancellation of group nights and food and beverage by one large group in February resulting in the loss of 844 group room nights as compared to the nine months ended September 30, 2016. In addition, there was less group revenue in June 2017 attributed to certain group stays, whose food and beverage purchases were lower than typical groups, that displaced other group business that may have been more profitable. This resulted in less banqueting revenue of approximately $510,000 as compared to the prior year.

        Our food and beverage expenses for the nine months ended September 30, 2017 were $5.2 million, a decrease of 8.8% as compared to $5.7 million for the nine months ended September 30, 2016. This decrease, which is generally a variable expense relative to food and beverage revenues, was primarily due to lower banquet and catering revenues and the cost of food and beverage. The decrease in food and beverage expenses relative to revenues increased food and beverage net profit to 24.6% for the nine months ended September 30, 2017 as compared to 19.1% for the nine months ended September 30, 2016.

Other Operating Departments, Rental and Other

        Overall, net profit from other operating departments, rental and other for the nine months ended September 30, 2017 was $2.7 million, an increase of 35.0% as compared to $2.0 million for the

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nine months ended September 30, 2016. An analysis of the performance of these other operating departments is presented below:

 
  Nine months
Ended September 30,
 
 
  2017   2016  
 
  (in thousands, except percentages)
 

Other Operating Department

             

Other revenue:

             

Other operating departments, rental and other

  $ 5,099   $ 4,650  

Other expenses:

             

Other operating departments, rental and other

    2,394     2,606  

Other operating department net profit

  $ 2,705   $ 2,044  

Other operating department net profit %

    53.0 %   44.4 %

        Our other operating departments, rental and other revenue for the nine months ended September 30, 2017 was $5.1 million, an increase of 8.5% as compared to $4.7 million for the nine months ended September 30, 2016. This increase was primarily due to an increase in cancellation revenues of approximately $320,000, attributed to cancellation of group nights and food and beverage by one large group in the first quarter of 2017 and transient cancellation fees. Spa revenues also saw an increase of $164,000 in 2017 with increased revenues and enhanced offerings from additional marketing.

        Our other operating departments, rental and other expenses for the nine months ended September 30, 2017 and 2016 were $2.4 million and $2.6 million, respectively. Other operating departments, rental and other expenses include payroll and labor-related expenses, operating supplies and laundry and linen expenses. The 8.5% increase in total other operating department revenue and 7.7% decrease in correlated expenses resulted in an increase in net profit for other operating departments to 53.0% from 44.4% for the nine months ended September 30, 2017 and 2016, respectively.

Other Operating Expenses

        Our other operating expenses include expenses relating directly to the St. Regis Aspen Resort's operations that are not categorized within a revenue-generating department. Significant other operating expenses are discussed below:

        General and Administrative Expenses.    Our general and administrative expenses for the nine months ended September 30, 2017 and 2016 were $3.4 million. General and administrative expenses include salaries in the finance, Hotel Management (General Manager and Director of Operations) and human resources departments, bonus accruals, and other hotel administrative expenses.

        Marketing and Promotion Expenses.    Our marketing and promotion expenses for the nine months ended September 30, 2017 were $2.8 million, an increase of 7.7% as compared to $2.6 million for the nine months ended September 30, 2016. This increase was primarily due to higher labor costs for a new director of marketing position added since September 30, 2016, national marketing expenses and expenses for the Starwood Preferred Guest program. While such marketing expenses increased, the benefits of such increases are reflected in higher total revenues.

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        Repairs and Maintenance.    Our repairs and maintenance expenses for the nine months ended September 30, 2017 were $1.4 million, an increase of 16.7% as compared to $1.2 million for the nine months ended September 30, 2016. This increase was primarily due to increases in building maintenance and repairs for items such as painting, wall coverings and general maintenance.

        Corporate Expense.    Our corporate expense for the nine months ended September 30, 2017 was $1.0 million an increase of 9.9% as compared to $910,000 for the nine months ended September 30, 2016. This increase was primarily due to $243,000 of third party costs related to our April 2017 refinancing, $124,000 of indirect expenses related to a planned equity offering and an increase of $272,000 in professional consulting fees, accounting, and travel fees. The nine months ended September 30, 2016 includes a one-time loss of funds of $475,000 caused by a hacker's impersonation of one of Elevated Returns' employees and, notwithstanding our having proper protocols in place, this hacker was successful due to an unaffiliated third party not properly following these protocols. Following this event, we updated our protocols to implement a more enhanced verification process to mitigate against a similar incident in the future.

        Utilities.    Utilities expense includes costs related to electric, gas, water and sewer charges. Utilities expenses for the nine months ended September 30, 2017 was $492,000, an increase of 1.7% as compared to $484,000 for the nine months ended September 30, 2016, primarily due to increased gas and electric charges, the usage of which generally correlates with increased occupancy.

        Management Fees—Related Party Expense.    Our related party management fee expense for the nine months ended September 30, 2017 was $1.1 million an increase of 91.0% as compared to $576,000 for the nine months ended September 30, 2016 primarily due to an incentive bonus payment of $500,000 in addition to the monthly $64,000 flat-fee designated in the management contract.

        Hotel Management Fees Expense.    Our hotel management fees expense for the nine months ended September 30, 2017 was $2.2 million, an increase of 46.7% as compared to $1.5 million for the nine months ended September 30, 2016. This increase was primarily due to an increase in base management fees by $108,000 and an increase in the earned incentive fee of $659,000 to the Hotel Manager due to higher hotel revenues for the nine months ended September 30, 2017 relative to the prior year. For more information on the fees payable under our hotel management agreement, see "Our Principal Agreements—Hotel Management Agreement."

        Property Taxes.    Our property taxes expense for the nine months ended September 30, 2017 was $699,000, an increase of 2.5% as compared to $682,000 for the nine months ended September 30, 2016.

        Depreciation.    Our depreciation expense for the nine months ended September 30, 2017 was $3.8 million, a decrease of 2.6% as compared to $3.9 million for the nine months ended September 30, 2016. This depreciation decrease is primarily due to certain assets becoming fully depreciated in the first quarter of 2017 that were not fully depreciated in the first quarter of 2016, offset by additions to fixed assets during the year.

Other Expenses.

        Other expenses include expenses not directly related to the St. Regis Aspen Resort's operation or those incurred at the corporate level. Significant other expenses are discussed below:

        Interest Expense.    Our interest expense for the nine months ended September 30, 2017 was $5.2 million, which represents an increase of 20.1% as compared to $4.3 million for the nine months ended September 30, 2016. The increase was primarily due to the refinancing of mortgage debt in April 2017 with an increase of par principal to $120.0 million from $100.0 million and a net increase in the interest rate as a result of an increase in one-month LIBOR offset in part by a base spread decrease to 4.55% over one-month LIBOR from 4.8%.

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Comparison of the year ended December 31, 2016 to the year ended December 31, 2015

        Presented below is the St Regis Aspen Resort's statement of operations for the year ended December 31, 2016 and the year ended December 31, 2015.

 
  Years Ended
December 31,
 
 
  2016   2015  
 
  (in thousands)
 

Revenues

             

Rooms

  $ 28,671   $ 24,350  

Food and beverage

    8,148     8,021  

Other operating departments, rental, and other

    5,745     5,028  

Total revenues

    42,564     37,399  

Departmental costs and expenses

   
 
   
 
 

Rooms

    6,350     5,416  

Food and beverage

    7,137     6,785  

Other operating departments, rental, and other

    3,279     2,834  

Total departmental costs and expenses, exclusive of depreciation shown below

    16,766     15,035  

Departmental income

   
25,798
   
22,365
 

Operating expenses

             

General and administrative

    4,483     4,101  

Marketing and promotion

    3,349     3,046  

Repairs and maintenance

    1,702     1,812  

Corporate expenses

    1,001     730  

Utilities

    643     735  

Management fees—related party

    768     679  

Hotel management fees

    2,164     1,558  

Property taxes

    928     918  

Depreciation

    5,127     4,878  

Total operating expenses, exclusive of depreciation shown below

    20,165     18,457  

Operating income

    5,633     3,908  

Other (income) and expenses

   
 
   
 
 

Interest expense

    5,792     7,273  

Other income

    (250 )   (543 )

Related party receivable write-off

        330  

Total other (income) and expenses

    5,542     7,059  

Net income (loss)

  $ 91   $ (3,152 )

Overview

        Our net income was $91,000 for the year ended December 31, 2016, an increase of 102.9% as compared to a net loss of $3.2 million for the year ended December 31, 2015. The discussion below first summarizes our main drivers, which are our revenue and expenses from our rooms department, food and beverage department and other operating departments, rental and other, and then summarizes our other expenses and corporate expenses.

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Rooms Department

        Overall, our room net profit for the year ended December 31, 2016 was $22.3 million, an increase of 19% as compared to $18.9 million for the year ended December 31, 2015. An analysis of the rooms department's performance is presented below:

 
  Years ended
December 31,
 
 
  2016   2015  
 
  (in thousands, except
percentages, ADR
and RevPAR)

 

Rooms Department

             

Revenue

  $ 28,671   $ 24,350  

Expenses

    6,350     5,416  

Rooms department net profit

  $ 22,321   $ 18,934  

Rooms department net profit %

    77.9 %   77.8 %

Occupancy

    60.0 %   56.1 %

ADR

  $ 733   $ 664  

RevPAR

  $ 440   $ 373  

        Our room revenue for the year ended December 31, 2016 was $28.7 million, an increase of 17.6% as compared to $24.4 million for the year ended December 31, 2015. This increase was primarily due to a year over year occupancy increase of 3.9%, an increase in ADR of $69 and RevPAR growth of 18%. The SPG guest loyalty program had the largest impact on room revenue growth, accounting for an additional $2.4 million in room revenue, both from SPG guest paying nights and over 95% compensation premium.

        Under the SPG guest loyalty program, compensation premium is additional revenues that we are eligible for when program participant occupancy exceeds certain contractual thresholds, which may vary from year to year. We have been advised by Marriott that they intend to revise the SPG guest loyalty program for us beginning March 1, 2018. Although we continue to discuss with Marriott the details regarding such changes, the impact of any changes could result in a decrease in revenues to us, which could reduce our profitability and could materially and adversely affect our results of operations and our ability to pay dividends. Based upon our discussions with our Hotel Manager, together with our revenue estimates for the remainder of the year ended December 31, 2017 (which estimate was based on our historical performance), we estimate that the changes to this program will have an adverse impact on our revenues compared to the year ended December 31, 2016 of $400,000 to $600,000, although there is a high degree of variability based on many factors including, but not limited to, market demand and holiday patterns. In turn, the amount of funds available for distribution to our stockholders for 2017 and beyond will be lowered, resulting in a potential lower yield on investment in our company.

        Our room expenses for the year ended December 31, 2016 were $6.4 million, an increase of 18.5% as compared to $5.4 million for the year ended December 31, 2015. This year over year increase was primarily due to payroll expenses, which increased $430,000 due to increased occupancy, an increase of $60,000 for transient travel agent commissions, an increase of $70,000 for in-house promotional expense, a $50,000 increase in costs relating to guest supplies and a $45,000 increase in reservation fee expenses. These increased expenses were generally attributable to increased occupancy.

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Food & Beverage Department

        Overall, our food and beverage net profit for the year ended December 31, 2016 was $1.0 million, a decrease of 18.2% as compared to $1.2 million for the year ended December 31, 2015. An analysis of food and beverage performance is presented below:

 
  Years Ended
December 31,
 
 
  2016   2015  
 
  (in thousands,
except
percentages)

 

Food & Beverage Department

             

Revenue:

             

Food & Beverage

  $ 8,148   $ 8,021  

Total food & beverage revenue

             

Expenses:

             

Food & Beverage

    7,137     6,785  

Food & beverage department net profit

  $ 1,011   $ 1,236  

Food & beverage department net profit %

    12.4 %   15.4 %

        Our food and beverage revenue for the year ended December 31, 2016 was $8.1 million, an increase of 1.3% as compared to $8.0 million for the year ended December 31, 2015 primarily due to increased occupancy and increased average food checks in all outlets. Banquet and catering average check price increased, and we served 6,000 more meals in the restaurant, in-room-dining and lobby lounge bar.

        Our food and beverage expense for the year ended December 31, 2016 was $7.1 million, an increase of 4.4% compared to $6.8 million for the year ended December 31, 2015 primarily due to higher labor and benefits costs and new uniforms in the restaurant.

Other Operating Departments, Rental and Other

        Overall, net profit from other operating departments, rental and other for the year ended December 31, 2016 was $2.5 million, an increase of 12.4% as compared to $2.2 million for the year ended December 31, 2015. An analysis of the performance of these other operating departments is presented below:

 
  Years Ended
December 31,
 
 
  2016   2015  
 
  (in thousands,
except
percentages)

 

Other Operating Department

             

Revenue:

  $ 5,745   $ 5,028  

Expenses:

    3,279     2,834  

Total other operating department net profit

  $ 2,466   $ 2,194  

Total other operating department net profit %

    42.9 %   43.6 %

        Our other operating departments, rental and other revenue for the year ended December 31, 2016 was $5.7 million, an increase of 14.0% as compared to $5.0 million for the year ended December 31, 2015 primarily due to an increase in occupancy resulting in increased valet parking revenue and increased spa revenues.

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        Our operating departments, rental & other expense for the year ended December 31, 2016 was $3.3 million, an increase of 15.7% as compared to $2.8 million for the year ended December 31, 2015 primarily due to increased occupancy resulting in increased payroll and benefits expense and other operating expenses. Increases in other operating expenses included contract services, promotional costs, laundry, supplies and marketing costs for local awareness.

Other Operating Expenses

        Our other operating expenses include expenses relating directly to the St. Regis Aspen Resort's operations that are not categorized within a revenue-generating department. Significant other operating expenses are discussed below:

        General and Administrative Expenses.    Our general and administrative expenses for the year ended December 31, 2016 were $4.5 million, an increase of 9.8% as compared to $4.1 million for the year ended December 31, 2015. This increase is higher primarily due to salary increases for major department heads of our Hotel Manager whereby, under the terms of our hotel management agreement, we are responsible for reimbursing our Hotel Manager for its personnel costs which we pay out of our operating account. In addition, year over year, we saw increases of $130,000 in credit card commissions, and $100,000 in relocation expenses.

        Marketing and Promotion Expenses.    Our marketing and promotion expenses for the year ended December 31, 2016 were $3.3 million, an increase of 10.0% as compared to $3.0 million for the year ended December 31, 2015 primarily due to increased occupancy and expenses related to the Starwood Preferred Guest program and $80,000 in national marketing fees.

        Repairs and Maintenance.    Our repairs and maintenance expenses for the year ended December 31, 2016 were $1.7 million, a decrease of 5.6% as compared to $1.8 million for the year ended December 31, 2015. This decrease was primarily due to savings on maintenance with the hotel's new boiler systems in place, and savings in painting, decorating and floor coverings, as multiple floors of the hotel were remodeled in 2015.

        Corporate Expenses.    Our corporate expenses for the year ended December 31, 2016 were $1.0 million, an increase of 37.0% as compared to $730,000 for the year ended December 31, 2015. This increase was primarily due to increases of approximately $80,000 in accounting fees and a one-time loss of funds of $475,000 caused by a hacker's impersonation of one of Elevated Returns' employees and, notwithstanding our having proper protocols in place, this hacker was successful due to an unaffiliated third party not properly following these protocols. Following this event, we updated our protocols to implement a more enhanced verification process to mitigate against a similar incident in the future. These increases were partially offset by a decrease in travel reimbursement.

        Utilities Expense.    Our utilities expenses for the year ended December 31, 2016 were $643,000, a decrease of 12.5% as compared to $735,000 for the year ended December 31, 2015. This decrease was primarily due to savings on electric and gas costs with the hotel's new boiler systems in place.

        Management Fees—Related Party Expense.    Our management fees paid to a related party expense for the year ended December 31, 2016 was $768,000, which was an increase of 13.1% as compared to $679,000 for the year ended December 31, 2015. This increase was due to an increase in the related party management annual fee from $679,000 to $768,000 per year as stipulated in a revised contract effective July 2015.

        Hotel Management Fees Expense.    Our hotel management fees expense for the year ended December 31, 2016 was $2.2 million, which was an increase of 37.5% as compared to $1.6 million for the year ended December 31, 2015. This increase was primarily due to our Hotel Manager earning an incentive fee for the first time due to increased revenues year over year. For more information on the fees payable under our hotel management agreement, see "Our Principal Agreements—Hotel Management Agreement."

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        Property taxes.    Our property taxes, for the year ended December 31, 2016 were $928,000, an increase of 1.1% as compared to $918,000 for the year ended December 31, 2015.

        Depreciation.    Our depreciation for the year ended December 31, 2016 increased 4.1% to $5.1 million as compared to $4.9 million for the year ended December 31, 2015. This increase was a result of increased depreciation on approximately $2.3 million in additions to fixed assets during 2016, including capital expenditures at the Hotel totaling $825,000 and new furniture and fixtures totaling $1.7 million.

Other Expenses

        Other expenses include expenses not directly related to the St. Regis Aspen Resort's operations or those incurred at the corporate level. Significant other expenses are discussed below:

        Interest Expense.    Our interest expense for the year ended December 31, 2016 were $5.8 million as compared to $7.3 million for the year ended December 31, 2015. This decrease was primarily due to us refinancing debt in 2015 resulting in a write-off of deferred financing costs and interest rate cap of approximately $1.4 million.

        Related party receivable write-off.    We had no related party receivable write-off included for the year ended December 31, 2016 compared to $330,000 for the year ended December 31, 2015. This write-off in 2015 was with respect to a receivable from a related party, Chefs Club Aspen, which was considered uncollectible.

Non-GAAP Financial Measures

        The following non-GAAP financial measures do not have standardized meanings prescribed by GAAP. Rather, these measures are provided as additional information to complement GAAP measures by providing further understanding of our results of operations from our management's perspective. Accordingly, they should not be considered in isolation or as a substitute for analysis of our financial information reported under GAAP. Hotel NOI, EBITDA, Adjusted EBITDA, FFO, and Adjusted FFO have important limitations as analytical tools and you should not consider them in isolation, as indicative of the cash available to us to make dividend payments or as a substitute for analysis of our results under GAAP. In addition, because other companies may calculate these non-GAAP measures differently than we do, these measures may not be comparable to measures reported by other companies. Moreover, our definition of these measures in this Offering Circular may not necessarily be the same as those we use for purposes of establishing covenant compliance under our financing agreements or for other purposes.

Hotel Net Operating Income (Hotel NOI)

        We define Hotel NOI as net income (loss), as determined under GAAP, plus corporate expenses (which are not related to hotel operations), management fees, depreciation and amortization, interest expense and financing charges, income tax expenses, acquisition costs, organizational and offering costs, impairment of long-lived assets, and other non-operating expenses and by subtracting non-operating income. Hotel NOI is not a measure of performance calculated in accordance with GAAP and is an internal performance measure as we believe it provides useful information regarding our financial condition and results of operations because, when compared across periods, it reflects the impact on operations from trends in occupancy rates and hotel operating costs on an unleveraged basis and therefore providing perspective not immediately apparent from GAAP net income. For example, interest expense is not necessarily linked to the operating performance of the hotel or real estate asset. Similarly, management fees, at the hotel or asset management level, vary among properties based on ownership and operating structures and other non-comparable terms and characteristics. In addition,

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because of historical cost accounting and useful life estimates, depreciation and amortization may distort operating performance measures at the property level.

        We believe Hotel NOI is useful to investors and management in evaluating our operating performance because:

        There are material limitations to using a non-GAAP measure such as NOI, including the difficulty associated with comparing results among more than one company and the inability to analyze certain significant items, including depreciation and interest expense, that directly affect our financial performance. We compensate for these limitations by considering the economic effect of the excluded expense items independently as well as in connection with our analysis of net income (loss). Hotel NOI should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP, such as total revenues, income from operations and net income (loss).

        The following table presents a reconciliation of net income (loss) to Hotel NOI for the periods presented.

 
   
   
   
   
  Pro forma
as of and
for the nine
months ended
September 30,
2017
   
 
 
  Nine Months Ended
September 30,
  Years Ended
December 31,
  Pro forma
as of and
for the year ended
December 31,
2016
 
(in thousands)
  2017   2016   2016   2015  

Net income (loss)

  $ 163   $ (330 ) $ 91   $ (3,152 ) $ (2,736 ) $ (4,795 )

Add

                                     

Depreciation

    3,786     3,851     5,127     4,878     7,220     9,367  

Interest expense

    5,230     4,318     5,792     7,273     5,366     6,335  

Management fees—related party

    1,076     576     768     679     226     302  

Hotel management fees

    2,237     1,470     2,164     1,558     2,237     2,163  

Hotel NOI

  $ 12,492   $ 9,885   $ 13,942   $ 11,236   $ 12,313   $ 13,372  

EBITDA and Adjusted EBITDA

        We define earnings before interest, taxes, depreciation and amortization ("EBITDA") as net income (loss), as determined under GAAP, plus interest expense, income taxes, depreciation and amortization expense. We define "Adjusted EBITDA" as EBITDA plus acquisition costs, organizational

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and offering costs, equity-based compensation expense, impairment of long-lived assets with adjustments for non-recurring, non-operating income and expenses. These further adjustments eliminate the impact of items that we do not consider indicative of our core operating performance. In evaluating EBITDA and Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in this presentation. Our presentation of EBITDA and Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

        We present EBITDA and Adjusted EBITDA because we believe they assist investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. EBITDA and Adjusted EBITDA have limitations as an analytical tool. Some of these limitations are:

        We compensate for these limitations by considering the economic effect of the excluded expense items independently as well as in connection with our analysis of net income (loss). EBITDA and Adjusted EBITDA should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP, such as total revenues, income from operations, and net income (loss).The following table presents a reconciliation of net income (loss) to EBITDA and Adjusted EBITDA for the periods presented.

 
   
   
   
   
  Pro forma
as of and
for the nine
months ended
September 30,
2017
  Pro forma
as of and
for the year
ended
December 31,
2016
 
 
  Nine Months
Ended September 30,
  Years Ended
December 31,
 
(in thousands)
  2017   2016   2016   2015  

Net income (loss)

  $ 163   $ (330 ) $ 91   $ (3,152 ) $ (2,736 ) $ (4,795 )

Add:

                                     

Depreciation

    3,786     3,851     5,127     4,878     7,220     9,367  

Interest expense

    5,230     4,318     5,792     7,274     5,366     6,335  

EBITDA and Adjusted EBITDA(1)

  $ 9,179   $ 7,839   $ 11,010   $ 9,000   $ 9,850   $ 10,907  

(1)
EBITDA and Adjusted EBITDA are the same as there are no additional adjustments for the periods presented.

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FFO and Adjusted FFO

        Funds from operations, or FFO, is a widely used performance measure for real estate companies and REITs and is provided here as a supplemental measure of our operating performance. The April 2002 National Policy Bulletin of National Association of Real Estate Investment Trusts, or NAREIT, which we refer to as the White Paper, as amended, defines FFO as net income (as determined under GAAP), excluding gains (or losses) from sales of real estate and related impairment charges, plus real estate depreciation and amortization, and after adjustments for unconsolidated partnerships and joint ventures. We also include amortization in our definition of FFO because we believe amortization is analogous to real estate depreciation, as the value of such intangibles is inextricably connected to the real estate acquired. We define Adjusted FFO as FFO, as further adjusted to eliminate the impact of certain items that we do not consider indicative of our core operating performance. These further adjustments consist of acquisition costs, organizational and offering costs, gains on debt forgiveness and gains (losses) on early extinguishment of debt.

        Management uses FFO and Adjusted FFO as a key performance indicator in evaluating operations. Given the nature of our business as a real estate owner and operator, we consider FFO and Adjusted FFO as key supplemental measures of our operating performance that are not specifically defined by GAAP. We believe that FFO and Adjusted FFO are useful to management and investors as starting points in measuring our operational performance because FFO and Adjusted FFO exclude various items included in net income (loss) that do not relate to or are not indicative of our operating performance such as gains (or losses) from sales of properties and depreciation, which can make periodic and peer analyses of operating performance more difficult. Our computation of FFO and Adjusted FFO may not be comparable to FFO reported by other REITs or real estate companies.

        FFO and Adjusted FFO should be considered in addition to, but not as substitutes for, other measures of financial performance reported in accordance with GAAP, such as total revenues, operating income and net income (loss). FFO and Adjusted FFO do not represent cash generated from operating activities determined in accordance with GAAP and are not a measure of liquidity or indicators of our ability to make cash distributions. We believe that to further understand our performance, FFO and Adjusted FFO should be compared with our reported net income (loss) and considered in addition to cash flows computed in accordance with GAAP, as presented in our financial statements.

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        The following table presents a reconciliation of net income (loss) to FFO and Adjusted FFO for the periods presented.

 
   
   
   
   
  Pro forma
as of and
for the nine
months ended
September 30,
2017
   
 
 
  Nine months
Ended September 30,
  Years Ended
December 31,
  Pro forma
as of and
for the year ended
December 31,
2016
 
(in thousands)
  2017   2016   2016   2015  

Net income (loss)

  $ 163   $ (330 ) $ 91   $ (3,152 ) $ (2,736 ) $ (4,795 )

Add

                                     

Depreciation

    3,786     3,851     5,127     4,878     7,220     9,367  

Amortization of lending costs

    301     309     413     352     400     808  

FFO

    4,250     3,830     5,631     2,078     4,884     5,380  

Add

                                     

Write-off of debt discount included in interest expense

                871          

Sale of interest rate cap

                571          

Third party financing expenses

    243                 243     243  

Fair value adjustments on interest cap

    57     17     17         57     17  

Adjusted FFO

  $ 4,550   $ 3,847   $ 5,648   $ 3,520   $ 5,184   $ 5,640  

Quantitative and Qualitative Disclosure About Market Risk

Interest Rate and Hedging Risk

        Prevailing market interest rates are sensitive to many factors, including governmental, monetary, tax policies, domestic and international economic conditions, and political or regulatory matters beyond our control. Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flows and to lower overall borrowing costs. To achieve these objectives, we will seek to borrow primarily at fixed rates or variable rates with the lowest margins available. With respect to variable rate financing, we will assess interest rate risk by identifying and monitoring changes in interest rate exposures that may adversely impact expected future cash flows and by evaluating hedging opportunities. As a result, we may use derivative financial instruments, such as interest rate swaps or caps, to manage, or hedge, interest rate risks related to our borrowings. We do not engage in complex or esoteric derivative forms or use derivatives for trading or speculative purposes. We also use methods which incorporate standard market conventions and techniques, such as discounted cash flow analysis and option pricing models to determine fair value. All methods of estimating fair value result in general approximation of value and such value may or may not actually be realized.

        Currently and upon the completion of this offering and the contribution transactions, we have and expect to have approximately $120.0 million of debt outstanding at a variable interest rate of 4.55% plus the greater of (i) 0.99% or (ii) one-month LIBOR. In connection with this debt, we will assume a rate cap agreement between 315 East Dean Associates, Inc. and SMBC Capital Markets, Inc. upon the completion of this offering. The rate cap agreement hedges against a rise in one-month LIBOR above 3.0%, and terminates on April 7, 2019 with no adjustment. Currently, one-month LIBOR is above 0.99%. So long as the rate cap does not apply, if one-month LIBOR were to increase or decrease by 5 basis points, the net increase or decrease in interest expense to us on our variable-rate debt would be $60,000 per year based on our current outstanding balance of $120.0 million.

        Interest rate risk amounts were determined by considering the impact of hypothetical interest rates on our financial instruments. This sensitivity analysis does not consider the effect of any change in overall economic activity that could occur. Further, in the event of a change of that magnitude, we may

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take actions to further mitigate our exposure to the change. However, due to the uncertainty of the specific actions that would be taken and their possible effects, these analyses assume no changes in our financial structure.

Liquidity and Capital Resources

        Upon the completion of this offering and the contribution transactions, we expect to have approximately $7.0 million in cash on hand. This estimate assumes $33.5 million in net proceeds from this offering (assuming the use of the proceeds of this offering as described under "Use of Proceeds" and the payment by our Predecessor of 100% of certain of our expenses incurred in this offering). We believe we have sufficient current liquidity to meet financial obligations for at least the next 12 months.

        Our principal source of funds to meet our cash requirements, including distributions to stockholders, is our operating cash flow. Historically, and in the future, our cash flow has been generated primarily from hotel operations.

        Cash flow from hotel operations is subject to all operating risks common to the hotel industry, including:

&n