What Happened to Hospitality Investors Trust (ARC Hospitality)? $25 Shares, a Brookfield Rescue and One $6-Capped CVR

The REIT in one paragraph

American Realty Capital Hospitality Trust was one of the non-traded REITs sponsored by the American Realty Capital family. It opened its offering on January 7, 2014 at $25.00 a share (up to 80 million shares, plus a dividend reinvestment plan), bought select-service hotels flagged by Hilton, Marriott and Hyatt through seven portfolio purchases between March 2014 and April 2017, and at its largest reported count owned 144 hotels with 17,321 rooms in 33 states (December 31, 2018). The offering was suspended on November 15, 2015 and formally ended on January 7, 2017. On March 31, 2017, when Brookfield's money arrived, it took its current name, Hospitality Investors Trust, and dropped its external advisor. About 19,000 stockholders of record still held its 39.1 million shares at the end of 2020.

Where the $885.5 million went

The FY2016 10-K is unusually specific about the use of the offering money. Through December 31, 2016:

The purchase-price line adds the four items the 10-K lists ($221.7, $53.2, $39.3 and $18.5 million) and the last line adds $6.2 million of fees and $1.7 million of repurchases (our sums); the rows total $885.5 million. The selling commission was up to 7.0% of the price and the dealer-manager fee up to 3.0%, which is why a $25 share started life with roughly $22.50 or less invested (our arithmetic). The $41.1 million of lost deposits came from hotel contracts the REIT could not finish paying for once fundraising stopped.

Distributions: two years of cash, all of it from new investors' money

In dollars: $1.95 million of cash distributions in 2014, $19.15 million in 2015 and $11.21 million in 2016, with another $1.52, $18.15 and $9.47 million reinvested through the DRIP. The 10-K tables show cash flow from operations covering none of it. A holder who bought in time for the first record month (April 2014) and took cash collected $3.40 a share over the 24 months (our arithmetic); later buyers got less. After January 2017, Brookfield's approval rights barred any common distribution above $0.525 a share a year, and none was ever paid again.

Every estimated NAV, and the exits offered against it

The tenders were small by design: the 2017 offer bought 0.29% of the shares. When the board opened the $9.00 repurchase program, its own 8-K said the price was 35.1% below the $13.87 NAV and that “the Board strongly recommends that Stockholders do not request that the Company repurchase their shares”. In hindsight the 211,154 shares that ignored the advice received more than anyone who held on. (For how other non-traded REITs have run tenders, see our non-traded REIT tender offer tracker.)

The last NAV shows why a hotel REIT with this much leverage was fragile. Per share as of December 31, 2019, the hotels were valued at $50.55 and the debt at $37.30; a fall of about 17% in hotel values, with debt unchanged, would have erased the $8.35 of equity (our arithmetic).

The 2017 Brookfield deal: senior money at $14.75

With its offering closed, deposits lost and hotels needing brand-mandated renovations, the REIT signed a Securities Purchase, Voting and Standstill Agreement with Brookfield Strategic Real Estate Partners II on January 12, 2017. The terms, from the 8-K and the 10-Ks:

The Class C coupons were costly for the common holders: $20.8 million in 2018, $46.3 million in 2019 and $53.3 million in 2020, all deducted before the net loss attributable to common stock, which reached $223.99 million ($5.72 a share) in 2020. The redemption date mattered too. If the REIT could not repay $441.4 million plus growing PIK units in 2022, Brookfield's special general partner could start selling the hotels.

COVID, and the road to a prepackaged Chapter 11

The portfolio was already shrinking before the pandemic: impairments of $26.4 million in 2018 and $114.6 million in 2019, and 20 hotels sold in 2019 and 23 more in 2020. Then travel stopped.

At December 31, 2020 the company had $1.3 billion of mortgage and mezzanine debt on the hotels and $441.4 million of Class C liquidation preference ahead of its common stock. Brookfield agreed in December 2020 and March 2021 to take its cash coupons in additional units at 12.5% instead, which kept cash in the hotels and grew its claim. The FY2020 10-K, filed March 30, 2021, told stockholders that a prepackaged bankruptcy was “expected to place our common stockholders at significant risk of losing all or substantially all of the value of their investment in our common stock”, and the Q1 2021 10-Q disclosed “substantial doubt” about the company's ability to continue as a going concern.

The bankruptcy covered only the parent and the operating partnership. The hotel-owning subsidiaries, their mortgage lenders, trade creditors and franchisors were left whole: the plan reinstated or paid in full every trade and other claim. The only parties whose position changed were Brookfield (preferred and DIP loan into all the new stock) and the common stockholders (stock into CVRs). The common class, Class 6, “were not solicited because such holders were deemed to have rejected the Plan”, the confirmation order says, and the court approved it anyway under the cramdown test, finding that the plan does not “discriminate unfairly” and is “fair and equitable” with respect to Class 6.

One clerical point if you are searching court records: the July 1, 2021 8-K prints the case number as 21-10381; the confirmation order and the plan say 21-10831, which is the one to use.

What common holders received: one CVR per share, and the waterfall in front of it

Each share of old common stock outstanding at the effective date, including 1,005,327.416 shares issued that day to settle employee and director RSUs, became one CVR. Brookfield's own 37,620 old shares got none. That produced 40,050,332.091 CVRs (39,082,624.675 + 1,005,327.416 - 37,620; our arithmetic matches the 8-K).

Read the tiers together: Brookfield's roughly $425 million (our sum of the two senior amounts) has to earn 12.5% to 15% a year before CVR holders get more than a 6% sliver. At those rates the hurdle grows by more than $50 million a year in the early years (our arithmetic: 12.5% of $395.3 million is about $49 million). To pay every CVR its full $6.00 would take about $240.3 million for CVR holders (our arithmetic: 40,050,332 x $6.00). The 8-K that announced the deal put it plainly: “The potential value of the CVRs is speculative, and the CVRs may ultimately have no or minimal value.”

What $10,000 at the offering became

Most of the money came in later: total proceeds went from $252.9 million at December 31, 2014 to $902.9 million a year later, so the typical buyer received fewer months of cash than this example. Anyone who sold into the 2018 repurchase program at $9.00 got more for each share than the CVR cap can ever pay.

June 30, 2026 has passed: where the CVRs stand

The CVR agreement set the Initial Maturity Date at June 30, 2026. To move it to June 30, 2028, the board had to notify Computershare “no later than ten (10) days prior to the Initial Maturity Date”, and the company then had to make the notice available to holders, by first-class mail or on its website. The agreement adds that a failure to notify holders does not invalidate the extension.

What the public record shows as of October 6, 2026:

• HIT has filed nothing with the SEC since its Form 15 on July 1, 2021, so there is no 8-K on the maturity date.
• Its website, hitreit.com, still posts the CVR agreement, the October 2021 amendment notice and an annual officer's certificate dated March 27, 2026 stating that the company “is not in default in the performance or observance in any material respect” of the agreement. It posts no notice of an extension, a calculation or a payment.
• The financial information on the CVR pool is not public: under Section 4.3 it goes to holders through a password-protected Computershare site, and holders must agree to keep it confidential.

So we cannot tell you from public documents whether the maturity was extended to 2028 or whether a final calculation came out at zero. A CVR holder can find out: the notice, if any, would have gone to the address on the CVR register, and the confidential site has the pool's annual and quarterly statements.

The lawsuits: the money went to the company

Two cases from the American Realty Capital era are described in the FY2020 10-K. A stockholder derivative suit against the former advisor, its affiliates and some current and former officers and directors (S.D.N.Y. No. 1:18-cv-01757) settled in September 2020: the company, not its stockholders, received $15,181,108.47 in cash (mostly from directors-and-officers insurers) and 83,504 shares handed back by defendants, and plaintiff's counsel received $2,250,000. A separate putative class action alleging fraud in the sale of the shares was dismissed with prejudice on June 18, 2020 and later settled with its plaintiff, who withdrew the appeals. The filings describe no class recovery paid to stockholders, and the plan's mutual releases, granted on the effective date, cover the company and Brookfield's conduct before and during the case.

What a former holder can do with this

• Find your CVRs. They sit with Computershare (1-866-638-5572; computershare.com/HITREIT), or in your brokerage account if your broker held the shares. Because they cannot be sold, there is no market price to look up.
• Ask Computershare two questions: whether the board extended the maturity to June 30, 2028, and whether any calculation certificate has been posted. Register for the confidential site if you want the pool's financial statements.
• Do not throw away the paperwork. If a payment ever comes, it goes to the registered holder; an estate or a trust can receive CVRs under the transfer exceptions.
• On taxes, general facts only. The company said in its 8-Ks that the $6.00 cap “may allow” a holder with a basis above $6.00 to claim a loss for the difference, but that the law is uncertain and holders should ask their own tax advisers. IRS Publication 550 says worthless securities are reported on Form 8949 and that a refund claim for a worthless-security loss can be filed within 7 years of the original due date of the return for the year the security became worthless, instead of the usual three. Which year applies to HIT shares is a question for a tax professional; our tax-loss guide covers the basics.
• If you still hold other non-traded REITs: the pattern here (offering money paying distributions, an outside investor buying senior paper below NAV, a prepackaged plan) is worth recognizing. Our listing discount study and the what happened to United Development Funding case show other endings, and American Strategic Investment is another REIT from the same American Realty Capital lineage.

This is analysis of public documents, not investment, legal or tax advice.

FAQ

Sources, read on October 6, 2026: Hospitality Investors Trust's Forms 10-K for 2015 (accession 0001583077-16-000021), 2016 (0001583077-17-000007), 2017 (0001583077-18-000002), 2018 (0001583077-19-000002), 2019 (0001437749-20-006431) and 2020 (0001437749-21-007683); Form 10-Q for the quarter ended March 31, 2021 (0001437749-21-012246); 8-Ks of January 13, 2017 (0001144204-17-002068), September 24, 2018 (0001144204-18-050507), February 28, 2019 (0001144204-19-011191), April 21, 2020 (0001104659-20-049273), May 19, 2021 (0001104659-21-069107) and July 1, 2021 (0001104659-21-087898) with its exhibits: the confirmation order of the U.S. Bankruptcy Court for the District of Delaware in In re Hospitality Investors Trust, Inc., No. 21-10831, the confirmed plan and the CVR agreement; Schedules TO-I and amendments of October 25 and December 26, 2017 and May 14 and July 3, 2018; Form 15-12G of July 1, 2021 (0001104659-21-087947); the notice to CVR holders of October 15, 2021 and the officer's certificate of March 27, 2026 posted on hitreit.com; and IRS Publication 550. Per-share totals, percentages, the $10,000 example and the waterfall sums are our arithmetic. This is analysis of public documents, not investment, legal or tax advice.