Filed Pursuant to Rule 424(b)(3)
 Registration No. 333-217578​

PROCACCIANTI HOTEL REIT, INC.
SUPPLEMENT NO. 6 DATED NOVEMBER 19, 2018
TO THE PROSPECTUS DATED AUGUST 15, 2018

This Supplement No. 6 supplements, and should be read in conjunction with, the prospectus of Procaccianti Hotel REIT, Inc., dated August 15, 2018, and supersedes and replaces Supplement No. 5 to the prospectus, dated November 16, 2018, which superseded and replaced all prior supplements to the prospectus. Unless otherwise defined in this prospectus supplement, capitalized terms used in this prospectus supplement shall have the same meanings as set forth in the prospectus.

The purpose of this prospectus supplement is to describe the following:

(1)

the status of our initial public offering (the “Offering”);

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(2)

the revised primary offering price per share of our Class K-I shares of common stock (“K-I Shares”);

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(3)

an increase in the selling commissions payable to our dealer manager with respect to K Shares purchased in the primary offering portion of the Offering;

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(4)

an update to our advisor’s obligation to purchase A Shares;

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(5)

the purchase of additional A Shares by TPG Hotel REIT Investor, LLC, an affiliate of our advisor, in order to fund organizational and offering expenses associated with shares purchased in the Offering;

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(6)

updates to the cover page of our prospectus;

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(7)

updates to the “Estimated Use of Proceeds” section of our prospectus;

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(8)

updates to the management compensation tables;

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(9)

updates to the “Plan of Distribution” section of our prospectus;

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(10)

updates to the “How to Subscribe” section of our prospectus;

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(11)

an updated notice to Pennsylvania and Washington investors;

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(12)

additional investor suitability standards applicable to North Dakota and Puerto Rico investors;

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(13)

the declaration of distributions to our holders of K Shares and distributions paid through October 2018;

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(14)

updates regarding our three hotel properties and associated borrowings and hotel management agreements;

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(15)

an update to our organizational structure chart;

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(16)

updates to our risk factors;

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(17)

updates to the “Questions and Answers About This Offering” section of our prospectus;

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(18)

an update to our prior performance summary;

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(19)

the amendment and restatement of our share repurchase program, effective November 30, 2018;

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(20)

updates to the “Experts” section of our prospectus;

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(21)

Management’s Discussion and Analysis of Financial Condition and Results of Operations section, substantially the same as that which was filed in our Quarterly Report on Form 10-Q on November 14, 2018;

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(22)

updated financial information;

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(23)

financial information for a significant hotel acquisition; and

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(24)

a revised form of our subscription agreement.

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Status of this Offering

Our registration statement on Form S-11 for our initial public offering, or the Offering, of $550,000,000 of shares of Class K common stock, or K Shares, Class K-I common stock, or K-I Shares, and Class K-T common stock, or K-T Shares, consisting of up to $500,000,000 of K Shares, K-I Shares and K-T Shares in our primary offering and up to $50,000,000 of K Shares, K-I Shares and K-T Shares pursuant to our distribution reinvestment plan, was declared effective by the U.S. Securities and Exchange Commission, or SEC, on August 14, 2018. As of November 15, 2018, we had accepted investors’ subscriptions for and issued approximately 21,700 K Shares, 11,158 K-I Shares, and 0 K-T Shares in this Offering, resulting in receipt of gross proceeds of approximately $217,000, $106,000, and $0.00, respectively, for total gross proceeds in this Offering of  $323,000.

As previously disclosed, we terminated our private offering of up to $150,000,000 in K Shares and Units (a “Unit” consists of four K Shares and one A Share) prior to the SEC effective date of our Registration Statement on August 14, 2018. At the termination of our private offering, we had received aggregate gross offering proceeds of approximately $15,582,755 from the sale of approximately 1,253,617 K Shares and 318,409 A Shares, which includes 295,409 A Shares purchased by TPG Hotel REIT Investor, LLC, an affiliate of our advisor, to fund organizational and offering expenses associated with the K Shares and Units sold in our private offering. Further, as disclosed below under “A Shares Purchased by TPG Hotel REIT Investor, LLC,” TPG Hotel REIT Investor, LLC purchased an additional $1,500,000 in A Shares on October 26, 2018 pursuant to a private placement.

Therefore, as of November 15, 2018, we had received total gross proceeds of approximately $17,405,755 from the sale of K Shares, K-I Shares and A Shares in all offerings.

Revised Primary Offering Price Per K-I Share

We will offer K-I Shares in our primary offering at $9.30 per K-I Share. Accordingly, all references to a $9.50 per K-I Share offering price are hereby superseded and replaced with $9.30. K-I Shares issued pursuant to our distribution reinvestment plan will continue to be issued at $9.50 per K-I Share.

Increased Selling Commissions With Respect to K Shares

On November 16, 2018, we executed the First Amendment to Dealer Manager Agreement with S2K Financial LLC, our dealer manager, and Procaccianti Hotel REIT, L.P., or our operating partnership, to increase the selling commissions payable to the dealer manager on account of the sale of K Shares in the primary offering from up to 5.0% to up to 7.0% of the gross proceeds from the sale of K Shares. All references to selling commissions payable to the dealer manager with respect to K Shares sold in our primary offering are hereby updated accordingly. The dealer manager will reallow all selling commissions to participating broker-dealers.

Update to our Advisor’s Obligation to Purchase A Shares

As a result of the revised offering price per K-I Share in our primary offering, all references to our advisor’s obligation to purchase A Shares are hereby superseded and replaced in their entirety as follows:

Our advisor and its affiliates have agreed to purchase A Shares in a private placement at the applicable estimated NAV per K Share in order to provide us with funds sufficient to pay the selling commissions, dealer manager fees, stockholder servicing fees, and other organization and offering expenses related to this offering and also to account for the difference between the applicable NAV per K-I Share and the applicable offering price per K-I Share and any amount equal to any discount to the initial offering price of K-I Shares, K Shares, and K-T Shares (excluding volume discounts).

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A Shares Purchased by TPG Hotel REIT Investor, LLC

On October 26, 2018, TPG Hotel REIT Investor, LLC, an affiliate of our advisor, completed the purchase of an aggregate of  $1,500,000 in shares of our Class A common stock, or A Shares, which equals 150,000 A Shares, par value $0.01 per share, pursuant to a private placement exempt from the registration requirements of the Securities Act of 1933, as amended. Such purchase was made in order to fund organizational and offering expenses associated with the K Shares, K-I Shares and K-T Shares sold in the Offering. Therefore, as of November 7, 2018, we had received total gross proceeds of  $4,454,095 from the sale of approximately 445,409 A Shares purchased by TPG Hotel REIT Investor, LLC to fund organizational and offering expenses in both our private offering and the Offering. All references in the prospectus to the total amount of A Shares sold to our advisor and its affiliates are hereby updated accordingly.

Cover Page of the Prospectus

The table on the cover page of our prospectus and all similar discussions appearing throughout our prospectus will be superseded and replaced in their entirety as follows:

(1)

Assumes we sell $500,000,000 in shares in our primary offering and $50,000,000 in shares in our DRIP pursuant to the allocations among the share classes set forth in footnote (6) below. We reserve the right to reallocate the amount of K-I Shares, K Shares and K-T Shares being offered among the K-I Shares, K Shares and K-T Shares registered, and between the primary offering and the DRIP.

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(2)

No selling commissions or dealer manager fees will be paid on shares of any class sold under the DRIP.

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(3)

Our advisor and its affiliates have agreed to purchase A Shares at a price equal to the applicable estimated NAV per K Share in a private placement in order to provide us with funds sufficient to pay the selling commissions, dealer manager fees, stockholder servicing fees and other organization and offering expenses related to the K-I Shares, K Shares and K-T Shares in our primary offering. In addition, we will allocate proceeds from the sale of A shares in amounts that represent the difference between (i) the applicable estimated NAV per K-I Share and the offering price of K-I Shares sold in our primary offering and (ii) any discount to the initial offering price of K-I Shares, K Shares and K-T Shares arising from reduced or waived selling commissions (other than reduced selling commissions for volume discounts) or dealer manager fees. Therefore, proceeds from the sale of K-I Shares, K Shares and K-T Shares will not be used to pay organization and offering expenses in connection with K-I Shares, K Shares and K-T Shares, and the proceeds before expenses to us for K-I Shares, K Shares and K-T Shares will be $9.30 per K-I Share (not taking into account proceeds allocated from A Shares), $10.00 per K Share and $10.00 per K-T Share. See the “Plan of Distribution” section of this prospectus.

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(4)

As provided in footnote (3) above, we will allocate proceeds from the sale of A Shares to our advisor and its affiliates in a private placement in amounts that represent the difference between the applicable estimated NAV per K-I Share and the offering price of K-I Shares sold in our primary offering to ensure that we receive the applicable estimated NAV per K-I Share, in proceeds before expenses in connection with each K-I Share.

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(5)

The table excludes the stockholder servicing fee for K-T Shares sold in our primary offering, which will be paid over time from proceeds of A Shares sold to our advisor and its affiliates in a private placement and other sources. With respect to each K-T Share sold in our primary offering, we will pay our dealer manager a stockholder servicing fee that accrues daily equal to 1.0%, annualized, of the amount of the estimated NAV per K-T Share sold in our primary offering. The aggregate selling commissions, dealer manager fees and stockholder servicing fees payable with respect to all classes will not exceed the 10% limitation on underwriting compensation imposed by FINRA.

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(6)

Assumes an allocation of the shares in our primary offering as follows: 25.00% of K-I Shares, 25.00% of K Shares, and 50.00% of K-T Shares. The proceeds before expenses amount of  $500,000,000 for the maximum primary offering and $550,000,000 for the total maximum offering (primary and DRIP) accounts for the allocation of the proceeds of the sale of A Shares to our advisor and its affiliates in a private placement towards (i) selling commissions, dealer manager fees, stockholder servicing fees and other organization and offering expenses in our primary offering, (ii) the difference between the applicable estimated NAV per K-I Share and the applicable offering price of K-I Shares sold in our primary offering and (iii) any discount to the initial offering price of K-I Shares, K Shares and K-T Shares arising from reduced or waived selling commissions (other than reduced selling commissions for volume discounts) or dealer manager fees.

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Estimated Use of Proceeds

The table contained in the section entitled “Estimated Use of Proceeds” on page 98 of our prospectus is superseded and replaced in its entirety as follows:

(1)

The selling commissions, dealer manager fees, stockholder servicing fee (K-T Shares only), and organization and offering expenses payable on account of the sale of the K-I Shares, K Shares and K-T Shares sold to investors in this offering generally will be paid from the proceeds of the sale of A Shares to our advisor and its affiliates in a private placement. For avoidance of doubt, the stockholder servicing fee payable in connection with K-T Shares sold in the primary offering is not paid with offering proceeds from K-T Shares and is not paid from amounts otherwise distributable to holders of K-T Shares.

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(2)

Reflects the estimated amount of A Shares we would need to sell to our advisor and its affiliates in a private placement, based on the allocations in the table above, in order to fund the difference between the applicable estimated NAV per K-I Share and the offering price per K-I Share sold in our primary offering so that net proceeds available for investment with respect to K-I Shares equal the applicable estimated NAV per K-I Share.

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(3)

Acquisition expenses may include customary third-party acquisition costs which are typically included in the gross purchase price of the real estate investments we acquire or are paid by us in connection with such acquisitions. These third-party acquisition costs include legal, accounting, consulting, travel, appraisals, engineering, due diligence, option payments, title insurance and other costs and expenses relating to potential acquisitions regardless of whether the property is actually acquired. The actual amount of acquisition expenses cannot be determined at the present time and will depend on numerous factors, including the type and jurisdiction of the real estate investment acquired, the legal structure of the transaction in which the real estate investment is acquired, the aggregate purchase price paid to acquire the real estate investment and the number of real estate investments acquired. For purposes of this table, we have assumed acquisition expenses will constitute 1.0% of net proceeds from

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the sale of K-I Shares, K Shares and K-T Shares. As further described in the “Management Compensation — Acquisition Fee — Our Advisor and our Service Provider” section beginning on page 39 of the prospectus, the payment of the 1.5% acquisition fee to our advisor is deferred until the occurrence of a liquidation event. In addition, upon liquidation event, all of the deferred acquisition fees plus all interest accrued thereon will be paid to the advisor only after the liquidation preference on our K Shares, K-I Shares and K-T Shares and parity securities has been paid in full to all holders of K Shares, K-I Shares and K-T Shares and parity securities and all accrued and unpaid asset management fees and all accrued interest thereon have been paid in full. Therefore, an estimated acquisition fee amount is not included in the table above.

(4)

We may incur capital expenses relating to improvements of our real property. At the time we make each investment, we will establish estimates of the capital needs of such investment through the anticipated holding period of the investment. We do not anticipate that we will establish a permanent reserve for expenses relating to an investment through its anticipated holding period. However, to the extent that we have insufficient cash for such purposes, we may establish reserves from gross offering proceeds, out of cash flow generated by our investments, or out of the net cash proceeds received by us from any sale or payoff of our investments.

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(5)

Until required in connection with investment in a portfolio of hospitality assets, substantially all of the net proceeds of our offering and, thereafter, our working capital reserves, may be invested in short-term, highly liquid investments, including government obligations, bank certificates of deposit, short-term debt obligations and interest-bearing accounts or other authorized investments as determined by our board of directors.

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(6)

We expect that organization and offering expenses will be 1.5% of offering proceeds, however, this is only an estimate. Should organization and offering expenses exceed 1.5% of offering proceeds, we will sell additional A Shares to our advisor and its affiliates in a private placement to pay such excess organization and offering expenses, subject to the limitation that our selling commissions, dealer manager fees and the other organization and offering expenses do not exceed 15% of the gross proceeds from this offering.

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(7)

No selling commissions, dealer manager fees, or stockholder servicing fees are payable in connection with shares sold pursuant to our DRIP.

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Management Compensation Table

The following rows and footnotes supersede and replace the corresponding rows and footnotes in the management compensation tables contained in the sections of our prospectus entitled “Prospectus Summary — Compensation to Our Advisor and its Affiliates” beginning on page 37 of the prospectus and “Management Compensation” beginning on page 134 of the prospectus:

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(1)

In order to provide the maximum amount of selling commissions, dealer manager fees and other organization and offering expenses that may potentially be paid in connection with the offering, the calculations relating to the maximum amounts of selling commissions, dealer manager fees and other organization and offering expenses assume that a maximum amount of  $500,000,000 in K Shares are sold in the primary offering and $57,500,000 in A Shares are sold to our advisor and its affiliates in a private placement to pay the related selling commissions, dealer manager fees and other organization and offering expenses. As described under “Description of Capital Stock — A Shares — Advisor’s Obligation to Purchase A Shares”, our advisor or its affiliates will be obligated to purchase A Shares from us (at a price equal to the applicable estimated NAV per K Share) in a private placement in an aggregate amount sufficient to fund our payment of our organization and offering expenses, including the selling commissions, dealer manager fees, stockholder servicing fees, and expense reimbursements payable to the dealer manager, subject to certain limitations.

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(2)

The per share purchase price for shares of shares in our primary offering will be $9.30 per K-I Share, $10.00 per K Share and $10.00 per K-T Share (which, in each case, includes the maximum amount allowed to be charged for commissions and fees, subject to certain discounts as described in “Plan of Distribution — Compensation of Dealer Manager and Participating Broker-Dealers” and “Plan of Distribution — Volume Discounts”). In determining the amount of selling commissions and dealer manager fees, we have assumed the sale of K-I Shares at a purchase price of  $9.30 per K-I Share, the sale of K Shares at a purchase price of  $10.00 per K Share, and the sale of K-T Shares at a purchase price of  $10.00 per K-T Share.

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Plan of Distribution

The following information supersedes and replaces in its entirety the first paragraph of the section entitled “Plan of Distribution — The Offering” on page 233 of the prospectus:

We are offering up to $500,000,000 in K-I Shares, K Shares and K-T Shares to the public pursuant to our primary offering and up to $50,000,000 in K-I Shares, K Shares and K-T Shares to our stockholders pursuant to our DRIP. The offering prices and the total dollar amount available for purchase per class in our primary offering are as follows: $9.30 per K-I Share (up to $125,000,000 in shares), $10.00 per K Share (up to $125,000,000 in shares), and $10.00 per K-T Share (up to $250,000,000 in shares). The offering prices and the total dollar amount available for purchase pursuant to our DRIP are as follows: $9.50 per K-I Share (up to $12,500,000 in shares), $9.50 per K Share (up to $12,500,000 in shares), and $9.50 per K-T Share (up to $25,000,000 in shares). We reserve the right to reallocate the amount of K-I Shares, K Shares and K-T Shares being offered among the K-I Shares, K Shares and K-T Shares registered, and between the primary offering and the DRIP.

The following information supersedes and replaces in its entirety the section entitled “Plan of Distribution — Compensation of Dealer Manager and Participating Broker-Dealers — Selling Commissions” on page 234 of the prospectus:

Selling Commissions

Except as provided below, the dealer manager will receive up-front selling commissions of up to 7% of the gross offering proceeds from the sale of K Shares and up-front selling commissions of up to 3% of the gross offering proceeds from the sale of K-T Shares; provided, however, that no selling commissions will be

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paid with respect to any K Shares or K-T Shares sold to our advisor or the Service Provider of their respective affiliates and no selling commissions will be paid with respect to shares of any class sold pursuant to our DRIP. We will not pay selling commissions to the dealer manager in connection with K-I Shares. The dealer manager will reallow all selling commissions to participating broker-dealers.

The following information supersedes and replaces in its entirety the section entitled “Plan of Distribution — Compensation of Dealer Manager and Participating Broker-Dealers — Limitations on Organization and Offering Expenses” on page 235 of the prospectus:

Limitations on Organization and Offering Expenses

FINRA rules also limit our combined total organization and offering expenses, inclusive of  (i) the total underwriting compensation paid from any source (as discussed in “— Limitations on Underwriting Compensation” above) and (ii) issuer expenses that are reimbursed or paid for with offering proceeds, to 15% of our gross offering proceeds from this offering. We will reimburse our advisor and its affiliates for organization and offering costs they incur on our behalf, either directly or through contract services provided by affiliates, but only to the extent that such reimbursement would not cause the sales commissions, dealer manager fees, stockholder servicing fees and the other organization and offering expenses we bear to exceed 15% of the gross proceeds from this offering, in each case as of the date of the termination of the offering.

The following information supersedes and replaces in its entirety the section entitled “Plan of Distribution — Compensation of Dealer Manager and Participating Broker-Dealers — Estimate of Maximum Underwriting Fees and Expenses” on page 236 of the prospectus, and is inserted as a new sub-section immediately prior to the section entitled “Plan of Distribution — Compensation of Dealer Manager and Participating Broker-Dealers — Selling Commissions” on page 234 of the Prospectus:

Summary

The following table shows the maximum commissions and fees payable to our dealer manager in connection with this offering, which may be reduced or waived in certain circumstances as described below in “ — Discounts for Certain Purchasers” and “ — Volume Discounts.” To show the maximum amount of dealer manager and participating broker-dealer compensation we may pay in this offering, the table assumes (1) that all shares are sold through distribution channels associated with the highest possible selling commissions and dealer manager fee and (2) we sell the maximum of  $500,000,000 in shares of our common stock pursuant to our primary offering (allocated as $125,000,000 in K Shares, $125,000,000 in K-I Shares and $250,000,000 in K-T Shares). In the event we sell a greater percentage of a particular class (which are subject to different selling commissions and dealer manager fees) than currently allocated in this prospectus, the amounts and percentages of offering expenses will differ. We reserve the right to reallocate the shares of common stock we are offering among the different classes of shares and between the primary offering and our distribution reinvestment plan. The table does not give effect to any shares issued pursuant to our distribution reinvestment plan.

(1)

The stockholder servicing fee is payable only with respect to K-T Shares sold in our primary offering. The stockholder servicing fee is an ongoing fee that is not paid to the dealer manager at the time a K-T Share is sold. With respect to each K-T Share sold in our primary offering, will pay the dealer manager a stockholder servicing fee equal to 1.0%, annualized, of the amount of our estimated NAV per K-T Share for each K-T Share purchased. The stockholder servicing fee accrues daily and is payable monthly in arrears. We will cease paying the stockholder servicing fee to our dealer manager upon the occurrence of one of the termination events described in “ — Stockholder Servicing Fees” below.

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Although we cannot predict the length of time over which the stockholder servicing fee will be paid due to potential changes in the estimated NAV per share of our K-T Shares, we expect to pay a maximum of $0.30 in stockholder servicing fees with respect to an individual K-T Share, assuming such fee would be paid over approximately three years from the date of purchase and a constant estimated NAV per share of  $10.00 per K-T Share.

The following information supersedes and replaces the section entitled “Plan of Distribution — Compensation of Dealer Manager and Participating Broker-Dealers — Expense Reimbursements” on page 235 of the prospectus:

Expense Reimbursements

We have agreed to reimburse the dealer manager or any participating broker-dealer for reasonable bona fide expenses set forth in itemized and detailed invoices, which may include travel, lodging, meals and other reasonable out-of-pocket expenses incurred by the dealer manager or any participating broker-dealer and their personnel. These reimbursements consist primarily of  (a) actual costs incurred for fees to attend retail seminars sponsored by participating broker-dealers, (b) amounts used to reimburse participating broker-dealers for the actual costs incurred by registered representatives for travel, meals and lodging in connection with attending bona fide training and education meetings and retail seminars sponsored by participating broker-dealers, (c) commissions and non-transaction based compensation paid to registered persons in connection with the wholesaling of our offering, (d) expense reimbursements for actual costs incurred by employees of our dealer manager in the performance of wholesaling activities, and (e) additional amounts for gifts and business entertainment expenses. In no event shall any gifts for registered representatives be given that exceed an aggregate value of $100 per annum per individual or are preconditioned on achievement of a sales target. Promotional items of nominal value may also be given to such representatives and are not subject to the annual gift limitation. We will reimburse our dealer manager for these expenses to the extent permissible under applicable FINRA rules.

The following information supersedes and replaces in its entirety the section of our prospectus entitled “Plan of Distribution — Volume Discounts” beginning on page 237 of the prospectus:

Volume Discounts

The dealer manager may, at its sole discretion, enter into an agreement with a participating broker-dealer whereby such participating broker-dealer may aggregate subscriptions as part of a combined order for the purpose of offering investors reduced aggregate selling commissions. Any reduction in the selling commissions arising from such volume discounts would be prorated among the separate subscribers.

The following table illustrates the various selling commissions discount levels that will be offered to qualifying purchasers by participating broker-dealers for K Shares purchased in this offering:

The table above is calculated assuming a purchase price (prior to any discounts) per K Share of  $10.00 per share. An investor’s purchase of K Shares may be aggregated for purposes of applying the discounts set forth in the table above.

In the event an investor wishes to have its subscriptions combined (to the extent purchases were made within one year), that investor must request such treatment in writing at the time of that person’s subscription and identify the subscriptions to be combined. Any combination request will be subject to our

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verification that the subscriptions to be combined are made by a single qualifying purchaser and made within one year. If the subscription agreements for the combined subscriptions of a single qualifying purchaser are submitted at the same time, then the selling commissions payable and the discounted K Share purchase price will be allocated pro rata among the combined subscriptions on the basis of the respective subscription amounts being combined. Otherwise, the volume discount provisions will apply only to the subscription that qualifies the single qualifying purchaser for the volume discount and the subsequent subscriptions of that single qualifying purchaser.

Please consult with your financial advisor and broker-dealer about the ability to receive volume discounts through any of the circumstances described above.

How to Subscribe

The following bullet points supersede and replace the second and third bullet points, respectively, of the first paragraph of the section of entitled “How to Subscribe” beginning on page iv of the prospectus:

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Complete the execution copy of the subscription agreement. A specimen copy of the subscription agreement, including instructions for completing it, is included as Appendix C. Subscription agreements may be executed manually or by electronic signature except where the use of such electronic signature has not been approved. Should you execute the subscription agreement electronically, your electronic signature, whether digital or encrypted, included in the subscription agreement is intended to authenticate the subscription agreement and to have the same force and effect as a manual signature. Electronic signature means any electronic sound, symbol, or process attached to or logically associated with a record and executed and adopted by you with your intent to sign such record.

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•

Unless you complete the subscription agreement electronically, deliver a check for the full purchase price of the shares being subscribed for, payable to “Procaccianti Hotel REIT, Inc.” along with the completed subscription agreement to your registered selling representative or investment advisor. The name of the participating broker-dealer appears on the subscription agreement. Certain participating broker-dealers that have “net capital” (as defined in the applicable federal securities regulations) of $250,000 or more may instruct their customers to make their checks payable directly to the dealer. In such case, the participating dealer will issue a check payable to us of the purchase price of your subscription.

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Notice to Pennsylvania and Washington Investors

The following information is inserted as a new paragraph above the pricing chart on the cover page of the prospectus:

PENNSYLVANIA INVESTORS:   Because the minimum offering amount of this offering is less than $33,333,334, you are cautioned to carefully evaluate the program’s ability to fully accomplish its stated objectives and to inquire as to the current dollar volume of program subscriptions.

The following information supersedes and replaces the section entitled “Plan of Distribution — Special Notice to Pennsylvania and Washington Investors” on page 240 of the prospectus:

Special Notice to Washington Investors

We will not offer shares in this offering to Washington residents until we have received total gross proceeds from our private offering and this public offering of at least $20,000,000. As of November 15, 2018, we had received total gross proceeds of approximately $17,405,755 from the sale of K Shares, K-I Shares and A Shares in all offerings.

Investor Suitability Standards

The following information is inserted as new paragraphs in the section entitled “Investor Suitability Standards” on page ii of the prospectus:

North Dakota.   In addition to the net income and net worth standards stated above, North Dakota investors must represent that they have a net worth of at least ten times their investment in us.

Puerto Rico.   In addition to the general suitability standards listed above, an investor may not invest, and we may not accept from an investor, more than ten percent (10%) of that investor’s liquid net worth in shares of us, our affiliates, and in other non-traded real estate investment trusts. Liquid net worth is defined as that portion of net worth (total assets exclusive of primary residence, home furnishings, and automobiles minus total liabilities) consisting of cash, cash equivalents, and readily marketable securities.

Distributions

The following information supplements, and should be read in conjunction with, the section entitled “Description of Capital Stock — Distributions” beginning on page 183 of the prospectus:

On August 20, 2018, our board of directors authorized the payment of distributions, which were authorized to be made with funds generated by property operations, with respect to each K Share outstanding as of June 30, 2018, to the holders of record of K Shares as of the close of business on August 21, 2018. Our board of directors determined that, with respect to the K Shares outstanding as of June 30, 2018, the cumulative amount of distributions that had accrued on a daily basis with respect to each K Share since March 31, 2018, was $147,590.31, or $0.0016438356 per K Share per day. On August 23, 2018, we paid such distributions in the cumulative amount of  $147,590.31 in cash to the holders of K Shares. We funded such distributions with cash flow from operations.

On October 22, 2018, our board of directors authorized the payment of distributions, which were authorized to be made with funds generated by property operations, with respect to each K Share outstanding as of September 30, 2018, to the holders of record of K Shares as of the close of business on October 24, 2018. Our board of directors determined that, with respect to the K Shares outstanding as of September 30, 2018, the cumulative amount of distributions that had accrued on a daily basis with respect to each K Share since June 30, 2018, was $183,081.52, or $0.0016438356 per K Share per day. On October 25, 2018, we paid such distributions in the cumulative amount of  $183,081.52 in cash to the holders of K Shares. We funded such distributions with cash flow from operations.

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We have paid the following distributions to holders of K Shares:

Our Hotel Properties

The following information supersedes and replaces the first paragraph of the section entitled “Prospectus Summary — Description of Real Estate Investments” on page 32 of the prospectus:

We engage in the acquisition and ownership of a diversified portfolio of hospitality properties. As of June 30, 2018, through our joint venture with Procaccianti Convertible Fund, LLC, an affiliate of our sponsor, we owned a 51% interest in two select-service hotel properties, comprising an aggregate of 239 rooms and approximately 4,250 square feet of meeting space. We subsequently acquired, through a wholly owned subsidiary of our operating partnership, a select-service hotel property on August 15, 2018, which has 107 rooms and approximately 3,000 square feet of meeting space.

The following information supplements, and should be read in conjunction with, the question and answer entitled “Do you currently own any assets?” in the “Questions and Answers About this Offering” section on page 4 of the prospectus:

On August 15, 2018, we, through a wholly owned subsidiary of our operating partnership, acquired 100% of the fee simple interest in a 107-room, 36,411 square foot select-service hotel property — the Hotel Indigo hotel located in Traverse City, Michigan, or the Hotel Indigo Traverse City property. The Hotel Indigo Traverse City Hotel property opened in May 2016 and features approximately 3,000 square feet of meeting space, 82 underground parking spaces (valet only), a fitness center, business center, restaurant and lobby bar, and a rooftop bar overlooking the Grand Traverse Bay.

The following information supersedes and replaces in its entirety the section entitled “Investment Objectives, Strategy and Policies — Description of Real Estate Investments” section beginning on page 119 of the prospectus:

Description of Real Estate Investments

We engage in the acquisition and ownership of hotel properties throughout the United States. As of the date of this prospectus, we owned interests in three select-service hotel properties.

As of November 15, 2018, we, through a wholly-owned subsidiary of our operating partnership, owned 100% of the fee simple interest in a select-service hotel property and, through our joint venture with Procaccianti Convertible Fund, LLC, an affiliate of our sponsor, owned a 51% interest in two select-service hotel properties. Each property was purchased from sellers unaffiliated with us, our sponsor, our advisor or their affiliates. These properties were financed with a combination of debt and offering proceeds from our private placement. For more information on the financing of our hotel properties, see “— Borrowings” below.

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The following table summarizes our three select-service hotel properties as of November 15, 2018. Unless otherwise indicated, information in this section is provided as of December 31, 2017.

*

We believe the property is suitable for its present and intended purposes and adequately covered by insurance.

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(1)

Represents the date that Procaccianti Convertible Fund, LLC, an affiliate of our sponsor, acquired the Springhill Suites property and the Staybridge Suites property. We exercised our option under an option agreement to purchase a 51% membership interest in Procaccianti Convertible Fund, LLC on March 29, 2018.

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(2)

Contract purchase price excludes acquisition fees and costs.

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(3)

Fees owed to advisor include payments deferred acquisition fees in connection with the property acquisition. It does not include fees paid to any property manager. For more detailed information on fees paid to our advisor or its affiliates, and the deferral of such fees, see the section captioned “Management Compensation” on page 137 of this prospectus.

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(4)

Amount represents the total amount of acquisition fees incurred in connection with both the Springhill Suites property and Staybridge Suites property.

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(5)

Represents real estate taxes for 2017.

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(6)

Estimated acquisition cap rate equals trailing 12-month net operating income divided by the total acquisition cost for the property. Net operating income for a specific hotel or capital expenditure project is calculated as the hotel or entity level operating profit less an estimate for the annual contractual reserve requirements for renewal and replacement expenditures. The acquisition cap rate is meant as a measure of the trailing 12-month net operating income yield at the time we acquire the property, and is not meant to be either an indication of historical, or a projection of anticipated future, net operating income yield for the acquisition.

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The following tables present occupancy, ADR and RevPar of the hotels in which we have an ownership interest as of the date of this prospectus supplement through July 31, 2018, including periods prior to ownership.

(1)

Represents occupancy for each calendar year, unless otherwise noted,, calculated as the number of occupied rooms divided by the number of available rooms.

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(2)

The Springhill Suites Wilmington Mayfaire opened in August 2015.

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(3)

The Staybridge Suites St. Petersburg opened in March 2014.

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(4)

The Hotel Indigo Traverse City opened in May 2016.

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(1)

“ADR” represents the average daily rate for a single room.

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(2)

The Springhill Suites Wilmington Mayfaire opened in August 2015.

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(3)

The Staybridge Suites St. Petersburg opened in March 2014.

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(4)

The Hotel Indigo Traverse City opened in May 2016.

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(1)

“RevPAR” represents the product of the ADR charged and the average daily occupancy rate, but excludes other revenue generated by a hotel property.

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(2)

The Springhill Suites Wilmington Mayfaire opened in August 2015.

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(3)

The Staybridge Suites St. Petersburg opened in March 2014.

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(4)

The Hotel Indigo Traverse City opened in May 2016.

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Because we are prohibited from operating hotel properties pursuant to certain tax laws relating to our qualification as a REIT, we, indirectly through our taxable REIT subsidiaries, or TRSs, will retain a property manager to be responsible for managing each of the hotel properties under a separate hotel management agreement. We will generally pay each property manager a property management fee each fiscal year with respect to each property equal to 3% of total operating revenues of each property (which exclude the gross receipts of any licensees, leases, and concessionaries), paid on a monthly basis, in addition to certain expense and centralized services costs and reimbursements. We may also pay the property manager a construction management fee equal to market rates for supervising and/or coordinating any construction, improvements, refurbishments or renovations of our hotel properties, in addition to certain expense reimbursements.

Our TRSs each entered into hotel management agreements with property managers affiliated with TPG Hotels & Resorts, Inc., an affiliate of our sponsor, to manage the Springhill Suites property, the Staybridge Suites property, and the Hotel Indigo Traverse City property on March 29, 2018, March 29, 2018 and August 15, 2018, respectively. The property managers will each receive the property management fee described above. Each hotel management agreement has an initial term of 5 years, with four automatic one-year renewals, unless otherwise terminated in accordance with the Hotel Management Agreement.

We currently have no plans for any material renovations, improvements or development of any of the hotel properties and believe each such hotel property is adequately insured and is suitable for its present and intended use, subject to typical maintenance and replacements in the ordinary course.

The following information is added as the fourth paragraph of the section entitled “Investment Objectives, Strategy and Policies-Depreciable Tax Basis” on page 119 of the prospectus:

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The Hotel Indigo Traverse City property has a depreciable tax basis of  $22,208,902.31 as of August 15, 2018. The property is generally depreciated for U.S. federal income tax purposes under the Modified Accelerated Cost Recovery System, or MACRS. Under MACRS the property is depreciated over a specified life ranging from seven years for furniture, fixtures and equipment to 40 years for the building. Land is not depreciated under MACRS. Depreciation rates are specifically defined by MACRS and vary year to year. We intend to make the election to use the Alternative Depreciation System method, or ADS, under MACRS.

The following information is inserted as a new sub-section entitled “Investment Objectives, Strategy and Policies — Description of Real Estate Investments — Borrowings” on page 119 of the prospectus:

Borrowings

Springhill Suites Property Loan

On March 29, 2018, our operating partnership, through its subsidiaries, took assignment from an affiliate of our sponsor of a loan agreement, promissory note, or the Note, and other loan documents, including a guaranty by TH Investment Holdings II, LLC, an affiliate of our sponsor, to secure an aggregate $11,268,000 mortgage, or the Springhill Suites Property Loan, on the Springhill Suites property with WELLS FARGO BANK, NATIONAL ASSOCIATION, AS TRUSTEE FOR THE BENEFIT OF THE REGISTERED HOLDERS OF JPMDB COMMERCIAL MORTGAGE SECURITIES TRUST 2017-C7, COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2017-C7 (as successor to J.P. Morgan Chase Bank, N.A.), as lender. Pursuant to the Springhill Suites Property Loan documents, as of March 29, 2018, the Note had a principal balance of  $11,268,000, matures on July 1, 2024, and bears interest at the rate of 4.49% per annum. Prepayments are allowed under limited circumstances. At the maturity date, all outstanding principal, accrued and unpaid interest and all other amounts are due under the loan. The Springhill Suites Property Loan is secured by the first priority deed of trust and certain other agreements that encumber the Springhill Suites property.

Staybridge Suites Property Loan

On March 29, 2018, our operating partnership, through its subsidiaries, took assignment from an affiliate of our sponsor of a loan agreement, promissory note, or the Note, and other loan documents, including a guaranty by TH Investment Holdings II, LLC, an affiliate of our sponsor, to secure an aggregate $13,325,000 mortgage, or the Staybridge Suites Property Loan, on the Staybridge Suites property with WELLS FARGO BANK, NATIONAL ASSOCIATION, AS TRUSTEE FOR THE BENEFIT OF THE REGISTERED HOLDERS OF JPMDB COMMERCIAL MORTGAGE SECURITIES TRUST 2017-C7, COMMERCIAL MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 2017-C7 (as successor to J.P. Morgan Chase Bank, N.A.), as lender. Pursuant to the Staybridge Suites Property Loan documents, as of March 29, 2018, the Note had a principal balance of  $13,325,000, matures on July 1, 2024, and bears interest at the rate of 4.34% per annum. Prepayments are allowed under limited circumstances. At the maturity date, all outstanding principal, accrued and unpaid interest and all other amounts are due under the loan. The Staybridge Suites Property Loan is secured by the first priority mortgage loan and certain other agreements that encumber the Staybridge Suites property.

Hotel Indigo Traverse City Property Loan

Our operating partnership, through one of its subsidiaries, entered into a first mortgage loan on August 15, 2018, with Citizens Bank, National Association, or Citizens, as lender, in the principal amount of  $17,836,000, or the Citizens Loan, which matures on August 15, 2021, or the Maturity Date. The Citizens Loan is secured by the Hotel Indigo Traverse City property and bears interest at LIBOR plus 3.00%. On August 15, 2018, the operating partnership, through one of its subsidiaries, entered into a swap derivative contract to fix the interest rate on all but $2,744,000.00 of the Citizens Loan, or the Paydown Amount. The interest rate swap agreement was issued at market terms so that it had no fair value at its inception. After repayment of the Promissory Note, the Company anticipates using proceeds from its offering to prepay the Paydown Amount. The Citizens Loan provides for interest only monthly payments until August 15, 2019; provided, however, the interest only period will be extended to maturity if the

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Paydown Amount is repaid to the Citizens Bank prior to August 15, 2019. Following August 15, 2019, in addition to any principal payments necessary to achieve the applicable DSCR (as described below), $35,000 per month in monthly principal payment generally must be paid concurrently with monthly installments of interest on the loan. With respect to first extension term, Borrower is required to achieve a debt service coverage ratio, or DSCR, of at least 1.45x and 1.50x for second and third extension terms. Any extensions require payment of extension fees to the lender of 0.10% for the first extension and 0.20% for the second and third extensions. No principal amortization will be required prior to August 15, 2019. Following August 15, 2019, in addition to any principal payments necessary to achieve the applicable DSCR, $35,000 per month in monthly principal payment shall be paid concurrently with monthly installments of interest on the loan.

Promissory Notes

Hotel Indigo Traverse City Promissory Note

On August 15, 2018, we executed a promissory note, or the Hotel Indigo Traverse City Promissory Note, in favor of our sponsor, in the principal amount of  $6,600,000 in order to fund the acquisition of the Hotel Indigo Traverse City property. The Hotel Indigo Traverse City Promissory Note accrues interest at the rate of 4.75% per annum (based on the number of actual days elapsed and a 365 day year) and has a maturity date of August 16, 2019. The Hotel Indigo Traverse City Promissory Note contains customary terms and conditions, including, without limitation, defaults for failure to pay and bankruptcy or insolvency proceedings. Upon the occurrence of a default, interest on the Hotel Indigo Traverse City Promissory Note will accrue at an annual default interest rate equal to 2.0% above the stated interest rate. The Hotel Indigo Promissory Note was approved by a majority of our board of directors (including a majority of the independent directors) not otherwise interested in the transaction as fair, competitive, and commercially reasonable and no less favorable to us than a comparable loan between unaffiliated parties under the same circumstances.

The following information is inserted as a new sub-section entitled “Investment Objectives, Strategy and Policies — Description of Real Estate Investments — Franchise Agreements” on page 119 of the prospectus:

Franchise Agreements

Our hotels operate under franchise agreements with a national brand that is separate from the agreement with the property manager pursuant to which the operations of the hotel are managed. Our franchise agreements give us the right to the use of the brand name, systems and marks with respect to specified hotels and establish various management, operational, record-keeping, accounting, reporting and marketing standards and procedures with which the licensed hotel must comply. In addition, the franchisor establishes requirements for the quality and condition of the hotel and its furniture, fixtures and equipment, and we are obligated to expend such funds as may be required to maintain the hotel in compliance with those requirements.

Typically, our franchise agreements provide for a license fee, or royalty, of 5% to 6% of gross room revenues. In addition, we generally pay 1.5% to 3.5% of gross room revenues as a program or reservation fees for the system-wide benefit of brand hotels.

Our typical franchise agreement provides for a term of 15 to 25 years, although some have shorter terms. The agreements typically provide no renewal or extension rights and are not assignable. If we breach one of these agreements, in addition to losing the right to use the brand name for the applicable hotel, we may be liable, under certain circumstances, for liquidated damages.

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Organizational Structure

The following chart supersedes and replaces the organizational structure chart on page 36 of the “Prospectus Summary” section of the prospectus and page 164 of the “Conflicts of Interest” section of the prospectus:

(1)

To be formed.

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(2)

As of the date of this prospectus supplement, TPG Hotel REIT Investor, LLC, an affiliate of our advisor, owned approximately $4,454,095 in A Shares, which were issued pursuant to a private placement.

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(3)

S2K Financial LLC and Colony S2K Servicing LLC are both wholly owned subsidiaries of Colony S2K Holdings LLC. Colony S2K Servicing LLC owns 125,000 B Shares of Procaccianti Hotel REIT, Inc.

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Risk Factors

The risk factor entitled “Because this is a ‘blind pool’ offering, you will not have the opportunity to evaluate our investments before we make them, which makes an investment in us more speculative” beginning on page 58 of the prospectus is hereby superseded and replaced with the following risk factor:

Because this is a “blind pool” offering, you will not have the opportunity to evaluate our investments before we make them, which makes an investment in us more speculative.

We have not identified all of the properties we will acquire with the net proceeds from the sale of K-I Shares, K Shares and K-T Shares in this offering. Our ability to identify well-performing properties and achieve our investment objectives depends upon the performance of our advisor in the acquisition of our investments and the determination of any financing arrangements. The size of this offering increases the challenges that our advisor will face in investing our net offering proceeds promptly in attractive properties, and the continuing high demand for the type of properties we desire to purchase increases the risk that we may pay too much for the properties that we do purchase. We will seek to invest substantially all of the net proceeds from our K-I Shares, K Shares and K-T Shares, after the payment of certain fees and expenses, in a diversified portfolio of commercial real estate investments consisting primarily of hotel properties across the United States in accordance with our investment objectives and using the strategies described in this prospectus. However, you will be unable to evaluate the economic merit of specific real estate projects before we invest in them. We expect to rely entirely on the ability of our advisor to select suitable and successful investment opportunities. We will not provide you with information to evaluate our proposed investments prior to our acquisition of those investments. Because of the illiquid nature of our shares, even if we disclose information about our potential investments before we make them, it will be difficult for you to sell your shares promptly or at all. Furthermore, our board of directors will have broad discretion in implementing investment policies. These factors increase the risk that your investment may not generate returns consistent with your expectations.

Effective November 30, 2018, the following information supersedes and replaces the risk factor entitled “You may not be able to have your K-I Shares, K Shares or K-T Shares repurchased under our share repurchase program; if you are able to have your K-I Shares, K Shares or K-T Shares repurchased under the share repurchase program, you may not be able to recover the amount of your investment” in the “Risk Factors — Risks Related to This Offering and Our Corporate Structure” section beginning on page 63 of the prospectus:

You may not be able to have your K-I Shares, K Shares or K-T Shares repurchased under the share repurchase program; if you are able to have your K-I Shares, K Shares or K-T Shares repurchased under the share repurchase program, you may not be able to recover the amount of your investment.

Our board of directors has adopted a share repurchase program available to holders of our K-I Shares, K Shares and K-T Shares, but there are significant conditions and limitations that limit your ability to have your K-I Shares, K Shares or K-T Shares repurchased under the plan. Repurchases of our K-I Shares, K Shares and K-T Shares, when requested, are at our sole discretion and generally will be made quarterly. A holder of K Shares, K-I Shares or K-T Shares, as applicable, must have beneficially held its shares for at least one year prior to offering them for sale to us through our share repurchase program, unless the K Shares, K-I Shares or K-T Shares, as applicable, are being repurchased in connection with a stockholder’s death, qualifying disability or other exigent circumstance as determined by our board of directors in its sole discretion.

The per share repurchase price will depend on the length of time you have held such shares as follows:

•

after one year from the purchase date, 92.5% of the most recent per share net asset value of the K Shares, K-I Shares or K-T Shares, as applicable;

​

•

after two years from the purchase date, 95% of the most recent per share net asset value of the K Shares, K-I Shares or K-T Shares, as applicable;

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•

after three years from the purchase date, 97.5% of the most recent per share net asset value of the K Shares, K-I Shares or K-T Shares, as applicable; and

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•

after four years from the purchase date, 100% of the most recent per share net asset value of the K Shares, K-I Shares or K-T Shares, as applicable.

​

Our repurchase of any K-I Shares, K Shares or K-T Shares will be limited to the extent that we do not have, as determined in our board of director’s discretion, sufficient funds available to fund any such repurchase. For additional information on our share repurchase program refer to the section entitled “Description of Capital Stock — Share Repurchase Program.”

We are not obligated to repurchase shares of our common stock under our share repurchase program. We will limit the number of shares repurchased pursuant to our share repurchase program as follows: (1) we will not repurchase in excess of 5.0% of the weighted average number of K Shares, K-I Shares and K-T Shares outstanding during the trailing 12 months prior to the end of the fiscal quarter for which repurchases are being paid (provided, however, that while shares subject to a repurchase requested upon the death of a stockholder will be included in calculating the maximum number of shares that may be repurchased, shares subject to a repurchase requested upon the death of a stockholder will not be subject to the percentage cap); and (2) funding for the repurchase of K Shares, K-I Shares and K-T Shares will be limited to net proceeds we receive from the sale of shares under our DRIP and any other operating funds that may be authorized by our board of directors, in its sole discretion.

Additionally, in the event that any stockholder fails to maintain a minimum balance of   $2,000 of K-I Shares, K Shares or K-T Shares, we may repurchase all of the shares held by that stockholder at the NAV repurchase price in effect on the date we determine that the stockholder has failed to meet the minimum balance, less any applicable repurchase discount.

Most of our assets will consist of properties which cannot be readily liquidated without affecting our ability to realize full value upon their disposition. Therefore, we may not have sufficient liquid resources to satisfy all repurchase requests. The share repurchase program will terminate immediately if our K-I Shares, K Shares, K-T Shares or any successor securities, are listed on any national securities exchange. In addition, our board of directors may amend, suspend (in whole or in part) or terminate the share repurchase program at any time upon 30 days’ notice. Further, our board of directors reserves the right, in its sole discretion, to reject any requests for repurchases.

The provisions of our share repurchase program may limit your ability to have your shares repurchased should you require liquidity and could limit your ability to recover the amount that you invested in our K-I Shares, K Shares or K-T Shares. The terms of our share repurchase program contain fewer limitations for repurchases sought as a result of a stockholder’s death, qualifying disability (as defined under “Description of Capital Stock — Share Repurchase Program”), or other involuntary exigent circumstance, in the sole discretion of the board of directors. For more information, see “Description of Capital Stock — Share Repurchase Program”.

The risk factor entitled “We will pay substantial fees and expenses to our advisor, our property manager, and their affiliates, which payments increase the risk that you will not earn a profit on your investment” beginning on page 66 of the prospectus is hereby superseded and replaced with the following risk factor:

If we were to become internally managed, we would pay substantial fees to our advisor prior to holders of K Shares, K-I Shares and K-T Shares receiving their agreed-upon investment returns. In addition, we will pay substantial fees and expenses to our property manager and their affiliates, and will reimburse our advisor and its affiliates for expenses, which payments increase the risk that you will not earn a profit on your investment.

Pursuant to our agreements with affiliated property managers, we may pay significant property management fees to our property manager and may be obligated to reimburse our property manager for certain expenses it incurs in providing services. We also will be obligated under our advisory agreement with our advisor to reimburse our advisor and its affiliates for expenses they incur in connection with their providing services to us, including certain personnel services.

We may also pay significant fees during our listing/liquidation stage. Although most of the fees payable during our listing/liquidation stage are contingent on holders of K-I Shares, K Shares and K-T Shares first enjoying agreed-upon investment returns, affiliates of our advisor could also receive significant payments even without our reaching specific investment-return thresholds should we seek to become internally

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managed. Due to the apparent preference of the public markets for internally managed companies, a decision to list our shares on a national securities exchange could be preceded by a decision to become internally managed. Given our advisor’s familiarity with our assets and operations, we might prefer to become internally managed by acquiring our advisor. Even though our advisor will not receive internalization fees, such an internalization transaction could result in significant payments to affiliates of our advisor irrespective of whether you received the returns on which we have conditioned other back-end compensation, and we would not be required to seek a stockholder vote to become internally managed.

These fees and other potential payments increase the risk that the amount available for distribution to stockholders upon a liquidation of our portfolio would be less than the purchase price of the shares in this offering. Substantial consideration paid to our advisor and its affiliates also increases the risk that you will not be able to resell your shares at a profit, even if our shares are listed on a national securities exchange. See “Management Compensation.”

The risk factor entitled “The proposed SEC standard of conduct for investment professionals could impact our ability to raise capital” on page 96 of the prospectus is hereby superseded and replaced with the following:

The proposed SEC standard of conduct for investment professionals could impact our ability to raise capital.

On April 18, 2018, the SEC proposed “Regulation Best Interest,” a new standard of conduct for broker-dealers under the Securities Exchange Act of 1934, as amended, that includes: (i) the requirement that broker-dealers refrain from putting the financial or other interests of the broker-dealer ahead of the retail customer, (ii) a new disclosure document, the consumer or client relationship summary, or Form CRS, which would require both investment advisers and broker-dealers to provide disclosure highlighting details about their services and fee structures and (iii) proposed interpretative guidance that would establish a federal fiduciary standard for investment advisers. The public comment period on Regulation Best Interest ended on August 7, 2018.

Proposed Regulation Best Interest is complex and may be subject to revision or withdrawal. Plan fiduciaries and the beneficial owners of IRAs are urged to consult with their own advisors regarding the impact that proposed Regulation Best Interest may have on purchasing and holding interests in our company. Proposed Regulation Best Interest or any other legislation or regulations that may be introduced or become law in the future could have negative implications on our ability to raise capital from potential investors, including those investing through IRAs.

Questions and Answers About This Offering

The following information supersedes and replaces in its entirety the Question and Answer entitled “How does the potential return to holders of K-I Shares, K Shares and K-T Shares in this offering compare to the potential return to stockholders of other publicly registered, non-traded REITs?” in the section entitled “Questions and Answers About This Offering” beginning on page 14 of the prospectus:

How does the potential return to holders of K-I Shares, K Shares and K-T Shares in this offering compare to the potential return to stockholders of other publicly registered, non-traded REITs?

We intend to use the proceeds from the sale of A Shares to our advisor and its affiliates to fund the selling commissions, dealer manager fees, stockholder servicing fees, the difference between the applicable estimated NAV per K-I Share and the offering price of K-I Shares sold in our primary offering, the difference between any discounted purchase price and initial offering price of K-I Shares, K Shares and K-T Shares (excluding volume discount purchases) and other organization and offering expenses payable in connection with the K-I Shares, K Shares and K-T Shares. Therefore, the proceeds from the sale of K-I Shares, K Shares and K-T Shares will not be used to pay organization and offering expenses in connection with the K-I Shares, K Shares and K-T Shares, and 100% of the gross proceeds of the K-I Shares, K Shares and K-T Shares would be available to us for investment in assets.

We believe our intended use of proceeds described above will provide greater protection to holders of K-I Shares, K Shares and K-T Shares than a traditional public non-traded REIT structure in the event of a downturn in the value of our shares. As referred to herein, a traditional public non-traded REIT structure refers to a publicly registered securities offering of a REIT not listed on a national securities exchange that

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uses proceeds from the sale of a share of common stock to fund the selling commissions, dealer manager fees and organization and offering expenses relating to the purchase of that share of common stock. By investing 100% of the proceeds from K-I Shares, K Shares and K-T Shares in assets, we believe we provide holders of K-I Shares, K Shares and K-T Shares with a greater likelihood of preservation of capital and consistent distributions that are not funded with return of capital sources as compared to the traditional public non-traded REIT structure. In exchange for this lower risk, holders of our K-I Shares, K Shares and K-T Shares would be limited in their potential return on investment should we return in excess of 9.84% on their investment. A stockholder in a traditional public non-traded REIT structure bears a greater risk of loss in the event of a downturn in the value of the REIT’s shares than holders of K-I Shares, K Shares and K-T Shares, but, as demonstrated in the model below, could potentially earn a higher return on investment than holders of K-I Shares, K Shares and K-T Shares in this offering.

The following table provides the assumptions used to calculate the hypothetical proceeds available for investment for each of a traditional non-traded REIT structure and the company. The model following the table below illustrates the potential returns upon liquidation to a holder of K Shares in this offering and a stockholder in a traditional public non-traded REIT structure. For purposes of the model below, “Investor” refers to a Class A stockholder in a traditional public non-traded REIT structure and holders of K Shares, K-I Shares and K-T Shares in the company’s offering, and “A Share Holder” refers to the advisor or its affiliates that own A Shares of the company. We expect that holders of each of the K Shares, K-I Shares and K-T Shares in this offering will receive substantially the same return on their investment as the holders of another class of the K Shares, K-I Shares or K-T Shares, assuming such shares were purchased at the same time. The model presents a hypothetical scenario and is for illustrative purposes only, and is not indicative of our potential investment results.

(1)

Assumes that the full selling commission and dealer manager fees are paid on all shares sold.

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(2)

As provided in the “Management Compensation — Acquisition Fee — Our Advisor and Our Service Provider” section on beginning on page 136 of this prospectus, the payment of acquisition fees to the company’s advisor will be deferred until the occurrence of  (i) a liquidation event (i.e., any voluntary or involuntary liquidation or dissolution of the company, including as a result of the sale of all or substantially all of the company’s assets for cash or other consideration), (ii) the company’s sale or merger in a transaction that provides stockholders with cash, securities or a combination of cash and securities, (iii) the listing of the company’s shares on a national securities exchange, or (iv) the termination (not in connection with one of the preceding events) of the advisory agreement, other than for cause, or the non-renewal of the advisory agreement. Upon a liquidation event described in clause (i) above, all of the deferred acquisition fees, plus all interest accrued thereon, will be paid only after the liquidation preference on the K-I Shares, K Shares, K-T Shares and parity securities has been paid in full to all holders of K-I Shares, K Shares, K-T Shares and parity securities, and all accrued and unpaid asset management fees and all accrued interest thereon have been paid in full. Therefore, the table above reflects that no acquisition fees have been paid to the company’s advisor, as it assumes that holders of K Shares, K-I Shares and K-T Shares have not received their liquidation preference.

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(3)

“A Share Holder” refers to a holder a A Shares of the Company.

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(1)

A holder of K Shares, K-I Shares and/or K-T Shares in this offering would be limited in their potential return on investment as compared to a traditional public non-traded REIT investor in the event the company returns in excess of 9.84% on their investment due to the percentages of excess cash that are distributable to holders of A Shares and the Service Provider.

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(2)

“Assets at Liquidation” equals the sum of   (a) the amount of Proceeds Available for Investment plus (b) the amount of Proceeds Available for Investment multiplied by the respective hypothetical percentage of return to investor.

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(3)

The model assumes that the disposition fee for both the traditional public non-traded REIT structure and the company are 1.50% of the sales price of each property or real estate-related asset sold. Payment of the disposition fee to the company’s advisor will be deferred until the occurrence of  (i) a liquidation event, (ii) the company’s sale or merger in a transaction that provides stockholders with cash, securities or a combination of cash and securities, (iii) the listing of the company’s shares on a national securities exchange, or (iv) the termination (not in connection with one of the preceding events) of the advisory agreement, other than for cause, or the non-renewal of the advisory agreement. Upon a liquidation event described in clause (i), all of the deferred disposition fees, plus all interest accrued thereon, will be paid only after the liquidation preference on the K-I Shares, K Shares, K-T Shares and any parity securities has been paid in full to all holders of K-I Shares, K Shares, K-T Shares and any parity securities, and all accrued and unpaid asset management fees and all accrued interest thereon have been paid in full, and all accrued and unpaid acquisition fees (including interest thereon) have been paid in full. Therefore, for purposes of this model, the company does not pay a disposition fee until holders of K Shares, K-I Shares and K-T Shares have received their liquidation preference (i.e. return of capital).

​

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(4)

“Investor” refers to a Class A stockholder in a traditional public non-traded REIT structure and holders of K Shares, K-I Shares and K-T Shares in the company’s offering. “Return of Capital to Investor” represents the return of an Investor’s initial investment.

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(5)

The payment of the acquisition fee to the company’s advisor will be deferred until the occurrence of (i) a liquidation event (i.e., any voluntary or involuntary liquidation or dissolution of the company, including as a result of the sale of all or substantially all of the company’s assets for cash or other consideration), (ii) the company’s sale or merger in a transaction that provides stockholders with cash, securities or a combination of cash and securities, (iii) the listing of the company’s shares on a national securities exchange, or (iv) the termination (not in connection with one of the preceding events) of the advisory agreement, other than for cause, or the non-renewal of the advisory agreement. Upon a liquidation event described in clause (i) above, all of the deferred acquisition fees, plus all interest accrued thereon, will be paid only after the liquidation preference on the K-I Shares, K Shares, K-T Shares and parity securities has been paid in full to all holders of K-I Shares, K Shares, K-T Shares and parity securities, and all accrued and unpaid asset management fees and all accrued interest thereon have been paid in full. Therefore, for purposes of this model, the company does not pay an acquisition fee until holders of K Shares, K-I Shares and K-T Shares have received their liquidation preference (i.e. return of capital).

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(6)

“A Share Holder” refers to a holder of A Shares of the company.

​

(7)

The model assumes that, with respect to a traditional public non-traded REIT structure, the Sponsor/Service Provider is entitled to receive 15% of any excess cash available for distribution. In the company’s offering, the Service Provider is entitled to receive 12.5% of any excess cash available for distribution.

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(8)

The model assumes that, with respect to a traditional public non-traded REIT structure, investors are entitled to receive 85% of any excess cash available for distribution. In the company’s offering, holders of K Shares, K-I Shares and K-T Shares are entitled to receive 50% of any excess cash available for distribution.

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(9)

Holders of A Shares are entitled to receive 37.5% of any excess cash available for distribution.

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The following information supersedes and replaces in its entirety the Question and Answer entitled “Why are you offering three classes of common stock, and what are the similarities and differences among the classes?” in the section entitled “Question and Answers About This Offering” beginning on page 10 of the prospectus:

Why are you offering three classes of common stock, and what are the similarities and differences among the classes?

We are offering three classes of common stock in order to provide investors with more flexibility in making their investment in us and to provide participating broker-dealers with more flexibility to facilitate investment in us. K Shares and K-T Shares are available for purchase by the general public through various distribution channels; however, K-I Shares are available for purchase only (1) through fee-based programs of participating broker-dealers, also known as wrap accounts, that provide access to K-I Shares, (2) through registered investment advisers not affiliated with a participating broker-dealer, (3) by endowments, foundations, pension funds and other institutional investors, or (4) other categories of investors that we name in an amendment or supplement to this prospectus. See the answers to the questions entitled “What rights are afforded to stockholders who purchase K-I Shares, K Shares and K-T Shares?” below for the primary differences among K Shares, K-T Shares and K-I Shares. Our advisor and its affiliates have agreed to purchase A Shares in a private placement at a price equal to the applicable estimated NAV per K Share in order to provide us with funds sufficient to pay the selling commissions, dealer manager fees, stockholder servicing fees, and other organization and offering expenses related to this offering and also account for the difference between the applicable estimated NAV per K-I Share and the applicable offering price of K-I Shares in our primary offering and any amount equal to any discount to the initial offering price of K-I Shares, K Shares, and K-T Shares (excluding volume discounts). The following table summarizes the differences in the fees and selling commissions among the classes of our common stock offered in the primary offering:

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(1)

As provided above, we do not anticipate that offering and organization expenses payable in connection with K-I Shares, K Shares and K-T Shares will be paid with offering proceeds from K-I Shares, K Shares and K-T Shares. The dealer manager may reallow all selling commissions and a portion of dealer manager fees and stockholder servicing fees to participating broker-dealers.

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(2)

We will pay our dealer manager a stockholder servicing fee with respect to ongoing services provided to our holders of K-T Shares purchased in our primary offering, which ongoing services may include providing ongoing or regular account or portfolio maintenance for the stockholder, assisting with recordkeeping, responding to investor inquiries regarding distribution payments, providing services to investors related to our share repurchase program, offering to meet with the stockholder to provide overall guidance on the stockholder’s investment in us or to answer questions about account statements or valuations, and/or providing other similar services as the stockholder may reasonable require in connection with his or her investment. While we expect that the participating broker-dealer of record for a holder of K-I Shares or K Shares may provide similar services to such stockholder, it is under no contractual obligation to do so and we will not pay a stockholder servicing fee for such services. The stockholder servicing fee, which is payable from proceeds of the sale of A Shares, will be equal to 1.0%, annualized, of the amount of the estimated NAV per K-T Share for each K-T Share purchased in the primary offering. Such stockholder servicing fee will accrue daily and be paid monthly in arrears. We will cease paying the stockholder servicing fee with respect to a K-T Share sold in our primary offering at the earlier of  (i) the end of the month in which our transfer agent, on our behalf, determines that the aggregate underwriting compensation from all sources equals 10% of the gross proceeds from the sale of shares in our primary offering (i.e., excluding proceeds from sales pursuant to our DRIP), (ii) the end of the month in which our transfer agent, on our behalf, determines that total underwriting compensation, including selling commissions, dealer manager fees, stockholder servicing fees and other elements of underwriting compensation with respect to such K-T Share, would be in excess of 10% of the total gross investment amount at the time of purchase of such K-T Share in our primary offering; (iii) the end of the month in which our transfer agent, on our behalf, determines that the stockholder servicing fee with respect to such K-T Share would be in excess of 3.0% of the total gross investment amount at the time of purchase of such K-T Share in our primary offering; (iv) the date on which such K-T Share is repurchased by us; (v) the date on which the holder of such K-T Share or its agent notifies us or our agent that he or she is represented by a new participating broker-dealer; provided that we will continue paying the stockholder servicing fee, which shall be reallowed to the new participating broker-dealer, if the new participating broker-dealer enters into a participating broker-dealer agreement or otherwise agrees to provide the ongoing services set forth in the dealer manager agreement, and (vi) the listing of any class or series of our stock on a national securities exchange, the merger or consolidation of our company or the sale of all or substantially all of our assets. At the time we cease paying the stockholder servicing fee with respect to a K-T Share pursuant to the provisions above, and if such K-T Share remains outstanding, such K-T Share (including any associated K-T Share issued pursuant to the DRIP) will convert into a number of K Shares (including any fractional shares) with an equivalent estimated NAV of such K-T Share as of the date of such conversion. Stockholders will receive a confirmation notice when their K-T Shares have been converted into K Shares. We currently expect that any such conversion will be on a one-for-one basis, as we expect the estimated NAV per share of each K-T Share and K Share to be the same. Although we cannot predict the length of time over which the stockholder servicing fee will be paid due to potential changes in the estimated NAV per share of our K-T Shares, we expect to pay a maximum of  $0.30 in stockholder servicing fees with respect to an individual K-T Share, assuming such fee would be paid over approximately three years from the date of purchase and a constant estimated NAV per share of  $10.00 per K-T Share.

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The following information supersedes and replace in its entirety the Question and Answer entitled “How do I subscribe for shares?” in the section entitled “Question and Answers About This Offering” on page 24 of the prospectus:

How do I subscribe for shares?

If you choose to purchase shares in this Offering and you are not already a stockholder, you will need to complete and sign, either manually or by electronic signature (except where the use of such electronic signature has not been approved), a subscription agreement, in the form attached to this prospectus as Appendix C, for a specific number of K-I Shares, K Shares and/or K-T Shares at the time you subscribe.

The following bullet point supersedes and replaces the eleventh bullet point of the Question and Answer entitled “Are there any risks involved in an investment in your shares?” in the “Questions and Answers About This Offering” section beginning on page 2 of the prospectus and the eleventh bullet point of the “Prospectus Summary — Summary Risk Factors” section beginning on page 31 of the prospectus:

•

If we were to become internally managed, we would pay substantial fees to our advisor prior to holders of K Shares, K-I Shares and K-T Shares receiving their agreed-upon investment returns. In addition, we will pay substantial fees and expenses to our property manager and their affiliates, and will reimburse our advisor and its affiliates for expenses, which payments increase the risk that you will not earn a profit on your investment.

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Prior Performance Summary

The following information supersedes and replaces in its entirety the section entitled “Prior Performance Summary — Summary Information” on page 176 of the prospectus:

Summary Information

The following table presents certain summary information regarding the Procaccianti Programs for the ten-year period beginning April 1, 2008 and ending March 31, 2018:

(1)

Percentage based upon aggregate purchase price.

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Amended and Restated Share Repurchase Program

Effective November 30, 2018, the following information supersedes and replaces the section entitled “Description of Capital Stock — Share Repurchase Program” beginning on page 187 of the prospectus:

Amended and Restated Share Repurchase Program

Our share repurchase program, as described below, may provide eligible stockholders with limited, interim liquidity by enabling them to sell shares back to us, subject to restrictions and applicable law. Stockholders are not required to sell their shares to us. The share repurchase program is only intended to

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provide interim liquidity for stockholders until a liquidity event occurs, such as the commencement of execution on a plan of liquidation, the listing of our K Shares, K-I Shares or K-T Shares (or successor security) on a national securities exchange, or our merger with a listed company. We cannot guarantee that a liquidity event will occur.

Repurchase of Shares.   A holder of K Shares, K-I Shares or K-T Shares, as applicable, must have beneficially held its shares for at least one year prior to offering them for sale to us through our share repurchase program, unless the K Shares, K-I Shares or K-T Shares, as applicable, are being repurchased in connection with a stockholder’s death, qualifying disability (as defined herein) or other exigent circumstance as determined by our board of directors in its sole discretion. If you have made more than one purchase of K Shares, K-I Shares or K-T Shares in our primary offering, and/or private offering, the one-year holding period will be calculated separately with respect to each such purchase. The Company may, at its sole discretion, repurchase K Shares, K-I Shares and K-T Shares presented to the Company for cash to the extent it has sufficient funds to do so and subject to the conditions and limitations set forth herein. Repurchases of our shares generally will be made quarterly. Shares repurchased under our share repurchase program will become unissued shares and will not be resold unless such sales are made pursuant to transactions that are registered or exempt from registration under applicable securities laws. We will not pay our sponsor, board of directors, advisor or their affiliates any fees to complete transactions under the share repurchase program.

Purchase Price.   The per share repurchase price will depend on the length of time you have held such shares as follows:

•

after one year from the purchase date, 92.5% of the most recent per share net asset value of the K Shares, K-I Shares or K-T Shares, as applicable;

​

•

after two years from the purchase date, 95% of the most recent per share net asset value of the K Shares, K-I Shares or K-T Shares, as applicable;

​

•

after three years from the purchase date, 97.5% of the most recent per share net asset value of the K Shares, K-I Shares or K-T Shares, as applicable; and

​

•

after four years from the purchase date, 100% of the most recent per share net asset value of the K Shares, K-I Shares or K-T Shares, as applicable.

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Shares repurchased in connection with a stockholder’s death or qualifying disability will be repurchased at a purchase price per share equal to 100% of the most recent per share net asset value of the K Shares, K-I Shares and K-T Shares, as applicable. Notwithstanding the foregoing, pursuant to securities laws and regulations, at any time we are engaged in an offering, the repurchase amount shall never be more than the current offering price of such shares. Shares repurchased in connection with a stockholder’s bankruptcy or other exigent circumstance, in the sole discretion of our board of directors, within one year from the purchase date will be repurchased at a price per share equal to the price per share we would pay had the stockholder held the shares for one year from the purchase date.

The purchase price for repurchased shares will be adjusted for any stock dividends, combinations, splits, recapitalizations, or similar corporate actions with respect to our common stock. If we have sold any properties and have made one or more special distributions to our stockholders of all or a portion of the net proceeds from such sales, the per share repurchase price will be reduced by the net sale proceeds per share distributed to stockholders prior to the repurchase date to the extent such distributions are not used to pay accumulated, accrued and unpaid distributions on such K Shares, K-I Shares and K-T Shares. Our board of directors will, in its sole discretion, determine which distributions, if any, constitute a special distribution. While our board of directors does not have specific criteria for determining a special distribution, we expect that a special distribution will occur only upon the sale of a property and the subsequent distribution of net sale proceeds.

No Encumbrances.   All shares presented for repurchase must be owned by the stockholder(s) making the presentment, or the party presenting the shares must be authorized to do so by the owner(s) of the shares. Such shares must be fully transferable and not subject to any liens or encumbrances. Upon receipt of a request for repurchase, we may conduct a Uniform Commercial Code search to ensure that no liens are held against the shares. Any costs in conducting the Uniform Commercial Code search will be borne by us.

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Holding Period.   Only our K Shares, K-I Shares and K-T Shares that have been held by the presenting stockholder for at least one year are eligible for repurchase, except under certain limited circumstances.

a.

Distribution Reinvestment Plan Shares.   In the event that we repurchase all of your shares, any shares that you purchased pursuant to our DRIP will be excluded from the one-year holding requirement. Such shares will be repurchased at a discount based on the applicable holding period of the associated primary shares. In the event that you request a repurchase of all of your shares, and you are participating in the DRIP, you will be deemed to have notified us, at the time you submit your repurchase request, that you are terminating your participation in the DRIP and have elected to receive future distributions in cash. This election will continue in effect even if less than all of your shares are accepted for repurchase unless you notify us that you wish to resume your participation in our DRIP.

​

b.

Death of a Stockholder.   Subject to the conditions and limitations described below, we will repurchase our K Shares, K-I Shares and K-T Shares held for less than one year upon the death of a stockholder who is a natural person, including shares held by such stockholder through a revocable grantor trust, or an IRA or other retirement or profit-sharing plan, after receiving written notice from the estate of the stockholder, the recipient of the shares through bequest or inheritance, or, in the case of a revocable grantor trust, the trustee of such trust, who shall have the sole ability to request repurchases on behalf of the trust, within two years from the date of death. If spouses are joint registered holders of the shares, the request to repurchase the shares may be made only if both registered holders die. The waiver of the one-year holding period will not apply to a stockholder that is not a natural person, such as a trust (other than a revocable grantor trust), partnership, corporation or other similar entity.

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c.

Qualifying Disability.   Subject to the conditions and limitations described below, we will repurchase K Shares, K-I Shares and K-T Shares held for less than one year requested by a stockholder who is a natural person, including shares of our common stock held by such stockholder through a revocable grantor trust, or an IRA or other retirement or profit-sharing plan, with a “qualifying disability” as defined herein, after receiving written notice from such stockholder within two years from the date of the qualifying disability, provided that the condition causing the qualifying disability was not pre-existing on the date that the stockholder became a stockholder. The waiver of the one-year holding period will not apply to a stockholder that is not a natural person, such as a trust (other than a revocable grantor trust), partnership, corporation, or similar entity.

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In order for a disability to be considered a “qualifying disability,” (1) the stockholder must receive a determination of disability based upon a physical or mental condition or impairment arising after the date the stockholder acquired the Shares to be redeemed, and (2) such determination of disability must be made by the governmental agency responsible for reviewing the disability retirement benefits that the stockholder could be eligible to receive (the “applicable governmental agency”). The “applicable governmental agencies” are limited to the following: (1) if the stockholder paid Social Security taxes and therefore could be eligible to receive Social Security disability benefits, then the applicable governmental agency is the Social Security Administration or the agency charged with responsibility for administering Social Security disability benefits at that time if other than the Social Security Administration; (2) if the stockholder did not pay Social Security benefits and therefore could not be eligible to receive Social Security disability benefits, but the stockholder could be eligible to receive disability benefits under the Civil Service Retirement System (“CSRS”), then the applicable governmental agency is the U.S. Office of Personnel Management or the agency charged with responsibility for administering CSRS benefits at that time if other than the Office of Personnel Management; or (3) if the stockholder did not pay Social Security taxes and therefore could not be eligible to receive Social Security benefits but suffered a disability that resulted in the stockholder’s discharge from military service under conditions that were other than dishonorable and therefore could be eligible to receive military disability benefits, then the applicable governmental agency is the Veteran’s Administration or the agency charged with the responsibility for administering military disability benefits at that time if other than the Veteran’s Administration.

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Disability determinations by governmental agencies for purposes other than those listed above, including but not limited to worker’s compensation insurance, administration or enforcement of the Rehabilitation Act or Americans with Disabilities Act, or waiver of insurance premiums, will not entitle a stockholder to the special repurchase terms applicable to stockholders with a “qualifying disability” unless permitted in the discretion of our board of directors. Repurchase requests following an award by the applicable governmental agency of disability benefits must be accompanied by: (1) the investor’s initial application for disability benefits and (2) a Social Security Administration Notice of Award, a U.S. Office of Personnel Management determination of disability under CSRS, a Veteran’s Administration record of disability-related discharge or such other documentation issued by the applicable governmental agency that we deem acceptable and demonstrates an award of the disability benefits.

We understand that the following disabilities do not entitle a worker to Social Security disability benefits:

•

Disabilities occurring after the legal retirement age;

​

•

Temporary disabilities; and

​

•

Disabilities that do not render a worker incapable of performing substantial gainful activity.

​

Therefore, such disabilities will not qualify for the special repurchase terms except in the limited circumstances when the investor is awarded disability benefits by the other “applicable governmental agencies” described above. However, where a stockholder requests a repurchase of his or her shares due to a disability, and such stockholder does not have a “qualifying disability” under the terms described above, the board of directors may repurchase the stockholder’s shares in its discretion on the special terms available for a qualifying disability.

d.

Involuntary Exigent Circumstance.   Our board of directors may, in its sole discretion, waive the one-year holding period requirement in the event of involuntary exigent circumstances such as bankruptcy.

​

Funding and Operation of the Program.   We are not obligated to repurchase shares of our common stock under our share repurchase program. We will limit the number of shares repurchased pursuant to our share repurchase program as follows: (1) we will not repurchase in excess of 5.0% of the weighted average number of K Shares, K-I Shares and K-T Shares outstanding during the trailing 12 months prior to the end of the fiscal quarter for which repurchases are being paid (provided, however, that while shares subject to a repurchase requested upon the death of a stockholder will be included in calculating the maximum number of shares that may be repurchased, shares subject to a repurchase requested upon the death of a stockholder will not be subject to the percentage cap); and (2) funding for the repurchase of K Shares, K-I Shares and K-T Shares will be limited to net proceeds we receive from the sale of shares under our DRIP and any other operating funds that may be authorized by our board of directors, in its sole discretion. The foregoing limits might prevent us from accommodating all repurchase requests made in any fiscal quarter or in any 12-month period, in which case quarterly repurchases will be made pro rata, except as described below. Further, our management and/or board of directors reserves the right, in its sole discretion at any time, and from time to time, to reject any request for repurchase for any or no reason.

We will determine whether we have sufficient funds and/or shares available as soon as practicable after the end of each fiscal quarter, but in any event prior to the applicable repurchase date. If we cannot purchase all shares presented for repurchase in any fiscal quarter, based upon insufficient cash available and/or the limit on the number of shares we may repurchase during any year, we will give first priority to the repurchase of deceased stockholders’ shares. While deceased stockholders’ shares will be included in calculating the maximum number of shares that may be repurchased in any annual period, they will not be subject to the annual percentage caps; therefore, if the volume of requests to repurchase deceased stockholders’ shares in a particular quarter were large enough to cause the annual cap to be exceeded, even if no other repurchase requests were processed, the repurchases of deceased stockholders’ shares would be completed in full, assuming sufficient proceeds from the sale of shares under our DRIP or other operating funds authorized by our board of directors were available. If sufficient funds are not available to pay all

28

such repurchases in full, the requests to repurchase deceased stockholders’ shares would be honored on a pro rata basis. We will next give priority to (i) requests of stockholders with qualifying disabilities, and in the discretion of our board of directors, stockholders with another involuntary exigent circumstance, such as bankruptcy, and (ii) next, to requests for full repurchases of accounts with a balance of 100 or less K Shares, K-I Shares and/or K-T Shares at the time we receive the request, in order to reduce the expense of maintaining small accounts. Thereafter, we will honor the remaining quarterly repurchase requests on a pro rata basis. Unfulfilled requests for repurchase will be carried over automatically to subsequent repurchase periods unless a stockholder withdraws the request for repurchase five business days prior to the next repurchase date.

Deadline for Presentment.   Repurchases of our K Shares, K-I Shares and K-T Shares will be made quarterly upon written request to us at least 15 days prior to the end of the applicable quarter. Valid repurchase requests will be honored approximately 30 days following the end of the applicable quarter, which we refer to as the “repurchase date.” Stockholders may withdraw their repurchase request at any time up to five business days prior to the repurchase date.

Account Minimum.   In the event any stockholder fails to maintain a minimum balance of  $2,000 of K Shares, K-I Shares or K-T Shares, we may repurchase all of the shares held by that stockholder at the net asset value repurchase price in effect on the date we determine that the stockholder has failed to meet the minimum balance, less any applicable repurchase discount.

Termination, Amendment or Suspension of the Program.   Our board of directors may suspend (in whole or in part) the share repurchase program at any time and from time to time upon notice to our stockholders and may amend or terminate the share repurchase program at any time upon 30 days’ prior written notice to our stockholders. We will notify our stockholders of such developments (1) in a Current Report on Form 8-K, in an annual or quarterly report, or (2) by means of a separate mailing to you. The share repurchase program will terminate immediately if our shares are listed on any national securities exchange.

For the year ended December 31, 2017, we did not repurchase any shares pursuant to our share repurchase program. For the six months ended June 30, 2018, we received valid repurchase requests related to approximately 2,500 K Shares, all of which were repurchased in full, for an aggregate purchase price of approximately $23,125 (an average of  $9.25 per K Share).

Effective November 30, 2018, the following information supersedes and replaces the section entitled “Prospectus Summary — Share Repurchase Program” beginning on page 50 of the prospectus:

Amended and Restated Share Repurchase Program

None of our capital stock is listed on a national securities exchange, and we do not intend to seek to list our stock until our independent directors believe that the listing of our stock would be in the best interest of our stockholders, if at all. In order to provide stockholders with the benefit of some interim liquidity, our board of directors has adopted a share repurchase program available to holders of our K-I Shares, K Shares, and K-T Shares, but there are significant conditions and restrictions that limit your ability to have your K-I Shares, K Shares or K-T Shares repurchased under the plan. The terms of our share repurchase program are more flexible in cases involving the death, qualifying disability, or other involuntary exigent circumstance, in the sole discretion of our board of directors, of a stockholder. See “Description of Capital Stock — Share Repurchase Program” for a definition of  “qualifying disability.”

Repurchases of our K-I Shares, K Shares, and K-T Shares, when requested, are at our sole discretion and generally will be made quarterly.

The per share repurchase price will depend on the length of time you have held such shares as follows:

•

after one year from the purchase date, 92.5% of the most recent per share net asset value of the K Shares, K-I Shares or K-T Shares, as applicable;

​

•

after two years from the purchase date, 95% of the most recent per share net asset value of the K Shares, K-I Shares or K-T Shares, as applicable;

​

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•

after three years from the purchase date, 97.5% of the most recent per share net asset value of the K Shares, K-I Shares or K-T Shares, as applicable; and

​

•

after four years from the purchase date, 100% of the most recent per share net asset value of the K Shares, K-I Shares or K-T Shares, as applicable.

​

Shares repurchased in connection with a stockholder’s death or qualifying disability will be repurchased at a purchase price per share equal to 100% of the most recent per share net asset value of the K Shares, K-I Shares and K-T Shares, as applicable. Notwithstanding the foregoing, pursuant to securities laws and regulations, at any time we are engaged in an offering, the repurchase amount shall never be more than the current offering price of such shares. Shares repurchased in connection with a stockholder’s bankruptcy or other exigent circumstance, in the sole discretion of our board of directors, within one year from the purchase date will be repurchased at a price per share equal to the price per share we would pay had the stockholder held the shares for one year from the purchase date.

We are not obligated to repurchase shares of our common stock under our share repurchase program. We will limit the number of shares repurchased pursuant to our share repurchase program as follows: (1) we will not repurchase in excess of 5.0% of the weighted average number of K Shares, K-I Shares and K-T Shares outstanding during the trailing 12 months prior to the end of the fiscal quarter for which repurchases are being paid (provided, however, that while shares subject to a repurchase requested upon the death of a stockholder will be included in calculating the maximum number of shares that may be repurchased, shares subject to a repurchase requested upon the death of a stockholder will not be subject to the percentage cap); and (2) funding for the repurchase of K Shares, K-I Shares and K-T Shares will be limited to net proceeds we receive from the sale of shares under our DRIP and any other operating funds that may be authorized by our board of directors, in its sole discretion. The foregoing limits might prevent us from accommodating all repurchase requests made in any fiscal quarter or in any 12-month period, in which case quarterly repurchases will be made pro rata, except as described below. Further, our management and/or board of directors reserves the right, in its sole discretion at any time, and from time to time, to reject any request for repurchase for any or no reason.

We will determine whether we have sufficient funds and/or shares available as soon as practicable after the end of each fiscal quarter, but in any event prior to the applicable repurchase date. If we cannot purchase all shares presented for repurchase in any fiscal quarter, based upon insufficient cash available and/or the limit on the number of shares we may repurchase during any year, we will give first priority to the repurchase of deceased stockholders’ shares. While deceased stockholders’ shares will be included in calculating the maximum number of shares that may be repurchased in any annual period, they will not be subject to the annual percentage caps; therefore, if the volume of requests to repurchase deceased stockholders’ shares in a particular quarter were large enough to cause the annual cap to be exceeded, even if no other repurchase requests were processed, the repurchases of deceased stockholders’ shares would be completed in full, assuming sufficient proceeds from the sale of shares under our DRIP or other operating funds authorized by our board of directors were available. If sufficient funds are not available to pay all such repurchases in full, the requests to repurchase deceased stockholders’ shares would be honored on a pro rata basis. We will next give priority to (i) requests of stockholders with qualifying disabilities, and in the discretion of our board of directors, stockholders with another involuntary exigent circumstance, such as bankruptcy, and (ii) next, to requests for full repurchases of accounts with a balance of 100 or less K Shares, K-I Shares and/or K-T Shares at the time we receive the request, in order to reduce the expense of maintaining small accounts. Thereafter, we will honor the remaining quarterly repurchase requests on a pro rata basis. Unfulfilled requests for repurchase will be carried over automatically to subsequent repurchase periods unless a stockholder withdraws the request for repurchase five business days prior to the next repurchase date.

Repurchases of our K Shares, K-I Shares and K-T Shares will be made quarterly upon written request to us at least 15 days prior to the end of the applicable quarter. Valid repurchase requests will be honored approximately 30 days following the end of the applicable quarter, which we refer to as the “repurchase date.” Stockholders may withdraw their repurchase request at any time up to five business days prior to the repurchase date. For more information on the restrictions and limitations of the share repurchase program, see the “Description of Capital Stock — Share Repurchase Program” section of the prospectus.

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Updates to our Experts

The following information supersedes and replaces the section entitled “Experts” on page 243 of the prospectus:

EXPERTS

The consolidated financial statements of Procaccianti Hotel REIT, Inc. as of December 31, 2017 and 2016, and for the year ended December 31, 2017 and the period August 24, 2016 (Inception) through December 31, 2016, the consolidated financial statements of Procaccianti Convertible Fund, LLC as of December 31, 2017 and for the period April 21, 2017 (Inception) through December 31, 2017, and the financial statements of Bayboro Hoteliers, LLC as of December 31, 2016 and for the year then ended and for the period January 1, 2017 through June 28, 2017, each appearing in this Prospectus and Registration Statement have been audited by Ernst &Young LLP, independent registered public accounting firm, as set forth in their reports thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

The financial statements of Grand Traverse Hotel Properties, LLC d/b/a Hotel Indigo as of December 31, 2017 and 2016, and for the years ended December 31, 2017 and 2016 appearing in this Prospectus and Registration Statement have been audited by Blum, Shapiro & Company, P.C., independent auditors, as set forth in their report therein appearing herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

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

The following discussion and analysis of our financial condition and results of operation is substantially the same as that in our Quarterly Report on Form 10-Q that was filed with the SEC on November 14, 2018, and supplements, and should be read in conjunction with, the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 166 of the prospectus, and our condensed consolidated financial statements and the notes thereto:

Overview

We were formed on August 24, 2016, under the laws of Maryland to acquire and own a diverse portfolio of hospitality properties consisting primarily of select-service, extended-stay and compact full-service hotel properties throughout the United States. As a newly formed company, we have a limited operating history. Subscription proceeds from K Shares, K-I Shares and K-T Shares in our Private Offering and our Public Offering, as discussed below, have been and will be applied to investments in hotel properties or real estate-related investments relating to hotel properties. We will experience a relative increase in liquidity as we receive additional subscriptions for shares and a relative decrease in liquidity as we spend net offering proceeds in connection with the acquisition and operation of our hotel properties.

We intend to make reserve allocations as necessary to aid our objective of preserving capital for our investors by supporting the maintenance and viability of properties we acquire in the future. If reserves and any other available income become insufficient to cover our operating expenses and liabilities, it may be necessary to obtain additional funds by borrowing, refinancing properties or liquidating our investment in one or more properties. There is no assurance that such funds will be available, or if available, that the terms will be acceptable to us.

On September 30, 2016, we commenced our Private Offering of K Shares and Units, which are comprised of four K Shares and one A Share, for an offering price of  $10.00 per K Share and $50.00 per Unit, with a targeted maximum offering of  $150,000,000 in K Shares (including K Shares sold as part of a Unit) to accredited investors only pursuant to a confidential private placement memorandum exempt from registration under the Securities Act. We terminated our Private Offering prior to the commencement of the Public Offering, and, as of such termination, received approximately $15,582,755 in gross proceeds from the sale of K Shares and Units in the Private Offering. Of the $15,582,755 in gross proceeds received, $2,954,095 was from the sale of A Shares to TPG Hotel REIT Investor, LLC to fund organization and offering expenses associated with the K Shares and Units. With the A Share proceeds we paid $782,705 in selling commissions, $275,794 in dealer manager fees and recognized $1,083,912 in other offering costs. The number of properties and other assets we will acquire will depend upon the number of shares sold and the resulting amount of net proceeds available for investment in properties and other assets.

On August 14, 2018, we commenced our Public Offering pursuant to the Registration Statement, to offer up to $550,000,000 in shares of common stock, including $500,000,000 in shares of common stock pursuant to the primary offering, consisting of the following three share classes: K-I Shares, at an initial offering price of  $9.50 per share, K Shares, at an initial offering price of  $10.00 per share, and K-T Shares, at an initial offering price of  $10.00 per share, which reflect the estimated net asset value per share of each of the K-I Shares, K Shares, and K-T Shares as of February 28, 2018, and $50,000,000 in shares of common stock pursuant to the DRIP, at $9.50 per K-I Share, $9.50 per K Share and $9.50 per K-T Share. As of September 30, 2018, we had not sold any shares under the Public Offering.

During the year ended December 31, 2017, we entered into an option agreement pursuant to which we had the right to acquire up to a 51% interest in Procaccianti Convertible Fund, LLC, or PCF, an affiliated entity that owns two select service hotel properties, the Staybridge Suites St. Petersburg Downtown in St. Petersburg, FL and the Springhill Suites Wilmington Mayfaire in Wilmington, NC. PCF is controlled by an affiliate of our advisor. We exercised our option under the option agreement on March 29, 2018, and we purchased a 51% membership interest in PCF for $8,331,899, which is comprised of the purchase price of $8,029,519 plus $302,380 in closing costs.

On August 15, 2018, we acquired a fee simple interest in a 107-room, select-service hotel property located in Traverse City, Michigan, or TCI, for a purchase price of  $26,050,000, exclusive of closing costs and typical hotel closing date adjustments. We accounted for the transaction as an asset acquisition.

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We are managed by Procaccianti Hotel Advisors, LLC, or PHA, pursuant to an Advisory Agreement by and among us, our Operating Partnership and PHA. Substantially all of our business is conducted through our Operating Partnership. We are the sole general partner of our Operating Partnership

Critical Accounting Policies

The preparation of our financial statements requires significant management judgments, assumptions and estimates about matters that are inherently uncertain. These judgments affect the reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our financial statements. Additionally, other companies may utilize different estimates that may impact the comparability of our results of operations to those of companies in similar businesses. There have been no significant changes to our accounting policies during the period covered by our Quarterly Report on Form 10-Q for the quarter ended September 30, 2018 other than described in Note 2 to our unaudited consolidated financial statements in this prospectus supplement in the discussion of our significant accounting policies.

Income Taxes

We intend to elect to be taxed as a REIT under the Code and intend to operate as such during the taxable year ending December 31, 2018. To qualify as a REIT, we must meet certain organizational and operational requirements, including a requirement to distribute at least 90% of our annual REIT taxable income to our stockholders (which is computed without regard to the dividends-paid deduction or net capital gain and which does not necessarily equal net income as calculated in accordance with GAAP). As a REIT, we generally will not be subject to federal income tax to the extent we distribute qualifying dividends to our stockholders. If we fail to qualify as a REIT in any taxable year, we would be subject to federal income tax on our taxable income at regular corporate income tax rates and generally would not be permitted to qualify for treatment as a REIT for federal income tax purposes for the four taxable years following the year during which qualification is lost unless the Internal Revenue Service grants us relief under certain statutory provisions. Such an event could materially adversely affect our net income and net cash available for distribution to our stockholders. However, we are, and intend to continue to be, organized and operated in such a manner as to qualify for treatment as a REIT.

We follow the income tax guidance under GAAP to recognize, measure, present and disclose in our consolidated financial statements uncertain tax positions that we have taken or expect to take on a tax return. As of September 30, 2018 and December 31, 2017, we did not have any liabilities for uncertain tax positions that we believe should be recognized in our consolidated financial statements. We have not been assessed interest or penalties by any major tax jurisdictions.

Distributions

Our board of directors may authorize distributions in excess of those required for us to maintain REIT status as it deems appropriate. We currently pay regular quarterly distributions to our stockholders. We expect to continue to pay distributions quarterly unless our results of operations, our general financial condition, applicable provisions of Maryland law or other factors make it imprudent to do so. The timing and amount of distributions will be determined by our board of directors, in its discretion, and may vary from time to time. Our board of directors’ discretion will be influenced in substantial part by its obligation to cause us to comply with the REIT requirements of the Code. We can provide no assurance that we will be able to pay distributions on our K-I Shares, K Shares or K-T Shares.

Our board of directors has adopted a policy to refrain from funding distributions with offering proceeds; instead, we plan to fund distributions from cash flows from operations and capital transactions (other than this or other securities offerings, but which may include the sale of one or more assets). However, our charter does not restrict us from paying distributions from any particular source, including proceeds from securities offerings, and our board of directors has the ability to change our policy regarding the source of distributions. However, in accordance with Maryland law, we may not make distributions that would: (1) cause us to be unable to pay our debts as they become due in the usual course of business; or (2) cause our total assets to be less than the sum of our total liabilities plus, unless our charter provides

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otherwise, senior liquidation preferences. Our charter currently provides that amounts that would be needed, if we were to dissolve at the time of such distributions, to satisfy the preferential rights upon dissolution of holders of K-I Shares, K Shares and K-T Shares shall not be added to our total liabilities for these purposes. Subject to the preceding, our board of directors will determine the amount of distributions we will pay to our stockholders. We have not established a minimum distribution level.

Liquidity and Capital Resources

Our charter authorizes the issuance of 248,125,000 shares of capital stock, of which (a) 55,500,000 shares are classified as K Shares, (b) 55,500,000 shares are classified as K-I Shares, (c) 116,000,000 shares are classified as K-T Shares, (d)125,000 shares are classified as B Shares, and (e) 21,000,000 shares are classified as A Shares.

Our principal demands for cash will be for acquisition costs, including the purchase price of any properties, loans and securities we acquire, improvement costs, the payment of our operating and administrative expenses, continuing debt service obligations and distributions to our stockholders. Generally, we will fund our acquisitions from the net proceeds of the Private Offering and Public Offering. We intend to acquire our assets with cash, including proceeds from the Public Offering, and mortgage or other debt. Our advisor and its affiliates have agreed to purchase A Shares in a private placement in order to provide us with funds sufficient to pay the selling commissions, dealer manager fees, stockholder servicing fees, and other organization and offering expenses in connection with the Public Offering. We will use the proceeds from the sale of A Shares to fund selling commissions, dealer manager fees, stockholder servicing fees and other organization and offering expenses payable in connection with the sale of K Shares, K-I Shares and K-T Shares in the Offering.

We intend to spend approximately $1,000,000 on refurbishments to TCI, primarily relating to renovation work to the garage facility and building’s exterior. The work will be performed in the fourth quarter of 2018 and the first quarter of 2019. The funding for the forthcoming renovation was obtained through proceeds from the sale of K Shares and debt proceeds.

As a result of damage sustained from Hurricane Florence in the third quarter of 2018, we accrued $66,000 for costs associated with the hurricane at the Wilmington Hotel. We do not anticipate receiving any insurance proceeds relating to hurricane damage. The expense is recognized in the rooms and other property expenses account on the statement of operations. We will use cash from operations to fund these costs.

We expect to use debt financing as a source of capital. Our charter provides that the maximum amount of our total indebtedness shall not exceed 300% of our total “net assets” (as defined in accordance with the Statement of Policy Regarding Real Estate Investment Trusts revised and adopted by the North American Securities Administrators Association on May 7, 2007) as of the date of any borrowing, which is generally expected to be approximately 75% of the cost of our investments; however, we may exceed that limit if approved by a majority of our independent directors and disclosed to stockholders in our next quarterly report following such borrowing along with justification for exceeding such limit. This charter limitation, however, does not apply to individual real estate assets or investments. In addition, it is currently our intention to limit our aggregate borrowings to 50% of the aggregate fair market value of our assets, unless borrowing a greater amount is approved by a majority of our independent directors and disclosed to stockholders in our next quarterly report following such borrowing along with justification for borrowing such a greater amount. This limitation, however, will not apply to individual real estate assets or investments. At the date of acquisition of each asset, we anticipate that the cost of investment for such asset will be substantially similar to its fair market value. However, subsequent events, including changes in the fair market value of our assets, could result in our exceeding these limits.

We anticipate that adequate cash will be generated from operations to fund our operating and administrative expenses, continuing debt service obligations and the payment of distributions. We believe that our current funding sources are sufficient to meet our obligations over the next twelve months. However, our ability to finance our operations is subject to some uncertainties. Our ability to sell our assets is partially dependent upon the state of real estate markets and the ability of purchasers to obtain financing at reasonable commercial rates. We do not intend to fund distributions from offering proceeds; however, if

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we have not generated sufficient cash flow from our operations and other sources, such as from borrowings, advances from our advisor, our advisor’s deferral, suspension and/or waiver of its fees and expense reimbursements, to fund distributions, we may use offering proceeds. Subject to certain limited exceptions, there is no limit to the amount of distributions that we may pay from offering proceeds. Moreover, our board of directors may change this policy, in its sole discretion, at any time.

Potential future sources of capital include secured or unsecured financings from banks or other lenders, establishing additional lines of credit, proceeds from the sale of properties and undistributed cash flow. Note that, currently, we have not identified any additional sources of financing and there is no assurance that such sources of financings will be available on favorable terms or at all.

Sources and Uses of Cash During the Quarterly Period Ended September 30, 2018

Proceeds from the sale of common stock were partially used to fund our initial investment in hotel properties and the related costs associated with the transactions. Such proceeds were also used to pay general and administrative expenses for the nine months ended September 30, 2018. The remaining proceeds are held in liquid cash accounts. Cash balances from our investments in hotel properties were consolidated during the nine months ended September 30, 2018.

Operating Activities

During the nine months ended September 30, 2018, net cash provided by operating activities was $1,219,358, compared to the net cash used in operating activities of  $190,395 for the nine months ended September 30, 2017. The change in net cash from operating activities is primarily due to an increase in net loss and an increase in depreciation and amortization, offset by the net change in operating assets and liabilities. We did not own any properties during the nine months ended September 30, 2017. The increase in cash from operations is primarily the result of the acquisitions of PCF and TCI. We expect to continue to generate cash flows from operations as we acquire more properties.

Investing Activities

During the nine months ended September 30, 2018, net cash used in investing activities was $33,035,588, compared to $0 during the nine months ended September 30, 2017. The increase in net cash used in investing activities was primarily the result of the acquisitions of our interest in PCF and TCI during the nine months ended September 30, 2018, compared to owning no properties during the nine months ended September 30, 2017. Net cash used in investing activities during the nine months ended September 30, 2018 consisted of the following:

•

$6,739,673 of cash used for the acquisition of our interest in PCF, net of cash acquired;

​

•

$26,061,459 of cash used for the acquisition of TCI, net of cash acquired; and

​

•

$234,456 of cash used for improvements to real estate investments.

​

Financing Activities

During the nine months ended September 30 2018, net cash provided by financing activities was $31,108,127, of which $7,964,959 represents proceeds received through the sale of common stock. These proceeds are offset by the payment of offering costs consisting partially of selling commissions and dealer manager fees totaling $623,041 for the nine months ended September 30, 2018. We received proceeds of $17,836,000 relating to the TCI Note, offset by $223,510 of deferred financing costs incurred as a result of the TCI acquisition. Additionally, we received $6,661,071 in proceeds from loans from affiliates, of which $6,600,000 was used to fund the TCI acquisition and $61,071 was used to fund distributions to stockholders. We received $750,000 in proceeds from loans from the franchisor relating to key money at the St. Pete Hotel. An additional $311,352 of distributions was paid to stockholders with proceeds from operations. Cash flow from financing activities for the nine months ended September 30, 2018, also includes $922,875 of distributions to noncontrolling interest. During the nine months ended September 30, 2018, we

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repurchased $23,125 of outstanding common stock. Net cash movement provided by financing activities for the nine months ended September 30, 2017 was $2,929,250, which was the result of the issuance of $3,141,000 of common stock offset with $211,750 of commissions and dealer manager fees.

Results of Operations

The discussion that follows is based on our consolidated results of operations for the three and nine months ended September 30, 2018 and 2017. The ability to compare one period to another is affected by the acquisition of a 51% membership interest of PCF on March 29, 2018 and the acquisition of TCI on August 15, 2018. As of September 30, 2017, we had not made an investment.

Room revenue

We expect the majority of our revenues to be derived from the operation of our hotel properties. Room revenue is the product of the number of rooms sold and the average daily room rate. Room revenue was $3,344,628 and $5,872,001 for the three and nine months ended September 30, 2018, respectively. There was no room revenue for the three and nine months ended September 30, 2017, as we did not own any hotel properties during this period.

Food and beverage revenue

Food and beverage revenue was $514,332 and $605,364 for the three and nine months ended September 30, 2018, respectively. There was no food and beverage revenue for the three and nine months ended September 30, 2017, as we did not own any hotel properties during this period. These amounts are comprised of revenue realized in hotel food and beverage outlets as well as catering events.

Other operating revenue

Other operating revenue was $73,517 and $111,145 for the three and nine months ended September 30, 2018, respectively. There was no other operating revenue for the three and nine months ended September 30, 2017, as we did not own any hotel properties during this period. These amounts include ancillary hotel revenue and other items primarily driven by occupancy such as telephone/internet, parking, gift shops, and other guest services.

Rooms and other property expenses

Rooms and other property expenses were $1,726,088 and $2,821,006 for the three and nine months ended September 30, 2018, respectively, and there were no rooms and other property expenses for the three and nine months ended September 30, 2017. These amounts include rooms, food and beverage, and other operating expenses which are primarily driven by the corresponding revenue account and occupancy. These amounts also include maintenance, utilities, franchise fees, property taxes and other taxes. Other property expenses also includes additional costs incurred in September 2018, as a result of Hurricane Florence in Wilmington, North Carolina.

General and administrative

General and administrative expenses for the three and nine months ended September 30, 2018 were $852,423 and $1,680,057, respectively, which includes expenses at both the property and Company level. This balance is compared to $121,111 and $264,173 for the three and nine months ended September 30, 2017, respectively, which did not include any property level expenses as we did not own any hotel properties during this period. General and administrative expenses consist primarily of transfer agent fees, fees paid to the board of directors, sales and marketing fees, audit fees, and other professional fees.

Property management fees to affiliates

Property management fees to affiliates were $118,062 and $197,761 for the three and nine months ended September 30, 2018, respectively. There were no property management fees to affiliates for the three and nine months ended September 30, 2017. Property management fees are property level expenses equal to a certain percentage of the hotel properties’ gross revenues and we expect them to fluctuate accordingly.

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Other fees to affiliates

Other fees to affiliates were $474,335 and $637,942 for the three and nine months ended September 30, 2018, respectively. There were no other fees to affiliates for the three and nine months ended September 30, 2017. Other fees include asset management fees due to PHA that are paid quarterly in arrears equal to one-fourth of 0.75% of the adjusted cost of the Company’s assets. Other fees also include acquisition fees due to an affiliate for providing services including selecting, evaluating and acquiring potential investments. This fee is equal to 1.5% of the Gross Contract Purchase Price of an investment.

Acquisition costs

There were no acquisition costs expensed for the three months ended September 30, 2018, as the acquisition costs incurred as a result of the TCI acquisition were capitalized, in accordance with Topic 805, as a component of the cost of the assets acquired. Acquisition costs relating to the purchase of a 51% interest in PCF were expensed as incurred, in accordance with Topic 810, and were $302,380 for the nine months ended September 30, 2018. There were no acquisition costs for the three and nine months ended September 30, 2017. Acquisition costs include closing costs associated with the purchase of hotel properties.

Depreciation and amortization

Depreciation and amortization expenses for the three and nine months ended September 30, 2018, were $430,292 and $779,656, respectively. These amounts include depreciation on our hotel buildings, improvements, furniture, fixtures and equipment, along with amortization of our franchise fees and certain intangibles. The Company did not own any assets during the three and nine months ended September 30, 2017.

Interest Expense

Interest expense was $475,709 and $770,118 for the three and nine months ended September 30, 2018, respectively. There was no interest expense for the three and nine months ended September 30, 2017. Interest expense represents monthly fixed rate payments on the outstanding mortgage notes payable balance. Interest expense also includes accrued interest on the outstanding asset management fees, acquisition fees and promissory notes from PHA and PCI. Also included in interest expense are the amortization of deferred financing costs and debt discounts.

Gain on acquisition

The $42,026 gain on acquisition for the nine months ended September 30, 2018, represents the gain incurred as a result of purchase of the 51% interest in PCF. The transaction was accounted for as an asset acquisition under the VIE model and therefore the difference in the fair value of the net assets acquired and consideration paid is recognized as a gain or loss. As any subsequent investments will be independent of this transaction, we cannot predict any future gains or losses but we will evaluate any future acquisitions accordingly. There was no gain associated with the TCI acquisition during the three months ended September 30, 2018.

Income tax benefit or expense

We had an income tax benefit of  $10,837 for the three months ended September 30, 2018. We had an income tax expense of  $75,703 for the nine months ended September 30, 2018. No income tax expense was recognized for the three and nine months ended September 30, 2017.

Net income or loss

For the three months ended September 30, 2018, we had a net loss of  $133,595 compared to a net loss of  $121,111 for the three months ended September 30, 2017. The increase in net loss of  $12,484 over the comparable prior year period was primarily due to an increase in operations as a result of the aforementioned acquisitions of hotel properties and increases in other fees to affiliates. For the nine months ended September 30, 2018, we had a net loss of  $634,087 compared to $264,173 for the nine months ended

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September 30, 2017. The increase in net loss of  $369,914 over the comparable prior year period was primarily due to an increase in operations as a result of the aforementioned acquisitions of hotel properties and increases to acquisition costs, other fees due to affiliates, and income tax expense.

Net income attributable to noncontrolling interest

Net income relating to noncontrolling interest for the three months ended September 30, 2018, was $166,877. Net income relating to noncontrolling interest for the nine months ended September 30, 2018, was $382,519, which includes the three days of operations in the first quarter. There was no net income relating to noncontrolling interest for the three and nine months ended September 30, 2017. This amount includes net income attributable to a third-party’s 49% ownership interest in PCF and will fluctuate accordingly with any increases or decreases to net income at PCF.

Funds from Operations and Modified Funds from Operations

One of our objectives is to provide cash distributions to our stockholders from cash generated by our operations. The purchase of real estate assets and real estate-related investments, and the corresponding expenses associated with that process, is a key operational feature of our business plan in order to generate cash from operations. Due to certain unique operating characteristics of real estate companies, the National Association of Real Estate Investment Trusts (NAREIT), an industry trade group, has promulgated a measure known as funds from operations, or FFO, which we believe is an appropriate supplemental measure to reflect the operating performance of a REIT. FFO is not equivalent to our net income (loss) as determined under GAAP.

We define FFO, consistent with NAREIT’s definition, as net income (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales of property and asset impairment write-downs, plus depreciation and amortization of real estate assets, and after adjustments for unconsolidated partnerships and joint ventures. Adjustments for unconsolidated partnerships and joint ventures will be calculated to reflect FFO on the same basis.

We, along with others in the real estate industry, consider FFO to be an appropriate supplemental measure of a REIT’s operating performance because it is based on a net income (loss) analysis of property portfolio performance that excludes non-cash items such as depreciation and amortization and asset impairment write-downs, which we believe provides a more complete understanding of our performance to investors and to our management, and when compared year over year, reflects the impact on our operations from trends in occupancy.

Historical accounting convention (in accordance with GAAP) for real estate assets requires companies to report its investment in real estate at its carrying value, which consists of capitalizing the cost of acquisitions, development, construction, improvements and significant replacements, less depreciation and amortization and asset impairment write-downs, if any, which is not necessarily equivalent to the fair market value of its investment in real estate assets.

The historical accounting convention requires straight-line depreciation of buildings and improvements, which implies that the value of real estate assets diminishes predictably over time, which could be the case if such assets are not adequately maintained or repaired and renovated as required by relevant circumstances and/or as requested or required by lessees for operational purposes in order to maintain the value disclosed. We believe that, since fair value of real estate assets historically rises and falls with market conditions including, but not limited to, inflation, interest rates, the business cycle, unemployment and consumer spending, presentations of operating results for a REIT using historical accounting for depreciation could be less informative.

In addition, we believe it is appropriate to disregard asset impairment write-downs as they are a non-cash adjustment to recognize losses on prospective sales of real estate assets. Since losses from sales of real estate assets are excluded from FFO, we believe it is appropriate that asset impairment write-downs in advancement of realization of losses should be excluded. Impairment write-downs are based on negative market fluctuations and underlying assessments of general market conditions. When indicators of potential impairment suggest that the carrying value of real estate and related assets may not be recoverable, we assess the recoverability by estimating whether we will recover the carrying value of the asset through

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undiscounted future cash flows and eventual disposition (including, but not limited to, net rooms revenues, net proceeds on the sale of property and any other ancillary cash flows at a property or group level under GAAP). If based on this analysis, we do not believe that we will be able to recover the carrying value of the real estate asset, we will record an impairment write-down to the extent that the carrying value exceeds the estimated fair value of the real estate asset. Testing for indicators of impairment is a continuous process and is analyzed on a quarterly basis. Investors should note, however, that determinations of whether impairment charges have been incurred are based partly on anticipated operating performance, because estimated undiscounted future cash flows from a property, including estimated future net rooms revenues, net proceeds on the sale of the property, and certain other ancillary cash flows, are taken into account in determining whether an impairment charge has been incurred. While impairment charges are excluded from the calculation of FFO as described above, investors are cautioned that due to the fact that impairments are based on estimated future undiscounted cash flows and that we intend to have a relatively limited term of our operations, it could be difficult to recover any impairment charges through the eventual sale of the property. No impairment losses have been recorded to date.

Publicly registered, non-listed REITs, such as us, typically have a significant amount of acquisition activity and are substantially more dynamic during their initial years of investment and operations. While other start up entities may also experience significant acquisition activity during their initial years, we believe that publicly registered, non-listed REITs are unique in that they have a limited life with targeted exit strategies within a relatively limited time frame after the acquisition activity ceases. We will use the proceeds raised in our offering to acquire real estate assets and real estate-related investments, and we intend to begin the process of achieving a liquidity event (i.e., listing of our shares of common stock on a national securities exchange, a merger or sale, the sale of all or substantially all of our assets, or another similar transaction) within five to seven years after the completion of our offering stage, which is generally comparable to other publicly registered, non-listed REITs. Thus, we do not intend to continuously purchase real estate assets and intend to have a limited life. Due to these factors and other unique features of publicly registered, non-listed REIT, the Institute for Portfolio Alternatives (IPA), an industry trade group, has standardized a measure known as modified funds from operations, or MFFO, which we believe to be another appropriate supplemental measure to reflect the operating performance of a publicly registered, non-listed REIT. MFFO is a metric used by management to evaluate sustainable performance and distribution policy. MFFO is not equivalent to our net income (loss) as determined under GAAP.

We define MFFO, a non-GAAP measure, consistent with the IPA’s Guideline 2010-01, Supplemental Performance Measure for Publicly Registered, Non-Listed REITs: Modified Funds from Operations (Practice Guideline), issued by the IPA in November 2010. The Practice Guideline defines modified funds from operations as FFO further adjusted for the following items included in the determination of GAAP net income (loss): acquisition fees and expenses; amounts related to straight-line rental income and amortization of above and below intangible lease assets and liabilities; accretion of discounts and amortization of premiums on debt investments; mark-to-market adjustments included in net income (loss); nonrecurring gains or losses included in net income (loss) from the extinguishment or sale of debt, hedges, foreign exchange, derivatives or securities holdings where trading of such holdings is not a fundamental attribute of the business plan; unrealized gains or losses resulting from consolidation from, or deconsolidation to, equity accounting; adjustments related to contingent purchase price obligations where such adjustments have been included in the derivation of GAAP net income (loss); and after adjustments for a consolidated and unconsolidated partnership and joint ventures, with such adjustments calculated to reflect MFFO on the same basis. Our MFFO calculation complies with the IPA’s Practice Guideline, described above. In calculating MFFO, we exclude paid and accrued acquisition fees and expenses that are reported in our condensed consolidated statements of operations. Since MFFO excludes acquisition fees and expenses, it should not be construed as a historic performance measure. Acquisition fees and expenses are paid in cash by us, and we have not set aside or put into escrow any specific amount of proceeds from our offerings to be used to fund acquisition fees and expenses. Acquisition fees and expenses include payments to our advisor or its affiliates and third parties. Such fees and expenses will not be reimbursed by our advisor or its affiliates and third parties, and therefore if there are no further proceeds from the sale of shares of our common stock to fund future acquisition fees and expenses, such fees and expenses will need to be paid from either additional debt, operational earnings or cash flows, net proceeds from the sale of properties, or from ancillary cash flows. As a result, the amount of proceeds available for investment and

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operations would be reduced, or we may incur additional interest expense as a result of borrowed funds. Nevertheless, our advisor or its affiliates will not accrue any claim on our assets if acquisition fees and expenses are not paid from the proceeds of our offerings. Under GAAP, acquisition fees and expenses related to the acquisition of properties determined to be business combinations are expensed as incurred, including investment transactions that are no longer under consideration, and are included in acquisition related expenses in the accompanying condensed consolidated statements of operations, and acquisition fees and expenses associated with transactions determined to be an asset purchase are capitalized.

All paid and accrued acquisition fees and expenses have negative effects on returns to investors, the potential for future distributions, and cash flows generated by us, unless earnings from operations or net sales proceeds from the disposition of other properties are generated to cover the purchase price of the real estate asset, these fees and expenses and other costs related to such property. In addition, MFFO may not be an indicator of our operating performance, especially during periods in which properties are being acquired.

In addition, certain contemplated non-cash fair value and other non-cash adjustments are considered operating non-cash adjustments to net income (loss) in determining cash flows from operations in accordance with GAAP.

We use MFFO and the adjustments used to calculate it in order to evaluate our performance against other publicly registered, non-listed REITs, which intend to have limited lives with short and defined acquisition periods and targeted exit strategies shortly thereafter. As noted above, MFFO may not be a useful measure of the impact of long-term operating performance if we do not continue to operate in this manner. We believe that our use of MFFO and the adjustments used to calculate it allow us to present our performance in a manner that reflects certain characteristics that are unique to publicly registered, non-listed REITs, such as their limited life, limited and defined acquisition period and targeted exit strategy, and hence the use of such measures may be useful to investors. For example, acquisition fees and expenses are intended to be funded from the proceeds of our offering and other financing sources and not from operations. By excluding acquisition fees and expenses, the use of MFFO provides information consistent with management’s analysis of the operating performance of its real estate assets. Additionally, fair value adjustments, which are based on the impact of current market fluctuations and underlying assessments of general market conditions, but can also result from operational factors such as the average daily rate and occupancy rates, may not be directly related or attributable to our current operating performance. By excluding such charges that may reflect anticipated and unrealized gains or losses, we believe MFFO provides useful supplemental information.

Presentation of this information is intended to assist management and investors in comparing the operating performance of different REITs, although it should be noted that not all REITs calculate FFO and MFFO the same way, so comparisons with other REITs may not be meaningful. Furthermore, FFO and MFFO are not necessarily indicative of cash flow available to fund cash needs and should not be considered as an alternative to net income (loss) as an indication of our performance, as an indication of our liquidity, or indicative of funds available for our cash needs, including our ability to make distributions to our stockholders. FFO and MFFO should be reviewed in conjunction with other measurements as an indication of our performance. MFFO may be useful in assisting management and investors in assessing the sustainability of operating performance in future operating periods, and in particular, after the offering and acquisition stages are complete and net asset value is disclosed. MFFO is not a useful measure in evaluating net asset value since impairment write-downs are taken into account in determining net asset value but not in determining MFFO.

FFO and MFFO, as described above, should not be construed to be more relevant or accurate than the current GAAP methodology in calculating net income (loss) or in its applicability in evaluating our operational performance. The method used to evaluate the value and performance of real estate under GAAP should be construed as a more relevant measure of operation performance and considered more prominently than the non-GAAP FFO and MFFO measures and the adjustments to GAAP in calculating FFO and MFFO. MFFO has not been scrutinized to the level of other similar non-GAAP performance measures by the SEC or any other regulatory body.

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Our calculation of FFO and MFFO is presented in the following table for the three and nine months ended September 30, 2018 and 2017:

Off-Balance Sheet Arrangements

As of September 30, 2018, we had no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Related-Party Transactions and Agreements

We have entered into agreements with PHA and its affiliates whereby we pay certain fees to, or reimburse certain expenses of, PHA or its affiliates for acquisition fees and expenses, asset management fees, disposition fees, property management fees, organization and offering costs and reimbursement of certain operating costs. Refer to Note 7 (Related Party Transactions) to our unaudited consolidated financial statements included in this prospectus supplement for a discussion of the various related-party transactions, agreements and fees.

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Updated Financial Information

The following financial pages should be read in conjunction with the financial pages beginning on page F-1 of the prospectus:

INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
OF PROCACCIANTI HOTEL REIT, INC.

F-1

PROCACCIANTI HOTEL REIT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

The accompanying notes are an integral part of these condensed consolidated financial statements

F-2

PROCACCIANTI HOTEL REIT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

The accompanying notes are an integral part of these condensed consolidated financial statements

F-3

PROCACCIANTI HOTEL REIT, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
(Unaudited)

The accompanying notes are an integral part of these condensed consolidated financial statements

F-4

PROCACCIANTI HOTEL REIT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)