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Moody National REIT I, Moody National REIT II close to merger agreement

Moody NationalREIT I Inc. and MoodyNational REIT II Inc. are close to signing a definitive mergeragreement.

The two companies have signed a nonbinding letter of intentfor Moody National REIT II to acquire Moody National REIT I. Following a reviewof strategic alternatives, a special committee of Moody National REIT I'sdirectors has accepted the nonbinding letter of intent from the other company,according to a filing.

The gross merger consideration for the deal is $11 per shareof Moody National REIT I's common stock.

The letter of intent provides that the net mergerconsideration payable to Moody National REIT I's shareholders cannot be lessthan $10.25 per share. Moody National REIT I's shareholders willalso have the option to receive either a cash payment or shares of MoodyNational REIT II, provided that no more than approximately 50% of the netmerger consideration is paid in cash.

The letter of intent also includes a go-shop period andtermination fee provisions.

Moody National REIT I has a 14-asset portfolio that includes12 hotels, while Moody National REIT II deals in select-service hotels.

Both REITs are sponsored by Moody National REIT Sponsor LLC,an affiliate of the Moody National Cos.

Moody National REIT I's special committee was represented byVinson & Elkins LLP and FBR Capital Markets & Co. as counsel andfinancial advisers, respectively.

Moody National REIT II's special committee was representedby Venable LLP as counsel and Houlihan Lokey Capital Inc. as financialadvisers.