{"url_path":"/sec/cik-0001745032/10-k/2026/item-13","section_key":"item-13","section_title":"Item 13 Certain Relationships and Related Transactions, and Director Independence.","topic":"sec","document":{"doc_type":"10-K","doc_date":"2026-05-15","source_url":"https://www.sec.gov/Archives/edgar/data/1745032/0001104659-26-062807-index.html","accession_number":"0001104659-26-062807","cik":"0001745032","ticker":null,"issuer_name":"Lodging Fund REIT III, Inc.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1745032/0001104659-26-062807-index.html","primary_entity_key":"0001745032","primary_entity_name":"Lodging Fund REIT III, Inc."},"word_count":3121,"has_tables":true,"body_markdown":"Item 13. Certain Relationships and Related Transactions, and Director Independence.\n\nPolicy Regarding Transactions with Related Persons\n\nThe Conflicts Committee will review and approve all matters our board of directors believes may involve a conflict of interest, including all transactions between the Company and affiliates of the Company and the Advisor. If we decide to acquire a property in which the Advisor, one of our directors or their respective affiliates owns an interest, a majority of members of the Conflicts Committee must first make a determination that such transaction is fair and reasonable to us and the purchase price is no greater than the price of the property to the affiliated seller, unless there is substantial justification for the excess amount and such excess amount is reasonable. Notwithstanding the foregoing, in no event will we acquire any property from an affiliated seller at an amount in excess of its current appraised value as determined by an independent third-party appraiser.\n\nIn addition, our Code of Conduct and Ethics lists examples of types of transactions with related parties that would create prohibited conflicts of interest and requires our officers and directors to be conscientious of actual and potential conflicts of interest with respect to our interests and to seek to avoid such conflicts or handle such conflicts in an ethical manner at all times consistent with applicable law. Our executive officers and directors are required to report potential and actual conflicts to the Chairman of the Audit Committee.\n\nCertain Transactions with Related Persons\n\nThe Conflicts Committee has reviewed the material transactions between our affiliates and us since January 1, 2023, as well as any such currently proposed material transactions. Set forth below is a description of such transactions.\n\n*Our Relationship with Legendary Capital REIT III, LLC.*Substantially all of our business is managed by the Advisor and its affiliates, pursuant to the Advisory Agreement. The Advisor is co-owned by Corey R. Maple and Norman H. Leslie. The Company has no direct employees. The employees of Legendary Capital, LLC, our sponsor and an affiliate of the Advisor (the “Sponsor”), provide services to us related to the negotiations of property acquisitions and financing, asset management, accounting, legal, investor relations, and all other administrative services. Pursuant to the terms of the Advisory Agreement, the Advisor is entitled to specified fees upon the provision of certain services, including acquisition fees, asset management fees, debt financing and refinancing fees, and disposition fees and real estate commissions. We also reimburse the Advisor and its affiliates, at cost, for certain expenses incurred on our behalf, including offering expenses, acquisition expenses and operating expenses. The Advisory Agreement has a term of 10 years. Pursuant to the terms of the Operating Partnership’s operating agreement, the Advisor also receives distributions from the Operating Partnership in connection with its ownership of non-voting Series B Limited Partnership Units (“Series B LP Units”) in certain circumstances.\n\nWe pay the Advisor a one-time acquisition fee of up to 1.4% of the hotel purchase price including funds allocated for any PIP at the time of each hotel property acquisition, and a financing fee of up to 1.4% of the hotel purchase price including funds allocated for any PIP at the time of closing the initial financing and a refinancing fee of up to 0.75% of the principal amount of any refinancing at the time of closing the refinancing. We also pay an annual asset management fee of up to 0.75% of the gross assets of the Company, which is payable on a monthly basis. We also pay a disposition fee equal to between 0.0% and 4.0% of the hotel sales price, payable at the closing of the disposition, which disposition fee in connection with a sale of all or substantially all of the Company’s assets, merger or similar transaction, shall be equal to between 0.0% and 4.0% of the gross consideration received (grossed up for liabilities of the Company), with the percentage dependent on the total return per share and timing of such transaction, payable at the closing of such sale, merger or transaction. We may also pay real estate commissions of up to 3.0% of the hotel purchase price in connection with the sale of a hotel property in which the Advisor or its affiliates provided substantial services, but in no event greater than one half of the total commissions paid with respect to such property if a commission is paid to a third party as well as the Advisor, and in no event will total commissions exceed 5.0% of the hotel sales price. Certain affiliates of the Advisor may receive an annual guarantee fee equal to 1.0% of the guaranty, paid on a monthly basis, for debt obligations of the hotel properties personally guaranteed by such affiliates. The Advisor may also receive an annual subordinated performance fee equal to 20% of the distributions after the common stockholders and Operating Partnership limited partners (other than the Series B LP Unit holders) have received a 6% cumulative, but not compounded, return per annum.\n\n77\n\n[Table of Contents](#TOC)\n\nPer the terms of the Operating Partnership’s operating agreement, the Advisor receives distributions from the Operating Partnership in connection with its ownership of non-voting Series B LP Units. In years other than the year of liquidation, after the Company’s common stockholders have received a 6% cumulative but not compounded return on their original capital contributions, the Advisor receives distributions equal to 5% of the total distributions made. In the year of liquidation, termination, merger or other cessation of the general partner, or the liquidation of the Operating Partnership, holders of the Series B LP Units shall be distributed an amount equal to 5% of the limited partner’s capital contributions after the common stockholders and the limited partners have received a return of their capital contributions plus a 6% cumulative but not compounded return. In the year of liquidation, termination, merger or other cessation of the general partner, or the liquidation of the Operating Partnership, holders of the Series B LP Units shall also be distributed an amount equal to 20% of the net proceeds from the sale of the properties, after the common stockholders and the limited partners have received a return of their original capital contributions plus a 6% cumulative but not compounded return from all distributions.\n\nThe Advisor and its affiliates may be reimbursed by the Company for certain organization and offering expenses in connection with the Company’s securities offerings, including legal, printing, marketing and other offering-related costs and expenses. Following the termination of the Offering, the Advisor will reimburse the Company for any such amounts incurred by the Company in excess of 15% of the gross proceeds of the Offering. In addition, the Company may pay directly or reimburse the Advisor and its affiliates for certain costs incurred in connection with its provision of services to the Company, including certain acquisition costs, financing costs, and sales and marketing costs, as well as an allocable share of general and administrative overhead costs. All reimbursements are paid to the Advisor and its affiliates at cost.\n\nFees and reimbursements earned and payable to the Advisor and its affiliates for the years ended December 31, 2025 and 2024, were as follows:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**Incurred**\n\n​\n\n​\n\n**For the Years Ended December 31,**\n\n​\n\n​\n\n**2025**\n\n​\n\n**2024**\n\nFees:\n\n \n\n​\n\n  ​\n\n \n\n​\n\n  ​\n\nFinancing fees\n\n​\n\n$\n\n645,614\n\n​\n\n$\n\n90,000\n\nAsset management fees\n\n​\n\n \n\n2,232,285\n\n​\n\n \n\n2,451,957\n\n​\n\n​\n\n$\n\n2,877,899\n\n​\n\n$\n\n2,541,957\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nReimbursements:\n\n \n\n​\n\n  ​\n\n \n\n​\n\n  ​\n\nOffering costs\n\n​\n\n$\n\n1,530,562\n\n​\n\n$\n\n1,901,538\n\nGeneral and administrative\n\n​\n\n \n\n3,167,907\n\n​\n\n \n\n3,631,895\n\nSales and marketing\n\n​\n\n \n\n62,687\n\n​\n\n \n\n57,574\n\nAcquisition costs\n\n​\n\n​\n\n40,146\n\n​\n\n​\n\n185,115\n\nOther\n\n​\n\n​\n\n992,614\n\n​\n\n​\n\n113,982\n\n​\n\n​\n\n$\n\n5,793,916\n\n​\n\n$\n\n5,890,104\n\n​\n\n​\n\n​\n\nFor the years ended December 31, 2025 and 2024, the Operating Partnership recognized distributions payable to the Advisor in the amounts of $0 and $118,232, respectively, in connection with the Advisor’s ownership of Series B LP Units.\n\nSamuel C. Montgomery, the Company’s Chief Financial Officer, is an employee of the Sponsor, and the Company reimburses the Sponsor, at cost, for an allocated portion of his compensation to the extent he provides services to the Company. For the years ended December 31, 2025 and 2024, the total amount of executive compensation expenses reimbursed by the Company for Samuel C. Montgomery was $0.1 million and $0.1 million, respectively. For the years ended December 31, 2025 and 2024, the Company paid Corey Maple and Norman Leslie distributions in the amount of $0 in connection with their ownership of 57,319 shares and $16,240 in connection with their ownership of 57,319 shares, respectively, each, of the Company’s common stock. Additionally, for the years ended December 31, 2025 and 2024, the\n\n78\n\n[Table of Contents](#TOC)\n\nCompany paid Corey Maple distributions in amount of $0 and $4,532, respectively, in connection with his ownership of 15,361 Series GO LP Units.\n\n*Our Relationship with NHS, LLC dba National Hospitality Services*. NHS is wholly-owned by Norman Leslie, a director and executive officer of the Company and a principal of the Advisor.\n\n**Property Management Services**\n\nThrough February 2025, NHS provided property management and hotel operations management services for our hotel properties, pursuant to individual management agreements. The agreements had an initial term expiring on December 31st of the fifth full calendar year following the effective date of the agreement, which automatically renewed for a period of five years on each successive five-year period, unless terminated in accordance with its terms.\n\n​\n\nPursuant to the management agreements, NHS earned a monthly base management fee for property management services, including overseeing the day-to-day operations of the hotel properties, equal to up to 4% of gross revenue. NHS may also earn an accounting fee of $14.00 per room for accounting services, payable monthly, and an administrative fee equal to 0.60% of gross revenues for administrative and other services. We reimbursed NHS for certain costs of operating the properties incurred on behalf of the Company. All reimbursements are paid to NHS at cost.\n\n​\n\nNHS also earns a flat fee of $5,000 per hotel property for due diligence services, including analyzing, evaluating, and reporting on documentation and information received by sellers or contributors during the period of due diligence. Such fee is waived if, upon acquisition by us, NHS is selected as the management company for the hotel property. NHS is also reimbursed for actual out-of-pocket costs incurred in providing the due diligence services.\n\n​\n\nIn February 2025, we terminated all property management agreements with NHS and entered into new property management agreements for those hotels with Hotel Equities Group, LLC a third party (See Note 8 “Related Party Transactions” of the notes to the consolidated financial statements included as part of this Annual Report on Form 10-K).\n\n​\n\n**Loan Agreement**\n\nWe have a $600,000 loan (the “NHS Loan”) with NHS (see Note 6 “Debt” of the notes to the consolidated financial statements included as part of this Annual Report on Form 10-K). The NHS Loan requires interest only payments, with all outstanding principal and interest amounts being due and payable at maturity. The NHS Loan has a fixed interest rate of 7.0% and a maturity date on September 30, 2025. We are working with NHS to extend this loan as of the date of this filing.\n\n​\n\n79\n\n[Table of Contents](#TOC)\n\nFees and reimbursements earned and payable to, NHS for the years ended December 31, 2025 and 2024, were as follows:\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n**Incurred**\n\n​\n\n**Payable as of**\n\n​\n\n​\n\n**For the Years Ended December 31,**\n\n​\n\n**December 31,**\n\n​\n\n​\n\n**2025**\n\n​\n\n**2024**\n\n​\n\n**2025**\n\n​\n\n**2024**\n\nFees:\n\n​\n\n​\n\n  ​\n\n​\n\n​\n\n​\n\n \n\n​\n\n  ​\n\n​\n\n​\n\n​\n\nManagement fees\n\n​\n\n$\n\n—\n\n​\n\n$\n\n761,201\n\n​\n\n$\n\n103,070\n\n​\n\n$\n\n321,408\n\nAdministrative fees\n\n​\n\n \n\n—\n\n​\n\n \n\n80,118\n\n​\n\n \n\n5,615\n\n​\n\n \n\n31,950\n\nAccounting fees\n\n​\n\n \n\n—\n\n​\n\n \n\n100,992\n\n​\n\n \n\n9,600\n\n​\n\n \n\n47,616\n\n​\n\n​\n\n$\n\n—\n\n​\n\n$\n\n942,311\n\n​\n\n$\n\n118,285\n\n​\n\n$\n\n400,974\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\n​\n\nReimbursements\n\n​\n\n$\n\n(260,177)\n\n​\n\n$\n\n672,472\n\n​\n\n$\n\n(19,140)\n\n​\n\n$\n\n421,333\n\n​\n\n*Our Relationship with One Rep Construction, LLC (“One Rep”).*One Rep is a related party through common management and ownership, as Corey Maple, Norman Leslie, and David Ekman, each hold a 33.33% ownership interest in One Rep. One Rep is a construction management company which provided construction management services to the Company during 2025 and 2024 related to the renovation construction activities at certain hotel properties. For the services provided, One Rep is paid a construction management fee equal to 6% or 7% of the total project costs. The Company reimburses One Rep for certain costs incurred on behalf of the Company, and all reimbursements are paid to One Rep at cost. For the years ended December 31, 2025 and 2024, the Company incurred $78,352 and $8,278 of construction management fees and reimbursements payable to One Rep, respectively. As of December 31, 2025 and 2024, the amounts outstanding and due to One Rep were $3,690 and $44,474 respectively, which is included in due to related parties on the accompanying consolidated balance sheets.\n\n*Our Relationship with Legendary A-1 Bonds, LLC (“A-1 Bonds”)*. A-1 Bonds is an affiliate of the Advisor which is owned by Mr. Leslie a director and executive officer of the Company and principal of the Advisor and Mr. Maple a director of the Company and principal of the Advisor. As of December 31, 2025 and 2024, the Company has an outstanding balance on its line of credit (the “A-1 Revolving Line of Credit”) amounting to $13.5 million and $14.3 million, respectively (see Note 6). As of December 31, 2025, the A-1 Revolving Line of Credit was a $20.0 million line of credit with a fixed interest rate of 17.50% and a maturity of December 31, 2027.\n\n*Loan Guarantees.*The members of the Advisor personally guaranty certain loans of the Company and may receive a guarantee fee of up to 1.0% per annum of the guaranty amount. As of December 31, 2025, Corey Maple is a guarantor of 50% of the loan secured by the Houston Property, which had an original loan amount of $13.9 million, is a guarantor of 50% of the loan secured by the Wichita Property, is a guarantor of the new loan secured by the Fort Collins Property, which had an original loan amount of $11.2 million and is a guarantor of the Company’s $5.0 million line of credit which is secured by the hotel properties located in Cedar Rapids, Iowa and Eagan, Minnesota, and 100,000 Common LP Units of Lodging Fund REIT III OP, LP. Mr. Maple is also a guarantor of the loan secured by the El Paso University Property, which had an original principal loan amount of $14.4 million. Mr. Maple was a guarantor of the Company’s loan secured by the Company’s hotel property in Fargo, North Dakota, which had an original loan amount of $7.4 million. That loan was repaid in full and the guaranty terminated on December 17, 2025. As of December 31, 2025, Norman Leslie is a guarantor of the Company’s new loan secured by the Fort Collins Property, which had an original loan amount of $11.2 million, and is a guarantor under the Company’s new loan secured by the Lakewood Property, which had an original loan amount of $12.0 million. Mr. Leslie was a guarantor of the Company’s loan secured by the Company’s hotel property in Pineville, North Carolina, which had an original loan amount of $9.3 million. That loan was repaid in full and the guaranty terminated on July 23, 2024. Mr. Leslie was also a guarantor of the Company’s loan secured by the Prattville Property, which had an original loan amount of $11.0 million. That loan was repaid in full and the guaranty terminated on December 30, 2025. For the years ended December 31, 2025 and 2024, the Company accrued guarantee fees in the amount of $0.1 million and $0.1 million respectively to each Mr. Maple and Mr. Leslie. In addition, during the second quarter of 2025, the Company recorded approximately $0.9 million of previously unrecorded guarantee fees relating to certain loans for the periods from October 1, 2021 through December 31, 2024. The Company evaluated this matter under SEC Staff Accounting Bulletins No. 99 and No. 108 and concluded that the omission of these fees was not material to any prior annual or interim period, nor to the current period. Accordingly, the cumulative amount was recorded as an out-of-period\n\n80\n\n[Table of Contents](#TOC)\n\nadjustment during the second quarter of 2025 and did not result in a restatement of previously issued financial statements. The guarantee fees are presented within Other Expense in the accompanying consolidated statements of operations. The total amount accrued of $2.9 million remained unpaid at December 31, 2025 and is included in Due to Related Party on the accompanying consolidated balance sheet.\n\nAs of December 31, 2025 and 2024, the Company had amounts due and payable to the Advisor and its affiliates of $21.6 million and $12.7 million respectively, which is included in due to related parties on the accompanying consolidated balance sheets.\n\n*Currently Proposed Transactions.* There are no currently proposed transactions in which we were or are to be a participant and the amount involved exceeded $120,000 and in which any related person had or will have a direct or indirect material interest.\n\n**Director Independence**\n\nTwo members of our board of directors, Jeffrey T. Leighton and Perry M. Rynders, are “independent” as defined by the rules of the New York Stock Exchange. The New York Stock Exchange standards provide that to qualify as an independent director, in addition to satisfying certain bright-line criteria, the board of directors must affirmatively determine that a director has no material relationship with us (either directly or as a partner, stockholder or officer of an organization that has a relationship with us). The board of directors has affirmatively determined that Jeffrey T. Leighton and Perry M. Rynders each satisfies the New York Stock Exchange independence standards. Neither of these directors has ever served as (or is related to) an employee of ours or any of our predecessors or acquired companies (if applicable) or received or earned any compensation from us or any such entities except for compensation directly related to service as a director of us. Therefore, we believe that both of these directors are independent directors. Accordingly, all of the members of the Audit Committee and the Conflicts Committee are “independent” as defined by the New York Stock Exchange."}